Ladies and gentlemen, welcome to the Montana Aerospace H1 2026 conference. I am [Moritz], your Chorus Call operator. I would like to remind you that all participants will be in a listen only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. If you would like to ask a question from the webinar, you may click the Q&A button on the left side of your screen and then click the Raise Your Hand button.
For written questions, please use the Q&A button and then the text button and type your questions. If you are connected via phone, please press star followed by ` on your telephone keypad. For operator assistance, please press the operator assistance button on the bottom left side of your screen or star zero on your telephone. At this time, it is my pleasure to hand over to Patrick Maurer. Please go ahead, sir.
Welcome everyone to the half year one 2026 earnings call of Montana Aerospace. Q2 , and therefore the first half of the year 2026, represent another chapter in Montana Aerospace's strong track record of revenue and results growth. As said, my name is Patrick Maurer, CFO of Montana Aerospace, and today I am joined by Vicky Welvaert, our CHRO, and as always, Mark Wesley in investor relations. In today's call, we will take you through the key developments of the first six months, our financial performance, the balance sheet and cash flow development, as well as going a bit deeper into selected strategic growth areas, giving some further insight into capital allocation priorities and finally, have an outlook for the remainder of 2026 and 2027.
Before we go into the numbers, I want to bring us all back on the same page why we in Montana Aerospace achieve industry leading performance in the aerospace industry. Over the past years, we have sharpened our portfolio significantly. This started with the divestment of the e-mobility segment in 2024 and energy in 2025. We now have a clear profile that allows for better comparability and through the proceeds of these divestments, also strengthened financial resilience. Our ambition from the beginning was to build an aerospace platform that is different from the traditional fragmented model that we typically see in the industry, because we want to be a game changer in the aerospace supply chain. That is not a slogan, it is based on concrete industrial capabilities that we see here on this page again.
One and foremost, our vertical integration that starts with partially chips recycling, metal chips recycling, casting, extrusion, and then going into the machining and assembly. So the full supply chain. What it brings for our customers is a reduced complexity, improved lead times, sometimes substantially improved lead times and of course, reduced transport and qualification cost and complexity. That on the second side allows us as Montana Aerospace to capture more value than other players in the industry. Second, our setup is based on a largely best cost country manufacturing footprint across all key regions in the Aerostructure industry. That is critical to be close to the customers, but also to ensure we are cost-wise competitive in the long run and also in the short run. Yeah, it is an outcome of our heavy investments over the last decade.
Third, we have a high material competence in Montana Aerospace in aluminum, steel, but also titanium, with a portfolio that ranges from structural components for fuselages, wings, and landing gears to very complex engine components. If we continue our processes and our long-term know-how and industrial experience, it gives us the required know-how and IP in order to really excel in this industry. Finally, and important to mention, through our integrated setup and being, let us say, where the customer is ESG is deeply embedded in our business model and allows us to solve ambitious sustainability goals, but also brings added benefits for the customers as we have just discussed. With that, Montana Aerospace not only participates in the aerospace industry and in the ramp up, but we with our model, address structural issues that our customers face today.
If we look on the next page, what it means is that we have a strong commercial aerospace order book above EUR 7 billion by now, and are best positioned to benefit from the growth and the very positive momentum that we currently see in the industry. The EUR 7 billion come from just EUR 3.9 billion in 2021 and underlie the progress we have made in expanding our position across all the different aerospace platforms and winning additional market share. What is important to mention here is that our order book is also qualitatively very strong across all narrow-body, wide-body, and business jet platforms, as well as military transportation aircrafts such as the A400M. The way it is calculated is rather conservative.
We basically take our contracted shipset value per plane. Multiply that by the duration of the contracts we have with our customers, so typically somewhere between five to seven, sometimes even more years. Then multiply that with our Montana build rate assumptions, which are for sure more conservative than the OEM build rates, and therefore give us, let us say, an upside potential. So we are basing our plan on a prudent view of what we believe can be achieved and still benefit from the strong long-term industry demand and momentum that we see. If we now switch to the financial performance of half year one, we can see that we have a nice sales growth of 12%. This despite the fact that FX rate in half year one 2025 was around 117 for the US dollar-euro exchange rate, and now in this year was around 1.09.
