Investor Presentation • May 7, 2021
Investor Presentation
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HENSOLDT – Q1 2021 results
Taufkirchen, 7th of May 2021
Thomas Müller, CEO Axel Salzmann, CFO
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 Q1 period ended March 31, 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. 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
purchase 25.1% of HENSOLDT's shares
(1) Order intake is defined as orders where the corresponding selling contract becomes effective and enforceable in accordance with the terms and conditions of the contract. (2) 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.
(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.
Baseline business develops as planned
Further growth in top and bottom line
| Consolidated Income Statement | ||
|---|---|---|
| First 3 Months | ||
| €m | 2021 | 2020 |
| Revenue | 208.8 | 196.6 |
| Cost of sales | (178.6) | (164.6) |
| Gross profit | 30.2 | 32.0 |
| Selling and distribution expenses | (23.2) | (21.6) |
| General administrative expenses | (17.6) | (20.0) |
| Research and development costs | (6.6) | (5.8) |
| Other operating income | 3.5 | 4.4 |
| Other operating expenses | (3.2) | (4.8) |
| Share of profit / loss from investment accounted for using the equity method | (1.0) | (0.7) |
| Earnings before finance result and income taxes (EBIT) | (17.9) | (16.5) |
| Interest income | 2.2 | 1.1 |
| (75.4) | ||
| Interest expense | (12.5) | |
| Other finance income / costs | 3.0 | (4.2) |
| Finance result | (7.3) | (78.5) |
| Earnings before income taxes | (25.2) | (95.0) |
| Income taxes | 3.2 | 25.3 |
| Group result |
(22.0) | (69.7) |
| thereof attributable to the owners of HENSOLDT AG | (21.6) | (69.6) |
| Consolidated Statement of Cash Flows | ||
|---|---|---|
| First 3 months | ||
| €m | 2021 | 2020 |
| Group result |
(22.0) | (69.7) |
| Depreciation and amortization | 29.3 | 29.0 |
| Financial expenses (net) |
9.1 | 72.9 |
| Change in net working capital(1) | (29.0) | (10.2) |
| Interest paid | (9.9) | (12.0) |
| Income tax expense Other(2) |
(3.3) (2.5) |
(25.4) 5.0 |
| Cash flows from operating activities | (28.3) | (10.4) |
| Acquisition/addition of intangible assets and property, plant and equipment | (20.1) | (23.4) |
| Acquisition of associates, other investments and other non-current investments | (9.0) | (1.2) |
| Disposal of associates, other investments and other non-current investments | 0.0 | 0.5 |
| Acquisition of businesses net of cash acquired | (2.2) | - |
| Other(3) | 0.1 | 0.4 |
| Cash flows from investing activities | (31.2) | (23.7) |
| Proceeds / repayment of financial liabilities(4) | (243.2) | 192.2 |
| Payment of lease liabilities | (3.9) | (3.5) |
| Transaction cost on issue of equity |
(3.4) | - |
| Cash flows from financing activities | (250.5) | 188.7 |
| Effects of movements in exchange rates on cash and cash equivalents | 0.2 | (4.2) |
| Other adjustments | - | (2.1) |
| Net changes in cash and cash equivalents | (309.8) | 148.3 |
| Cash and cash equivalents | ||
| Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period |
645.5 335.7 |
137.4 285.7 |
(1) Includes changes in provisions, inventories, contract balances, trade receivables, trade payables, other assets and liabilities. (2) Includes allowances on inventories, trade receivables and contract assets, profit/loss from disposal of non-current assets, share of profit in entities recognized according to the equity method, other non-cash expenses/income, income taxes payments / refunds, (3) Proceeds from sale of intangible assets and property, plant and equipment and Other cash flows from investing activities, (4) includes Repayment of financing liabilities to banks, Proceeds from financing liabilities to banks and Proceeds/repayment of other financing liabilities.
