Leonardo Spa · MIL:LDO
Leonardo Spa — Investor Presentation (February 2020)
44 slides from Leonardo Spa's investor presentation, Feb 6, 2020
Slide 1: Leonardo Group Lunch – Mediobanca
Leonardo Group Lunch – Mediobanca Gian Piero Cutillo – MD Helicopters Investor Relations and Credit Rating Agencies Milan, 6 February 2020
Slide 2: Agenda
Agenda > Focus on Helicopters > Leonardo results and outlook > Appendix © 2019 Leonardo - Società per azioni 2
Slide 3: Kopter acquisition extending market leadership leveraging SH09 helicopter
Kopter acquisition extending market leadership leveraging SH09 helicopter STRATEGIC RATIONALE PRODUCT KEY SUCCESS FACTORS • Strengthen positioning in the light single engine segment (>1.8 tonne) • Leverage innovation, new capabilities and engineering skills • Exploit a cost/effective and versatile p
Slide 4: SH09 perfect fit for our state of the art product range
SH09 perfect fit for our state of the art product range… DUAL USE Tilt Rotor AWHERO SH09 AW249 SPECIALISED MIL/GOV’T Light Light Light Medium Intermediate Medium Single Twin Intermediate Heavy …offering opportunities for future technological developments and cross-fertilization © 2019 Leonardo - Soc
Slide 5: Increasing position in the US domestic market
Increasing position in the US domestic market TH-119 US Navy Trainer • Two key orders from US DoD in the last 18 months o TH-119 for US Navy, Leonardo Prime Contractor for the first time (130 helicopters + support equipment for ~650 M$) o MH-139 for US Air Force MH-139 (84 helicopters + training & s
Slide 6: On track for sustainable growth
On track for sustainable growth • Successfully achieving our Industrial Plan targets, notwithstanding challenging civil market • Performing pretty well in Military market • Weakening civil market, keeping our leadership position (especially 3-10 tonne) • Stronger offer for Customer Support & Trainin
Slide 7: Fully focused on Industrial Plan Objectives: returning to sustainable growth
Fully focused on Industrial Plan Objectives: returning to sustainable growth LEONARDO HELICOPTERS REVENUES • Committed to top line increase, 2017-2020 CAGR ≥ 5% 3.4 €bn o Military and Customer Support & Training ahead of schedule… o …more than compensating current civil market challenges o New comme
Slide 8: Attractive military market supported by new opportunities
Attractive military market supported by new opportunities GLOBAL MILITARY MARKET FOCUSED EFFORT ON KEY GEOGRAPHIES Total market value $ Indicative and not bn per year ~15 exhaustive ~14-15 Combat 101 Naval Poland TH-119 Spain Utility/ Multi-Role Heavy MH-139 Qatar Utility/ Multi-Role Medium Utility/
Slide 9: Civil Market reducing pace, we remain leader
Civil Market reducing pace, we remain leader CIVIL HELICOPTERS MARKET EVOLUTION Market Value $ bn • Civil market slightly decreasing trend in 2019-21 5.9 o Uncertain macro economic situation o Operating lessors financial issues +4% o Difficulties of some large operators with knock-on effect on other
Slide 10: Customer Support & Training is a priority business in a growing market
Customer Support & Training is a priority business in a growing market MARKET LEONARDO In service fleet evolution, # Helicopters >10,000 >50% >41,000 15% 600 2,900 2018A 2028E 2012 2018 2006 2018 2006 2018 Maintenance & Support Services market trend • Priority business: Civil Outlook (CAGR '18-'28)
Slide 11: Balanced orders across Commercial, Military and Customer Support & Training
Balanced orders across Commercial, Military and Customer Support & Training DIRECTIONAL* 100% 100% • Balanced volumes across the 3 core segment: Commercial, Military & Governmental, Customer Support & Training • Military & Governmental and Customer Support & Training offsetting lower Commercial volu
Slide 12: Investing in innovative products and disruptive technologies
Investing in innovative products and disruptive technologies Tilt Rotors Real-time Advanced Algorithms Advanced sensors & Materials & for Cyber- Power Advanced Processes Protection Management Analytics RUAV Noise Reduction and Passenger Comfort Improvement Payload fraction Improvement Green Technolo
Slide 13: Safety is a core Company value
Safety is a core Company value • Strongly committed towards continuous improving our Safety PRODUCT • We look at helicopter as a “system”, not only as a platform PILOTS • New “Safety Systems Governance” in place SAFETY • Focus on state of the art processes, products and services… • … leveraging on i
Slide 14: Agenda
Agenda > Focus on Helicopters > Leonardo results and outlook > Appendix © 2019 Leonardo - Società per azioni 14
Slide 15: Global player in High Tech Aerospace, Defence and Security business