That took a bit away of the dynamic but nonetheless, the performance is very positive. Important to mention is that this growth was purely organic, without any acquisition or other dilutions, driven by increased volumes and additional market share wins in the Aerostructure segment and other interesting industries or related industries. EBITDA was EUR 87.1 million in 2026 half year one, which also corresponds to a growth of 12.2%, and the EBITDA margin was at 16.8%. Here I would like to highlight that there were no adjustments made in the EBITDA 2026. So it's, let's say a pure EBITDA without anything to consider or without anything to adjust for. What I also like to highlight is that the Aerostructure segment again performed very strongly.
The growth there, again, without taking FX into account, was over 13%, and EBITDA growth in the Aerostructure segment was over 16%, bringing us to a strong 18.3% EBITDA margin. Overall, sales are growing organically, EBITDA is increasing, and most importantly, margins are resilient and improving where it matters the most in our Aerostructure segment. When we switch then now to the next page, it's a pleasure to present to you that the operating leverage that we have allows the results basically to flow through to EBIT, where we see a 22% increase, and to the final result of the period, which is at around almost EUR 30 million, heavily increased compared to the last year.
Because in addition to the strong operative performance, we have also not seen a negative impact from the non-cash FX impacts that we saw last year, because the US dollar didn't fall or didn't weaken further compared to December 2025. As a consequence, the earnings per share have heavily increased to EUR 0.47 from just EUR 0.1 in half year one 2025. The key takeaway is that our business is converting operational progress into bottom line improvement, and we're not only growing sales, we are seeing the benefit through EBITDA, EBIT, net result, and earnings per share. That is an important proof point for the scalability of our platform. If we deep dive a bit more into the Aerostructure segment, I like to highlight the path where we came from.
Only three years ago, we were standing at around 10%, a bit above 10% EBITDA margin, despite the pretty strong US dollar in that timeframe, to now, just three years later, where we are very well on track towards our 20% EBITDA margin in the Aerostructure segment. That means over a timeframe of three years, we were able to almost double the margin profile in our Aerostructure segment. We invested heavily in this last decade in capacity, process capabilities, our best cost country footprint, and program readiness. That naturally came with let's say, fixed costs and industrialization expenses and a certain underutilization at the start. But now as the volume continue to grow and we more and more utilize our assets and our asset base, our platform sees better margin and strong operating leverage, and that we expect to certainly continue going forward.
Let us now switch and address our cash flow, working capital, and balance sheet progress. In half year one, Montana Aerospace generated a free cash flow of EUR 67 million, including, as we know, the first proceeds from the energy divestment. If we go through step-by-step the different contributors, we see a cash flow from operating activities of EUR 26 million, which is behind half year one for two main reasons. One is an inventory increase from the pre-buying and the higher pricing of metal pass-throughs. As you know, driven by the Middle East situation and crisis, we started early on to secure our supply chain to not see any impacts and any production limitations for the rest of the full year. So that's clearly an impact on the inventory that we saw in this first half year, in addition, of course, to the higher business activity.
The second equally important factor is that we do not factor anymore a customer who was last year still in certain financial difficulties. Therefore, we had to mitigate and reduce the risk by having non-recourse factoring in place. But this we stopped entirely for that customer and has, of course, a certain impact in this first half year of 2026. Cash flow from investing activities of EUR 41 million, roughly, is positive because of the proceeds from the energy segment. Of course, we will come to a bit more details on the further investing activities and capital allocation relating to it in the upcoming slides. From the finance perspective, we just paid back part of the term loan as you know, and have some movements there back and forth, but overall in a continuous and very strong financial position.
Also having quite large credit lines open that are currently largely unused. If we switch to net debt, we see further progress and improvements compared to December 2025. So substantial ones as you see, from a 0.8 - 0.4 leverage, but also compared to Q1, we see a certain slightly better numbers than in Q1 2026. With that, we are fully on track to a cash positive position at year-end, as we have communicated before, driven by our positive operative free cash flow and on top then the proceeds from the energy segment that we already saw and that we still expect in the second half year of 2026. Working capital, as addressed before, saw a certain increase to above what we consider best practice.
