Leonardo S.p.A. — Earnings Release 2023

Nov 9, 2023

3Q/9M 2023 Results Presentation

Rome

9 November 2023

Agenda

• Q&A
• Sector results
• Appendix

• Key messages Roberto Cingolani, Chief Executive Officer

• Financial review Alessandra Genco, Chief Financial Officer

My first 6 months as Leonardo's CEO

Delivering against financial and strategic priorities

9M results in line with plan, solid progress across core businesses

• SOLID PERFORMANCE ACROSS CORE BUSINESSES
• RECONFIRMING 2023 GUIDANCE
• GOOD BASE TO BUILD FOR THE FUTURE
• Solid 3Q 2023 performance
  • Order intake of € 13.3 bn, up 14.8%* YoY with no jumbo orders
  • Backlog at € 40.2 bn and Book-to-bill at 1.3x
  • Revenues at € 10.3 bn, up 4.8%* YoY
  • EBITA at € 644 mln, up 6.3%* YoY
  • RoS at 6.3%
  • Aerostructures on track with the recovery plan
  • FOCF at € -604 mln, up 33.2%* vs 9M2022
• Committed to maintaining investment grade

* Adjusted perimeter to exclude the contribution of Global Enterprise Solutions, sold in July 2022

Building the Leonardo of the future

Main results and actions undertaken

Governance and Organization Products and technologies for the future • Direct reports to CEO reduced from 26 to 10 • Appointed the new Chief Innovation Officer, Chief Strategy Officer, Chief Sustainability Officer and the Managing Director of Cyber Division. • Legal and Compliance departments separated • People Strategy focused on building a knowledge-based company attracting/retaining the best talent • Reducing corporate cost • Digitalisation a key tool to connect core business and newer growth areas of Space and Cyber • Massive digitalisation of process already underway • Focus on Digital Continuum 1. Conveying Leonardo Labs' disruptive technologies throughout the entire organisation and value chain to deliver the best solutions for customers 2. 4 key pillars: AI, quantum computing, deep digital technologies and digital twin 3. HPC as key enabler reinforcing the supercomputing capabilities 4. Goal of digital servitization of existing and future products • Technologies for the next generation of products and solutions (e.g. green propulsion, ….) Geopolitical strategic positioning • Working for strong alliances to create European hubs in specific Defence segments • Working for achieving the right positioning in global Atlantic and European alliances • Working for increasing role in GCAP • Working for a common strategy for the Space Alliance

The new Industrial Plan

Main strategic guidelines to reinforce our core business

Addressing new growth areas

Cyber and Space as strategic priorities

National leader and European key player CYBER SPACE

• Total market value of ~€110bn
• Estimated to reach a value of ~ €240bn in the next decade

Consolidate national leadership in EU

• Total market value of ~\$350bn (~70% services and Ground equipment)

• Estimated to reach a value of ~ \$1tn in the next decade

• Cyber security by design

• Service-based offering model
• Focus on strategic areas (Cybersecurity, Data Valorisation for Defence, Space and national strategic organizations)
• Reviewing strategic partnership structure
• Focus on digital transformation, AI and servitization

Key takeaways

• Strong performance across the Group
• Taking actions to strategically position Leonardo for future growth
• Creating a leaner and stronger organization
• Leveraging innovation and competitiveness in strategic products
• 2023 guidance reconfirmed
• New Industrial Plan to be presented alongside FY results in March

-

• Q&A
• Sector results
• Appendix

• Key messages Roberto Cingolani, Chief Executive Officer

• Financial review Alessandra Genco, Chief Financial Officer

9M 2023 Highlights

• Continued strong demand for our products driving top line growth
• Record backlog of over € 40 bn
• Book-to-bill at 1.3x
• Solid profitability across all divisions
• Stepping up FOCF
• Confirming deleveraging path

	9M2022A	9M2022 Adj.1	9M2023	% Δ1
ORDERS (€bn)	11.7	11.6	13.3	+14.8%
REVENUES (€bn)	9.9	9.8	10.3	+4.8%
EBITA (€mln)	619	606	644	+6.3%
FOCF (€mln)	(894)	(904)	(604)	+33.2%
NET DEBT (€bn)	4.4	4.4	3.8	-12.5%

1) Adjusted perimeter to exclude the contribution of Global Enterprise Solutions

Order Intake

Strong commercial performance reflecting strength of Defence Government business and Civil recovery

	€ mln	∆ % YoY
9M2022A*	11,560
HELICOPTERS	4,177	-9.6%
ELECTRONICS EUROPE	4,855	+38.9%
LEONARDO DRS	2,309	+15.2*
AIRCRAFT	1,824	+11.4%
AEROSTRUCTURES	528	+54.4%
ELIMINATIONS & OTHER	-418
9M2023A**	13,275	+14.8%

