Avio S.p.A.

Good afternoon. This is the Coruscant Conference Operator. Welcome and thank you for joining the Avio First Half 2026 Results presentation. All participants are in listen-only mode and after the presentation there will be a Q&A session. At this time I would like to turn the conference over to Mr. Nevio Quattrin, Head of Investor Relations. Please, go ahead, sir.

Good afternoon everyone and welcome to First Ops 2026 Results Conference Call of Avio. I'm with Mr. Giulio Ranzo, Chief Executive Officer of Avio, and Mr. Roberto Carassai, Chief Financial Officer.

In a moment we will go through the presentation we just uploaded a few minutes ago on our website. At the end, as usual, we will welcome any questions you may have. At this time, I turn the conference to Giulio. Please go ahead.

Thank you, Nevio, and good afternoon to you all, or good morning. Very glad to report to you the first half of 2026. Nevio, can you jump to page four? So we start with the highlights, and then our CFO, Roberto, will follow with some more financial details. So if we are on page four, so in essence the first half of 2026 demonstrated again a sustained and solid double-digit growth in revenues and profits. So very consistent across the last few years as I will point out to you in a few minutes. So in this first half we accomplished the 29th flight of Vega with a successful performance for the very first time with Avio as the non-service operator, which is a very relevant incremental responsibility we have. As you know, this was ended from Ion Space to Avio at the occasion of the last flight. Everything went extremely well. Now we are getting ready for the next flight on Monday night, and we will launch a couple of satellites for the European Commission and for the European Space Agency. In this first half also, we successfully flew the new version of the first stage of Agassi M-9-6, the P-160 boosters, which flew on Ariane on an Amazon flight with four boosters and a four booster configuration. So that's very important because it will fuel the rate at which we now incrementally manufacture these boosters for Ariane. By the way, I am in Paris at the moment. Ariane Space just announced yesterday that they will launch additional six flights for the Amazon Constellation so there will be many more 160 boosters to be manufactured and we can only be happy about that. Also one very important milestone in this first house is that we accomplished the full integration of our liquid propulsion prototype rocket that will be ground tested in 2026 and then successfully flown in the course of 2027. So that's a very important milestone with a radically new technology that will populate the future of our next generation rockets. In the meantime, we're making progress on our U.S. project to establish a manufacturing plant in the U.S., as you know. Along this path, we have completed the hiring of our C-level organization, our new CFO, an operating officer, chief of engineering, and so on. So the organization is shaping up. And in the meantime, in the first half, we also have purchased land, as you may remember, a few months ago. And then we have continued with our design for the plant. And now we are breaking ground. at the end of the month with the actual beginning of works to erect the new plant. Also in the first six months, we have raised additional 110 million euro from private equity fund advent, as you know, in a further capital increase that will further support the expansion of Avio both in Italy but in particular in the U.S. So in aggregate, we have now raised over 500 million euro in the course of the last nine months or so. So that's very important. It's a lot of firepower available for our growth plans. So in aggregate, we continue to deliver double-digit growth. I mean, I would say 20% growth consistently now across the last four years. And this is, I think, the emphasis that I would like to to draw your attention to because it's not so obvious that you continue to grow at 20% every year, four years in a row, and that seems to be the pace that we are now consolidating. As a consequence of that, we are, of course, confirming guidance for the end of 2026 amid, of course, a number of uncertainties, as one can imagine, given the geopolitical challenges that we are all going through, but at the same time, also some better than expected performances that we are also consolidating at the moment. Moving to page 5, as I said before, the last Vega flight was a success. You can see from this page it was the first to have a big Avio logo on the fairing, because it means it marked the flight in which we fully operate the flight, and therefore we take charges of the flight towards the energy responsibility vis-à-vis the the French institutions. We carried out a fantastic flight for the European Space Agency delivering SMILE, a very interesting scientific satellite, and the satellite was perfectly put in orbit with great satisfaction of the customer, so it couldn't be any better, quite frankly, to demonstrate the full stretch of our capabilities all the way to flight operations. Now, on page six, In the first six months, as I said before, we also had the first flight of the P-160 booster on Ariane 6. This was a success that I'm particularly proud of because I remember when we invented this solution together with Ariane in order to help, in particular, Amazon launch more satellites in a single flight. We made it happen, so it's a longer booster compared to P120 with about 16 tons more propellant, so we are quite happy about that. It performed extremely well, as you can see also from the picture. In particular, I believe that Amazon was happy enough that it led Amazon a few weeks or months later to now sign up for another six launches with Ariane. So we are very happy about that because that will likely push the production rate of P160 faster and probably beyond what we had expected to be the rate of 35 buses a year. We probably, with the support of the European Space Agency, go somewhat beyond that level in order to increase the flight frequency of IAM and at the same time also the flight frequency of BEI. So on page seven, as a matter of fact, we are marching towards the end of 2026 with what looks like we're probably going to have seven to eight launches of Ariane and three launches of Vega. We could have done more this year, but one... One satellite was somewhat late, but we are scheduled to have a launch next Monday, and then another one at the very beginning of December, and more to come, of course, at the beginning of 2027. Lots of different projects, as I said, in Ariane, you know, this court custom at Amazon, but also Galileo, and some other core European institutional satellites, and similarly in and for Vega we are now launching for the European Commission, the European Space Agency, but in December we will launch the first batch of the Italian Earth observation constellation Iride, so that's a very interesting integration of a proprietary Earth observation constellation. There will be more flights for the same constellation, so a very active dynamic market growing demand for both Allianz and Vega, and this will drive both of us to simultaneously grow the maximum cadence of Vega and Allianz in the few years to come. Switching gears on page 8 on research and development, we had reported to you that we were developing an entirely new rocket concept leveraging liquid oxygen methane as a technology. using our MR-10 engine. And this is what the new flight demonstrator looks like. This is a prototype rocket that will be capable to launch with this technology and lots of new technologies, especially