Indra Sistemas Sa Ord

Good morning. Welcome to Indra's first quarter 2026 results presentation. I now hand the conference over to Mr. Ezequiel Nieto, head of investor relations. Please go ahead, sir.

Buenos dias y bienvenidos a la presentación.

Good morning and welcome to the presentation of results of the first quarter 2026. My name is Ezequiel Nieto. I'm in charge of relations with investors. First of all, allow me to make reference to this slide which offers the legal framework for this presentation. I'd like to start by introducing the speakers in this session, José Vicente de los Mozos, CEO, and Miguel Cortés, Financial Director. Thank you, Ezequiel. Welcome, everybody, and welcome to the presentation of the results of the first quarter 2026. Since my arrival in May 2003 and the presentation of the Lead in the Future strategic plan and its phase focus starting March 6, 2024, InnoTeams are committed to the transformation of this company with solid work. We have been able to achieve the objectives we set to ourselves. During the presidency of Ángel Esquivano we have accelerated the industrialization of the group and now with the arrival of Ángel Simón I would like to welcome today. I am sure we will keep on accelerating our transformation. At a group level we keep on executing the rotation of our portfolio we have closed with the investment of BPO and we keep an active pipeline of over 20 operations. Besides that, we closed the quarter with a growth in our headcount of 3% compared to the first quarter of 2025, with an increase that's especially relevant in our headcount in defence, and has increased by 35% in terms of the milestones of our businesses. We have also achieved important investment in defence. We keep on expanding our industrial base in Spain with new plants in León and Córdoba that are already working in to open in the third quarter of 2026. Besides, we have close relevant international agreements with Rain Metal, DL, ELT and Andua. The last one provides us with capacities to develop artillery or self-propelled artillery systems adapted to the needs of the armed forces and will provide Spain with autonomous capacity and design and manufacturing sovereignty on track and land platforms. In Spain, we completed the integration of ISPA-SAT and ISPA-SAT in the group, which turns us into a player with end-to-end capabilities and position us to take the opportunities that are about to come that we will elaborate on next. In ATM, we just opened a new plant in Kansas. We'll be fully operational in there. fourth quarter this year in 2026, and we will keep on advancing in international contracts, key international contracts, including the modernization of radars of the FAA in the United States. In mobility, we ensure contracts, important contracts, TFL in the UK, the rail Mecca Medina in Saudi Arabia, the modernization of railways in Chile, And so, contributing to our international presence, I would like to inform you that the Washington, D.C. Transport Authority has proposed Indra as the winner of its ticketing tender. In Indramine, we started the deployment of a platform of sovereign AI, and we accelerated vertical use cases. In Meanside, we are advancing the investment of non-core units, and the optimization of the international footprint focuses in in Latin America. Besides, we have advanced in cross-cutting capabilities in the rest of the units of the group, but we already have 1,300 developers working on digitalization in defense, air traffic, space, and mobility. We keep on focusing on advancing and delivering, and that's why today, once again, I'd like to I mentioned the 2026 guidance over 7 billion of euros in revenue, over 700 million in EBIT and over 375 million euros of free cash flow. No changes and with conviction. And besides, I'd like to ensure you that we will check how revenues are going to keep on growing quarter after quarter aligned with our delivery agenda planned for 2026. These results as you will see, are above our initial budget in the Living the Future strategic plan that we presented back in March 2026. I'd like to zoom on our transformation in IndraSpace, with the integration of EastBasad and EastDesad. In the group, IndraSpace operates as an integrated layer with end-to-end capabilities, which positions us As what sets us apart in an excellent moment, if official investment in the space sector is growing strong at the European level, the budgets of the European Space Agency for 2026-2028 plan have grown by 32% compared to the previous cycle. At the national level, this increase of investment is translated into binding commitments. You know that Spain is the fourth contributor to the European Space Agency, and it has the commitment to keep on advancing within the space strategy. For example, the Spanish Airspace Agency has approved over €625 million distributed in key programs such as the ESEA+, LEOPNT, IRIS II and launches. In terms of specific programs, I'd like to share two important messages with you this morning. First, IRIS II. is a reality, and the European commitment and interest are already developing its roadmap in its participation, about its participation, and according to its evolution, we'll provide you with further detail on its scope. At the same time, we have also launched our industrialization plan on satellite components with construction that's planned to be ready for the last quarter of this year. As you know, we are a defense and technology company And in this sense, we are, of course, we are aware of the disruption of artificial intelligence in our businesses, and that's why we are analyzing, according to our experience in the sector and our technology capabilities, how the transformation of the business should happen and how MINSight should be transformed. We are focused on accelerating our capabilities and improve the profitability of the technology business And after carrying out a 360-degree analysis of our daily operations, we have made a series of decisions, first divesting non-core units, which has allowed us to free resources and increase average revenue per employee. Second, creating cross-cutting capabilities beyond meanside in the rest of the group, we already have 1,300 developers that provide direct impact in the profitability of Mindsight and an acceleration in technology elements such as, for example, the integration of artificial intelligence in the development of new radars for civil as well as for military use. Also, the optimization of international footprint with the One Latin Plan, whose objective is to reduce over 2,000 technicians this year and we have already been able to reduce 1,000 already. And besides that, we're walking along strategic lines that position us as a technology group that's referenced in artificial intelligence. Today, our sovereign AI and introvert necessary reality has already been deployed in over five clients and with a solid pipeline for 2026 to 2028. We are already catalyzing the transformation of AI all throughout the group in solutions for clients in business processes and in corporate processes. We are and will be partners in the transformation of the business and the operation of our clients and in the application of AI with a purpose, which means that applied AI will have real impact in the business model of our clients. Of course, we will accompany them in the application of AI in a differential manner. And besides, we are accelerating products and vertical use cases with the support of our very wide knowledge in the sector. All of this is already ongoing, and so the first quarter is a good reference on which we should keep on building. We are making decisions with main size, advancing the disruption of AI, and we have a roadmap that we will present in the phase leading the future scale up, that goes from a sovereign platform all the way to applied AI in the processes we are transforming. Before, we start talking about the financial results. I would like to share with you a short clip, sometimes an image worth more than a thousand words, to show you the speed of the industrial transformation that's actually taking place in the group to increase our industrial capabilities and improve their delivery in the next quarters and years.

