Indra Sistemas, S.A. ($IDR)

Good morning. Welcome to Indra's First Quarter 2026 Results Presentation. I now hand the conference over to Mr. [indiscernible], Head of Investor Relations. Please go ahead, sir.

Good morning, and welcome to the presentation of results of the first quarter '26. My name is [indiscernible]. I'm in charge of relationship with investors. First of all, allow me to make reference to this slide. which offers the legal framework for this presentation. I'd like to start by introducing the speakers in this session. Jose de Los Mozos Obispo, CEO; and Miguel Garau, Financial Director.

Thank you, [indiscernible]. Welcome, everybody, and welcome to the presentation of the results of the first quarter 2026. Since my arrival in May 23 and the presentation of the leading the future strategic plan -- and it's phased focus, starting March 6, 224. Imetems are committed to the transformation of this company with solid work. We have been able to achieve the objectives we set to ourselves during the presence of [indiscernible], we have accelerated the industrialization of the group. And now with the arrival of [ Henkel Simon ]. I would like to welcome today. I am sure we will keep on accelerating our transformation. At a group level, we keep on executing -- the rotation of our portfolio have closed, deinvestment of BPO, and we keep an active pipeline of over 20 operations. Besides that, we closed the quarter with a growth in our headcount of 3% compared to the first quarter, 2025 with an increase, especially relevant in our headcount in Defense that has increased by 35% in terms of the milestone of our businesses. We have also achieved in potent investments in Defense. We keep on expanding our industrial base in Spain with new plants in [ Leon ] and Cordoba that are already working to open in the third quarter 2026. Besides we have close relevant international agreements with [ rain metal ], ELT and [ Handel ]. And the last 1 provides us with capacities to develop artillery self-propelled artillery systems adapted to the needs of the forces and will provide Spain with autonomous capacity and design and manufacturing sovereignty on track land platforms. In Spain, we completed the integration of IspasaransteSad in the group which turns us into a player with end-to-end capabilities and position us to take the opportunities that are about to come that we will elaborate on next. In ATM, we just opened a new plant in Kansas, will be fully operational in the fourth quarter this year in 2026. And we will keep on advancing in international contracts, key international contracts, including the modernization of radars of the FAA in the United States. In Mobility, we ensure contracts, important contracts, TFL in the U.K., the [indiscernible] in Saudi Arabia, the modernization of railways in Chile. And so contributing to our international presence, I would like to inform you that the Washington D.C. Transport Authority as proposed Indra as the winner of its ticketing tender. In ingrain, we started the deployment of our platform of sovereign AI, and we accelerate vertical use cases. In Minsait, we advance in the investment of noncore units and the optimization of the international footprint, focusing in Latin America. Besides, we have advanced in the cross-cutting capabilities in the rest of the units of the group. But we already have 1,300 developers working on digitalization in Defense, and Traffic, Space and Mobility. We keep on focusing on -- keep on advancing and delivering. And that's why today, once again, I'd like to mentioned the 2026 guidance of EUR 7 billion in revenue, over EUR 700 million in EBIT and over EUR 375 million of free cash flow. No changes and with conviction. And besides, I'd like to ensure you that we will check how revenues are going to keep on growing quarter after quarter. aligned with our delivery agenda plan for 2026. These results, as you will see, are above our initial budget in the Leading the Future strategic plan that we presented back in March 2026. I'd like to zoom on our transformation in interspace. With the integration of [indiscernible] in the group interspace operates as an integrated player with end-to-end capabilities, which positions us what sets us apart in an excellent moment. Institutional investment in the space sector is growing strongly at the bean level, the budgets of the European Space Agency for 2026-2028 plan, have grown by 32% compared to the previous cycle. And at a national level, this increase of investment is translated into binding commitment. You know that Spain is the fourth contributor to the European Space Agency. And it has the commitment to keep on advancing within the space strategy. For example, the Spanish Air space agency has approved over EUR 625 million distributed in key programs, such as the [ ESEA Pla, LionTree ] and launches. In terms of specific programs, I'd like to share two important messages with you this morning. First, IRIS 2 is a reality and European commitment and Indra is already developing its road map. -- in its participation about its antipation. And according to its evolution, we'll provide you with further detail on its scope. At the same time, we have also launched our industrialization plan on satellite components with construction that's planned to be ready for the last quarter this year. As you know, we are a defense and technology company. And in this sense, we are -- of course, we are aware of the disruption of artificial intelligence in our businesses. And that's why we are analyzing, according to our experience in the sector and our technology capabilities, how the transformation of the business should happen and how Minsait should be transformed. We are focused on accelerating our capital improve the profitability of the technology business. And after [indiscernible] a 360-degree analysis of our daily operations, we have made a series of decisions first divesting noncore units, which has allowed us to free resources and increase average revenue per employee. Second, creating cross-cutting capabilities beyond Minsait in the rest of the group, we already have 1,300 developers that provide direct impact in the profitability of inside and an acceleration in technology elements such as, for example, the integration of artificial intelligence. [indiscernible] the development of new radars for civil as well as for military use, also the optimization of international footprint with 1 LatAm plan, whose objective is to reduce of 2,000 technicians this year, and we have already been able to reduce time already. And besides that, we are working along strategic lines that position us as a technology group that's referenced in artificial intelligence. Today, our sovereign AI and Indra necessary reality. It's already been deploying in over 5 clients and with a solid pipeline for 2026 to 2028. We are already catalyzing the transformation of AI throughout the group in solutions for clients in business processes and in corporate processes. We are and will be partners in the transformation of the business and the operation of our clients and in the application of AI with a purpose, which means that applied AI will have real impact in the business model of our clients. Of course, we will accompany them in the application of AI in a differential manner. And besides, we are accelerating products and vertical use cases with the support of our very wide knowledge in the sector. All of this is already ongoing. And so the first quarter is a good reference on which we should keep on building. We are making decisions with Minsait, advancing the disruption of AI. And we have a road map that we will present in the phase Leading the Future Scale Up that goes from a sovereign platform all the way to applied AI in the process as we are transforming. Before. we start talking about the financial results, I would like to share with you a short [indiscernible] an image worth more than 1,000 words. To show you the speed of the industrial transformation that's actually taking place in the group to increase our industrial capabilities and improve the delivery in the next quarters and years. [Presentation]

