Joining us today in this conference call and to present the results of Talgo for the third Q 2021. For this end, Gonzalo Urquijo, CEO of Talgo will go through it, and at the end, we will open a Q&A session.
Thank you, Javier. Good morning to all of you, and thank you very much for attending this call. It's a call with the third quarter results. As you know, it is a limited format in the sense that we don't review the balance sheet in this call. Now, if we go to the first page, that is the key business highlights. In terms you know, our first priority is health and safety. We are working to improve our safety measures. Our target is zero accidents. You have seen here that our frequency rate is 8.24, and it's coming down from 8.69. Clearly we are below industry standards. In terms of severity rate, I have to say that in June we were at 0.19, and as of today we are 0.22.
It has increased somewhat. Clearly, we ask for the frequency. We are below industry standards. That is, as you know, our number one priority, and we'll have to continue working on that. The second point I wanted to share in terms of COVID, we're all doing better, and we hope there's no new phases, even though we have seen in Spain some increases now in number of people that are with COVID. They are very minor, I would say. In terms of backlog, where are we in backlog? At the end, we've seen backlog. We are in EUR 3,013 for the first nine months figure, and we would have to add EUR 249. That includes all the contracts that have been awarded, but not signed.
If I add up those two figures, it would be 3,262. In terms of order intake, we have the same. We have the two figures there. Signed EUR 255. In total, with the ones that are not signed, we would—the signing will be coming. It's a question of time, it's a question of the contracts, et cetera, and we would be at EUR 504. In terms of key financial figures, you've seen our revenues. We'll go through them after. It's a high revenue. It is in a moment where we are finishing the very high-speed train for Spain project. That train is coming down, and we have to now start increasing with the Deutsche Bahn one. In terms of maintenance, we're starting to see that recovery.
I think 100% recovery in tonnage will be for next year. Clearly we are in the good trend for that full recovery. Last but not least, I would like to address raw materials, not only raw materials and transport, I would say clearly. That has been a matter of concern with us. Clearly we have been working. We know, for contracts that are ending, like the high-speed train, the impact is nil. For the contracts we're now building, we've hedged it's gone. We've put it through our margins already, and we still continue to be very prudent. That is, once we have an awarded offer, we try to close as soon as possible in order not to have an open risk of raw materials.
All in all, after this stage, I would say, well, it's an adequate, I would say, volume of execution. The maintenance is doing better. You know, as Talgo, we always like to be prudent. We can go to the next page. That is the key operational figures. One of the major points there, we already spoke about the backlog. That is the 3.3, adding the 249 that we expect to deliver the high-speed train in the first semester of 2022. We are undergoing testing activities, and that is working okay. Last but not least, we are recovering that maintenance. You have seen here where we are in maintenance. In Spain, 75%, and in international, 90%.
If I go to a further breakdown, well in places like Kazakhstan, like Russia, Uzbekistan, we're around 100%. In Saudi Arabia, also 100%, and in U.S., 70%. That would be the breakdown of the figures. Next, page, please. That is the key operational figures and market considerations. First of all, the order intake is amount around EUR 500 million. That includes the awarded but not yet signed. The second one, we have seen delay in projects in our pipeline, the Renfe one and others, so they are there.
We do feel comfortable because we are working in over 30, I would say, active opportunities, mainly in Europe, Middle East and Africa, and also in other third countries. Last and not least, very important, you see in that page, our pipeline is EUR 5.5 billion. This gives us a positive outlook for the industry. We do believe that this industry, it's a really green industry with a growth perspective additionally to that order liberalization. We are quite optimistic, I would say, on that point. Now in terms of the order intake, we are at present at EUR 0.9, which is lower than what we had given as a guidance. We'll come back to that in the last page. The next page, key financial figures, revenues.
On the revenues, as you've seen, they have increased. We are at EUR 427 million. It is clearly higher than last year, but last year we were impacted by COVID and the previous year. In terms, if you see it on a quarterly basis, you see EUR 133.7 million. I do think there's two impacts. The basic impact here is we are finishing the high speed of Spain, and we are starting with the DB, which will lead to the major part of the revenues in 2022. I would say there has been some seasonality, this year effect, also. Next page, key financial figures, EBITDA. Where are we in EBITDA? You see here we are at accumulated in year 49.8.
