LEONARDO, BOARD OF DIRECTORS APPROVED RESULTS FOR THE FIRST NINE MONTHS OF 2023:

• ORDERS +14.8%1 AT € 13.3 BILLION VS € 11.6 BILLION 9M 2022
• RECORD BACKLOG € 40 BILLION; BOOK TO BILL OF CA. 1.3X
• REVENUES +4.8%1 AT € 10.26 BILLION (VS € 9.8 BILLION 9M 2022)
• EBITA € 644 MILLION (+6.3%1 VS € 606 MILLION 9M 2022)
• FOCF IMPROVED SIGNIFICANTLY AT € - 604 MILLION (+33.2%1 VS € - 904 MILLION 9M 2022)
• GROUP NET DEBT OF € 3.8 BILLION IN REDUCTION OF € 546 MILLION AGAINST € 4.4 BILLION 9M 2022 DRIVEN BY IMPROVING FOCF 
• RATED INVESTMENT GRADE BY ALL 3 RATING AGENCIES. STRONG COMMITMENT TO MAINTAIN SOLID FINANCIAL PROFILE
• FY 2023 GUIDANCE CONFIRMED
• RECOVERY OF THE AEROSTRUCTURES IN LINE WITH EXPECTATIONS. ON TRACK TO BREAKEVEN IN 2025

Leonardo's Board of Directors, convened today under the Chairmanship of Stefano Pontecorvo, examined and unanimously approved the results for the first nine months of 2023.

“The nine months 2023 performance confirms the strength of our business in line with our expectations. – Roberto Cingolani, Leonardo CEO and GM, stated – We improved our backlog and confirmed our competitiveness in all business areas. Aerostructures is confirming its recovery path in line with expectations”.

“All the economic and financial indicators – added Roberto Cingolani – are performing well, with a good increase in profitability. The expected reduction in intra-year cash absorption had also a positive effect on Group Net Debt reduction”.

“We are implementing the digitisation of processes and products – ended Roberto Cingolani – to further strengthen the competitiveness of our offer, integrating to the core our newer growth areas in Cyber and Space. We are working on the new Industrial Plan with the aim to present it with the FY 2023 results”.

^{(1)    Adjusted perimeter to exclude the contribution of Global Enterprise Solutions, sold in July 2022.}

9M 2023 economic-financial results
The strong performance already reported by the Group in 2022 continued into the first nine months of 2023. Such performance is far more significant if we compare the adjusted figures, which were restated to make the results of comparison homogeneous and more representative, taking into account the changes in the Group’s scope of consolidation, as set out below.

New orders recorded a substantial increase of 13.3% which went up to 14.8% compared with the adjusted figure in September 2022, especially driven by the European component of the Defence Electronics and Security business, thus confirming the strengthening of the Group market positioning in this sector. The commercial growth is even more pronounced considering that new orders in the comparative period reflected the order from the Ministry of Poland related to the AW149 helicopters.
Revenues were up by 3.5% (4.8% against the Adjusted figure), driven by significant recovery in Aerostructures (+32% against the first nine months of 2022) and the performance of the Defence Electronics and Security. The growth of Revenues was accompanied by a growth of EBITA of 4.0%, which appears more evident in the Adjusted figure or 6.3% on an adjusted basis, with sound profitability across all business segments.
Free Operating Cash Flow for the period improved by a significant 32% (33% against the adjusted figure), with a consequent positive impact on the Group Net Debt, which decreased by about 13% compared with the comparative period.

Key Performance Indicator with perimeter adjusted

For a better comparability of the Group's operating performance for the period, we report below some Adjusted performance indicators for the comparative period, excluding the main deconsolidation transactions from the Group’s scope of consolidation (GES business which was sold in July 2022). When compared with Adjusted data, the signs of growth in the Group’s New Orders, Revenues, Operating Profit and Free Operating Cash Flow previously reported are further strengthened:

2023 Guidance

In view of the results achieved in the first nine months of 2023 and the expectations for the coming periods, we confirm the guidance for the entire year as drawn up when preparing the annual financial statements as at 31 December 2022.
 