And now let's start taking a look at the financial results of the group. The results of the first quarter show a clear picture. We are meeting what we committed to, and we are doing it in all our business lines. Backlog reached EUR 20.3 billion with growth of 154% and also another intake of 2.8 -- almost [ 2 ] million, 56% compared to last year, which shows the trust of the market in our proposal and how solid our position in defense and ATMS. In terms of our revenue, have grown 14.6%, up to EUR 1.3 billion, with all our divisions showing positive figures this year. If we zoom into the results of the Defence division, we can show that income linked to the [ PMS ] Spanish modernization plans are not linear throughout the year. Do you to the planification on the planning of milestones in projects having an impact in EBIT linked to those milestones. However, in the Defense division, we'll keep on increasing our sales at an important pace. And I can already mention this morning that sales in the Defense division in the first half of 2026 will be beyond EUR 1 billion, which is twice the sales of that division if compared to the first half of 2025. What's actually most relevant is that the improvement of revenue in this first quarter of 14.6% turns into real profit because the EBIT margin reached 8.9% with an improvement of 0.7 percentage points and EBIT and EBITDA growth 24% and 5%, respectively. Net benefit is EUR 76 million, 28% more than the first quarter 2025. And free cash flow generation, especially [ highway ] EUR 1.4 billion in the first quarter compared to EUR 77 million last year, which is perfectly explainable due to the advancement received due to the modernization special programs. Net debt increased its position up to minus EUR 855 million with a ratio of minus 1.3x LTM EBITDA, which provides enough financial strength to keep on investing in growth. As a summary, a first quarter that's aligned with annual objectives that gives us a solid foundation and trust to keep on building the rest of the year. If we now take a look at the results of sales in the first quarter, which we have achieved a growth of 15% in local currency and 6% in organic growth, the positive impact of our acquisitions with organic growth have balanced out the negative effect of ForEx. I would also like to mention that over 63% of the EBIT of the group comes from Aerospace and Defense business, as we can see in the chart at the bottom of the screen. Our headcount has grown 3% up to [ 62,089 ] people, mainly in defense, which increased its head count up to 7,296 employees aligned with the acceleration of the business. Revenues for employee grew 11% compared to March last year. And if we include the effect of the divestments that have already been announced, the improvement will be beyond 15%, which is a trend that will keep on improving as those divestments keep on happening. If we take a look at the detail by divisions with its evolution and the main milestone of each business in the quarter, in Defence, it's a quarter that confirms how stronger businesses in all its dimensions, both backlog order intake and revenues as well. Backlog group -- or sorry, [ order ] intake grew 43% pushed by simulation, special modernization programs, the international FCAS program. [ Marine Systems ] and Eurofighter and programs provide visibility in the long term and increase book-to-bill to 1.8x. Revenues grew 33%, with land-based systems, DSS, VCR and Naval Systems especially, which show the programs already under execution. In that sense, I would like to mention that the TESS VCR, [ 8x ] so -- since we are in control of TESS, we are also monitoring and controlling the manufacturing and project, and we will see an important evolution in the delivery of vehicles to our clients. As I already mentioned earlier, we are going to see a very clear acceleration of EBIT and revenues after the -- well, we started in the second quarter as a result of the milestones of the special modernization plans. Margins are -- still have our reference in the sector. EBITDA, 25.7% and EBIT 18.1%. In Space, it's a quarter set by the integration of [indiscernible] that transforms the