Thales Sa · EURONEXT:HO
Thales Sa — Investor Presentation (September 2024)
72 slides from Thales Sa's investor presentation, September 2024
Slide 1: Investor meeting
Investor meeting September 2024 www.thalesgroup.com
Slide 2: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 2
Slide 3: Thales today: a set of focused, technology-driven businesses
Thales today: a set of focused, technology-driven businesses Sales by segment EBIT margin R&D total spend 29% 11.0% 11.6% Aerospace 10.2% 9.0% Civil 8.1% 53% ~70% ~30% aeronautics: ~10% €18.4bn(a) Defence & Customer- ~€4bn(a) Self-funded security funded R&D ~20% of sales R&D 18% Digital identity & s
Slide 4: Portfolio focused on leading and highly synergistic businesses
Portfolio focused on 3 leading and highly synergistic businesses Critical decision chains Sensing and data gathering Data transmission and storage Data processing and decision making Flight management Aerospace Observation satellites Military communications systems Defence & Security Advanced sensor
Slide 5: Thales builds on key strengths
Thales builds on 4 key strengths Connectivity Big data Mobility analytics Artificial Cyber- intelligence AI security Cutting edge R&D Deep domain knowledge Large digital asset base Global presence ~€4bn, ~20% of sales Top 3 globally or Thales portfolio: Presence in 60+ ~70% customer-funded #1 in Eur
Slide 6: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 6
Slide 7: Key 2024 priorities
Key 2024 priorities > Continued ramp up to capture market growth > Maintained innovation leadership > Space recovery plan > Integration of acquisitions 7
Slide 8: Solid progress in H1 2024
Solid progress in H1 2024 1 2 3 4 Capacity Innovation Space recovery Acquisitions' ramp-up leadership plan integration > 3,900 recruitments > Trusted AI > Internal > Imperva integration completed in accelerator redeployment of progressing as H1 2024 the jobs actively planned > 600 experts and > Seve
Slide 9: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 9
Slide 10: Avionics: top line growth to normalise in 2024
Avionics: top line growth to normalise in 2024 Key growth drivers for 2024 Global passenger traffic evolution Air passenger traffic Billion RPKs. Source: IATA › Expected to remain dynamic in 2024 vs same period in 2019 Yearly Evolution › Fuelling aftermarket sales albeit at a slower pace than in 2
Slide 11: Space: two main business lines with leadership positioning
Space: two main business lines with leadership positioning Observation, Exploration, Navigation JV structure Telecom - Commercial customers (OEN) - Institutional & defence customers 67% Thales/ 33% Leonardo Leading positioning Best-in-class product range Optical and radar unique offer: All In One
Slide 12: Telecom action plan to restore profitability
Telecom action plan to restore profitability Conjunctural headwinds How to capture new No inflation pass-through mechanism market opportunities • Adjust the workforce to Supply chain difficulties notably for Adapt to the GEO market new size propulsion the current workload Maintain ability to
Slide 13: Defence & Security: ramping up to deliver on new record backlog
Defence & Security: ramping up to deliver on new record backlog and address sustained demand growth Defence & Security end-year backlog 35.2 €bn and 31.0 Confirmation of a robust demand context years of sales 26.1 21.8 23.2 Geopolitical tensions driving sustained budget growth in main 3.6 3.4 year
Slide 14: DIS: global leader on cybersecurity and digital identity markets
DIS: global leader on cybersecurity and digital identity markets Key 2023 highlights fuelling 2024 pipeline 2024 context and priorities x2 eSIM activations 100 Million eSIM for connected cars Cybersecurity x2 eco-friendly payment cards, crossing the › Integration of Imperva and Tesserent 250 Mu mi
