Thales S.A.

Good morning ladies and gentlemen and thank you for standing by. Welcome to Thales Q1 2026 Order Intake and Sales Conference Call. The presentation will be held by Pascal Bouchier, Thales CFO. It will be followed by a question and answer session. If you wish to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded. I would now like to hand the conference over to Mr. Louis Gonnet, VP, Head of Investor Relations. Please go ahead, sir.

Thank you. Good morning, all. Welcome and thank you for joining us for the presentation of Thales Q1 2026 Order Intake and Sales. I am Louis Gonnet, Head of Investor Relations at Thales. With me today is Pascal Bouchard, Chief Financial Officer of Thales. As usual, this presentation is audio broadcasted live on our website, thalesgroup.com. where the slides and press release are also available for download. A replay will be available soon after the end of the event. With that, I'd like to turn over the call to Pascal Bouchard.

Thank you. Thank you, Louis. Good morning, everyone. Let me start with Q1 2026 highlights. I'm now on slide two. We wish today a robust first quarter 2026 that reflects the continued positive momentum across our businesses. Order intake was sharply year-on-year, driven by the high level of demand for Thales products and solutions in a global supportive market environment. Even though I would like to reiterate that looking at order intake on a quarterly basis can be misleading, this performance illustrates the relevance of our premium portfolio, moreover in light of the current events. Sales posted almost 10% organic growth in the quarter, with a particularly strong performance in defense. This strong start to the year reflects both the quality of our backlog and continued solid execution across programs. Q1 also saw the continuous enrichments of our offer, notably in defense. We are already well aware of Calais' technological leadership and the increasing efforts we put on innovation. And this is a new testimony with solutions increasingly powered by AI. We indeed introduced Skydefender, a multi-layer and multi-domain air defense dome designed to provide full protection against the growing complexity and diversity of aerial threats. Sky Defender naturally includes the SAM-T-NG for mid-range air defense alongside other multiple Thales solutions to also address short- and long-range threats. We also unveiled Expeditionary Pathmaster, a turnkey system that enables the conduct of full naval mine countermeasure missions. These leading offers, both boosted by our AI algorithms, illustrate how Thales is combining advanced technologies with operational expertise to deliver differentiated solutions that are more than ever at the heart of our clients' key priorities. Finally in space, Thales once again demonstrated its role as a trusted partner for its clients' sovereign capabilities. Thales Alenia Space was selected to supply a defense geostationary communication satellite to Luxembourg. This contract highlights our ability to support governments with strategic space capabilities and confirms the strength of our positioning in a domain that is becoming ever more critical for national autonomy and security. Overall, Q1 was a very solid quarter in the context of our 2026 objectives. Moving on to order intake on slide three. Q1 2026 order intake was strong and amounted to 4.7 billion euros as of end of March. which is a 27% organic growth versus Q1 2025. The commercial momentum remains strong across our businesses and in particular defense. Large orders were a significant contributor to this performance. Seven of them were booked at group level in the first quarter this year for a total amount of 1.6 billion euros against five large orders last year. Two large orders were booked in space, of which the Defense Geostationary Communications Satellite for Luxembourg I already mentioned. Five large orders were booked in defense this quarter. Among them, the SAMTI-NG order from Denmark, as well as an air surveillance contract for Qatar, comprising various Grand Master WADA. Besides large orders, the high granularity of order intake is also a source of satisfaction and resilience. In terms of value, the orders with a unit value below 10 million euros were again up year over year, and they accounted for half of the orders recorded in Q1, 2026. It reflects the strength and diversity of demands across our businesses. Well, finally, the performance by regions. Order intake was particularly strong across Europe and Middle East this quarter. Two regions that are seeing strong demands. Moving on to sales on slide four. Sales amounted to 5.3 billion euros in Q1 2026. and grew by 9.7% organically versus Q1 last year. This performance was primarily driven by defense, where sales increased by 14.3% organically. Aerospace also delivered a good quarter with organic growth of 5.9%, driven by