size and the profile of the division. In fact, this is the first time we show results of Space independently. The backlog reached EUR 2,868 million. And order intake grew 87%, pushed by American services of [Hispasat ] and [ Hisdesat ] businesses that provide visibility and reoccurrence long term revenue grew 393%, mainly due to the consolidation of Hispasat and Hisdesat that for first time. fully integrated in the scope of the group. The consolidation of both companies also transforms the profile of the margins. EBITDA goes from minus 8% to 38.8% and and EBIT from minus 11% to 6.6%. So a vision that's entering a new profitability phase. In ATM, a quarter that reinforces our position as 1 of the all reference brands in the management of aerospace. And I'm humbly , I'd like to mention that I am sure that our digital solution in traffic is the most advanced solution in the sector as can be seen with the results. Our order intake grew by 47%, thanks to [ radar ] contracts with the American FAA and in the UAE, 2 markets of high strategic value that in result book to bill to 3.12x. Revenues grew 17% with Brazil, Canada, UAE and Vietnam as our main contributors in traffic management systems and [ radars ]. Margins are still stable. EBITDA is 16.8% and EBIT, 13.5%. In Mobility, our other intake shows the advancement of our international [indiscernible]. Order grew for 122%, pushed by the contract of transport for London and the maintenance contract of railway system maintenance in Saudi Arabia, 2 very in important references at the international level. Revenues grew 1%, thanks to the tolling in the United States and intelligent transport and ticketing systems in Spain that are partially balancing our lower revenues in Europe and EMEA. Margins are at 4.7% in terms of EBITDA and 0.9% for EBIT. In Minsait, profitability increases and well, other intake is improving. Other intake increased by 8.8%, pushed by [indiscernible] Instrations and Health with a growth of 58% and financial services with a ratio backlog to revenue, it's above 1 for the first time ever. And precisely, 1.02%, that's the backlog revenue to LTM ratio, We have grown our revenues with [indiscernible], the main engine margin -- EBIT margins already reached 5.8% with an improvement of 0.2 points. And towards the rest of '26, my priorities are clear. Before October 31, we will present our strategic plan Leading the Future Scale Up. an ambitious plan that's aligned with what we have shown, we're capable of doing. And providing [ disability ] up to 20, 303 years ago, we started a strategic plan stick change. in Indra Group. That phase is reaching it in, and now we're starting the next phase. We have a solid and robust road map, and it helps our equity story to be capped. At the same time, of course, we continue with implementation of industrial plan. We have programs to deliver factories that we have to get ongoing and engineers and professionals that we need to attract and train. We are focusing on delivering, delivering and delevering. In terms of internationalization, we have advanced a lot in Spain, and we have consolidated our base. Now we have to make the most of this momentum to keep on growing out of Spain, both from an organic perspective as well as from an organic perspective, geopolitics providers with those tailwinds, and we have to capitalize a [ loss ], which is not the least important. We have to keep on advancing in the transformation of the culture and the integration of excellence in our group. As I mentioned at the beginning of this presentation, I would like to once again affirm the guidance of 2026 for 3 years we have been consistent in delivering objectives. As already mentioned in the previous presentation of results of fiscal year 2025, we increased our guidance for 2026, setting objectives are 17% above the original strategic plan in terms of revenue and EBIT and 19% above our planning free cash flow. Today, once again, I'd like to highlight that we are going to meet this new guidance for this year. And once again, I offer my full commitment to keep on leading this project. Now I'd like to give the floor to our Financial Director, Miguel Forte.