Slide 15: 2023 adjusted net income cash conversion above target
2023 adjusted net income Adjusted net income conversion into cash conversion above target Free operating cash flow €m 162% 185% 2023: fourth year of significant 115% 2,527 free cash flow outperformance 98% 2,515 135%: above Strong order intake, especially in defence markets 2,026 target 113% 1,768
Slide 16: 2024 Financial objectives refined
2024 Financial objectives refined 1 2 3 Order Intake Sales EBIT Margin(c) Book-to-bill +5% to +6% (a) 11.7% to 11.8% (a) above 1 organic growth, corresponding to €19.9 to 20.1 billion(b) Unchanged Narrowed Range Narrowed Range a. Assuming no new major disruptions of the health situation, of th
Slide 17: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 17
Slide 18: Imperva
Imperva THALES _ nent may nol be reproduced, modified, adapled, published. ranslated, in any way, in wnole orn port or disclosed to @ thitd party without the prot wilten consent of Tholes © 2024 THALES. Al rights reserva
Slide 19: Imperva: Leading global data and application security provider
Imperva: Leading global data and application security provider Transaction completed in December 2023 2022 revenue by segment Transaction price based on a $3.6bn enterprise value(a) Valuation multiples: › Implied EV/2024E sales multiple of 6.1x 39% Data 61% › Implied EV/2024E EBIT of 17x post sy
Slide 20: Imperva: Creating the global benchmark data security platform
Imperva: Creating the global benchmark data security platform Identity Data security platform Applications A B C Customer Identity & Hardware Security Data discovery Access Management Web App. Firewall Modules & classification Workforce Identity & Data security Encryption DDoS protection Access Mana
Slide 21: Imperva: positioned for sustained long term growth and cash generation
Imperva: positioned for sustained long term growth and cash generation Robust software business model Sales growth Compelling products and technologies Double Highly recurring revenue model digit High growth, high EBIT margin +8% Structurally high free cash-flow margin US business at scale
Slide 22: Building a world-class global cybersecurity leader
Building a world-class global cybersecurity leader with a comprehensive range of premium products and solutions Key pro forma metrics Global security products Data security Application security > €2bn(a) sales in 2024 Identity & Access management Double digit organic growth Reported EBIT margi
Slide 23: Imperva: positioned for sustained long term growth and cash generation
Imperva: positioned for sustained long term growth and cash generation $50m run-rate cost synergies, achieved by Expected ramp-up of synergies 2028 $m, EBIT impact SG&A savings on full perimeter Procurement cost reduction ~110 Real estate footprint optimization ~100 ~70 Revenue synergies $60m
Slide 24: Cobham Aerospace Communications
Cobham Aerospace Communications 24
Slide 25: Cobham Aerospace Communications strengthens Thales avionics portfolio
Cobham Aerospace Communications strengthens Thales avionics portfolio Acquisition of Cobham Aerospace Communications (“AeroComms”) for US$1.1bn(1) from Cobham Aerospace Ltd Significant opportunity to strengthen Thales Avionics business Adding global leading position in safety cockpit communication
Slide 26: AeroComms: safety cockpit communication leader
AeroComms: safety cockpit communication leader Leading supplier of advanced, ultra-reliable innovative safety cockpit communication systems AeroComms Revenue Split (FY 23E) Full L-Band Satcom systems (antennas and transceivers) R&D Complete audio and radio management solutions (10%) Passive an
Slide 27: AeroComms: expertise, products and positions driving superior growth
