Montana Aerospace AG

Ladies and gentlemen, welcome to the Montana Aerospace H1 2026 conference. I'm Mauritz, your chorus call operator. I would like to remind you that all participants will be in a listen-only mode and the conference has been recorded. The presentation will be followed by a question and answer session. If you would like to ask a question from the webinar, you may click the Q&A button on the left side of your screen and then click the raise your hand button. For written questions, please use the Q&A button and then the text button and type your questions. If you are connected via phone, please press star followed by one on your telephone keypad. For operator assistance, please press the operator assistance button on the bottom left side of your screen or star zero on your telephone. At this time, it's my pleasure to hand over to Patrick Maurer. Please go ahead, sir.

Welcome everyone to the half year one 2026 earnings call of Montana Aerospace. Quarter two, and therefore the first half of the year 2026, represent another chapter in Montana Aerospace' strong track record of revenue and results growth. As said, my name is Patrick Maurer, CFO of Montana Aerospace, and today I'm joined by Vicky Welvaert, our CHRO, and as always, Marc Vesely in investor relations. In today's call, we will take you through the key developments of the first six months. Our financial performance, the balance sheet and cash flow development, as well as going a bit deeper into selected strategic growth areas, giving some further insight into capital allocation priorities, and finally have an outlook for the remainder of 26 and 2027. But before we go into the numbers, I want to bring us all back on the same page Why we in Montana Aerospace achieve industry leading performance in the aerospace industry. Over the past years, we have sharpened our portfolio significantly. This started with this divestment of the e-mobility segment in 24 and energy in 25. And we now have a clear profile that allows for better comparability and through the proceeds of these divestments, also strengthened financial resilience. Our ambition from the beginning was to build an aerospace platform that is different from the traditional fragmented model that we typically see in the industry because we want to be a game changer in the aerospace supply chain. And that's not a slogan. It's based on concrete industrial capabilities that we see here on this page again. One and foremost, our vertical integration that starts with partially chips recycling, metal chips recycling, casting, extrusion, and then going into the machining and assembly. So the full supply chain. And what it brings for our customers is reduced complexity, improved lead times, sometimes substantially improved lead times, and of course, reduced transport and qualification cost and complexity. And that, of On the second side allows us as Montana Aerospace to capture more value than other players in the industry. Second, our setup is based on a largely best cost country manufacturing footprint across all key regions in the aerostructure industry. And that's critical to be close to the customers, but also to ensure we are cost-wise competitive in the long run and also in the short run. and this is an outcome of our heavy investments over the last decade. Third, we have a high material competence in Montana Aerospace in aluminium, steel but also titanium with a portfolio that ranges from structural components for fuselages, wings and landing gears to very complex engine components. If we continue our processes and our long Long-term know-how and industrial experience gives us the required know-how and IP in order to really excel in this industry. And finally, and important to mention, through our integrated setup and being, let's say, where the customer is, ESG is deeply embedded in our business model and allows us to solve ambitious sustainability goals, but also brings added benefits for the customers, as we have just discussed. And with that, Montana Aerospace not only participates in the aerospace industry and in the ramp up, but we, with our model, address structural issues that our customers face today. And if we look on the next page, what it means is that We have a strong commercial aerospace order book above 7 billion euros by now and are best positioned to benefit from the growth and the very positive momentum that we currently see in the industry. And the 7 billion come from just 3.9 billion in 2021 and underlie the progress we have made in expanding our position across all the different aerospace platforms and winning additional market share. And what is important to mention here is that our order book is also qualitatively very strong across all narrowbody, widebody and business jet platforms, as well as military transportation aircrafts such as the A400M. The way it's calculated is rather conservative. So we basically take our contracted ships at value per plane. multiply that by the duration of the contracts we have with our customers so typically somewhere between five to seven sometimes even more years and then multiply that with our Montana build rate assumptions which are for sure more conservative than the OEM build rates and therefore give us let's say an upside potential so we are basing our plan on a prudent view of what we believe can be achieved and still benefit from the strong long-term industry demand and momentum that we see. If we now switch to the financial performance of half year one, we can see that we have a nice sales growth of 12%. and this despite the fact that FX rate in half year 1.25 was around 1.17 for the US dollar euro exchange rate and now in this year was around 1.09 so that took a bit away