Leonardo S.p.A. — Investor Presentation 2020

Nov 5, 2020

3Q/9M2020 Results Presentation

Alessandra Genco Chief Financial Officer

Alessandro Profumo Chief Executive Officer

Rome, 5 November 2020

Agenda

-

• Sector Results

• Appendix

© 2019 Leonardo - Società per azioni

Key messages Chief Executive Officer

9M 2020 Results Chief Financial Officer

Key messages Well positioned, resilient business reacting effectively to changing market dynamics

• Successfully and effectively responding to short term challenges with business performing well in the current macro environment
• Very good performance in military / governmental business and Customer Support & Training, offsetting softness on the civil side
• Proven ability to capture opportunities in growing military / governmental markets and international programmes
• Significant backlog providing resiliency and visibility
• Productivity is continuing to increase and order intake is showing positive signs
• Strong confidence in our core business fundamentals and well positioned for the medium-long term

Demonstrating resilience in extreme market conditions

COMMERCIALLY STRONG	ORDERS € 8.5 bn • Inevitable civil slowdown offset by continued military / governmental 13% 36% performance 51% • Strong support from domestic customers (i.e Helicopters up ca. 41% YoY) • Resilient customer support and training HELICOPTERS AERONAUTICS DEFENCE ELECTRONICS & SECURITY
SOLID RESULTS	REVENUES € 9 bn EBITA € 497 mln EBITA +3% YoY IMPROVEMENT IN 3Q2020 RoS +5.5% -75% YoY -23% YoY +3% YoY -75% YoY 28% 25% 15% 35% 205 251 50% mln mln 47% € € 41 41 HELICOPTERS AERONAUTICS HELICOPTERS AERONAUTICS 1Q2020 2Q2020 3Q2020 1Q2020 DEFENCE ELECTRONICS & SECURITY DEFENCE ELECTRONICS & SECURITY	-40% YoY -28% YoY 497 292 1H2020 9M2020
HIGHER PRODUCTIVITY	COST CUTTING MEASURES BEARING FRUIT • Industrial efficiency back to normal in BUDGET 2020 FY2020 September BASELINE TARGET • Productive hours recovering shortfall € 2.9 bn LABOR COST ca. Productive hours vs budget € 450 mln € 1.4 bn CONTROLLABLE COSTS -7% -11% € 700-750 mln 40-50% NET INVESTMENTS -15% Benefitting from Government Grants 1Q2020 2Q2020 3Q2020	9M2020 ACHIEVEMENT ✔ ✔ ahead of expectations
INCREASINGLY AGILE	• System promptly reacting / operational machine responding to new environment • Rightsized our businesses for demand (i.e. Helicopters in the UK and ATR) • Re-oriented commercial effort leveraging key pockets of demand
STRONG LIQUIDITY AND FINANCIAL FLEXIBILITY	• FOCF heavily weighted towards Q4 • No need to raise equity • No need for additional liquidity • No refinancing needs until 2022

© 2020 Leonardo - Società per azioni 4 successfully navigating and responding to 2020 short term challenges

Strong confidence in core business fundamentals and clear path for the future Our business mix is a real strength

STRONG BACKLOG	BACKLOG € 35 bn 29% 35% › well diversified across businesses and markets 36% › with very good visibility of 2.5 years HELICOPTERS AERONAUTICS DEFENCE ELECTRONICS & SECURITY
EXPECTED DEFENCE EXPENDITURE*
LEVERAGING GROWING	\$ bn	ITALY	UK	USA	POLAND	FRANCE	NATO TOTAL
MILITARY /	2019E	23.6	59.4	730.1	11.9	49.6	1,031.5
GOVERNMENTAL	2020E	24.9	59.6	785.0	12.0	50.2	1,092.5
MARKETS	∆YoY	+5.5%	+0.3%	+7.5%	+0.8%	+1.2%	+5.9%
	* Source: NATO
STRONG RELATIONSHIPS WITH DOMESTIC CUSTOMERS	• Strategically relevant In Italy, in the UK and in the US • Leonardo DRS fully aligned with DoD priorities
ANCHORED IN KEY INTERNATIONAL PROGRAMMES	• Running and future, leveraging our presence on both Platforms & Systems › Eurofighter opportunities in OE and systems upgrades (i.e. radar) › NH90 › EuroMale › Tempest programme • Strong set of export opportunities identified
HIGH QUALITY PRODUCTS AND SERVICES	• Leadership position in key market segments • Continued technological innovation leveraging core competences driving business opportunities • Growing customer support, service and training activities

