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November

Telvent Announces Third Quarter 2007 Financial Results

November 27, 2007

  • Nine-month Revenues of € 407 million, a 23% increase
  • Nine-month Pro Forma Diluted EPS of € 0.59, an increase of 23%
  • 2007 Revenue and EPS guidance raised

Madrid – November 27, 2007 – Telvent (Nasdaq: TLVT), the IT company for a secure and sustainable world, today announced unaudited financial results for the third quarter and nine-month periods ended September 30, 2007.

Revenues for the third quarter 2007 were € 128.6 million, impacted by USD/EUR exchange, compared to €129.2 million in the third quarter 2006. Revenues for the first nine months of 2007 were € 406.6 million, an increase of 22.8% (20% organic), compared to € 331.2 million for the first nine months of 2006.

Net income for the third quarter 2007 was € 3.6 million, compared to € 3.9 million reported for the third quarter 2006. Diluted EPS for the third quarter 2007 were € 0.12, compared to € 0.13 in the third quarter 2006. Net income for the first nine months of 2007 was € 12.3 million, an increase of 17%, versus € 10.5 million reported for first nine months of 2006. Diluted EPS for the first nine months of 2007 were € 0.42, compared to € 0.36 in the same period in 2006.

Pro forma net income for the third quarter 2007 was € 5.8 million, an increase of 5.8%, versus € 5.5 million for the third quarter of 2006. Pro forma diluted EPS for the third quarter 2007 were € 0.20, versus € 0.19 in the third quarter 2006. Pro forma net income for the first nine months of 2007 was € 17.3 million, an increase of 23.2%, versus € 14 million for the first nine months of 2006. Pro forma diluted EPS for the first nine months of 2007 were € 0.59, versus € 0.48 for the same period in 2006.

New order bookings (or new contracts signed) in the third quarter of 2007 were € 104.3 million, a 44.6% decrease from €188.2 million during the same period in 2006, where € 54.4 were included from Farradyne bookings. The accumulated bookings year to date were € 446.9 million, a 7.2% increase from the same period in 2006.

Backlog (representing the portion of signed contracts for which performance is pending) was € 515.7 million as of September 30, 2007, which reflects 4.6% growth over the € 493.1 million in backlog at the end of September 2006.

Pipeline, measured as management’s estimates of real opportunities within the next 6 to 12 months, is approximately € 1.7 billion.

Manuel Sanchez, Chairman and Chief Executive Officer, said, “The strength and momentum of our business have been reflected in the results for the first nine months in 2007. The increase in the demand from the utilities, and good performance in our Transportation, Public Administration and Global Services segments, helped us to deliver double-digit revenue growth. We continued to execute our strategic plan, which has driven improvements in margins and profits. We also expect to have very good visibility for the rest of fiscal 2007, given our strong bookings and backlog”

He added, “I am particularly delighted with the Matchmind acquisition that took place in October and the successful status of its integration into Telvent, which we believe will round out our solutions’ delivery. We are convinced it will be of significant benefit to our clients and improve our positioning in the IT market, given the important synergies between the two companies. In addition, Matchmind brings a wide range of skills and experience in areas that include IT consulting, ERP deploying and IT outsourcing, along with a team of seasoned professionals serving a full range of public and private clients”

“The strength of our first nine-month 2007 results shows that we are executing well our business plan, combined with our pipeline and backlog, and gives us confidence that we may outperform our previously stated financial targets for the year. We are pleased to revise upwards our guidance for organic revenue growth to a range of 17% to 20%, complemented with acquisitions, and pro forma diluted EPS to a range of € 0.97 to € 1.00”

Gross margin was 23.9% in the third quarter of 2007, showing a major improvement from 21.3% in the third quarter of 2006. Gross margin was 23.1% for the first nine months of 2007, up from 22.2% in the same period a year ago.

Operating expenses, as a percentage of revenues, were 16.8% in the third quarter of 2007, versus 15.5% in the same quarter of 2006. Operating expenses, as a percentage of revenues, were 17.5% for the first nine months of 2007, up from 17.0% in the same period a year ago.