We'll start with free cash flow. First thing I'd like to highlight is that the company has achieved in the first quarter 2006 Free cash flow does extraordinarily positive EUR 1,144 million. That can be clearly explained due to the advancement received from the special modernization programs in which Indra Group is the main contractor or is in a joint venture with other companies. These advancements were received in the second week of January and have already we have already started investing in CapEx and OpEx, getting them to the ecosystem of our suppliers and partners that are going to be contractors. In such way, out of those advancements received in January, the net impact at the end of the first quarter, after discounting what's already been invested; is EUR 1,671 million. In the next quarters, we will see how the free or the reported free cash flow, of course, will reduce as we use those advancements to execute the programs. And another relevant aspect that is a change compared to the practice of -- on the past few years is that for the first time, we have not used factoring and closing the quarter. Of course, the availability of cash flow in our accounts makes it inefficient to use this resource. Historically, accounted for EUR 187 million in the closing of each and every quarter and have been so for many years. However, and in order to be able to compare this year to the previous year and to be able to report the cash flow generation in a comparable way our guidance, that's over EUR 375 million on the right-hand side; you can see we go from the reported cash flow of EUR 1,144 million to that year-on-year free cash flow of minus EUR 40 million in the first quarter. adjusting by year-on-year factoring and the net advancements of the plans. These result comparable free cash flow from minus EUR 40 million in the first quarter compared to the EUR 77 million in the first quarter of 2025 is the logical result of greater CapEx and working capital. excluding advancements of PEMs that responds to investments and expenses needed to execute the programs and the contracts committed in our portfolio. And of course, that's not a risk to our guidance of over EUR 375 million in fiscal year 2026, excluding the advancement of those PEMs. On working capital, the evolution of accounts receivable or can be explained to the advancement of PEMs, which is minus 119 days of sale and also due to the net positive effect on date of sale of the consolidation of [indiscernible] that accounts for minus 34 days of sale, Contrary to that, stock increased to 124 days due to the start of contracts on industrial transformation of the group and also due to the integration of TESS and that started June. As a result, at the end of the first quarter 2026, we are at minus 124 days of sale compared to the minus 9 days that we had in March 2025. And now let's start talking about the evolution of net financial [ debt ] in the first quarter 2026. The company closed the first quarter with net cash flow position of EUR 855 million compared to a net debt of EUR 583 million at the end of fiscal year 2025. This change can be mainly explained due to the advancements received from the special modernization programs that at the end of the quarter, accounted to a net figure of EUR 1,671 million. Besides that impact, we must highlight, the solid operational cash flow of EUR 158 million can be compared to the EUR 98 million that we had back in the first quarter 2025. Of course, that's the result of a good operational evolution of our businesses. CapEx increased significantly up to EUR 59 million compared to EUR 5 million in the first quarter 2025 aligned with a [indiscernible] of the industrial transformation of the group. As a consequence of what we've seen before, the leverage ratio of net debt-to-EBITDA improved to minus 1.3x at the end of the first quarter compared to minus 0.2x in the first quarter 2025. And last, in terms of the structure of our debt, I'd like to mention that we keep on advancing in reducing the cost of our gross debt. That's now down to 2.9% at the end of the quarter, coming from 3.1% that we had in 2025. The average maturity of debt is now 3.9 years compared to 3.1 that we reported at the end of 2025. And last, we have closed the quarter with a consolidated cash flow of EUR 2,350 million as a consequence mainly of the advancements received from the plans that we have already mentioned. Besides that, the company has EUR 1,015 million in additional credit lines, amongst which we can include funding from the investment European bank. That accounts for EUR 385 million with the defined use of those funds. And that is the end of our presentation, and we will now like to start the Q&A session.

