Montana Aerospace AG

Ladies and gentlemen, welcome to the Montana Aerospace 9 Months 2025 Earnings Calls. I am Valentina, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions in writing via their relative field. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Michael Bistauer. Please go ahead.

Welcome everybody to nine months 2025 earnings call of Montana Aerospace. This is the first earnings call as a pure play aerostructures company. a goal which many of you know we followed consequently since 2023, and we are extremely happy to announce that this time we have achieved this goal to be a pure-play aerostructures company. Yes, balance sheet is still heavily impacted by the carve-out of the energy segment. We will go into detail of those aspects, but still we think aerospace is doing great. And we are more than positive and confident that we will also in the future outperform our peers in aerospace. Today's aerospace earnings call, as always, and me, Michael Pistor will guide through and we are happy to answer your questions after the presentation. of Montana Aerospace earnings in 2025. Where are we right now? We announced our strategic transition into a pure play aerostructures company already in 2023. And the reason for this statement and strategy was pretty clear. that aerospace as an industry has an extremely long-term perspective. Not many other industries can share this long-term perspective. Connected with long-term contracts, which we will then also discuss a bit later on. And we think we can outperform the market, consequently something we did in the past few years, And we can outperform also for the future, we think, because of a special setup. Why? We do have a very special approach to the market. We are situated in the meantime, a transition we had in the last three years, as a global player, still local to local, something which is under the light of tariffs and other developments more important than ever and also adds additional market share to our portfolio. We are one of the few ones in our special area we are in who has a fully integrated value chain. Something which is also for the future as we think the market still in the supply chain stays shaky is more and more important. To partner up at the end with our which are the tier ones and OEMs in aerospace industry. And last but not least, we have not only best-in-class entities, but most of our assets are situated in so-called best-cost manufacturing footprint countries. Price pressure is something which is constantly on. And certain price pressure for us with situations set up like we have is a positive momentum, which also brings us some tailwind into our development. And we have a very clear core, which helps us to perform better and better together with our customers. Let me elaborate on the carve-out, which is definitely one of the crucial topics within our balance sheet in the nine-month results. And we think that the carve-out is highly accretive for the company Fontana Aerospace. Why? We have achieved an enterprise video in the carve-out of 204 million. And before we go into the details of additional impacts, let me shortly elaborate the transition history. In 2023, when we announced that Montana Aerospace is elaborating into a pure-play aerostructures company, we tried a so-called carve-out IPO in the energy segment. We failed. We failed out of the reason that a carve-out IPO within a stock-listed Montana Aerospace was not accepted in the market and by the investors. We then have subsequently M&A possibilities worked out and more than 30 interested parties went through a very deep diligence, many of them strategists. Strategists like Siemens GE and other companies were not able to participate in a carve out due to the market share of energy segment and therefore the fear of consequences of trade commissions and merger control issues. After two years' time, we choose the highest, by far the highest offer we have received. Yes, with some impact, but on the other hand, by far the highest offer. Also, because we had some time pressure, time pressure which was given by the fact able with this condition precedent or are able with this condition precedent to shift some debt into equity with non-diluted impacts for the Montana aerospace, which I would like to explain. So, all in all, we achieved, with the carve out of energy, 3.7 million enterprise value. We avoid it as a Montana aerospace. equity injection which was planned and also guided of 30 million. This is done by the new shareholder. We have an opportunity for a so-called uncapped burnout component which is also to be paid either by good performance of the energy segment or M&A transaction or an IPO. of the energy segment by the shareholder to Montana Aerospace. And here we calculate with an amount of 40 million plus already to happen hopefully in the next year to come. And further, we have then achieved our goal as a pure play aerostructures company, which gives us or provides us, I would say, the fact of a condition precedent to fulfill the debt equity swap with the Belgium state fund in the amount of more than 66 million euro, which otherwise would have been cash effective to pay back. So all in all, we think with an amount totaling up of clearly over 320 million euro, a very creative topic for Montana Aerospace, and therefore we're quite happy also to announce. Cash index is a bit delayed. As the closing of the transaction was late in September 2025, the net net impact will be around 25% of the total amount in Q4 2025, and around 75% is expected to happen within the first half of the year, 2026. most likely even in the first quarter, 2026. Which also lead us later in the guidance to our, I would say, very optimistic and positive guidance on net debt or net cash with one-time net debt EBITDA this year and even a net cash position together with the operational business and the aerostructures cash flow in 2026. Let's go into the details of the first nine months of 2025. And here we see again a P&L, and please note this P&L is showing only anymore the aerospace business. Montana Aerospace also, as it will look forward-looking without the energy segment, with the PurePlay Aerostructures Company, which is mirrored here. And what we see is in sales, stronger than the market growth, with 15.5%, the net sales of 712 million, and as announced, the over-proportional development of the EBITDA. Yes, the quarters are not anymore completely the same. There is a kind of a seasonality. with a strong second quarter and a very strong fourth quarter to be awaited or expected, mostly even in EBITDA, which also then bring us later to a very strong EBITDA guidance for 2025 and also for 2026. The result, which shows the result of the continued operations from negative to positive within one year. And please note that the result still includes a heavy impact of a non-cash impact we have to suffer with, or digest, is the FX impact, which is in the financial result. For a detail, to be more specific, The financial results, you find the position of almost 30 million of negative impact, which resides out of IC loans, so intercompany loans from Montana Aerospace to its entities in U.S. dollar. And as the dollar changed dramatically within this year from around FX105 by the beginning of the year, to at the end of December date of 1-17. More than 10% of these almost 300 million loans are evaluated differently, even so they will never have a negative cash impact for the Montana aerospace as shown in the result. And still then, with this 30 million impact, we show a continuous operations result of three. Otherwise, it would have been 33 or even more. Catbacks, and here I would like to stress the catbacks without the energy segment for comparative reasons. Slightly lower than last year, and I would say exactly in the area of our guidance where we say always even with small additional capacity increases, we are at the level of 40 to 60 million on a yearly basis, which is far below our depreciation, therefore shows the strong cash flow, operational cash flow possibility and potential. Net debt, including the total company as it is on the year's end, or in this case the nine months end, it shows a quite significant decline in comparison to the last year, 2024. Please note that within this year, we had Besides also the CAFAT of ASTA, or energy segment, an impact which was net debt related, there was an earn-out component of the, out of the ASCO transaction. ASCO was bought by Montana Aerospace within the year 2022-2023. There was always an earn-out component within our balance sheet in the amount of 30 million. And this earn-out happened to be paid out by July 2025 in the amount of 28 million. It's a bit less than what we expected. But nevertheless, of course, this impact was also something which impacts the net debt. Without that impact on a like-to-like basis, the net debt decrease could have been even over 100 million. to be more specific, 30 million or almost 30 million lower than what we see right now. Free cash flow shows the total impact of the transactions. Transactions are just told. On the one hand, the earn out component, but also the impacts of the energy segment. the impact of the energy segment, the free cash flow shows at the level of $2.8 million. Without the impact of the additional earn-out component for the ASCO segment, the free cash flow would show an amount of over $30 million. So on an operational basis, we are extremely happy with the development and I guess If you look at the details, it shows the strong position we as a Montana Aerospace have. And additionally, with the really strong contracted sales of over $7 billion, where Kai is giving also some more color on it in just a moment, we think we are prepared more than positive for the future. Details on the results. I would like to hand over to Guy and give you more details on the development of the industry and of aerostructures, aerospace, Montana Aerospace in the last few months.

