Mtu Aero Engines Hldgs Ag

Good morning and welcome to our conference call for MQ's nine-month 2026 results. We'll begin today's session with Johannes, sharing some thoughts on the current environment and recent developments. Following that, Katja will walk you through the financials. Johannes will share our guidance and will summarize the key takeaways before we open the floor for your questions.

With that, it's my pleasure to hand over to Johannes. Yeah, thanks, Thomas. Welcome, everybody. Today's key message is straightforward. MTU continues to execute exceptionally well. In the first nine months of the year, revenue grew by 13% to €7.1 billion, with an adjusted EBIT exceeding €1 billion and a margin of 14.6%. Most notable, free cash flow increased by 67% year over year to €466 million, resulting in a strong cash conversion rate This strong performance gives us the confidence to update our 2026 guidance in particular for revenues and for free cash flow. Let us start with a brief look at the market environment and some key business highlights from the quarter. The overall industry environment remains supported. Global passenger and cargo traffic continues to show resilience despite ongoing geopolitical uncertainties and elevated jet fuel prices. Flight cycles have steadily recovered since June this year with limited disruption from renewed hostilities. At the same time, we are not seeing any material changes in the airline's behavior. Demand for both the new aircraft and MRO services remains strong. This reflects the continued importance of fleet availability and operational reliability for airline customers. The aftermarket environment remains particularly strong. High fleet utilization combined with low retirement on mature engine platforms continues to drive demand for the maintenance services and supports favorable market conditions across the MRO value chain. The key challenge for the industry remains on the supply side. rather than on the demand side. Demand continues to exceed available capacity while supply chain bottlenecks and production constraints are limiting industry output. As a result, execution capacity expansion and supply chain stability remain critical priorities across the aerospace sector. Thanks to our diversified portfolio, MGU remains very well positioned to capitalize on the attractive growth opportunities across both OEM and aftermarket. Let's take a look at the GTF program. Execution of the GTF fleet management plan continues in line with our expectations. Improved operational performance, better availability of powder metal parts and additional shocks in the network have contributed to a higher output of TTF engines for maintenance. Due to an expected seasonal peak up in engine removals, AOGs remained relatively stable recently. We expect a further reduction of aircrafts on ground during the coming months. Overall, we see a significantly lower level of AOGs compared to one year ago. Good progress on compensations. We expect the remaining powder-methyl-related AOG compensation payments to be settled by the end of 2026. During the first nine months of 2026, we paid roughly $170 million. At the same time, we achieved important milestones for the GTAF Advantage. MTU assembled and delivered its first GTF Advantage engine this summer and in September United Airlines took delivery of the first GTF Advantage Power A321XLR. The aircraft has entered service the past weeks and we are very excited to see this engine in service now. Looking ahead, the transition from the PW1100 base production to the Advantage standard across the network will further strengthen the competitiveness and operational performance of the GTF program. The technological improvements of this upgrade will also be made available for the GTF base engines. After certification of the Hot Section Plus package, we expect to incorporate the upgrade during the shop visits already early next year. Let's move on to our MRO network and two expansion projects in particular. The opening of our Fort Worth VAT facility and the induction of the first CFM LEED-1B engine marked an important step in expanding NTU's global MRO network and capability. The site strengthens our North American footprint, adds significant capacity, and supports long-term growth. It allows us to increase our capabilities in the huge LEAP MRO market. In the second step, we will add GENX full engine overhaul capabilities, rounding up our profile for this new site. Jingguang already completed its 100th PW1100 shop visit just 18 months after opening as part of the successful ramp up of our global GTF MRO network. Jindwan's rapid start highlights the scalability of our global MRO network and our ability to efficiently expand capacity. The facility is well positioned to support growing GTF aftermarket demands through potential further capacity expansion and productivity gains. Let me now head over to Katja for the financials.