[Operator Instructions] And our first question comes from the line of Michael Briest from UBS.

A very complex quarter in terms of the impact on Defense from [ PEMs ] and cash flow. I know you don't guide quarterly, but you must have some sense on the milestones and the achievability. Can you talk a bit about Q2? I think you did say that there would be more milestones hit, but how much of of progress do you think we'll see in the second quarter in Test and PEM specifically? Also, I heard you mention inorganic expansion, both inside and outside of Spain. Can you give some sort of weighting of the probabilities, the quality of the pipeline and anything on timing there? And then equally, are there any more of the 2025 [ PEMs ] that has not yet hit your order book for various contracting reasons to arrive? And any insights into the timetable for 2026 PEMs and the nature of the contracts? Thank you.

Well, if we start with test. As I mentioned, since the end of the year, now Indra as most of test. And one of the things we have done has been, well, starting having control on its operation. And the best thing we can do is control the manufacturing process. That manufacturing process is a reality already. And we actually see that in their results in vehicles delivered to our Army or we can see that operational levels are improving every day. And the budget we've got is to be able to deliver 80 to 90 vehicles and over $400 million in revenue. I can already tell you that we are going to exceed 100 vehicles delivered at the end of the year. That's our aspiration, and that's what we're working for. On PEMs 2026, we still have no information that the Ministry of Defense. Of course, we're working. And quite clearly, the Indra Group is a company that's a reference and essential in the defense ecosystem in Spain. And -- well, that's why I'm sure we will keep on having the trust of the Ministry of Defense and our armed forces, and that's what we're working for. But the best trust is to show that the modernization plans that we have been awarded are being executed, and that's what we are doing, not just in terms of delivery milestone, but also in how it [ premium ] the Spanish system. We have experienced in FCAS, for example, over 30% has been layered throughout all the companies. And that's also our objective with our special modernization plans. We had our first [indiscernible] with our suppliers. In March and in May, we're going to have another one in Catalonia online with the corridors set by the Ministry of Defense. On inorganic deals, well, as you very well know, until the operation has been closed, it's better not to say anything in the context, that's not easy because every country wants to keep its own companies. And inorganic operations cannot always be a purchase of a majority stake of a full company. I believe they're going to help us establish alliances. And I believe the alliances such as the 1 we have with [indiscernible] for vehicles with electronic [indiscernible] in defense. I believe they are aligned with Indra of having Indra as a European leader. And the best example, the EDF programs of the European Union, Indra has been amongst the companies I have won most of those contracts because we believe we are Spanish multinational company, but we focus in Europe, and we are very much committed with the NATO programs and projects. And well, as I mentioned, sales will keep on growing quarter after quarter. And while last year, we received a grade portfolio, and we need some time to keep on organizing these projects and the guidances there are EUR 700 million of EBIT, up 10%. And that's a commitment that we are sharing with you now. I'm sure we're going to be able to meet it.

Next question from the line of Carlos Trevino from Banco Santander.

[Audio Gap] In your business, have you perceived any impact that could impact the business over the next quarters and see more or specific ones...

Carlos. Please, can you start the question again because we couldn't hear you. I'm sorry.