Good afternoon, everyone. Before I start with the details, let me also give you some remarks, personal remarks from my side. Of course, everybody is under the impression of today's share price development. I'd just like to mention that I'm not focused on a day or a week or a month or a quarterly development. I'm definitely focused on the sustainable development of the company, and I guess we have all the right to say that for the last past years, and there's absolutely no reason to questioning or getting negative on our business model. So we stay positive, and there's a good right to do so because we see what is happening in the market. There's no changes in the last month, so the OEM is still publishing the same rates. Our market position is getting stronger and stronger. We are winning more work packages because the customers like our business model. And it's extremely difficult to be a copycat and do the same business model wherever in the world. I guess this is still very underlined by the recent developments and the recent packages we are winning. And as said, there is absolutely no reason for getting pessimistic for the future or getting negative on our business model. I don't see that. We are winning the packages we want to win. And this is definitely also reflected in the margins we are able to create. And I guess this is giving us the right to stay positive on the business model, and we will continue the way we have chosen just a couple of years ago. Why are we a bit more pessimistic for the future? I will come to it on the next pages. Let me start first with the current development of the quarter three compared to 2024. you see that we are close to a 20% increase in quarter-by-quarter comparison and also a 17% increase in our EBITDA. As Michi already said, traditionally the strongest quarter of the year is the fourth quarter, and I'm staying positive that we will at least achieve the guidance for 2025. There is no reason we shouldn't not achieve it. We see what's coming in. And therefore, I'm quite positive that we at least achieved the guidance for 25. And let's move ahead, and then we can see about our rate assumptions and the guidance for 26. I don't see the next page now. Okay, no. Yeah, so here, as already discussed and mentioned, there is always the influence of the energy business. And as you can see, if you compare quarter by quarter, operationally, I guess we are doing pretty well in line with what we expected for the different quarters. The trajectory is absolutely healthy, and definitely it will continue like this. And for the fourth quarter, as already mentioned now a couple of times, it should even be stronger than this one. Okay, what does this mean now for for the outlook in terms of really the rate assumptions and the guidance for 2026. I guess this was one of the biggest questions and maybe a reason for some questions also later on. If I come to the guidance, as said a couple of minutes ago, from the environment we are in, you don't see any changes from the big OEMs. You don't see that they adjust their delivery announcements for 2025, but also for 2026. But if I see, well, if I look a little bit deeper into the market, I also see that Airbus announced around more than 50 gliders in Toulouse. I saw photos of one of our biggest customers, Spirit Aerosystems in Wichita, where I see more than 200 few of the largest on stock, I see that the supply chain is still influenced by fastener shortages and so on. And also we see some discussions we have on the extrusion side in terms of the volume demand for 2026. So if I combine everything of the information we get from our customers but also from our supply chain, I think this is the reason why we, probably we are a bit more conservative than the complete market. But I also like to say in the last four years, there was not a single time in one of our earning calls that we had to come with a winning warning. It was only one time, and this was a positive one. And I guess in terms of professionalism and also in terms of the conservative approach we might take in here, I guess this is simply what we see from the supply chain, but also from the OEMs. And this has been... embedded in our planning for 2026. We are not that much focused on the revenues, just to be also very clear on this one. We are focused on our margins. We are focused on the generation of cash flow, and we are focused on a lot of projects which are in the pipeline and where we are in very, very good discussions with our customers. And I'm quite positive that in the near future you will see a lot of announcements coming from our side in terms of maybe new projects where we engaging ourselves and also in terms of new contracts, we will be able to sign with the big OEMs. This will definitely give us the baseline and the fundament for the way forward. And I'm ready to take every challenge or every question on 26 and onwards. But again, I guess we are in a very, very healthy position And I'm quite positive that we at least achieve the guidance also for 26.

