Theon International Plc (THEON) Earnings Call Transcript & Summary

Good morning, and welcome to Theon International plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I would now like to hand over to Philippe Mennicken, Executive Director, Deputy CEO, and Business Development Director. Good morning, sir.

Thank you, Paul. Good morning, everybody, and thank you for joining us today. I am Philippe Mennicken. I'm the Deputy CEO of Theon International and the Business Development Director. Today, I'll be taking you through an overview of Theon, the business model, our operations, recent financial results, and an outlook ahead. As I understand, we have here quite a few people that may hear first time about us. So for those who know us, you may hear things that you already know, but it's never bad to hear things again and maybe that improves the understanding as well of what we do. As a short introduction to myself, I'm a Belgian national, but I've been living in Greece for many, many years, and I have been with Theon for more than 15 years. When I arrived at Theon, it was a small company with around 30, 40 people and maybe EUR 8 million or EUR 10 million revenues. And since then, I have witnessed an incredible growth journey that we have been on, which is the result of very hard work, and I'd say, a unique business development DNA that we have within the company. Actually, we had to work twice as hard, and I like always to say this as anybody else in the industry because we had to overcome many prejudices in the market, being a Greek company and not a U.S., German, French, or British company. And we had to gain the trust of our customers, which we did. And today, we are indeed a brand and a reference worldwide. So for those who are unfamiliar with Theon, we design, develop, and manufacture high-tech military optronics for both man-portable and platform-based use. What does that mean? Man-portable and platform-based is simple as the words say, man-portable is anything that the operator, the soldier wears on his or her body, goggles, sights, anything like that. And platform-based is any optronics that go onto a platform, can be an armored vehicle, a drone, a naval vessel, whatever it may be. With over 20 years in the market as a pure-play defense supplier, we establish ourselves as a global leader in our field. And definitely, we are the global leader today when it comes to night vision -- man-portable night vision equipment. What differentiates us is besides the unique business development DNA that we have within the company from the business development department down to production and engineering departments, it is really our ability to deliver fully customized solutions, which is something that we have been doing from the very beginning of the existence of the company, where we design and adapt our products to operational needs. We listen to the customers as simple as it may sound, not everybody does this. And we implement what the operator who knows best what he needs tells us to do as long, of course, it's within the laws of physics. So as I said, this approach has enabled us to build long-term relationships with our customers who trust us. And this is really crucial, and a crucial element of our business success. Because when we have these long-term relationships with the customers, they trust us and they give us business, especially in these times where product availability and fast deliveries are crucial. Over all these years, we have introduced a focused portfolio of man-portable and as I said, also now platform-based optronics with relatively low CapEx and R&D investment, an element that contributed as well to our Star of Innovation Award last November. We have delivered more than 250,000 systems across 72 countries, including 26 NATO member states. Historically, over 90% of our revenues have come from night vision equipment, which is our bread and butter business in which we are the world leader. And as you can see, we have a high growth, which was even present before the beginning of the Ukraine war, and we have a market-leading and a very strong profitability. Just like the ancient Greeks established trade outposts outside of Greece, we also establish local presences worldwide, wherever it makes sense and especially in industrial presences, where we also want to give something back to our customers, to the economy, to the country. So here, you can see our expanding global presence. Obviously, our main facility and the headquarters of the company are in Athens, where I'm sitting now, where we have around 300 employees. The facility is around 8,000 square meters, and we plan to increase. Actually behind me, they are digging at the moment the ground to build our new third factory here in Athens, which is going to increase the available production capability or capacity even further expected in Q2 2027. If we look at the global map, we have a strong focus on Germany, which is a very, very important and trusted customer of ours. We have a production site in Wetzlar as a joint venture together with HENSOLDT. We invested into Harder Digital and Kappa as well as Andres Industries. I will talk a little bit more about this just in a while. We have a presence in Denmark, where we have a repair and maintenance hub. Now in Belgium, we have a factory in Belgium that focuses on thermal equipment. The U.S., obviously, an important market to us. We have co-production with EOTech. We have as well a subcontracting and equipment supply to Elbit Systems of America that then produces and delivers our equipment to the U.S. Marine Corps. We have cooperation and investments in U.S. companies, eMagin, Alereon, Kopin Corporation, and more about these companies later. SHOCK EOS in South Africa. In the Middle East, we have co-production sites in the UAE as well as in Saudi Arabia. And last but not least, in South Korea. We have Theon Saudi through which we increase as well our industrial presence in the Asian Pacific area. As a Theon Group total, we are now close to 1,000 employees. Now considering the business model very, very briefly. We control the full process. So it's our design, it's our development. We test