However, with clear reason behind was as said, the inventory buildup to have a resilient supply chain for the rest of the year and starting 2027, and the certain impact from factoring that we need to progressively improve through better terms and conditions with customers and suppliers. Okay. Let me then turn to say a bit more on two further strategic growth platforms where Montana Aerospace is present and very well positioned in, defense and space. Starting with defense, we are proud, as we have announced, to expand our strategic partnership with Lockheed Martin and have further program content included in our books with, as typical for the Aerostructure industry, long-term production visibility, long-term contracts, and clearly a planability and partnership that we are proud of.
But in addition to that, we are proud and very positive that there is further growth potential with two other or many others, but in more concrete discussions with two other leading European defense players. There we expect to have more clarity on the outcome and what that means in terms of sales and potential margin benefits for the years to come in the second half of the year. If we then turn to the second growth pillar, space, which has become a very meaningful growth platform to Montana Aerospace and where we see revenues developing towards 10% group revenue in 2026.
Here I like to highlight that our vertical integration, again, was the basis that customers are coming to us because of fast lead times, because of reliability a competitive cost setup, and fast engineering capabilities that allows them and us to dynamically provide innovations and provide products also for this sector of the aerospace industry. The result is that what was an opportunity just three years ago is now one of our key growth drivers. As said, going towards EUR 100 million in sales per annum and with very strong momentum and perspective in the years to come. As you all know from different IPOs in that field and all the things that are happening there.
What I also like to mention and highlight here is that we are not only focused on one single platform or one single product, but we are part of different generations different platforms, and more and more, working towards also a broader customer field in that segment or in that industry. Let us now address the capital allocation and knowing that we move towards net cash position in the course of the year. We have, of course, discussed together with the board how to create value for our shareholders and have agreed basically on a certain framework of a capital allocation. So one step of that is seeing through our business wins, seeing the capacity requirements in the aerospace commercial industry, but also these two additional growth platforms and the impact and importance of being in different regions.
We have decided, in addition to the maintenance CapEx or standard CapEx of around EUR 50 million that we have discussed with you in the past, to add an additional EUR 30 million -EUR 40 million per annum in the next two years, at least, for accretive margin projects and growth CapEx. That is not related to only a specific area or one side. It is related to all geographies and markets and it is both as said, market wins where we partially need just additional machinery or strategic projects where we continue our integration and further strengthen our independence from the rest of the supply chain. Obviously that, in the long term, will increase to also bring our platform to the even next level to where we are now. Okay. I think we can then with that, continue.
Here we see the consolidated supply chain in Aerostructure on the left side, which still gives room and attractive opportunity in the end to decomplexify the Aerostructure supply chain. As many specialist suppliers are small, have very limited integration, sometimes financial troubles, and can become a source, or are a source of uncertainty in the ramp-up environment for the OEMs and Tier 1 customers. There, our approach is something that the customers really appreciate and where we gain a lot of traction. Of course, in terms of M&A, we remain disciplined and selective to what adds really value to our supply chain. In most cases, it has to be in alignment with the OEMs. There are alternatives, often alternatives on the inside to have brownfield or additional investments to just win packages and market share instead of purchasing one of the current suppliers.
Nonetheless, the conclusion is that the supply chain consolidation overall remains a meaningful value creation opportunity for us, clearly both on the organic side, but also potentially on the inorganic side, should interesting opportunities come up. When we switch to our guidance, I believe the strong half year one 2026 is the best example and the best concrete support for our 2026 and 2027 guidance. So we remain very confident in these figures and believe in clearly a sales number above EUR 1 billion and adjusted EBITDA, which will be probably the same as the reported EBITDA as in half year one, of above EUR 185 million. Then Aerostructures segment margin moving to the 19% range, depending a bit on the cost side and what we pass on there, but it is just a flow-through basically.
Cash conversion, excluding or before growth CapEx that I just mentioned and before M&A, remains at target to move towards 50% this year and above 50% in the years to come. With that, I believe we are well set up to achieve or overachieve our guidance and are open and happy for our discussions with you all now in the next minutes to come. Thank you.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of the screen and then click the raise your hand button. For written questions, please click the Q&A button and then the text button and type in your questions. If you are connected via phone. Please press star followed by one on your telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press the lower your hand button from the webinar or press star and two on your telephone. Anyone who has a question may queue up now. One moment for the first question, please. The first question comes from George McWhirter from Berenberg. Please go ahead.
