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Welcome to the Alstom 2026-2027 First Quarter Orders and Sales Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to Bernard Delpit, Executive Vice President and CFO. Sir, please go ahead.

Thank you. Good morning everyone and thanks for joining Alstom's orders and sales update for the first quarter of fiscal year 26-27. And let's start with orders on slide 3. The group recorded 2.6 billion euros of order intake in the first quarter. This represents a book-to-bill ratio of 0.5 compared to a 0.9 in Q1 last year. Similar to prior years, we expect order intake to accelerate in the coming months and reach a book-to-bill ratio above 1 for the full year starting with Q2 where we also expect a book-to-bill above 1. Some additional color by product line and region. Rolling Stock was the largest contributor this quarter, representing around 1.2 billion euros of orders. In particular, the group was awarded a locomotive contract in the Africa, Middle East, and Central Asia region for 800 million euros. Services delivered a solid performance with €0.8 billion of order intake, with in particular contracts for locomotive maintenance in India and several service contracts in Northern Europe. Signalling recorded €600 million of orders, benefiting notably from around €300 million of orders in Egypt. So as a whole, a low volume but good quality of order intake, with locomotives being a platform we push for, and with average margin on new orders being accretive to overall gross margin in the backlog. At the end of June, the backlog amounted to 102.8 billion euros. Turning to slide four with some operational highlights in the first quarter. In France, TGVM received homologation from both the European and French authorities to enter passenger service. This is an important milestone for the group, considering that 190 Avelia Horizon trains have been ordered by several customers to date. Some of them, including the ones ordered by SNCF and Eurostar, will have 11 cars in total. Some others will be configured with one or two fewer cars, but all are based on the same platform. In Egypt, commercial service began on Africa's first monorail system. This marks a significant milestone for the first large turnkey project and the start of the operations and maintenance contract by Alstom for a period of 30 years. In signaling, we commissioned the first Argos digital interlocking system in France. This is an important step in the future deployment of the European Signaling Standard . In the UK, the first of the 10 Elizabeth Line train options based on the Aventra platform has been manufactured and is now undergoing testing. Finally, in France, serial production programs reached significant milestones to date 500 regional trains have been manufactured under the Omneo platform and our customer Ile-de-France Mobility has more than 100 RER new generation trains in commercial service now across the Paris region. Turning to slide 5 on car production, which gives an indication of the level of activity for slightly over half of our business. The group produced 940 cows in the first quarter, compared with 961 in Q1 last year. Beyond this 2% decrease, we do note that all regions reported year-on-year growth, except the Americas, partly due to the completion of major programs such as BART for San Francisco. From a mixed perspective, in the first quarter, the group produced fewer metros but more commuters and regional trains compared to the same period last fiscal year. In addition, we continue to bring the several new platforms we mentioned in Q4 through their industrialization phase. You recall this had an impact on car production in Q4 last year, and it continues to weigh on production in Q1. However, the year-on-year decline moderated to 2% compared with 6% in the previous quarter. Beyond the usual seasonality, we expect car production to improve relative to last year's levels, particularly in the second half. The full-year production target is 4,400 to 4,500 cars, compared with 4,284 produced last fiscal year. We also note that the number of cars delivered to our clients increased in the first quarter compared to the same period last year and exceeded the number of cars produced, which is a KPI that we report here since 2024. Let me now turn to sales performance in the first quarter. The group recorded 4.7 billion euros of sales in the first quarter, up 4.9% compared to the same period last year. Currency impact on sales was broadly neutral, meaning organic growth was 4.8% over the period. Rolling Stock recorded sales of 2.5 billion euros, up 6% versus last year on an organic basis. This was primarily driven by the execution of regional and commuter train projects currently in serial production in France, but also the ramp-up of production for regional trains sold in Eastern Europe, as well as increased locomotive production. Services delivered another strong quarter at 1.2 billion euros of sales, up 9% on an organic basis. Growth was supported by the expansion of our operations and maintenance activities in North America, as well as commuter and regional maintenance contracts in Australia. Signalling sales grew by 4%, reaching 600 million euros. It was supported by the acceleration of the Perth High Capacity Signalling Project in Australia, while several signalling contracts in Poland continued to progress according to plan. System sales were 400 million, down 10% on an organic basis. This mainly reflects major projects such as Trenmaya in Mexico and the Sao Paulo monorail continuing to ramp down and now reaching the final stages of execution. Turning to slide seven. where we confirm the outlook for this current fiscal year as given at the time of full year results in May. We expect a book-to-bill above 1, organic sales growth of around 5%, and car production in the range of 4,400 to 3,500 units. The target is an adjusted debit margin of around 6.5% and positive free cash flow for the full year. As usual, cash generation will be heavily weighted toward the second half, and we therefore continue to anticipate around 1.5 billion of free cash flow consumption in H1 and a strong recovery in the second half. Finally, regarding capital structure, the Group issued its first green hybrid bond last month with a nominal amount of 700 million euros. This transaction will enable Alstom to continue financing both capital expenditure and operating expenditures that are aligned with the European taxonomy. It also strengthened the group's liquidity position ahead of the repayment of the 700 million senior bond maturing in October this year. This concludes the presentation and we will now open the floor to your questions. Thank you.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Delphine Brault from Otto BHF. Please go ahead.

