Leonardo S.p.A. — Investor Presentation 2021

May 6, 2021

1Q2021 Results Presentation

Alessandra Genco Chief Financial Officer

Alessandro Profumo Chief Executive Officer

Rome, 6 May 2021

Agenda

-

• Sector Results

• Appendix

© 2019 Leonardo - Società per azioni

Key messages Chief Executive Officer

1Q 2021 Results Chief Financial Officer

Solid start to the year: progressing well with our plans First step to achieve our FY2021 Guidance

		BACKLOG* € 36.4 bn	ORDERS € 3.4 bn
LEVERAGING OUR BACKLOG IN A COMPLEX GLOBAL CONTEXT	• Benefitting from the resilience of military/governmental and demand in export markets	14% 30% 26% 19% 12% NORTH AMERICA REST OF EUROPE REST OF WORLD UK ITALY *not including Soft Backlog	24% 17% 59% HELICOPTERS AERONAUTICS DEFENCE ELECTRONICS & SECURITY
	EBITA € 938 mln REVENUES € 2.8 bn	EBITA € 95 mln	ROS 3.4%
SOLID RESULTS CONFIRMING OUR GROWTH PATH	+8% YOY 27% 21% 52% HELICOPTERS AERONAUTICS DEFENCE ELECTRONICS & SECURITY	• 130% YOY	• Higher profitability across the Group besides Aerostructures
	• FOCF at - € 1.4 bn reflecting usual seasonality • Strong liquidity and financial flexibility
WELL POSITIONED IN THE MEDIUM-LONG TERM © 2019 Leonardo - Società per azioni	• Although the first quarter is the smallest contributor to YE results, it represented a solid start • Military and defence markets remain robust • Cautious on the speed of recovery on the civil side • Continuing to make good strategic progress in important areas • Progress towards ESG goals: ESG targets proposed as part of both short term and long term incentive plan

Strategic progress update Taking actions on portfolio

AEROSTRUCTURES REVIEW	Proactive review of options to accelerate transformation and address structural issues • Including rationalising industrial sites; investing to increase efficiency/flexibility; headcount reduction •
HENSOLDT ACQUISITION	Further cooperation in complementary businesses across geographies product and end markets • Establishes a strategic long term presence in the fast growing German defence market •
EVALUATING POTENTIAL DISPOSALS (e.g. Automation)	Critical product portfolio "reshaping", focusing capital on lines of business where we have strongest capabilities • Will contribute to maintaining a solid capital structure •
DRS IPO POSTPONEMENT	Strong investor interest during roadshow but adverse market conditions did not allow adequate valuation of DRS • Fully committed to transaction when market conditions are more favourable so as to highlight the embedded value of • DRS

Strategic progress update Leonardo and HENSOLDT Strategic partnership

Key transaction terms

• Leonardo to acquire a 25.1% stake in German HENSOLDT from KKR
• Total purchase consideration of €606 million
• Establishment of a new strategic partnership to optimise ongoing cooperation and maximise future opportunities
• Closing of transaction expected for 2nd half of 2021, subject to customary closing conditions
• Solid capital structure will be maintained also through disposals and DRS listing

Strategic partnership shared objectives

• 1. Enhancing our combined access to the German, Italian and UK domestic markets
• 1. Leveraging respective commercial networks to accelerate growth in international markets
• 1. Leveraging complementary portfolios to offer comprehensive products and solutions to customers
• 1. Build foundations for common basic future technologies

Access to a wider international customer base

• Countries with Leonardo local presence
• HENSOLDT presence through sales offices / production facilities

Key business strengths

Confidence in the medium and long term potential in our main businesses

Helicopters

• Demonstrated strength in current conditions
• Well balanced in military and civil with attractive customer support
• Solid backlog and leading product portfolio
• Continue to invest and build for the future (i.e. Kopter acquisition, AW609, Hero, AW169)

Defence Electronics

Electronics

• Strong order book
• Long-term customer relationships
• Won positions on attractive long-term opportunities (e.g. EFA fleets and Tempest)
• Programmes transitioning from development to more mature phases

DRS

• Top line growth confirmed, well positioned towards US DoD key priorities
• Margin expansion driven by programmes moving from development to production

Aircraft

• Structurally strong business
• Well positioned on key long-term programmes (i.e. EFA)
• Best in class profitability
• Growing on all metrics in absolute terms
• Investing in Trainers as a opportunity for growth