At Indra Group, we are building a strong and competitive industry with comprehensive capabilities at the highest technological level. With determination and speed, we are expanding our industrial footprint and incorporating new production and engineering centers. In Asturias, we have consolidated our presence with the transformation of new facilities in Quijones for the manufacturing and modernization of next-generation military land vehicles. We have launched a new center in Cordoba, which will be a benchmark in innovation and advanced reindustrialization, and from which we are already producing radars and critical defense systems. Our industrial commitment extends to the United States with our new center in Kansas, which has already begun manufacturing communication systems and will soon add the production of air traffic surveillance systems. These are some examples of how we are moving forward successfully and without pause in our industrial growth plan and how, with commitment and in record time, we turn challenges into realities. Nothing stops us. Indra Group.

And now let's start taking a look at the financial results of the group. The results of the first quarter show a clear picture. We are meeting what we committed to and we are doing it in all our business lines. Backup reached 20.3 billion with growth of 154% and also another intake of 2.8, almost 2.5 million, 56%, compared to last year, which shows the trust of the market in our proposal and our solid position in defense and ATMS. In terms of revenue, we have grown 14.6%, up to 1.3 billion, with all our divisions showing positive figures this year. If we zoom into the results of the defense division, we can show that Income linked to the PMS Spanish modernization plans are not linear throughout the year due to the planification on the planning of milestones in projects having an impact in every link to those milestones. However, in the defense division, we'll keep on increasing our sales at an important pace. And I can already mention this morning that sales in the defense division in the first half of 2026 will be beyond 1 billion euros, which is twice the sales of that division, if compared to the first half of 2025. What's actually most relevant is that the improvement of revenues in this first quarter of 14.6% turns into real profitability because EBIT margin reaches 8.9% with an improvement of 0.7% and EBITDA growth 24 and 55,000 respectively. Net benefit is 76 million euros, 28% more than the first quarter 2025. And free cash flow generation, especially high with 1.4 billion euros in the first quarter compared to 77 million last year, which is perfectly explainable due to the advancement received due to the modernization special programs, net debt increases position up to minus $855 million with a ratio of minus 1.3 times LTM EBITDA, which provides enough financial strength to keep on investing in growth. As a summary, a first quarter that's aligned with annual objectives, that gives us solid foundations and trust to keep on building the rest of the year. If we now take a look at the report, results of sales in the first quarter, which we have achieved a growth of 15% in local currency and 6% in organic growth, the positive impact of our acquisitions with organic growth have balanced out the negative effect of forex. I would also like to mention that over 63% of the EBIT of the group comes from aerospace and defense business, as we can see in the chart at the bottom of the screen. Our headcount has grown 3% up to 62,689 people, mainly in defense, which increased its headcount up to 7,296 employees, aligned with the acceleration of the business. Revenues for employees grew 11% compared to March last year, and if we include the effect of the divestments that have already been announced, the improvement will be beyond 15%, which is a trend that will keep on improving as those divestments keep on happening. If we take a look at the detail by divisions with its evolution and the main models of each business in the quarter, in defense... It's a quarter that confirms how strong a business is in all its dimensions, both backlog, order intake, and revenues as well. Backlog grew by, oh, sorry, order intake grew 43% of push-forward simulation, special modernization programs, the international FCAS program. MyRAN systems are unified around programs that provide visibility in the long term and increase book-to-bill to 1.8 times. Revenues grew 33% with land-based systems, TSS, VCR, and naval systems especially, which show the programs are already under execution. In that sense, I would like to mention that the TSS, VCR, since we are in control of TESS, we are also monitoring and controlling the manufacturing