Montana Aerospace AG (AERO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Sandra, the Chorus Call operator. Welcome, and thank you for joining the Montana Aerospace AG Full Year 2023 Conference Call hosted by the Co-CEO and CFO, Michael Pistauer; as well as the Co-CEO, Kai Arndt. [Operator Instructions] I would now like to turn the conference over to Michael Pistauer, Co-CEO and CFO of Montana Aerospace. Please go ahead, sir.

Hello, and a warm welcome from our side. Michael Pistauer speaking, Co-CEO and CFO of the company to our Montana Aerospace earnings call for the year 2023 and presented together with my colleague, Kai Arndt, also Co-CEO of Montana Aerospace. He will later give you a very detailed outlook and overview of our most important segment, Aerostructures, also the name giver and then we'll discuss it in detail what are the ongoing trends and also our impact to the industry there. Let me upfront start with a quote, which is to be fair, very positive in our regards. We are very happy about it. Montana Aerospace is seen according to a very well-known magazine in the aerospace in the industry, the so-called Flight International magazine, is the fastest growing aerospace player. And we are proud because this reflects very in detail our, I would say, ambitious development. And hopefully, in the future, we will see not only the Montana Aerospace is the top sales growing company, but also the fastest-growing company in EBITDA and earnings and cash flow. Some of the goals we have already achieved, and we will give a clear guidance also for the years 2024 and 2025. The financial year 2023 for us was in general a very, again, challenging but very positive. We have grown our net sales by around 10% to EUR 1.4 billion, and the adjusted EBITDA reached a height of EUR 138 million, it rose the first time since a couple of years, I would say, since corona. We have reached again a very positive free cash flow for the full year of over EUR 50 million, EUR 52.6 million. Please keep in mind that the EBITDA growth in the first sight might not look too much. But in 2022, we had out of M&A transactions. I will come to that one a bit later on, around EUR 30 million in EBITDA. So we increased our EBITDA by almost EUR 40 million within 1 fiscal year. The balance sheet is again strengthened mostly by the reduction of the net debt. The refinancing which comes at a later point also in detail, the reduction of the trade working capital and the strengthening of the equity ratio. The only point which to be met in 2024, by the way, is a positive net income was not reached in 2024. Main point for not reaching yet a positive net income in 2023 was the impact that we suffered from the financial result with very unfavorable FX development, which is noncash, but still impacting the net income and also refinancing relatively high interest costs, which should be lowered within the year 2024 and 2025 significantly. Let me then in detail discuss the segments later as well also the guidance for the year 2024. What we all have together in all 3 segments is a very clear mission or, let's say, strategy. We want to have a very clear USP and a very clear understanding of how we structure our businesses within the value chain. Coming to that one. In detail, also maintain the discussion of the segments give you some highlights of 2024 -- 2023, sorry. One of the highlights is, in any case, the massive increase again of our so-called contracted sales. So if you may call it, also the order backlog with more than EUR 7.5 billion contracted sales only for Aerostructures only for this 1 segment gives us a very clear understanding and security for the next years how to reach our ambitious goals on sales and also on EBITDA and more or less secures our sales growth for the next plus/minus 6 years from now on. Another highlight of 2023 was the refinancing and the refinancing is at least from Montana Aerospace was a critical milestone as we had a financing, which was mostly supported by our old majority shareholder MTC AG in the years before 2023. And some KPIs or covenant criteria were still linked to some sister companies in order to MTC. And in 2022, this financing, our promissory notes brought us in a situation, which was very unfavorable due to a very negative development of VARTA, our sister company. And with the refinancing, which happened in autumn 2023, we are now completely ring-fenced and have the foundation for a positive growth within the next years from now on our own. The positive side effect that we have reduced our balance sheet by that will also lower the financial result in 2024 onwards and have strengthened by the lowering of our balance sheet also our equity ratio. If we continue with the highlights of the key financials, we have grown by around 10%. As said, in 2022, numbers still one topic of the acquisition was still part of it. We sold the machine building capacities of Montana Aerospace in late 2022, with around EUR 100 million worth in sales. So the growth on a like-to-like basis was even stronger than the 10% shown on a year-on-year basis here. The EBITDA very, I would say, sustainable basis for further growth with EUR 137.7 million. As also here already mentioned adjusted EBITDA in 2022 was impacted by positive M&A transactions by around EUR 30 million. So on a like-to-like basis from around EUR 100 million to EUR 137 million reflects almost 35% to 40% growth. As guided, we lowered massively our CapEx, the large capacity increasing programs in Aerostructures mainly were finished in 2023. And therefore, we have a very sustainable basis and the high capacity also in Aerostructures, which can be filled right now with the contracted sales. And on the other hand, this lowers, of course, the CapEx spend, not only in 2023, but also in the ongoing years. Trade working capital. We mentioned in September 2022, that on the trade working capital, we have reached over EUR 500 million or absolute peak, it was a strategic peak those days because we didn't want to fund falling any short cut on the supply side, therefore, had a lot of inventory on our stock since then, we streamlined our trade working capital and reached another reduction, together with the growth of sales, a very positive cash-producing element with EUR 294 million, we're around 2% lower than what we had in the year 2022. Total assets lowered mostly by also the refinancing and the reduction of cash on the one hand side, but mostly on the gross debt on the other hand. And this, of course, over strengthened our equity ratio to almost 50%, we come to that one a bit later. Net debt reduction in total reflects the positive cash flow and the free cash flow probably -- still negative free cash flow in 2022 has also guided a positive free cash flow in the year 2023, a bit stronger than what we expected and gives us, again, a very confident feel on the year 2024 for our guidance on the cash flow basis. Now coming to the different segments. We will start with the most important segment, Aerostructures, which again showed confident growth. And here, I would like to hand over to Kai to give you a detailed overview of the developments of Aerostructures.