Yes, good evening. Thanks for taking my questions. I have two and will ask them one at a time. Starting with your car production in Q1 down by 2%, was it in line with what you expected and is it just a timing effect or did you experience any additional tension?

Well, it's almost in line with our expectations. As I said, the ramp down of one of the large projects in Americas was planned, so this one was totally, again, expected. It's true that for some units we were expecting more, but it was embedded in the early guidance, so no major deviations.

Thank you. And then, second, in your press release, you mentioned that you expect commercial momentum to accelerate in Q2 and you just confirmed a B2B above 1 in Q2. Can you be a bit more specific on what you see in terms of pipeline and in terms of mix between rolling stock and service signaling system?

Okay, so in the pipeline, we have orders in the Middle East, possibly confirmed in the coming weeks, both in Israel and in the region, I would say. France and North America will also have some contracts signed in Q2. I remind you that we also have an exclusive agreement with Virgin for the supply of a high-speed single-deck train and the discussions are moving well. We have also some tender awards expected in the UK for Leicester this year. So we are expecting a year for strong book-to-bill in service coming ahead. You know that first quarters historically are softer than the full year, so there is no change in the demand dynamics, but rather a reflection of the cycle. So I confirm here that the book-to-bill Thank you. That's very helpful. Thank you, Delphine.

The next question comes from Gail Debray from Deutsche Bank. Please go ahead.

Oh, good evening, everybody. Can I just follow up on your latest comment, Bernard? I'm wondering if the slow start to the year in terms of commercial momentum is just a question of lumpiness and phasing effects or is there something behind the organization maybe now paying even stronger attention to the terms and conditions of the contracts and maybe with a bit more selectivity on your side?

I would say both, Gaëlle. First, of course, Q4 last year was extremely strong. So there is a kind of cycle here, I would say. And we continue to pay a lot of attention to selectivity. There are a few others, by the way, last year that we didn't follow. and it has an impact maybe on the book to build of this quarter but I would say both we continue to be selective and there is also the fact that the cycle is such that Q1 was expected to be low.

Okay understood and then post Q1 and with certainly an even greater visibility now on the potential orders you May or not bag in Q2? Would you say that the free cash flow is tracking fully in line with the guidance for H1 or a bit better or a bit weaker, even after the soft order intake you had in the first quarter?

Frankly, I will not give any qualitative indication. It tracks online with what we said. And you remember that at the time of the issuance of the guidance, we explained that Down payments were planned to be totally unbalanced between H1 and H2. So I confirm that what you've seen here in terms of orders is in line with this unbalanced phasing of down payments in H1 and H2. And the rest, I would say, is in line. So we have confirmed the free cash flow guidance, and we have confirmed that the $1.5 billion negative is what we see for H1. No news.

Okay, thank you very much.

The next question comes from James Moore from Rothschild and Co. Redburn. Please go ahead.

Yeah, good evening, everyone. Hi, Bernard. I wondered if I could ask a little bit about your soft start on car production. And my understanding was that there was some stopping of production in Germany and then some restarting. And just given the importance of the German contract, Could you talk a little bit about the impact of that, how you're feeling about German profitability improvement and the ramifications for free cash flow in Germany?

