Talgo (TLGO) Q2 2024 earnings summary

Executive summary

• Sustainability is central to strategy, with strong manufacturing in Spain, Germany, and Denmark, and a robust commercial pipeline of €6.4bn–€6.7bn supporting future growth.

• Net turnover for H1 2024 reached €346.1m, a 20% increase year-over-year, driven by strong industrial activity and execution of the order book.

• EBITDA rose to €41m (11.8% margin), up from €34m (11.6%) in H1 2023, with net income up to €15m.

• Net financial debt increased to €357m (4.3x EBITDA), reflecting higher working capital needs and investments.

• Backlog stands at €4.0bn, providing high revenue visibility; 80% is international, mainly in Europe.

Financial highlights

• Revenues grew 20% year-over-year to €346.1m in H1-2024, driven by manufacturing for DB, DSB, and Renfe.

• EBITDA was €41m (11.8% margin), EBIT €29m, and net profit €15m, all showing strong year-over-year growth.

• Operating cash flow was negative at €(100)m, reflecting project cycle, increased working capital, and delayed collections.

• Working capital increased to €495m (92% of LTM revenues), mainly due to €102m growth in work-in-progress.

• Cash and cash equivalents stood at €112m at period end.

Outlook and guidance

• FY-2024 EBITDA margin expected at ~11.5%.

• Net financial debt forecasted at ~3.5x EBITDA due to higher working capital.

• Awaiting major contract awards for train supply and maintenance, which could further boost the order book and workload in 2024.

• Book-to-bill ratio to remain above 1.0x, supporting ongoing commercial momentum.

• Ongoing investments in R&D and production capacity to support future growth.