Tinexta S.p.A.

Good afternoon. This is the Coral School Conference Operator. Welcome and thank you for joining the TENEXA Group Consolidated Results at 30th of September 2023 conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Joseph Mastragostino, Chief Investor Relations Officer of Tinexta. Please, go ahead, sir.

Good afternoon and good morning to the folks in the U.S. Thank you for joining Tinexta's 2023 conference. 9 Months Results Presentation. Here with me today, O'Donohue Pozzi, Group Chief Financial Officer. As a reminder, all the relevant documentation of the first 9 Months 2023 results can be downloaded from our company website in the Investor Relations section. For the purpose of this call, I will go over the first 9 Months 2023 highlights and updates. O'Donohue instead will go over the first 9 Months 2023 financial results as well as business units' performance, providing us with a deep dive. The last part of the call will be dedicated to Q&A. A recording of this conference call will also be available on our company website, and it will be posted upon completion of this call. At this point, given that you all have the presentation, I will kick it off by turning to page four of the presentation. Here we have highlighted some of the key data. Revenues for the first nine months came in at $269 million, 0.5 plus 9% versus prior year. EBITDA adjusted came in close to 57 million, growing 4% versus prior year. EBITDA on a reported basis came in at 51 million or growing 5% versus prior year. Net profit at a reported base was 48.5 million. Net financial position was 91.5 million versus 77.6 billion of the prior year. Starting to page five, aside from some of the numbers already commented, it is important to highlight that adjusted free cash flow of continuing operation rose by 11% versus prior year, hitting 40 euro millions. And even more significant is the adjusted free cash flow on an LPN base, which came in at over 53 million, showing the group's continued ability to generate significant amount of cash. Net financial position grew versus fiscal year 22 to 91.5 million. Such increase, it's important to highlight, is attributable to the acquisition of a minority stake in Defense Tech Holding, as well as Acercia, which took place in the months of April and July of 23, respectively. This was partially offset by the proceeds of the sale of Revalota, just as a reminder, which was completed on March the 7th of 23. Net financial position over the last 12 months EBITDA adjusted came in sub-1 or 0.94 times. In the first nine months of the year, in a nutshell, digital trust continued very strongly with growing trends. Revenues grew 14.4%, with EBITDA growing nearly 15%. EBITDA margins stood at a historical high, almost close to 29%. Cybersecurity grew 15% in terms of revenue, even more I would say outstanding was the performance of EBITDA on an adjusted basis, which grew 67% versus the prior year. This is, therefore, an extremely great result. We have posted resilient growth for four consecutive quarters, with EBITDA margin reaching nearly 13%. Business innovation grew fairly in terms of revenue, with EBITDA reaching $22 million, and EBITDA margin close to 28%. Going to page six, as most of the comments, the numbers have been commented, I would like to remind you that the comparative data for the first nine months of 22 have been restated in relation to the completion in the fourth quarter of 22 of the activities identified in terms of fair value for the assets and liabilities of CERF Europe, consolidated November 1st of 21, E-Value, fully consolidated in January 1st of 22, announces April 22, Serabit in May of 22, and Plant and 9-in-1, consolidated as July 1st, 22. It is important to highlight that the results in the first nine months of 23 include the contribution of Assepsia Limited. and its subsidiaries. We'll go into that detail and provide you all the backup of this. But it is important to highlight that the contribution is as of August the 1st. So it is basically August and September of the third quarter. Such contribution is shown as a change in scope while as a result of the aforementioned mergers, the contribution of the 23 results of the acquisitions finalized during 2022 is not punctually measurable and accountable as a change in scope. For any further details, always refer to the interim report. Turning to page 7, we think this is again another slide that we are proposing again in Q3. It is an important one because we would like to highlight the cadence and confirm that this is a back-ended EBITDA story with the fourth quarter obviously having the greatest weight in terms of adjusted EBITDA. Again, we have confirmed that the average weight per quarter is absolutely in line with the average of the prior two years. At this point, I will leave it to Odone to provide us with a deep dive on the results.

Thank you, Joseph. Good afternoon, everybody. Good morning to people who are connected from the U.S. As anticipated by Joseph, you know, results of year-to-date Q3 came, you know, aligned with our expectations first. Overall, we got... two business units, Digital Trust and Cyber Security, that has continued the excellent performance of the first two quarters. This was also confirmed in Q3, showing the steady growth of Digital Trust and the significant rebound of Cyber Security. As far as concerns business innovation, the situation is uh is on track with you know our expectation and we do expect a quite significant important q4 as occurred during q4 2022 and this is refers exactly to what to the last slide that jose presented to you uh if we move into into the the pnl uh the pnl is uh showing uh grow in the range of above 9% for the consolidated results of the group. In top five products and services, all our business units are represented. It means that revenue is well distributed between the companies. and between the different business units. In terms of cost, we do see that service and other costs are growing less than the revenue, and this is bringing some contribution of profitability, while the personal costs are growing more than the revenue. This is something that we do see as a temporary situation, as the Q4 is going to be the stronger quarter of the year where, you know, the absorption of personal costs will be much higher than in the previous courses. So we do expect at the end of the year, you know, an improving of profitability compared to the situation where we are. The EBITDA adjusted came in the growth of 4% compared to previous year. The LTI incentives as well as non-recurring costs are aligned with the previous year. EBITDA is at 19% compared to 19.8% of previous year for the reason I mentioned above. The level of depreciation and amortization that are linked to our investment policy in terms of capital is increasing. This is the result of the continuous investment from our business unit. Digital Trust, Cyber Security and Business Innovation are continuing to invest in new solutions and products in order to keep very updated and fresh our portfolio of products and services. And this is showing an increase compared to the previous year. If we move to financial charges and income, we do see here a quite significant improvement. So our capability to cover the financial debt, keeping it well below the current cost of money, allow us to invest the cash available at the higher interest rates than the cost of debt. That is bringing up, as we can see, we recorded just in nine months 5 million positive interest. While the negative interest grew compared to the previous year, half of this was related to a couple of write-offs in terms of minority interest in some activities. Income tax is aligned with our expectation, higher than the previous year, but here last year we had a tax relief related to the francavento we performed last year and it was already very clear explained last year. Results of this continued operation includes both in first nine months 22 as well as in first nine months 23. the gain related to the sale of Inolva in 22-4 with a net gain of 41 million, and the gain of the sale of Revaluta in 23 with a gain of 37 million after taxes.