Yes. My first question was on the conflict in the Middle East. So I was wondering if there is any impact in your business? Or do you think that the conflict is going to mean any impact over next quarters.. And few more specific ones. The first one is on the international [indiscernible] project. You have highlighted in the sense that you had received an order from this project. My question is if this changed your expectations for the year before you were expecting at around of EUR 200 million from the [ tax ] projects for this year, this new order could mean incremental business there? And specifically on two business divisions, on Space, revenues has dropped by minus 24% year-on-year in Q1 organically, you are highlighting a tough year-on-year comparison. I would like to ask you for the expectation that you have in the Space for the rest of the year? And also the last one on Minsait side growth in Q1. This is slightly below the growth gain we have seen recently. So my question is still do you think that you can grow at around mid-single digit for the year as a whole in Minsait? And well, I assume that especially looking at the good evolution in the backlog, this could be possible. But I would like to ask specifically also on outsourcing where perhaps the drop of minus 5% has been a bit higher than in previous quarter. if you think that these trends could accelerate or not? Or this has been only one quarter and we can see a normalization moving forward?

Thank you, Carlos. If we start with the Middle East. The impact of the business, as you know, in the Middle East, we have a joint venture with etch and we are fully in touch with them. The impact can only be positive. There's demand especially for defense systems and what we're working on the delivery of some elements that we can deliver this year. And those are opportunities that will not be included but those opportunities until they actually materialize, well, I cannot actually provide it with more data on it. On FCAS. We haven't got information on this year. You know the situation of this program, it's a European program, Spain with 1/3. So the return should be 1/3. And you know the debate between Airbus and Dassalut on whether there's going to be 1 plane or 2 planes. Given that we focus on systems we're just waiting for for this decision to be made. And then we'll see. In 2026, we expect around EUR 206 million of revenue from the international cash. In terms of Space, it's a matter of calendar. This year, we expect to have a revenue of over EUR 400 million. and we expect to meet those figures. And while I wouldn't focus so much on the first quarter because this is going to be balanced in the next quarters. On Minsait, when we see our competitors of just firing people. And we -- not only we're not guaranteeing those jobs, but we are actually increasing our EBIT. And we are we're creating a cross-cutting capabilities. That's something that surprised me within Indra. How -- and having our digital [ capabilities ] we were not accelerating R&D, technology R&D in the rest of the divisions such as [ radars] and IndraMind we have the first contract. So we are sure that we will keep on improving the profit of Minsait, but the issue here isn't just to improve profitability. We need to transform Minsait and make sure we have an IT company that's going to be referential by integrating, especially, the disruption of AI and integrating all the technology disruptions that we are facing and that we are being able to face. And then we have Latin America, we believe that our business in Latin America was not efficient up. We've got the 1 LATAM plan program that we signed at the end of last year. And the message was clear. If we want to survive in this world we must be best-in-class and improve our excellence and focus on added-value businesses. That's why in Latin America, while we've already got over 1,200 people focused on cybersecurity, we are integrating IndraMind in countries such as Brazil or Colombia. So our idea is to transform and make the most of Minsait. We'll see this in prestigic plan and turn insight into a modern IT company that's agile, that's best-in-class in terms of technology.

Our next question comes from the line of Sika Agarwal from Goldman Sachs.

But just following up on the question on defense. I think it was mentioned in the call that like first half in defense the expectation is more about EUR 1 billion plus of revenues. So that means roughly about like EUR 700 million for the second quarter. Am I understanding it right? And if that's the case, what are the puts and takes there? And how should we be thinking -- so will the phasing be like, again, in the second half being, is it will be more 4Q weighted as how we should be thinking about it? Any color would be helpful. I think that's it from my end.

As I mentioned, within the special modernization plans, -- it's a matter of the milestones and the timing of the milestones, including the projects. So according to the different milestones and different programs, we will keep on executing those sales. That's work that's done jointly with the Ministry of Defense. First, we have to agree on the delivery milestones. And of course, that will provide us with that acceleration in sales.

This question comes from the line of Marco Vitale from Mediobanca.

The first one is a follow-up still on the Defense business. I think you mentioned that you expect sales over the first part of the year to exceed EUR 1 billion. If you'll just confirm this and also if you can provide some, say, qualitative indication award projects, which projects will underpin this acceleration besides that? Second question is about the large intake that you awarded within the Air Traffic Management business, also Mobility. If you could. I'm referring to the, say, transfer for London and also the U.S. rather replacement. If you provide us any guidance in terms of timing that you expect in terms of P&L impact for those projects? And last question, just a clarification on the prepayments for -- from PEMs. Should you award faster contract over the first part of the year? Should we expect disprepayments to be associated with that? And potentially, what could be the timing for this?

