Leonardo Spa · MIL:LDO
Leonardo Spa — Investor Day (March 2024)
59 slides from Leonardo Spa's investor day presentation, March 2024
Slide 1: Leonardo: Technologies for a Safer Future
Leonardo: Technologies for a Safer Future Industrial Plan 2024-2028 - Executive summary
Slide 2: The evolution of our KPIs
Financial KPI 20231 20282 Orders, €bn (+26%) 17.9 22.6 Revenue, €bn (+39%) 15.3 21.3 The evolution EBITA, €bn (+92%) 1.3 2.5 of our KPIs FOCF, €bn (+111%) 0.64 1.35 ROIC, % (+76%) 11.9% 21.0% ROS, % (+37%) 8.4% 11.5% Double digit 2026 1. Does not include consolidated Telespazio figures Doubled Divid
Slide 3: Agenda
1. Architecture of the Industrial Plan 2. Business overview Agenda 3. Group’s targets 4. Relevant new initiatives 3
Slide 4: Lessons learnt in recent years: the three-fold challenge of Defense
Lessons learnt in recent years: the three-fold challenge of Defense Lesson Warfare is changing combination of traditional weapons and new digital technologies, Bullets and bytes #1 satellite applications, and drones (to destroy targets valued 1,000x) Lesson Globalization as an element of fragility F
Slide 5: Lessons learnt in recent years: the three-fold challenge of Defense
Lessons learnt in recent years: the three-fold challenge of Defense Lesson Warfare is changing combination of traditional weapons and new digital technologies, Bullets and bytes #1 satellite applications, and drones (to destroy targets valued 1,000x) Lesson Globalization as an element of fragility F
Slide 6: Lesson #1: Bullets and bytes
Lesson #1: Bullets and bytes Key features AI-powered Multi-domain interoperability Enablers Multi domain Digital interoperability Continuum Space Cloud Command and control Cloud (petabytes) Communications and standards Computing power Modelling, simulation, (petaflops) Air Space and training Resilie
Slide 7: Lessons learnt in recent years: the three-fold challenge of Defense
Lessons learnt in recent years: the three-fold challenge of Defense Lesson Warfare is changing combination of traditional weapons and new digital technologies, Bullets and bytes #1 satellite applications, and drones (to destroy targets valued 1,000x) Lesson Globalization as an element of fragility F
Slide 8: Lesson #2: From Defense to Global Security
Lesson #2: From Defense to “Global Security” Market outlook CAGR 23-28 Total Defense expenditure in NATO Europe1, €bn CAGR Defense expenditure in NATO Europe 4.5% +4.5% 2% GDP NATO goal +3.8% +1.5% -2.4% +0.2% Cyber as a way to protect data 8.8% 350 365 380 323 338 304 273 277 256 266 233 226 232 23
Slide 9: Lessons learnt in recent years: the three-fold challenge of Defense
Lessons learnt in recent years: the three-fold challenge of Defense Lesson Warfare is changing combination of traditional weapons and new digital technologies, Bullets and bytes #1 satellite applications, and drones (to destroy targets valued 1,000x) Lesson Globalization as an element of fragility F
Slide 10: Lesson #3: Security as a continental problem
Lesson #3: Security as a continental problem Procurement budget, 2023 € ~110 bn $ ~250 bn 1 SELECTED CATEGORIES # of different series of platforms in production 8 Land 6 16 Air 4 6 Maritime 2 30 Total2 12 Procurement budget / # of different series of € ~4 bn $ ~20 bn platforms in production 1. NATO
Slide 11: Is Leonardo ready to face those challenges?
