Slide 1: FY 2022 Results – A Stronger Leonardo
10th March 2023 FY 2022 Results – A Stronger Leonardo Rome
Slide 2: Agenda
2 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outlook
Slide 3: FY2022: a year of solid execution and commercial success
3 © 2022 Leonardo - Società per azioni DELIVERING ON PROMISES ACCELERATING COMMERCIAL MOMENTUM IMPROVED FINANCIAL PERFORMANCE; STEPPING UP FOCF PROGRESS ON ESG FY2022: a year of solid execution and commercial success • Meeting or exceeding Guidance • Continuing to deliver and making the Group strong
Slide 4: A Stronger Leonardo: Successful Delivery of 2018-2022 Industrial Plan
4 © 2022 Leonardo - Società per azioni A Stronger Leonardo: Successful Delivery of 2018-2022 Industrial Plan *€3 bn NH90 Qatar ** €1.4bn AW149 Poland Delivering results in line or exceeding yearly Guidance Emerging stronger commercially and financially with a more resilient and sustainable business
Slide 5: Strengthen our core, transform to grow, master the new
5 © 2022 Leonardo - Società per azioni STRENGTHEN OUR CORE Reinforce the core business and core activities Significant progress delivering against our roadmap towards the future TRANFORM TO GROW Leveraging digitalisation to capture new opportunities MASTER THE NEW Create advanced technological solut
Slide 6: Core business growing stronger: Helicopters and Aircraft
6 © 2022 Leonardo - Società per azioni Core business growing stronger Helicopters and Aircraft Helicopters Aircraft 2022 Backlog € 13.6bn 2018-2022 Revenues*: +4.5% 2018-2022 EBITA*: +4.0% 2022 Backlog € 8.6bn 2018-2022 Revenues*: +12.4% 2018-2022 EBITA*: +12.2% * CAGR • Strong performance, programm
Slide 7: Core business growing stronger: Electronics and Leonardo DRS
7 © 2022 Leonardo - Società per azioni • Technology leadership in key focus areas i.e. sensors, radars, electro-optical and combat management systems driving solid revenue and profitability growth • Strategic presence across Air, Land and Sea, maximizing market opportunity • Well positioned to captu
Slide 8: Customer, Support & Training providing resiliency and long-term visibility
8 © 2022 Leonardo - Società per azioni Customer, Support & Training providing resiliency, solid revenue stream & long- term visibility ~ 4,000 Helicopters flying > 1,000 Aircrafts flying ca. 10 years Electronics useful life of equipment Helicopters • Net cash present value embedded in customer suppo
Slide 9: Interoperability and strategic presence across all domains
9 © 2022 Leonardo - Società per azioni Interoperability and strategic presence across all domains Strategic presence as leader across Helicopters, Simulation & Training and EU Defence Electronics Key player in European Cooperation Programmes, Safety and Security partner for Institutions Synergies in
Slide 10: Committed to SBTI: important progress towards ESG milestones in 2022
10 © 2022 Leonardo - Società per azioni Committed to SBTI Important progress towards ESG milestones in 2022 • >50% of investments SDG-aligned • 55% of financial sources ESG linked • -15% CO2 Scope 1 & 2 emissions** vs 2021 • -7% intensity* of energy consumption vs 2021 • -4% intensity* of waste prod
Slide 11: Agenda
11 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 12: Strong fundamental drivers of commercial outlook over medium term
12 © 2022 Leonardo - Società per azioni FY 2022 Results Strong fundamental drivers of commercial outlook over medium term Positive market outlook in our core defence markets • A,D&S market CAGR over the next 5 years: ca. 6% • A,D&S annual average market value: ca. €800 bln • Leonardo’s addressable m
Slide 13: Positive order intake momentum providing long-term visibility
13 © 2022 Leonardo - Società per azioni Positive order intake momentum providing long-term visibility Well positioned to capture future opportunities FY 2022 Results LEVERAGING ON GROUP STRENGTHS 2022-2026 OUTLOOK IMPROVED Cumulative value Ca. € 90 bln (prev. ca. € 80 bln) OPPORTUNITIES ACROSS THE B
Slide 14: Well positioned to capture opportunities in Global Monitoring