Well, I'll start a bit on the backlog, and then you can start talking about the results. Well, on our Air Traffic Management projects when we turn it into an individual division, that provide a lot of current because, as you know, in each country, there's only 1 client. And the fact that we have 1 division that's fully focused and with the digital acceleration that we are providing in traffic management, this shows the quality of our business, and that's why that portfolio is increasing. So for example, one of them is the raders for the FAA. And the plan was to deliver 2 secondary radar, 1 in the first 3 months, and we have delivered them. So today, in Kansas, we're already delivering -- and the contracts actually were in 4 months ago. We are going to have radars for the United States produced in the United States. I believe that the response provide trust. And that's why our guidance in terms of revenue is 2 digits in 2026 because when the contracts are there, we have to start delivering. And I believe that being agile and having a contract in December like the 1 we had in December. And by the end of April, having delivered 3 raders already that shows that something is changing in the mindset of Indra. And on Mobility, well, as you know that those are contracts that are very long-term contracts. And will revenue -- the revenue stream is a bit different. And this year, we expect, well, 1 digit get revenues. And just to mention about the future projects and revenues in Defense, well, besides what was clearly mentioned about what we expect in TESS, they are going to contribute to our revenues and also PEMS, I believe that acceleration is clear. We also expect growth in defense coming from Eurofighter, we have a revenue forecast at around EUR 280 million, EUR 285 million. compared to EUR 260 million last year. We expect growth in radar, simulation, electronic water. So we still have a positive view, as it's been mentioned In terms of potential advancement or prepayments, well, as you know and as we have explained, we have some gross advancements of around EUR [ 1,150 ] million from what we have already discounted as mentioned, what's already been transferred to the suppliers and OpEx. And we understand that as mentioned by our CEO, of course, that those transfers are going to accelerate because we have to make those funds available to our suppliers and contractors. It's true that part of the advancement received this year has not been deployed or still restricted such as dev projects. And of course, those will materialize as soon as they are approved and as soon as that cash is available. That's now restricted as well as some other amounts, which are minor amounts. In terms of whether or not we are going to see some advancements of prepayments this year or next year, that will probably depend on how future programs materialize, and we'll see further year. And there's one additional element on revenue in Defense. So we have actually changed the way in which we work. We just started our projects in the automotive sector. And I would like to give you something. We decided to manufacture 12 radars and 100 equipments of land warfare anticipating potential programs. The culture used to be we won't invest as long as we having got that program. But now I cannot tell a country in a conflict to give me the program that I'm going to be delivering in 3 years' time. On the [indiscernible], that's 1 of the main raters. At the end of the year, we'll be ready to have 12 to 15 radars ready to be delivered, which shows our agility. And that's the change of industrial mines that we have carried out in the group. So that's this program, and there's a pad that we manufacture with the client, but there's part of it that we manufacture for potential clients. And why have we done that? Well, because we have worked on design to cost. When I was here, they were -- well, there was on the 10% of the standardization rates. Now we have 14 radars. We have over 60% of [ senolization ], which allows us to reduce delivery times. And before, it took Indra 3 years to deliver radars. And now we are saying that another 12 months, we're going to be delivering raters. And that's going to bring about opportunities in the Middle East or other countries. So if we have product that can be delivered in, so to speak, short time, this will provide us with additional operations, and that's what needs to be done. We have to make the most of all the investments that we are now in R&D and within those PEMs to accelerate our internationalization, I believe that today, we are leaders in raders as well as in ATM and defense, but there's yet another field in which we are working hard, which is electronic welfare. I believe we have something to say here. We are working on it, and we see this in naval and marine warfare the word. It's just between -- we have development times and programs. So we have to be patient. But we'll see how sales are going to increase. When we end the first quarter 2025 with first quarter 2026. In 2025, revenues in defense were EUR 470 million. And this year, I already mentioned that we -- it's going to be double that. That's thanks to the work of our teams, our commitment development and getting factories working and just traveling around the world and positioning Indra as a reference company in Defense and technology.

