Leonardo Spa Ord

Welcome, everybody. My name is Claudia Introvigne. I'm responsible for investor relation and market analysis here in Leonardo. Today, we are here to present our first quarter results for 2026, and I'm really pleased to have here with me our CEO, Roberto Cingolani, and our CFO, Giuseppe Aurelio. So now we can begin, and I will hand over to Roberto. Thank you.

Thank you, Claudia. Hello, everybody. This is our last meeting and will be the last day of my mandate, so I will leave Leonardo tomorrow. So, at that occasion, which we will present the Q1 data, I would like to take a few minutes of your time to wrap up the last three years in view of the change of top management and to say goodbye to all of you. Let's start with the Q1 and the numbers that you have seen already there on the table. In the first three months of 2026, a few months after having launched the Michelangelo Dome in October 25th, and the updated plan, we've got very good and encouraging results. The order backlog has been rising to 57 billion, plus 23% versus 2025. The book-to-bill ratio is two. And the new orders amount to $9 billion, so plus 31% year over year. Revenues increased to $4.5 billion, plus 6.9% year over year. EBITDA growing by 32%, up to $281 million. The adjusted net result is $184 million, plus 60% year over year. Free operating cash flow has been improved by 29%. It is still in the negative ground. It's minus 411 million. The workforce has been increased by 5,600 units, and we have reached now more than 65,000 people in Leonardo Global. This data does not include the upside given by the acquisition of Iveco Defense, which has been, however, estimated as remarkable, Giuseppe will tell you more later. I mean, frankly, you guys, the numbers are very good, and the upside of IDV is very promising, so we could have even proposed an upgrading in guidance, but because tomorrow we will have the new CEO, I think, for fairness, we'll leave this choice to the next top management, but as you see, the numbers are very promising, and I'm sure they will do a fantastic job. Anyway, Q1 2026. confirms that the plan is solid, credible, and feasible. This is in line with the expected further growth, which is foreseen by the new plan. I remind you, by the year 2030, the challenge is 32 billion order, 30 billion revenues, 3.6 billion EBITDA, 12% return on sales, more than 2 billion free operating cash flow. This is in 2030. 2030. So this follows the already positive three-year trend that we registered during the mandate. I just want to remind you that in the last three years, we grew up by almost 20,000 people, reaching the 60,000 units. Importantly, one quarter were women. 64% of the new people own a technical background. and more than one half were below 30 years old. The productivity per capita has been increasing. I mean, the pre-COVID to post-COVID comparison, those are data at the end of 25, were increasing from 290 kilo-euro per headcount pre-COVID to 320 kilo-euro per headcount last year. The share value was growing from 10 to 64 maximum about one month ago. Market cap from 4.6 billion to 34 billion. That was under control. The free operating cash flow exceeded 1 billion for the first time in 2025. It was a psychological target almost, but very meaningful. And the margins are moving towards double digit through all the company, which was our main commitment since the very beginning. Which were the guidelines for our operations over the mandate? The first one was what we define bullets and bites, so this intriguing and unexpected merge of hardware and software, digital technologies and defense platforms that we've learned abruptly after the Russian invasion of Ukraine. The second guideline was no one can make on its own, so the need of alliances, especially at the European level, to fight the, to contrast the fragmentation of the European defense space, and also major acquisition in big collaborations among industries. The third guideline was moving quickly from conventional defense to global security, not only military deterrence, but also cyber security, space security, so space observation, infrastructure security, Energy security is something that we have to work on in the future and even food security one day. Which were the enabling factors that brought us to get good results over the three years? First, cleaning the portfolio and withdrawing non-core business activities that were heavy stones in the balance sheet. Launching a saving plan, a very strategic and systematic saving plan. transversal to all the company, a strong effort in digitalization. Today, we have one terabyte per headcount memory and .5 teraflop computational power per headcount. Those numbers are world-class. That means AI-driven products and processes, improved manufacturing, digital services towards servitization, of course, use of digital twin in all our hardware platforms, New services. Then the efficiency plan, because the demand of defense was growing because of the tremendous geopolitical situation, more than 60 conflicts on the planet. So we're working actively, we