the equipment and we produce and assemble this equipment. So we tap in Greece here in a pool of high-caliber engineers and have also access to skilled workers, all of this at a pretty competitive cost, if I may say so. We are renowned for our on-time delivery. And as trivial as this may sound, again, this leads to trust and additional business. And I always like to mention that especially in Germany, when we talk to the head of the procurement of the German Army or as well the OCCAR Director and another personnel, they all typically praise us for our on-time delivery, which I said is not a given in the business, but we are proud that we stick to this. We do have sufficient production capacity at the moment to serve our customers in Athens, in our various production sites around the world. And as I said, we expand this capacity just behind me to serve our customers as well in the future. If we come and have a quick look at our trading performance since the IPO in 2024, I'd have to say that our share performance has been exceptional. We are listed in Amsterdam, as part of the Euronext, which is establishing itself as a hub for defense listing. We IPO-ed with a valuation of around EUR 700 million at the time and a 20% free float, where we raised close to EUR 100 million in funds to fund our initial M&A strategy, which enabled us in an initial move, the acquisition of a majority stake in Harder Digital, which is one of the four image-intensifier tube manufacturers in the world, and which is important, and I will tell you a little bit more -- a little bit later because image-intensifier tubes are the main components of night vision system are the detectors. And the global supply of these detectors of the tubes is short. And hence, the investment into Harder Digital in the first step, which we did right after the IPO to strengthen the supply chain for the tubes. Following the strong investor demand, we then executed two secondary placements of existing shares to improve liquidity and later completed as well a share capital increase in December. Our main shareholder, he is the Founder and CEO of Theon International, Christian Hadjiminas, participated in the raise, which reinforced confidence in the business plan. And the proceeds of this raise basically supported the acquisition of a 9.8% stake in Exosens, which is another image intensifier tube manufacturer. It's the second tube manufacturer in Europe and one of four global tube manufacturers and actually the only producer of 60-millimeter tubes. So this was a strategic investment basically to secure the supply chain, amongst other reasons, of course. And last but not least, our market cap today stands at approximately EUR 2.5 billion. So let's have a move on to the overview of our products and the markets we operate and provide you some color on the recent acquisitions and the strategic partnerships that we have worldwide, starting with the products. First of all, we divide them into two main categories. It's the man-portable equipment and platform-based equipment. So here, we're talking about on this slide, man-portable category. There are two main types of equipment, night vision and thermals. The night vision is what we call analog equipment and the thermal is the digital equipment. So night vision, the major part and the major part of our revenues are night vision goggles, which is the first thing that any soldier needs to have in order to operate during the night. You need to be able to see in order to operate. And then you have a variety of weapon sights, which is the second thing with which you would equip a soldier for night fighting capability in order to target and to aim during night combat operations. On the thermal or the digital side, we have a variety of weapon sights. We have fire control systems. What are fire control systems? These are systems have not to do with fire, it's with shooting basically. They increase the accuracy of the targeting so that basically the first shot basically goes onto the target. And in times of ammunition scarcity, this is a big advantage to have, and it protects the soldier as well because if you hit the target as a first shot, the risk to be hit back is obviously much, much lower. And of course, we have as well some customized solutions on the thermal and fire control systems, so the digital side. Last but not least, we have as well a new category, let's put it that way, of products, which is called A.R.M.E.D. A.R.M.E.D. is short for Augmented Reality Modular Ecosystem of Devices. And the A.R.M.E.D. ecosystem basically combines both technologies, night vision and thermal. So what it is about these A.R.M.E.D. products? Basically, the future warfare requires the soldier to have a better awareness of what's going on in the battlefield. And to have this awareness, the soldier needs to have access to data. This basically means that the soldier needs to be connected. It needs to be -- soldier needs to be connected to a battle management system, to command and control center that can then provide the soldier with crucial information of the battlefield. But at the same time, the soldier can feedback information to the command and control center. And the soldier needs to be equipped with a better vision of the battlefield. And here comes fused vision into play, where you fuse night vision and thermal technology onto one screen. So in this field, we have developed a variety of products. First of all, the THEA, it's a heads-up display. It's the only product that we have for daytime operations. It's a see-through display that provides this augmented reality data to the soldier. We have the IRIS-C, which is a small thermal clip-on that mounts onto our night vision goggles or on any night vision goggle really and provides the soldier with fused imagery, but as well the augmented reality capability during nighttime operations. And here, especially for this product, we -- there's a huge potential. We got a recent contract with OCCAR to supply this equipment to the Belgian and German armed forces, a total of around 25,000 systems, including the options. We have as well some other customers, existing customers in NATO