I'm from the line of Lorenzo de Patrice from Bank of America.

So my first question, what should we expect from the change of the group chairmanship, notably regarding the possible M&A transaction? Secondly, what traction are you getting on IndraMind? What revenue and EBIT contribution should we expect from it in full year '26? Down Space, how should we expect margins to evolve medium term, given they were quite strong in Q1? And lastly, could you please remind me of the contribution you expect from FCAS and Eurofighter in full year '26?

Well, well, I believe we have to differentiate governance from operations. We have gone from an Executive President, [indiscernible]. And I believe, he really pushed that industrial advancement. He is an entrepreneur, and he knew the sector very well. And now we have a new President, a new Chairman, with great international experience and governance experience. And I believe his vision is also going to be important, both his view as well as the Board's view on the M&A operation. I mean this is -- I believe it's quite simple. The ones who stopped the operation were as [indiscernible]. They stopped this potential deal. So when there's a negotiation between 2 companies and 1 of them says that right now, the circumstances aren't right. Well, the only thing I can say is, well, nothing really. Just wait. Today, they make a decision we'll check it. But today, if they believe it was not the right time, I have nothing to say. And of course, I respect their decision on IndraMind this year already. And integrating development revenues are going to be above EUR 100 million in the first quarter. and EBIT is going to be above the average of the group, but 10%. Miguel?

Well, yes, on margins that we expect coming from the different businesses in Defense, I'd say, we mentioned we expect a very clear increase of revenues with margins that are going to be close to the margins we have had in the past if we exclude the effect of the sales of TESS, we expect to be around 17%, 18%, where we've been in the past. And in terms of Space, the guidance we can provide is that we expect to go beyond EUR 400 million of revenue this year. In Traffic Management, we expect the growth, well, of double-digit growth, mainly due to the great contribution -- or above the contribution we have got last year. And EBIT margin, that's going to be between 12% and 13%. In terms of Mobility, we expect revenues around high single digits and an EBITDA is going to be close to the 1 we had last year. It's going to be around 6%. And in Minsait, as explained, we expect mid-single-digit growth in terms of revenues, and we expect to [indiscernible] and we expect to [Technical Difficulty] The other way around in the first quarter was 68 million compared to [ 64 ] million last year. And we expect that for [Technical Difficulty].

If we exclude nonaccessible cash of PEMs, what's the debt or accessible cash available to Indra. On M&A, I mean, their sales -- their purchases are going to be sales. Sizes, we will see. This is just one you go hunting. If you find good [indiscernible], of course, we won [indiscernible] to begin or it's going to be a big game. So we know our path. It's not a matter of just buying for the sake of it. It needs to provide me with capabilities that I haven't got that make my business more efficient in open markets, I'm not in. If those things are present, well, that's what we're saying. And it could be just a matter of [indiscernible] I think we can fund some alliances with some other companies in some sectors, that can actually position myself as a reference in that sector. So everything is quite open and it actually depends on the opportunity, Indra Sistemas will find. And Miguel?

Yes. On the second question, I mean, we cannot mention those specific margins. And on the third question, if we don't take into account those advancements of -- coming from the PEM and taken into account. And if we took into account the factor of EUR 180 million that I explained earlier, that are not part of our net financial debt would be -- will have a net debt of around EUR 630 million. And I believe that a that can be -- that explains this free cash flow of minus EUR 40 million. And in any case, it will be below 1x EBITDA in the conversion with our PEMs and factoring would be around, yes, EUR 630 million. Thank you very much. And last, very simple and easy messages. Our objective is EUR 7 billion, EUR 700 million of EBIT and [indiscernible] 5% free cash flow. We are in a new governance pace, but the teams are committed, not just the team, but also myself. And in that sense, there's a lot of speculation. My full commitment from my site Board decides. I will be happy to keep on working because I believe that the project of Indra group right now is amongst the most billing plans that we can have in our country. And in that sense, we keep on working to transform this company, which is a referential in our country. Thank you very much and see you at the end of the first half of the year. Thank you.