HENSOLDT

9M 2021 Results – Analyst & Investor Presentation

Ulm, 10th of November 2021

Thomas Müller, CEO Axel Salzmann, CFO

Disclaimer

This presentation and the information contained herein are for information purposes only and should not be treated as investment advice or recommendation. It is not, and nothing in it should be construed as an offer for sale, or as a solicitation of an offer to purchase or subscribe to, any securities in any jurisdiction. Neither this presentation nor anything contained therein shall form the basis of, or be relied upon in connection with, any commitment or contract whatsoever. This presentation does not constitute a prospectus in whole or in part, and any decision to invest in securities should be made solely on the basis of the information to be contained in a prospectus and on an independent analysis of the information contained therein. This presentation may not, at any time, be reproduced, distributed or published (in whole or in part) without prior written consent of HENSOLDT. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state of the United States, and may not be offered, sold or otherwise transferred in the United States absent registration or pursuant to an available exemption from registration under the Securities Act.

Certain financial information including financial information as of and for the 9M period ended September 30, 2021 is unaudited. This presentation contains certain supplemental financial or operative measures that are not calculated in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") or any other generally accepted accounting principles, and are therefore considered non-IFRS measures. We believe that such non-IFRS measures, when considered in conjunction with (but not in lieu of) other measures that are computed in accordance with IFRS, enhance the understanding of our business, results of operations, financial position or cash flows. There are, however, material limitations associated with the use of non-IFRS measures including (without limitation) the limitations inherent in the determination of relevant adjustments. The non-IFRS measures used by us may differ from, and may not be comparable to, similarly-titled measures used by other companies.

The information contained in this presentation has not been independently verified, and no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained herein and no reliance should be placed on it. HENSOLDT does not accept any liability for any loss howsoever arising (in negligence or otherwise), directly or indirectly, from this presentation or its contents or otherwise arising in connection with this presentation. This shall not, however, restrict or exclude or limit any duty or liability to a person under any applicable law or regulation of any jurisdiction which may not lawfully be disclaimed (including in relation to fraudulent misrepresentation).

The information contained in this presentation is provided as of the date of this presentation and is subject to change without notice.

Forward Looking Statement

This presentation may contain forward-looking statements about HENSOLDT and its businesses, including statements concerning its strategies, future growth potential of markets and products, profitability in specific areas, future product portfolio, and development of and competition in economics and markets. These statements are based on the current views, expectations, assumptions and information of management, and are based on information currently available to management. Forwardlooking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods.

Any such forward-looking statements involve known and unknown risks which may cause actual results to differ significantly from any future results expressed or implied. While we believe that the assumptions made and the expectations reflected in today's presentation are reasonable, no assurance can be given that such assumptions or expectations will prove to have been correct. The risks and uncertainties which these forward-looking statements may be subject to include (without limitation) future market developments and the impact of global and European social, political and economic events and developments, including the COVID-19 pandemic, as well as defence and security spending by governments, legal restrictions and controls applicable to sales of HENSOLDT's products, including government approval requirements and moratoriums, international conflicts and political developments affecting HENSOLDT, including by way of new export restrictions, trade barriers, or political support for competitors, HENSOLDT's inclusion and participation in major defence projects and platforms and HENSOLDT's competitive situation.

The company assumes no liability whatsoever to update these forward-looking statements or to adjust them to future events or developments.

HENSOLDT's public reports and presentations are available via www.hensoldt.net

HENSOLDT Business Update

HENSOLDT: Strong momentum continues

HENSOLDT: Leading high technology portfolio

HENSOLDT is fully on track

We continue to 'walk the talk' and deliver on our guidance
We continue to benefit from the growth momentum in the defence electronics sector
We further expanded our position in German and European key programs

HENSOLDT Financials

9M 2021 – growth in top line sustains in €m

and taking into account revenue and adjustments for the respective reporting period, and ending with the final stock.

9M 2021 – bottom line follows top line development in €m

Investments in bid budget and self-funded R&D ensure further growth

(1) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects.(2) Adjusted EBIT is defined as EBIT adjusted for certain non-recurring effects relating to effects on earnings from purchase price allocations, transaction costs, separation costs, IPO related costs and other non-recurring effects. ((3) Adjusted Pre-Tax Unlevered Free Cash Flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement.