Good afternoon also from my side. I'm happy to share the current situation with you. And I was really looking forward for the call because for me, the numbers from 2023 are confirmation and proof of our concept. We heavily invested over the last years in our structure and our portfolio. And with all the heavy investment, it was very clear that we need volume to make use of the investments -- and as seen in many of our presentations, we invested in the unique system for me, uncomparable in aerospace. I'm working in aerospace since more than 30 years. And I think the system is difficult to be copied. And now we see that it's paying off. So we -- as mentioned by Michael Pistauer, we have an order book of about EUR 7.5 billion. We won only in '23, another EUR 500 million of new contracts over -- for the last -- for the next year. So it's confirming that the investment we have been done that they are now paying off. So as I said, for me, that's a proof that the confirmation from the big customers that they want to invest further in our company and then they also rely on the system we have in place. You saw the outlook and Mike mentioned it. So I think -- and also we have an invested capacity in the moment of EUR 1.2 billion. And I do think that we will also achieve the industry benchmark in terms of the margin we can achieve in this segment. So ultimately, we are targeting for a roughly 20% EBITDA margin in the segment, and the utilization of our system today is around 60% to 70%, of course, and the planning for 2024 we saw another increase in terms of the utilization, which will then ultimately bring the margins in '24. Of course, this was based on the fact that we need organical growth from the OEMs, and I'm pretty sure you are curious to hear about the impact of the 737 crisis. I will come to it a little bit later. But you can also see in the planning, we are targeting to be above EUR 900 million from EUR 723 million for the year 2024. You will see another steep increase in terms of the sales numbers. And ultimately, of course, then this will also lead to better EBITDA margins bottom line. So that's where we are today. What does it mean in terms of the impact we see in the moment with the incident of the 737. First of all, I'd like to mention that this was a big hit to our industry, because to put in question how safe it is to fly? As a passenger who is flying every week, and normally flying every week with the 737, I can tell you I feel completely safe when flying with the 737. And I think that's the main topic of this incident so that Boeing needs to work on the quality topics and make sure that for every passenger, it's the feeling of flying is again a safe one. So that's definitely the main topic, and I'm pretty sure after talking to my Boeing colleagues more or less every week, they are doing everything to fix the situation and to manage it, and I'm pretty sure they will do it. For us, in terms of the planning, we had already a more conservative planning in terms of the ramp-up scenarios from both of the OEMs and for all of the customers. So we were a bit more conservative than the official announcement. You have seen in the press. So -- therefore, the impact of any different scenario might be lower than expected. So in our planning, we had a ramp-up from the last year numbers to 37 to 42 and by the end of the year, beginning of next year to 47. So that was the planning for the 737 on our books. And whatever scenario is now coming for us, then the impact will be managed in terms of this planning. We know that the Q1 results in terms of deliveries are even lower than the Q4 results in 2023. So obviously, the impact is already seen in the deliveries of the 737, and there is a good right to say that Boeing might not achieve even the CAP 37 with just the CAP from the FAA. So there might be a good argument to say, well, even the CAP is not achieved by Boeing, but anyhow, this was also the case for Q1 in the last year. So whatever the scenario will be in the end, and if I just take the current numbers of 32 in the 737 and we just calculate the impact out of this number, then we will see an unmitigated and maybe an impact of 4% in terms of the sales numbers. Of course, if you take our current system, the huge variability in terms of the technology. So we have the extrusion part in terms of the technology, and we have the detailed parts and vertical integration part. For extrusion, we will hardly see no impact out of the scenarios because all the open capacity, which might be the result of lower rates, we can immediately fill with other contracts, sometimes even with better margins. So on the extrusion side, there will be no impact out of whatever scenario is valid in the end. For detailed parts and vertical integration is different. So there is definitely no chance to have a fast fill up of the capacity if there will be lower scenarios. And so there might be an impact on the overall sales number, but the EBITDA impact should be manageable and should be in a very low digit percentage number for the company. So that's the impact out of the 737 program. If there are further questions on this one, of course, I'm ready to discuss it. Yes, that's the current outlook. As said, we won a lot of new packages. And I also like to mention that we try to diversify our portfolio. So we won also some remarkable packages from a space provider. So that's definitely something which is diversifying us and is making us more robust if some of the aerospace businesses are struggling. So that's definitely also remarkable, and it will be increased in terms of the percentage of sales for the next years to come. So I think we are quite robust in terms of what is happening on the OEM side, but allow me one comment in terms of the industry itself. I don't think that there are so many other industries with such a growth path in front of us. So there's definitely a very positive outlook, whatever the ramp-up will be from the big OEMs, I think the industry is set for success. And in the Aerostructures segment, definitely Montana Aerospace is playing a big role in terms of exploiting the current system. That's for the Aerostructures segment in detail. If there are some questions later on, I'm happy to listen and hopefully, I can give all the answers you expect.

