Leonardo Drs, Inc. · NASDAQ:DRS
Leonardo Drs — H1 2023 Earnings Presentation
34 slides from Leonardo Drs's earnings presentation, Jul 28, 2023
Slide 1: 2Q/1H 2023 Results Presentation
28 July 2023 2Q/1H 2023 Results Presentation Rome
Slide 2: Agenda
2 © 2022 Leonardo - Società per azioni Agenda 2Q/1H23 Results • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix
Slide 3: CEO Introduction
3 © 2022 Leonardo - Società per azioni • Leader across Helicopters and Defence Electronics • Key player in international cooperation programmes • Well positioned in key domestic markets • Leading portfolio offering across the businesses • Solid H1 performance; reconfirming FY guidance CEO Introducti
Slide 4: A new era of defence
4 © 2022 Leonardo - Società per azioni • Changing nature of the conflict as demonstrated by the war in Ukraine • Bytes instead of bullets • Concept of conventional defence evolving into National Security • Leonardo’s technology leadership to be boosted and accelerated to adapt to global changes unde
Slide 5: Building the Leonardo of the future
5 © 2022 Leonardo - Società per azioni Building the Leonardo of the future Evolving product portfolio and positioning to meet geopolitical developments and technological transformation An innovative and agile business that is strongly positioned for growth New era of defence and technological transf
Slide 6: Reinforcing and strengthening the core products
6 © 2022 Leonardo - Società per azioni Connectivity Big Data & Advanced Analytics Services from satellites Reinforcing and strengthening the core products More recurrent revenues, higher margins and low capex requirements STRATEGIC PRODUCTS & SERVICES FAST ROTORCRAFT NEW GENERATION HELICOPTER RUAV N
Slide 7: Making Space and Cyber strategic priorities
7 © 2022 Leonardo - Società per azioni Making Space and Cyber strategic priorities SPACE CYBER • Cumulative market value of ~ €700bn between 2024-28 • Estimated segment growth of 8% CAGR 2024-2028 • Total market value of ~$350bn (~70% services and Ground equipment) • Estimated to reach a value of ~
Slide 8: Key takeaways
8 © 2022 Leonardo - Società per azioni Key takeaways 1. Strengthening the core business 2. Making the organisation more efficient 3. Optimising the product portfolio 4. Growing international presence 5. Improving cash generation and profitability through new high-tech service based products 6. More
Slide 9: Agenda
9 © 2022 Leonardo - Società per azioni Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 2Q/1H23 Results
Slide 10: 1H 2023 Highlights
10 © 2022 Leonardo - Società per azioni 1H 2023 Highlights 2Q/1H23 Results 1) Adjusted perimeter to exclude the contribution of Global Enterprise Solutions 1H2022A 1H2022 Adj.1 1H2023 ORDERS (€bn) 7.3 7.2 8.7 +21.4% REVENUES (€bn) 6.6 6.5 6.9 +6.4% EBITA (€mln) 418 407 430 +5.7% FOCF (€mln) -962 -97
Slide 11: Order Intake
11 © 2022 Leonardo - Società per azioni Order Intake Commercially strong, reflecting continued strength of defence-governmental business € mln ∆ % YoY 1H2022A* 7,161 HELICOPTERS 2,805 +28.5% ELECTRONICS EUROPE 3,045 +19.9% LEONARDO DRS 1,339 +15.6%* AIRCRAFT 1,497 +0.5% AEROSTRUCTURES 225 +42.4% ELI
Slide 12: Revenues
12 © 2022 Leonardo - Società per azioni Revenues Solid performance confirming growth path € mln ∆ % YoY 1H2022A* 6,480 HELICOPTERS 2,160 +2.4% ELECTRONICS EUROPE 2,198 +4.2% LEONARDO DRS 1,107 +6.8%* AIRCRAFT 1,348 +6.9% AEROSTRUCTURES 327 +39.7% ELIMINATIONS & OTHER -246 1H2023A** 6,894 +6.4% 2Q/1H
Slide 13: EBITA and Profitability
13 © 2022 Leonardo - Società per azioni EBITA and Profitability Improving Profitability 2Q/1H23 Results € mln RoS ∆ % YoY 1H2022A* 407 6.3% HELICOPTERS 157 7.3% +4.0% ELECTRONICS EUROPE 225 10.2% +7.1% LEONARDO DRS 84 7.6% -9.7%* AIRCRAFT 160 11.9% +6.7% AEROSTRUCTURES -72 -22.0% +18.2% ATR -5 n.a.
