Leonardo DRS Overview and Outlook€¦ · positive market trend ... Mission Command and Battle...

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© Leonardo - Finmeccanica - Società per azioni

Leonardo DRS Overview and Outlook

May 18, 2018

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JOINT VENTURES AND SUBSIDIARIES

Revenues 2017

€ 3.3 bn

Helicopters Aircraft AerostructuresAirborne &

Space Systems

Security & Information

Systems

DefenceSystems

Leonardo DRS

Revenues 2017

€ 3.1 bnRevenues 2017

€ 5.5 bn

Land & NavalDefence

Electronics

Telespazio(67% Leonardo)

Thales Alenia Space(33% Leonardo)

AVIO(26% Leonardo)

MBDA(25% Leonardo)

ATR(50% Leonardo)

Elettronica(31% Leonardo)

DIVISIONS

Global player in High Tech Aerospace, Defense and

Security business

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Strategic overview - key messages

We are a global player in High Tech Aerospace & Defence business

Significant industrial presence worldwide

4 domestic markets

We intend to execute an Industrial Plan to go back to long-term sustainable growth

Attractive market improvement

Taking actions to leverage off a new commercial

strategy and a new customer centric approach

FY2017 results in line with revised Guidance

In 2017 we have reset expectations

We have taken actions to address non-structural issues in our world-class Helicopters business

2018 is a consolidation year

Laying the seeds for a new phase of sustainable growth

Entering a new phase of solid and sustainable growth in the long term

Top-line and profitability improvement

Increasing cash-flow generation from 2020

…with the key objective of creating value for all our stakeholders

Key dual-use technologies

3 core business

Strong portfolio

Selected investments for growth to enhance

further core products and technologies

Disciplined financial strategy

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DRS Revenue Growth Outpaces DoD Budget Growth in 2016-2022

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An Overview of Leonardo DRS

A leading technology innovator and supplier of integrated products, services and support to military forces, intelligence agencies and prime contractors worldwide

• A wholly owned subsidiary of Leonardo S.p.A.

• Headquartered in Arlington, Virginia

• $2B+ Revenue

• We are organized into eight customer-focused lines of business

– Airborne and Intelligence Systems

– Daylight Solutions

– Electro-Optical and Infrared Systems

– Global Communications and Security

– Land Electronics

– Land Systems

– Naval Electronics

– Naval Power Systems

LeonardoDRS.com

Twitter@drstechnologies

Linkedin.com/LeonardoDRS

U.S. Army28.3%

U.S. Navy and Marine Corps

21.1%U.S. Air Force9.8%

U.S. Agency/Other13.3%

U.S. Commercial9.9%

International17.6%

2015 – 2019

Business Mix By Customer

http://www.leonardodrs.com/

https://twitter.com/drstechnologies

https://www.linkedin.com/company-beta/8288/

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Overview of Leonardo DRS 20185,000+ Employees19 States

Maryland (217)

Alabama (149)

California (251)

Connecticut (312)

Massachusetts (112)

New York (68)

Virginia (212)

Florida (1204)

Minnesota (20)

Missouri (743)

Montana (11)

Wisconsin (496)

North Carolina (115)

New Jersey (14)

Ohio (87)

Pennsylvania (636)

South Carolina (17)

Texas (431)

Illinois (7)

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DRS Evolution

PRIOR TO FINMECCANICA: GROWTH

BY ACQUISITIONS

INTEGRATION IN FINMECCANICA

DEVERSIFY AND ADAPT

GROWTH

…2008 2009 - 2012 2013

TODAYNew DRS

Management

DRS

Acquisition

$2+B publicly traded (NYSE)

mid-tier defense electronics

company

Grew through a decade-long

series of acquisitions

Won significant Army wartime

supplemental business

2008 - Finmeccanica acquires

DRS

Sequestration / Troopwidrawl

impacts army business

2012-2014 streamlined

organization to adapt to new

markets while increasing

deversification

2016-2018 – DRS experiences 3 years

of above market topline growth and

reorganizational efforts enhances

operating margins

2015-2016 – DRS reshapes the portfolio

disposing of non-core business,

generating ~$100M in proceeds

2017 – DRS acquires Daylight Solutions

with proceeds generated primarily from

dispositions

2015 - 2018+

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Revenues and

profitability almost flat

YoY

Upward trends in

some business

areas

Efficiency

improvement

Higher

contribution from

development

programmes

DRS benefiting from

positive market trend

Avg. exchange rate €/$ @1.2295 in 1Q2018

Avg. exchange rate €/$ @1.0647 in 1Q2017

Of which DRS:

2018 OUTLOOK1Q FY

€ mln

2017

Reported

2017

Restated2018

%

Change

2017

Reported

2017

Restated

Orders 1,039 1,039 965 (7.1%) 6,146 6,146

Revenues 1,146 1,156 1,149 (0.6%) 5,506 5,550

EBITA 84 88 73 (17.0%) 537 537

ROS % 7.3% 7.6% 6.4% (1.2 p.p.) 9.8% 9.7%

1Q FY

$ mln

2017

Reported

2017

Restated2018

%

Change

2017

Reported

2017

Restated

Orders 401 401 424 5.7% 2,016 2,016

Revenues 395 395 455 15.2% 1,914 1,947

EBITA 25 25 21 (16.0%) 143 146

ROS % 6.3% 6.3% 4.6% (1.7 p.p.) 7.5% 7.5%

Electronics, Defense & Security SystemsRemains strong

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9% revenue growth driven by positions secured in Army modernization efforts as well as continued enhancement

in market share in various rapidly growing markets.