To continue with the other segments, let me shortly elaborate on the E-Mobility segment. It's the smallest segment. You remember we had a very strong growth in 2022 in comparison to 2021. 2023, I would say, mixed feelings, why the lower net sales of the group, good reason, but on the other hand, increased the EBITDA in absolute terms and more interesting also in margin levels. So very strong earnings concerning EBITDA and income and cash flow on the one hand side, but lower net sales, what happened. We do have a capacity of around up to EUR 220 million on total sales, a good quarter part is the legacy business. This was extremely strong. And in many cases, compensated what was lost in the non-legacy area, which is the recycling of material and recycling of aluminum, of alloy, production of billets, which we, of course, use ourselves, but the excess capacity we usually sell to the market. And here, we had to say that 2023 was impacted by very low demand and also gray imports of such billets, mostly out of Turkey, legally or some sources out of Russia and Iran to Europe. And therefore, also our third-party sales in this noncore business was lower but as said, didn't impact the EBITDA, so mixed feelings about the mobility. Concerning guidance, 2024, we are here a bit cautious but positive optimistic on the development of the sales, nevertheless, with again, strong EBITDA to be expected. E-Mobility next -- last segment is Energy. We still see a tail storm in this market, in this industry. The demand for our products, the copper cores, for transformers, and high-voltage generators is unbroken. The only constraint we have is the capacity which is installed there. So simply said, every milligram, we produce is already presold. And this was increasing margin levels, and a very strong partnership with our customers, which give us also here very positive possibility to guide for many years from now with more and more long-term contract in hands, which is a more or less the need for capacities for their ongoing in transition worldwide. Net sales of EUR 567 million, more than 18% is -- the only constraint in this area is the capacity, which we already started to increase in 2023. And therefore, we have also the possibility to grow in the next years to come. Let's go into some details of the financials. When we look at the cash flow, which is for us a very important KPI. Please see on the next page, then we see that there is a strong operating cash flow, mainly in the year 2024, and mainly here also impacted in the Q4 -- late in the Q4 2023 by a strong business. Sorry, I don't see that slide, shift to Page #15. So hopefully, you can see that wasn't on the presentation. I'm not sure about it. If not, I apologize for the technical topics. So just continuing on in the slide number, if you don't see it in the presentation in parallel. The gross debt was reduced ongoing with the free cash flow from EUR 700 million to EUR 450 million. This was part of the refinancing. What we did is simply, we paid back the promissory notes with the unpleasant covenant criteria. within the refinancing, also did not meet this, I would say, high amounts of cash anymore, and therefore, also reduce the balance sheet some. The net debt was, therefore, also reduced from EUR 280 million to EUR 275 million this year by positive cash flow -- free cash flow of over EUR 50 million. And please never forget that we did some, I would say, efforts in 2022, not to fall in a breach of covenant criteria which still impacted 2023, our numbers. So therefore, without those, I would say, supportive topics, our free cash flow and net debt reduction would have been even higher, something which is -- and hopefully will be reflected in 2024 onwards. Going on the details of the trade working capital. We had some -- the operating cash flow on Page #15 shows that we had a very strong third and fourth quarter. The reason for it is that the 1 topic is that we have a continuous growth in all the segments, many of these excess costs, inflationary costs invoiced by the end of the year, the third and fourth quarter, this is reflecting also the positive development of the EBITDA and of course, also the operating cash flow. Further also, the CapEx was continuously lowered over the last quarter is also positively impacting the operating cash flow as well, the trade working capital reduction. Please keep in mind, and that's why we also had on this slide that last 2 quarters of 2022 by the end of year of 2022 when we saw potentially takeout of the financing with the covenant criteria including our sister companies and MTC. We did some extraordinary efforts to lower, I would say, our net debt and increase our cash flow, which had some negative impact still in 2023, something which is now on a permanent level, not anymore. So therefore, 2024 will show a continuous growth also on the operating cash flow and the free cash flow without any impact out of the past. When we go to the details of the trade working capital, one very crucial element on the one hand side to be ongoing, able to deliver and support our customers. We want also there to keep on to stay in a position to jump in when others maybe are not able to deliver, which is possible due to our long value chain and the capability effort to jump in when others have problems with their supplies, which is always helping us also to continuous growth. We had a high peak in trade working capital reached in the third quarter 2022. That's also when we announced to continuously lower the strategic high inventory. So I would say, more normal levels. We are on good development terms here with EUR 294 million. We will see concerning also the percentages in the different areas, a continuous reduction in 2024 onwards. As said, net income not yet on a permanent level positive, mostly impacted by a very high 2023 negative financial result, around EUR 60 million. Around 1/3 of this negative financial result is out of noncash relevant exchanges in the balance sheet. The rest out of, I would say, unfavorable situation of the financing previous to the refinancing. And therefore, with the refinancing finished and closed, we are positive from reducing this impact heavily and guide also here for lower financial results in 2024, and therefore, positive net income together with the growing EBITDA on a permanent level. Saying that of the other KPIs of the group, developed in, let's say, in the area of the guidance or the expectations, production performance plus personnel expenses under proportional, even so we always have to upfront higher people expecting in the higher build rate and also our market share growth and therefore growth, but still under proportional on the personnel expenses. Other operating expenses and net income in 2022, highly positively impacted by the M&A transactions. So it was not a deterioration in 2023, but mostly positive impact in 2022, which did not happen in M&A in 2023 anymore. So therefore, also, I would say, a more sustainable basis, what we see right now on the operating expenses and income [indiscernible] for the next years. In saying that, we can therefore guide but before we guide maybe a short comment on today's technical issues we had on the homepage. Sorry for that one, but somehow with an external provider, the home page in the morning broke down. And therefore, only the numbers and all the details were shown a bit delayed. It was an external supplier. That's how it is. And maybe this once again positively undermines our strategy to have the full value chain in our core business, in our legacy business, which is the 3 segments we showed you in our own hands and therefore, cover more or less as good as is possible in all areas, the full value chain without daily supplies. Guidance for 2024 unbroken, and we already have in our guidance included, I would say, a potential reduction of some build rates, as already mentioned by Kai, and before we need cover the topic of Boeing and also Airbus, we guide our adjusted EBITDA, again, a growth of around plus more than EUR 180 million. And the positive -- continuous positive free cash flow as well, which is also for us, very important positive net income and the streamlining -- continued streamlining of the trade working capital as a percentage to sales. Into 2025, based on the contracted sales, we have enhanced in all 3 areas, in all 3 segments, sales grows to -- organic sales grows to around EUR 2 billion in total sales and an EBITDA grows to more than EUR 250 million. With that, thank you very much for listening to our presentation of the financials 2023 and also the guidance. We're very happy to answer your questions.