Yeah, just shortly, a bit more details before we come to the guidance also on some numbers. You see here the cash flow of Montana Aerospace Development, which was already discussed by Kai. The quarter three was still impacted in the free cash flow, not only by the energy segment, but also, as we said, by the so-called earn-out component concerning ASCO. And taking this one into account, also the free cash flow would have been above the year 2024. As you see on the next page, it's a constant development of the trade working capital and also of the net debt. So trade working capital since our high peak two years ago, we constantly worked down 365 in Q3 2024 versus 328 by Q3 2025. On absolute terms, a reduction of almost 40 million. Concerning percentage, of course, concerning the change of our Now, from a two-segment to a one-segment business, there is a percentage change, which is in line also with what we guided and what we expected to be, and to be prepared also to overcome certain difficulties in the supply chain of others with our stock we have, and therefore been able to supply when others can't. Net debt, constant reduction. The outlook already for this year is to be, which will come into the guidance in a second, is to be at the level of one-time net debt EBITDA. And consequently, together also with the proceeds out of the carve-out, which we said already are expected to happen on the net debt level in 2025 by around 25%. and around 75% of the remaining amount by the beginning of 26. We think that we will end up at the net debt level of a positive cash level of a higher double-digit amount by end of 2026. So no net debt in future, but net cash, which provides us additional firepower for not only dividends, but mostly for additional activity either in CapEx or in M&A. The bill rates which were discussed by Kai show the market development. As I said, it's a bit still not in line with what were the announcements of the OEMs, and that's also something we keep on going for the future. Concerning our expectations, we think there's a steady development upwards, so more build rate of the OEMs, but not as fast and not as steep as sometimes announced or hoped. And this is on a – so therefore, there is a market growth, yes, not as steep as thought, but on the other hand, still also concerning the shakiness of the industry. additional tailwind for our businesses, which gives us a situation where we can choose between the possibilities on the market and the packages, which we think is quite favorable and positive to partner also futurely up with the OEMs. Finally, we come to the guidance. The guidance now is a Montana Aerospace Aerostructures pure play company. So we slightly increase even our single segment industry company, the sales to above 900 million or around 900 million in 2025. Heavy growth also in comparison to last year. Aerostructure segment. think and guide for a trusted EBITDA of around $160 million. Therefore, exactly once again mirrored what Kai already announced, to be expected a very strong quarter for 2025 mainly in the EBITDA and on the other hand also concerning net income and free cash flow and therefore also the with a positive net income by year's end on the business as it is, on the continued business, and as already said, a net debt of around net debt one time EBITDA by the year's end 2025. 2026, again, impacted by growth, but the focus is Cash flow strong and also EBITDA strong growth based to over a billion on aerostructures, aerospace, Montana Aerospace, and the adjusted EBITDA goes of over 185. Please let me explain that our assumption for this EBITDA also is based on a certain FX and certain tariff situation. We calculate with the U.S. dollar of 119, which is in comparison to the last guidance we gave at the beginning of 2025 at 105, much weaker in comparison to the Euro. Well, it's a certain percent difference. What does it mean in a business or industry which is, in general, 95% of the sales in this industry, not only for us but for everybody, is U.S. dollar based. Even companies like Airbus are invoiced and calculate fully in U.S. dollar. So out of a sales volume of around one billion, we do have a long position in U.S. dollar. of around 30% or let's say equaling more than 300 million euro. And the 300 million euro now having an FX impact which we at least expect with 119 versus 105 amounts for more than 30 million, almost 40 million. On the other hand, we still think that even so the tariffs with after, first shock, I would say, in the first months of 2025, had shown that, in general, aerospace is, in most parts, excluded. Nevertheless, certain supplies and other topics in the full value chain are still impacted. So over here, in comparison to the guidance of end of 2024, beginning of 2025, or the We see or calculate with an impact which is worth almost double-digit million-euro amount on EBTA. So on a like-to-like basis, same FX or lower FX in case of this development, and it may be eased or stable development of the tariffs, the EBTA would be up by more than almost 40 million. 185 million adjusted EBITDA with this conditions precedent or assumptions is mirroring a very strong EBITDA and growth for the year 2026. Last but not least, and already mentioned today, a strong cash flow operationally with decent capex and a board a more stable trade working capital, therefore a strong cash conversion on the EBITDA. And on the other hand, the impacts of the carve outs, therefore we calculate with a higher double-digit million-euro amount on a net cash position by the year 2026. With that, we would end the presentation, and I'm happy to answer your questions. Thank you very much.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Webcast viewers may submit their questions in writing via the relative field. Anyone who has a question may press star and 1 at this time. The first question comes from Josh Sullivan from Jones Trading. Please go ahead.