and projects And we will see an important evolution in the delivery of vehicles to our clients. As I already mentioned earlier, we are going to see a very clear acceleration of EBIT and revenues starting in the second quarter as a result of the milestones of the special modernization plans. Margins still have a reference in the sector EBITDA 25.7% and EBIT 18.1%. In space, it's a quote said by the integration of space and space that transforms the size and the profile of the division. In fact, this is the first time we show results of space independently. The backlog reached 2,868 million and other intake grew 87%. pushed by America the services of Ispasad in Peru and Istesat, businesses that provide visibility and reoccurrence in long-term. Revenue grew 393%, mainly due to the consolidation of Ispasad and Istesat, that for the first time are fully integrated in the scope of the group. The consolidation of both companies also transforms the profile of the margins. Every day it goes from minus 8% to 38.8%. and EBIT from minus 11% to 6.6%. So, at the vision, it's entering a new profitability phase. In ATM, a quarter that reinforces our position as one of the world reference brands in the management of aerospace. And, humbly, I'd like to mention that I am sure that a digital solution in air traffic is the most advanced solution in the sector, as can be seen with the results. Our auditing grew by 47% thanks to radar contracts with the American FAA and in the UAE, two markers of high strategic value that increase our book-to-bill to 3.12 times. Revenues grew 17% with Brazil, Canada, UAE and Vietnam as our main contributors in air traffic management systems and radars. Margins are still Stable EBITDA is 16.8% and EBIT 13.5%. In mobility, our order intake shows the advancement of our international ban. Order intake grew 422% pushed by the contract of transport for London and the maintenance contract of railway system maintenance in Saudi Arabia, two very important references at the international level. Revenues grew 1% thanks to the tolling in the United States and intelligent transport and ticketing systems in Spain that are partially balancing out lower revenues in Europe and EMEA. Margins are at 4.7% in terms of EBITDA and 0.9% for EBIT. In MINSIDE, profitability increases and, well, other intake is improving. The auditing increased by 8.8%, pushed back by administrations and health, with a growth of 58%, and financial services, with a ratio backlogged to revenue. It's above 1 for the first time ever, and precisely 1.02%. That's the backlogged revenues LTM ratio. We have grown our revenues with administrations and health, as the main engine margin, EBIT margins, already reached 5.9%, with an improvement of 0.2 points. And towards the rest of 2036, my priorities are clear. Before October 31st, we will present our strategic plan leading the future scale up. An ambitious plan that's aligned with what we have shown we're capable of doing. And providing disability after 20, 30, three years ago, we started a strategic plan, a strategic change in INGRA Group. That phase is reaching its end, and now we're starting the next phase. We have a solid and robust roadmap and it helps our equity story to be kept. At the same time, of course, we continue with implementation of our industrial plan. We have programs to deliver factories that we have to get ongoing and engineers and professionals that we need to attract and train. We are focusing on delivering, delivering and delivering. In terms of internationalization, We have advanced a lot in Spain and we have consolidated our base. Now we have to make the most of this momentum to keep on growing out of Spain, both from an organic perspective as well as from an organic perspective. Geopolitics provide us with those tailwinds and we have to capitalize it. And last, which is not really this important, we have to keep on advancing in the transformation of the culture and the integration excellence in our group as I mentioned at the beginning of this presentation I would like to once again affirm the guidance of 2026 for three years we have been consisting in delivering objectives as already mentioned in the previous presentation of results of fiscal year 2025 we increased our guidance for 2026 setting objectives are 17% above the original strategic plan in terms of revenue and EBIT, and 19% above are planning free cash flow. Today, once again, I'd like to highlight that we are going to meet this new guidance for this year, and once again, I offer my full commitment to keep on leading this project. Now, I'd like to give the floor to our Financial Director, Miguel Forteza. Thank you, José Vicente, and good morning, everybody. We'll