We will fully deliver our FY2021 KPIs and beyond

Short- and medium-term guidance confirmed

	Change vs. 2020	vs. guidance
Order backlog(1) of ~€5.2bn	+€1,8bn	Book-to-bill improved
Book-to-bill ratio(2) of 2.2x	+0,1x
Revenues ~€1.5bn	+24%
EBITDA margin(3) Adjusted at >18% Excl. pass-through revenues	same level
FCF(4) Adjusted pre-tax unlevered at 70% on adjusted EBITDA	-€20m
Excellent operating cash flow generation Net leverage(5) ~2x	-0,6x
Excellent operating cash flow generation Dividend up to 20% of Adjusted Net Income

(1) Order backlog is defined as the value of the order book at the respective reporting date by keeping record of customer orders starting from the opening stock and taking into account revenue and adjustments for the respective reporting period, and ending with the final stock, (2) Book-to-Bill ratio is defined as order intake / reported revenue for the relevant period, (3) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects / reported revenue for the relevant period, (4) Adjusted Pre-Tax Unlevered Free Cash Flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement, (5) Net financial leverage including lease liabilities, excluding pensions.

Key financial takeaways

Visibility	• Soft order backlog matured • High revenue coverage from firm order backlog	Order backlog(1) / LTM revenues ~4,0x 9M2021(2)
Top-line growth	• Step change in growth momentum • Significant development in order intake and revenues	Revenue growth +24% 2020A – 2021E
Profitability	• Operational margins on high level • Gross profit increase enables further sustainable investments in bid budgets and R&D • Growth in absolute bottom-line margin continues	>18% Adj. EBITDA excl. 2021E(3) pass-through
Liquidity	• Strong operating cash generation • Deleveraging according to plan	Net leverage(4) ~2x 2021E
Outlook	• Short- and medium guidance confirmed for all KPIs • Dividend policy confirmed	Up to 20% of Adjusted Net Income

(1) Order backlog is defined as the value of the order book at a respective reporting date by keeping record of customer orders starting from the opening stock and taking into account revenue and adjustments for the respective reporting period, and ending with the final stock. (2) Calculated as 9M2021 order backlog divided by LTM revenue. (3) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects / / reported revenue for the relevant period. (4) Targeted net financial leverage including lease liabilities, excluding pensions.

HENSOLDT Q&A session

HENSOLDT Financial Section

Consolidated Income Statement

Consolidated Income Statement
		First 9 months
€ m	2021	2020
Revenue	849.8	712.1
Cost of sales	(694.1)	(566.4)
Gross profit	155.7	145.7
Selling and distribution expenses	(73.0)	(64.5)
General administrative expenses	(58.7)	(64.2)
Research and development costs	(21.0)	(19.4)
Other operating income	22.9	14.4
Other operating expenses	(11.9)	(18.2)
Share of profit/loss from investments accounting for using the equity method	(2.0)	(2.6)
Earnings before finance result and income taxes (EBIT)	12.0	(8.8)
Interest income	6.1	2.4
Interest expense	(35.1)	(126.4)
Other finance income/costs	1.5	(9.2)
Finance result	(27.5)	(133.2)
Earnings before income taxes	(15.5)	(142.0)
Income taxes	0.6	23.9
Group result	(14.9)	(118.0)
thereof attributable to the owners of HENSOLDT AG	(13.4)	(117.6)
thereof attributable to non-controlling interests	(1.5)	(0.4)

Consolidated Statement of Cash Flows (1/2)

Consolidated Statement of Cash Flows (1/2)
	First 9 months
€ m	2021	2020
Group result	(14.9)	(118.0)
Depreciation and amortization	91.3	87.6
Financial expenses (net)	25.3	119.7
Change in
Provisions	2.0	8.2
Inventories	(108.0)	(64.3)
Contract Balances	21.3	68.9
Trade receivables	30.6	97.1
Trade payables	27.6	3.5
Other assets and liabilities	(48.0)	(49.7)
Interest paid	(27.3)	(36.5)
Income tax expense	(0.6)	(23.9)
Other(1)	(15.6)	(20.5)
Cash flows from operating activities	(16.3)	72.1
Acquisition/addition of intangible assets and property, plant and equipment	(73.3)	(70.3)
Acquisition of associates, other investments and other non-current investments	(8.6)	(5.8)
Acquisition of businesses net of cash acquired	(8.3)	4.0
Other(2)	1.8	0.3
Cash flows from investing activities	(88.4)	(71.8)

(1) Includes Allowances on inventories, trade receivables and contract assets, Profit/loss from disposals of non-current assets, Share of profit in entities accounting for using the equity method, Other non-cash expenses/income and Income taxes payments / refunds.. (2) Proceeds from sale of intangible assets and property, plant and equipment and Other cash flows from investing activities.