Hey, good morning. Good morning, please. Yeah, so just to be clear, we strip out the FX and tariff noise on the 26 guide. You know, you said you're conservative on guidance, but is that the same position you were sequentially on the conservatism? And just to be clear, you're incrementally positive on build rates in the aerostructure segment generally.

For the bill rates, I would like to hand over to Kai, but before we go over to the bill rates on the FX, yes, we calculate with a FX of 119 to the euro, which means a very weak US dollar. This was by end of September, beginning of October, I would say the forward-looking FX exchange rate. So saying that, if the development is like right now, not as weak concerning the US dollar, we would have, of course, the positive impact out of it. So, saying like right now, 116, three points less than the 119 already impacts many million Euro amount additionally with the . Of course, we hedge to a certain extent. So, for instance, this year we hedged most of our sales at 107 for the total year's average. But, of course, hedging is only possible for a certain period of time. Therefore, right now, the guidance is based on a full FX impact of 190. For the build rates, please, Kai.

Yeah, thank you, Michi. Yeah, as mentioned in my little speech just a couple of minutes ago, there is a variance in terms of how we see the build rates because we have so many different work packages ending up in a different set of the aircraft. If you just compare the wings for the 737, the fuselages of the 737, then it's a big variance, a big difference in terms of the volume demand for 2026. I like to be very clear because I guess this is the name of the game today. And in all clarity, I guess we, overall, we have roughly a discounted build rate of, I would say, 10% in most of the packages. And some other areas, like extrusion, we see even a stagnation in terms of the demand from the supply chain. And this was one of the reasons why we had a more conservative approach for 2026. We are flexible enough. If the volumes are increasing more than expected, then, of course, we are flexible enough to deliver even more. But for the budget assumptions, we were very detailed in all of the different work packages. We more or less have different assumptions in terms of the build rates, especially when it comes from exclusion to machining to detailed parts and assembly. There's always a different set of rate assumptions because we see what's – demanded by the customers, but also we see what is happening in the supply chain. Overall, I mean, there is a steady increase from 25 to 26, which is still, given the industry we are in, I guess a very good place to be, but it's maybe a little less than anticipated by some of you.

And then maybe, you know, in the remarks, you mentioned you're winning more work packages. What is Montana's ability to take share here, you know, as you see it? You know, build rates are generally accelerating over the next couple of years, spirit being absorbed, fractured supply chain. Can you just talk a bit about those work packages you're winning and how we can think of the work package opportunity for Montana, you know, over the next couple of years?

Yeah, with pleasure, because this is explaining the business model we are. we are in and what we can deliver to the customer. And I guess it's always the customer who is giving us then the bigger packages and, of course, is willing to pay for it. That's the main topic. So a couple of years ago, we were winning packages which were maybe in the machining, maybe in the extrusion, Maybe we want also some packages and assembly for Vietnam, but none of them were really vertically integrated. Today, we are winning work packages from the raw material until the final delivery, which of course is giving us then the chance to also create higher margins because it's a win-win situation for customers but also for us. This will continuously go like this. We are approached by the customers for these kind of work packages, and we are definitely refusing single work packages out of one technology. That's not longer what we are after. We want to have the full packages, everything under our control, and that includes also the supply chain. So whatever we can build on our own, we want to be independent from any supply chain terminal. You see that today, and I guess it will continuously happen in the next three years, that there will be suppliers which underrated their inventory situation And there will be some impact from the supply chain in the next two years. At least that's my hunch. And we can go after packages where we are more or less independent from those impacts. And this is recognized also by the customers. You mentioned the Spirit takeover by Boeing. Yeah, of course. This will open up a complete new field of business because my guess is after the takeover, Boeing has to clean their portfolio first. and they are searching for reliable partners. We are in discussion with Boeing on some of the packages, and I'm very, very positive that we will find solutions also in the near future on them. What does it mean? I guess we will see the impact on these work packages maybe in 18 or 24 months. It will not influence the 26 numbers, but for 26, I guess with the current work statement, we are quite happy.

Thank you. And then I guess just one last one, I'll get into the queue. Can you just make any comments what you're seeing in the space market and as that economy grows, you know, where your exposure is and what your expectations are there? Thank you for the time.

Yeah, I guess you heard me saying in the first quarter earnings call and also in the second quarter earnings call, we are absolutely happy that we are winning more and more market share in the space. industry in the space market. On the other side, we always said that this is not the core business we are in because the changes in the space market for work packages are so fast. I would say it's ten times multiple compared to the aerospace business in terms of design changes, and it's by far faster. So they are looking for flexible partners. This is why we are winning the packages. We are faster than anybody else in the industry. And for the moment, we are quite happy of winning even more work package, even more market share with the space business. But as I said, I don't think on the long run, I'm not quite sure if this will be a sustainable inflow of revenue and EBITDA. So this is why also on the space, We have not this steep increase in 27, 28, 29, which is maybe in some other guidances visible. But I guess we are in our field in the industry for the space. I think we are also market leader on this one.

