The following is a summary of the Hensoldt AG (HAGHY) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Hensoldt AG in Q1 2024 reported a record order backlog of €5.9 billion and a revenue of €329 million.

• The company's adjusted EBITDA increased to €33 million (10.3% margin) and adjusted EBIT to €11 million (3.2% margin).

• First quarter cash generation significantly improved year-on-year because of initial prepayments from a German customer.

• A slight impact on adjusted EBIT margin occurred due to increased amortization of capitalized R&D expenses.

• Net leverage by the end of Q1 2024 was at 0.6 times, factoring in the capital increase to partially finance the ESG acquisition.

• Approximately €7-€8 million gain in interest income due to hedging strategy and interest derived from cash management.

Business Progress:

• Hensoldt AG has prioritized operational excellence, digitalization, and internationalization in the near and medium term.

• Expansion of production capacities and strengthening of supply chains are underway, with TRML-4D radar production increasing fivefold in the past three years.

• A recent acquisition of ESG has been made to bolster a shift towards digitization and software-driven future.

• Order intake in Q1 stood at a hefty €665 million with meaningful contracts for short and very short-range air defense systems and the TRML-4D radar.

• Hensoldt predicts international growth boost in 2024 from leveraging its portfolio and customer base.

• Notable growth in sensor competences, accompanied by the ESG acquisition.

• Collaborative projects with major companies like Thales, KNDS, and Rheinmetall are in the pipeline.

• The company has plans for expansion in the UK, France, and South Africa, focusing on different system specialisations in each region.

• Hensoldt is transitioning to next-gen gimbal in optronics and anticipates a potential of approximately €2 billion from the European Skyshield program.

• Implementation of OneSAPnow is ongoing as part of efficiency planning, expecting returns to outweigh investments in the longer run.

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