[Operator Instructions] The first question comes from Phil Buller from Berenberg.

I have 3 actually, if I may. I'll ask each one, one at a time. Firstly, perhaps this is one for Kai, thanks for the update on the MAX exposure. Just to clarify, is it right to see that the slight tweak to the revenue guidance wording for 2024, is that 100% related to the MAX situation? And also, can you perhaps share if there's been any other smaller sequential changes on other programs perhaps have things got easier or tougher on the 320, 220. 777X or anything on that? That's question one.

Yes. Thanks for the question. And I'm, of course, happy to answer it. And yes, it's good to hear that you also referenced to the other programs because in all the discussions we have around the 737 MAX crisis, we ignore a little bit that also on the long-range side, talking about the 350 to 787 mainly. We see a massive ramp-up. And fortunately, this one is at least in the moment, it's still ongoing. And we see that the ramp-up is in line with the announcement from the big OEMs, especially when it comes to our North American sites that we have a big exposure to the 787, and I'm happy to see that this ramp-up is still in good shape. You asked about the slight sales adaptation. And you're correct. That's already another [indiscernible] based on the 767. But I also like to say that there is no official announcement yet. We are, of course, speculating about the impact that might come, but for the moment, we still have the demand in the purchase orders, which is -- which was planned. But as you can see, the delivery numbers in Q1, there's definitely a good reason to say that there might be some adaptations on the OEM side when it comes to the similar -- especially from Boeing.

A follow-on question, I guess, also on Aerostructures, but ASCO. What can you provide a bit of an update on what's happening there? It was obviously still a drag in 2023. Can you just provide us with overview on what the current situation is there and how we should think about the contribution from that business in 2024, please?

Yes. Another very good question. So ASCO, as you know, we acquired after roughly 2 years ago now, and the integration of ASCO as expected, was not an easy one because we -- that was the first time that we have more complex assemblies in our portfolio. And from the very first beginning, it was the intention to in-source as much as we can in terms of the supply chain of ASCO. I think that the integration is still running pretty well. So the numbers from 2023 confirming that we are on track in terms of the margins, but not on track in terms of the sales. So ASCO is heavily exposed to the wing manufacturing. And as you know, for the A320, the wing manufacturing in Bolton is ahead of the schedule. And so there was an impact in 2023 on the sales numbers on ASCO. But fortunately, in terms of the margin after delivered. And that's a very good message in terms of how far are we with the integration of ASCO for 2024. We see a significant increase both in terms of sales and also in the EBITDA, and we will continue to in-source as much as we can into our own -- into our own system. And that's again confirming that as much as we can control of the supply chain, the better it is for the company. And there, we have a lot of initiatives running in '24, but also in '25 to in-source as much as we can. And I think we are on track with these initiatives.

And just a final one really. I guess, it feels like the MAX is the topic of the day. But overall, a lot happened in 2023, and a lot of progress has been made on the gross debt and the refinancing and there's a lot of things to be pleased about with the core business and the structure and shape of the balance sheet. So I guess the question is, where is M&A on the agenda now? And also on the other side, what's the latest thinking on a potential separation of asset, please?

Yes. Okay, sorry. No, no, go ahead. Maybe yes, let me start with the progress you've seen in terms of the development of the company. And then I will hand over to Michael when it comes to the M&A activity. I'm just coming from Telus. So Montana Aerospace is now part of the strategic supplier panel in Telus with Airbus. I think that's a remarkable success for the company. And the second one, only yesterday, we received a letter from Boeing that we are now a premium partner in their point of view. So I think that's, again, underlining the path we are on and definitely is a proof of concept in terms of the strategy. So we are clearly -- we are very happy to see that also from the OEMs, they are seeing us now as a strategic partner. And now I can give to -- hand over to Michael.