Well, is that clear enough?

The next question comes from . Okay. They're from . Please go ahead.

Good afternoon. Thanks for the questions. Maybe on Q3 free cash flow, can you just run through the composition of the 39 million cash costs relating to the asset divestment firstly? Thank you.

Yes, this is no problem. It's explained, of course, we looked at the impacts in the cash flow statements directly in the statement we published today. There's, of course, the disposal impact of the so-called discontinued operation as the net cash impact, but it's also the acquisition of intangible assets and property and plant, which shows a position in there. And together with the changes in assets, which you dispose, you come up with the total impact of this 39 billion. So it's assets minus assets. it's assets minus the cash which you, which we sold. So the impact is mostly that there was some cash impact also given to the, when you dispose the asset, IFAS looks at it in the case of what went out in this moment. And at the moment of the transaction, there was a cash impact or net cash, which was at the cost of around 50 million. So this is part of the cash flow statement. On the other hand, there was also a lot of debt, which was acquired by the new, let's say, shareholder or part of the energy segment, which also flew out. And it's not in the cash flow statement. So therefore, it's really hard to read. Sorry about it, but that's IFRS. Hopefully it explains. So you look at the balance sheet as it is. The cash flow statement, of course, shows only the cash impact directly, but not the disposal of net debt. The disposal of net debt is in the cash flow from financing activities. And there you also have the the impact of the reduction of the net end out of the AASTA transaction.

That's helpful. Thank you. The second one is on free cash flow. So you help to guide it to higher double-digit Euro million net cash position at the end of FY26. Can you just run through what you expect in terms of free cash flow for this year and next year, please?

On an operational basis for 2026, we guided 485 million adjusted EBITDA, or let's say EBITDA IFIS. There is a capex in the amount of higher double-digit amount included in the cash flow. There is low taxation still. There is also, it's not part of the cash flow, but also a lower interest rate expected. We have, we calculate with something around minus 15 million financial result of the, in 2020, 26. And we calculate with a high, the ABTA, sorry, with a more or less stable trade working capital. in absolute terms, even though the sales are increased, therefore a better percentage. And if you sum it up, you come to operational cash flow, which is in the amount of triple-digit amount. And even if you deduct on a comprehensive cash flow discussion, also deduct taxes and interest, you are at a high double-digit amount, million-euro cash flow or cash-in in 2026, so high cash conversion on the EBITDA. We always said that we intend to have a cash conversion of the EBITDA of 50% plus-ish. That's, I think, something we can achieve in 2026.

Thank you. The last one is just on the build rate assumptions. You mentioned no big changes in discussions with OEMs. Can you just comment about what you're seeing on the A220 with Airbus build rates in 2026 and 2027?

Yeah, with pleasure. Let me just add one comment to your question to the cash flow generation, because I have your market study in front of me, which you published on the 17th of October. And I definitely like to say there's no reason that I doubt what is in your own paper, and we are by far generating the best cash profile in the next five years, so the compound average gross rate in comparison to all our peers is by far higher, and this will remain. So there's no reason why we should put this in question, and even if you then compare a PE ratio, this is by around nine in 2030, compared to the median, which is around 25. This is why I'm always coming back to the environment, and I like to speak with data and with facts. And this is your own market study. This is why I just wanted to come back to it and give you some add-on on this one. In terms of the rate assumptions, I mean, there is clearly the path forward for the rate 70, 75 on the A320. Airbus published it. They want to achieve the 75. I think it's by the end of 27. Currently, they are evolving in this direction. As said, we have some different work packages which we are delivering to Airbus. If I start with the ASCO work packages, which is the being movable, so the flat tracks, the flat tracks, we are delivering for the A220 and the A320 out of ASCO Belgium. And there is a huge difference in terms of what we see as the announcements and what we see as the demand coming from Broughton in the UK, where they are assembling the wings. This is exactly what I was talking about when I was talking about the differences in terms of what you see as announcements from the OEMs and what we put into the budget. And I guess our budget assumptions are still different. very realistic, very serious and professional. So I definitely stick to them. We are in talks with Airbus if there is a higher demand coming up because the inventory levels are going down, then of course we are ready to deliver more. But I guess we, if you talk in rates, I guess we are always a little bit behind the announced rate of Airbus because the inventory levels are so high, especially in the assembly areas of Airbus themselves. If you take the 737, for example, I mean, I like to remind everybody the difficult times we have been through in the last three years with all the turmoil going within, the door blowout last year. And this created so much friction in the system. And my hunch is that in every of the single suppliers, and I'm talking about more than 10,000 suppliers still, There are so many different levels of inventory, and this is seen also in the demand coming through our extrusion facility, that we need to be very careful how we plan the volume and how we distribute it to the supply chain. This is why we definitely also see, in terms of the 737 announced rates, we are roughly always five shipsets a month behind what Boeing is seeing in their announcements. This is simply based on the fact that we deliver a lot of parts into the fuselage, and as said, there are still around 200 fuselages in Wichita, and I guess it will take at least two years until they have burned down the inventory to a normal level, and then, of course, we will participate also in the rate announcements which are given to the market. So this is the logic. We have been implemented in the budget, and I definitely guess there is some room for opportunity, no doubt, but after four years or five years in a row where I guess none of the UNs delivered to their announcements, I guess that our conservative approach was always the right way to go. Thank you very much.