AeroComms: expertise, products and positions driving superior growth % FY23E revenues SATCOM 30% Audio/Radio 40% Antennas(1) 30% SATCOM antennas Complete audio & radio Passive antenna systems enabling connectivity, Solution and transceiver technology management solutions communications & navigation
Slide 28: Thales & AeroComms on board
Thales & AeroComms on board Radio-navigation antennas Digital Audio / L-Band SATCOM Radio controls Communications Thales Computers/ Cyber Glass cockpit Navigation Flight Control Computers GPS / GNSS Navigation Avionics Critical Computers Displays and head-up displays Inertial Navigation System Cyber
Slide 29: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 29
Slide 30: Sustainability ambitions anchored in our purpose
Sustainability ambitions anchored in our purpose Our purpose Our ambitions “Building a future we Maximize the sustainability impact of our can all trust” portfolio of solutions Embed ambitious sustainability commitments in all processes Working to make the world safer, greener and more inclusive 30
Slide 31: Take our sustainability performance to the next level
Take our sustainability performance to the next level: high value contributions in 2023 through portfolio of solutions Greener: ~20% Design solutions to reduce the Safer: ~60% environmental impact of our customers Keep citizens safe in both physical and digital worlds IRIDE radar and optical PureFly
Slide 32: Optimization of aircraft operations: a major CO2 reduction opportunity
Optimization of aircraft operations: a major CO2 reduction opportunity for aviation Major CO2 emission reduction achievable Possible CO2 emission reduction through operations optimization via aircraft operations optimization (avoided emissions, million tons of CO2) 10 to 15% CO2 reduction › CO2-op
Slide 33: Addressing aircraft operations optimization through continuous innovations
Addressing aircraft operations optimization through continuous innovations in both avionics and Air Traffic Control PureFlyt TopSky-ATC One Flight Management System Air Traffic Management system › Improve flight trajectories (climb, cruise, › Deliver civil Air Traffic Control solutions that descent)
Slide 34: Defence is essential to safe, stable and prosperous societies
Defence is essential to safe, stable and prosperous societies We live in a globalised Combining military The protection offered by and increasingly capability, diplomacy and Defence to wider society unpredictable world, development assistance is provides the foundation facing emerging threats necess
Slide 35: Thales: leading in one of the most regulated global industries
Thales: leading in one of the most regulated global industries Strict export controls What we stand for Committed and certified to stringent export control regulations Processes integrated in day-to-day business through training, audit, and focus on continuous improvement Operating ethically; sellin
Slide 36: Continuous progress in ESG performance
Continuous progress in ESG performance Targets Targets -52% 75% of 35% reduction of 0% 49% 87% management 2023 2023 operational CO2 committees with emissions(a) at least 3 women 2018 2023 2018 2023 by 2023 by 2023 2022 result: -40% 2022 result: 76% Strategy 100% of new 0% 100% Diversity & 20% of wom
Slide 37: Gender diversity scorecard and targets
Gender diversity scorecard and targets Gender diversity ratios Glass ceiling KPIs and targets (large European A&D companies) Percentage of management Board of directors 87% committees with 50% at least 3 women 42% 39% 33% (44 committees) 27% 25% 68% Percentage of women in senior Executive committee
Slide 38: Performance also recognized externally: ESG ratings improvement
Performance also recognized externally: ESG ratings improvement 2030 Targets VALIDATION “A” Rating LEADING LEADING 1% Joined CAC SBTi 1.5 #1of CAC40 1.5% Note: RSCE stands for 'Corporate Scientific Responsibility.' (Responsabilité scientifique des entreprises). This ranking assesses the effectivenes