^{2023 exchange rate assumptions: € / USD = 1.10 and € / GBP = 0.87
1) Based on the current assessment of the effects deriving from the geopolitical situation on the supply chain and the global economy and assuming no additional major deterioration.
2) Assuming dividend payment of € 0.14 per share and new leases for ca 100 mln.}
 

Commercial Performance

• New Orders, amounted to EUR 13,275 million significantly increased (+13.3% on the Reported value, +14.8% on the Adjusted value) compared to the first nine months of 2022, thanks to the important contribution of the Defence Electronics and Security sector that recorded – in all the business areas of its European component – a sharp growth compared to the first nine months of 2022. The increase in the period is even more substantial considering that the comparative figure included the important acquisition of the order for the AW149 helicopters received from the Polish Ministry of Defence (€bil. 1.4). The abovesaid Order level is equal to a book to bill (the ratio of New orders to Revenues for the period) of 1.3x

• Backlog, amounted to EUR 40,186 million ensures a coverage in terms of production higher than 2.5 years. The successful sales campaigns launched in recent years led the Group to reach - for the first time - an Order Backlog exceeding the € 40 billion threshold

Business Performance

• Revenues, amounted to EUR 10,269 million, increased compared to the first nine months of 2022 (+3.5% on the Reported value, +4.8% on the Adjusted value), in almost all business sectors, including Aerostructures, which benefitted from resuming deliveries of B-787. The European component of the Defence Electronics and Security sector was particularly important

• EBITA, amounted to EUR 644 million, reflects the solid performance of the Group’s businesses, increasing compared to the first nine months of 2022 (+4.0% on the Reported value, +6.3% on the Adjusted value), thanks to the higher volumes recorded especially in Helicopters and in the European component of the Defence Electronics and Security sector

• EBIT, amounted to EUR 537 million, showed a slight decrease compared to the first nine months of 2022 (€mil. 552), due to higher impacts of the expected restructuring costs related to the additions to the agreement for the early retirement of the workforce in the Corporate and Staff functions (€mil. 20), as well as for the amortisation of the Purchase Price Allocation related to the acquisition of Rada, which was completed in the second half of 2022

• Net Result before extraordinary transactions, amounted to EUR 290 million, (€mil. 387 in the comparative period) reflected, on the other hand, the increase in borrowing costs, mainly linked to exchange rate operations and the effect of the non-strategic investments valued at equity

• Net Result, equal to EUR 301 million (€mil. 662 in the comparative period) included, in addition to the Net Result before extraordinary transactions, the capital gain of €mil. 11 arising from the sale of the ATM business unit on the part of Selex ES LLC. The figure of the comparative period reflected, on the other hand, the capital gain arising from the sale of the Global Enterprise Solutions and Advanced Acoustic Concepts businesses of Leonardo DRS, for €mil. 275

Financial performance

• Free Operating Cash Flow (FOCF), negative for EUR 604 million, improving significantly (+32.4%) compared to the comparative period of 2022 (negative for €mil. 894), thus confirming the path embarked on to reduce interim cash absorptions. The figure consolidates the positive results of the initiatives aimed at strengthening the performance of operations, streamlining and making working capital more efficient, and of a careful investment policy in a period of business growth and efficient financial strategy. The expected positive trend towards improvement however confirmed the usual interim trend that is characterised by significant cash absorptions during the year

• Group Net Debt, of EUR 3,813 million, reduced significantly (approx. €bil. 0.5) against September 2022, driven by the Group's cash generation.Compared to 31 December 2022 (€mil. 3,016) the figure increased mainly as a result of the seasonal cash outflow, as well as of the payment of dividends in July for an amount of €mil. 83 and the signing of new lease agreements in the period, for a value of €mil. 87

9M 2023 Key Performance Indicator

^{(*) EBITDA is given by EBITA, as defined below, before amortisation and depreciation (excluding amortisation of intangible assets arising from business combinations) and impairment losses (net of those relating to goodwill or classified among “non-recurring costs”).
(**) EBITA is obtained by eliminating from EBIT the following items: any impairment in goodwill; amortisation and impairment, if any, of the portion of the purchase price allocated to intangible assets as part of business combinations, restructuring costs that are a part of defined and significant plans; other exceptional costs or income, i.e. connected to particularly significant events that are not related to the ordinary performance of the business.
(***) EBIT is obtained by adding to Income before tax and financial expenses (defined as earnings before “financial income and expense”, “share of profits (losses) of equity- accounted investees”, “income taxes” and “Profit (loss) from discontinued operations”) the Group’s share of profit in the results of its strategic investments (MBDA, GIE ATR, TAS, Telespazio and Hensoldt), reported in the “share of profits (losses) of equity-accounted investees”.}