in the avionics bay. This will be completely new, much more software-based. So let's say we are experimenting here a whole number of technologies that will represent what we will have in next-generation rockets. What is interesting about this is that it is a prototype that will be able to launch to space and also come back from space. The main stage will have a controlled re-entry. You can see from the pictures the so-called grid fins that will enable the first stage to also have a controlled re-entry. So, lots of opportunity to learn. We're quite happy to have reached this important milestone. Now we will proceed towards the end of the year to ground test this without flying yet. Collect a lot of data and maybe fly next year. So, very, very important milestone. On page 9, some updates on the defense market. The defense market continues to Thank you very much. In June, another 35 million worth of orders, probably more orders to come in the rest of the year in response to the growing demand for missile defense, given the geopolitical instability and the huge consumption of these products that we experienced in the course of the last three to four years. So as you can see, the orders are coming every now and then. It's very difficult for us to predict when they come, but as I reported to you, we know that more is coming for sure, not only from European customers, but also from U.S. customers. Then on page 10, let's review a little bit where we are on the execution of our Avio U.S. strategy project. where we are essentially on track. As I reported, we acquired some 1200 acres worth of industrial land in Virginia earlier this year. We then signed up for all of the orders with the companies to develop the infrastructure in the U.S. We also agreed with the Commonwealth of Virginia for an incentive package that may be as big as $97 million to support basically the establishment in this part of the country. And as I said, we also broadened our team with the CFO, Chief Operating Officer, VP Engineering and VP Business Development. Based on this C-Suite, we will then develop the other ranks. We have a whole pipeline of people we want to hire, and we will leverage the Commonwealth of Virginia funds to also recruit and the rest of the team and train them over the next few months and years. So there's a very robust plan to basically grow capacity not only by growing the assets but also growing the human capital that we will need to succeed and the Commonwealth of Virginia starting from the governor down. They have a fantastic team to support us to make this happen and I think it's a good piece of good news. In parallel, we are working long-term commitments from customers while we are deploying capital, of course, to the process equipment. The long-lead items have been ordered and some of them are under negotiation but most of the long-lead items have already been ordered. with the main suppliers. So the detailed design of the plant is being finished up. In the meantime, we will kick off with a groundbreaking ceremony and start the main works to develop essentially the land and therefore, you know, shape up for the new infrastructure. So, on page 11, there's also one important point with respect to about a year ago. A year ago, we presented to you our business plan. And while presenting our business plan, we explained to you that the solid rocket motor unmet demand, meaning the part of demand that the supply is unable to deliver against, was already quite big. Well, about a year later, we realized that this gap has further widened by another 40%. So basically, the gap between total demand in terms of the tons of propellant required per year for the next few years appears to be even farther from what the supply capacity is today and for the foreseeable future until 2030. So, no doubt that the demand over the next few years will grow. Still, in the next few years, even if we put in place a new capacity, the other competitors put in place new capacity, the consumption of these products is so fast that the gap will continue to grow, which means that the demand will surely be there and will exceed what we had put in our business plan, okay? Now we have come up with a plant design that will enable potentially growing the size of the plant if we need to. Now we have to see how this demand actually turns into contracts and commitment from customers. So we will have to go through the flow down from the government customers to the primes to the suppliers like us. But all I want to signal to you is that there is definitely more demand than we anticipated a year ago. Moving to page 12, given that the demand is growing so fast, we figured we would be better off collecting more cash to be able to invest more quickly. And so we embarked on an agreement with private equity fund Advan to invest another 110 million to support a faster expansion. So Advent agreed to invest, to acquire nearly 7% of Avio's share capital at a price of €33.40, which, by the way, is higher than kind of market price and higher than the market price at which we executed the first capital increase, as you may recall, a few months back. So we're very happy to have a very credible partner in the U.S., Advent has actually done a number of deals in U.S. defense companies with nicknames like Maxar and others. These deals ended up being successful. They have grown these companies. Many of these companies were non-U.S. They turned into more successful U.S. companies, larger. Some of them were sold. two U.S. primes like Ultramartin to lock it very recently. So we think Advent is a very dynamic financial partner who can help us a great deal accelerate the pace of growth, accelerating our ability to reach out for relationships in the U.S. and also for additional capital should we need additional capital in the future. So we count on them being a very, very good add-on into our cap table. Last point on my pitch on page 13, I want to go back to the story of solid double-digit growth. Now, a lot of times companies talk about growth prospects for the future, you know, they set out charts showing, you know, how big a hockey stick chart you can have for the future. I mean, look at this chart. This is the last four years what we delivered, okay? We delivered double-digit growth in terms of revenues and EBITDA, both, okay? That's not easy. That's not easy to accomplish because it means you can certainly capture orders from customers, you can follow demand, but then turning that into actual delivery of stuff, it's not that easy, you know? And the fact that four years down the road, we are consolidating a consistent A double-digit growth pace of 20% is absolutely non-trivial, okay? Now, what's happening is that our EBITDA reported looks small compared to revenues. Why is that? Because a portion of that revenues we anticipated to you, a portion of that profit as we anticipated to you a year ago, we are reinvesting in the U.S. and growing the team and growing the capabilities and so on. If we reach now nearly something north of 40 million worth of EBITDA reported, then a portion of that, as much as probably 8 million, let's say 20% of that EBITDA is reinvested in the meantime in growing the U.S. capabilities until these U.S. capabilities would generate profits by themselves. pretty much by the end of 2028, beginning of 2029 and at that point they will start to be cash generative for Avio as well. So that's pretty much our recipe for value growth that we have permitted to all of you shareholders and therefore we plan on continuing like this for the future. Now I will hand it to Roberto Carassai to deliver to you the financial side of the presentation.