Global player in High Tech Aerospace, Defence and Security business Cyber Leonardo 2018 REVENUES Helicopters Aircraft Aerostructures Electronics Security DRS in € bn 12.2 31% 24% 44% Other activities: 1% % Revenues Joint Ventures & Subsidiaries 15% From Italian market 85% From international markets
Slide 16: Strong progress towards Industrial Plan objectives
Strong progress towards Industrial Plan objectives Building long term sustainable future • 2018 targets delivered or exceeded • Order growth ahead of Industrial Plan, with record backlog • Strengthened international presence to drive export success • Profitability to benefit from growth, efficiencie
Slide 17: Strong 2019 performance, meeting or exceeding expectations
Strong 2019 performance, meeting or exceeding expectations FY2019 Revised FY2018A Guidance* expectations* New Orders (€ bn) 15.124 12.5 - 13.5 Above the top-end of the range Revenues (€ bn) 12.240 12.5 - 13.0 Mid to upper-end of EBITA (€ bn) 1.120 1.175 - 1.225 the range Slightly above FOCF (€ mln)
Slide 18: Appendix
APPENDIX © 2019 Leonardo - Società per azioni 18
Slide 19: 2018 Key Data
2018 Key Data 11.500+ 1.400+ Employees Customers 5.000+ €B 6,2 Operative Order Intake Fleet €M 141 €B 3,8 Revenues R&D 9,4% EBITA 2018 Company Data Margin © 2019 Leonardo - Società per azioni 19
Slide 20: Worldwide presence
Worldwide presence • Leonardo Helicopters develops the latest generation rotorcrafts that meet the most demanding current and future operational requirements in all conditions and environments © 2019 Leonardo - Società per azioni 20
Slide 21: Helicopters are our business
Helicopters are our business • Leonardo Helicopters covers the value chain of its business • from design and development, to production and support Manufactur- Market Research & Design & Test & Industrializa- Support & ing & Upgrades Analysis Technology development Validation tion Services prototypi
Slide 22: Commercial applications
Commercial applications • Leonardo Helicopters range of civil helicopters is designed to safely fly in any condition at the lowest possible cost. The right product to perform any mission © 2019 Leonardo - Società per azioni 22
Slide 23: Military / Government applications
Military / Government applications • Flexible products for Military / Government missions offering both specialized and dual use platforms © 2019 Leonardo - Società per azioni 23
Slide 24: Best in class Customer Support & Training offering
Best in class Customer Support & Training offering • Support team available 24 hours a day, 7 days a week to assist all of our customers around the world FLEET CUSTOMERS SERVICE CENTRES LOGISTIC CENTRES 5,000+ helicopters 1,400+ 90+ 14 TRAINING ACADEMIES 5 Sesto Calende (ITA) Yeovil (UK) Philadelphi
Slide 25: Digital processes & offer portfolio
Digital processes & offer portfolio Sat/ Example – Example – GPS Digital End-2-End Real time HUMS* Configurator Cell/ WiFi WiFi ISAT DIGITAL Customer Relationship *Health and Usage Monitoring System Management Underlying enabler of agile industrial and managerial processes, driver of new added value
Slide 26: About Leonardo
ABOUT LEONARDO © 2019 Leonardo - Società per azioni 26
Slide 27: 3Q/9M 2019 Results
3Q/9M 2019 Results Group Performance 3Q 2018 3Q 2019 % Change 9M 2018 9M 2019 % Change FY 2018 € mln New Orders 4,786 2,434 -49.1% 9,390 8,579 -8.6% 15,124 Backlog 34,501 35,672 +3.4% 36,118 Revenues 2,651 3,172 +19.7% 8,240 9,134 +10.8% 12,240 EBITA 162 199 +22.8% 632 686 +8.5% 1,120 RoS 6.1% 6.3%
Slide 28: Helicopters
Helicopters Well positioned to capture growth opportunities 3Q 2018 3Q 2019 % Change 9M 2018 9M 2019 % Change FY 2018 € mln Orders 3,356 527 -84.3% 4,685 2,234 -52.3% 6,208 Revenues 826 841 +1.8% 2,656 2,736 +3.0% 3,810 EBITA 64 70 +9.4% 217 270 +24.3% 359 RoS 7.7% 8.3% +0.6 p.p. 8.2% 9.9% +1.7 p.p.
Slide 29: Helicopters
Helicopters DELIVERIES BY PROGRAMME REVENUES BY CUSTOMER/SEGMENT 9M2019 = 91 new units 9M2019 AW169 AW189 /149 20 71% 4 63% 37% 19 AW109 / AW119 / 29% SW4 / AW009 36 AW139 /W3 7 23 NH90 AW101 Civil Military/Governamental OE CS&T/Other AW159 / Lynx AW FAMILY 9M2018 = 113 new units 9M2018 AW169 AW189
Slide 30: Defence Electronics & Security
Defence Electronics & Security Growing Revenues and Profitability ELECTRONICS - EU 3Q 2018 3Q 2019 % Change 9M 2018 9M 2019 % Change FY 2018 2019 OUTLOOK € mln Orders 620 652 +5.2% 1,950 2,660 +36.4% 4,408 • 2019 revenue growth Revenues 843 867 +2.8% 2,587 2,738 +5.8% 4,010 EBITA 50 66 +32.0% 218 23
Slide 31: Aeronautics
Aeronautics Solid Aircraft performance offsetting lower ATR 3Q 2018 3Q 2019 % Change 9M 2018 9M 2019 % Change FY 2018 € mln Orders 291 681 +134.0% 1,420 2,012 +41.7% 2,569 Revenues 599 915 +52.8% 2,025 2,304 +13.8% 2,896 EBITA 44 44 +0.0% 167 165 -1.2% 328 RoS 7.3% 4.8% -2.5 p.p. 8.2% 7.2% -1.0 p.p.
