Talgo S A : increased revenues to 147.1 million euros as a result of greater industrial activity

Talgo S.A., a leading company in the design, manufacture, and maintenance of high-speed light trains, registered a revenue of 147.1 million euros in the first quarter of 2021. The increase in revenue is driven by a higher activity in manufacturing projects, mainly in the Spanish High-Speed project (Renfe Avril), which consolidates the expected revenue growth cycle. Meanwhile, net profit reached 6.4 million euros in the first quarter of 2021.

The company registered an adjusted EBITDA of 13.4 million euros in Q1 2021. The decline in EBITDA still reflects the extraordinary situation caused by the economic context derived from the impact of Covid-19. However, the efforts made in cost savings and efficiency improvements drive the progressive recovery of adjusted EBITDA margins (which went from 0% in the second quarter of 2020 to 7% in the fourth quarter of 2020 and 9.1% in the first quarter of 2021), and therefore the ability of the business to regain normalized profitability, although this remains subject to progress on vaccination and mobility restrictions, whose impact is mainly reflected in maintenance activity, which is still heavily impacted.

The quarterly performance considers the progressive recovery of the projects' productivity and the company's efforts to implement plans to maximise operational and financial cost containment. Thus, Talgo's business model is once again an example of flexibility to effectively adapt to adverse market contexts.

Talgo has a strong and diversified backlog of more than 3.3 billion euros, a third of which is focused on manufacturing projects, generating long and medium-term revenue visibility and ensuring industrial activity for the period 2020-2024.

Strategic opportunities

The company's commercial strategy combines geographical and product diversification with a selective approach to business opportunities (with an appropriate risk-return ratio) that consolidates a high-quality portfolio to ensure long-term sustainable growth. The company is currently working on commercial opportunities for a total value of approximately 7.5 billion euros, including high-speed and regional/commuter train opportunities in Europe.

The company maintains its Talgo Vittal-One train as its green-hydrogen-powered platform to set the benchmark in the commuter/medium distance segment, given the positioning of passenger rail transport as the key solution for the decarbonisation of transport in the coming years.

2021 Outlook

The first quarter results and the current outlook for project performance confirm the objectives set for 2021.

The company expects to execute up to 35%-37% of its order book in the period 2021-2022. Talgo maintains a target of achieving an average book-to-bill ratio of more than 1.2x for the period 2020-2021.

In terms of profitability, the company forecasts an adjusted EBITDA of 10%-12% for 2021, derived from a gradual recovery in profitability, subject to mobility restrictions and their impact on group's maintenance activity.

Also in 2021, Talgo expects a net investment in operational need of funds (NFO) to finance ongoing projects, the efficient and optimal use of the available financing capacity. It also foresees an investment in Capex for 2021 of approximately 25 million euros, prioritising R&D&I activities (such as, for example, those related to hydrogen technology).

Regarding shareholder remuneration, Talgo will proceed to the second cancellation of shares from the Buyback Programme in the second quarter of 2021, for a total of 3.6 million shares, representing 2.8% of the share capital.

Finally, in line with its commitment to sustainable and socially responsible management and ESG criteria, Talgo will present its first Annual S&R Report in 2021, in accordance with GRI standards.

Shareholders' support

At its Annual General Shareholders' Meeting held on Thursday, Talgo received the support of the majority of its shareholders for its efficient management in a difficult year marked by an unprecedented global health and economic crisis. Thus, all the proposed resolutions were approved by a large majority.

Talgo's Chairman, Carlos Palacio Oriol, said during his speech at the meeting: 'Thanks to the company's rapid adaptation, as well as the success of the operational measures implemented to normalize the manufacturing pace and protect our employees, Talgo was able to continue its industrial activity in 2020 to meet the expectations and needs of our customers'. He also recalled that, 'Talgo's mission is to continue working with the aim of maintaining our position at the top as a global and innovative railway company, with a benchmark product in terms of quality and reliability'.

Likewise, the newly appointed Chief Executive Officer of Talgo, Gonzalo Urquijo Fernández de Araoz, reminded that 'Talgo's unique characteristics, as well as its international success, have been a hallmark that has allowed the company to continue growing, not only in the manufacture and sale of trains and railway material, refurbishment and maintenance activities, but also in its positioning as a reliable, innovative and quality global manufacturer'. Urquijo recalled that Talgo is well positioned as 'a reference in the manufacture of railway material that contributes to reducing the carbon footprint in transport, at a time of transformation of the transport sector in which the path towards greater efficiency and lower emissions is irreversible'.

Note to editors:

Talgo S.A., is the leading Company in the design, manufacture and maintenance of high-speed light trains with an industrial presence in seven countries: Spain, Germany, Kazakhstan, Uzbekistan, Russia, Saudi Arabia and the United States. The Company is recognized worldwide for its innovative capacity, unique and distinctive technology and reliability. Talgo is the train supplier for the 'Haramain' high-speed rail project between Mecca and Medina in Saudi Arabia.

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