14 © 2022 Leonardo - Società per azioni Well positioned to capture opportunities in Global Monitoring Our strengths FY 2022 Results v Secure-by-design solutions and predictive analysis-based integration of data from several sources Computing and storage platform (e.g., predictive analysis, big data
Slide 15: Innovation is the key for our future
15 © 2022 Leonardo - Società per azioni Innovation is the key for our future Group capabilities and technological innovation to drive long-term growing commercial success DAVINCI-1 HPC/CLOUD ARTIFICIAL INTELLIGENCE BIG DATA DIGITAL TWIN AND ADVANCED SIMULATION Certification by Simulation UNMANNED RO
Slide 16: Innovation is key for our future: Global Combat Air Programme (GCAP)
16 © 2022 Leonardo - Società per azioni Innovation is key for our future: Global Combat Air Programme (GCAP) Groundbreaking ‘System of Systems’ connecting all domains FY 2022 Results • ALL DOMAIN • CONNECTIVITY • AUTOMATION • AI, BIG DATA • SECURE BY DESIGN LEAD SYSTEM INTEGRATORS • DIGITAL TWIN
Slide 17: Aerostructures recovery plan on track
17 © 2022 Leonardo - Società per azioni Aerostructures recovery plan on track Confirming breakeven by end of 2025 FY 2022 Results AIRBUS • Increasing volumes of A220 & A321 programmes • Investment in state-of-the-art A220 assembly line complete ACTION PLAN • Reduced headcount by 20% • Reducing cost
Slide 18: Agenda
18 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 19: FY22: Making the Group stronger, resilient and sustainable
19 © 2022 Leonardo - Società per azioni FY22: Making the Group stronger, resilient and sustainable Delivering above FY22 guidance FY 2022 Results (1) 2021 Adjusted perimeter to exclude the contribution of Global Enterprise Solutions (2) Including the acquisition of 25.1% stake in Hensoldt net of div
Slide 20: Order Intake
20 © 2022 Leonardo - Società per azioni Order Intake Continued strong commercial momentum € mln ∆ % YoY FY2021A** 14,267 HELICOPTERS 6,060 38.7% ELECTRONICS 5,628 4.4% LEONARDO DRS 2,997 36.6% AIRCRAFT 2,800 4.9% AEROSTRUCTURES 420 15.1% ELIMINATIONS & OTHER -639 FY2022A* 17,266 21.0%** 32 AW149 Pol
Slide 21: Revenues
21 © 2022 Leonardo - Società per azioni Revenues Growing top line and continued strong programme delivery € mln ∆ % YoY FY2021A** 14,050 HELICOPTERS 4,547 9.4% ELECTRONICS 4,712 4.3% LEONARDO DRS 2,558 5.1% AIRCRAFT 3,085 -5.6% AEROSTRUCTURES 475 7.5% ELIMINATIONS & OTHER -664 FY2022A* 14,713 4.7%**
Slide 22: EBITA and Profitability
22 © 2022 Leonardo - Società per azioni EBITA and Profitability Improving Profitability € mln RoS ∆ % YoY FY2021A** 1,114 7.6% FY2021 Restated 1,060*** 7.5%*** HELICOPTERS 415 9.1% 2.2% ELECTRONICS 553 11.7% 14.0% LEONARDO DRS 252 9.8% 15.6% AIRCRAFT 421 13.6% -2.4% AEROSTRUCTURES -183 -38.5% 9.9% A
Slide 23: From EBITA to Net Result
23 © 2022 Leonardo - Società per azioni From EBITA to Net Result Stronger bottom line thanks to EBITA increase +9.3% YoY +5.5% YoY € m ln FY 2022A -114 -119 -24 -213 -51 235 EBITA Non recurring costs Restructuring costs* PPA EBIT Net financial expenses Income taxes Net ordinary results Discontinued
Slide 24: On track with our commitment to improve cash flow
24 © 2022 Leonardo - Società per azioni On track with our commitment to improve cash flow • Mid-single digit revenue growth • High single digit EBITA growth • Continued cash discipline in core • Consistent contribution from JVs • Aerostructures breakeven in 2025 Focus on deleveraging Main drivers (€
Slide 25: Leonardo investments for innovation, growth and sustainability
25 © 2022 Leonardo - Società per azioni FY 2022 Results Leonardo investments for innovation, growth and sustainability Strongly aligned to SDG goals (1) Including Capitalized R&D, Capex, Tooling and Other Immaterial (2) The initiatives mainly impact SDG 9 “Industry, Innovation & Infrastructure” foll
Slide 26: 55% of Leonardo funding sources now are ESG linked