| HENSOLDT – Q1 2021 results |
||
|---|---|---|
| Consolidated Statement of Financial Position – | Assets | |
| As at | ||
| €m | Q1 2021 | YE 2020 |
| Non-current assets | 1,312.8 | 1,313.4 |
| Goodwill | 638.1 | 637.2 |
| 382.4 | 386.2 | |
| Intangible assets | ||
| Property, plant and equipment | 103.7 | 103.1 |
| Right-of-use assets |
148.4 | 143.5 |
| Investments and other financial assets(1) | 17.5 | 12.3 |
| Other non-current assets | 4.8 | 4.8 |
| Deferred tax assets | 17.9 | 26.3 |
| Current assets | 1,371.7 | 1,634.2 |
| Other(2) | 23.7 | 19.9 |
| Inventories | 462.5 | 403.7 |
| Contract assets | 203.9 | 204.4 |
| Trade receivables | 258.2 | 282.0 |
| Other currents assets |
87.7 | 78.7 |
| Cash and cash equivalents | 335.7 | 645.5 |
(1) Includes investments accounted for using the equity method, other investments and other non-current financial assets, non-current other financial assets; (2) Includes Other non-current financial assets, due on short-notice, Other current financial assets, income tax receivables.
| HENSOLDT – Q1 2021 results |
||
|---|---|---|
| Consolidated Statement of Financial Position - | Equity and Liabilities | |
| As at | ||
| €m | Q1 2021 | YE 2020 |
| Share capital | 105.0 | 105.0 |
| Capital reserve and other reserves(1) | 547.2 | 510.5 |
| Retained earnings | (303.2) | (281.6) |
| Equity held by shareholders of HENSOLDT AG | 349.0 | 333.9 |
| Non-controlling interests | 13.0 | 12.9 |
| Equity, total | 362.0 | 346.8 |
| Non-current liabilities | 1,249.8 | 1,257.1 |
| 447.4 | 482.6 | |
| Non-current provisions | 601.5 | |
| Non-current financing liabilities(2) | 602.9 | |
| Non-current contract liabilities | 41.7 | 16.0 |
| Non-current lease liabilities | 145.2 | 140.3 |
| Other non-current liabilities | 7.3 | 9.0 |
| Deferred tax liabilities | 5.3 | 7.7 |
| Current liabilities | 1,072.7 | 1,343.7 |
| Current provisions | 185,9 | 193.6 |
| Current financing liabilities(3) | 216.2 | 461.1 |
| Current contract liabilities | 415.1 | 416.8 |
| Current lease liabilities | 14.9 | 13.7 |
| Trade payables | 150.5 | 164.0 |
| Other current liabilities | 81.0 | 86.9 |
| Tax liabilities Total equity and liabilities |
9.1 2,684.5 |
7.6 2,947.6 |
| Reconciliation of reported to adjusted pre-tax unlevered FCF | ||
|---|---|---|
| First 3 months | ||
| €m | 2021 | 2020 |
| Cash flows from operating activities | (28.3) | (10.4) |
| Cash flows from investing activities |
(31.2) | (23.7) |
| Free cash flow | (59.5) | (34.1) |
| (+) Transaction costs | - | 0.4 |
| (+) Separation costs | - | (0.1) |
| (+) IPO related costs | 3.5 | 1.4 |
| (+) Other non-recurring effects | 3.2 | 5.3 |
| (+) Interest(1), income taxes(2) and M&A-activities(3) | 20.8 | 10.7 |
| Adjusted pre-tax unlevered free cash flow | (32.0) | (16.2) |
(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 recognized according to the equity method', 'Acquisition of associates, other investments and other non-current investments', 'Disposal of associates, other investments and other non-current investments' 'Proceeds from sale of intangible assets and property, plant and equipment', 'Acquisition of subsidiaries net of acquired cash' 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 | ||
| First 3 months | ||
| €m | 2021 | 2020 |
| Order intake | 546.2 | 184.6 |
| Sensors | 402.3 | 129.4 |
| Optronics | ||
| 144.2 | 55.3 | |
| Elimination/Transversal/Others | (0.3) | (0.1) |
| €m | ||
| Revenue | 208.8 | 196.6 |
| Sensors | 164.9 | 154.3 |
| Optronics | 44.3 | 42.4 |
| Elimination/Transversal/Others | (0.4) | (0.1) |
| €m | ||
| EBITDA(1) Adjusted |
15.1 | 19.5 |
| Sensors | 13.2 | 16.5 |
| Optronics | 3.2 | 3.7 |
(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.
