Leonardo Spa · MIL:LDO
Leonardo Spa — Investor Presentation (February 2020)
88 slides from Leonardo Spa's investor presentation, Feb 10, 2020
Slide 1: Leonardo Breakfast Meeting
Leonardo Breakfast Meeting Alessandro Profumo Chief Executive Officer Investor Relations and Credit Rating Agencies Milan, 10 February 2020
Slide 2: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses > CEO Remuneration > Appendix © 2019 Leonardo - Società per azioni 2
Slide 3: 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 4: 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 5: Recent achievements
Recent achievements • 14 January 2020: $176mln contract for 32 TH-73A for the US Navy • Including initial spares, support and training • Deliveries to start in 2020 up till 2024 • Additional tranches expected for up to 130 helicopters ($648mln) • 4 December 2019: Standard & Poor’s raised Leonardo’s
Slide 6: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses > CEO Remuneration > Appendix © 2019 Leonardo - Società per azioni 6
Slide 7: 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 8: 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 9: We are tracking ahead of plan
We are tracking ahead of plan 2018 Orders and Revenues above Guidance range ORDERS AHEAD OF PLAN REVENUES AHEAD OF GUIDANCE € bn € bn +30.4% +4.3% 15.1 12.2 11.5-12.0 14.5-15.0 11.7 12.5-13.0 11.6 FY2017A FY2018 Guidance FY2018A FY2017A FY2018 Guidance Revised FY2018 FY2018A Guidance EBITA AT UPPER
Slide 10: Industrial Plan delivering the growth required for sustainable performance
Industrial Plan delivering the growth required for sustainable performance 2018 Orders and Revenues above Guidance range ORDERS AHEAD OF PLAN • Outstanding achievement in 2018 delivered by: € bn o Growth ahead of our market: o Driven by Leonardo DRS, (i.e Mounted Family of Computer Systems and “Thro
Slide 11: 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 12: 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 13: 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 14: Leonardo investments as guarantee for the future growth of the business
Leonardo investments as guarantee for the future growth of the business INVESTMENTS 2019-2023 PRODUCTS & TECHNOLOGIES Electronics, Defence and M345 HET Emergency M-S Aeronautics Security Systems VIP Transport M346 FA Offshore Radar: ATC, maritime and land surveillance Helicopters Sensors Drones • Fo
Slide 15: 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 16: 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 17: 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 18: 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 19: Execution of sustainability plan to create long-term value
Execution of sustainability plan to create long-term value Governance, reporting and culture • A sound governance supports the achievement of sustainability targets • Alignment of the executive pay with sustainability performance strategy • Disclosure of non-financial information according to intern
Slide 20: Our vision for Leonardo
Our vision for Leonardo Strengthening multi-country presence in Aerospace, Defence & Security with growing international presence in the right markets > Leading in our strengths > Driving value in the portfolio • Civil Helicopters • Strong foothold in fighter • Defence Electronics • Leverage economi
Slide 21: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses > CEO Remuneration > Appendix © 2019 Leonardo - Società per azioni 21
Slide 22: Solid 9M 2019 performance
Solid 9M 2019 performance • Successfully driving commercial momentum • Good progress in 3Q/9M o Orders at € 8.6 bn (9M18 included NH90 Qatar for ca. € 3 bn) o Revenues up 11% YoY at € 9.1 bn o EBITA up 9% YoY at € 686 mln with RoS at 7.5% o Net Result up 76.8% at € 467 mln o FOCF at € (1.2) bn, in l
Slide 23: Order Intake
Order Intake Good commercial momentum across the Group 3Q18 included €3bn NH90 Qatar. Strong 9M19 Orders driven contribution from by military (NH90 Electronics and Mainly driven by Spain and AW101 Leonardo DRS Aircraft (EFA, F-35, Poland) and CS&T (MFoCS II) M345 and M346 FA) ORDER BACKLOG 9M 2019 c
Slide 24: Revenues
Revenues Positive momentum mainly in Defence Electronics & Security and Aeronautics CS&T and Higher EFA Kuwait, military/governmental Driven by Leonardo B787 and A220 offsetting lower civil DRS production rate +3.0% +12.5% +13.8% +10.8% YoY YoY YoY YoY € mln 2,304 (243) 9,134 ca. € 112 mln 8,240 pos
Slide 25: EBITA and Profitability
EBITA and Profitability Higher performance across all businesses, with lower contribution from Space Manufacturing and ATR Driven by Higher Aircraft and Corporate costs and military, CS&T Aerostructures Lower Manufacturing centralised activities and UK pension Higher volumes in partially offsetting