© 2020 Leonardo - Società per azioni 5 well positioned for the medium long term

Agenda

-

• Sector Results

• Appendix

© 2019 Leonardo - Società per azioni

Key messages Chief Executive Officer

9M 2020 Results Chief Financial Officer

9M 2020 highlights

Resilient top line performance with EBITA steadily recovering QoQ. FOCF reflecting usual seasonality and some pressure from COVID-19

• Commercially strong performance through 9M2020 despite COVID-19, domestic order intake balancing lower exports
• Top line on track and stable
  • Order intake of € 8.5 bn, flat YoY
  • Revenues at € 9 bn, flat YoY
• Strong domestic order intake balancing lower exports
• EBITA at € 497 mln, down 28% YoY, steadily recovering QoQ, affected by JVs contribution
• FOCF at € -2.6 bn, reflecting usual seasonality and postponements of cash-ins due to COVID-19, with higher working capital cash absorption

Order Intake

Commercially strong, reflecting continued strength of domestic military / governmental business

	€ mln	∆ % YoY
9M2019A	8,579
HELICOPTERS	3,154	+41.2%
ELECTRONICS EUROPE*	2,246	-15.6%
LEONARDO DRS*	2,262	+12.8%
AIRCRAFT**	772	-49.2%
AEROSTRUCTURES**	449	-16.1%
ELIMINATIONS & OTHER	-315
9M2020A***	8,510	-0.8%

* Excluding € 9 mln of Defence Electronics & Security eliminations

** Excluding € 49 mln of Aeronautics eliminations

© 2020 Leonardo - Società per azioni 8 *** Including ca. € 63 mln of positive forex

Revenues

Solid performance across the Group, EFA Kuwait ramping up and Leonardo DRS continuing to grow

	€ mln	∆ % YoY
9M2019A	9,134
HELICOPTERS	2,642	-3.4%
ELECTRONICS EUROPE*	2,731	-0.3%
LEONARDO DRS*	1,719	+6.4%
AIRCRAFT**	1,704	+13.4%
AEROSTRUCTURES**	630	-25.5%
ELIMINATIONS & OTHER	-320
9M2020A***	9,025	-1.2%

* Excluding € 32 mln of Defence Electronics & Security eliminations

** Excluding € 49 mln of Aeronautics eliminations

© 2020 Leonardo - Società per azioni 9 *** Including ca. € 47 mln of positive forex

EBITA and Profitability

Improving operationally quarter by quarter, despite negative contribution from JVs and COVID-19

	€ mln (RoS)	RoS	∆ % YoY
9M2019A	686	7.5%
HELICOPTERS	219	8.3%	-18.9%
ELECTRONICS EUROPE	216	7.9%	-9.6%
LEONARDO DRS	101	5.9%	-1.9%
AIRCRAFT	204	12.0%	+8.5%
AEROSTRUCTURES	-47	-7.5%	-74.1%
ATR	-62	n.a.	n.m.
SPACE	-1	n.a.	-104.3%
CORPORATE & OTHER	-133		-16.7%
9M2020A*	497	5.5%	-27.6%

* Including ca. € 1 mln of positive forex

From EBITA to Net Result

Net Result affected by EBITA performance and higher financial expenses associated with FX hedging