Thank you, Giulio. I think we can move on slide 15 so we can comment a bit on the backlog. and, as you can see, we are still having a huge backlog, more than 2 billion in June, despite the very significant revenue growth that we have experienced even in the first half of this year. And we have booked 160 million in the period, two-thirds of them coming from the defense, and one-third coming from the launch system. It has to be noted that we have also booked a quite significant order for 60 million at the beginning of July coming from the launch system business unit, just to say that this backlog could have been even higher if the booking of the order would have happened two days before. and in terms of composition of the backlog, you can appreciate that the defense business is above 30%, and it keeps growing also the contribution coming from the production contract that now have achieved 70% overall. If we move to the next slide, here we can comment a bit more the revenue profile. As Giulio was saying, we keep growing at double digit pace, 18% more than last year, achieving almost 280 million in the first half, and this growth compared to last year has been generated by all the three segments, clearly largely by the launch system segment, but also state professionals and defense, have contributed in a quite significant manner. The launch system is the result of the growing in accordance with the flight manifest. The space propulsion is increasing because we are increasing the production cadence for peak 120 and 150, the defense business is growing there because we are increasing the production on the two major projects, Aster and Kamer, but also we are starting the execution of the U.S. contracts. In terms of the composition, even on the revenue side, you can appreciate that the production contracts are now contributing for almost 70% of the total revenue. Moving to the next slide, you can appreciate the overall picture of the profit and loss results. Overall, we can say that along all the lines, we are doing better than last year. Obviously, we have already commented the growth on the revenue side. that has driven the growth at ABTDA reported. The ABTDA achieved the number of 12 million compared to 10 million last year. As Giulio was highlighting before, please note that AVLSA in Europe has generated almost 15 million of ABTDA in the period with operating costs coming from and the USA company for almost 3 million. In terms of EBIT reported, despite a slight increase on the depreciation cost, we have been able to generate a positive result of 1.2 million. Last year was zero. And in terms of net income, actually we have generated a very significant result, positive result, 9 million plus. This is the result, the consequence of the good operating performance, but also from the good financial income that we have generated on the average cash holdings that we have on our account in the range of 5 million. And then we have also benefited from the fair value adjustment on a minority participation. Moving in the next slide, on the next financial position, we are going exactly in the direction that we were expecting at the beginning of the year. We clearly explained that we would have a cash disbursement over the course of 2026. mostly related to the CAPEX that we are going to incur both in Italy but also in the US for the special project. Therefore, here you can say that we have had, let's say, a reduction of the net financial position of almost 60 million in the first half. Nonetheless, we are still having 535 million positive net financial positions. The other main driver of the reduction of the cash absorption in the period is related to the working capital side. As you may recall, we have booked a significant amount of advance payment at the end of last year and now we are progressing, releasing part of it to our sub-costs and suppliers. If we can move on the next slide, here we are commenting a bit the balance sheet. We have actually discovered already, so you can see an increase in the working capital that I remind everybody is structurally negative for our company. And also you can appreciate that there has been an increase on the fixed asset due to the capex that we have incurred in the period. and we have already commented the negative variation on the net financial position. Then, in this slide, you can appreciate the quarterly evolution at ABTDA level. You can appreciate that, same as in the first quarter, even in the second quarter, we have been able to exceed last year's results. We are on track for the year end. you know that there is a bit of seasonality in our results, you are familiar with Avio and you know that most of the results are basically achieved during the last quarter. In terms of net financial position, we have already commented that we have at the end of June 535 million In our bank accounts, please, I need to remind you that in the second half, mainly in the third quarter, we will cash in 110 million coming from the capital injections, other capital injections. and in the second half of the year we keep, let's say, incurring capex, mainly in the U.S., but not only, so for sure we will have cash disposal related to this topic as well to be taken into account. Moving to the last slide, here we can say that based on the first half results, we are able to confirm the year-end. Thank you very much for your attention. Thank you, Giulio. Thank you, Roberto. I think we can open up the Q&A session.