Consolidated Statement of Cash Flows (2/2)

Consolidated Statement of Cash Flows (2/2)
	First 9 months
€ m	2021	2020
Cash flows from operating activities	(16.3)	72.1
Cash flows from investing activities	(88.4)	(71.8)
(3) Proceeds/repayment of financial liabilities	(283.6)	31.3
Payment of lease liabilities	(12.2)	(10.4)
Dividends paid to shareholders of HENSOLDT AG	(13.6)	-
Issue of shares	-	300.0
Transaction cost on issue of equity	(3.4)	(6.0)
Cash flows from financing activities	(312.8)	314.9
Effects of movements in exchange rates on cash and cash equivalents	(0.2)	(5.1)
Other adjustments	-	(2.2)
Net changes in cash and cash equivalents	(417.7)	307.9
Cash and cash equivalents
Cash and cash equivalents at beginning of period	645.5	137.4
Cash and cash equivalents at end of period	227.8	445.3

(3) Proceeds / repayment from financial liabilities, Change in other financial liabilities

Consolidated Statement of Financial Position – Assets

Consolidated Statement of Financial Position – Assets
		As at
€ m	9M 2021	YE 2020
Non-current assets	1,331.7	1,313.4
Goodwill	651.9	637.2
Intangible assets	389.6	386.2
Property, plant and equipment	104.9	103.1
Right-of-use assets	142.7	143.5
Investments and other financial assets(1)	20.5	12.3
Other non-current assets	2.8	4.8
Deferred tax assets	19.3	26.3
Current assets	1,315.1	1,634.2
Other(2)	11.8	19.9
Inventories	515.3	403.7
Contract assets	195.0	204.4
Trade receivables	258.6	282.0
Other currents assets	106.6	78.7
Cash and cash equivalents	227.8	645.5
Total assets	2,646.8	2,947.6

(1) Includes Investments accounted for using the equity method, Other investments and non-current other financial assets, Non-current other financial assets. (2) Includes Other non-current financial assets, due on short-notice, Other current financial assets and Income tax receivables.

Consolidated Statement of Financial Position - Equity and Liabilities

Consolidated Statement of Financial Position -	Equity and Liabilities
		As at
€ m	9M 2021	YE 2020
Share capital	105.0	105.0
Capital reserve and other reserves(1)	528.1	510.5
Retained earnings	(294.5)	(281.6)
Equity held by shareholders of HENSOLDT AG	338.6	333.9
Non-controlling interests	10.1	12.9
Equity, total	348.7	346.8
Non-current liabilities	1,260.5	1,257.1
Non-current provisions	474.2	482.6
Non-current financing liabilities(2)	602.5	601.5
Non-current contract liabilities	31.3	16.0
Non-current lease liabilities	140.5	140.3
Other non-current liabilities	6.9	8.9
Deferred tax liabilities	5.1	7.7
Current liabilities	1,037.6	1,343.7
Current provisions	165.0	193.6
Current financing liabilities(3)	176.6	461.1
Current contract liabilities	413.5	416.8
Current lease liabilities	16.0	13.7
Trade payables	189.8	164.0
Other current liabilities	75.3	86.9
Tax liabilities	1.4	7.6
Total equity and liabilities (1) Includes Capital reserve, Other reserves. (2) Includes Non-current financing liabilities, Other non-current financial liabilities. (3) Includes Current financing liabilities, Other current financial liabilities.	2,646.8	2,947.6

(1) Includes Capital reserve, Other reserves. (2) Includes Non-current financing liabilities, Other non-current financial liabilities. (3) Includes Current financing liabilities, Other current financial liabilities.

Reconciliation of reported to adjusted pre-tax unlevered FCF

Reconciliation of reported to adjusted pre-tax unlevered FCF
		First 9 months
€ m	2021	2020
Cash flows from operating activities	(16.3)	72.1
Cash flows from investing activities	(88.4)	(71.8)
Free cash flow	(104.7)	0.3
(+) Transaction costs	0.3	0.9
(+) Separation costs	-	(0.1)
(+) IPO related costs	4.0	15.9
(+) Other non-recurring effects	6.5	9.3
(+) Interest(1), income taxes(2) and M&A-activities(3)	46.1	39.3
Adjusted pre-tax unlevered free cash flow	(47.8)	65.7
Cash flows from financing activities	(312.8)	314.9

(1) Defined as 'Interest paid' as reported in the consolidated cash flow statement. (2) Defined as 'Income taxes payments / refunds' as reported in the consolidated cash flow statement. (3) Defined as sum of 'Share of profit in entities accounting for using the equity method', 'Proceeds from sale of intangible assets and property, plant and equipment', 'Acquisition of associates, other investments and other non-current investments', 'Acquisition of businesses net of cash required' and 'Other cash flows from investing activities' as reported in the consolidated cash flow statement.