* Adjusted perimeter to exclude the contribution of Global Enterprise Solutions

** Including ca. €110 mln of negative forex

Revenues

Solid performance confirming growth path

	€ mln	∆ % YoY
9M2022A*	9,802
HELICOPTERS	3,202	+1.6%	Increase due to dual-use models and CS&T offsetting expected lower contribution from NH90 Qatar
ELECTRONICS EUROPE	3,294	+4.6%	Growing volumes across all areas
LEONARDO DRS	1,753	+6.6%*	Increase on the IM-SHORAD and MFoCS programmes
AIRCRAFT	1,938	-1.1%	Slightly below comparable period
AEROSTRUCTURES	462	+31.6%	Driven by increasing activity on all lines of business
ELIMINATIONS & OTHER	-380
9M2023A**	10,269	+4.8%

* Adjusted perimeter to exclude the contribution of Global Enterprise Solutions

** Including ca. € 82 mln of negative forex

EBITA and Profitability

Improving Profitability

	€ mln	RoS	∆ % YoY
9M2022A*	606	+6.2%
HELICOPTERS	250	+7.8%	+6.8%	Solid performance driven by top-line growth and business mix
ELECTRONICS EUROPE	327	+9.9%	+6.9%	Confirming strong profitability
LEONARDO DRS	146	+8.3%	+5.8%*	Solid performance driven by favorable business mix
AIRCRAFT	242	12.5%	0.0%	In line with 9M2022
AEROSTRUCTURES	-127	-27.5%	+5.2%	Higher asset utilisation from increased production volumes
ATR	-2		+50.0%	Increasing deliveries offset one-off customer settlement in 2022
SPACE	6		-40.0%	Positive trend in Service. Manufacturing affected by Telco Business. Continued to be impacted by production
CORPORATE & OTHER	-198			delays due to persistent supply chain tension.
9M2023A**	644	+6.3%	+6.3%

* Adjusted perimeter to exclude the contribution of Global Enterprise Solutions

** Including ca. € 6 mln of negative forex

From EBITA to Net Result

Solid bottom line

• Net result impacted by higher financial expense due to higher market rates, performance of non strategic equity accounted holdings and FX fair value YoY comparison
• Stepping up cash flow : 9M 2023 FOCF at € 604 mln, up 33.2% vs 9M 2022 (€ 904 mln*)
• Continued deleveragingwith Net Debt down €0.5 bn vs 9M2022

* Adjusted perimeter to exclude the contribution of Global Enterprise Solutions, sold in July 2022

Recent progress to Investment Grade

Confirming deleveraging commitment

RATED "INVESTMENT GRADE" BY ALL 3 RATING AGENCIES

S&P	Moody's	Fitch
• Upgraded Leonardo to BBB- in Aug'23, with stable outlook • The Investment Grade upgrade reflects • Management's priorities to improve cash flows, reduce debt, and strengthen the balance sheet • Management commitment to use cash flows to reduce debt, then maintain constant shareholder return	• Upgraded Leonardo to Baa3 in May' 23, with stable outlook • Ratings upgrade reflects • Strong execution through the pandemic • Solid growth prospects for the Defence business • Track record of material deleveraging • Commitment for further reduction, whilst maintaining a stable shareholder remuneration and strong growth prospects	• Upgraded Leonardo's outlook from Negative to stable, with a BBB rating in Jan'22 • The outlook upgrade reflected strong cash flows improvement expectations

2023 Guidance confirmed

	2022A	2023E1
ORDERS (€bn)	17.3	ca. 17
REVENUES (€bn)	14.7	15-15.6
EBITA (€mln)	1,218	1,260-1,310
FOCF (€mln)	539	ca. 600
NET DEBT (€bn)	3.0	ca. 2.62

• Continued solid commercial momentum, with book-to-bill>1x
• Successfully navigating inflationary pressures
• Continued improvement in FOCF and focus on deleveraging

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 p.s. and new leases for ca €100 mln

-

• Q&A
• Sector results
• Appendix

• Key messages Roberto Cingolani, Chief Executive Officer

• Financial review Alessandra Genco, Chief Financial Officer

Q&A

-

• Q&A
• Sector results
• Appendix

• Key messages Roberto Cingolani, Chief Executive Officer

• Financial review Alessandra Genco, Chief Financial Officer

Helicopters

Continued strong commercial performance

• Strong level of order intake expected both in civil and governmental; confirming increasing revenues and deliveries
• Good level of profitability supported by structured actions to offset inflationary pressure

(*) Based on the current assessment of the effects deriving from the geopolitical situation on the supply chain and the global ec onomy and assuming no additional major deterioration

Electronics

Growing revenues and profitability

1) Adjusted perimeter to exclude the contribution of Global Enterprise Solutions

* Avg. exchange rate €/\$ @ 1.0650 in 9M22; Avg. exchange rate €/\$ @ 1.0835 in 9M23