Thank you. This is the Coruscant Conference operator. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, Please click continue on the bottom of the pop-up window. If you are connected in audio only, please press star 1 on your telephone. The first question comes from Walter Guagnano with Aurelia. Please go ahead. Mr. Guagnano, we can see you but not hear you. Maybe you are muted. Mr. Quagnano, your line is open. So I'll put you back on cue. We will try to understand why we cannot hear you. The next question comes from Martino D'Ambrogio with Equitar. Please go ahead.

Thank you. Thank you. My first question is on the casheen coming from Advent. If I understand correctly, considering that you already covered with the financial resources the need for CAPEX, the use for this cash could be maybe the priority additional CAPEX for more capacity, or maybe M&A, although not shortly, but just to understand that how this additional cache will be used. The second question is on the NVDA orders. I clearly understand it is not the first time you mentioned that it's difficult to predict when they will come. Number one, could you quantify the soft backlog that you have in mind considering all the contracts that NVDA recently or maybe not so recently signed? and if you can explain us why the process is so long so maybe this question should be asked in MBDA but just to have an idea and the third question is on maybe for the long shot so ISAR tested the first launch for the spectrum it will take time before becoming a real serial producer of Spectrum and so on, but do you see this could become an issue in terms of price pressure in the future or the bottleneck is so strong that there won't be any effect?