Agenda

-

• Sector Results

• Appendix

© 2019 Leonardo - Società per azioni

Key messages Chief Executive Officer

1Q 2021 Results Chief Financial Officer

1Q 2021 highlights Confirming growing path

• Continued strong demand for our products supports growing top line
  • Backlog at € 36.4 bn
  • Order intake of € 3.4 bn, flat YoY, with no jumbo orders included
  • Revenues at € 2.8 bn, up 7.7% YoY
• Recovery in profitability
  • EBITA at € 95 mln, more than double 1Q20, notwithstanding Aerostructures issues
• FOCF in line with plan
  • FOCF at € -1.4 bn, reflecting usual seasonality
• Strong liquidity position confirmed; no material refinancing due in 2021

Order Intake

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

	€ mln	∆ % YoY
1Q2020A	3,421
HELICOPTERS	855	-42.6%
ELECTRONICS EUROPE*	1,544	+79.1%
LEONARDO DRS*	593	-3.6%
AIRCRAFT	595	+15.5%
AEROSTRUCTURES	36	-75.0%
ELIMINATIONS & OTHER	-188
1Q2021A**	3,420	0%

* Excluding € 4 mln of Defence Electronics & Security eliminations

** Including ca. € 122 mln of negative forex

Revenues Solid performance confirming growing path

	€ mln	∆ % YoY
1Q2020A	2,591
HELICOPTERS	792	+12.5%	Ramp-up in military/governmental (NH90 Qatar and TH-73A US Navy)
ELECTRONICS EUROPE*	931	+10.0%	Strong increase across all business areas
LEONARDO DRS*	565	+8.0%	Considerable increase despite a negative impact of the USD/Euro forex
AIRCRAFT	510	+18.3%	Increase driven by M-346 trainers
AEROSTRUCTURES	111	-51.3%	B787 and ATR production slowdown
ELIMINATIONS & OTHER	-107	+1.2%
1Q2021A**	2,790	+7.7%

* Excluding € 2 mln of Defence Electronics & Security eliminations

** Including ca. € 105 mln of negative forex

EBITA and Profitability

Improving profitability across the business; COVID-19 affecting Aerostructures

	€ mln (RoS)	RoS	∆ % YoY
1Q2020A	41	1.6%
HELICOPTERS	31	3.9%	+72.2%
ELECTRONICS EUROPE	79	8.5%	+71.7%
LEONARDO DRS	48	8.6%	+41.2%
AIRCRAFT	47	9.2%	+80.8%
AEROSTRUCTURES	-46	-41.4%	-76.9%
ATR	-14	n.a.	+17.6%
SPACE	3	n.a.	250.%
CORPORATE & OTHER	-53		-39.5%
1Q2021A*	95	3.4%	+131.7%

* Including ca. € 21 mln of negative forex

From EBITA to Net Result Net Result benefitting from EBITA increase

• EBIT up 150% due to EBITA increase
• Net Result mainly benefitting from EBITA increase, with lower FX charges and higher taxes
• 1Q21 FOCF at -€1.4bn in line with plan, reflecting usual seasonality

Strong liquidity position at ca. € 4.2 bn

• Cash availability and credit facilities ensure a Group's liquidity above € 4.2 bn
  • Existing credit lines (confirmed and unconfirmed) equal to € 2.6 bn
  • Credit Line signed in May 2020 equal to € 1.25 bn(1)

(1) €750mln Term Loan fully cancelled at the end of 2020 following the bond issuance and EIB financing

2021 Guidance confirmed

Assuming progressive improvement in the global health situation through the year with consequent normalization of operating / market conditions

		FY2020A	FY2021 Guidance
New Orders	(€ bn)	13.8	ca. 14
Revenues	(€ bn)	13.4	13.8-14.3
EBITA	(€ mln)	938	1,075-1,125
FOCF	(€ mln)	40	ca. 100
Group Net Debt	(€ bn)	3.3	ca. 3.2*

2021E
-------	--

• Military/governmental business robust and resilient driving top-line growth, improving profitability and FOCF generation
• Civil Aeronautics expected to continue to be impacted by COVID related market downturn