55% of Leonardo funding sources now are “ESG linked" 26 © 2022 Leonardo - Società per azioni 55% ESG linked ~€6,0bn €2.4 bn ESG linked Revolving Credit Facility (RCF) €600 mln ESG linked Term Loan (to refinance January 2022 debt maturing) ESG linked financial transactions Financing sources €200 mln
Slide 27: Reduced debt by ca. 35% and decreased cost of funding by ca. 45%
27 © 2022 Leonardo - Società per azioni Reduced debt by ca. 35% and decreased cost of funding by ca. 45% Focus on deleveraging 5.4% 4.7% 4.0% 3.5% 3.0% 2.3% 3.0% 2016 2017 2018 2019 2020 2021 2022 € 4.6bn € 3.0bn 2016 2022 • Important deleveraging achieved in 2022 vs 2016 • In 2022 full redemption o
Slide 28: Capital allocation – Deleveraging
28 © 2022 Leonardo - Società per azioni Capital allocation – Deleveraging is written on the cards CASH FLOW GENERATED PORTION OF CASH IN HAND aimed at and Cash Flow generation and available cash Gross Debt reduction Shareholder remuneration CAPITAL DEPLOYMENT • Cash flow generation will be devoted t
Slide 29: 2023 Outlook
29 © 2022 Leonardo - Società per azioni 2023 Outlook ORDERS (€bn) 17.3 ca.17 REVENUES (€bn) 14.7 15-15.6 EBITA (€mln) 1,218 1,260-1,310 FOCF (€mln) 539 ca. 600 NET DEBT (€bn) 3.0 ca. 2.62 2022A 2023E1 • Continued solid commercial momentum, with book-to-bill>1x • Successfully navigating inflationary
Slide 30: Agenda
30 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 31: Confidence in the medium-term
31 © 2022 Leonardo - Società per azioni Confidence in the medium-term Based on strong fundamentals of our businesses ORDERS 2022-2026 Cumulated ca € 90 bn (€ 80 bn vs previous plan) Book to bill >1 REVENUES Confirming Mid Single Digit CAGR 2023-2027 Cumulated ca € 85 bn EBITA Confirming High Single
Slide 32: Closing remarks
32 © 2022 Leonardo - Società per azioni Closing remarks • Leonardo is stronger, more robust, resilient and sustainable • Successfully capturing increasing opportunities • Continued strong commercial activity globally building our backlog • Top line growth across all defence/governmental sectors • Ro
Slide 33: Agenda
33 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 34: Q&A
34 © 2022 Leonardo - Società per azioni Q&A FY 2022 Results
Slide 35: Agenda
35 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 36: Helicopters 2018-2022 Results
36 © 2022 Leonardo - Società per azioni 6,208 4,641 4,494 4,370 6,060 2018 2019 2020 2021 2022 2018-2022 Results 3,810 4,025 3,972 4,157 4,547 2018 2019 2020 2021 2022 € mln 4Q 2021 4Q 2022 % Change Orders 1,979 1,437 -27.4% Revenues 1,438 1,393 -3.1% EBITA 183 181 -0.5% RoS 12.7% 13,0% +0.3 p.p. 4Q
Slide 37: Electronics and Leonardo DRS 2018-2022 Results
37 © 2022 Leonardo - Società per azioni 4,409 4,444 4,710 5,392 5,628 2,879 2,923 3,054 2,595 3,156 2018 2019 2020 2021 2022 Electronics - EU (€ mln) Leonardo DRS ($ mln) 2018-2022 Results 394 427 360 485 553 151 208 202 258 265 9.8% 10.0% 8.7% 10.7% 11.7% 6.5% 7.6% 7.3% 9.0% 9.8% 2018 2019 2020 202
Slide 38: Aircraft 2018-2022 Results
38 © 2022 Leonardo - Società per azioni 1,700 1,904 2,031 2,668 2,800 2018 2019 2020 2021 2022 2018-2022 Results 1,932 2,329 2,634 3,268 3,085 2018 2019 2020 2021 2022 € mln 4Q 2021 4Q 2022 % Change Orders 1,025 1,163 13.5% Revenues 1,147 1,126 -1.8% EBITA 191 176 -7.9% RoS 16.7% 15.6% -0.9 p.p. 4Q2
Slide 39: Aerostructures and ATR 2018-2022 Results
39 © 2022 Leonardo - Società per azioni 925 948 581 365 420 2018 2019 2020 2021 2022 2018-2022 Results 1,020 1,125 819 442 475 2018 2019 2020 2021 2022 Aerostructures € mln 4Q 2021 4Q 2022 % Change Orders 66 78 18.2% Revenues 37 124 235.1% EBITA -78 -49 37.2% RoS -210.8% -39.5 171.3 p.p. 4Q22 Result
Slide 40: Space 2018-2022 Results
40 © 2022 Leonardo - Società per azioni 2018-2022 Results € mln 4Q 2021 4Q 2022 % Change EBITA 25 21 -16,0% 4Q22 Results EBITA (€m) 2023 Outlook(*) • Growing volumes driven by solid and increasing backlog • Profitability improvement expected in Manufacturing • Satellite business confirmed strong fun
Slide 41: Agenda