** 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

© 2023 Leonardo - Società per azioni

Aircraft Solid profitability

© 2023 Leonardo - Società per azioni

Aerostructures and ATR

Recovery on track

(*) 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

Space Solid performance of Satellite services

(*) 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

-

• Q&A
• Sector results
• Appendix

• Key messages Roberto Cingolani, Chief Executive Officer

• Financial review Alessandra Genco, Chief Financial Officer

3Q/9M 2023 Results

Group Performance

€ mln	3Q 2022	3Q 2023	% Change	9M2022	9M2023	% Change	FY 2022
New Orders	4,409	4,584	+4%	11,719	13,275	+13.3%	17,266
Backlog				37,353	40,186	+7.6%	37,506
Revenues	3,341	3,375	+1%	9,917	10,269	+3.5%	14,713
EBITA	201	214	+6.5%	619	644	+4.0%	1,218
RoS	6.0%	6.3%	+0.3 p.p.	6.2%	6.3%	+0.1 p.p.	8.3%
EBIT	190	169	-11%	552	537	-2.7%	961
EBIT Margin	5.7%	5.0%	-0.7 p.p.	5.6%	5.2%	-0.4 p.p.	6.5%
Net result before extraordinary transactions	120	93	-22.5%	387	290	-25.1%	697
Net result	395	93	-76.5%	662	301	-54.5%	932
EPS (€ cents)	0.689	0.142		1.151	0.483	-58.0%	1.611
FOCF	68	-87	n.a.	-894	-604	+32.4%	539
Group Net Debt				4,359	3,813	-12.5%	3,016
Headcount				50,677	52,973	+4.5%	51,392

Free Operating Cash-Flow (FOCF): is the sum of the cash flow s generated by (used in) operating activities (w hich includes interests and income taxes paid) and the cash flow s generated by (used in) ordinary investment activity (property, plant and equipment and intangible assets) and dividends received

Solid Group liquidity ensures adequate financial flexibility

• Available credit lines

• € 2.4bn ESG Credit Line signed in October 2021
• € 1.0bn existing unconfirmed credit lines
• € 1.0bn Commercial Paper signed in August 2022
• € 0.3bn new «Sustainability-Linked» EIB loan

together with the Revolving Credit Facility signed in November 2022 by Leonardo DRS, following the merger with RADA, available for € 0.2bn and cash in-hands ensure a Group's liquidity of approx. € 5.7bn

Balanced debt maturity profile

CREDIT RATING
	As of today

	As of today	Before last review	Date of review
S&P	BBB- / Stable Outlook	BB+ / Positive Outlook	August 2023
Moody's	Baa3 / Stable Outlook	Ba1 / Positive Outlook	May 2023
Fitch	BBB- / Stable Outlook	BBB- / Negative Outlook	January 2022

Covenants FY2022

	FY2022A Post IFRS 16		FY2022A Post IFRS 16
EBITDA*	€ 1,671 mln	Group Net Debt	€ 3,016 mln
Net Interest	€ 104 mln	Leasing (IFRS 16)	- € 570 mln
		Financial Debt to MBDA	- € 713 mln
		Group Net Debt for Covenant	€ 1,733 mln
		EBITDA*	€ 1,671 mln
EBITDA / Net Interest	16.1	Group Net Debt / EBITDA	1.0
THRESHOLD	> 3.25	THRESHOLD	< 3.75

* EBITDA net of depreciation of rights of use

© 2023 Leonardo - Società per azioni

SAFE HARBOR STATEMENT

NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Company's views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Given these uncertainties, you should not rely on forward-looking statements.

The following factors could affect our forward-looking statements: the ability to obtain or the timing of obtaining future government awards; the availability of government funding and customer requirements both domestically and internationally; changes in government or customer priorities due to programme reviews or revisions to strategic objectives (including changes in priorities to respond to terrorist threats or to improve homeland security); difficulties in developing and producing operationally advanced technology systems; the competitive environment; economic business and political conditions domestically and internationally; programme performance and the timing of contract payments; the timing and customer acceptance of product deliveries and launches; our ability to achieve or realise savings for our customers or ourselves through our global cost-cutting programme and other financial management programmes; and the outcome of contingencies (including completion of any acquisitions and divestitures, litigation and environmental remediation efforts).

These are only some of the numerous factors that may affect the forward-looking statements contained in this document.

The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely.

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CONTACTS

Head of Investor Relations and Credit Rating Agencies

+39 06 32473.697

valeria.ricciotti@leonardo.com

Leonardo Investor Relations and Credit Rating Agencies

+39 06 32473.512

ir@leonardo.com

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© 2022 Leonardo - Società per azioni