Talgo S A : Results Presentation 2022

Results Presentation Fiscal Year 2022

28 February 2023

Table of contents

1. Executive summary
2. Other materials

1. Business performance

1. Financial results

ANNEX

1

Executive Summary - Key Highlights

1. ESG

II. Business performance

1. Financial Results

IV. Outlook

• High social commitment with highest Health & Safety standards and employee engagement.
• Environmental policies across all operations and developments.
• Corporate Government best practices implemented.
• Challenging 2022 with increases in raw materials costs, inflation and supply chain disruptions impacting manufacturing margins.
• Maintenance remained strong with leading technologies underway.
• Cost-controlaction plan contributing to stabilize margins although still reflects inflation impact on existing backlog.
• New debt issued in 2022 anticipating increasing interest rates with c. 90 €m of new debt issued. Resulting sound financial profile with strong capacity to finance current and future projects
• Net income impacted by extraordinaries (Russia and NOLs reversals)
• Strong revenues increase expected for FY-2023f
• Outlook reflects current backlog margins.
• Outstanding commercial momentum with significant opportunities ahead to enhance order intake in 2023.

	FY-2022
Freq. Index.	9.961
CO2 emmisions	4.8152
Board members	10 (-33%)

	FY-2022
Backlog	€2,748 m

	FY-2022
Revenues	€469.1 m
aEBITDA mg.	11.2%3
NFD	€97.4 m
	FY-2023f
Revenues	40%4
aEBITDA mg.	12.0%3
NFD	2.0x5
Order intake	2.0x Btb6

1)	Industrial accidents per million man-hours worked. Includes Talgo Group FTEs	5)	Times LTM Adjusted EBITDA		2
2)	tCO2eq	6)	Book to bill ratio.	Source: Company
3)	Adjusted EBITDA margin
4)	Calculated as total revenues in the period 2023-2024 over FY2022 backlog (€2,748 m)

1. ESG

• Employee Management Business Model :

1. Health & Safety highest standards in the industry as main priority, with the objective to target zero accidents in the business activity.

• 1. Launch of new talent and professional careers management model to encourage employee-company engagement.
• Corporate governance and business:
• 1. Creation of Sustainability and Strategy Commission with comprehensive assumption of all key ESG levers.
  1. Approval of the 2022-2024ESG plan with 29 strategic projects and 94 goals.
  1. Talgo's economic activities considered "eligible" in >90% (Regulation of sustainable finance).
• Environmental management:
• 1. Publication of the 1st Talgo environmental product declaration (Avril model) resulting on a product recyclability rate of 94% while rated as the train with lowest CO2 emissions in the world.

1. Smart factories maximizing safety while reducing waste generation and energy consumption (ie solar panels). o R&D focused on operational efficiency (ie Industry 4.0) and products (ie Hydrogen).

Operational Risk Prevention main figures

			2022	2021
Frequency Index	1	9.96	8.51
Severity Index	2		0.22	0.25
Board members (#)	10	15
CO2 emissions (tCO2eq)	4,815	5,171
Indefinite employment rate	90.9%	93.3%

Talgo's workforce (# employees)

2021	2022
2,711	2,874

(1)	Industrial accidents per million man-hours worked. Includes Talgo Group FTEs		3
(2)	Number of working days per 1,000 hours worked. Includes Talgo Group FTEs	Source: Company

II. Business performance (I/II)

Operating challenges

Inflation /

Raw materials

Supply Chain

Industrial capacity

Other challenges

Action plan

• Updated salary base for 2021-22 agreed with unions (9.2% in two years).
• >70% backlog with indexation clauses (maintenance contracts).
• Back-to-backclient/suppliers reducing exposure to prices volatility.
• Pass-throughto clients in new projects with indexation clauses.
• Cost hedging structures.
• Increasing suppliers base to enhance flexibility.
• Suppliers relocation strategy to promote agility and reduce disruptions.
• Strengthening requirements and guarantees to ensure performance.
• Rescheduled existing manufacturing projects.
• Product and manufacturing processes standardization to optimize manufacturing lines and existing developments.
• Working capital alternative structures to mitigate cash flow unevenness.
• Services in Russia cancelled in march 2022 (<1% of revenues).
• LACMTA (USA) contract terminated by client under litigation process.
• Force majeure claimed in contracts.

4

Source: Company