Thank you. Let me start from this last question, since I'm in Paris and I was sitting next to the CEO of ISAR yesterday, and also next to the European Commissioner, Kubilius. So, yes, it will take some time for them to ramp up to higher launch frequencies. ISAR has highlighted that they're happy about the first flight, but one thing is flying once, they said their words, and one thing is establishing regular pace of flights, so I think great congratulations to them for this achievement, and as we all know, it takes years to ramp up to regular service. And by the way, they are far from having a performance of the rocket comparable, nearly comparable to that of Vega-C, so it's a different type of service for small satellites for the time being. That said, we were together also with the European Commissioner. The European Commissioner explained that in the next multi-year financial framework they have for space and defense a budget that is about six times for space and defense what it used to be in the previous multi-year financial framework. So the ability to do space projects is greatly improved on the public side of the demand which is a lot of our demand because as we know Vega is fueled largely by government customers. Therefore, I think there will be demand for everyone. Still, even if we have more providers, we will struggle to fulfill such demand because it appears to be way more than we had anticipated. The same story we keep hearing from the European Space Agency and, you know, the last ministerial conference has improved their budget going forward, so therefore also the European Space Agency satellites will be many more than we had anticipated. So, in essence, I think there will be space for everyone. Now, the story of the MBDA orders is simple, is we are a supplier, right? So, MBDA makes some announcements. They have signed up for S.A.M.P.T. in yet another country. Every week they announce something like that. That is a deal they achieve at the level of the system. Then, as you know, for Aster 30, they have us as the source flyer, so there is no doubt that a portion of order will come to us. The problem is that we need to go through the contracting process to get from announcements to real contracts takes time because they need to convert that Thank you for your time. all the backlog we can share with you we can try to put something together we have traditionally been pushing back on publishing soft orders otherwise we would easily get to billions and billions worth of soft orders then people will ask how soft is that how hard you know it's it's very difficult to quite quite frankly not that we don't want to share but uh we we will try to put some some as much visibility as we can uh transparent in place for you but all we can signal to you vis-a-vis The outlook we have provided and the guidance we have provided that there is more than we had anticipated for sure and it's materially more. Now, the cash from Advent will be used for sure to fuel more capacity, in particular to accelerate possibly the pace at which we put this capacity in place. and some of it may be for M&A. In fact, we haven't closed with Advent even yet. We will likely close soon. We have recently received all necessary regulatory clearances for us to close. So as soon as we are, you know, Advent is legitimately part of our team, we will work with them to see, for example, you're right, absolutely, if we can do some and some M&A, and if this M&A, you know, a private equity fund is their job, right? It's what they do with the bi-company, so they can definitely help us, in particular, as I always said, to fine-tune our degree of vertical integration in a way that will support faster ramp-up against our production deadlines.

Okay, thank you, and no issue for the building of the new U.S. plant in terms of availability of raw mat going ahead and so on. So this is not an issue for you.

No, so far there is no blocking point from that point of view, but, you know, the supply chain is a science in itself. It's not a single raw material. You need to make sure that all your suppliers believe on time and on quality, and that's an enormous challenge, I have to tell you. In fact, For the space part, we want to put in place a special task force together with ESA to make sure that we push the whole supply chain to move at another pace. In certain cases, we will need to think about vertically integrating, so doing it ourselves, because maybe we have a better degree of control on the pace of the ramp-up. So it's a tremendous effort. and the same holds true for defense. The defense industry was not ready for such a ramp up. So yes, the big plans get lots of orders, but you can only go as fast as the slowest of your suppliers. So what we need to do is work in partnership with these suppliers, invest in these suppliers. If they cannot make it, then we should try to do it ourselves. It's a tremendous undertaking that we are working on and also maybe some of the cash we gathered from Adben could be deployed against this task of securing supply chain pace and readiness for the years to come.

Okay, thank you. And if the cache of Advent is used to accelerate the capacity deployment, could it mean that you could start production before second half 28?

Well, this I don't know. But if the point is that we have to deliver even more capacity than we anticipated, then we have to seriously think about options to make more capacity available for the future. We also need to increase capacity for space in Europe and in French Guiana. We will work with ESA on that. But if we have to move more quickly to flight rate 6 for Vega and maybe to flight rate 12 for Ariane, then we need to move very, very quickly. So there's lots of investment we need to make. We need to use the money wisely. We need to have the support of our institutions as well for the assets and so on. But it's definitely what we are trying to do is to accelerate the pace of growth.

Thank you, Giulio.

Next question comes from Andrea Bonfa with Banca Acros. Please go ahead.