countries, and there's a strong interest because this is the future. You have night vision equipment, which is here to stay for many, many years to come. But with this equipment, you provide the soldier with extra capabilities, fused vision and augmented reality capabilities. Then we have the ORION. It's the principle of an integrated fused goggle, again, with augmented reality capabilities. And then we have the Smart Battery Pack. We have different variants of the Smart Battery Pack. It's the hub basically. It's a battery pack that sits at the back of the helmet and it's like the central computing unit that connects the goggle, whatever goggle it is, the ORION, the IRIS-C or even the THEA during a day to the Battle Management System. And the Smart Battery Pack together with the THEA, for example, is already introduced in Germany with the [ Infanterist der Zukunft ], the German Future Soldier Program. If we move over to the platform-based optronics, we have a growing range of this type of equipment. Now I have to be honest with you, the amount of revenues generated today from this type of equipment is very, very small. We are a new kid on the block. But what we intend to achieve and we will achieve this is to repeat the success that we've had in the man-portable segment. Platform-based optronics, as I said, go on any kind of platforms. We have an initial focus on armored vehicles. But as I said, this equipment can be used as well on unmanned, for example, sea vessels, on unmanned ground vehicles, on unmanned aerial vehicle, drones. So this is an area we really focus on at the moment, and we have had some original successes last year, which we announced, and there's more to come. And there are some announcements to come very, very soon. So as I said, we want to replicate the success that we've had in the man-portable segment in this platform optronics-based segment, and we can do this. I mean, we have the business development channels. We are still as hungry and as aggressive as we've been in the old days where we were nobody basically. We can provide the same reliable quality, the same competitive products to our customers. And today, we are a brand. We have a reputation. The customers know us. They respect us for our on-time deliveries, high-quality products, and outstanding customer support. Let's have a look at the geopolitical landscape. We see emerging multipolarity. What doesn't mean there's not any more East against West. There are different poles around the world. And this basically leads to investments everywhere basically in the defense. In Europe, in particular, we have seen decades of underinvestment, and now this is being addressed. This started obviously with the invasion of Ukraine by Russia. And we see Germany leading Europe basically with almost unlimited defense spending, but it's not only Germany, it's Scandinavia, the Baltics, Eastern Europe. And we also expect Southern Europe that have obviously budget issues to be forced to step up and increase the spending there as well. In Europe, overall, we see an ambition of Europe to play a stronger role in the global defense landscape, which benefits as well European defense companies. We can see a similar trend as well in other regions in the Middle East and the Asian Pacific area with ongoing tensions and now with the recent news in the Middle East, of course, leading to rapid procurement decisions and increased defense budget. We see this in the Asian area with Japan, Taiwan, Korea, all substantially increasing their defense budgets because everybody is aware that you cannot necessarily rely on the old allies and you have to make sure that you can defend your country in terms of a conflict. Last but not least, the U.S. it's not prominently facing on this slide, but the U.S. remains the world's largest defense spender. And while the current administration prioritizes domestically designed and manufactured systems, which, in essence, a similar thing is happening in Europe. We at Theon, we are driving a parallel, how can I say, investments and business development activities. So we're focusing on Europe. But in a separate stream, so to speak, we're focusing on the U.S., where we move forward with our A.R.M.E.D. equipment, where we have invested in technology companies to bring the A.R.M.E.D. ecosystem to the next level. And we are focusing as well on all the units in the U.S. to strengthen our presence in this country. Of course, the U.S. today, in terms of revenues, it doesn't have a major part of our global revenues. Why? Because in the U.S., typically, we ship our equipment as kits without the tubes, for example, the U.S. Marine Corps, which uses our night vision goggle. We ship the equipment to the U.S. It's assembled there with U.S. tubes and then shipped to the U.S. Marine Corps by Elbit Systems of America. So as a revenue stream, it is relatively low. But obviously, it is a very large and prestigious market. This is, I think, a very important slide, especially for those who are maybe new to this field. We like to talk about penetration rates. So what does it mean? As I said before, in order to enable a soldier for nighttime operations, the first thing you need to do is to equip them with a night vision goggle. And here, there is a trend which has started in the U.S. many, many years ago to equip every soldier with a night vision goggle. And we try to estimate, obviously, these numbers are not accurate, but we pretty much know what's going on with our customers worldwide, this penetration rate. If we start from the left, the U.S. or North America has more or less 100% penetration rate. The U.S., as I said before, they realized this many, many years ago. Their motto was always Own the Night, and they have pretty much one soldier -- one goggle per soldier. But here, the U.S. is moving into a replacement cycle where they have many, many tens and -- hundreds of thousands of very old night vision equipment, which needs to be replaced. So even in the U.S. there is a big potential for night vision goggles even though the penetration rate is 100%. Interestingly or more interesting though is Europe, which is our focus at the moment. In Europe, we