Hi James, thank you for this question. I will not elaborate on profitability and cash specifically on Germany. When you say that we have stopped some production in Germany, it's true that we try to adapt as much as possible The production to what we see in terms of engineering and supply chain issues when they are some or to the planning of homologation in order not to build the cars that could be subject to retrofit. So that's exactly what happened in Germany. Now it has resumed and we are, I would say, in line with what we expected. You refer to the Coradia Max platform for regional trains. So we have a lot of activity on this platform. We expect the first homologation of our six homologations for the Coradia platform to happen at the end of this fiscal year. So we prepare for this homologation and the adaptation of the production is done in order to make it as smooth as possible.

Great thanks and maybe I could try a second one. Obviously we would love to hear your first thoughts or Martin's first thoughts on what he's going to say next year but I presume we won't be able to talk about that at all but what do you think internally are the exercises that have already been done since Martin's arrival and what has to be done ahead of the CMD next year in terms of how you want to lay out Your own internal understanding of the ability to reach the margin in the backlog and the future improvement in free cash flow beyond this year, just in terms of sequencing of what you're trying to do at the C-suite level organizationally.

Frankly, I'm not the one that should discuss this on behalf of Martin. You will have occasions, opportunities to talk to Martin at a later stage. What I see is that he has now visited many different sites. He had the opportunity to discuss with many project managers so I think that moving forward he has a good sense of how the company is both organized and working and what he wants to change in both the organization and the ways of working. So we have already started to implement some changes. There are some work streams going on on the way we organized the DOA, the way we can simplify the organization. We are also launching some initiatives. In terms of cost, because this is where competitiveness relies. So it's not the timing for me to say anything more on that, but I think that he has an agenda in order to That's very helpful. Thank you. Thank you Bernard.

The next question comes from Daniela Costa from Goldman Sachs. Please go ahead.

Hi, good afternoon. Thank you for taking my questions. Just two quick things. Can you help us understand a little bit better in terms of like how payments work in terms of the various phases in the contracts? When there is homologation, do we get an amount of cash that is, for example, similar to when it is in advance, or is it very different? It would be good to have some color in there. And the second one, also in terms of a bit of help and guidance on How should we think about sort of a platform like the TGV versus in terms of like the type of profitability that you get versus your kind of normal group margin? I understand you have a much stronger position probably in terms of market share and dominance in there. Are we talking sort of is it the highest margin in the group or can you help us give some pointers on how should we think about forecasting those type of events?

Okay. Sales and Order Conference today, so I will not elaborate a lot on that, but maybe share with you that on payments, so all contracts are different. And specifically in Germany, the contract that we are discussing here, the ones on the Coradia platform, those were Well-funded contracts. So the down payments at the time of the notice to proceed to the very start of the program, I think it was in 21, something like that, were high. So of course, there is some cash-in This is tied to the deliveries of the trains, not specifically to the homologation, but to the deliveries of the trains, so it will come after the homologation. There is some payments attached to that, but not that much as a down payment, typically, at the inception of the contract. So payments will be attached to cars' deliveries, and I cannot elaborate more on that, but it's not as much as a down payment, to be specific. On TGV profitability, nothing I can share with you, of course, but I confirm that we have a high market share for TGV in France, for sure. But nothing I can share. This is an innovation. This is a high-tech trend, so there are some risks attached to it, and the price is in line with the The next question comes from Andre Kuknin from UBS. Please go ahead.

Hi, good evening. Thank you very much for taking my questions. Can I just pick up on the bottom slide that talks about the higher share of projects in ramp-up phase of, I think, 2x versus last year. How do you expect that to develop through the year? And if it is heavier in H1 versus H2, should we think about kind of more pronounced margin seasonality for H1 versus H2?

In fact, André, thank you for the question. The full year, the share of ramp-up program on the full year will be higher than the share of ramp-up program in Q1. So we have this profile that explains, by the way, the profile of the cash flow as we have to get prepared for the production of those cars. So no, I mean, it's the opposite. We have more ramp-up projects for the full year than in Q1.

That's very helpful, thank you. And does that affect profitability or not? Will that affect the seasonality this year?

Not materially, I would say.

Great, thank you. And I just wanted to check, so we've gone through I think majority of the projects that you mentioned before that were challenging and very clear on the expected timeline for the German one. Is there anything else out there that is sizable that we need to sort of keep an eye on and think about this year with kind of the Ventra, Tejaver, Amtrak all kind of making it there now?