start with free cash flow. First thing I'd like to highlight is that the company has achieved in the first quarter of 2026 a free cash flow that's extraordinarily positive, 1,444 million euros. That can be clearly explained due to the advancement received from the special modernization programs in which Infogroup is the main contractor or is in a joint venture with other companies. These advancements were received in the second week of January and we have already started investing in CAPEX and OPEX, getting them to the ecosystem of our suppliers and partners that are going to be our contractors. In such a way, out of those advancements received in January, the net impact at the end of the first quarter, after discounting what's already been invested, is huge. 1,671 million euros. In the next quarters we will see how the reported free cash flow, of course, will reduce as we use those advancements to execute the programs. And another relevant aspect that is a change compared to the practice of the past few years is that for the first time we have not used factoring in closing the quarter. Of course, the availability of cash flow in our accounts makes it inefficient to use this resource that historically accounted for 187 million euros in the closing of each and every quarter and had been so for many years. However, And in order to be able to compare this year to the previous year and to be able to report the cash flow generation in a comparable way to our guidance, that's over 375 million euros on the right hand side, you can see how we go from the reported cash flow of 1,444 million euros to that year-on-year free cash flow of minus 40 million the first quarter. Adjusting by year-on-year factoring and the net advancements of plans. These result comparable free cash flow for minus 40 million in the first quarter compared to the 77 million in the first quarter of 2025 is the logical result of greater CAPEX and working capital. Excluding advancements of PEMs and response to investments and expenses needed to execute the programs and the contracts committed in our portfolio. And, of course, that's not at risk to our guidance of over $375 million in fiscal year 2026, excluding the advancement of those PEMs. On working capital, the evolution of... accounts receivable or can be explained to the advancements of PEMs which is minus 119 days of sale and also due to the net possibility of effect on date of sale of the consolidation of Ispasana and Istesat that accounts for minus 34 days of sale contrary to that stock increased 224 days due to the start of contracts and industrial transformation of the group, and also due to the integration of TESS that started in June 2025. As a result, at the end of the first quarter of 2026, we are at minus 124 days of sale compared to the minus 9 days that we had in March 2025. And now let's start talking about the evolution of net financial debt in the first quarter of 2026. The company closed the first quarter with a net cash flow position of 855 million euros compared to a net debt of 583 million at the end of fiscal year 2025. This change can be mainly explained due to the advancements received from the special modernization programs that at the end of the quarter accounted to a net figure of 1,671 million euros. Besides that impact, we must highlight the solid operational cash flow of 158 million euros can be compared to the 98 million euros that we had back in the first quarter of 2025. Of course, that's the result of a good operational evolution of our businesses. CAPEX increased significantly up to 59 million euros compared to 5 million in the first quarter 2025, aligned with our bet of the industrial transformation of the group. As a consequence of what we've seen before, the levered ratio of net debt every day improved to minus 1.3 times at the end of the first quarter compared to minus 0.2 times in the first quarter 2025. And last, in terms of the structure of our debt, I'd like to mention that we keep on advancing in reducing the cost of our gross debt. That's now down to 2.9% at the end of the quarter, coming from 3.1% that... we had in 2025. The average maturity of debt is now 3.9 years compared to 3.1 that we reported at the end of 2025. At last, we have closed that quarter with a consolidated cash flow of €2,350 million as a consequence mainly of the advancements received from the plans that we have already mentioned. Besides that, the company has 1,015 million euros in additional credit lines, amongst which we can include funding from the Investment European Bank that accounts for 385 million euros with the defined use of those funds. And that is the end of our presentation and we will now like to start the Q&A session.

Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press a star followed by five on your telephone keypad. And our first question comes from the line of Michael Bliss from UBS. Please go ahead.

Good morning. Thank you. Obviously a very complex quarter in terms of the impact on defense and pens and cash flow. I know you don't guide quarterly, but you must have some sense on the milestones and their achievability. Could you talk a bit about Q2? I think you did say that there would be more milestones hit, but how much of progress do you think we'll see in the second quarter in TESS and PEMS specifically? Also, I heard you mention inorganic expansion both inside and outside of Spain. Can you give some sort of weighting of the probabilities, the quality of the pipeline, and anything on timing there? And then equally, are there any more of the 2025 pens that has not yet hit your order book for various contracting reasons to arrive, and any insights into the timetable for 2026 pens and the nature of the contract. Thank you.

Well, if we start with T of a test, as I mentioned since the end of the year and now Indra has most of tests and one of the things we have done has been most certainly having control on its operation and the best thing we can do is control the manufacturing process. That manufacturing process is a reality already and we actually see that in The results in vehicles delivered to our army, we can see that operation levels are improving every day. And the budget we've got is to be able to deliver 80 to 90 vehicles and over 400 million in revenue. I can already tell you that we are going to exceed 100 vehicles delivered at the end of the year. That's our aspiration and that's what we're working for. On PEMS 2026 we still have no information that's the Ministry of Defense of course we're working and quite clearly the INDRA group is a company that's a reference and essential in the defense ecosystem in Spain and well that's why I am sure we will keep on having the trust of the Ministry of Defense and our armed forces, and that's what we're working for. But the best trust is to show that if modernization plans that we are being awarded are being executed, and that's what we are doing, not just in terms of delivery milestone, but also in how it permeates the Spanish system. We have experience in EFCAS, for example, over 30%. has been layered throughout all the companies and that's also our objective with our special modernization plans we had our first event in Madrid with our suppliers in March and in May we're going to have another one in Catalonia aligned with the corridors set by the Ministry of Defense on inorganic deals? Well, as you very well know, until the operation's been closed, it's better not to say anything. In the context, that's not easy, because every country wants to keep its own companies, and in organic operations cannot always be, you know, a purchase of a majority stake of a full company. I believe they're going to help us establish alliances, and I believe that alliances such as the one we have with Ray Metal for vehicles, with Electronic of Rome and Leonardo in defense, I believe they are aligned with the idea of having INDRA as a European leader and the best example are the EDF programs of the European Union. INDRA has been amongst the companies that have won most of those contests because we believe we are a Spanish multinational company but we focus in Europe and we are very much committed with the NATO programs and projects and well As I mentioned, sales will keep on growing quarter after quarter. And, well, last year we received a great portfolio, and we need some time to keep on organizing these projects. And the guidances, there are 700 million of EBIT at 10%. And that's a commitment that we are sharing with you now, and I am sure we are going to be able to meet it.

Siguiente pregunta, por favor. Next question, please.

Next question from the line of Carlos Treviño from Banco Santander. Please go ahead.

Thank you. Have you perceived any impact that will impact the business over various quarters? And three more specific ones. Carlos, Carlos.

Carlos, Carlos. Please, can you start the question again? Because we couldn't hear you. I'm sorry.