Slide 39: Table of contents
Table of contents 01 02 03 04 Introduction to Thales Key priorities Outlook Acquisitions 05 06 Sustainability: safer, H1 2024 results greener, more inclusive 39
Slide 40: H1 2024 highlights
H1 2024 highlights > Strong H1 order intake, driven by excellent momentum for large orders, notably in Defence & Security > Robust organic sales growth both in Avionics and in Defence & Security © Damen_Thales > Slight improvement in EBIT margin while increased R&D expenses in Space and unfavourable
Slide 41: H1 2024 key figures
H1 2024 key figures Order intake and book-to-bill (€m) Sales (€m) EBIT and EBIT margin(b) (€m and %) +10.4% +26% +8.9% +4.7%(a) +23%(a) +6.0%(a) 11.5% 0.98 1.13 11.4% Adjusted net income(b) (€m) Free operating cash-flow(b) (€m) Net cash (debt) position(b)(c) (€m) (From continued activities - excl. T
Slide 42: H1 2024 order intake by contract unit value
H1 2024 order intake Order intake by contract unit value > Strong H1order intake, driven by Organic growth: +23% excellent momentum for orders €m above €100m > 3 orders above €500m > 12 large(a) orders booked in H1 2024 Unit value > 9 in Defence & Security (in the Netherlands, > €100m Germany, Asia,
Slide 43: H1 2024 organic sales growth
H1 2024 organic sales growth H1 sales growth drivers > Scope and currency impact > Scope impact resulting from: €m – acquisitions of Cobham (Aero), Imperva and Reported growth: +8.9% Tesserent (DIS): +€342m Organic growth: +6.0% – divestment of Aeronautical Electrical Systems (Aero): -€66m Organic g
Slide 44: Summary adjusted P&L: from sales to EBIT
Summary adjusted P&L: from sales to EBIT H1 2024 H1 2023 Change €m % of sales €m % of sales total organic Sales 9,493 8,716 +8.9% +6.0% Gross margin 2,771 29.2% 2,457 28.2% +12.8% +4.3% Indirect costs (1,710) 18.0% (1,509) 17.3% +13.4% +3.4% o/w R&D expenses (599) 6.3% (513) 5.9% +16.9% +7.6% o/w Ma
Slide 45: Aerospace: H1 2024 key figures
Aerospace: H1 2024 key figures H1 H1 Change €m 2024 2023 Total Organic Order intake 2,688 2,349 +14% +16% Sales 2,582 2,469 +4.6% +4.8% EBIT 167 169 -1.5% -10.2% in % of sales 6.5% 6.9% -0.4 pts -1.0 pts > Order intake above H1 2023, with contrasted dynamics > Double digit growth for Avionics with a
Slide 46: Defence & Security: H1 2024 key figures
Defence & Security: H1 2024 key figures H1 H1 Change €m 2024 2023 Total Organic Order intake 6,120 4,498 +36% +36% Sales 4,938 4,544 +8.7% +8.5% EBIT 639 576 +10.9% +11.0% in % of sales 12.9% 12.7% +0.3 pts +0.3 pts ©Yann Bourdin Photopointcom_Thales > Robust order intake > 9 large contracts in H1 i
Slide 47: Digital Identity & Security (DIS): H1 2024 key figures
Digital Identity & Security (DIS): H1 2024 key figures H1 H1 Change €m 2024 2023 Total Organic Sales 1,934 1,672 +15.6% +0.4% EBIT 272 246 +10.7% -7.4% in % of sales 14.1% 14.7% -0.6 pts -1.2 pts > H1 2023 figures restated to include the cyber civil activities transferred from Defence & Security > S
Slide 48: Summary adjusted P&L: from EBIT to adjusted net income
Summary adjusted P&L: from EBIT to adjusted net income €m H1 2024 H1 2023 EBIT 1,096 993 Cost of net financial debt and other financial results (55) 1 Finance costs on pensions and other employee benefits (28) (38) Income tax (193) (175) Effective tax rate 20.4% 20.0% Adjusted net income – discontin
Slide 49: H1 2024 Free operating cash-flow
H1 2024 Free operating cash-flow €m H1 2024 H1 2023 > Significant negative H1 WCR Operating cash flow before WCR changes, 1,472 1,319 variance due to higher stocks interest and tax > Additional stocks to mitigate + Change in WCR and reserves for contingencies (995) (686) supply chain difficulties Pe