• EBIT down 39% due to EBITA decrease and COVID-19 extra costs
• Net Result mainly affected by EBITA performance and by slightly higher financial expenses associated with exchange rate hedging
• 9M19 Net Result benefitted from the release of the risk provision set against guarantees given upon disposal of transportation business of AnsaldoBreda

Free Operating Cash Flow

Usual seasonality amplified by higher working capital as expected

detailed action plan in place addressing unwinding of working capital of every single programme

Strong liquidity position at ca. € 3.6 bn

Leonardo can leverage multiple sources of liquidity to meet financing needs, even in stress case scenarios

• 30 September cash balance of ca. € 0.4 bn
• Available Credit lines worth € 3.1 bn (confirmed and unconfirmed)
• Bank Bonding lines of € 10.7 bn out of which aproximately € 3.7 bn available to support Leonardo's commercial activity

Balanced debt maturity profile No refinancing needs until 2022

	As of today	Before last review	Date of review
Moody's	Ba1 / Stable Outlook	Ba1 / Positive Outlook	October 2018
S&P	BB+ / Stable Outlook	BB+ / Positive Outlook	April 2020
Fitch	BBB- / Negative Outlook	BBB- / Stable Outlook	May 2020

* Excluding the bond expiring in January 2021, refinanced in July 2020 through issuance of € 500 mln 2026 bond

2020 Guidance

FY2020 GUIDANCE PROVIDED AT 1H RESULTS PROGRESS TOWARDS FY2020 GUIDANCE**

		FY2020 Guidance
New Orders	(€ bn)	12.5 – 13.5
Revenues	(€ bn)	13.2 – 14.0
EBITA	(€ mln)	900 – 950
FOCF	(€ mln)	heading to neutral
Group Net Debt	(€ bn)	ca. 3.3*

* Including € 0.1 bn higher IFRS16 effect, Kopter acquisition (ca. € 0.2 bn) and dividend payment

2020 forex assumptions: € / USD = 1.15 and € / GBP = 0.88

• Progressing well on Orders anchored on ongoing commercial campaigns
• Revenues supported by delivery of Backlog and advancement on milestones
• EBITA supported by productivity improvement and military / governmental activities across the Group
• Actions in place to control costs delivering expected results and helping offset JVs and civil performance
• Fully focused on FOCF generation
• Detailed action plan to deliver cash-ins on every single programme, reflecting exceptionally high concentration of activities in the last 2 months of the year and the current level of COVID-19 related restrictions

^** In absence of further worsening of the pandemic and consequent additional restrictions which may compromise operations

Strong business fundamentals to leverage on in the medium- long term

• Strong backlog of € 35 bn
• Sound business mix
• Growing military / governmental and security markets
• Strong relationships with domestic customers
• Anchored in key international programmes
• Innovation leveraging competences and products to enlarge business opportunities
• Leadership position in key segments of Helicopters, Defence Electronics and Aircrafts, well recognised in export markets

© 2019 Leonardo - Società per azioni 17 Q&A

SECTOR RESULTS

Helicopters

€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
Orders	527	628	+19.2%	2,234	3,154	+41.2%	4,641
Revenues	841	949	+12.8%	2,736	2,642	-3.4 %	4,025
EBITA	70	80	+14.3%	270	219	-18.9%	431
RoS	+8.3%	+8.4%	+0.1 p.p.	+9.9%	+8.3%	-1.6 p.p.	+10.7%

Defence Electronics & Security

ELECTRONICS – EU

€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
Orders	652	826	+26.7%	2,660	2,246	-15.6%	4,444
Revenues	867	919	+6.0%	2,738	2,731	-0.3%	4,289
EBITA	67	134	+100.0%	239	216	-9.6%	427
RoS	+7.7%	+14.6%	+6.9 p.p.	+8.7%	+7.9%	-0.8 p.p.	+10.0%