estimate around a penetration rate of 30%, maybe 40%. In APAC, which, as I said before, is investing -- is expected to invest a lot in defense equipment and in our equipment, the penetration is even lower. We're just talking about probably 10% of soldiers having night vision equipment. The Middle East and Africa, 20%. And then Latin America, also 20%. So if you look at these numbers, if you look at the numbers of soldiers in all these areas, you can do your math. And you can see the potential is there for our man-portable equipment. And as I said, traditional night vision equipment is here to stay for many, many years to come. Whatever you may see new technologies, whatever you may hear, yes, there are developments on new technologies, and we are moving into this area as well with our A.R.M.E.D. ecosystem and future developments, but traditional night vision equipment is here to stay for 10, 15, 20 years for sure. So if we have a look at defense spending at the global market, and we have a look at the segment breakdown. If we look at the man-portable segment, where we hold the leading global market position, particularly in night vision goggles, the market is expected to grow at around 11% annually, whereas we foresee a higher growth than the actual market is expected to grow. On the platform-based segment, as I said, we are -- I wouldn't say nobody, but we are a new kid on the block in this segment. But if you look at the total volume, the total potential, it's much, much bigger than the man-portable business, and it's growing at a similar rate. And here, our growth in this segment, we predict this to be very, very high, coming in with our new developed products, including as well the products of our newly acquired company, Kappa in Germany. Talking about which newly acquired companies. Let's have a look at the acquisitions and the strategic initiatives and the M&A basically that we have carried out over the past two years. So we have executed a series of targeted investments to support our growth plan, but not only, but as well to secure our supply chain and to expand our technological capabilities. All these three elements are very, very important in our overall strategy. So our first priority was the night vision supply chain. As I said before, in 2024, we acquired a 60% stake in Harder Digital. So -- and this was a cash injection basically to replace old production equipment to increase the capacity basically of Harder Digital and to have direct access to image intensifier tube technology, which before was something like a black box for us. In 2025, we then broadened our footprint -- sorry, we invested into Andres Industries, which is a small company based in Berlin, Germany. So we acquired a 10% stake with an option to reach roughly 25%. With Andres, we hold an existing contract for our IRIS-C thermal clip-on for the Belgian and German armed forces. And with this investment and this cooperation, we strengthened as well our presence in Germany, obviously. Then further in August 2025, we invested into platforms optronics with the full acquisition of Kappa, which shall accelerate our entry into airborne, but also vehicle-based optronics, where Kappa has a series of cameras, for example, on tanker airplanes, the cameras come from Kappa. And on the armored vehicle side, they have 360 cameras that are mounted on armored vehicles that allow basically the driver, the commander, and the crew of the vehicle basically to see what's going on around the vehicle. And we see a need for this equipment everywhere basically because it increases the situational awareness and it protects the soldier that the soldier doesn't get out of the vehicle without knowing what is going out there. The management team of Kappa, and this is important to mention, remains fully engaged. And this is what we typically do. We don't want to run the companies we invest in. We want the management to run the company and then through the synergies to grow the business together with us. So Kappa is expected to contribute around 6% to 8% of our 2026 revenues, and there's a very, very strong growth potential, of course. Now moving on to Kopin and Varjo. These are two technology investments, I would describe them. That's -- Kopin is a company active in the field of displays, a very specific displays, a lot of technology there and Varjo, a Finnish company in virtual and augmented reality systems. So these elements are needed for our future development, what we call the THEON NEXT initiative, which brings our existing A.R.M.E.D. equipment portfolio into the next level. And we -- these technology investments basically to have access to these technologies and in order to work with these and develop over the coming years, the products of the next generation. Then in October, we invested and acquired a 9.8% stake in Exosens, further reinforcing our supply chain of image intensifier tubes. Just for your understanding, there are four image intensifier tubes in the world, two in the U.S., two in Europe. We have relationships with all of them. One of the two European companies is Harder. It's -- we own a 60% stake. And the other one is Exosens, which is the leading company in terms of production size and capability in terms of image intensifier tubes. The stake we acquired, we acquired this at a price of EUR 54, which at the time was a premium to the share price when we acquired them. But today, we actually see that they're trading well over EUR 60. But this wasn't an investment to make money. It was an investment on a strategic decision, and it was as well, if I may say, some sort of a defensive move. At the time, there was a stake available for sale. We saw a chance to move in to secure this and basically to strengthen the relationship with our main supplier of image intensifier tubes and to strengthen the access to this very, very critical component. At the same time, we signed or even before we signed a long-term supply agreement, which was at the same time, extended basically with Exosens that secures us tens of thousands of tubes over the coming years so that we are able to satisfy the surging demand of this type of equipment that we see