Reconciliation of order intake, segment revenue and adjusted EBITDA to group figures

EBITDA to group figures

	First 9 months
€ m	2021	2020
Order intake	2,820.8	2,003.4
Sensors	2,515.7	1,823.9
Optronics	308.7	182.4
Elimination/Transversal/Others	(3.6)	(2.9)
€ m
Revenue	849.8	712.1
Sensors	661.1	553.6
Optronics	191.1	160.7
Elimination/Transversal/Others	(2.4)	(2.2)
€ m
Adjusted EBITDA(1)	110.4	102.8
Sensors	88.8	82.3
Optronics	23.7	23.1
Elimination/Transversal/Others	(2.1)	(2.6)

Overview of EBITDA and EBIT adjustments

EBITDA adjustments (€m)		EBIT adjustments (€m)
	9M 2021	9M 2020		9M 2021	9M 2020
EBIT	12.0	(8.8)	EBIT	12.0	(8.8)
(+) Depreciation	32.2	30.2	(+) Effect on earnings from purchase price allocations	47.8	51.5
(+) Amortization	59.1	57.5	thereof intangible assets	47.3	51.0
EBITDA	103.3	78.9	thereof property, plant and equipment	0.5	0.5
(+) Transaction costs	0.3	0.5	thereof inventories	-	-
(+) Separation costs	-	-	(+) Transaction costs	0.3	0.5
(+) IPO related costs	0.7	13.4	(+) Separation costs	-	-
(+) Other non-recurring effects	6.1	10.0	(+) IPO related costs	0.7	13.4
Adjusted EBITDA	110.4	102.8	(+) Other non-recurring effects	6.2	10.2

	9M 2021	9M 2020









Adjusted EBIT	67.0	66.8

Q3 Key KPIs HENSOLDT Group

€m
	Q3 2021	Q3 2020
Order intake	709.2	227.8
Book-to-bill ratio(1)	2.0x	0.8x
Revenue	363.6	271.8
Adjusted EBIT(2)	51.3	48.7
Adjusted EBITDA(3)	66.3	61.5
Adjusted EBITDA margin	18.2%	22.6%
Adjusted pre-tax unlevered free cash flow(4)	9.5	39.5

(1) Book-to-Bill ratio is defined as order intake / reported revenue for the relevant period. (2) Adjusted EBIT is defined as EBIT adjusted for certain non-recurring effects relating to effects on earnings from purchase price allocations, transaction costs, separation costs, IPO related costs and other non-recurring effects. (3) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects. (4) Adjusted pre-tax unlevered free cash flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement.

Backup

Guidance 2021 and medium term targets confirmed

	2021 target	2022 target	Medium term target
Book-to-bill ratio(1)	~2x	>1x	>1x
Revenue / revenue growth	~€1.5	Mid teens growth	Mid to high single digit
Adj. EBITDA margin(2)	Excl. pass-through revenues >18% with effects from early stage of major projects	recovery to approx. 2019 levels in the medium term excl. pass-through revenues (~€150m) in short term
FCF(3) Adj. pre-tax unlevered	~70% conversion on adjusted EBITDA	NWC: stable in absolute terms, thereafter falling slightly as % of revenue Cash tax rate: 2022: 10-12% thanks to use of tax loss carryforwards, medium term 28.3%
Net leverage(4)	~2x	<2x
Dividend	Up to 20% of adj. net income Up to 20% of adj. net income 30-40% of adj. to reflect the excellent development		net income
Capex and intangible investment	Capex: 2.0-2.5% of revenue €85-90m p.a. Cap. R&D: 2.0-3.0% of revenue (o/w €50-55m capitalized R&D)
D&A (% of revenues)	~4% (o/w IAS38 1-2%) of revenue

(1) Book-to-Bill ratio is defined as order intake / reported revenue for the relevant period. (2) Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization (including non-recurring effects on earnings from purchase price allocations), as well as certain non-recurring effects relating to transaction costs, separation costs, IPO related costs and other non-recurring effects / / reported revenue for the relevant period. (3) Adjusted Pre-Tax Unlevered Free Cash Flow is defined as free cash flow adjusted for non-recurring operating effects as well as interest, tax and M&A activities. The free cash flow is defined as sum of the cash flows from operating and investing activities as reported in the consolidated cash flow statement.(4) Net financial leverage including lease liabilities, excluding pensions.

IR Contacts

Contact: Veronika Endres
Phone: +49 89 51518 2499
Email: [email protected]
Internet: www.hensoldt.net

Contact HENSOLDT share Reports

Type of share: Bearer shares
Stock Exchange: Frankfurt Stock Exchange
Security reference number: ISIN DE000HAG0005
Financial Reports: https://investors.hensoldt.net
Annual Report: https://annualreport.hensoldt.net
Sustainability Report: www.hensoldt.net

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