Slide 26: Net Result
Net Result Below the line benefitting from lower restructuring costs and PPA 9M 2018 9M 2019 +8.5% +74.2% +76.8% YoY YoY YoY 632 (187) 686 (7) (11) (20) 648 (188) (73) 465 372 (177) (93) 98 € mln € mln 99 263 (31) EBITA Restructuring costs PPA EBIT Net financial expenses Income taxes Results of disc
Slide 27: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses > CEO Remuneration > Appendix © 2019 Leonardo - Società per azioni 27
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: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses • Helicopters: delivering on promises • Electronics • Leonardo DRS • Aircraft © 2019 Leonardo - Società per azioni 33
Slide 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: 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 43: 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 44: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses • Helicopters: delivering on promises • Electronics: a gem in the crown • Leonardo DRS • Aircraft © 2019 Leonardo - Società per azioni 44
Slide 45: Key messages
Key messages • A bigger Division, addressing the largest part of the A&D market • Bringing Business Units together to make them stronger, through o Internationalisation o Focus on performance o Focus on performance o Product Development Synergies o Internationalisation • High quality businesses with
Slide 46: One Electronics Division within One Leonardo
One Electronics Division within One Leonardo • On 1st February 2019 Leonardo creates a new Electronics Division, which brings together the former o Airborne and Space Systems Division o Land and Naval Defence Electronics Division o Defence Systems Division o Automation Systems and Traffic Control Sy
Slide 47: How we are going to do it…
How we are going to do it… Organised for partnerships Become more International Coherent market offerings MARKET Change the culture PEOPLE Empower our people PROCESS Drive efficiencies Address the cost base Promulgate best practice © 2019 Leonardo - Società per azioni Fully focused on people, delive
Slide 48: Transition Plan to be accomplished over the medium term
Transition Plan to be accomplished over the medium term 15 WORKSTREAMS CREATED (WS) • Two WS are Turnaround of 2 lines of business • Four WS relate Engineering including Research and Development • One WS in Marketing and Sales • Four WS in Operations and Procurement • One WS in UK Cost Efficiency •
Slide 49: Turnaround
Turnaround AUTOMATION AS WAS FUTURE AUTOMATION • Good Technology • New Structure • Able to compete in the market • Integrated Project Team • Poor Execution • Configuration Control • Inadequate disciplines • Account management principles • Skilled resource shortage • Reviewing partnership models TRAF
Slide 50: Our path to double digit profitability
Our path to double digit profitability… 2019 EBITA – ROS (%) Airborne and Space Systems Defence Systems TARGET RoS % Land and Naval Defence Electronics SIZE = REVENUES Security and Information Systems EBITA © 2019 Leonardo - Società per azioni Consistency of delivery to underpin the Industrial Plan
Slide 51: Diversity through internationalisation
Diversity through internationalisation Country 8 Country 10 Country 12 Country 13 1% Country 14 1% Country 11 1% • 1% Country 7 1% Country 9 1% 1% In 2019, the Division is forecasting to take around 800 Country 6 1% Other Countries 2% Country 5 5% new contracts, with 90% of these being less than 2%
Slide 52: Well Diversified Order Intake Full Year 2019
Well Diversified Order Intake Full Year 2019 MARKET BUSINESS UNIT 12% 7% 14% 26% 39% 49% 32% 21% Domestic Export Intercompany Land and Naval Airborne & Space Systems Electronics UK Defence Systems Other © 2019 Leonardo - Società per azioni 52
Slide 53: Tempest – Typhoon to Typhoon LTE and Beyond
Tempest – Typhoon to Typhoon LTE and Beyond • In July 2018 the UK Government launched its Combat Air Strategy, delivering an ambitious vision for the future • The strategy confirmed the UK’s intent to remain at the cutting edge of combat air systems development in order to meet the UK’s National Sec
Slide 54: Electronics UK & Italy – Next Pillar
Electronics UK & Italy – Next Pillar • On the 10th September the Governments of Italy and the UK signed a Statement of Intent (SOI) as a broad pledge to cooperate on matters of “combat air capability.” The idea is to “deepen discussions on Tempest military requirements,” come up with a “road map” fo
Slide 55: Achieving our full potential…