coming. Now finally, then in November, we expanded our collaboration with a company in South Africa, SHOCK EOS. They are a design house, really experts in terms of platform optronics. We partnered with them since 2024 on stabilized gimbal development. And then in November, we acquired 30% and agreed on an option to reach the majority holding of the company. Looking ahead, now we intend to continue our M&A activity through smaller bolt-on acquisitions, focusing on areas that can accelerate our efforts in fire control systems, platform-based products, and of course, the A.R.M.E.D. ecosystem. And the THEON NEXT initiative, which brings the A.R.M.E.D. ecosystem to the next level, to the next generation of fully integrated digital man-portable solutions. At the same time, we plan to keep expanding our global footprint, particularly in the U.S., but also in the Asian Pacific regions. So as part of the strategy, we're actively evaluating potential acquisition targets in these areas and technology fields that complement our long-term growth plan. Importantly to say here, any acquisitions, at least in the near -- medium-term future, are expected to be funded without the issuance of new shares. Now let's have a look at financial performance, starting with the financial year 2025 highlights. 2025 was indeed an exceptional and another record year for Theon, both financially and commercially. The revenues exceeded the initial guidance of EUR 410 million to EUR 430 million, reaching EUR 443.5 million and represented a year-on-year growth of over 25%. The profitability outperformed this growth with an increased market-leading adjusted EBIT of 26.2%, fully delivering on our mid-20s guidance. We also achieved a record high order intake of EUR 1.3 billion, of which I will provide some more details on the next slide. As said, in 2025, we completed a sequence of strategic investments, acquisitions, and partnerships in support of our THEON NEXT vision strategy as presented at the Capital Markets Day held in November. In January now, we completed the acquisition of the Exosens stake and the acquisition of Kappa, further cementing our position in night vision and accelerating our introduction into platform-based electrooptronics. In December, last but not least, we successfully raised EUR 150 million through a share capital increase and refinanced our borrowing at much better terms, which maintains as well financial flexibility to fuel future organic and inorganic growth. Now looking at the visibility going ahead. As I just said, in 2025, we achieved a record high order intake of EUR 1.3 billion. This was supported by the largest single order ever placed for night vision goggles through the OCCAR organization for Germany, which placed an order for 100,000 goggles on -- with us to secure the equipment of the troops for the coming years. And here, a small parenthesis why did Germany do this and why are other European countries or why have they moved to framework agreements securing the long-term supply simply because the demand of this equipment is expected to be much, much higher than what can be delivered, what can be delivered in terms of image intensifier tube. So the supply/demand is just in a balance, but it is expected that the demand is going to be higher than the supply. And more and more countries are moving into securing their equipment for the coming years. So not to be left out, not to be -- not to have to stand at the end of the queue because all the equipment is gone. And that's what Germany did and that's what many other countries do. And this is -- brings us in a very good position, especially in the context of all these long-term relationships that we have with many European customers that, as I said, are placing these long-term framework agreements with us. Plus we have secured our supply chain. We have our own image intensifier tubes. We have the supply agreement with Exosens. We have as well access to U.S. tubes, even though they have some limitations in terms of exportability. We, as Theon, are able, as it stands today to support and to supply our customers. But of course, there's only so much available supply even from our end. So customers are urged and they do this basically to come and secure their supply. If we have a look at the backlog that we experienced at the end of last year, you see there it's almost EUR 2.3 billion, and that includes options. And when it comes to options, I think we have never missed any options. So any contract that we had with options, these options have always been exercised. So the soft backlog, including the options, is well over the double of the level of 2024. So a quick outlook in terms of guidance. Our guidance for this year represents an expected revenue increase of around 30% compared to last year, so around EUR 570 million to EUR 600 million. And we continue to expect to have market-leading mid-20s EBIT margins. with an increase in CapEx to EUR 30 million to support the ongoing strong growth of the company. Dividends are expected to be in the range of 20% to 30%. So with this, I come to the last slide, just a brief summary and an outlook. So we have entered 2026 with a very strong momentum starting from the very high backlog that we have, the expanding product portfolio, continued tailwinds in the global market. Revenue contribution from new digital products. So that's the A.R.M.E.D. ecosystem that as well the platform optronics, including Kappa are expected to more than double this year from last year and reach 20% to 25% of our revenues. Our supply chain is secured. And the acceleration of the production capacity increase at Harder Digital, which we announced in January 2026, is expected to further boost our capacity and our ability basically to serve our customers worldwide. We expect to see further bolt-on M&As. And this -- we all do this with the aim to grow and to not only to be a leader as we are today in night vision equipment, but to become the leader as well in defense optoelectronics over the medium-term horizon. So with this, I like to give back the microphone to Paul, and then we can address any questions that may be raised by. Thank you very much.