Is Leonardo ready to face those challenges? Actions Lesson Strengthen the Rationalize/optimize the portfolio, focus R&D, Bullets and bytes core business and implement massive digitalization Security as a Forge international alliances and JVs continental problem Pave the way to Enhance cyber capabili
Slide 12: This means... Now / Then
This means... Now… …Then … into a Company working in a Transforming a Company working in multiple cross-divisional multi-domain environment Divisions and related domains… powered by the Digital Continuum ELECTRONICS AIRCRAFT CYBER HELICOPTERS AEROSTRUCTURES SPACE Single domain approach AIR LAND MARI
Slide 13: Financial KPI: our growth model
ILLUSTRATIVE Financial KPI Our growth model Inorganic 𝟐𝟎𝟐𝟖 growth 𝑲𝑷𝑰 = 𝑰𝒏𝒆𝒓𝒕𝒊𝒂𝒍𝒌 + 𝑶𝒌 + 𝑬𝒌 + 𝑰𝒌 𝒚=𝟐𝟎𝟐𝟒 y Efficiency 𝒌 boost Where k = LDO Division and JVs Organic growth Inertial Years 13 Company General Company Use Internal
Slide 14: How we will implement it: the arsenal of initiatives
How we will implement it: the “arsenal” of initiatives Organic growth Focused R&D and technological innovation Focus on digital technologies such as AI, digital twin, and cloud computing Massive digitalization of solutions and operations Key enabler for increased product competitiveness, streamlined
Slide 15: How we will implement it: the arsenal of initiatives
How we will implement it: the “arsenal” of initiatives Organic growth Focused R&D and technological innovation Focus on digital technologies such as AI, digital twin, and cloud computing Massive digitalization of solutions and operations Key enabler for increased product competitiveness, streamlined
Slide 16: Agenda
1. Architecture of the Industrial Plan 2. Business overview Agenda 3. Group’s targets 4. Relevant new initiatives 16
Slide 17: The strategy menu: a glance at the Industrial Plan
The strategy menu: a glance at the Industrial Plan Where we are… (Now) …where we want to go (Then) Strengthen Electronics Second largest European player in Defense Global player with European leadership and catalyst core business electronics with a qualified US presence for European cooperation, lev
Slide 18: Strengthen core business
Strengthen core business Where we are… (Now) …where we want to go (Then) Electronics Second largest European player in Defense Global player with European leadership and catalyst electronics with a qualified US presence for European cooperation, leveraging GCAP spillovers, alliances/JV (land and nav
Slide 19: Electronics: the role of electronics today and in the future
The role of electronics today and in the future Electronics ILLUSTRATIVE Legacy Current Future (~1980s – 1990s) (~2000s – 2010s) (~2020s – 2030s+) Tornado Eurofighter GCAP 60% 55% Other 75% Air 40% 45% Electronics 25% Leopard 2A4 Ariete C1 AICS 55% 45% Other 75% Land 45% 55% Electronics 25% Maestral
Slide 20: Electronics: our actions going forward
Our actions going forward Electronics •1 Rationalize 20% of the current portfolio in order to focus on the core offering and optimize the capital allocation (main area of rationalization being custom C2, communications, airborne, Global player with land & naval radars, and other legacy products) Eur
Slide 21: Electronics: Facts and figures
Facts and figures Electronics NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA Backlog2 ROS 12.8 13.8 15.0 15.9 16.5 17.1 10.0% 10.2% 11.1% 11.8% 12.2% 12.4% +3.3% +7.8% 6.6 6.7 6.9 6.2 6.4 6.1 6.4 5.7 5.9 5.2 4.7 +12.5% 4.4 0.75 0.79 0.67 0.57 0.44 0.48 2023
Slide 22: Strengthen core business
Strengthen core business Where we are… (Now) …where we want to go (Then) Electronics Second largest European player in Defense Global player with European leadership and catalyst electronics with a qualified US presence for European cooperation, leveraging GCAP spillovers, alliances/JV (land and nav
Slide 23: Helicopters: our portfolio today and for the future