Pro forma operating margin was 8.1% in the third quarter of 2007, compared to 7.2% in the third quarter of 2006. Pro forma operating margin was 6.9% for the first nine months of 2007, up from 6.5% in the same period a year ago.

As of September 30, 2007, cash and cash equivalents were € 68.3 million and total debt (including net € 57.4 million credit line due to related parties) was € 115.7 million, resulting in a net debt position of € 47.4 million. As of December 31, 2006, net cash position was € 46.7 million.

For the first nine months of 2007, cash used in operating activities was € 71.3 million, compared to € 51.9 million used in the same period last year. Cash provided by investing activities in the first nine months of 2007 amounted to € 20.1 million, versus € (11.8) million in the same period last year.

Business Highlights

Energy

  • Telvent signed a contract with one of Panama’s main electricity companies, Elektra Noreste S.A. The company will upgrade Elektra Noreste’s electricity management systems, which control distribution lines that supply electricity to more than 300,000 customers in the eastern half of Panama. This project is included in the strategic initiatives that Elektra Noreste is undertaking to upgrade and enhance its services and to ensure more secure, reliable and efficient operation of its electricity distribution grid. Telvent will implement leading-edge systems for data management and control (SCADA), energy distribution operations planning and optimization (DMS) and electric incident on the grid management (ArcFM/Responder). The systems are expected to shorten outage response times and enhance the service quality provided to Elektra’s customers.
  • Telvent, in a consortium with HP Italy, signed a contract with Snam Rete Gas in Italy to upgrade its existing SCADA system to OASyS DNA. The system manages the transmission of approximately 96% of all Natural Gas in Italy. Given the size of the pipeline network, this will be a highly distributed implementation. This project will consolidate Telvent’s market penetration in Italy and throughout Mediterranean Europe.
  • Agreement executed with Emcali, from Colombia, for the supply of a Distributed Management System. The scope of this project includes SCADA, DMS, and AMS/OMS applications which are all performed using Telvent’s technology like OASyS in SCADA and ArcFM, and Responder for AM/OMS. This area is one of the greatest challenges of Telvent for the future due to the worldwide planned investments in the utilities sector, for the purpose of optimizing energy management, fostering savings and a sustainable development.
  • Telvent signed a contract with Fluor Corporation, in the United States, to upgrade to DNA and S2300’s. Fluor Corporation is one of the world's largest publicly-owned engineering, procurement, construction, and maintenance services companies. Over the past century, Fluor, through its operating subsidiaries, has become a trusted global business leader by providing exceptional expertise and technical knowledge across every phase of a project.

Transportation

  • The Transit and Road Transport Authority of Panama awarded Telvent a nine-year concession for the construction and management of the Panama City’s traffic control infrastructure. The project, which will be financed by Telvent, is valued at more than 14 million euro. This project comprises implementation of the ITACA smart solution for real-time urban mobility management at 130 traffic-light controlled intersections, to be operated from a traffic control center. Telvent will construct the system and then operate it for seven years. By deploying this leading-edge technology, Panama City should achieve enhanced traffic mobility and fluidity on its thoroughfares and increased average vehicle speed which should reduce the time drivers spend behind the wheel on city journeys.<(li>
  • Telvent was awarded a contract by the Florida Department of Transportation, in the United States, to provide telecommunications consulting to FDOT’s central office and its District Offices in the planning and development of projects, operations, and maintenance of its telecommunication systems and networks. Also with District 1 of the Florida Department of Transportation in the United States, Telvent signed a contract to provide operations services at its traffic operations center in Ft. Myers, which manages Southwest Florida freeway traffic.