Philippe, fantastic. Thank you for such an in-depth presentation. [Operator Instructions] Philippe, as you can see, we've had a number of questions from investors today, and thank you to all those who've submitted. So perhaps let's start off with the first one and no surprise, I guess, with this comment and question really. Can you comment on the current Iran conflict?

Yes, even though we don't comment on specific events or political events. But yes, obviously, when there is a conflict, there is always a need for armament and for our type of equipment, both in the short term, but as well in the long term. And we see this already now to take place.

Okay. Just moving on to the next question we have got here is what are your revenue ambitions? And how quickly can you reach them? I know you touched on some of those financials in the outlook, but just back to you, please.

Our revenue ambition is to achieve revenues of EUR 1 billion. The original ambition was to achieve this with organic and inorganic growth, obviously. The original ambition was to achieve this by 2030. But we believe that -- and we are on track to achieve this ahead of this original projection.

That's great. Thank you, Philippe. A little bit of an expansion on Exosens. Can you comment on Exosens' new contract in the U.S.? Did you participate in the tender?

Yes, an expected question, I guess. Yes, we participated, but we knew and we expected that we will not be part of this directly. But then for Exosens, we are the second largest investor in Exosens. And obviously, we are very pleased for them and for us as a large investor in this company with this new contract. As we have said on our end, when it comes to the U.S., we intend to further grow in the U.S. independently of this contract in the U.S. for the U.S. Army. We will continue strengthening our local presence, our strategic relationships there. And of course, we expect to be in a position to -- and we are already in a position to address all other major pillars of the defense market in the U.S. It's not only the U.S. Army. We have an ongoing contract with the U.S. Marine Corps. We are active in the commercial market, and there are as well some other very large units in the U.S., which we are addressing. So there's more to come in the U.S. from Theon and for Theon.

Just a question here, sorry, on share price. Can you comment on the share price volatility?

Yes. I mean, first of all, if you look at the past few days, the whole sector sees high volatility, which is due to the war in the Middle East at the moment. If this question refers to previous volatility at the end of last year, in particular, then it was related to our preannounced rights issue that was -- that was subsequently successfully completed in December. And just to be clear here as well, there are no current plans to issue any more new shares or for any new or near-term sell-downs by the majority shareholders.

Next one reads here. I'd like to ask if the platform's optronics production will start before the third manufacturing plant is completed or if it's necessary the third plant to be completed in order to begin the process.

Yes. Now we do have available production capacity here to start the production of this equipment. There's no need to have the new facility in place in order to commence this. But obviously, with this type of equipment, there's going to be a ramp-up. There's going to be more business, and this will then be covered by the new facility.

Question here. Data link is an important aspect of network-centric warfare. How does your equipment fare in terms of data link connectivity? How is the situation in case you pursue non-NATO customers considering they don't use standard NATO data link?

Yes. To answer this question, just to explain a little bit more about what we do. In terms of connected equipment, as I said, we have the various goggles, heads-up displays and so on. They are connected to our Smart Battery Pack, which is the computing hub. And this is then connected typically to a radio, for example, or to a tablet. And in the end of the day, connected to a Battle Management System. How this is linked, how the data is transmitted to and from the soldier, this is not part of our business. Part of our business is that our equipment and in particular, the Smart Battery Pack is compatible with any battle management systems. And we do have already today, we cover the majority of Battle Management System that our system can connect to. And to connect to new Battle Management System is just a matter of writing the software basically to have the correct plug-in. So there are no restrictions basically for our A.R.M.E.D. equipment to work with any battle management systems around the world.