That is for the quarter we have done 19.3. It is a good margin. It's 14.4, which you see in the second part of the column in the right part. Clearly, there has been an important industrial activity and the recovery of the maintenance. Now, I would be prudent. I think we have had two issues here in the sense that we have had good margins. As the revenues were lower, we have been somewhat impacted with that margin of 14.4. I'll come back in the last page, but we do remain with a guidance. I would like to be between 11%-12% in terms of EBITDA. Now, other issues I can talk here.
I do think it's important to come back to those raw materials. As I said before, we have been impacted by raw materials. Not that much in the sense that finished products, we are not that impacted. For the new projects, we try to close as soon as possible. It's a fact that steel has doubled, that aluminum has multiplied by 2.5. Copper is also at 50%. The freights. There has been an increase there. Now, the increase we have seen there, we have put it already in the manufacturing, the one we've seen in our projects, in the manufacturing of the projects we are doing now. Going forward, we will continue. I mean, the ideal would be we could do complete pass-throughs.
We are trying to push that, but that's not where the industry is yet. I would say another point here that I know where we are trying to close is, as I said before, and I want to insist, as soon as possible once we are awarded that specific project. The other page, that is key financial figures in net income. The net income is EUR 20.7. That's what we have reached in the nine months. That's a net margin of practically 5%. In addition to that, we've had good financial expenses, I would say, that is for this year. They have been positively impacted by a positive foreign exchange effect we've had of the Saudi Arabian currency. The dollar versus, sorry, the Saudi Arabian currency.
In terms of our debt, you'll see what our gross debt is. You'll see what our average maturity and the cost of our debt. I think in terms of balance sheet, our liquidity, we are satisfied because we have a strong balance sheet, good liquidity, and we believe we are very competitive in our costs of debt. I go to the last page before we turn to questions. In terms of our outlook, well, profitability, EBITDA margin between 11%-12%, that will remain equal and we have not changed that guidance. We reiterate this guidance for the end of the year.
Second, in terms of capital structure, we have no major changes expected in working capital, and we will be in terms of guidance of the debt towards EBITDA of 1.2, and our CapEx will be aligned with the EUR 25 million we have given in our guidance. Now, other points I mention. Backlog execution, it will be 35%-37% of both years, 2021 and 2022. Let's say one third clearly. Now, in terms of our issues, I just wanted to conclude a bit with this. In terms of the strategic plan. Look, we are moving ahead on this, and we are moving ahead adequately. We had a board of directors yesterday. I think it went at least in my view it went well.
We've reviewed first the financial part, then more strategic plan. This is not concluded. I do want to say that we've discussed this a lot in the board among us. It will be difficult to do disclosure because at the end, I would be giving or what is our future path to our competitors, so that doesn't make much sense. If I would give you the general trend of that, I would say it's on one side performance. What do I mean by that? Operational excellence, that's cost, quality, times, it is productivity. Second, it is to remain with a strong balance sheet. We do believe it could be, going forward, should be growth that could be organic or inorganic if the opportunities are there and have always an adequate balance sheet structure.
This would be it. I thank you very much, and we're open now to questions. Thank you very much. Gracias.
Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. You can also submit your questions on the webcast platform. We already have some questions coming, and the first one comes from Jaime Escribano, from Banco Santander. Please go ahead, sir.
Hello. Good morning. Yeah, a few questions from my side. The first one would be regarding margins. You are doing 14.5% EBITDA margin in Q3. My question would be: What could we expect going forward in, for example, in 2022? Where do you see like a range or a target? Because it looks good, right? You have not improved the guidance for the full year, which if you model the Q4, it looks you could be above 12%. Then my second question, which maybe would be related with this, is are you seeing any inflation, supply chain issues that maybe prevent you from being more optimistic on margin?
A third question on pipeline, if I may, which is if you can be more specific on short-term tenders that you are working right now that could happen in the next, let's say, three to six months. Thank you very much.
[Non-English content] Thank you very much, Jaime. Now, in terms of margin. Look, for the moment we've said we are leaving the full year guidance between 11% and 12%. It is true for next year we will have a full year of maintenance. That should impact. For the moment, we are not going to come back with any figure for 2022. We'll do that, as we always do, in the first months of 2022. We'll give you a full guidance as we've always done. For the moment, I would say at least the expectations are good in terms of maintenance. I think they should be also good in terms of progress.