Can you hear me now? Perfect. Perfect. Yeah, my first question was on the conflict in the Middle East. So I was wondering if there is any impact in your business, or do you think that the conflict is going to mean any impact over the next quarters. And three more specific ones. The first one is on the international tech task project. You have highlighted in the first that you have received a new order from this project. My question is, if this change you are expecting for the year, before you were expecting another one or 200 million euros from the tech task project for this year, this new order could mean incremental business there. And specifically on two business divisions, for the space, revenues have dropped by minus 24% year-on-year in Q1 organically. You are highlighting a tough year-on-year comparison. I would like to ask you for the expectations that you have in space for the rest of the year. And also the last one on the main site, 2% organic growth in Q1. This is slightly below the growth that we have seen recently. So my question is, if still you think that you can go at the round with the single digit for the year as a whole in the inside, and, well, I assume that especially looking at the good evolution in the backlog, this could be possible. But I would like to ask specifically also on outsourcing, where perhaps the drop of minus 5% has been decided at the previous quarter. Do you think that these trends could accelerate or not? Or this has been only one quarter, and we can see a normalization moving forward? Thank you. Gracias, Carlos.

Thank you, Carlos. We'll start with the Middle East. The impact of the business, as you know, in the Middle East, we have a joint venture with Edge and we are fully in touch with them. The impact can only be positive. There's demand especially for editing systems and what we're working on is on the delivery of some elements. that we can deliver this year and those are opportunities that were not had not been included but those opportunities until they actually materialize well I cannot actually provide it with more data on it on FCAS we haven't got information on this year you know the situation of this program it's a European program Spain is currently with a third so the return should be one third and you know the debate between Airbus and Dassault on whether there's going to be one plane or two planes. Given that we focus on systems, we're just waiting for this decision to be made. And then we'll see. In 2026, we expect around 206 million euros of revenue from the international aircrafts In terms of space, it's a matter of calendar. This year we expect to have a revenue of over 400 million, and we expect to meet those figures. And while I wouldn't focus so much on the first quarter, because this is going to be balanced in the next quarters, on the main side, when we see our competitors... just firing people, and not only are we not guaranteeing those jobs, but we are actually increasingly rapid, and we are creating cross-cutting capabilities. That's something that surprised me within Indra, how on having our digital capabilities we were not accelerating R&D, technology R&D, and the rest of the divisions, such as Raiders and in Ingramind where we have the first contract so we are sure that we will keep on improving the profitability of Mainsight but the issue here isn't just to improve profitability we need to transform Mainsight and make sure we have an IT company that's going to be referential by integrating especially the disruption of AI and integrating all the technology disruptions that we are facing and that we are being able to face. And then we have Latin America. I believe that our business in Latin America was not efficient enough. We've got a one-latham plan and program that we designed at the end of last year, and the message was clear. If we want to survive in this world, We must be best in class and improve our excellence and focus on added value businesses. That's why in Latin America, we've already got over 1,200 people focused on cyber security. We are integrating and reminding countries such as Brazil or Colombia. So our idea is to transform and make the most of MinSight. And we'll see this in the strategic plan and turn MinSight into a modern IT company that's agile, that's best in class in terms of technology. Thank you, Carlos. Next question, please.

Thank you. Our next question comes from the line of Jessica Agarwal from Goldman Sachs.

Please go ahead. Hi. Thanks for taking my question. A lot of my questions are answered, but just following up on the question on defense, I think It was mentioned in the call that like first half, it depends. The expectation is more about $1 billion plus of revenues. So that means roughly about like $700 million for the second quarter. Am I understanding it right? And if that's the case, what are the puts and takes there and how should we be thinking? Will the phasing be like again in the second half, it will be more fortuated is how we should be thinking about it? Any color would be helpful. I think that's it from my end.

As I mentioned, within the special modernization plans, it's a matter of the milestones and the timing of the milestones, including the projects. So, according to the different milestones in different programs, we will keep on executing those sales. That's work that's done jointly with the Ministry of Defense. First, we have to agree on the delivery milestones. And, of course, that will provide us with that acceleration in sales. Next question, please.

This question comes from the line of Marco Vitale from Mediobanca. Please go ahead.

Mario, thank you for taking my question. The first one is a follow-up still on the defense business. I think you mentioned that you expect, say, over the first part of the year to exceed one billion. If you could just confirm this and also if you can provide some, say, qualitative indication of what projects, which projects will understand the from acceleration besides pens. Second question is about the large intake that you awarded within the air traffic management business, also mobility. If you could, I'm referring to the, say, transport for London and also the U.S. router replacement. If you could provide us any guidance in terms of timing that you expect. in terms of P&L impact for those projects. And last question, just a clarification on the prepayments from PEMS. Should you award faster contracts over the first part of the year? Should we expect additional prepayments to be associated with that? And potentially what could be the timing for this? Thank you.