have been working actively in improving efficiency in production. And then, most important, a focus on specific technological priorities. Increasing digital capability, as I mentioned before, digital twin, AI, cloud, data analytics, high-performance computing. Develop hybrid warfare technologies. Develop interoperability in the multi-domain. Develop unmanaged system in all domains. Today, all our platforms, LAN, C, Air, have the unmanaged counterpart of any managed platform. Last but not least, we've been working on building a brand and the digital identity of the company, which was perceived like an old paper-based company. I think this transformation helped a lot in having more confidence in our approach. The tool for all this was the industrial plan, an innovative rolling industrial plan, which started in 23. primarily with the disciplinary capital allocation, dividends, debt, clear R&D strategy, organic and inorganic growth, the completion of the product portfolio covering all domains, both through investments in new products, just remind you, satellite constellation, high-performance computing, cybersecurity, or through M&A, land vehicles, drones, some new parts of cybersecurity, et cetera. The International Alliances and Mergent Acquisition marked the difference with the past. Land Defense had a new impulse through the collaboration with the joint venture with Rheinmetall, collaboration with KMDS, EVECO Defense acquisition, the recent one. Vicar and the drone technology. By the way, I'm happy to tell you that in a few weeks, we will launch our first drones in Ronchi del Legionari, the new models. So this will be after a few months, the collaborative drone venture started, will be an interesting inauguration. Even IVD, IVD, opens up some interesting perspective towards land drones. Again, in the multi-domain concept where you have manned and unmanned systems that are interoperable, interconnected. The new aeronautic division, which is now doing very well with the new orders on the fighters, GCAP, and the Eurofighter, the 346 and the Eurofighter, also has incorporated the aerostructure, and we've been working a lot to create an international JV on aerostructures, which is finally at reach. And finally, the cyber acceleration to enhance our AI capability and the new high-performance computing line of business that were created in 2025. In less than three years, all of this has generated the Michelangelo Dome project, a blend of electronic sensors and command and control at the center of the multi-domain, together with AI and cybersecurity, satellite constellations for Earth observation, and early warning, manned and unmanned air, land, and sea platforms in the digital continuum of the combat cloud. We became the only industrial company in the world that has all the hardware platforms and the AI digital capabilities to create the first open shield architecture for air defense that can accommodate any asset compatible with NATO and our defense doctrines. At the same time, the diversification and orchestration of hardware and software technologies makes us increasingly flexible, accelerating Leonardo's transformation from a defense company to a global security company. After three years, we'll leave a free, clean, and safe highway that must be traveled with great conviction, regardless of who is called to lead the transformation. And I'm sure that my successor and the new top management will move in the continuity because they participated in most of this work done so far. All of this has been possible thanks to the work of Leonardo employees, everyone from the first to the last in each of the 126 countries where we operate actively with production. The strategy is built, capitalized, and contracted. The plan is communicated. The job now is execution, not strategy anymore. Deviation from the plan could be detrimental for the company. About one billion-year self-funded R&D, in addition to the customer-funded two billions per year R&D, is key to keep the pace of growth and to make Leonardo a world-class player. This is a good capital allocation story applied to a novel technology story that's called bullet-and-bite vision. Both very timely in the current geopolitical scenario. Any short-term margin optimization through R&DCAT would cause failure. The engineering capability in conjunction with the unique integration of software and digital technologies together with hardware platforms and the consequent enhanced servitization will increase margins, EBITDA, through operating cash flow, and the overall competitiveness of Leonardo. I'm proud of the work done so far, and I'm sure there will be continuity by the next management. The last three years were fantastic. I believe there is plenty of room for further growth, and the acceleration ramp of the Q1 2026 is very encouraging. I want to thank all of you, dear investors and analysts, for your support, your constructive attitude, and for sharing the dream of a world-class Leonardo. Now it's my time to go, but maybe we'll meet again. Thank you, hopefully, for your support. Bye-bye.