of the dynamic but nonetheless the performance is very positive and important to mention is that this growth was purely organic so without any acquisition or other dilutions Driven by increased volumes and additional market share wins in the aerostructure segment and other interesting industries or related industries. EBTA was 87.1 million in 2026 half year one, which also corresponds to a growth of 12.2%. And the EBTA margin was at 16.8%. And here I would like to highlight that there were no adjustments made in the EBITDA 2026. So it's a, let's say a pure EBITDA without anything to consider or without anything to adjust for. And what I also like to highlight is that the error structure segment again performed very strongly. So the growth there, again, without taking a fix into account was over 13%. and EBTA growth in the aerostructure segment was over 16%, bringing us to a strong 18.3% EBTA margin. So overall, sales are growing organically, EBTA is increasing and most importantly, margins are resilient and improving where it matters the most in our aerostructure segment. When we switch then now to the next page, it's a pleasure To present to you that the operating leverage that we have allows us allows the results basically to flow through to EBIT where we see a 2022% increase and to the final result of the period which is at around or almost 30 million euros We have also not seen a negative impact from the non-cash FX impacts that we saw last year because the US dollar didn't weaken further compared to December 2025. And as a consequence, the earnings per share have heavily increased to 0.47 euro from just 0.1 euros in half year one 2025. The key takeaway is that our business is converting operational progress into bottom line improvement. And we're not only growing sales, we're seeing the benefit through EBITDA, EBIT, net result and earnings per share. And that is an important proof point for the scalability of our platform. If we deep dive a bit more into the air structure segment, I like to highlight the path where we came from. So only three years ago, we were standing at around 10%, a bit above 10% EBTA margin, despite the pretty strong US dollar in that timeframe to now, just three years later, where we are very well on track towards our 20% EBTA margin in the air structure segment. That means over a timeframe of three years, we were able to almost double the margin profile in our aerostructure segment. We invested heavily in this last decade in capacity, process capabilities, our best country footprint and program readiness. And that naturally came with, let's say, fixed costs and industrialization expenses and a certain underutilization at the start. But now as the volume continues to grow and we more and more utilize our assets and our asset base, our platform sees better margin and strong operating leverage. And that we expect to certainly continue going forward. Let us now switch and address our cash flow, working capital and balance sheet progress. In half year one, Montana Aerospace generated a free cash flow of 67 million including as we know the first proceeds from the energy divestment and if we go through step by step to the different contributors we see a cash flow from operating activities of 26 million which is behind half year one for two main reasons one is an inventory increase from the pre-buying and the higher pricing of metal pass-throughs As you know, driven by the Middle East situation and crisis where we started early on to secure our supply chain to not see any impacts and any production limitations for the rest of the full year. So that's clearly an impact on the inventory that we saw in this first half year. In addition, of course, to the higher business activity. And the second equally important factor is that we do not factor anymore a customer who was last year still in certain financial difficulties and therefore we had to mitigate and reduce the risk by having non-recourse factoring in place but this we stopped entirely for that customer and has of course a certain impact in this first half year of 2026. Cash flow from investing activities of 41 million roughly is positive because of the proceeds from the energy segment. And of course, we will come to a bit more details on the further investing activities and capital allocation relating to it in the upcoming slides. From the finance perspective, we just paid back part of the term loan, as you know, and I have some movements there back and forth. but overall in a continuous and very strong financial position, also having quite large credit lines open that are currently largely unused. If we switch to net debt, we see further progress and improvements compared to December, 2025. So substantial ones, as you see from a 0.8 to 0.4 leverage, but also compared to Q1, we see a certain slightly better numbers than in Q1, 2026. And with that, we are fully on track to a cash positive position at year end as we have communicated before, driven by our positive operative free cash flow and on top then the proceeds from the energy segment that we already saw and that we still expect in the second half year of 2026. Working capital, as addressed before, saw a certain increase to above what we consider best practice. However, with clear reason behind, as I said, the inventory build up to have a resilient supply chain for the rest of the year and start in 2027 and the certain impact from factoring that we need to progressively improve through better terms and conditions with customers and suppliers. Let me then turn to say a bit more on two further strategic growth platforms where Montana Aerospace is present and very well positioned in, defense and space. And starting with defense, we