Slide 50: Movement in net debt over H1 2024
Movement in net debt over H1 2024 Free Free operating operating Acquisitions Dividends New leases cash-flow from cash-flow from & disposals paid (IFRS16) Others €m continued discontinued operations operations +23 -108 +528 -534 -95 -218 Out of which: - Acquisitions: -1,152 Out of which - Disposal: +
Slide 51: Appendix
APPENDIX www.thalesgroup.com 51
Slide 52: Confirmed ramp up of recruitment capabilities
Confirmed ramp up of recruitment capabilities Global recruitment volumes Pursuing dynamic recruitment in 2023 Number of employees 11,500 10,900 Ramping-up engineering centers in Romania and 9,400 India Prior to 8,700 8,500 Continued increase in production outputs Gemalto acquisition Turnover b
Slide 53: Ramp-up in capex and supply chain management to address strong demand
Ramp-up in capex and supply chain management to address strong demand Capex ramp-up plan ~720 €m Continued increase in capex 622 IS/IT and other Ramping-up production output to meet growth 525 Several sites extension and footprint optimization 496 446 380 371 Engineering Supply chain disruption
Slide 54: Sustained excellence in R&D, a key differentiator
Sustained excellence in R&D, a key differentiator Self-funded R&D €m and % of sales Sustaining excellence in R&D Among Clarivate’s “top 100 global innovators” 1,108 2024, for the 11th year Portfolio of more than 20,500 patents 797 ~6.5% Leveraging multiple funding sources 6.0% €73m collaborati
Slide 55: Unveiling the extent of Thales' capabilities in AI for critical usages
Unveiling the extent of Thales’ capabilities in AI for critical usages AI, already a reality for Thales and a business enabler To accelerate customers’ operations To improve decision making › POD Talios: 100 times faster target detection › Maritime patrol: automatic target categorisation › TopSk
Slide 56: A strong set of focused businesses
A strong set of focused businesses Segment Sub-segment Civil Military 2023 sales(a) (€m) Market position Flight avionics(b) #3 worldwide including cockpit avionics, communications, electrical systems, ~2,100 (flight avionics) training and simulation (of which civil: ~€1,400m, military: ~€700m) Conne
Slide 57: Aerospace segment: identity card
Aerospace segment: Sales by solutions Organic sales growth identity card 10% Connected in-flight +12% 40% entertainment (IFE) +6% Flight avionics and other 8% +2% aircraft 2 Global Business Units Microwave equipment tubes and services Avionics -4% -24% Space 42% 2019 2020 2021 2022 2023 Space 18,400
Slide 58: Defence & Security segment: identity card
Defence & Security Sales by solutions Organic sales growth segment: identity card +6% +6% +7% +4% 3 Global Business Units 48% Communications 52% Sensors and Land & Air Systems & C2 systems mission systems -2% Defence Mission Systems 2019 2020 2021 2022 2023 Secure Communications & Information System
Slide 59: Digital Identity & Security (DIS) segment: identity card
Digital Identity & Security Sales by solutions Organic sales growth (DIS) segment: identity card 19% 26% +15% Mobile connectivity (a) Cloud Protection & Licensing (a) +4% +2% n/a 1 Global Business Units 35% Digital Identity & Security Banking & Payment 20% -6% Biometrics 2019 2020 2021 2022 2023 16,
Slide 60: Global leader in flight avionics and connected in-flight entertainment
Global leader in flight avionics and connected in-flight entertainment Sales by solutions Sales by platform type Sales by activity type 28% Military 81% platforms Flight avionics and other 43% 51% 49% aircraft €2.6bn(a) €2.6bn(a) Narrowbody Aftermarket €2.6bn(a) Original equipment and services (2023
Slide 61: Highly diversified Defence & Security customer base