It was a perfect introduction because M&A has many shapes, please, Phil. We are a strategic partner in the meantime of the OEMs and also of large Tier 1s and they name us and serve some kind of potential M&A targets on a permanent basis. But sometimes or let's say differently, we only go into an M&A if we think it's highly accretive for the company, there have a possibility to bring it to a good EBITDA, cash flow and net income level with a very decent period of time. But companies which are maybe situated with a lack of quality within the sales pipeline, in countries which are not called best cost manufacturing footprint countries, but high-cost countries, this is sometimes not the best business case. And therefore, it makes more sense maybe to take over the work packages, I would say, the sales pipeline and have an organic growth on our own with our own capacities instead of taking over those companies. So therefore, I would say that the good portion of our sales pipeline increased contracted sales, which we showed at present [indiscernible] is also based on some indirect takeovers in 2023. Nevertheless, we look at many companies right now. I also have to admit -- we have to admit that when we started to go public in 2021, we thought that the potential window for interesting M&A transactions is maybe ending in 2024. Today, we have to admit -- it don't even really start it. We now see a massive increase of potential transactions on the table, even some stock-listed companies sometimes discussed to be looked at. So therefore, yes, we look at many and we will, therefore, also continue our path of organic and inorganic growth, but also here some restrictions only if it's to be financed out of our free cash flow. And only if it's highly accretive and not impacting negatively our net debt-to-EBITDA covenant criteria. But I think we will see something in the, let's say, next years from now.

And on ASTA?

On ASTA, here, we have a very clear path. I mean we have this tail storm -- these tail storms makes us somehow or brings us in the situation that we have to increase the capacities. Otherwise, the energy transition worldwide will not be supported enough. And this can be financed by our own means on free cash flow, but maybe to have a more faster growth possibility. We also thought and that's what you reflect on a more, I would say, independent development of ASTA. And Phil, we are still, I would say, in a potential preparation of such possibilities. But let's see if it's highly accretive for us, we like the segment. That's a very good development, a very strong development, very reliable. We have the possibilities with a bit stretching also to finance the growth to up to EUR 1 billion on total sales before the end of the decade ourselves. But if there is a good possibility for what kind of was the more independent development of Montana Aerospace, we are open to it. In any case, 2025 will be the decisioning -- sorry, this year sorry, 2024.

That's understood.

The next question comes from Aymeric Poulain from Kepler Cheuvreux.

Yes. I've got also 3 questions, if I may. The first one is on your sales guidance for the Aerospace division, it seems very, very strong. So just curious about the drivers of this 30% plus growth in the aerospace business. Is it some leftover of price increases? Is it some of the contract you are expecting from ASCO that are finally kicking in? Or just -- could you give a bit more color on the assumptions behind? And again, just to clarify the impact of the 737 production hold, could you remind us the 4% that was mentioned earlier, what is it exactly is 4% if we stay at the current rate of production of Boeing? Is that the right thinking? And perhaps could you also remind us what is the last year's contribution of the 737 MAX to the Aerospace division. So that will be for the first series of questions on the aerospace sales guidance. Secondly, on the free cash flow guidance that it should be a positive free cash flow. Could you just clarify, again, are we talking about positive growth of free cash flow or just a positive free cash flow? And what would be your assumption for CapEx? I understand you started adding capacity in the Energy division and adding CapEx there. So could you just give us an update on that CapEx plan for the Energy division, please? And last, on the Energy division sales guidance, you seem to assume no growth despite this capacity increase. Could you explain also what underpins this assumption?

Okay. So I hope that I got all the questions. If not, please then correct me and then raise it again. So the sales increase is -- I confirm, is significant in the Aerostructures segment. It's a mix of different things. So you mentioned price increases and you will probably understand that I cannot go into detail, but we were happy last year with the discussions we had with the main customers, and we found solutions more or less on all the contracts we are owning. So that's the part of the growth, but not the biggest part of growth. Organically, of course, the volume that is coming in from the ramp-ups and I mentioned earlier that it's not only on the single aisle, so not only on A320 and the 737, but also massively on the long-range programs we are owning. So that's organically what we have already in place. Inorganically, I would call also the new contracts we won. So they will kick in, in '24, but also massively in '25, and we are still winning new contracts. So I expect in '25, '26, another big portion of the growth part is coming from new contracts we are winning. In terms of the MAX portion to be very detailed. It's around 20% of the sales in 2023, it's coming from the single aisle program from Boeing. Then this is where I based my calculation in terms of what might be the impact if we stay on the current rates. To be very clear, the current rates of deliveries in Q1 from Boeing were around 30, even less than that. And the cap from the FAA on the deliveries is at 37, 38. So provided that Boeing will manage to increase the delivery rates, I think there might be not the big impact we all see for the -- we all saw for Q1. But anyhow, to talk in numbers, this is where I was coming from when I explained the impact of the 737. And here, we need to know the 20%, it's a little bit more about the 20%, again, is splitted between the different technologies we have. So in terms of extrusion, I don't see any impact whatever the rates will be on the 737. So the impact is only on the detailed parts business and the vertical integration and there we have to find mitigation actions to overcome some shortfalls in terms of the rates. So overall, it's a mixture of different things. To come to this 900 plus, it's in the planning, we have 954 Aerostructures. So I'm quite confident that we see some sales numbers around this number.