The next question comes from Amy from . Please go ahead.

Thank you for taking my questions. I've got three, please. I've got to say, I still don't understand your guidance for 2026. So could you help us just with very simple numbers? What volume do you expect in terms of ship set in 2026 growth, in terms of growth for volume? What pricing you would see? What the effects assumption that you have for 2026? And then on the FX, I'd like to better understand your hedging policy because, again, I didn't understand your explanation. So I think you said 100% of your sales is in US dollars. 70% or so is naturally hedged, so you have an exposure of 30%. And last year, or this year, it's at 107, so you have no exposure on the EBDA of that dollar effect. But next year, you expect 119, so a big drop in the sales coming from the dollar effect, but you didn't explain what the hedging policy was and how much was your exposure. in terms of hedging to the dollar. So that would be helpful to have this number, please. And then the last question is, as volume should nonetheless increase over the next two years, when do you expect full capacity utilization to be reached, please?

Maybe I start again with the rates and the utilization. I like to start with a very concrete example, which I mentioned already. The ships that we are delivering into the removables or the wings of Borton, this year we will end up with around 640 ships on the A320. Next year, the current demand from Airbus is around 720 plus. This is what we have budgeted for. This is what I was talking about in terms of the rate assumptions and maybe the the rates which are published, these rates might be a bit higher, but this is not what we see in terms of the demand coming from the OEM directly. So, the second question, was it again on the rates? I'm not sure. 100% sure?

It was to make, because you give figures, but in terms of the translation in a model, it's impossible to actually see what volume growth you actually assume, because you say, okay, there may be some effects, but we have also hedging, sorry, effects that have to impact your 26 cells. So would you be able to just give us simple numbers like volume growth, pricing, effects, That would help understand the 26 guidance perhaps a bit better, please.

Okay. I mean, in terms of pricing, that's not easy in a call to give you a pricing assumption, but you see the revenue growth, you see the EBITDA growth, you see the margin evolution year by year, and this should give you some boundaries about how we manage the different volumes. And when it comes to the FX and the impact of the FX, I like to hand over to Michi here.

Yeah, simply said, as I said, concerning the pull rates, or let's say the, for us, necessary build rates, we calculate around. It depends really on the work packages or the certain parts, because in certain areas, a lot of inventory is still in the supply chain, sometimes more, sometimes less. And they said we are a bit more conservative concerning our expectations of the build rates of the OEMs. But we can calculate with around 10% growth on the pull rates, 2026 versus 2025. So with A320, depending again from two, we calculate with less than 800 ship set on a yearly basis in 2026. Again, depending up and more down from which part we are discussing, calculating always in the certain amount of inventory with the OEMs or T1s. For the 737, better growth, but still definitely not the 42, which is announced there. So also here we calculate with less than 40 depending again on the parts. All in all, plus minus around 10% growth from the pull rates, which is expected. If it comes stronger, we are happy. And also from the outlook, we don't think, for instance, we'll calculate with more than below 70%. for the A320 for the next years to come. So also here, we're a bit more conservative. Nevertheless, we think that we can always grow faster than the market in this area. Concerning ethics, yes, sorry about it. It is complicated, but it's the way we are. It's the world in the meantime we are living in. You're right. Almost all of the sales is calculated or is invoiced in U.S. dollars. is in general a U.S. dollar-based industry. Even if you invoice to a German, whatever tier, it's based in U.S. dollar. If you invoice to Airbus, it's based on U.S. dollar. So it's a U.S. dollar business, and all of the contracts, everything is done in the meantime in U.S. dollar. It changed also in the last years more and more into this direction. So around 95% of our total sales are completely U.S. dollar related. By saying that, you're right. Most of it is naturally hedged. So around 70% of this total sales is naturally hedged because we also try to supply or calculate our structure or base the structure concerning all the entities on U.S. dollar FX space. So the remaining amount is around 30% of our total sales, and therefore, as we invoice and have less U.S. dollar on our cost side, it's a U.S. dollar long position. This U.S. dollar long position, you're right, this year, as we have hedged most of the amounts for this year, is around 107%. calculated to the Euro, and next year we took the forward FX rates, which is usual also for this basis for the year 2026, and we calculate and give our guidance on a 119 FX rate. So 105, which was the beginning of the year, to 119 is 13% up. Well, let's say less sales, yes, for the total amount, and, of course, also an impact on the open position of 13% difference. Taking, to simplify the calculation, the $1 billion on total sales, 30% long position, so it's $300 million. $300 million multiplied with 13%, it's almost $40 million. It all impacts up and down more than 30 million, which directly, of course, impact the EBTA. You receive less. That's the simple topic. And this is also part of the guidance. So we calculate that on a like-to-like basis, if you want to compare it to the old guidance of 250, let's try a bridge. And the bridge was like 250 for 2026 based on a FX rate of 105. and more or less no tariffs. So if I compare this one, I take the energy segment out because this is not part of the guidance anymore. I reduce the remaining amount by the impact of the Fx, which is around 30 million. I reduce the remaining amount by around double out of security reasons in 2026, even though aerospace is mostly excluded, but some supplies are. So we end up with, on a like-to-like basis, 2024 guidance for 2026, 160. Now we show 185, which means we are 25 million better than what we expected at the beginning of the year, and this, I guess, signals the strong position we are in. Well, saying differently, in case the FX would be 105 to 107 again, and the tariffs on the supplies are coming not as strong as we expect for the guidance 2026, then we would end up at the EBITDA of 225. Now, coming to your last question, which is our hedging, our hedging structure, we can't hedge for the next 10 years. Simply said. What we can do is always to try best to mitigate the effects of the next year, which we do. And therefore, the bigger the long position is creating, we try to hedge naturally as good in line with our local-to-local strategy. Therefore, I think that also for the future, a bit less impacts on the long position, which has to be hedged by financial instruments, will remain, but not for the year 2026 yet. And the amount then is financially hedged as good as possible. So any time we see a good development below 119, which is the amount we calculate with for 2026. We try to hedge as good as possible our sales and therefore the impact on the EBITDA. Hopefully this explains. We had already some positions hedged at the favorable development we had in the past few weeks at 115, 116, but not all of the volume and therefore there's still some open positions. but I guess already now point part of the positive hedging impacts affected and will not happen to influence our EBITDA. Therefore, with the guidance with those hedged amounts should be more than secure and even over to be over achieved in 2026. Sorry, that's a complicated world in the meantime concerning the changes of DEFIX. It was not as heavily loaded on those topics in the past, but the industry changed. The industry changed concerning tariffs, concerning more local to local. The industry changed concerning everything in the meantime, even Airbus, the European company, everything to US dollar, and therefore also we have to guide on that point.