Highly diversified Defence & Security customer base Defence & Security sales by region, 2023 3% 7% Rest of world Middle East 6% Asia 7% Australia/NZ 31% 43% France outside 8% Europe North America 11% Rest of Europe 6% 9% Germany United Kingdom & Netherlands 61
Slide 62: Thales on board the Rafale
Thales on board the Rafale MODULAR DATA PROCESSING UNIT pha Mission computer prow dot fusion SPECTRA ELECTRONIC SYS} end enabling moliple figurations "WARFARE SUITE \ laser and infrared demal FRONT SECTOR OPTRONICS TALI ‘ g - AESA RBE2 ‘ADVANCED MAN MACHINE INTERFACE | clase ‘MISSILE ELECTRONICS COM
Slide 63: H1 2024 order intake by destination
H1 2024 order intake by destination H1 H1 Change 5% In € millions 2024 2023 Total Organic 10% Rest of the world Middle East France 2,099 2,058 +2.0% +2.1% United Kingdom 571 577 -1.0% -4.2% Rest of Europe 2,884 2,771 +4.0% +3.7% 19% France Europe 5,554 5,406 +2.7% +2.2% 17% North America 1,274 1,048
Slide 64: H1 2024 sales by destination
H1 2024 sales by destination H1 H1 Change 5.8% 4.9% In € millions 2024 2023 Total Organic Middle East Rest of the world France 2,940 2,639 +11.4% +11.4% United Kingdom 624 573 +8.9% +4.9% 9.8% Asia 31.0% Rest of Europe 2,250 2,057 +9.4% +8.8% France Europe 5,814 5,268 +10.4% +9.6% North America 1,26
Slide 65: H1 2024 adjusted net result
H1 2024 adjusted net result Change in Actuarial Consolidated Adjusted Impact of Disposal of fair value of gains/losses P&L P&L business assets and derivative FX on other long €m H1 2024 combination others instruments term benefits H1 2024 Sales 9,493 — — — — 9,493 Cost of sales (6,985) 263 — — — (6,
Slide 66: H1 2023 adjusted net result
H1 2023 adjusted net result Change in Actuarial Consolidated Adjusted Impact of Disposal of fair value of gains/losses P&L P&L business assets and derivative FX on other long €m H1 2023 combination others instruments term benefits H1 2023 Sales 8,716 — — — — 8,716 Cost of sales (6,438) 179 — — — (6,
Slide 67: H1 2024 EBIT by operating segment
H1 2024 EBIT by operating segment H1 H1 Change €m / % of sales 2024 2023 Total Organic Aerospace 167 6.5% 169 6.9% -1.5% -10.2% Defence & Security 639 12.9% 576 12.7% +10.9% +11.0% Digital Identity & Security 272 14.1% 246 14.7% +10.7% -7.4% EBIT – operating segments 1,078 11.4% 992 11.4% +8.7% +2.8
Slide 68: Organic sales growth per quarter
Organic sales growth per quarter 2021 2022 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Aerospace Defence & Security Digital Identity & Security Total(a) a. Excluding Transport in all periods (Transport business classified as "discontinued operations" as of 01/01/2021 and disposed as of 31/05
Slide 69: Q2 2024 order intake by operating segment
Q2 2024 order intake by operating segment Q2 Q2 Change €m 2024 2023 Total Organic Aerospace 1,685 1,150 +47% +46% Defence & Security 2,998 3,127 -4% -4% Digital Identity & Security 1,028 848 +21% +4% Other 19 18 Total 5,730 5,142 +11% +8% 69
Slide 70: Q2 2024 sales by operating segment
Q2 2024 sales by operating segment Q2 Q2 Change €m 2024 2023 Total Organic Aerospace 1,400 1,314 +6.6% +4.6% Defence & Security 2,633 2,506 +5.0% +4.5% Digital Identity & Security 1,017 854 +19.1% +3.1% Other 21 16 Total 5,071 4,690 +8.1% +4.4% 70
Slide 71: Definition of non-GAAP measures and other remarks
Definition of non-GAAP measures and other remarks > Rounding of amounts in euros > Adjusted net income: net income, less the following elements, net of the corresponding tax effects: (i) amortization of acquired assets In the context of this presentation, the amounts expressed in millions of euros (
Slide 72: Thales contact details
Thales 4 rue de la verrerie 92160 Paris Meudon France [email protected] This presentation contains certain forward-looking statements. Although Thales believes that its expectations are based on reasonable assumptions, actual results may differ significantly from these forward- looking statements d