I mean, I'm not going to give the long list of the critical projects that we are watching. I remind you that the portfolio is made of 2,500 contracts, so it's a lot of different contracts and we have a list of, I would say, 50 contracts maybe that we are watching more precisely than the others. Coradia Max in Germany is one of them. We have also contracts in the Nordics. We have the TGV revenue service starting in September. I won't go into the list. I just want to remind you that rolling stock is 50% of our business, and we are dealing here with A portion of that. So don't forget that in signaling, in services, we have also large contracts developing well that do not have this phase of ramp up, ramp down, startup series that makes the life more difficult for rolling stock than for the rest of the business by definition.

Got it.

Thank you very much. The next question comes from Vlad Sergievski from Barclays. Please go ahead.

Good afternoon and thanks very much for taking my questions. Could you share what influenced your choice for additional hybrid capital? It is clearly more expensive than perhaps plain Manila bonds, for example, which you have opted for.

Yes, yes, for sure. By definition, the product is not the same as a senior bond, so it comes with additional spread. But that was clearly explained during the roadshow for the hybrid. Going for the hybrid has a lot of merits, including in terms of management of the leverage ratio according to Moody's. So that's a way to manage, again, the leverage ratio, but nothing more in terms of liquidity. We have sized it in order to deal with the repayment of the senior bond in October, so not much more to elaborate on.

Understood. Thanks very much. And while you are in the process of getting through those underperforming projects that you mentioned and getting them back on track, should we expect contract assets to keep increasing while you are going through those processes and specifically in the first half of this year? If you could give us some idea, please.

Well, by definition, when you are in a ramp-up phase, you have contract assets, by definition. And I remind you that the way we report contract assets and contract liabilities, you should look at the net of both. So I think the net of contract assets and liabilities on a long period reflects the cycle

of the deliveries of our backlog.

And second, seasonality has also an impact on the amount of contract assets and contract liabilities. For example, as we said, Down payments will be back-end loaded. You should expect that contract liabilities will grow in second half rather than in the first half. And because of the ramp-up phase of some contracts, by definition, it will increase contract assets. Now, it's far too early to give you more indication on what you're going to find in the H1 for contract assets and contract liabilities. But it has to do with the cycle, and it has to do with seasonality on top.

The next question comes from William Mackey from Kepler Shoebrew. Please go ahead.

Yeah, hi, good evening. Thanks for the time. I would just like to ask a question about your expected growth across the business lines that you're running, and maybe just to dig in briefly into systems. So you've reiterated the approximate 5% organic growth, but we've seen quite a lot of variance across rolling stock services and signaling and systems. Could you share some more color on where you think those will land for the year in terms of expected growth and specifically in systems is there a backlog there to replenish the wind down of the Mexican and Brazilian projects?

I couldn't elaborate that much on the system situation, but I would say that it will continue to be down over the year. But one of the large orders that we booked, I think it was in 23, 24, in the Asia-Pacific region will start to ramp up. So that would create some mitigator. Let's wait for H1 to give you more color on the net of ramp-up. For signaling and services, you shouldn't expect the 9% organic growth to continue at this level for the rest of the year, but by definition it will be above 5%. Signalling, I would say that you could take what we've seen in H1 as a run rate for the rest of the year. And for rolling stock, as we have some ramp ups coming in, I would say that also around five, maybe north of five is my expectation for the rolling stock run rate.

Thank you. And the follow up would be relating to Efficiency measures that you're undertaking across the group clearly your focus is on project execution and the project process but I think there was elements of restructuring in Germany and other regions and implementations of various new business processes so could you give an update on where those are relative to your plans of last year and how much of a contribution they're expected to roll into the rest of the year?

Well, I will answer maybe more, I would say, differently. We expect non-operational expenses and restructuring to be in the region of 100 million in H1, maybe 150 for the full year. And we will detail the breakdown of those mostly restructuring in each one when we'll have more visibility on what's going on. But I would say that we have some restructuring going on. in different countries, not only by the way in Germany where we have a transformation plan that is going on, but we have also some plans in the UK, in Australia, in some other regions, and Belgium as well. So it's, I would say, not only in Germany.

Super. Thank you very much.