| Overview of EBITDA and EBIT adjustments | |||
|---|---|---|---|
| EBITDA adjustments (€m) | |||
| Q1 2021 | Q1 2020 | ||
| (17.9) | (16.5) | ||
| (+) Depreciation | 10.4 | 9.8 | |
| (+) Amortization | 18.9 | 19.2 | |
| 11.4 | 12.5 | ||
| (+) Transaction costs | - | - | |
| (+) Separation costs | - | - | |
| (+) IPO related costs | 0.7 | 2.3 | |
| EBIT EBITDA (+) Other non-recurring effects Adj. EBITDA |
3.0 15.1 |
4.7 19.5 |
| EBIT adjustments (€m) | ||||
|---|---|---|---|---|
| Q1 2021 (17.9) |
Q1 2020 | |||
| Q1 2021 | Q1 2020 | (16.5) | ||
| EBIT | ||||
| (+) Effect on earnings from purchase price allocations | 15.8 | 17.2 | ||
| thereof intangible assets | 15.6 | 17.0 | ||
| thereof property, plant and equipment | 0.2 | 0.2 | ||
| thereof inventories | 0.0 | 0.0 | ||
| (+) Transaction costs | - | - | ||
| (+) Separation costs | - | - | ||
| (+) IPO related costs | 0.7 | 2.3 | ||
| (+) Other non-recurring effects Adj. EBIT |
3.0 1.6 |
4.7 7.7 |
| Guidance 2021 and medium term targets confirmed | ||||
|---|---|---|---|---|
| 2021 target | 2022 target | Medium term target |
||
| ratio(1) Book-to-bill |
~2x | >1x | >1x | |
| Revenue / revenue growth |
€1.4-1.6bn | Mid teens growth |
Mid to high single digit |
|
| Adj. EBITDA margin(2) | ~18% | Excl. pass-through revenues (~€100m) 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) | <2.25x | <2x | ||
| Dividend | Up to 20% of adj. net income |
Up to 20% of adj. net income |
30-40% of adj. net income |
|
| Capex and intangible investment |
€85-90m p.a. (o/w €50-55m capitalized R&D) |
Capex: 2.0-2.5% of revenue Cap. R&D: 2.0-3.0% of revenue |
||
| 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, | ||||
| investing activities as reported in the consolidated cash flow statement.(4) Net financial leverage including lease liabilities, excluding pensions. | 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 |
We at HENSOLDT exist to pioneer technologies and human potential that promote the protection of all kind of species worldwide.
Our activities shall serve the higher purpose of securing the freedom and future of our planet, our nature and our lives.
We strive to protect the nations with our sensor solutions and electronics portfolio to foster the security and resilience of our society.
We recognize our employees as our most valuable asset. Our goal is to enhance a culture of life-long learning and offer opportunities to the generation of tomorrow.
We seek responsible leadership and are keen to anchor our culture of Integrity and honesty through strong corporate values and principles.
We foster relationships of the local communities. Transparency and communication shall encourage a collaborative atmosphere and strengthen society´s trust.
We aim to reduce the environmental Impact of our operations, promote alternative energies and contribute to combat the world´s climate challenges.
| People | Support of local communities, education and development of our society Diversity and equal opportunities at all levels of the organization (Elevate, Initiative Chefsache) Personal and career development to leverage our human potential (iLead, Women's bursary program South Africa) Activities at universities and on social media to attract the pioneers of tomorrow |
|---|---|
| Planet | 100% Green electricity at German sites Mobility Concept promoting hybrid and electric vehicles Alternative energies from solar power or hydrogen Wildlife Protection |
| Performance | Comprehensive compliance program implemented Strong export control processes in place to ensure HENSOLDT products are not used for abuse of human rights Identification of non-financial risks and opportunities integrated into ERM Around 16% of revenues are non-defence related |
* Dates might be subjected to changes
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