A three-part question just on the U.S. Some of these parts, I think you have covered off in just some of your previous answers, but I'll read them all out. Are you part of the BiNOD program, which -- I can't even say it today. Exosens one, will you supply kits to Elbit in the BiNOD program? And do you plan to invest CapEx into the U.S.?

As I said before in the previous question concerning the Exosens contract in the U.S., yes, it's related to the BiNOD program. No, we were not selected. But yes, we are happy for Exosens. And one comment here as well. I said it before, the revenue stream from the U.S. in terms of revenues is fairly small. It's a small part of our overall revenues. And our guidance and our revenue ambitions, this EUR 1 billion is -- there's no BiNOD program included in these numbers. So it does not have an impact on our guidance. To answer the second part of the question, no, we do not supply kits to Elbit for the BiNOD program. We supply kits, and we continue to supply kits on the U.S. Marine Corps Program. And then whether we plan to invest CapEx in the U.S., I don't want to comment on this. We have a forecast for the CapEx, which I mentioned before. And as I said before, we're focusing on the U.S., both on traditional night vision equipment, the various pillars, the various customers we have there, the A.R.M.E.D. equipment, but as well platform optronics. So the U.S. is and remains an important market for us. And we believe that we -- through strengthening our presence in the U.S., we will definitely increase our revenues coming from the U.S. despite the fact that we were not selected on the BiNOD program.

How important will augmented reality products become? And will all products be sold be able to link to this?

As I said before, augmented reality is becoming more and more important for the soldiers in order to have better awareness of what's going on in the battlefield. But first of all, traditional night vision equipment is here to stay. It's analog equipment. It's, I wouldn't call it cheap equipment, but it's fairly priced equipment. It works, and it provides the soldier with the ability to see in the night. In parallel, we will see more and more development of augmented reality products. And as I mentioned in my presentation, we are already in this area, and we have an immediate solution for the soldier, which is our thermal clip-on, which mounts onto our night vision goggle and immediately enables the goggle to be augmented reality ready. And yes, as long as the product has a digital output, it can be connected. It can have an augmented reality capability.

What are the price points of the main products?

I'm not sure if I understand the question correctly because obviously, I cannot provide prices here. But typically, night vision binoculars are several thousands of euros depending on whether it's a monocular or a binocular, then we're talking about A.R.M.E.D. equipment. This equipment can be more expensive. The smart an equipment is, the more technology there is an equipment, the more engineering work that goes into this, obviously, the higher the price of such an equipment. And then if we're talking about platform-based optronics, there, we're talking about tens of thousands of euros and can go even in the hundreds of thousands of euros if we're talking about really, really big multi-sensor stabilized gimbals.

Just a question following on from the first one. Are there any consequences from the U.S.-Iranian war for your sales for 2026?

I'm not sure if I can really comment on this. But as I said before, when there is a conflict, what we typically see, there's a demand for armament, including our equipment. And there's a conflict in the Middle East. So just do the math and put one to one together.

And just to step on from that. Can you elaborate on the exact arguments for the 1:1 ratio? Are all soldiers obliged to carry/use night vision equipment?

It'd be great for us if they were obliged and that would make things easier basically. No, they are not obliged. But the -- especially the Ukrainian war has shown the importance of night vision equipment. You may remember at the initial days of the Russian invasion when there was this very long convoy towards Kyiv and what did the Ukrainians do? Basically, they attacked this convoy during a night equipped with night vision equipment because the Russians didn't have such equipment. This is public knowledge. It's not me making up this story basically. And they attacked and made this convoy to break down and to retreat. And not only because of this event, but in general, it made everybody aware that if your soldiers cannot see during a night, they cannot operate during the night. And obviously, when you operate during the night, you have a huge tactical advantage because it's dark. So if you can see, but the enemy cannot see or the enemy cannot see as well as you can, you have a huge advantage. And that's why we see this drive to equip every soldier at least with a night vision goggle and then in the second wave to provide them as well with targeting capabilities during the night.

Do the thermal and FCS products need the same critical image intensifier tubes?

