Thales S.A.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Thales Q3 2026 order intake and sales conference call. The presentation will be held by Mr. Jeremie Papin, Thales CFO. It will be followed by a question and answer session. If you wish to ask a question, you will need to 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 will now like to hand the conference over to Mr. Louis Igonet, VP, Head of Investor Relations. Please go ahead, sir.

Thank you. Thank you. Good morning. Welcome and thank you everyone for joining us for the presentation of Thales 9 Months 2026 Order, Intake and Sales. I'm Louis Igonet, Head of IR at Thales. With me today is Jeremie Papin, CFO of Thales. As usual, this presentation is audio broadcasted live on our website, Thalesgroup.com, where the slides and the 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 Jeremie Papin. Thank you, Louis, and good morning to everyone. Let me start with the Q3 2026 highlights on slide two. First, Thales recorded continued strong commercial momentum over the third quarter. which translated into a solid level of order intake over the first nine months of the year driven by space and defense. Demand for our solutions remains high in a context of increased defense spending from many countries in Europe, but not only. Sales also recorded a robust growth in the third quarter driven notably by strong project execution across businesses. Continued efforts in capacity ramp up in defense and confirmed growth trajectory in our cyber business. From a strategic standpoint, Thales keeps driving innovation in its markets with the launch of several premium high-tech solutions this quarter. In September, we unveiled Hexaforce, our next generation AI-powered multi-domain command and control system designed for NATO and allied nations. It builds on the capabilities of Cortex, our AI accelerator, where 800 engineers and data scientists collaborate. Our ambition on the next-gen C2 market are strong, and ExaForce, which is available from now, will be a key asset. In cybersecurity products, we launched Luna8, our next-generation hardware security module designed to protect critical data and applications against ever-increasing cyber threats and prepare our customers for the post-quantum era. In space, during Q3, the IRIS Square program took another important step forward. Thales Alenia Space signed in September a letter of agreement with the TELSAT to provide the governmental payloads for the 330 IRIS Square telecommunication satellites in low Earth orbit. This major contract confirms our role as a key industrial partner of this flagship European sovereign program, with a total of 3 billion euros awarded to Thales Selenia Space, including some orders already booked over the last 12 months. Moving on to the order intake year to date on page three. I would like you to remember three key highlights. Our order intake is growing, granular, and well spread geographically. So first in terms of growth, Our strong commercial momentum has allowed us to book 19.1 billion euros of new orders over the first nine months of the year. This is a 15% organic growth over the same period last year. Second, granularity. As you can see on the chart, our order intake remains highly granular with orders below 100 million representing over 60% of total intake. On top of those, The momentum in large orders has been a key driver of order intake growth in 2026. 29 large orders have been booked over the first nine months of the year, 11 of which in Q3 alone. This compares to a total of 28 larger orders booked over the same period in FY25. Out of those 11 orders booked in Q3, Defense accounted for nine large orders with several contracts for air surveillance and defense, effectors, naval solutions, and a new contract related to the development of the Rafale for France. Space contributed two large orders, including the contract related to Iris Square mentioned earlier, underscoring our strength in the strategic and sovereign domain. One data point to note, 80% of our order intake since the beginning of the year came from outside France. a further proof of the strength of our multi-local platform. France, which accounts for 20% of the order intake, grew by a strong 47% year on year, which includes in particular three contracts related to the development of the F5 standard for the Rafale. Looking now at the 80% of order intake coming from outside of France over the first nine months of the 2026, the momentum remains driven by Europe, but also by the Near and Middle East where new orders grew more than 200% year on year. Moving on to slide four, fueled by continued momentum in Q3, sales organic growth reached 8.1% over the first nine months of 2026. This performance was in particular driven by defense which delivered double digit growth in Q3 supported by the continued ramp up across the whole portfolio. Aerospace showed good momentum as well with growth in space, with solid growth in space. Finally, cyber and digital was slightly up over the first nine months. As expected, cyber showed a confirmation of the growth trajectory in Q3. Geographically, we maintained a balanced performance reflecting Thales' strong positions worldwide. Importantly, our mature market showed 8% organic growth over nine months, fueled notably by Europe. And emerging markets, which account for 40% of the organic growth over the first nine months, sales increased by 15.8%, including contribution from Near and Middle East, where sales are now growing by 49% year on year. A quick comment on currency and scope. While scope impact is not material over nine months, Forex remained negative year to date, despite a positive contribution in Q3. Now moving on to performance by segment starting with aerospace on slide 5. Order intake in aerospace reached 5 billion euros up 29% organically over the first nine months of 2026. This performance was driven by space where strong institutional demand is fueling the business momentum. Seven large orders were booked since the beginning of the year including Nearly 500 million orders for IRIS Square and several contracts notably in Qatar, Spain or with the European Space Agency. Sales in the segment amounted to 4.2 billion euros, up 4% organically. This includes a 7.8% organic sales increase in Q3 following an H1 that was impacted by one-off items in space. Excluding these H1 items, space has been delivering strong underlying organic sales growth over the first nine months and a particularly strong Q3. Avionics were up over the nine-month period, showing ongoing growth on high comps. Importantly, the impact from lower air traffic, notably in the Middle East region, remained limited on our aftermarket business in Q3. Overall, aerospace continues to demonstrate strong momentum with both order intake and sales showing good growth. Now moving to defense on slide six. Order intake in defense reached 11.3 billion euros, up 14% in total in organic terms over the first nine months of 2026. This performance reflects sustained commercial momentum supported by increasing budgets for military equipment for our customers both in mature and emerging markets. Twenty-two large orders were booked over the period, of which nine in Q3 alone. Demand remained strong in particular in the naval domain, in effectors, and in air surveillance and defense. Thanks to a premium multi-domain, multi-layer offering and its best-in-class products in air defense, Thales is ideally positioned to address customers' most critical needs. Defense recorded double-digit sales growth in the third quarter, leading sales over the first nine months to reach €9.4 billion, up 13% organically. The main drivers behind this performance were the continued ramp-up in production capacity, helping Thales to meet increasing customer demand and strong project execution. Overall, Defense Delivery momentum with both order intake and sales efficiency significantly up year on year. Moving on to cyber and digital on slide seven. Sales in the cyber and digital segment reached 2.7 billion euros over the first nine months of 2026, slightly up organically. First, cyber, where sales were up 2.5% over the first nine months. In Q3, sales were up 4.3%, Organically, confirming the growth that we published in Q2. In a growing market where the relevance of Thales products and solutions is stronger quarter to quarter, the group is firmly committed to pursuing this growth path going forward. Those growth perspectives are supported by our innovation capacity with the launch of new products such as the new HSM Luna 8, and the strengthening of our data security posture management offer to address ever-growing risks linked to widespread absorption of AI. In digital identity, where sales were slightly down in organic terms, remember the comparison basis given last year one-off in secured connectivity. Digital solutions in both payment and secured connectivity recorded strong momentum over the first nine months of 2026. Not fully offsetting the current impact of lower volumes for physical products. I will conclude with our financial objectives on the current year on slide 8. The momentum in Q3 for both order intake and sales and strong perspectives make us fully confident to achieve the financial targets set for the year. A book-to-bill ratio above 1.1. and cells that are now firmly expected at the upper end of the plus six to plus seven guided range for organic growth and potentially beyond. The adjusted EBIT margin is expected between 12.6 and 12.8%. Many thanks for your attention. I will now be pleased to answer your questions.

Thank you. Ladies and gentlemen, we will now start the question and answer session. As a reminder, if you wish to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. First question comes from the line of Chloe Lemarie from Jefferies. Please go ahead.