Well, Miguel?

Well, I'll start a bit on the backlog, and then you can start talking about the results. Well, on our air traffic management project, when we turn it into an individual division, that provided a lot of traffic, because as you know, In each country, there's only one client. And the fact that we have one division that's fully focused and with the digital acceleration that we are providing in traffic management, this shows the quality of our business. And that's why that portfolio is increasing. So, for example, one of them is the Raiders for the FAA. And the plan was to deliver two secondary Raiders, one in the first three months. And we have delivered them. So today in Kansas we are already delivering and the contracts actually were signed four months ago. We are going to have raters for the United States producing in the United States I believe that the response provide a trust and that's why our guidance in terms of revenue is two digits in 2026 because when the contracts are there we have to start delivering and I believe that being agile and having a contract in December, the one we had in December and by the end of April, having delivered three raters already, that shows that something is changing in the mindset of Indra. And on mobility, well, as you know, those are contracts. Those are very long-term contracts. And, well, revenue, the revenue stream is a bit different. And this year we expect one-digit revenues. And just to mention about future projects and revenues in defense, besides what was clearly mentioned about what we expect in test, we are going to contribute to our revenues and also PEMS. I believe that acceleration is clear. We also expect growth in defense. Coming from Eurofighter, you know, we have a revenue forecast at around 280, 285 million, compared to 260 million last year. We expect growth in radars, simulation, electronic warfare. So, we expect still have a positive view, as has been mentioned. In terms of potential advancements or prepayments, well, as you know, and as we have explained, we have some gross advancements of around $1,150 million, from which we have already discounted, as mentioned, what's already been transferred to the suppliers and OPEX. And we understand that, as mentioned by our CEO, of course, that those transfers are going to accelerate because we have to make those funds available to our suppliers and contractors. It's true that part of the advancement received this year has not been deployed or is still restricted, such as the dev projects, And of course, those will materialize as soon as they are approved, and as soon as that cash is available, that's now restricted, as well as some other amounts, which are minor amounts. In terms of whether or not we're going to see some advancements or prepayments this year or next year, that will probably depend on how future programs materialize, and we'll see for the year. And there's one additional... element on revenue in defence. So we have actually changed the way in which we work. We just started our projects in the automotive sector and I would like to give you something we decided to manufacture 12 LTM Raiders and 100 equipments of land warfare anticipating potential programs. The culture used to be we won't invest as long as we haven't got a program. But now, I cannot tell a country in a conflict to give me the program that I'm going to be delivering in three years' time. On the L25 radar, you know, that's one of the main radars. At the end of the year, we'll be ready to have 12 to 15 radars ready to be delivered, which shows our agility And that's the change of industrial mindset that we have carried out in the group. So that's this program, and there's part that we manufacture with the client, but there's part of it that we manufacture for potential clients. And why have we done that? Well, because we have worked on design to cost. When I was here, there was under 10% of standardization raters. Now we have 14 raters. We've over 60% of standardization which allows us to reduce delivery times and before it took Indra three years to deliver radars and now we are saying that in under 12 months we are going to be delivering radars and that's going to bring about opportunities in the Middle East or other countries so if we have product that can be delivered in so to speak show time this will provide us with additional operations and that's what needs to be done We have to make the most of all the investments that are now in R&D and within those PEMs to accelerate our internationalization. I believe that today we are world leaders in graders as well as in ATM and defense. But there's yet another field in which we are working hard, which is electronic welfare. I believe we have something to say here. We are working on it and we see this in... naval and marine, warfare, and that's the way forward. It's just that between, you know, we have development times and programs, so we have to be patient. But we'll see how sales are going to increase. When we compare first quarter 2025 with first quarter 2026, in 2025, revenues in defense were $470 million, and this year, I already mentioned that it's got to be double that. That's thanks to the work of our teams, our commitment, development, and getting factories working and just traveling around the world and positioning Indra as a reference company in defense and technology. Thank you. Next question, please.

And from the line of Lorenzo Di Patrizzi from Bank of America, please go ahead.