41 © 2022 Leonardo - Società per azioni Agenda FY 2022 Results • Key messages • Industrial review • Financial review • Q&A • Sector results • Appendix Alessandro Profumo, Chief Executive Officer Lucio Valerio Cioffi, General Manager Alessandra Genco, Chief Financial Officer • Medium-long term outloo
Slide 42: Revenue and Backlog diversification
42 © 2022 Leonardo - Società per azioni Revenue and Backlog diversification FY 2022 Results REVENUES NEW ORDERS ORDER BACKLOG EBITA € 14.7 BN € 17.3 BN € 37.5 BN € 1.2 BN REVENUES AND BACKLOG BY GEOGRAPHY REVENUES AND BACKLOG BY BUSINESS 39% 35% 23% 3% 45% 31% 21% 3% Defence Electronics Helicopters
Slide 43: 4Q / Group Performance
43 © 2022 Leonardo - Società per azioni 4Q/FY 2022 Results Group Performance Free Operating Cash-Flow (FOCF): this is the sum of the cash flows generated by (used in) operating activities (which includes interests and income taxes paid) and the cash flows generated by (used in) ordinary investment a
Slide 44: Available credit lines and Group liquidity
44 © 2022 Leonardo - Società per azioni FY 2022 Results • Available credit lines • ESG Credit Line signed in October 2021 equal to € 2.4 bn • Existing unconfirmed credit lines equal to € 1.0 bn • Commercial Paper, signed in August 2022, equal to € 1.0 bn • New «Sustainability-Linked» EIB loan equal
Slide 45: Balanced debt maturity profile
45 © 2022 Leonardo - Società per azioni FY 2022 Results Balanced debt maturity profile • Leonardo DRS, following the merger with the company RADA, has signed total funding of $500mil expiring in 5 years (of which $225mil Term Loan fully drawn on December 31, 2022 and agreement for $275mil Revolving
Slide 46: Capex initiatives that align our portfolio with SDGs
46 © 2022 Leonardo - Società per azioni FY 2022 Results Capex initiatives that align our portfolio with SDGs represent 50% of the total New initiatives increasing industrial process efficiency New products included in our SDGs-aligned portfolio AW609 First civil tiltrotor to be certified which will
Slide 47: Development costs capitalised as intangible assets
47 © 2022 Leonardo - Società per azioni FY 2022 Results Development costs capitalised as intangible assets as at 31 December 2022 (*) Movements w/o cash and PL effects € mln Self Funded National Security Self Funded Other Total 01 January 2022 Opening Balance 1,760 849 2,609 Gross R&D capitalised 98
Slide 48: Covenant FY2022
48 © 2022 Leonardo - Società per azioni Covenant FY2022 FY 2022 Results * EBITDA net of depreciation of rights of use FY2022A Post IFRS 16 EBITDA* € 1,671 mln Net Interest € 104 mln EBITDA / Net Interest 16.1 THRESHOLD > 3.25 FY2022A Post IFRS 16 Group Net Debt € 3,016 mln Leasing (IFRS 16) - € 570
Slide 49: Defence Budget perspectives
49 © 2022 Leonardo - Società per azioni Defence Budget perspectives • USA: the main defense spender worldwide (> 780B $ in 2022) • Return to growth expected from • 2026 (>840 B $ expected in 2023) • Asia Pacific: > 570B $ in 2022 • China the main spender • Significant Defense budgets in South Korea,
Slide 50: Important progress towards ESG from 2018
50 © 2022 Leonardo - Società per azioni Important progress towards ESG from 2018 • -37% intensity* CO2 Scope 1 & 2 emissions location based • -24% intensity* of energy consumption • -26% intensity* of waste produced • -30% intensity* of water withdrawals • 75% of employees work at sites with certifi
Slide 51: Our main ESG achievements in 2022
51 © 2022 Leonardo - Società per azioni Our main ESG achievements in 2022 Confirmed for the third time in Bloomberg’s Gender Equality Index (GEI). MSCI SUSTAINALYTICS S&P CDP MOODY’S ESG ISS ESG LEONARDO RATING SCALE (low | high) LEONARDO RANKING in the sector SECTOR Score average A 21.2 medium risk
Slide 52: Safe Harbor Statement
52 © 2022 Leonardo - Società per azioni 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 fo
Slide 53: Contacts
53 © 2022 Leonardo - Società per azioni CONTACTS leonardo.com Valeria Ricciotti Head of Investor Relations and Credit Rating Agencies +39 06 32473.697 valeria.ricciotti@leonardo.com Leonardo Investor Relations and Credit Rating Agencies +39 06 32473.512 ir@leonardo.com