Our Helicopter portfolio today and for the future Helicopters Now… …Then AW09 Development and new product certification Mature new product reaffirming superiority in the segment AW109 Weaponization for military, revamping for VIP market Avionics upgrades for continued attractiveness in VIP market Li
Slide 24: Helicopters: our actions going forward
Our actions going forward Helicopters 1• Optimize industrial model by scaling industrial capacity (more standardization of configurations) and improving industrialization Confirm record-level orders process (digitalization and supply chain) and accelerate backlog conversion to revenue 2• Reinforce p
Slide 25: Helicopters: Facts and figures
Facts and figures Helicopters NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA Backlog2 ROS 14.4 15.2 15.9 16.4 16.7 16.7 8.9% 9.0% 9.3% 9.6% 10.2% 10.2% +2.4% +5.6% 6.0 6.2 6.2 5.7 5.8 5.9 5.8 5.5 5.4 4.9 5.2 4.7 +8.4% 0.59 0.63 0.48 0.52 0.42 0.44 2023A 202
Slide 26: Strengthen core business
Strengthen core business Where we are… (Now) …where we want to go (Then) Electronics Second largest European player in Defense Global player with European leadership and catalyst electronics with a qualified US presence for European cooperation, leveraging GCAP spillovers, alliances/JV (land and nav
Slide 27: Aircraft: our portfolio today and for the future
Our Aircraft portfolio today and for the future Aircraft Now… …Then EFA Primary role in production and Long-term operational capabilities evolution, bridging sales campaigns next-gen fighter F-35 Full wing and aircraft assembly production Production and logistics full capacity, business growth inclu
Slide 28: Aircraft: our actions going forward
Our actions going forward Aircraft Secure, in the 1• Acquire sustainable order levels leveraging: short-term, orders for ‒ primary role in Eurofighter campaigns and platform evolutions sustainable growth and ‒ upgraded platforms portfolio (e.g., M345, M346, and UAV) also through boost the high-margi
Slide 29: Aircraft: Facts and figures
Aircraft Facts and figures NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA Backlog2 ROS 8.0 7.9 8.0 8.3 8.4 8.4 14.3% 12.7% 11.9% 12.0% 12.0% 12.0% +11.4% 4.1 +7.2% 4.2 CAGR 2023-28 3.7 3.9 3.7 3.5 3.3 3.4 3.1 3.2 +3.5% 2.9 0.50 2.4 0.42 0.45 0.40 0.39 0.41
Slide 30: Strengthen core business
Strengthen core business Where we are… (Now) …where we want to go (Then) Electronics Second largest European player in Defense Global player with European leadership and catalyst electronics with a qualified US presence for European cooperation, leveraging GCAP spillovers, alliances/JV (land and nav
Slide 31: Aerostructures: our portfolio today and for the future
Aerostructures Our Aerostructures portfolio today and for the future Diversifying external product portfolio by entering … and leveraging intragroup opportunities on in high potential segments… leading platforms Boeing 787 EFA/F-35 Boeing 777X Fighters Boeing 767 GCAP Wide-body Comac 929 C-27J Airli
Slide 32: Aerostructures: our actions going forward
Aerostructures Our actions going forward •1 Capture new orders deriving from the recent OEMs' strategy to Confirm breakeven mitigate geo-political/industrial risks by 2025, thanks to market recovery and •2 Exploit investments in digital/automation carried out during Covid-19 (NEMESI program) to (i)
Slide 33: Aerostructures: Facts and figures
Aerostructures Facts and figures NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA3 Backlog2 ROS 1.1 1.2 1.2 1.3 1.3 1.3 -23.7% -12.3% 1.3% 3.2% 4.8% 6.8% +16.0% +16.5% 1.3 1.4 1.4 1.3 1.4 0.09 1.2 1.2 1.3 0.06 0.04 1.0 0.02 0.9 0.6 0.6 -0.11 -0.15 2023A 2024E
Slide 34: Pave the way to the broader security challenge