Can I continue with the cash flow? I guess there was the second part of the question. Cash flow, as simply said, in growth in absolute terms and in percentage. That's what is ahead. We have slightly more CapEx due to the energy growth ambitions here. But we have a, I would say, decent development of the trade working capital in our guidance due to the streamlining of the trade working capital percentages, a massive reduction of the financial result due to the refinancing and the development of the interest rates also here and also the positive free cash flow and therefore a growth in free cash flow on both areas, growth absolute and also in percentage. Concerning energy, here, your question was the funding of the growth in the growth path. Yes, we guide this year for over EUR 600 million on total sales. So this is already a positive impact of the started program concerning capacity increase, the years 2025 onwards, we guide for a growth of EUR 100 million more sales on a yearly basis based on the CapEx we started to invest in 2023 already in energy. But over here, we fund this right now, a bit stretched growth CapEx program by the free cash flow generated in Energy segment itself. And this is already -- reflected already in our guidance. So if there is the strategy this would then maybe be possible to have a faster investments and therefore, the faster growth. But we stick to that plan right now of a growth of around EUR 100 million sales on a yearly basis 2025 onwards.

[Operator Instructions] The next question comes from Beltran Palazuelo from DLTV.

First of all, regarding the 2025 guidance, if I'm not wrong, the numbers are around EUR 2 billion in revenue and EUR 250 million of EBITDA, more than EUR 250 million in EBITDA. It seems if you do the numbers the other way around, then I think I was mentioning that around 2025, we should already, let's say, reach 20% EBITDA margins in Aerostructures, it seems to be a little bit more than EUR 250 million. So what has to happen in order to not, let's say, get to next to EUR 200 million, EUR 300 million in EBITDA. So it's -- that is my first question. And maybe the next 2 ones, I can take them once you answer the question.

Maybe I should answer on the first topic, the 2025 guidance. Yes, we guide for around EUR 2 billion on total sales split up in the 3 segments with around EUR 250 million on EBITDA. Still, there is a very clear also from our side, I would say strategy behind. We always want at least to meet the guidance, the first thing. And second thing, you have to always to expect something which is not be seen right now. So expect the unexpected. There will be impacts which might be to be worked around. This is also included in the guidance. If you simply structure the financial model without those impacts, it might be even higher the EBITDA. That is correct.

Okay. So maybe let's say, EUR 30 million to 40 million can be actually a good estimate?

We calculate with some uncalculated topics, which are not foreseeable right now. Let's say the history of the last year showed that those topics always come. And therefore, we stick to our guidance of around EUR 250 million.

Okay. And the second -- 2 questions I have is regarding balance sheet, of course, you were talking about, let's say, the expected increase in energy, but we've seen your numbers, on seeing that we are quite confident that the working capital should stay more or less stable. It looks like let's say a free cash flow generation in the next 24 months to be between EUR 200 million and EUR 300 million. Why so much, let's say, looks like quite conservative. You're always talking about this EUR 100 million of energy that the company is doing in a conservative way. It looks like if nothing happens, the company should reach the end of 2025, even with dividend with, let's say, zero net debt. So why so conservative? And then regarding, let's say, the dividend, when the war Russia versus Ukraine started, your stock was over CHF 30. Now clearly, you're showing that this company at some point in the near future, can generate next to EUR 200 million in free cash flow. What other, let's say, you were talking about M&A, what other, let's say, tools this company have to, let's say, make the stock price reflect the intrinsic value is at some point, a buyback or extraordinary dividend in the cards. And then the last question regarding legal costs in the last quarter, if you could give a little bit more detail, only lawyers is a settlement with Arconic or what happened in the last quarter.

I'll start with the latest one. Yes, the legal costs were enormously high. We had this little issues with Arconic, something we always report the last years in our also annual report. It is a topic out of the past. As you know, we had also made some announcements last year. But still, I would say the impact of the legal cost is something we had to digest in 2023. And once it comes to the invoices, it's not when the trial is taking place, but it's taking place from the lawyers in quarter or 2 quarters, even later. That's why the impact was in the late 2023 happening and also impacted our total numbers quite heavily. What to expect here in 2024 on these terms, I would say, nothing serious anymore on a normal way of lawyers, which we have for ongoing business in different areas, but no low-cost anymore. This is the one topic concerning our dividend policy. This is unchanged. We have, at least from our side as a management, we want to have the guide for at least the possibility to support a dividend in 2025 for the year 2024, supported also by a positive free cash flow reduction of net debt and also a positive net income. If it's then decided it's up to the shareholders. But from our side, we want to propose it and we would propose something like 1/3 of a dividend payout ratio. This is, I think, a healthy possibility also for a company and every good company should at least have the possibility to generate a payout ratio and then pay a dividend. Whether or not it's decided it is part of the shareholders. Nevertheless, also here from our side, the net debt reduction. We had net debt of a bit more than 2x net debt to EBITDA a bit more than 2x -- of around 2x last year. We want to be, for the future, lower than 2x net debt to EBITDA so which brings us also to the point that we want to slightly lower it, but on the other hand, it brings us over the possibility with our free cash flow to not only grow organically, but also inorganically to M&A.