Slide 32: Space
Space Pressure on Manufacturing 3Q 2018 3Q 2019 % Change 9M 2018 9M 2019 % Change FY 2018 € mln EBITA 10 10 +0.0% 31 23 -25.8% 58 2019 OUTLOOK • Continued downturn in telecommunication market expected to affect Manufacturing activities © 2019 Leonardo - Società per azioni 32
Slide 33: Growth in international markets
Growth in international markets Well positioned in key-high growth markets FAR EAST MIDDLE EAST EUROPE US • High-growth markets providing a strong backdrop for our growth plan • Well balanced worldwide footprint • Leonardo is expected to address ca. 20% A&D market © 2019 Leonardo - Società per azion
Slide 34: Profitability to deliver growth benefits to the bottom line
Profitability to deliver growth benefits to the bottom line TODAY TOMORROW AIRCRAFT AIRCRAFT ELECTRONICS ELECTRONICS LEONARDO DRS 10 LEONARDO 10 HELICOPTERS LEONARDO LEONARDO DRS HELICOPTERS RoS % RoS % CYBER CYBER AEROSTRUCTURES 1,000 1,000 AEROSTRUCTURES EBITA € mln EBITA € mln What we have done…
Slide 35: Leonardo investments as guarantee for the future growth of the business
Leonardo investments as guarantee for the future growth of the business FNEC Yearly AW249 average NEES € 1.5 bn MFOCS Active Protection Systems Customer Funded R&D ≈ 65% Eurofighter Typhoon Integrated Sensor Suite Command SOC & AW169 Self Funded Cyber R&D ≈ 15% & Control Evolution AW189 AW609 M346 C
Slide 36: FOCF higher than old plan, stepping up in 2020
FOCF higher than old plan, stepping up in 2020 • 2018-2019 FOCF higher than in old plan • Material step up in 2020 FOCF driven by: • 2019 FOCF reflecting EFA Kuwait cash absorption • EFA Kuwait deliveries • Cash drain due to: • Improving profitability throughout the Group o Aerostructures underperfo
Slide 37: Aerostructures: still draining cash but clear recovery path defined
Aerostructures: still draining cash but clear recovery path defined • Identified and implementing initiatives aimed at improving industrial performance, recovering profitability and cash generation • Clear targets and action plan to reach break-even in terms of operating cash flow by 2022/2023 2018
Slide 38: On target to deliver the Industrial Plan communicated in January 2018
On target to deliver the Industrial Plan communicated in January 2018 Return to top-line Strict cost control, Sustainable Focus on cash and a growth reinvested in growth improvement in stronger capital profitability structure ca. ca. ca. ca. 50% € 70bn € 200mln 10% Avg. 2015-2018 Cash 2018-2022 Annu
Slide 39: Sustainability as a base of the Industrial Plan
Sustainability as a base of the Industrial Plan Being able to attract Building a solid and Promoting operational Financing a responsible and nurture talents reliable supply chain eco-efficiency business model 40% LEAP2020 -6% ISO37001 Implementation of Supply certification of anti- new hires under 3
Slide 40: Solid Financial Position as at end of September 2019
Solid Financial Position as at end of September 2019 Bond Dollar € mln Bond Sterling Bond Euro EIB DEBT MATURITY Term Loan Average life: ≈ 5,4 years (1) 18 November 2019: $127mln Repayment buyback with NPV materially positive The Term Loan Facility is characterised by a 5 years bullet repayment; the
Slide 41: Availability of adequate committed liquidity lines as at end of September 2019
Availability of adequate committed liquidity lines as at end of September 2019 • In order to cope with possible swings in financing needs, Leonardo can € mln Undrawn at 30 September 2019 As of 30 September 2019 leverage: o 30 September cash balance of € 1.0 bn o Credit lines worth € 2.5 bn (confirme
Slide 42: Reduced gross debt and cost of funding earlier than promised
Reduced gross debt and cost of funding earlier than promised • Reduced Gross Debt by 20%1 one • 2018 Leverage Ratio • Lowered cost of funding by 30%, year earlier than forecasted through more than previously expected • Net Debt / EBITDA: 1.6x cash generation • Diversified Funding Pool € bn GROSS DEB
Slide 43: Safe Harbor Statement
SAFE HARBOR STATEMENT NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Co
Slide 44: Contacts
Contacts Valeria Ricciotti Head of Investors Relations and Credit Rating Agencies +39 06 32473.697 valeria.ricciotti@leonardocompany.com Leonardo Investors Relations and Credit Rating Agencies +39 06 32473.512 ir@leonardocompany.com leonardocompany.com © 2019 Leonardo - Società per azioni 44