LEONARDO DRS

\$ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
Orders	676	951	+40.7%	2,253	2,543	+12.9%	2,923
Revenues	687	713	+3.8%	1,816	1,932	+6.4%	2,729
EBITA	53	44	-17.0%	116	114	-2.0%	208
RoS	+7.7%	+6.2%	-1.5 p.p.	+6.4%	+5.9%	-0.5 p.p.	+7.6%

Avg. exchange rate €/\$ @ 1.12412 in 9M2020 Avg. exchange rate €/\$ @ 1.12371 in 9M2019

Aeronautics

AIRCRAFT

€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
Orders	534	103	-80.7%	1,521	772	-49.2%	1,904
Revenues	641	630	-1.7%	1,502	1,704	+13.4%	2,329
EBITA	58	82	+41.4%	188	204	+8.5%	320
RoS	+9.0%	+13.0%	+4.0 p.p.	+12.5%	+12.0%	-0.5 p.p.	+13.7%

AEROSTRUCTURES +

€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
Orders	162	106	-34.6%	535	449	-16.1%	948
Revenues	289	157	-45.7%	846	630	-25.5%	1,125
EBITA	-19	-35	-84.2%	-27	-47	-74.1%	-11
RoS	-6.6%	-22.2%	-15.6 p.p.	-3.2%	-7.5%	-4.3 p.p.	-1.0%

ATR

	€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
EBITA		5	-28	-660%	4	-62	-1,650%	53

Space

€ mln	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change	FY 2019
EBITA	10	9	-10.0%	23	-1	-104.3%	39

APPENDIX

3Q/9M 2020 Results Group Performance

	3Q 2019	3Q 2020	% Change	9M2019	9M2020	% Change
€ mln New Orders	2,434	2,406	-1.2%	8,579	8,510	-0.8%
Backlog				35,672	34,980	-1.9%
Revenues	3,172	3,147	-0.8%	9,134	9,025	-1.2%
EBITA	199	205	+3.0%	686	497	-27.6%
RoS	+6.3%	+6.5%	+0.2 p.p.	+7.5%	+5.5%	-2.0 p.p.
EBIT	186	168	-9.7%	648	395	-39.0%
EBIT Margin	+5.9%	+5.3%	-0.6 p.p.	+7.1%	+4.4%	-2.7 p.p
Net result before extraordinary transactions	115	76	-33.9%	367	135	-63.2%
Net result	116	77	-33.6%	465	137	-70.5%
EPS (€ cents)	0.202	0.134	-33.7%	0.809	0.237	-70.7%
FOCF	-167	-707	-323.4%	-1,217	-2,596	-113.3%
Group Net Debt	4,301	5,884	+36.8%	4,301	5,884	+36.8%
Headcount				49,234	49,973	+1.5%

© 2020 Leonardo - Società per azioni 24 Free Operating Cash-Flow (FOCF): is the sum of the cash flows generated by (used in) operating activities (which includes interests and income taxes paid) and the cash flows generated by (used in) ordinary investment activity (property, plant and equipment and intangible assets) and dividends received

Covenant FY2019

	FY2019A Post IFRS 16		FY2019A Post IFRS 16
EBITDA*	€ 1,743 mln	Group Net Debt	€ 2,847 mln
Net Interest	- € 182 mln	Leasing (IFRS 16)	- € 451 mln
		Financial Debt to MBDA	- € 651 mln
		Group Net Debt for Covenant	€ 1,745 mln
		EBITDA	€ 1,743 mln
EBITDA / Net Interest	9.6	Group Net Debt / EBITDA	1.0
THRESHOLD	> 3.25	THRESHOLD	< 3.75

* EBITDA net of depreciation of rights of use

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.

Contacts

Valeria Ricciotti

Head of Investor Relations and Credit Rating Agencies

+39 06 32473.697

valeria.ricciotti@leonardocompany.com

Leonardo Investor Relations and Credit Rating Agencies

+39 06 32473.512

ir@leonardocompany.com

© 2019 Leonardo - Società per azioni 27

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