Thank you, Roberto. And I know that today I can talk for everyone in Leonardo in thanking you for your outstanding leadership and for the contribution to the group over the last year. So thank you, Roberto. So back to Q1. It was a very strong start of the year, as Roberto said. So outstanding performance in all of our KPIs. Plus 30%, around plus 30% in EBITDA, free operating cash flow and order intake. Revenues up by 10% net of the exchange difference. And improved profitability up to 6.3% from 5.1% in Q1 2025. So again, strong start of the year. In the quarter, we completed also the acquisition of Iveco Defense. with a total consideration of 1.6 billion. EDV is not in the numbers we were discussing earlier. It was consolidated for the balance sheet and for the backlog, but for all the other flows, so income statement and cash flow, it will be consolidated starting April the 1st, 2026. Third point, very important, progress in the credit ratings. We have improved our rating with Moody's from BAE3 to BAE2, maintaining also a positive outlook. So good prospects for the future. And at the same time, Southern Pools confirmed the current rating, but improving the outlook to positive from stable. So this is a very important acknowledgement of the progress we have made from a differential standpoint. So Q1 results, Roberto has gone through them, just a couple of points. Again, orders were up to $9 billion in Q1 2026, so plus more than 30% plus than last year. Revenues were up by 7%. Again, it's 10% excluding the negative impact of the translation, mainly of the U.S. dollars and of the DRS components. EBITDA has increased by more than 30% compared to Q1 2025, and free operating cash flow is negative, as it is usually in our business, and it is expected, but much less compared to the past. So plus 30%, it is an important result of our effort to make the trend much more linear over the year, also negative in the first quarter. So let's focus now on orders. I said very important result, strong commercial momentum. Orders were up by 31% compared to Q1 2025, with a total backlog at 57 billion. So it's more or less 2.5 years of production, including also the backlog coming from IDV, which is something close to 6 billion. If we look at each sector, you see that the progress is spread over all the business. So we can say we are very much on track for getting our full year guidance. We see a very good commercial momentum in all the division. Of course, the value, the total value of $9 billion is also driven by a couple of big orders. I want to remind the NMH order in helicopters. for AW149 for the UK Armed Forces, which was a very important order for us. It was an important milestone, so very important to get it ready in the first quarter. And in the Aeronautics, where you see a big peak compared to Q1 2025, we have to remind the big order from the Austrian Air Force for M346. So a couple of big orders driving up to 9 billion, but all the sectors improving. Defense electronics has improved significantly compared to last year. 20% if we look at electronics Europe. Whereas Leonardo DRS was negative compared to Q1 2025, but because of a couple of effects. The first one is, as said, the negative exchange difference. And the second is the fact that in Q1 2025, DRS recognized a very important order on IBAS activities. So the trend of DRS is very positive. We will see when commenting revenues and debit pay again. Helicopters, as said, the performance is outstanding, of course, driven by the order for NMH, but also Q1 2085 has benefited from some important orders from governments, mainly the AW249 from the Italian MOD, so it partially offset the increase relating to the recognition of the NMH order. Aeronautics has said we have the Austrian order for M346, but we have also a number of very good success. We have IFA order from Germany and Italy and also C27J contract for logistics support for the Italian Air Force. So very good results, and very good results also from our structure. We will see better when talking about the revenues and the pay, but we see an increase of workloads, which is the key matrix for this division. Cyber and space, smaller division, but again, like last year, growth rate very important, plus 30% for cyber, 18% for space. This has led us to a book-to-bill, which is two times. So very important. It's a total backlog of $57 billion. Revenues. So let's talk about the execution of this contract. Up by 10%, excluding the negative translation of dollars, with improvements across all the business and all the divisions. So very solid performance. Again, very well on track versus our full year guidance. Let's focus on the different sectors, starting from defense electronics. We see electronics Europe growing by 15% compared to last year, so very good improvement, additional scale. Leonardo DRS, you see a red number, but just because of the negative exchange difference. Otherwise, it will be a growth of 6%. So performing very well, driven by RADA and Columbia Marine Plus programs. Helicopters, we are growing at a lower rate compared to the overall growth rate of the group, so around 3.8%, but you may remember that this growth is in line with our full year estimate, where we estimated a growth of 3.5% for helicopters, also due to the fact that over the last two years, we have been growing by more than 10% in each year. So very good performance, very solid performance in aeronautics based on our core program, so GCAP, IFA, M346, and C27J. Aerostructure, as I said, we see a big increase. Of course, this is mainly due to the increased rate of production on B7A7, You may remember that in Q1 2025, the rate of production was around four deliveries per month. We started the year 2026 with seven. Now we are at eight. So the increasing rate of production is driving additional revenues and improving the results of our structure. Okay. Cyber security and space, again, as we've seen for others, they're growing a lot. Cyber by around 20%, space by 14% on a mix of programs. Space is benefiting from the service components, so SAP com business and satellite systems and operations mainly. So very good performance in terms of revenues. well on track to deliver our full year guidance. And now let's focus on EBITDA where we see the outstanding results up 33% compared to Q1 2025. And as you can see, of course, this is partially due to