So my first question, what should we expect from the change of the group chairmanship, notably regarding the possible Yemeni transaction? Secondly, what traction are you getting on Indramind? What revenue and EBIT contribution should we expect from it in full year 26? Down space, how should we expect margins to evolve medium term, given they were quite strong in Q1? And lastly, could you please remind me of the contribution you expect from FCAS and Eurofighter in full year 26?

Let's start. Well, I believe we have to differentiate governance from operations. We have gone from an executive president as Ángel Esquivel and I believe he really pushed that industrial advancement, he is an entrepreneur and he knew the sector very well. And now we have a new president, a new chairman with great international experience and governance experience and I believe his vision is also going to be important both his view as well as the board's view on the M&A operation. I mean, this is, I believe it's quite simple. The ones who stopped the operation were Esquivano. They stopped this potential deal. So when there's a negotiation between two companies and one of them says that right now the circumstances aren't right, well, the only thing I can say is, well, nothing, really. Just wait. Today they make a decision. We'll check it. But today, if they believe it was not the right time, I have nothing to say. And of course, I respect their decision on Indramind this year already. And integrating development, the revenues are going to be above 100 million. 100 million in the first quarter. And if it is going to be above the average of the group, it's 10%. Miguel? Well, yes, on margins that we expect coming from the different businesses in defense. We mentioned we expect a very clear increase of revenues with margins that are going to be close to the margins we have had in the past if we exclude the effect of the sales of tests we expect. to be around 17, 18% where we've been in the past. And in terms of space, the guidance we can provide is that we expect to go beyond 400 million of revenue this year. In air traffic management, we expect the growth, well, or double digit growth, mainly, due to the great contribution or above the contribution we got last year, an EBIT margin that's going to be between 12% and 13%. In terms of mobility, we expect revenues around high single digits and an EBIT that's going to be close to the one we had last year. It's going to be around 6%. And in insight, as explained, we expect mid-single-digit growth

in terms of revenues, and we expect to go down to about 6.6% and a bit higher than that we had last year, and we expect to be around 6.6.7 or between 6.6 and 10.7, that's what we expect to be. And in terms of FCAS and Euroviders, FCAS suggests that Euroviders Last year, last year, the revenue from the past was about $214,000, and this year, we expect to end over $250,000. In your fire, the other way around, the revenue from the first quarter was $1,000,000, compared to $1,600,000 last year. And we expect that.

I have a couple questions.

First, on the size of M&A operations mentioned, and which size of those operations could have. And second, I don't know if you can share with us the order book EBIT margin. And next one for Miguel. If we exclude non-accessible cache of PEMs, what's the dead or accessible cache available to Indra? On M&A, I mean, their purchases are going to be sales. sizes so I will see this is just as when you go hunting if you find a good animal of course we won and just let it go by but until you see or can but you don't really know if you're gonna go back home with with the you know two pigeons or it's gonna be a big game So we know our path. It's not a matter of just buying for the sake of it. It needs to provide me with capabilities that I haven't got or synergies that make my business more efficient or open markets I'm not in. If those things are present, well, that's what we're saying. And it can't be just a matter of buying. I think we can find some alliances with some other companies in some sectors that can actually position myself as a reference in that sector. So everything is quite open, and it actually depends on the opportunities that we'll find. And Miguel? Yes, well, on the second question, I mean, we cannot mention those specific margins. And on the third question, if we... don't take into account those advancements coming from the PEMs, and take it into account, and if we're talking about the factory of 180 million that I explained earlier, that are no part of our net financial debt, we'll have a net debt of around 630 million. And I believe that explains this free cash flow of minus 40 million. In any case, it will be below one times EBITDA in comparison without VEMs and factoring. It will be around 630 million. Thank you very much. And last, very simple and easy messages. Our objective is 7 billion, 700 million of EBIT and 375 million of free cash flow. We are in a new governance space, but the teams are committed. not just the teams, but also myself. And in that sense, there's a lot of speculation. My full commitment from my side, and the board decides it, I will be happy to keep on working, because I believe that the project of INCRA Group right now is amongst the most appealing plans that we can have in our country. And in that sense, We keep on working to transform this company, which is a referential in our country. Thank you very much and see you at the end of the first half of the year. Thank you.