Pave the way to the broader security challenge Where we are… (Now) …where we want to go (Then) Cyber Domestic player with a recognized European key player in cyber security, secure positioning in selected segments digital platforms and mission critical communications, focused on Defense, space, and
Slide 35: Cyber: our actions going forward
Our actions going forward Cyber 1• Rationalize and focalize the existing product portfolio, leveraging big data and AI, targeting: Cyber & Accelerate the evolution towards an “AI-intensive cyber products eco- resilience system” for Defense, space, and strategic organizations: (1) predictive European
Slide 36: Our Cyber portfolio today and for the future
Our Cyber portfolio today and for the future Cyber & resilience Secure digital platforms Mission critical comms QUALITATIVE Stop investments Order intake Now… …Then Evaluate Cyber Evaluate Cyber Secure Digital consulting consulting cloud platforms Secure Global Digital Cyber resilience cloud monitor
Slide 37: Cyber: Facts and figures
Facts and figures Cyber NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA Backlog2 ROS 1.0 1.2 1.3 1.6 1.9 2.2 6.1% 7.8% 11.2% 12.4% 13.0% 13.7% CAGR 2023-28 CAGR 2023-28 1.4 +12.6% 1.1 +15.8% CAGR 2023-28 1.3 1.0 1.1 0.8 0.7 32.7% 0.15 0.9 0.8 0.6 0.6 0.12 0.
Slide 38: Pave the way to the broader security challenge
Pave the way to the broader security challenge Where we are… (Now) …where we want to go (Then) Cyber Domestic player with a recognized European key player in cyber security, secure positioning in selected segments digital platforms and mission critical communications, focused on Defense, space, and
Slide 39: Space value chain
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Slide 40: Space: our actions going forward
Space Our actions going forward •1 Establish the Space Division through the re-organization of the Group space activities and the consolidation of Telespazio •2 Consolidate leadership in European institutional segment, and expand the business in Defense and commercial segments by: European leader on
Slide 41: Our Space portfolio today and for the future
Space Our Space portfolio today and for the future Now… ...Then Revenue Market verticals Transversal markets1 QUALITATIVE LDO Space Division LDO Space Division revenue, €bn revenue, €bn Institutional3 Institutional3 Invest and Grow SatCom – Invest and Grow Geo-information Commercial Commercial2 Comm
Slide 42: Space: Facts and figures
Space Facts and figures NOT TO SCALE Financials (estimated values for 2024 and beyond), €bn1 Orders Revenue EBITA3 Backlog2 ROS 1.7 1.8 2.1 2.4 2.7 2.8 8.7% 9.0% 9.4% 9.9% 10.2% 10.6% +10.0% 1.5 1.6 +11.3% 1.4 CAGR 2023-28 1.3 1.4 1.2 1.1 1.1 0.9 1.0 +15.9% 0.15 1.0 0.8 0.13 0.11 0.08 0.09 0.07 2023
Slide 43: Agenda
1. Architecture of the Industrial Plan 2. Business overview Agenda 3. Group’s targets 4. Relevant new initiatives 43
Slide 44: Orders will exceed €22bn in 2028
Figures do not include the Orders will exceed € 22 bn in 2028 impact of the inorganic boost Orders of Leonardo Group (estimated values for 2024 and beyond), €bn1 CAGR 2023-28 +3.9% € ~105 bn 21.8 22.6 2024-2028 20.2 21.0 18.7 19.4 expected cumulated orders 2023A 2024E 2025E 2026E 2027E 2028E >1.1 41
Slide 45: Revenue will surpass €21bn in 2028
Figures do not include the Revenue will surpass € 21 bn in 2028 impact of the inorganic boost Revenue of Leonardo Group (estimated values for 2024 and beyond), €bn CAGR 2023-28 +5.9% 21.3 20.0 17.7 18.8 16.0 16.8 € ~95 bn 2024-2028 expected cumulated revenue 2023A 2024E 2025E 2026E 2027E 2028E Rev
Slide 46: EBITA will almost double by 2028
Figures do not include the impact of the inorganic boost EBITA will almost double by 2028 EBITA of Leonardo Group (estimated values for 2024 and beyond), €bn CAGR 2023-28 2.5 +13.1% 2.1 ~1.8x 1.9 expected EBITA 1.6 1.3 1.4 in 2028 vs. 2023 2023A 2024E 2025E 2026E 2027E 2028E Double digit RoS by 2026
Slide 47: FOCF will more than double by 2028