Let's wait until we have our budget for the year, and we can give you figures that really are more worked upon and more reviewed and analyzed. That is as for now. In terms of inflation, you said, are we optimistic? Well, inflation, I mean, we have an issue of concern we all have with the raw materials, so I think we have to be prudent. We like to cover our risk as soon as possible. I have to tell you, listen, when you make the offer, when your answer to that, there's also an open gap there. We've seen that enormous increase in raw materials and in freights. We have seen the last weeks it seems to have flexed somewhat, but we are prudent with this.
We still have an issue there that we would have to monitor carefully. Look, in terms of inflation, I have to say, we're also looking at going forward inflation of our salaries. That could be an issue, but we for that, we want to answer with productivity. What we have to answer in that is we have to be more productive. We've seen the figures of inflation. We see that could increase our workforce and, you know, our salaries of the workforce. But for that, we are really following our cost-cutting program that we also already announced. We think we're going to meet what we said that was between 10% and 15% for 2021, 2022. That is clear. As for our pipeline, Jaime, I'll tell you somewhat. Well, we have a pipeline.
You know there's a project we are still pending to have more information for Spain. We have projects also in Europe. That is, we also have them in CIS and in North Africa. At present, we have these projects, and that is what we are looking at now. We do believe we should be in figures or backlog similar to the ones we've had this year. That is where we are now, Jaime. Okay. Thank you very much for the question.
Okay. Thank you.
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Thank you very much.
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We have another question coming from José María Cánovas, JB Capital Markets. Please go ahead.
Hello. Good morning, and thank you for taking my questions. Two of them, if I may. First of all, maybe a follow-up on Jaime's question, regarding the margin, the target for this year. I just wanted to understand if you are just being conservative and that's the reason why you are reiterating this 11%-12%, or if we are missing something for the first quarter. Because if we do the math, we would get an implicit EBITDA margin, significantly below the ones in the third quarter. Just wondering if you're just being conservative here or if you're expecting any extraordinary impact to come in the fourth quarter. Secondly, you did upgrade your target for net debt and now expecting 1.2 x for the end of the year.
Also wondering what has happened at this line, and if you could give us some color regarding the factory levels, you know, through the vehicle that you have for the Deutschland project. If you could give us here any update, even if just qualitative and not quantitative, that would be very useful. Thank you.
I'll start. [Non-English content] for your three questions. I'll start by the last one. In terms of factoring, at the end of this quarter we haven't done. At the end of the fourth quarter we will have to see. In terms of the acknowledged abstract debt, we have not increased that, but we did say that we do plan, as the project moves ahead, and we will move ahead on this. We maintain our target there of net debt coming back to your second point to the 1.2x, if you want, in terms of EBITDA, and that, so we keep and maintain that one.
In terms of the net debt, there's little more I can tell you because that is not a published figure for this third quarter. Now in terms of margins for the quarter, do you think we are being conservative or extraordinary? Well, no. You do know we are a prudent company. That is, the answer is yes, we've always been in that sense, and it continues being like that. Now, I would like to see that, you know, how is the evolution of the raw materials? What is the evolution in terms of the inflation in this country? In that sense, that's why we have to take those things into account. Also, I would be careful with the third quarter because our revenue has been somewhat lower.
With that, you had a good, you know, margin, but when you divide it by the revenue, having a lower revenue, well, then it does look higher. That is why we are being prudent on that, and we would like to maintain between 11% and 12%. That is for the second or the fourth quarter, and that would go take us for the full year to a high that we said in the last quarter we would be in the higher parts of the year between 11% and 12%. That's all we can say for this moment. We do have challenges. We are conservative, and let's see how the outcome is. Okay, José María.
Thank you very much.
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We have another question coming from Alfred Glaser from Oddo BHF. Please go ahead.
Yes. Hi, good morning. I was wondering on raw materials and transport inflation. You said in your presentation that on projects with a high degree of advance, there is no impact and you have been updating the margins on the other projects. Could you be a bit more specific how this works? Could you also explain how much of the raw material and other inflation impact you really can offset through these measures? I'll have another question which I might ask afterwards.