are proud, as we have announced, to expand our strategic partnership with Lockheed Martin and have further program content included in our books. with, as typical for the aerostructure industry, long-term production visibility, long-term contracts, and clearly a planability and partnership that we are proud of. But in addition to that, we are proud and very positive that there's further growth potential with two other, or many others, but in more concrete discussions with two other leading European defence players and there we expect to have more clarity on the outcome and what that means in terms of sales and potential margin benefits for the years to come in the second half of the year. If we then turn to the second growth pillar space, which has become a very meaningful growth platform to Montana Aerospace, and where we see revenues developing towards 10% group revenue in 2026. Here I'd like to highlight that our vertical integration again was the basis that customers are coming to us because of fast lead times, because of reliability, a competitive cost setup and fast engineering capabilities that allows them and us to dynamically provide innovations and provide products also for this sector of the aerospace industry. And the result is that what was an opportunity just three years ago is now one of our key growth drivers, as said, going towards 100 million in sales per annum and with very strong momentum and perspective in the years to come. as you all know from different IPOs in that field and all the things that are happening there. What I also like to mention and highlight here is that we are not only focused on one single platform or one single product but we are part of different generations, different platforms and more and more working towards also a broader customer field in that segment or in that industry. yeah let us now address the capital allocation and knowing that we move towards a net cash position in the course of the year we have of course discussed together with the board how to create value for our shareholders and have agreed basically on a certain framework of a capital allocation so one Step of that is seeing through our business wins, seeing the capacity requirements in the aerospace commercial industry, but also these two additional growth platforms and the impact and importance of being in different regions. We have decided in addition to the maintenance cutbacks or standard cutbacks of around 50 million that we have discussed with you in the past, to add an additional 30 to 40 million per annum in the next two years at least for agreative margin projects and growth cutbacks. And that's not related to only a specific area or one site, it's related to all geographies and markets. and it's both as said market wins where we partially need just additional machinery or strategic projects where we continue our integration and further strengthen our independence from the rest of the supply chain. And obviously that in the long term will increase to also bring our platform to the even next level to where we are now. Okay, I think we can, Then with that, continue. Here we see the consolidated supply chain in aerostructure on the left side, which still gives room and attractive opportunity in the end to de-complexify the aerostructure supply chain. As many specialist suppliers are small, have very limited integration, sometimes financial troubles, and can become a source or are a source of uncertainty in the ramp up environment for the OEMs and tier one customers. And there our approach is something that the customers really appreciate and where we gain a lot of traction. And of course, in terms of M&A, we remain disciplined and selective to what adds really value to our supply chain. And in most cases, it has to be in alignment with the OEMs. and there are often alternatives on the inside to have brownfield or additional investments to just win packages and market share instead of purchasing one of the current suppliers. But nonetheless, the conclusion is that the supply chain consolidation overall remains a meaningful value creation opportunity for us, clearly both on the organic side, but also potentially on the inorganic side, should interesting opportunities come up. When we switch to our guidance, I believe the strong half year one, 2026, is the best example and the best concrete support for 2026 and 2027 guidance. So we remain very confident in these figures and believe in clearly a sales number above the 1 billion euros. and adjusted EBTA, which will be probably the same as the reported EBTA as in half year one of above 185 million. And then aerostructures segment margin moving to the 19% range, depending a bit on the cost side and what we pass on there. But it's just a flow through basically. Cash conversion excluding or before gross capex that I just mentioned and before M&A remains a target to move towards 50% this year and above 50% in the years to come. And with that, I believe we are well set up to achieve or overachieve our guidance. and are open and happy for our discussions with you all now in the next minutes to come.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of the screen and then click the raise your hand button. For written questions, please click the Q&A button and then the text button and type in your questions. If you are connected via phone, please press star followed by one on your telephone keypad. 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 the lower your hand button from the webinar or press star and two on your telephone. Anyone who has a question may queue up now. One moment for the first question, please. and the first question comes from George McWhither from Berenberg. Please go ahead.