Achieving our full potential… ELECTRONICS ACCESIBLE MARKET LEVERAGING SUCCESS AND EXPLOITING OPPORTUNITIES € bn • Longevity of Typhoon Leonardo 3.9 4.9 captured • Tempest market 31.3 • Future Capabilities 24.5 • Future Support Models • Partnerships • Addressing the Export Market Current 2021 © 2019
Slide 56: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses • Helicopters: delivering on promises • Electronics • Leonardo DRS: growth outlook • Aircraft © 2019 Leonardo - Società per azioni 56
Slide 57: Overview
Overview NAVAL SYSTEMS AIRBORNE & COMMUNICATIONS We have eight lines of business organised Naval Power Naval Electronics Global Enterprise Solutions Airborne & Intelligence into three customer-facing sectors Systems • Leading U.S. mid-tier defence company with over 6,500+ employees worldwide • Recen
Slide 58: Leonardo DRS contributing to Leonardo’s Industrial Plan targets
Leonardo DRS contributing to Leonardo’s Industrial Plan targets • US Defence Budget continues to rise o 2020 Projects healthy 3% growth o Growth curve ‘flattens’ in 2021 & beyond but spending at historically high levels with bipartisan support • Leonardo DRS uniquely positioned to excel in current m
Slide 59: US Defence Budget Outlook
US Defence Budget Outlook FUNDING FOR DEPARTMENT OF DEFENCE • New Two Year Budget Deal in Congress Billions of 2020 Dollars o Raises FY20 & FY21 budget caps and ends sequestration o Stabilised defence planning • DOD Budget Growth of 3%, from already high historical base levels, in FY20 o Strong defe
Slide 60: Growth: Leonardo DRS outperforming US defence market
Growth: Leonardo DRS outperforming US defence market NEW ORDERS CONTINUE ABOVE MARKET LEONARDO DRS ALIGNED IN HIGH GROWTH SEGMENTS • Army Electronics & Sensors $ mln o Product alignment within Army’s key modernization priorities fueling continued growth o 2018 Revenue Growth – 26% o 2017 Revenue Gro
Slide 61: Six Army Modernisation Priorities Driving Growth
Six Army Modernisation Priorities Driving Growth • Next-Generation Combat Vehicle o Aligned to be positioned for situational awareness and targeting, including next generation sensing and Active Protection System • Future Vertical Lift o Positioned to protect the platform through combination of degr
Slide 62: Army Growth: Quick Response = Rapid Growth
Army Growth: Quick Response = Rapid Growth • New environment has rewarded innovative companies that are quick to market and cost competitive o Leonardo DRS organisational structure affords both streamlined decision making coupled with a lean cost structure resulting above market growth o Across all
Slide 63: Driving Improving Profitability
Driving Improving Profitability DOUBLE DIGIT EBITA GROWTH MARGIN EXPANSION $ mln • 17% EBITA CAGR supporting increased shareholder return • Increased EBITA margins drive free cash flow generation o Programme portfolio / required investments allow for above market conversion of EBITA into FCF 174 153
Slide 64: 4 Levers of Improved Profitability
4 Levers of Improved Profitability TOP LINE GROWTH EXCEEDS COST BASIS OPERATIONAL EXCELLENCE • Revenue Growth Trend Secure • Project launched geared at enhancing returns through a combination of efficiencies and cost • Maintain lean environment to enable competitive cutting efforts advantage while i
Slide 65: Development Programme Transition
Development Programme Transition DRSDRS LEONARDO % OF%DEVELOPMENT REVENUE REVENUE OF DEVELOPMENT TIMELINE OF EVENTS • ‘War-Time’ spending drove large production bubble in 2008 - 2012 25% • 2015-2018 Leonardo DRS awarded ‘next generation’ design programmes geared at refreshing existing technologies f
Slide 66: Key Takeaways
Key Takeaways • Optimistic on Growth Trajectory o Multi-year revenue CAGR and H1 2019 results confirm continued growth that exceeds industry peers o Leonardo DRS remains well aligned with Pentagon’s major procurement priorities • Army Electronics & Sensors well positioned within the U.S. Army’s mode
Slide 67: Agenda
Agenda > Recent achievements > Executing the Industrial Plan > 9M 2019 Results > Sector Results > Focus on Businesses • Helicopters: delivering on promises • Electronics • Leonardo DRS • Aircraft: a strong strategy to deliver the Industrial Plan in a high growth market © 2019 Leonardo - Società per
Slide 68: Great position in high growth market
Great position in high growth market • We operate in a materially high growth market • Strong and comprehensive product range Strong Backlog Revenues Profitability ~ €11bn ~ €2bn > 10% • Leveraging our strong product portfolio and enhancing services © 2019 Leonardo - Società per azioni …Strongly gro
Slide 69: Double digit growth in military aircraft markets