Thank you very much for your question. Look, how does this work? I'll try to give more breakdown to this at the end. First of all, for projects that are finishing, there's no doubt it's high speed. That is probably stating the obvious. It has little or no impact, I would say. That is clear. Now for projects that we are now in, like Deutschland and things like that. I have two comments to this. First of all, we purchase around 70% of what we are producing, and the minute we get awarded, we try to close in order not to have open positions in terms of raw materials.
Not only raw materials, but other materials we may be buying, because at the end, this through the freight, freights and everything, you may have inflation. Maybe it's not as big as in the steel or in the copper or in the freights or in the aluminum. The other ones, everybody has also had that impact and also try to inflate. My second point here on how it works, Alfred, is we try to close as much as possible the minute we get the contract awarded. That diminishes the risk quite a lot, also. There always is some open positions or there always is some modifications you have to do or you couldn't have some delay, and that you could be impacted by that. What have we done?
If there is any impact on this, we pass it through the P&L or that is the margin that we have passed. There is also I would say the impact is limited on one side, but we pass it through the P&L. So the third quarter P&L, anything that we have seen or suffered, it has been already passed through the P&L. Of course, it not only impacts the what we have today in the P&L, but the margin going forward, that is your that squeeze, to quote it, or that small squeeze you may have, it is already envisaged in the margin going forward. Okay.
Thank you. That helps a lot. I was wondering about top line revenues and the outlook. You said before that revenues obviously have been a bit lower in Q3 than in previous quarters. You have your guidance of billing between 35%, is it 35% and 37% of the backlog in 2021 and 2022. Do you think that this is in line with what the consensus is expecting now in terms of revenues this year or next year? Or is this somewhat a bit below?
Yes, we have confirmed this, and we are confirming it. It is true, we are in a moment that you suffer a bit when you're finishing a project and you're starting the other one, and you get cruising speed. That is what we've seen here. You could see, say that in the fourth quarter somewhat because that project of ABB will be growing as time goes by. That is, we have confirmed that in the guidance in terms of the top line. Okay.
All right. Okay. Thank you very much.
We have another question from Bosco Ojeda from UBS. Please go ahead.
Hi, good afternoon. I wanted to clarify on your order intake. When you say around half of the EUR 500 million is pending contracts to be signed, are those contracts that you already made public or you would make it public once you sign them and then formalize those? Just wondering if you give a little bit of color on what orders you gained this year, or this was already announced and partly the year before, where there was already contracts pending to be signed. Thank you.
Yes, I'll give you the answer. I think there's one that was made public. That was the big one on the locomotives, because we thought that was very important in order to transparency, give the market transparency at a high. There's other smaller ones, which we have not made public. It's a question more of administration, I would say one way or the other, because in this case, the one we made public is the most important for the public to know. At the end, there's no way back on it. That is where we are, and that's where we have this. We do think that in the following weeks, months, we should have all this signed. From our side, we are pushing very much. We are very interested.
As you know, our customers are our customers, and they're not only always right, but for us it is important to get them signed as well. That's where we will continue, Bosco. Gracias [Non-English content ], pushing for that. Only one I can tell you, which is the major one, has been made public. Okay, Bosco.
Thank you.
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We have another question from Pablo Cuadrado from Kepler. Please go ahead.
Yes, good morning, everyone. Three questions from my side, two more financial and one more for what is today. On the financial ones, could you just detail you know the tax rate, which seems to be quite low during Q3? If you can help us to little bit have a view going through full year results. I think accumulated nine months was 22%. Where do you see that performing going through year-end? Also, you have mentioned in the presentation on the good performance of financial expenses, and you mentioned as well the positive impact on Forex from the currency in Saudi Arabia. I reckon that in Q3, again, it was less than EUR 1 million financial expenses during the quarter on a standalone basis, similar to Q1.
If you can help us, you know, to derive how much was the impact on the Forex on that front. The strategic one is, well, we have been discussing a lot on this raw material, energy costs, transport costs, for the current backlog and how this affects. Thank you very much for all the visibility. I would like to go a step forward, probably just looking to the EUR 5.5 billion tenders that you are working right now. How do you see this raw material is going to affect in the future tenders?