Hello, good afternoon. Thank you for taking my question. I got a few one. One is you are mentioning that the negotiation with U.S. potential customer are going on. I'm wondering if on this kind of negotiation there is the possibility to initially give some production to the Italian plant. which will have, of course, a faster impact on profitability. So this is my first question. And I'm wondering if there were some articles on this, let's say, new space company called the Expeditionary Company, mentioning a new engine which is based on methane. And it seems, to some extent, for my little knowledge, similar to the one you are experimenting, if you can comment on that, if they are similar, or what are your thoughts about this, also because the evaluation of those companies are, in my opinion, particularly impressive compared to your evaluation. and the third one is on, let's say, the possibility of SpaceX going captive from 2029 or something like that. There's some hints in the market which will imply a potential demand boost for all the other operators. So, any thoughts on you on that? And finally, if I may, you see a little bit behind on your CapEx deployment. Shall we reset a little bit the curve, less this year, more next year? Just a quick comment. Thank you.

Okay, so let's start from the first one. Regarding the U.S. customers, yes, this is what we're doing. We are trying to use Capacity in Italy in anticipation of what we will then do in the U.S. This is obviously very true for the U.S. Army. The U.S. Army customer is doing 100% in Italy right now. In the future, they have expressed the wish to also leverage the U.S. plant, but for the time being, what we are doing for them is 100% in Italy. Raytheon is kind of the same because we are carrying out the for the development and qualification of the Mark 104 motor in Italy, and then we will transfer production to the U.S. when ready. With Lockheed Martin, we haven't started yet, but I think the objective will pretty much be very similar. Now, regarding the other questions on space, so I am in Paris. I participated to the International Space Summit that was held here. in Paris over the last two days. It's interesting that you bring the story of space exploration. I was actually sitting next to the CEO of Space Exploration last night together with the President of the French Republic at the Elysée. We talked a lot about that. There are lots of interesting developments, in particular the space exploration companies focusing on a a capsule that will be launched with Ariane. It's a cargo capsule that can go and dock to the space station and re-enter atmosphere. That's the core of the business they're working on today. They also want to develop a very, very, very large engine, which is a very, very, very ambitious undertaking. Of course, they are interested in what they do and what we do. We are interested in what they do. We'll see if there's anything we can do together. I don't know yet. We already are jammed with so many different development projects that we also have to be a little bit disciplined on how many fronts we want to open. I do not want proliferation of too many projects because ramping up at a pace like we're doing, delivering 20% growth every year, and yet having a new research project every week, it's impossible. So we have to be selective, we will see, but it's definitely an interesting development. Now, it's interesting your question on the fact that SpaceX may go captive. I can tell you SpaceX has already gone captive because we have a whole bunch of customers coming to us and saying, oh my God, can you fly us because SpaceX no longer gives us a chance to launch. In fact, as you may recall, SpaceX has practiced a lot of price dumping for a number of years by launching satellites at very cheap rates, all together with the so-called transporter mission. Guess what? The party is finished. And they don't do that anymore. So they want to do it. Maybe they do it at twice the price. So now all these smaller customers are turning back to us and asking to launch. Thank you very much. Now we will try to do for them what we can. We are certainly happy to entertain again discussions with customers that seem to be only looking at SpaceX. Actually, all these customers, I was here at the conference, they went to European institutions and asked if they can have a fund or something, some money to sweeten a little bit the price for them to launch with European rockets because they no longer have SpaceX option.

Okay.

We'll see how Europe will react. Maybe they will fly with Vega-C, maybe with IM6, maybe with ISAR, I don't know. But for sure, now we have a whole wave of small customers who no longer have that option available and would like to leverage ours. And we're more than happy to help if we can. In terms of the CapEx deployment, I wouldn't expect much of a change. We know what our CapEx plan is. We cannot rewrite our business plan every week. We have a certain deployment plan in the near term for 26 and 27 that I don't think will be changed. But if so, we will for sure let you know if and when we have a different plan in mind.

Thank you very much. Very useful.

The next question comes from Gabriele Gambaroba with Intesa San Paolo. Please go ahead.

