• Revenues for the first quarter of 2022 are lower compared to last year and reflect the company’s change in the mix of projects under execution, as well as supply chain disruptions.
• The Spanish Very High-Speed project (Renfe Avril) is about to complete the testing phase and is expected to start delivery in 2022. Projects for the European operator Deutsche Bahn (Germany) and ENR (Egypt) will be the main revenue contributors in the coming months.
• The company maintains its 2022 outlook and has a solid order backlog (3,137 million), which provides long and medium-term revenue visibility and ensures industrial activity for the coming years.

 

Talgo S.A., a leading company in the design, manufacture, and maintenance of high-speed light trains, registered a revenue of €118 million in the first quarter of 2022, compared to the €147 million in Q1 2021. The decrease in revenues is due to lower industrial activity in manufacturing projects, resulting from the current change in the mix of projects in execution and disruptions in the supply chain. The Spanish Very High-Speed project (Renfe Avril) is completing the testing phase and is expected to start delivery in 2022. Projects for the European operator Deutsche Bahn (Germany) and ENR (Egypt) will be the main revenue contributors in the coming months, anticipating a new revenue growth cycle.

The company registered an adjusted EBITDA of €12.6 million in the first quarter of 2022. The slight decrease of the EBITDA reflects the impact of higher prices on raw materials, materials, labour and logistics costs. The efforts made in cost savings and efficiency improvements have managed to maintain the operating margin at 10.7%, compared to 9.1% in the first quarter of 2021, although progress in the recovery of profitability remains subject to factors exogenous to the business. Net profit reached €3.4 million in the first quarter of 2022.

The quarterly performance considers the recovery of the maintenance activity as a stable and recurring unit, both in terms of revenues and cash generation, as well as the company’s efforts to implement plans to maximize operating and financial cost containment. Talgo’s business model continues to display a high degree of flexibility to adapt effectively to adverse market contexts.

Talgo has a solid and diversified backlog of €3,137 million, of which more than 900 million euros correspond to manufacturing and refurbishment projects. This guarantees a high level of industrial activity for the period 2022-2024, as well as long-term revenue visibility thanks to steadily growing maintenance contracts. This backlog includes contracts awarded in 2021 worth €519 million, including the manufacture and maintenance of up to 40 VHS powerheads for Renfe and the extension of the number of cars in the manufacturing contract with Danish operator DSB, rolling stock overhaul projects in Spain, as well as maintenance services in Spain, Saudi Arabia, Uzbekistan and the United States.

Additionally, it should be noted that, in January 2022, Talgo signed a long-term green loan with the EIB for €35 million to finance R&D and Capex projects, in line with its commitment to new developments and the SDGs in the 2030 agenda. In conclusion, the company has a solid balance sheet with a strong financial capacity to successfully execute the projects in the backlog and continue to grow.

2022 Outlook

Talgo maintains its 2022 Outlook, supported by the manufacturing projects in Germany, Egypt, Denmark and the project to manufacture 40 locomotives for Renfe, as well as good commercial expectations, although the forecasts are subject to an inflationary environment, as well as other exogenous factors (logistics, geopolitical, Covid…).

In line with its commitment to sustained and selective growth, the company maintains a target of achieving a book-to-bill ratio of approximately 1.0x by 2022. In terms of profitability, the company has an adjusted EBITDA forecast of 13%, resulting from a progressive recovery in profitability, subject to the evolution of the current inflationary and supply chain context.

Also in 2022, Talgo anticipates a net investment in need of funds for operations (NFO) to finance ongoing projects. Additionally, Talgo foresees a Capex investment for 2022 of up to €25 million, in line with 2021. Regarding net debt, Talgo expects to maintain it at 1.5 times adjusted EBITDA.

In terms of commercial activity, Talgo is currently working on various projects to be awarded in the 2022-2023 period with a total value of 9.8 billion euros. Of these, 56% corresponds to opportunities in Europe and are mainly focused on high speed, long distance and intercity opportunities, although the company also focuses its commercial activity on other new segments. The company’s commercial strategy combines geographical and product diversification with a selective approach to opportunities and continues to be key for consolidating a high-quality portfolio that guarantees sustainable growth in the long term.

The full recovery of the maintenance activity in all international markets and in Spain will provide recurrence and stability in 2022, ensuring the generation of revenues and cash flows of the business. The company maintains Talgo Vittal-One as the green hydrogen technology platform to be a reference in the commuter/medium distance segment, to position as a the most environmentally friendly solution to contribute to the process of decarbonization of passenger transport in the following years.

Committed to its shareholders

Talgo launched in Q1 2022 as€10 million Remuneration Program, implemented through a scrip dividend and Share Buyback Program, thus offering shareholders a choice between shares or cash. 83% of the company’s shareholders decided to receive the scrip dividend in shares, instead of cash, thus increasing their stake in Talgo’s share capital, which is a clear sign of support and confidence of the shareholders in the future of the company.

On May 5, the company announced the start of the execution of a Share Buyback Program, which includes the subsequent redemption of the shares acquired. This will eliminate any dilutive effect on the shareholders who decided to receive their dividend in cash, and at the same time it will increase the stake of the shareholders who decided to receive their remuneration in shares, generating a real remuneration for all shareholders.

The Share Buyback Program has been launched after the implementation of the flexible dividend, and in the same proportion as the capital increase, the objective of which was to proportionally distribute shares to those shareholders who decided to receive their remuneration in shares. The Share Buyback Program will remain in effect from May 5h , 2022 until up to November 5, 2022.

About Talgo

Talgo S.A. is a leading company in the design, manufacture and maintenance of high-speed light trains with a manufacturing presence in seven countries such as Spain, Germany, Saudi Arabia and the United States, among others. The company is recognized worldwide for its innovative capabilities, unique and distinctive technology and reliability. Talgo is Renfe’s main supplier of high-speed and ultra high-speed trains and the supplier of trains in the “Haramain” high-speed railway line project between Mecca and Medina in Saudi Arabia. Talgo is also the manufacturer chosen by the German operator Deutsche Bahn and the Danish operator DSB to decarbonize its network with the Talgo 230 long-distance trains.

For further information, please contact:

Aída Prados and Esther Almendros – Estudio de Comunicación

Email: talgo@estudiodecomunicacion.com

Phone no.: +34 91 576 52 50