Environment

  • Telvent won a contract with Kahramaa, the Qatari water and electricity utility company. Under the contract, valued at over 5.5 million euros, Telvent will provide consulting services to Kahramaa for a period of four years on ways to enhance its drinking water transmission and distribution network. Through the services and systems to be supplied, Telvent will seek to optimize current distribution network management. The Company will sectorize and study Qatar’s current water network, supply equipment required for leak detection, model the network, and design, create and provide related training for leak detection during the four years of the contract’s term. The project is expected to allow Kahramaa to achieve management quality levels similar to those of the world’s leading water management companies.
  • Telvent singed a contract with Comtrol Corporation, in Taiwan, to supply an Automated Weather Observation Systems (AWOS) Network to the Republic of China Air Force (ROCAF). The purpose of this project is to install AWOS at 14 airbases in Taiwan, plus a central system to collect, process, display and store all the data from all air bases and other sources, such as satellite, radar, upper-air soundings, and typhoon warning data. There are also 17 transportable AWOS and 1 rapid deployment mobile AWOS system to be delivered. This is a very strategic project for Telvent in the Asian region. Many of the neighboring countries look to Taiwan for technological expertise. It also provides a very good defence contract reference for other military forces in the region.

Public Administration

  • Telvent was awarded a contract with the Andalusian Regional Government, in Spain, for expanding the NISA, Connection Node Security and Access, project. This is the Node through which all the Internet traffic entering/leaving the Andalusian Regional Government’s systems travels. Its main objective is to protect the Andalusian Regional Government’s Network from outside access, as well as enabling interconnection with other Organisation’s networks and controlling external access from these. It comprises two centres with complete redundancy between them.

Global Services

  • Telvent signed an agreement, through its Global Services business unit, with Oracle Ibérica S.A. for the joint development of technological solutions applied to businesses, focused on covering an emerging niche in the outsourcing market for new business process outsourcing (BPO).

Use of Non-GAAP Financial Information

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use certain non-GAAP measures, including pro forma net income and EPS. Pro forma net income and EPS are adjusted from GAAP-based results to exclude certain costs and expenses that we believe are not indicative of our core operating results. Pro forma results are one of the primary indicators management uses for evaluating historical results and for planning and forecasting future periods. We believe pro forma results provide consistency in our financial reporting which enhances our investors’ understanding of our current financial performance as well as our future prospects. Pro forma results should be viewed in addition to, and not in lieu of, GAAP results.

Pro forma net income excludes the amortization of intangible assets from the purchase price allocations in our acquisitions, stock compensation plan expenses and mark to market hedging, that Telvent believes are not indicative of its core performance or results. Reconciliation between GAAP, pro forma net income and EPS is provided in this release in a table immediately following the condensed consolidated financial statements.

Conference Call Details

Telvent’s Chief Financial Officer and Head of Investor Relations, Ana Plaza, will conduct a conference call to discuss the third quarter 2007 results, which will be simultaneously webcast at 9:00 A.M. Eastern Daylight Savings Time / 3:00 P.M. Madrid Time on Wednesday, November 28, 2007.

To access the conference call, participants in North America should dial (800) 374-0724 and international participants should dial +1 (706) 634-1387. A live webcast of the conference call will be available on the investor relations zone of Telvent’s corporate web site at www.telvent.com. Please visit the web site at least 15 minutes early to register for the teleconference webcast and download any necessary audio software. A replay of the call will be available on the web site approximately two hours after the conference  call is completed.

About Telvent

Telvent (Nasdaq: TLVT), the IT company for a secure and sustainable world, specializes in high-value-added products, services and integrated solutions in the Energy, Transport, Environmental and Public Administration industry segments, as well as Global Services. Its innovative technology and proven experience help ensure secure and efficient management of the operating and business processes of the world’s leading companies. (www.telvent.com)

Investor Relations Contact:

Ana Plaza
Phone: +34 902-335599
Email: ana.plaza@telvent.abengoa.com

Lucia Domville
Phone: +1 646-284-9416
Email: ldomville@hfgcg.com

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often are proceeded by words such as “believes,” “expects,” “may,” “anticipates,” “plans,” “intends,” “assumes,” “will” or similar expressions. Forward-looking statements reflect management’s current expectations, as of the date of this press release, and involve certain risks and uncertainties. Telvent’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Some of the factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the “Risk Factors” described in Telvent’s Annual Report on Form 20-F for the year ended December 31, 2006, filed with the Securities and Exchange Commission on March 30, 2007, and updated, if applicable, in Telvent's Quarterly Report on Form 6-K for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007, filed with the Securities and Exchange Commission on May 24, 2007, August 30, 2007 and November 27, 2007, respectively.

Third Quarter 2007 Financial Results



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