Yes. So the question, Michael, you are guiding to close to EUR 200 million in EBITDA for 2024 and you're guiding, let's say, for more than EUR 250 million in EBITDA, and you have clearly stated a buffer. Is the maintenance CapEx is EUR 50 million and we're already executing the energy and the energy we would need, let's say, more than -- around EUR 100 million [indiscernible]. So if you have, let's say, EUR 15 million or EUR 20 million every year, it seems that even though there's working capital movements, there should be, let's say, more than EUR 200 million to EUR 250 million of free cash flow. So that brings you now with the dividend payment. The net debt to 0 at the end of 2025. There's no big M&A occurred is -- are you thinking about anything to get, let's say, the stock price to reflect the intrinsic value or at the moment working on and you let the stock markets...

I think that our continuous growth, delivery of the different KPIs, even upfront to potential KPIs or consensus should bring confidence in our stock and therefore, also then be reflected in the share price. Nevertheless, please keep in mind that the maintenance CapEx is the one topic. On the other hand, there are possibilities to grow, not only M&A, but we have a very good, let's say, overview of the possibilities also to grow inorganically, which we will also drive -- organically, excuse me, which we want to drive further in the area of Aerostructures and not only in energy. But, yes, we have a very confident view for our future, and this is already reflected in our guidance.

Let me allow one comment on that because Mike touched on the share price development. So I'm investing in companies in more than 20 years, and I added roughly 10,000 shares in 2023 into Montana Aerospace by myself. So there should be some indication that I'm completely convinced that this company is right on track. I think investing in companies always have 2 pillars. One is the robustness. Mike touched on the financing, the new financing we achieved last year. We have a solid plan and the strategy, where we, from quarter-to-quarter confirming that we are in line with the strategy. That's the second topic. And for me, the third one is the fantasy in terms of what can this company achieve. And we discussed lengthy about our growth plan, but also the ambition to come to the still EUR 2 billion of sales and EUR 200 million of EBITDA, which I think is a good recipe for success and should be reflected also in the share price.

The next question comes from Michael Kors from Bellevue Asset Management.

Just 2 questions actually just for actually the purpose of understanding or modeling. I mean the first one on ASCO, I don't know if you could give us like a ballpark figure of where it is currently in terms of turnover or just an indication, obviously, we expect good growth now in '24 also in terms of margins. But just to understand where we ended in '23. That would be the first question. And the second question, just for illustrative purposes. If we look at the shipset value at the group level blended. I'm not looking for nitty-gritty details now, but I remember at the time of the IPO, you were giving that on a project-by-project basis to give us an illustration. And if I'm not mistaken, for the group level or let's say, for the Aerospace division, it was about EUR 300,000 per plane or something like this, which has probably doubled now since then. And I just wanted to see where would we go from now with the visibility you're talking about the EUR 7.5 billion book obviously, you see this probably further increasing. I mean, certainly not maybe by the same extent of what we saw from -- since the IPO until now. But I mean, whatever you could give us in terms of figures or illustration just to have some grasp on this for -- just for the purpose of understanding some of the drivers of the growth looking forward.

Okay. I think I will take the first question on ASCO. So in details in 2023, the turnover was around EUR 270 million and we achieved EUR 20-plus million in terms of EBITDA. And the outlook for ASCO should be around EUR 340 million, and we are targeting to come to mid-20 number in terms of EBITDA. Of course, there are always some risk and opportunities. But I think for ASCO, ASCO is exposed to Airbus programs. So not impacted by the 737 at least not too much. So there will be a robust plan in terms of the achievable numbers in terms of revenue and EBITDA for 2024.

And the EUR 340 million you just mentioned, this would be for when did you specify?

That's for 2024.

For '24. Yes.

Yes. That's the targeted number for 2024. And for the Q1, I think we are on track with the number. And hopefully, there will be no impact from the OEM on these numbers.

In total, we have a very promising development in the first quarter. So therefore, also giving us confidence for our guidance 2024. Concerning the shipset value, let me also actually answer on that point, we gave some, I would say, indication during the IPO to be fair, it's not so easy to be calculated because at some point, it's also in many planes used. So we can pinpoint it to one single platform. Also we have to say still that we have larger planes like the widebody planes, which still have many -- much more material included at the end also value, but all in all, we have a very, I would say, over the full family of Boeing and also Airbus a very balanced shipset value. And this is, I guess, what we can guide on that point. So we don't have too much impacts, but we have more or less no impacts, whether it's a more A320 or 737 whether it's the A350 or large Boeing plane. So this is more or less on equal terms on all areas. So whatever plane it is, we're happy about it, which is still built on. The last question, I have to admit that the line was shortly broken. So please would you be so kind to repeat it once again, so that we correctly understand it.

Sure. Actually, I only had 2 questions. So I think you answered. Probably the last one was a follow-up for an add-on on the shipset value. But I mean, what you said is clear that -- but I was just wondering if -- I mean, I understand that on the mix basis, you're happy because whether you more or less in plane, that's fine. But I was just wondering if there is still an increase per se in terms of value per content -- valuable content you see ships in average. But in the past, obviously, it was quite massive. It was in double-digit area. But would you say that from now, just as a rule of thumb, are we talking about like a mid-single digit growth per annum in terms of ships at value. And then this would come on top of the volume assumptions. Not that I mean...