both avionics and space. Cyber and digital recorded a 2% organic growth. From a geographic standpoint, growth was well distributed. Both mature and emerging markets showed solid sales growth and contributed to the overall performance. In mature markets, Europe posted organic growth of 11.8%, while Australian New Zealand grew by 14.3%. In emerging markets, which grew by 9.8% organically, the quarter, Middle East was particularly strong with a 29.8% organic growth. This broad-based dynamism underlines the strength and the relevance of our positioning with customers worldwide and our capacity to deliver. A word lastly on technical impact. Scope was not material this quarter. By contrast, currency effect was significant, mainly due to the year-on-year evolution of the euro against the US dollar. Overall, currency led to a 2.5 points headwinds on reported growth. Let me now turn to performance by segments, starting with aerospace on slide five. Order intake in aerospace remained at a solid level in the first quarter and amounted to 1.5 billion euros, up 1% in organic terms. The too large orders booked in space offset the absence of large orders in avionics this quarter, while Q1 last year benefited from a specific large order booked in avionics. This reflects the natural lumpiness of order intake from one quarter to another, while underlying demand trends remain solid. To that extent, original equipment in our avionics business notably saw good order momentum in the first quarter. Sales reached 1.4 billion euros in Q1, and posted robust organic growth of 5.9% over the period. Evionics saw continued growth on a demanding comparison base as Q1 2025 sales were already up by strong double digits. This highlights the continued good level of activity across our end markets. While the current conflict in Iran had a negligible impact on Q1 performance, it could weigh on the aftermarket business from Q2 and onwards, depending on the evolutions of air traffic in the short to mid-term. In space, sales growth was also solid, notably supported by the progressive contributions of orders booked in 24 and 25, which are now moving into executions. On a reported basis, total sales growth was impacted by foreign exchange. Moving on now to defense on slide six. Defense delivered a solid start to the year, with order intake in the segment that amounted to 2.2 billion euros in the first quarter a 75% organic growth. Five large orders were booked in Q1 2026 compared to one in the same period last year. This strong order intake reflects ongoing commercial momentum across our entire portfolio and in all domains. The recent events and the global geopolitical climate highlight more than ever the relevance of status capabilities supported by the depth of our portfolio. Two critical domains where Thales technologies and positioning is considered as best in class are particularly in the spotlight, namely air surveillance and defense and mine hunting capabilities. Perspective in those two areas are stronger. Sales amounted to 3 billion euros a robust 14.3% token growth. This performance was a result of sound program execution and was supported by further deliveries in a context of production ramp-up. We saw sustained momentum across the board, notably in the airborne, naval domains, as well as sensors and effectors. Moving now to slide nine. Excuse me, moving now to slide seven. Cyber and digital sales amounted to 0.9 billion euros and delivered low single digit sales organic growth in the first quarter, in line with the phasing anticipated for the year. In cyber, the year started slowly, as expected, with slightly negative organic growth. We anticipate a gradual and progressive growth recovery over the coming quarters. In digital identity, sales posted good organic growth as they were up 4%. This performance reflected continued sustained momentum in digital solutions, both in payment solutions and in secure connectivity. By contrast, payment counts still saw low volumes as expected. Torex's impact was overall matter to report its sales growth over the quarter. Concluding now with our financial objectives for 2026 on slide eight. The fundamental underpinnings of the group's activities are robust, supported by structurally favorable trends and offering strong visibility on the group's growth trajectory. We also remain attentive to the evolutions of the global geopolitical situation and its potential short and mid-term effects. In that context, the robust first quarter and the visibility we have are giving us confidence to confirm all our objectives for 2026. Book-to-bill ratio will be above one, Sales are expected to grow organically between six and seven persons, corresponding to a range of 23.3 to 23.6 billion euros. And the adjusted EBIT margin is expected between 12.6% and 12.8%. Many thanks for your attention, and I will now be pleased to answer your questions.