Good afternoon. Thank you very much for the questions. Firstly, on the cash proceeds from the energy divestment, can you just run through your assumptions on the timing of that? How much do you expect to receive in the second half of this year and next year? What level of net debt do you expect to reach at the end of the year? The second question is on the decision to raise the growth CapEx guidance for the next two years. Can you just explain a little bit in more detail the areas that you are planning to invest in, and when we should actually begin to see the revenue being generated from this additional investment? Thank you.
Thank you, George, for the questions. Starting with your first point on cash proceeds. We expect for the second half year at least another roughly EUR 50 million to come through. That is well in line with recent discussions with the board and CFO of ASTA Energy. With that proceeds and a bit depending on how much finally come through, we will be clearly cash positive at the end of the year. At this point, it is difficult to mention or to say how exactly that position will look like. First of all, for the proceeds of the energy segment, but also from a perspective of our strategic investments. The question is how much we can bring into the spend already in the second half of the year. On the gross CapEx guidance, to continue with that.
It is a combination of programs that enhance our integration and margin profile, which are not always generating extra sales, but improve the margin profile and strategically our independence from the rest of the supply chain. That is in different regions and sites. That is the guidance that I would give for that for the moment and has been approved by the board already. Then there are indeed some additional growth CapEx for market share wins that we have brought on board in the recent months, I would say. There, the revenue will largely come in 2027 on board or start to come on board and being industrialized in 2027. Some of the machines obviously have lead times of close to a year. That is a bit the timeline of expectations of when additional sales from these investments will hit our P&L.
Thank you very much.
Thank you, George.
Then the next question comes from Josh Sullivan from Jones Trading. Please go ahead. Mr. Sullivan, you need to unmute your line. Now we can hear you.
Hey, good morning. Can you hear me now?
Yes, we can hear you.
Just as far as the CEO search. At this point are you leaning internal versus external candidates, and any color you can provide on timelines as well?
Yeah. I will maybe leave that to our group CHRO, who joins me today.
Yes. I would like to reiterate what we said last time. That is that after the resignation of our CEO of Montana Aerospace, the company's operating activities are continuing as planned, supported by a strong and highly experienced leadership structure. The responsibilities are currently distributed across the group management board, the divisional management teams, and a strong extended leadership team comprising well-respected executives with many years of execution experience in our industry. The board of directors continues to work diligently on the future composition of the management team and expects to provide a further update in the third quarter of this year.
Yeah. I guess just switching over to more of a fundamental demand pull question from the aerospace OEMs. Just how are you looking at it relative to the guidance assumptions you had earlier in the year at this point?
From a guidance perspective as said, we remain conservative, but are very confident that we at least achieve the guidance. I think half year one comparatively looks quite positive and strong on the track to get there, as you can see from the pure numbers. On a run rate basis, typically Q3 and Q4 are stronger. I would say from the current perspective, I still expect it, but especially still with the macroeconomic environment and situation. There are some things that let's say are not clear enough yet for a clear guidance raise. We stay very confident with the 2026 figures. 2027. Of course, we will review once we know more about how the defense possibilities develop and also the space platform. Of course, the additional wins that we saw or that we discussed with the extra CapEx.
We will find and come to a consensus in the Q3 , beginning Q4 as a group, and then at some point can give there some update as well.
I guess just a clarification question on the increased growth CapEx plans. Is the upside related to that contemplated in the guidance at this point?
No, they are largely not encompassed. Of course, we have certain new business wins inside our guidance, which are typically quite conservative. Those market share wins that we had or have go above that. As said, from a sales and EBITDA perspective or result perspective, they will largely come on board only in 2027.
Great. Thank you for the time.
Part of the current guidance. Yeah.
Okay. Thank you for the time.
Thanks, Josh.
Then the next question comes from Aymeric Poulain from Kepler Cheuvreux. Please go ahead.