No, I'm trying to give you an answer on it very simplified. You see that we grow. We guided again for around more than EUR 200 million growth this year on Aerostructures only when we talk about this segment. So this is reflecting something almost 30% growth. And this 30%, I would say, is simplified that it's coming from 3 different areas, more than 1/3 definitely from the wind of market share, and this is nothing but decrease of the shipset value. So thank you, Kai, for you and your team for doing a sensational job on that point, to really increasing our market share here. I would say a bit of estimate is coming out of the growth from the ramp-up of the build rates we discussed at [indiscernible], in the first half of this call, where we have a bit more conservative view in general, but we see right now at this is coming also, I would say, some decent reliable data in the industry at all. And the rest is mostly non OEM-based Aerostructures or aerospace business, so it's space in the aero but not only Boeing and Airbus related topics, but also other customers also the growth. So space is growing also quite rapidly. So hopefully, this answers.

The next question comes from Olfa Taamallah from ODDO BHF.

I have actually 4. Maybe a quick follow-on with the 737 MAX, if you can detect your assumption on production rate for '24 and '25? My second question is related to the supply chain, I guess, that it creates a big mess around supply chain and the pressure is quite significant. So wondering if you can comment a little bit what you are seeing currently with regard to negotiation with Boeing and Spirit, given, I mean, the cost overruns so far? And how do you see the health of this operation? Where do you see risk and opportunities today for you? My third question is related to ASCO. You have mentioned EUR 10 million impact from supply chain issues, if you could elaborate more on that. Are you still seeing same issues or new players are involved today? And when do you expect to have the certification from Airbus, namely? And the last one, if you could elaborate a little bit on Q1 performance and how it compares to last year? I'm not sure to get your comment on current MAX production. You have mentioned 32. So what would that imply on aerospace performance? And as well if you can comment a little bit what you're seeing on energy and e-mobility.

Okay. So well, let's try to work on one after the other. You mentioned the 737 situation in terms of rates, and you also mentioned the '24 and '25, of course, that's a bit like looking in the crystal ball. But in our planning, I explained that the ramp-up towards the 47 was in the plan for '24 and '25. And of course, the announcement from Boeing was on 52 during the course of '25, and this is what we also had in the plan. I said that we were a bit more conservative in terms of the speed of the ramp-up. So that is now helping us a little bit in terms of calculating the possible impact if there would be some reduction in the rates. But of course, we will be ready to plan whatever is needed and hopefully to find mitigation actions. And of course, for '25, it will be by far easier than on short notice if something will happen in terms of the rates in 2024. So we are working on that. As I said, it's extrusion, it's not a big topic as we can sell immediately the open capacity to other sources that will be even a positive impact in that case. But for detailed parts and vertical integration there we need to work on what does it mean if in '25, we also see lower rates. But it's not confirmed, and I don't have any indications that for Boeing, it means that they will not recover in '25. The situation, of course, from the OEMs and especially from Boeing, is very fragile when it comes to supply chain issues. So if they might lower the rates in '24, I think it's not so easy to [indiscernible] when they recover. So they need to maintain a certain level of deliveries from the supply chain, including us, of course, to be ready to ramp up after they manage the crisis and hopefully get the release from the FAA to produce even higher rates than the 37 or the 38. So that's somehow what Boeing needs to come with, and I hope they will protect their supply chain in terms of accepting even higher rates during the course of '24 and then '25. You mentioned the impact of supply chain. I think the EUR 10 million that is for total, it's not only on ASCO. So there were some supply chain issues over 2023, and it's continuing also in 2024. So this is why we want to become more and more independent from our supply chain and we are trying to in-source as much as we can. We have some successes on this side. So we insourced already some of the detailed parts business, mainly to Romania and also to our sites in Vietnam, but it will continue in 2024. The Spirit situation, I'm not sure if I heard it correctly, but I think you mentioned the rumors and the announcement in the press that Spirit might be taken over by Boeing or let's say, will be brought into the Boeing system again. I definitely think that might be a positive move, not only for Boeing because they are definitely the leading complexity out of the supply chain. I see it very positive if this will happen. Of course, there will be some adaptations arrangements with Airbus necessary because some of the Spirit sites are also delivering to Airbus. I definitely think Airbus and Boeing are in talks to find the best solution available. But in the end, it will definitely take out complexity from the supply chain. And this is always better also for us as of the suppliers into the system and that can only be helpful also for us. If this provides any opportunity for us, definitely, I think, yes, because the consolidation in the supply chain is needed. And we hear that every time one of the big OEMs is giving a press conference, they want to decomplexify the supply chain and consolidation is one of the topics, and this is where we are come into play, and I think we are ready to help the OEMs to decomplexify the supply chain.

Which you also see in the development of the first quarter for the last question. So we started very solid and this in all 3 areas, but mainly, I would say, Aerostructures and Energy. And within our guidance also in E-Mobility.

Ladies and gentlemen, as we are already running over the time, I would now turn the conference back over to Michael Pistauer for any closing remarks.

Thank you for attendance. Thank you for being a part of our large Montana Aerospace family. We are happy to start this 2024 year again with a very positive guidance. And hopefully, we hear again and see again latest in our next call when we present in the Q1 numbers. And as said, the sky has no limit, it's our slogan. That's what we are heading for. Thank you very much.

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.