You're welcome.

The next question comes from Martin Wilkie from Citi. Please go ahead.

Yeah, thank you. Good evening. It's Martin at Citi. Just one final one from me. You do mention the guidance assumes no disruptions from the Middle East, but in your order list that you mentioned for Q2 and later this year, you had highlights of the Middle East. Should we assume that for now there is no disruption neither on the operational business nor on order intake? Just understand if that's sort of a Just a get-out clause in case of future activities or if there's anything you're seeing at the moment in the region. Thanks.

Yeah. Thanks, Martin. For sure, the situation in the region doesn't help. And it could create some hiccups in the way our operations are managed. because we have operations in the Gulf, in Israel, and in all the regions. But I remind you, for example, that the Haifa Nazareth project has been awarded in 2024. So now we are working on the closing in order to start operations. And frankly, in other countries of the region, people are continuing to plan for larger investments. That's what we are talking about here and I expect some news in the next weeks or maybe in September in order to book some large new contracts in the region as well.

Great. Thank you very much.

The next question comes from Akash Gupta from JP Morgan. Please go ahead.

Yes, hi, Bernard. Thanks for your time. I got a couple as well. The first one is on follow-up on the Middle East. I think we hear from some countries in the region that they are looking to cut their reliance on Strait of Hormuz, and I guess rail could play an important role in transporting both people and goods. So when you talk about this Middle East project, is there something that might be related to getting more Strategic Autonomy by Reducing Reliance on Strait of Hormones like ICE. Is that linked or maybe it is too early to talk about those kind of commercial opportunities? That's the first one.

Hi, Akash. I will take this one, then you will continue. Frankly, first, we are not that much involved in the freight business. So I do not see today any major projects popping up because of the situation in the Strait of Hormuz creating some new investment in order to run logistics in a different way. So my short answer is no.

Thank you. And then my second one is on input cost development in the quarter. Is there anything to call out there in terms of any unexpected positive or negative development that we should be watching out for?

In terms of costs? Yeah, it's true that the situation in the region has created some tensions on transportation costs. We see some tension on sea transportation, see some impact also on air traffic as well. The mix, of course, for us is more on ocean transportation, and it creates some tension. So let's see how it will develop. but it's true that the index have been increasing so part of that is hedged or locked I would say but certain that is on a spot basis so it has some impact and so we are trying to mitigate that as much as possible.

Thank you and lastly a housekeeping question on H1 versus H2 margin split like historically we had around

90 bps variation between h1 and h2 and is there any reason why it would be different this year and this year thank you yeah yeah and you know the usual way we guide for h1 and we continue to guide this way we expect that h1 will be in the vicinity of the full year EBIT of last year full year EBIT so more in the region of six and as we have guided for 6.5 I think it should be, by definition, above 6.5 in order to length as an average 6.5, but I would say maybe lower than the usual 90 bps gap between H1 and H2. But we are, I mean, I don't want to refine too much on those. But let's for the moment concentrate on focusing on H1. I see it very much as around 6%, and we stick to the guidance of 6.5%. We will refine that at the time of the H1 disclosures. Thank you, Bernard. Thank you, Akesh.

The next question comes from Louis Billen from Alpha Value. Please go ahead.

Hi, good evening, and thank you for taking my question. So my question is about order intake. Could you provide more color on which countries or geographies came in below your expectation in first quarter? And also, could you give us more color on the pipeline in Germany and maybe also in France? Because you mentioned France would be strong in Q2 in the second quarter. Could you give us more detail on the tender in France?

Frankly, I couldn't really elaborate on the situation on a country basis. In France, We are not expecting huge orders in the coming quarters. Frankly, we are delivering on the existing backlog. That is very much what is at stake. No, we are expecting a specific order in France for a specific project, and I cannot share with you more details, but it's one of its kind. I don't want to elaborate on that. It has nothing to do with previous orders and it is going to be a very specific one. I hope that we can share that with H1 disclosures. In Germany, we have some options, I would say, so not one brand new project that we are working on. Thank you for your questions. Let me hand the conference back to the speakers for any closing comments No specific closing comments. I wish you a good summer break for those of you who will take some vacation and hope to talk to you soon in September. Thank you. Bye bye.

Thank you ladies and gentlemen. The live presentation is now over. You may now disconnect.