Figures do not include the impact of the inorganic boost FOCF will more than double by 2028 FOCF of Leonardo Group (estimated values for 2024 and beyond), €bn CAGR 2023-28 >2.0x expected FOCF +15.7% 1.35 in 2028 vs. 2023 1.15 1.00 0.87 0.77 0.65 ~83% FOCF/EBITA Adj1 by 2028 2023A 2024E 2025E 2026E 2
Slide 48: Efficiency boosting
Efficiency boosting 2024-2028 plan, €M Saving category € ~1.8 bn Efficiency measures: 70% savings across the 590 • Direct procurement industrial plan horizon (e.g., offload, production) 13% 470 • Travel 13% • Energy 12% 360 • Real estate 9% 280 • IT 8% • Other indirect procurement (e.g., advisory, s
Slide 49: Investing in growth: disciplined capital allocation strategy
Disciplined capital allocation strategy supporting growth Principle 2024-2026 Capital deployment Strong and Flexible Debt payment Pay down ~50% of maturing debt 1 Balance Sheet Debt repayment Maintain investment grade while preserving liquidity € 750-850 M annual investments Investing in growth Inve
Slide 50: Agenda
1. Architecture of the Industrial Plan 2. Business overview Agenda 3. Group’s targets 4. Relevant new initiatives 50
Slide 51: Selected enabling factors underpinning the strategic plan
Selected enabling factors underpinning the strategic plan Main objectives Sustainability to create shared value Integration of sustainability along the entire value chain, leveraging technological innovation as a 1 Sustainability cross driver to generate shared value Increase of i) the competitivene
Slide 52: Sustainability across the value chain: key projects
Sustainability across the value chain: key projects Talent Engine – people-driven projects Next Generation Civil Tilt-rotor (NGCTR) aimed at increasing gender balance, inclusion and wellbeing, DE&I Sustainable Aviation Fuels (SAF) enhancement, STEM promotion Rotorcraft digital twin Gender Certificat
Slide 53: Committed to sustainable business
Committed to sustainable business Main Group Sustainability Targets o Sustainable • ≥500 key suppliers trained on strategic sustainability supply chain topics by 2027 • >70% of major tenders including ESG criteria by 2028 DE&I enhancement In-orbit servicing o Digitalization • +40% computing & storag
Slide 54: Selected enabling factors underpinning the strategic plan
Selected enabling factors underpinning the strategic plan Main objectives Sustainability to create shared value Integration of sustainability along the entire value chain, leveraging technological innovation as a 1 Sustainability cross driver to generate shared value Increase of i) the competitivene
Slide 55: Selected enabling factors underpinning the strategic plan
Selected enabling factors underpinning the strategic plan Main objectives Sustainability to create shared value Integration of sustainability along the entire value chain, leveraging technological innovation as a 1 Sustainability cross driver to generate shared value Increase of i) the competitivene
Slide 56: Selected enabling factors underpinning the strategic plan
Selected enabling factors underpinning the strategic plan Main objectives Sustainability to create shared value Integration of sustainability along the entire value chain, leveraging technological innovation as a 1 Sustainability cross driver to generate shared value Increase of i) the competitivene
Slide 57: Selected enabling factors underpinning the strategic plan
Selected enabling factors underpinning the strategic plan Main objectives Sustainability to create shared value Integration of sustainability along the entire value chain, leveraging technological innovation as a 1 Sustainability cross driver to generate shared value Increase of i) the competitivene
Slide 58: 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 59: Contacts
CONTACTS 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 leonardo.com 2