Market Leading Army Positions to Include

Aircraft Survivability

Mission Command and Battle Management

Soldier and Targeting sensing systems

Naval Business also driving growth through electronic and combat systems upgrade positions secured on both

surface and submarine platforms

Positive Book to Bill ratio of 1.05 and franchise positions secured in 2017 solidifying business base, enabling

continued above market growth in 2018

EBITA YoY growth of 11.7% driven by revenue performance and improved operational efficiencies, enhancing

overall profit margins

Leonardo DRS – Where we Are Today

In USD

2017 2016

%

Change

Orders 2,015 1,923 4.8%

Revenues 1,914 1,753 9.2%

EBITA 143 128 11.7%

Full Year

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DRS provides leading sensor technology and

integrated solutions for Land, Sea, Air and Space

Systems, world class cyber hardened Network

computing for C4I and integrated situational

awareness as well as world-class integration of

complex technologies into legacy systems and

platforms for military and commercial customers

Long Range EO/IREO/IR surveillance sensors &

targeting sights for combat /

tactical wheeled vehicles

(domestic and international)

Precision Fires &

Dismounted TargetingDismounted / mounted location

& targeting systems for combat

precision fires & designation

Army Electronics & Sensors

Platform ComputingIntegrated computer & display

systems for enhanced SA on

the battlefield

Active Protection

System (APS)TROPHY™ The world’s

first and only fully

operational, combat-

proven APS

Bridging SystemsJoint Assault Bridge

(JAB) - uniquely

Combines capability,

reliability, and

affordability

2017 Revenue Growth +35%

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As a trusted provider of naval systems, we provide power

and control technology, delivering customer-focused

products and support solutions for the U.S. Navy and our

allies. In addition, we provide complex naval computing

infrastructure, network and data distribution and middleware

enterprise services, with an unmatched track record.

Naval Systems

Naval Computing

Infrastructure & NetworksReliable display & processing

modernization, C4I Build-To-

Print services, & middleware

enterprise solutions

Ship CommunicationsIntegrated systems that can

control and manage tactical,

administrative, voice and data

communications for new-built

platforms or legacy systems

Naval Radars & SensorsC-band radars and Infra-Red

Search & Track (IRST)

sensors for navigation

guidance, situational

awareness and automatic

threat detection

Power Conversion,

Control & DistributionPower storage, low &

medium voltage power

distribution and modular

power solutions for ship &

submarine platforms

Naval Nuclear

Instrumented Control

SystemsTrusted provider of critical

naval instrumentation and

controls for nuclear

submarines & aircraft carriers

2017 Revenue Growth +7%

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Airborne and Communications

Equipping our customers with world-class integrated

airborne, ground, and naval-based solutions.

Air Combat Maneuver

Instrumentation & EW

SimulationEquip the Combat Air Forces

with live-virtual-constructive

aircrew training devices

Electronic Warfare (EW)

Systems & TrainingState of the art EW for land,

naval & airborne platforms that

covers the entire RF spectrum

including jamming capabilities

Signal SolutionsProviding high-end SIGINT

Tuners, Receivers, Recorders

& Subsystems covering

the HF through Microwave

Spectrum

DRS delivers world-class, mission-critical

communications and security solutions

with unmatched reliability and support

anywhere in the world 24x7x365.

Network ServicesMonitoring & Control,

Broadband Internet

Access, Video

Conferencing, VoIP

Prepaid Calling

Platform, etc.

Satellite ServicesManaged Satellite

Operator (MSO) of

commercial and

military satellite

resources

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Current jet trainer was introduced in 1961. Average age in USAF inventory is more than 44 years old

Competition underway for new trainer aircraft. “T-X” program calls for 350 new aircraft & associated ground based training systems (GBTS) (simulators, training devices, computer based training systems & academics)

Acquisition strategy deliberately focused on low risk, in-production, off-the-shelf solution

Advanced Pilot Training (T-X) Competition

KEY PROGRAM MILESTONES

Draft Requirements Release

Draft RFP Release Final RFP Release Proposal Submitted Contract Award

August 2015 September 2016 December 2016 March 2017 July 2018

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Propulsion & Power

Supply Systems

Twin F124 Engines

Develops & Designs the

World’s Most

Sophisticated Aviation

Training Systems

Prime Integrator

The T-100 Team

Partners since 2001

T-100 Aircraft Provider

with ETTS & LVC

Tuskegee Aerospace Development Center, AL

© Leonardo - Società per azioni15

Raffaella Luglini

EVP External Relations, Communication, Italian Institutional Affairs,

Investor Relations and Sustainability

+39 06 [email protected]

We do business in a sustainable manner, with a continued

commitment to economic and social development and the

protection of public health and the environment.

Company Documentation

External Relations, Communication, Italian Institutional Affairs, Investor Relations and Sustainability

Valeria Ricciotti

Equity & Fixed Income Analysts & Investors

and Relationship with Credit Rating Agencies


Sustainability

Manuel Liotta

Group Sustainability & ESG


Member since 2010

Partecipation since 2008

Member since 2016

Contacts

Social Hub

Sustainability and

Innovation Report

Annual ReportCorporate

Governance Report

Remuneration

Report

www.leonardocompany.com

Leonardo Social Hub

mailto:[email protected]



http://www.leonardocompany.com/

http://www.leonardocompany.com/news-media/social-media/social-media-1

© Leonardo - Società per azioni16

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.

Leonardo DRS Overview and Outlook€¦ · positive market trend ... Mission Command and Battle...

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