Yes. Thank you very much for taking my question. I have got two please. The first one is, again, on the conservative, I think that you were guidance reiteration, especially for 2027, 10% growth when most of your customers are targeting a much higher ramp-up rate. You also highlighted the positive contribution of space, which is much bigger than what you anticipated originally. You have higher pricing of aluminum. You have better dollar. Why are you not in a position to raise this guidance? Is it because of your own capacity restriction, which would explain the CapEx increase, or is it because you are taking a very conservative assumption on the production rates of the two main customers of yours? That would be the first question. Second question is on factoring. You said you reduce the factoring in this first half.
What is the current level of balance sheet factoring debt at the moment? When you look at the free cash flow guidance for the year, do you anticipate a factoring to grow and contribute to that free cash flow, or should we assume it flat from here on? Thank you.
Yeah. Thank you, Aymeric, for the questions. Let us start with the guidance one. Yeah, so first of all indeed, we are more conservative versus our customers on their growth expectations. Simply looking backwards at the last years, yeah, where we have, I think, a good reasoning to be on the conservative end there. Space and defense for sure provide key opportunities, but not all of them are signed yet. So that is for us, still open to be seen how much that translates already next year into the sales and result perspective. From that reason, let us say we stay conservative for the moment and do not reiterate the guidance. Do not change it, sorry, but rather reiterate it and, yeah, give a positive outlook on it and belief that it is probably on the lower end for the moment, but not yet there to raise it.
On the factoring question, yeah, clearly lower factoring at the moment compared to last year or also end of the, yeah, last year, June, or end of the last year, 2025. There is still some factoring in our books for the simple reason of flexibility and yeah, very strong financial ability of some of the customers, as you may know. They provide also cheap and flexible financing, I would say. But yeah, lower than in the past, and I believe it will also despite the higher activity and higher sales, it will stay on a lower level compared to the past.
Okay. Thank you.
As maybe to amend, because we do not have to factor, yeah, one of the customers for financial reasons or financial instability, which was quite expensive. That is clearly gone and also helps the financial result as you see. But also it's not necessary from a risk mitigation perspective.
Thanks.
As a reminder, anyone who wishes to ask a question may click the Q&A button on the left side of the screen and then either click for the voice or text option. If you are connected via phone, please press star and one. We do have one question by text coming from Yannick Züllig from AWP. You mentioned a potential share buyback program. What would need to happen for the board to actually launch one, and what size could such a program have?
Yeah. Thank you for the question, Yannick. Indeed, I maybe didn't highlight this enough in the capital allocation slide. Apart from the strategic growth investments and accretive margin investments, together with the board, we have agreed that a share buyback or delivering share cash and value to our shareholders remains a critical component of Montana Aerospace, or is a critical component that we want to see in the future. That could take the form of a share buyback or dividend or even both. What needs to happen, basically for the moment and for the past, we are somehow limited by the loan requirements, but I think the strong financial performance will give us much more room also on bringing such return to shareholders. Therefore, I believe we are not far away from getting to this stage of Montana Aerospace.
There are currently no more questions at this time, so I would like to turn the conference back over to Patrick Maurer for any closing remarks.
Yeah, let me close. Of course, feel free to still add questions along the way. But otherwise, let me close with the main takeaways from today's presentation. First and foremost, Montana Aerospace continued the strong operational track record and delivered a very positive and strong first half of 2026. Second, Aerostructure as a segment continues to be the central value driver of the group. The segment has increased the sales to EUR 485 million, an EBITDA of almost EUR 89 million, and an EBITDA margin that expanded to 18.3%. Third, we significantly strengthened the financial profile of the group, with positive net cash position still expected at the end of 2026 and as communicated, and the declining financial leverage, which gives us the opportunity for the capital allocation measures we have discussed. Fourth, the aerospace strategy is more and more clear and understandable.
Commercial aerospace remains our core, while the engine, defense, and space sectors provide very attractive additional growth opportunities to Montana Aerospace. It's not, let's say, a fantasy. We are positioned in these segments or in these areas and will further grow there. Fifth, for that reason, our outlook remains very strong and robust. We reiterate our 2026 and 2027 guidance and see a clear path to stronger utilization, stronger margins, and improved cash generation. In summary, Montana Aerospace combines long-term visibility, a differentiated industrial and integrated platform that others don't have a further improving margin profile and cash generation profile, and meaningful value creation opportunities for all of you as our shareholders. Thank you very much, and if there are no further questions, I suggest we close the call.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.