the volume effect. So more revenues, of course, more EBITDA, but a big increase is due to the improvement in profitability margins. So with the return on sales going up from 5.1% to 6.3%. And again, very important for me, it is an improvement which is spread across all the divisions. So it's a general improvement compared to last year. Let's look now at the breakdown by segment of EBITDA. So, starting from defense electronics, which was the biggest contributor to this increase. plus 20% on a year-on-year basis compared to Q1 2025. If we look at the different components, you know that inside the EBITDA of electronics defense, we have four building blocks. We have Electronics Europe, we have Leonardo DRS, and we have the contribution from MBDA and ENSULT only at EBITDA level. So if we look at this breakdown, you can see that electronics Europe has grown up by 25%. So outstanding results. Ross already in double digit starting Q1. That's a result that usually we get later in the year. This year in 2026, we are already double digit in electronics Europe in Q1. So very important. DRS has improved by 15%. despite it was affected by around 10 million of negative exchange differences. So otherwise, the improvement would have been much higher. And again, they are running at around 10% return on sales. So they are closing the year at 9.8%, with a big improvement compared to last year, where they closed the quarter at 8.2%. Aircrafts. Aircraft, again, very solid performance driven by the programs I was remembering earlier. So plus 20% in terms of EBITDA compared to Q1 2025. Return on sale close to double digit already in Q1. So very good quarter also for aircraft. Air structure, as you can see, is negative, of course, minus 45. But we see a partial recovery compared to last year, where we closed the quarter minus 56. So it's plus 20%. And, of course, this is mainly driven by the increase of the rate of production on B7A7 I was mentioning earlier. very very important this increase it gives us much more workloads and so it reduces the losses during the year cyber plus 36 percent so again this is an impact mainly of the additional scale of increasing scales of cyber because we are increasing revenues but we are increasing cost, fixed cost mainly, and cost below the line much less compared to the increase of revenue. So plus 36%, again, like last year, you may remember, we got an excellent result also on that. Space, plus 100%. Here we have a strong performance of the service component, like in line with last year, also the payload and robotics Business is performing very well, getting some important orders also on some ESA activities. But, of course, there is also a big difference deriving from the partial recovery of the loss of the linear space. So it is still negative as expected, but it has reduced the loss compared to Q1 2025. And this, of course, has led to an improvement of 100% compared to last year. So key message, ROS is improving across all the business. We are already double-digit in electronics, close to double-digit in aeronautics. Overall, very good results, very strong results. And in line with our targets, we've been able to improve our free operating cash flow. which was a key target for us. It is a key target also to make the negative trend over the first nine months much more linear over the year. So free operating cash flow in general was up 30% thanks to our operating performance, of course, but also to the actions we are doing on the working capital. and on the effort that we are making to make this trend more linear, both in terms of revenues, EBITDA, and also FOX, pre-operating cash flow. So it is a strong increase, and if we look at cash flow used in operating activities so you can better appreciate the improvement because we have 0.2 billion in 2026 compared to 0.4 but this 0.2 billion includes also the settlement of the nh90 litigation for which we had a cash out of 100 million in the first quarter. So otherwise, it would have been around 0.1 billion negative, so a good improvement compared to V1 2025. And again, this is something we see across all the division. And back for a second to air structure, we've seen the results in EBITDA, which was in line with our estimates. Also, the cash drag from air structure was in line with our expectation. So overall, again, a very strong result also in terms of free operating cash flow. Free operating cash flow that contributes to the increase of our net debt, which is increasing up to 3 billion as expected, so perfectly in line with our expectation. Starting from one, of course, we had 0.4 of negative free operating cash flow plus 1.6 related to the closing of the acquisition of IVECO. So 3 billion group net debt, excluding the lease liabilities and the loans from joint venture, our net debt is around 0.7. So very strong balance sheet in our view, very disciplined approach to our capital allocation. We continue to see the progress and we continue to see the results. And these results have been, you know, well accepted also by our credit ratings. As I said, Moody's has improved our rating to BAE2 with a positive outlook, and we have also positive outlook from Standard & Poor's, so we will see in the future our possible potential additional improvements. And therefore, if we look now for a second at the full year, what we see for the full year, we can confirm our guidance. I mean, the Q1 gives us strong confidence in confirming our guidance for the full year with the new orders at $25 billion. Revenues at 21 billion, EBITDA at 2.03 billion, with a free operating cash flow 1.1, despite the settlement of the NH90 litigation I was mentioning earlier. So, we confirm our guidance. As I said, we completed the acquisition of Iveco Defense Vehicle in the second half of March, so we are now also in a position to continue communicate preliminary add-ons to group results coming from the consolidation of Iveco Defense. We will consolidate, as I said, profit and loss order and free operating cash flow starting from April 1st, 2026. And you can see what we expect from IDV for these nine months. So new orders at around $1.2 billion, revenue $1.1 billion, EBITDA at 0.12 billion and free operating cash flow at 0.22 billion. So, to conclude, very strong results, very good start of the year, very well on track to deliver our full year guidance and achieve our group results.