*Assuming no dividend payable for 2020 results

2021 exchange rate assumptions: € / USD = 1.18 and € / GBP = 0.90

Closing remarks

• Continued good commercial progress with continuous order intake distributed across the Group
• Confirmed growth path in revenues
• Solid industrial performance
• Robust profitability
• Cash flow in line with plan
• Progress towards ESG Goals: ESG targets proposed as part of both short term and Long Term Incentive Plan

© 2019 Leonardo - Società per azioni 16 Q&A

SECTOR RESULTS

Helicopters

2021 OUTLOOK*

• Growth driven by military/governmental business offsetting COVID related civil softness
• Profitability supported by efficiencies initiatives and impacted by prime contractorship margin dilution

Defence Electronics & Security

ELECTRONICS – EU

1Q 2021	1Q 2020	% Change		FY 2020
				4,710
				4,147
				360
				8.7%
	€ mln 1,544 931 79 8.5%	862 846 46 5.4%	+79.1% +10.0% +71.8% +2.6 p.p.

LEONARDO DRS

	1Q 2021 \$ mln	1Q 2020	% Change	FY 2020
Orders	715	678	+5.5%	3,054
Revenues	681	576	+18.2%	2,757
EBITA	58	37	+56.8%	202
RoS	8.5%	6.4%	+2.1 p.p.	7.3%

Avg. exchange rate €/\$ @ 1.12056 in 1Q2021 Avg. exchange rate €/\$ @ 1.1023 in 1Q2020

2021 OUTLOOK*

• Slight growth in revenues recovering 2020 pandemic slow down
• Profitability improvement supported by efficiency despite pass through and programmes under development

*In absence of further worsening of the pandemic and consequent additional restrictions which may compromise current scenario

Aeronautics

AIRCRAFT

	1Q 2021 € mln	1Q 2020	% Change	FY 2020
Orders	595	515	+15.5%	2,031
Revenues	510	431	+18.3%	2,634
EBITA	47	26	+80.8%	355
RoS	9.2%	6.0%	+3.2 p.p.	+13.5%

AEROSTRUCTURES

€ mln	1Q 2021	1Q 2020	% Change	FY 2020
Orders	36	144	-75.0%	581
Revenues	111	228	-51.3%	819
EBITA	-46	-26	-76.9%	-86
RoS	-41.4%	-11.4%	-30.0 p.p.	-10.5%

ATR

	€ mln	1Q 2021	1Q 2020	% Change	FY 2020
EBITA		-14	-17	+17.6%	-69

2021 OUTLOOK*

• Aircraft production increase driven by EFA Kuwait, F35 and proprietary products (M-345, M-346)
• Aerostructures and GIE-ATR still heavily impacted by the civil market downturn caused by COVID

*In absence of further worsening of the pandemic and consequent additional restrictions which may compromise current scenario

Space

2021 OUTLOOK*

• Volumes an profitability expected to increase supported by gradual recovery of manufacturing
• Confirmed solid performance of satellite services

*In absence of further worsening of the pandemic and consequent additional restrictions which may compromise current scenario

APPENDIX

1Q 2021 Results Group Performance

€ mln	1Q 2021	1Q 2020	% Change	FY 2020
New Orders	3,421	3,421	-	13.754
Backlog	36,414	37,000	-1.6%	35.516
Revenues	2,790	2,591	+7.7%	13.410
EBITA	95	41	+131.7%	938
RoS	3.4%	1.6%	+1.8 p.p.	7%
EBIT	75	30	+150%	517
EBIT Margin	2.7%	1.2%	1.5 p.p.	3.9%
Net result before extraordinary transactions	-2	-59	+96.6%	241
Net result	-2	-59	+96.6%	243
EPS (€ cents)	-0.003	-0.103		0.419
FOCF	-1,422	-1,595	+10.8%	40
Group Net Debt	4,640	4,396	+5.6%	3.318
Headcount	49,780	49,180	+1.2%	49.882

© 2020 Leonardo - Società per azioni 23 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

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

Covenant

	FY2020A Post IFRS 16		FY2020A Post IFRS 16
EBITDA*	€ 1,378 mln	Group Net Debt	€ 3,318 mln
Net Interest	€ 168 mln	Leasing (IFRS 16)	- € 555 mln
		Financial Debt to MBDA	- € 663 mln
		Group Net Debt for Covenant	€ 2,100 mln
		EBITDA*	€ 1,378 mln
EBITDA / Net Interest	8.2	Group Net Debt / EBITDA	1.5
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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