Okay, thank you.

The next question comes from Christian Bader from . Please go ahead.

Yes, good day, gentlemen. I've got three questions, and I'd like to do them one after the other. So first of all, if I look at your guidance for this year, you talk about more than 900 million. After achieving 712 million, it implies at least a turnover of 190 million. So while in the conference call, Kai said that he was confident that in the fourth quarter, turnover might be even higher than the third quarter. So this gets me to a group revenue number of 960 million. So why are you guiding so conservatively, or it seems so conservative?

So it was mostly by the EBITDA. We concentrated on the EBITDA concerning our statement. Hopefully, it's not misleading. So we expect a very strong EBITDA growth in the absolute and relative in the fourth quarter. On the sales, we are a bit more conservative, but you're right, there's upside potential. Nevertheless, concerning EBITDA, we think that we can more or less overachieve on a quarterly basis most of our last quarters by far.

Okay. My next question has to do with, again, with the guidance for next year. Can you maybe comment whether your adapted guidance for 2036 is purely based on the existing backlog?

Of course, there's some POs which are coming in, but I would say 95% as everything else is not possible. Otherwise, it's based on the existing backlog. We do have here, right, the contracted sales basis, which is worth more than $7 billion. What does it mean? We have contracts. We are more or less on exclusive terms for those parts by effect or single source by those topics. So, of course, we are dependent on the build rates or pull rates of those OEMs and Tier 1s. If they pull less to a certain extent, we have to digest it. Therefore, we are always a bit more conservative concerning certain assumptions also when we give our numbers. But on everything else, yes, you're right. It's based on the present water backlog.

Just to confirm, you said 95% is based on the existing backlog.

Yeah, there's some ups and downs, I would say even up to 100%. Everything is based on contracts, but there are some points where they would like a bit more, some parts are missing from some other suppliers, and then we try to jump in.

Okay, I see. And my next question relates to the sale of the energy segment. You gave the percentages in terms of proceeds that you expect. What are the actual amounts of cash inflow that you expect?

The total impacts on the net debt would be far over 200 million. Of the total of the transaction we have shown on this one page of total aspects, yes, it's far over 200 million.

Is that including the earn out or excluding the earn out?

It's including the earnout. Yes, here we have to be fair. It's including a certain amount of earnout. As we said, she calculated with more than 40 million, but this is in this case with 40 million, and this is including also the earnout.

Very fine. Okay. But you reported a cash out of 51 million from the disposal in the third quarter now.

As I said, the net debt reduction is not shown. IFRS in this aspect is, sorry, it's not our invention, not as easy to read, but the cash flow shows only if the cash is going out cash, but it's not showing the cash flow, the net debt, which is reduced by all the transaction as the assets for disposal also includes some net debt position.

Okay. That's it for me. Thank you. You're welcome.

The next question comes from Beltran Palazuelo from DLTV. Please go ahead.

Hello. Good afternoon. Thank you for taking my questions. I have a couple. First of all, regarding the aerospace capacity with, let's say, with the euro-dollar at 119, could you repeat what is the current capacity? And if I'm not wrong, in October you put a press release that you are increasing capacity of the So the machinery, so just if we could know what is the maximum capacity and when do you expect to reach it? That would be my first question.

I can take this. I can take this. I guess it's a quite easy one. We always said we are good for 1.2 billion in terms of the installed capacity right now. It's an easy one to install further machines to increase even this capacity we have overall. utilization right now depending on the technology. I would say in some areas around 85% and in other areas still at 70%. So there's still room for further load, for further volume, but this is where we are still in, yeah, this is still the volume we can produce.