Thank you, Johannes, and a warm welcome also from my side. Let me start with an overview of our key financials. As Johannes highlighted at the beginning, we continued our strong performance in the first nine months. Revenues increased by 13% to 7.1 billion euro. In US dollar terms, revenues show a 17% increase. Growth was primarily driven by our commercial MRO and military business. In commercial OEM, Euro revenues remained almost stable. Adjusted EBIT increased by 5% to over €1 billion, resulting in a margin of 14.6%, a strong profitability while down year over year due to a different revenue mix with stronger MRO growth. Profitability was influenced by higher installed engines and strong spare part sales, as well as the Solid Military Business. Commercial MRO delivered a strong EBIT contribution despite ongoing headwinds from the capacity ramp up in our entire network and a high GTS MRO revenue share of 45%. Adjusted net income increased by 4% broadly in line with EBIT reaching 751 million Euro. Pre-cash flow is exceptionally strong at €466 million, an increase of 67% year-on-year and already above the full-year level reported for 2025. Cash conversion of 62% is ahead of our expectations and highlights our consistent focus on cash generation, operational excellence and long-term value creation. Now turning to OEM details on page 9. OEM continued to deliver a solid performance with strong spare parts demand and high military revenues offsetting OEM mix headwinds. Starting with Q3 2026, total OEM revenues increased by 15% in Euro terms driven by 16% growth in commercial OEMs and 10% growth in military OEM revenues. Military growth was mainly supported by NGFE and TP400 programs. In commercial OEM, organic U.S. dollar revenues increased by a low to mid-teens percent, reflecting high single-digit growth in OE revenues and mid-teens growth in spare parts revenues, particularly for the retention 500, GTF and PWC engine families. While installed engine deliveries increased significantly during the quarter, spare engine deliveries normalized from the elevated levels seen earlier in the year. Together with ongoing supply chain constraints, this led to OE revenues coming in below our initial expectations. As a result, we have lowered our full year OE revenue outlook. Johannes will provide further context on this in a moment. Consequently, adjusted either declined to 212 million Euro resulting in a margin of 28.6% in line with our midterm outlook. Headwinds from OEM mixed effects were largely offset by the strongest spare parts business and solitary military performance. Turning to the nine months performance. Total OEM revenues increased by 2% in Euro terms with commercial OEM revenues broadly stable and military OEM revenues up 13%, again, driven by the EG200, NGSE, and TP400 programs. Commercial OEM organic U.S. dollar revenues increased by 0.13%, supported by mid-single-digit growth in OE revenues and mid-teens growth in spare parts revenues. While spare engine deliveries remained broadly stable during the first nine months of the year, installed engine deliveries increased as expected. Adjusted EBIT stays even above our mid-term targets range. It reached 633 million Euro, corresponding to a strong margin of 30.3%. These earnings reflect robust spare parts demand and high military revenue growth, slightly impacted by the OEMs. Overall, OEM profitability remains fully in line with our full-year expectations despite continued supply chain constraints and BOE mix. Let's move to commercial MRO on page 10. Commercial MRO continued its strong performance in the first nine months, driven by GTS MRO and a healthy core out-and-out business, resulting in a stable EBIT margin of 8%. Let's have a look at the Q3 2026 numbers. Commercial MRO revenues in Euro were up 14%. In US dollar, revenues have been up 13%. Core MRO revenues in US dollar increased by 18%, mainly supported by broad base growth across independent MRO. MLS Leasing and Asset Management business and parts repair activities. The GTS MRO revenue share stood at 45%, reflecting a higher number of shop visits as well as high material content. Adjusted EBIT increased by 20%, resulting in an improved margin of 8% compared to Q3 2020 fund. Strong performance in our core MRO business including MLS overcompensated headwinds from the capacity ramp up particularly at NTU Fort Worth and Gen 1 and the higher share of GTS MRO revenues. Turning to the nine month figures. Commercial MRO revenues in Europe were up 19%. In US dollars, revenues have been up 23%. Within that, co-MRO Aero Engines Hldgs Ag, Ottmar Pfander, Silke Maurer, Thomas Franz, Katja Garcia Vila, Johannes Bussmann Aero Engines Hldgs Ag, Ottmar Pfander, Silke Maurer, Thomas Franz, Katja Garcia Vila, Johannes Bussmann The basic effects were basically identical to the ones described for the quarter. Let's move to page 11 for more details on our free cash flow. Cash generation was once again a standout of our performance in Q3 and the first nine months of 2026. In the third quarter, free cash flow more than doubled to 172 million euro, resulting in a cash conversion rate of 69%. Lower GTF AOG compensation payments and military prepayments were the main drivers of the improvement. Year-to-date, free cash flow increased 67% to €466 million, lifting cash conversions to 62%, slightly above our expectations for the full year. The improvement reflects lower GTF-AOG-related cash-outs, strong operational performance, military prepayments, and healthy dividend inflows. At the same time, we continue to invest in capacity expansion to support future growth. Excluding GTF-AOG compensation payments, cash conversion would have reached 81%, underlining the strong cash-generating capabilities of the business. Overall, these results confirm that MTU continues to translate profitable growth into strong cash generation while investing for the next phase of expansion. Let's now move to our Hatchbook on page 12. As already mentioned in our previous earnings call, we are fully hatched for 2026 at an average hatch rate of 114. For 2027, We increased our hedge coverage to 2.36 billion US dollars, in line with our hedge coverage target range, with an average hedge rate of 1.16. Due to our rolling hedging model, we are well positioned to take advantage of more favorable FX rates in the coming months, depending on US dollar movements. Our hatching policy and related actions limit the impact of US dollar fluctuations and provide greater predictability of our earnings. Turning to our order book now on page 12. Our strong order book of 29.8 billion euro continues to provide exceptional long-term visibility for both revenues and earnings. Demand remains strong across our businesses. In OEM, all the momentum continues to be driven by the GTF program, reflecting airline's ongoing need for fuel-efficient aircraft. In MRO, we see continued demand for widebody engines as well as mature narrowbody platforms, underlining customers' confidence in MTU's technical capabilities and global service network. Overall, Our backlog and recurring aftermarket exposure provides the resilient foundation for sustainable growth over the coming years. With that, I will hand back to Johannes for the guidance update and final remarks.