Double digit growth in military aircraft markets REFERENCE MARKET € bn • Fighter market Tactical Transport and Special Missions o Opportunities in Asia, Far East and Middle-East Trainers • Trainers market o Opportunities for Light Attack Versions (Dual Role 16 Capability) and Integrated Training Ser
Slide 70: Long term Revenue visibility from very significant Backlog and additional high potential opportunities
Long term Revenue visibility from very significant Backlog and additional high potential opportunities REVENUE GROWTH UNDERPINNED BY BACKLOG OPPORTUNITIES TO GROW BACKLOG FURTHER • Strong Backlog supporting long term visibility € bn 2018-2023 CAGR ~14% • Over 100 market opportunities in addition to
Slide 71: We have the right portfolio to deliver growth
We have the right portfolio to deliver growth Best in class aircraft portfolio ready to serve market demands International Collaborations (Fighters) EUROFIGHTER JSF F-35 F-35 MRO&U HUB Trainers M-346 AJT IFTS (2019) M-345 HET (2020) M-346 LFFA (2021) Tactical transport & Special missions C-27J ATR S
Slide 72: From platforms to services: complimentary meaningful and profitable growth
From platforms to services: complimentary meaningful and profitable growth • Delivering world-class services and capabilities to our customers • > 1,100 aircraft supported in ~30 countries worldwide • Industrial collaborations worldwide • ~25% of aircraft division turnover and more than 30% of its p
Slide 73: We are thinking and working on the future…
We are thinking and working on the future… EUROMALE 2025 • Hybrid/Electric Propulsion Management (IVHM) • Virtual Pilot Technologies • Highly automated Assembly • Digital Twin • Integrated Vehicle Health Eurofighter Long European 6th Term Evolution Generation Fighter A real collaboration among the E
Slide 74: Strong Outlook
Strong Outlook • Great growth potential in the markets we serve supported by a strong and comprehensive product range • Very significant backlog with plenty of opportunities to make it biggest still • Best-in-class aircrafts already in the market, complemented by our integrated training services • B
Slide 75: CEO Remuneration
CEO REMUNERATION © 2019 Leonardo - Società per azioni 75
Slide 76: Balanced Remuneration Policy
Balanced Remuneration Policy Aligned with shareholders interests • Convergence of interests between management and shareholders CEO REMUNERATION • Clear link between pay and degree of achievement of targets Fixed Remuneration Short-Term Variable Long-Term Variable Remuneration Remuneration • Alignin
Slide 77: CEO performance: Management by Objectives
CEO performance: Management by Objectives MBO remuneration is paid in cash on a yearly basis GATES Group EBITA 85% of budget Group FOCF 100% of budget TARGETS Group EBITA Group FOCF Industrial Plan Sustainability Objectives 30% of REM 30% of REM 30% of REM 10% of REM - ON/OFF 2 specific KPIs Linked
Slide 78: Remuneration scheme: methodology
Remuneration scheme: methodology • CLAW-BACK CLAUSE • Leonardo is entitled to request repayment of the variable remuneration paid in the event. of erroneous or falsified calculation. • SEVERANCE • No severance payment for early termination and non renewal of mandate. • CEO severance not higher than
Slide 79: Long Term Incentive Plan (LTIP)
Long Term Incentive Plan (LTIP) • BENEFICIARIES • Chief Executive Officer • Executive directors, employees and/or associates with a greatest impact on the achievement of business results (210 people) • FREQUENCY • 3 year cycles assigned yearly on a rolling basis • AWARD • Max 67.4% € 620.000 CEO • L
Slide 80: LTIP Performance conditions
LTIP Performance conditions TSR Relative RETURN ON SALES OF THE Group 50% 25% Return on Sales measured as average of the Median final values of each year during the vesting Position period of the Plan 25% TOTAL 50% BONUS Positioning Bonus 25% 1-4 100% NET FINANCIAL POSITION OF THE Group 5-6 50% 25%
Slide 81: Appendix
APPENDIX © 2019 Leonardo - Società per azioni 81
Slide 82: 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 83: 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 84: 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 85: 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 86: IFRS 16
IFRS 16 • IFRS 16 redefines recording methods of operating leases in the financial statements imposing a single recognition method for all types of leasing, with the consequent recognition in the balance sheet of the tangible assets and liabilities for future payments • The main impacts deriving fro
Slide 87: 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 88: 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 88