Do you think that you are going to make an approach where you are going to put flexibility into the tenders, where you are going to share with the customer the overall value, and also involving suppliers of raw materials, given the tremendous spike that we have seen there? Do you think that we can keep working like in the past where basically you put an order when you sign, you try to cover, but you think that clients are going to accept that, taking into account the tremendous increase in the cost of whatever raw material stock in just a few months?
Probably any view that you can share on how you're approaching those future tenders in terms of flexibility or how you think you are going to be able to lock the margins is going to be useful.
[Non-English content] Thank you very much. Three questions. I understood, first of all is tax rates. You know our tax rate is between 20%-22%, but it depends where we have the profits. For example, this year, Kazakhstan, we have to pay taxes there, et cetera, and Saudi Arabia. That is depending on where they're coming from and then, once we have the year closed, we'll see what we pay in each geography. That's basically it. That is on one side. It is true, we are making more money than last year, and especially in some of these countries, so we will have to pay somewhat more taxes. In terms of financial expenses, I think there's two issues to the financial expenses. One of them. Look, we have.
The cost of our debt has decreased, and we already seeing this. We have a low cost for the bonds, and we are not using that much, and we have had in foreign exchanges are somewhat positive, that is somewhat above EUR 1.5 million in terms of the impact in positive in foreign exchange. That would be basically it. What other issues? Now, the risk in terms. I think you raised a key question, if I understood correctly. Again, do you think. I think there's really a strategic issue here. Could we pass in order to not to see margin squeeze? Now, margin squeeze today, if suddenly raw materials go down, you could see it as always in the differences. But we are not here to speculate with raw materials or anything like that.
The ideal would be for us, pass-throughs. Pass-throughs, I would say to the left and to the right. What do I mean? Pass-throughs upwards towards our customers. But that is difficult. The way if you are going to a public tender, you at the end, what they want is to close the full amount, and once they've closed the full amount, then what they want is that is it, and it's up to you to negotiate. That's not always easy, because at the end, it's these big tenders with public, and you cannot change the figures. It's not easy, I would say. For me, there's two issues there. That is one, the raw materials, and the second one would be an ideal pass-through if we believe that inflation will go up in terms of HR issues.
That we have to beat it with productivity. Going to the other side, that is, could we pass it to our suppliers? Well, I have to tell you, that's a big fight we are having now, and we are now opening negotiations with many of the majority of our suppliers. That is, we would like at the end, if we are not capable of pushing it forward, or we are doing towards our customer, at the end, we are the customer, where what we want is, at the end, that our suppliers share this burden with us also. That's what we are doing now, and that's what we are fighting now. In some cases, it does work, and other ones it depends on the leverage you have, the importance you have, and in other ones it's more difficult.
For us, that is a clear challenge and a clear chapter where we are working. Look, in maintenance for example, we do update the CPI, so that is done, and we would like this to be transferred to others. I think that's a day-to-day negotiation, I would be saying, with our suppliers. Okay?
All right. Thank you. Best to you. Thank you.
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Ladies and gentlemen, as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. You can also submit your questions on the webcast platform.
Okay. I think that it seems that there are no more questions through the phone platform. In the webcast, there are two questions. The first one comes from Carlos with Stifel. It says as follows. Could you give us some information about pipeline percentages regarding the high speed, commuter maintenance and so on? Thank you in advance.
Yes. I would give you here that it's basically of the EUR 5.5 billion, it is 50% would be intercity passenger coaches. High speed is around, in round figures of 15%. And then we have commuter and locals. That is around another 25%. And maintenance is included. Okay?
Okay. Thank you. The next question comes from Bruno Bessa from BBVA. It is the following: Could you please provide a bit more color on the Spanish commuter trains contract in terms of timing, potential amount of the contract and how it should be split in terms of packages?
Yeah. Look. That we still don't have the final legal offer of the tender, so there's little we can say here. We are still waiting for this. What we call PCAP or Bruno. That is legal requirements of this tender, and that is what we're waiting for, yeah. There's little more we can tell you on this point, sadly. Thank you both of you for the questions.
Okay. I believe there are no more questions. Thank you very much, Gonzalo. Thank you very much, all the people that have joined the call. Obviously if there are any additional questions, we have always opened the channel via IR. You can access us through that channel. Thank you very much. I'm looking forward to hearing from you again in the next conference call. Bye.
Thank you very much, Bruno.