So with our Eurodollar change, maybe instead of 1.2, 1.1 So has this changed with the change in ethics?

Yes, of course there's a change in ethics. Whenever the dollar is weaker, then of course the revenue will also be influenced by it. But overall, I like to do the like-to-like comparison. And we said in all of the last earning calls, we always mentioned it's around 1.2. Maybe with additional machines it's a little bit higher. And if you compare the like-to-like, it's still there.

Understood. Thank you. Thank you very much. And then my second question would be, no, you were talking about your integrated value chain. So my question would be, how sustainable is your current competitive advantages? And then the second question would be, if you are long in dollar, no, and maybe I suppose that some of your competitors maybe are not as long as you in dollar terms, does the let's say the euro appreciation and your cost appreciation, does it erode your competitive advantages or not?

Also, the value chain is something we constantly optimize. There's still room to move forward. So therefore, we think our competitive advantage is still quite huge. Please note, if you would start on a greenfield basis right now, error structures, investments, you would not see any sales before in seven years. It takes such a long time to install it, to get the certifications, to apply for contracts, then to industrialize. So it's a very long period of time. Of course, other companies don't sleep. They also try to mitigate this way or that way, optimize, not maybe in the value chain, but mostly concerning base cost manufacturing footprint countries. But I guess our situation is extremely favorable, and there's a concentration of the suppliers to the OEMs anyway, so there's enough, more than enough to share, and here we're in a very strong partnership position where it's more selective in partnership with discussions with the OEMs than competition. Concerning the FX, which you also mentioned, Bertrand, you're right in case you would be as a company completely in U.S. dollar, naturally hedged completely, you would be on the first glance not having impacts out of the FX, but you would have other issues. So at the end, it equals out. So for instance, there are other issues concerning also FX. maybe then tariffs or other areas where you're then heavily impacted. So we don't think that we are, in contrary, I think that in comparison to our European and worldwide acting competitors, we have a much higher local to local basis than many of them. Therefore, also a higher chance and also percentage of natural hedging. And therefore, we think that they're quite good situated, but still it impacts.

Great. Thank you very much. Only two more. Sorry about the questions. Regarding now, maybe M&A, it's great to see that you conservatively are guiding for a high single-digit or high double-digit, let's say, net cash position for the end of 26, of course, if your buyer pays you. A good point. So if you, if I'm not wrong, say that maybe your max capacity, you do not want to go maybe over two times. Of course, if you buy something, which if you buy it now, and it's a US dollar industry, you can buy it at a better multiple. So your firepower will be around 500 million euros. What are your plans? What are you analyzing? It's good to see you in the next 12 months with a lot of firepower, but what are your plans? And if there's no plans, dividends, buyback, if the stock were to- Yeah, thank you very much.

We will proceed to propose as a management to the General Assembly a dividend for the year 2025 and therefore to be paid out in 2026. We think it's feasible to at least propose it and hopefully it will be also decided. That's one aspect, but still it would leave us with a good cash position in the high firepower. What is it supposed to be used for? Yes, we are looking at M&A constantly. Also this year we had, for instance, two larger targets where we quite put some effort into it, but at the end we didn't pull back. We pulled back in terms of not letting us into a discussion to buy too expensive, because we look at it, it must be always super highly critical. Otherwise, we concentrate more on the second area, which is just to take over the workload and do CAPEX, strategic CAPEX. And right now, to give you a bit more guidance on that point, There are two topics which we look very carefully right now for more strategic topics to integrate in certain areas in comparison to an M&A transaction. And I guess we will see this way or that way something where we can show something to the market in the second half of 2056. This is the one point. For the 500 million, I just received a letter from the firepower from a bank signed by also the management of this large commercial bank, and they just said they gave us a line of 500 million firepower for a day. So not the only one who sees this firepower is Montana Aerospace, and this was also printed in black and white also by a commercial bank to us. So we see the thing that we have some firepower, and we will do something with it.

Great. Thank you very much. So maybe the last question. Now that you have a great balance sheet, and it will look even better going forward, what will be the, let's say, the cash interest in 2026? Because it's, you know, quite puzzling to see year by year now that they're going to be in net cash, but let's say the cash interest are high. Yeah.

Yeah, you're absolutely right. We count with around an impact of 10 to 15 million on this. Still, you have to see even if you're cash positive, then by the year's end, on a monthly basis, you have to work with it. There's still some line which you need at the end. It is on a daily basis, cash pooling back and forth. So we count with a total interest rate of around 10 to 15 million for the next year, also cash impacting the company. All the support.

Thank you for the answers and the hard work.

You're welcome and we try our best at least.

Ladies and gentlemen, due to time restrictions, that was the last question for today. I would now like to turn the conference back over to Michael Pistower for any closing remarks.

I think there's a lot of questions and therefore a lot of interest in Montana aerospace. We're extremely proud and happy about it. We try our best also to outperform in the future. Now as an aerostructures-only company, I guess also the evaluation of our development within our peers and our constant outperformance should be seen a bit easier, and we're looking forward to that one and hope to see and hear you in the next earnings call for the full year 2035.

Ladies and gentlemen, the conference is now over. Thank you for choosing Coral School and thank you for participating in the conference. You may now disconnect your lines. Goodbye.