Yes, thank you for taking my questions. Good afternoon. On defense, I understand it's very difficult to assess when the T1s in the U.S. will replace production contracts, but I was wondering if you can explain Give me at least an idea, if you have an idea of when this could happen. I don't know if it's something that might happen this year, 2026, or we should expect next year. I'm asking this because we saw even yesterday T. Harris getting 4.7 billion contacts from Lockheed, if I'm not wrong. So I was wondering... Basically, if it's a short-term, let's say, by the end of the year aspect, or we should wait for longer? This is the first question. The second question regards Ariane. The increased rate, the possible, the likely increase in the rate of launches, you said it may be 12 per year. I was wondering what could be, say, the timing for this and if this increase implies for you additional capacity or you can deal with it with the existing capacity. And finally, on the liquid propulsion demonstrator, I was wondering if you can give us some more color on it in terms of payload timing this kind of things.

Okay, thank you for your question. Let's start from the first one, the timing of the orders, you know. We have difficulties predicting NBDA orders. You can imagine how difficult it is to predict the orders from Lockheed Martin and Raytheon since this year was a crazy year. They received the jumbo orders that they have never seen before. They sign these deals, they know they have them, but again, before they flow it down to the supply chain, it takes quite a bit of time. In fact, for this process, for us, what is more relevant to the production order is that we do get selected to be qualified for production, right? Like we did in the case of Mark 104 for the standard missiles of Reitman, okay? Once you are qualified as a second source and you have developed the necessary NGE for that, then your orders will be proportional to their orders. So you don't have to worry so much about the when. You have to be sure you are in as a selected supplier. We're breaking on, given that we are in the Mark 104 model, it means that on every standard missile 2, 3, or 6, we will have a share, that is for sure. So, now, the when is complex, because they get through, especially in the U.S., a funding process by the government that depends on the Congress, the appropriation the Congress makes every year, on the budget of the following year, etc., etc. So it's a very lengthy, complex process, but we are not so worried about that because, by the way, you know, we can only start production in two, three years from now after we have completed qualification for production. So if I had a production order tomorrow morning, I wouldn't be able to manufacture because we are not yet qualified to do this. We have to go through all the technical qualification process. So We're working on Mark 4 for Raytheon. We'll soon work on another product for Lockheed, hopefully. We are working on the two products for the U.S. Army, and for those we have nothing. Actually, for the U.S. Army, we even have the production orders. So we have more orders than we can crunch at the moment, so we're not particularly worried about that. Now, on the story of Ariane and Vega capacity, okay, so what we will do, as we have always done, because behind this expectation to raise the cadences of Ariane and Vega, as I anticipated before, there is a lot of additional unexpected European government demand. What the European Space Agency will do, will try to support us, as in the past, with projects to be funded largely by the member states to grow the production capacity of both Ariane and Vega, okay? The main centerpiece of this is also our common first stage P160, so we are working heavily on securing that we get the right funding to grow the production rate of P160. and I'm quite confident we can gain substantial support for that in the short term. Timing, to put that in place, probably between two and a half years, something like that. Obviously, it's relevant in terms of the changes we need to make to the infrastructure and so on, but we already start from a very robust production infrastructure that, if you notice, has allowed IN6 to grow their pace of growth in the launches faster than any other rocket in the world. So they are now approaching the ninth flight in less than two years. So they have been extremely rapid in ramping up production, so we will try to follow this path as well. and grow even further for the future. As soon, again, as we have updates between now and the end of the year on this subject, we will keep you updated on such matter. We are already partly funded both ourselves and IN6 to grow the cabin, so if we have to do more, fine, but we already have funds that we can crunch to the end. Now, regarding IFD, the flight demonstrator, That's an interesting project that has been funded with the EU Next Generation Fund. We started sometime in 2022 with the ambition to create a radically new rocket using liquid propulsion, in particular liquid oxygen and methane, and using a completely different type of avionics largely based on software. And moreover, we wanted to make a rocket whose first stage can possibly reenter Atmosphere and Land. A very ambitious project, it's a research project and therefore we have decided to test our abilities in flight and we will do this next year. Now prior to that, before the end of this year, what we want to do is we want to have this test, this experimental rocket be tested on ground such that we can collect all the data on the performance of the engine, the performance of the tanks, the performance of all of the subsystems without flying, but still a lot of important data points. Now, what's interesting is that this experimental rocket uses the same core engine that we plan to use in the future for Vega-E. So, you know, all these parts of the puzzles are connecting at the moment. We will keep you informed between now and year end when we plan to test on ground ISD, but it's a very nice undertaking and we are quite confident on that. For the time being, this is an experimental rocket, so we'll bring no payload, but of course it's intended to become a rocket at some point, and we will keep you updated on the evolutions of that.

Okay, thank you very much.

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