Slide 14: From EBITA to Net Result
14 © 2022 Leonardo - Società per azioni From EBITA to Net Result Solid bottom line +5.7%* YoY +1.7% YoY 1H 2023A • Net Result impacted by higher financial expenses due to increasing rates and the performance of non strategic equity accounted JVs (in 1H22 financial expenses benefitted from fair value
Slide 15: 2023 Guidance Confirmed
15 © 2022 Leonardo - Società per azioni 2023 Guidance Confirmed 2Q/1H23 Results 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 • Successful
Slide 16: Agenda
16 © 2022 Leonardo - Società per azioni Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 2Q/1H23 Results
Slide 17: Q&A
17 © 2022 Leonardo - Società per azioni Q&A
Slide 18: Agenda
18 © 2022 Leonardo - Società per azioni Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 2Q/1H23 Results
Slide 19: Helicopters
19 © 2022 Leonardo - Società per azioni 22 16 3 37 31 28% 72% Civil Defence/ Govermental 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 Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability 2023 Outlook(*) • S
Slide 20: Electronics - EU and Leonardo DRS
20 © 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 21: Aircraft
21 © 2022 Leonardo - Società per azioni Aircraft Solid profitability 2Q/1H23 Results 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 Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability * Based on the current
Slide 22: Aerostructures and ATR
22 © 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 Orders (€ mln) Revenues (€ mln) EBITA (€ mln) and Profitability 2023 Outlook(*) • Increasing volume driven by increasing production rate for Airbus
Slide 23: Space
23 © 2022 Leonardo - Società per azioni 2018-2022 Results EBITA (€m) 2023 Outlook(*) • Growing volumes driven by solid and increasing backlog * Based on the current assessment of the effects deriving from the geopolitical situation on the supply chain and the global economy and assuming no additiona
Slide 24: Agenda
24 © 2022 Leonardo - Società per azioni Agenda • Key messages Roberto Cingolani, Chief Executive Officer • Financial review Alessandra Genco, Chief Financial Officer • Q&A • Sector results • Appendix 2Q/1H23 Results
Slide 25: 2Q/1H 2023 Group Performance
25 © 2022 Leonardo - Società per azioni 2Q/1H 2022 Results Group Performance Free Operating Cash-Flow (FOCF): 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 activi
Slide 26: Solid Group liquidity ensures adequate financial flexibility
26 © 2022 Leonardo - Società per azioni 2Q/1H23 Results Solid Group liquidity ensures adequate financial flexibility • Available credit lines • ESG Credit Line signed in October 2021 equal to € 2.4bn • Existing unconfirmed credit lines equal to € 1.0bn • Commercial Paper, signed in August 2022, equa
Slide 27: Balanced debt maturity profile
27 © 2022 Leonardo - Società per azioni Balanced debt maturity profile 2Q/1H23 Results In € mil CREDIT RATING Moody’s S&P Fitch Baa3 / Stable Outlook BB+ / Positive Outlook BBB- / Stable Outlook As of today Ba1 / Positive Outlook BB+ / Stable Outlook BBB- / Negative Outlook Before last review May 20
Slide 28: Covenants FY2022
28 © 2022 Leonardo - Società per azioni Covenants FY2022 2Q/1H23 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 29: Remuneration policy aligned with shareholders
29 © 2022 Leonardo - Società per azioni • Convergence of interests between management and shareholders • Aligning the remuneration package with international market best practices • Including Sustainability/ESG objectives, consistently with business strategy • Complying with transparency and merit s
Slide 30: CEO short term variable remuneration (MBO)
30 © 2022 Leonardo - Società per azioni Economic and Financials P e rf o rm a n c e G a te Strategic Sustainability Group EBITA KPIs Group Free Operating Cash Flow (FOCF) Launch of 3 lines of research for Leonardo Labs Book to Bill Inclusion in Dow Jones Sustainability Indices Reduction in average a
Slide 31: Long Term Incentive Plan (LTIP)
31 © 2022 Leonardo - Società per azioni Relative Total Shareholder Return 35% WeightKPIs 2025 ( Delta vs 2023) Reference financial period 1-4 5- 6 7 8-13 Performance range (Target / Guidance) 100% 50% 25% 0% Payout range Group Net Debt 25% 2025 Target (< 1.6 € bil.) 100% Minimum 50% Return on Invest
Slide 32: Connecting ESG progress and remuneration
32 © 2022 Leonardo - Società per azioni Connecting ESG progress and remuneration Confirming alignment between Industrial plan and management performance 10% of short-term variable remuneration linked to ESG objectives 20% of long-term variable remuneration linked to ESG objectives CEO & General Mana
Slide 33: Safe Harbor Statement
33 © 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 34: Contacts
34 © 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