Yes, very, very good question. And I didn't really go into this during my presentation. No, they don't. Image intensifier tubes are used in night vision goggles. And what is an image intensifier tube is basically a detector that collects light, whatever light is available from the moon, from the stars, from street lights and amplifies them the light and then projects the image onto typically a green or a black and white screen like you see in the movies. It's an analog device, but it works very, very well at an affordable cost, affordable power consumption, and it does not have any lag. It's an analog device. The image is at speed of light basically, and there's no lag when you look around. Thermal and fire control systems or any digital equipment doesn't use image intensifier tubes. It typically uses bolometers, which are detectors basically that detect difference in temperatures. So my body has a higher temperature than the environment. So this detector detects the difference in temperature and displays the image typically in various gray shades or sometimes as well in color or red to provide an image to the user. The disadvantage of thermal technology is that you cannot really have an exact image of what you're looking at. So sometimes not easy to identify what am I looking at? Is it a soldier? Is it a civilian? You cannot look through glass, for example, because glass has a uniform temperature. So you will see just black basically and has some other disadvantage. But the big advantage of thermal is basically it's perfect for detection because when the soldier is hidden in a forest, for example, with camouflage, with a night vision goggle I will not see him. But if I have a thermal clip-on and a thermal equipment, then I will see the heat signature of the soldier and it will be very, very strong and I immediately detect the soldier. And then with the night vision capability, I can then go closer or identify it is actually a soldier or what am I actually looking at? That's why fusion of these two technologies is basically the best of both worlds.

Just a penultimate question, just we're coming up to the hour mark. Do you have some more color on your plans regarding the new FCS segment and any recent development steps, product launch, R&D partnerships in this segment? What's the anticipated revenue contribution from FCS?

Yes. I mean in the FCS, we already moved into this segment. We've been working with Aimpoint for quite some time with their fire control systems where we basically have a thermal clip-on that goes with their FCS. We have as well other customized equipment that upgraded to FCS. We now have our first own fire control system using thermal technology. And we are actively talking to partners, to users to continue the development of this type of equipment. As I said, it's crucial equipment because it increases the accuracy of the targeting and ensures that ideally, the target is hit with the first shot, which reduces the use of ammunition and as well increases the security and the safety of the user.

Just final one, Philippe. Given increasing tight supply for tube, should we expect margin expansion, pricing power in NVG or margin expansion be derived from new product categories?

Not sure what is meant by margin expansion. I mean we have given our guidance in terms of margin, mid-20s. Just very briefly -- I mean, of course, there are -- there's business that had a -- that has lower margins, for example, even when there is a tight competition for interesting contracts. Then yes, margins may have to suffer or for example, in the platform segment, if we want to really get a certain business and really get our foot into the market, then to a certain extent, margins may have to be sacrificed in the short term just to get in. But on the other hand side, products, as I said before, that are smarter, that have more advanced technology, whether it's man-portable equipment or platform-based equipment can command higher margins. So in essence, basically, we stick to our midterm guidance for a mid-20s EBIT margins.

Thank you for answering all those questions you have from investors. And thank you to all the investors for submitting your questions. I know there's a number that haven't been responded to, but the company will be able to address those. And we publish responses where appropriate to do so on the Investor Meet Company platform. Just before redirecting investors to provide you their feedback, and it's particularly important to you and the team, Philippe, can I just ask you for a few closing comments, please.

I mean, first of all, thanks for this opportunity. I hope that I was able to give you an interesting brief on our company and what we do, in particular, for the newcomers that may be listening for the first time about Theon. In short, these are definitely exciting times. There are a lot of things to come. We will cement basically our global leading position in night vision equipment, and we continue to cement this. That's why with this various investments into the image intensifier tube, we secured our supply chain. We have the capacity here. We have the long-term agreement, and we want and we will remain the leader in this field. We move aggressively into the next generation in the augmented reality and fused enabled products through our A.R.M.E.D. ecosystem, which exists and which is continuously being improved and developed further also in the context of the THEON NEXT initiative. And last but not least, we enter the platform optronics segment, which in absolute terms is much, much bigger and which is a segment that we already entered last year with our initial contracts for small quantities, but very important contracts. And this happened much, much earlier than we expected. And you shall hear more about this very, very soon. So thanks again for the attention. And any further questions, I guess you can always address yourselves to our Investor Relations team, who'll be able to help you further. Thanks, Paul. Back to you.

Philippe, thank you so much for updating investors today. Can I please ask investors not to close this section as you'll be automatically redirected to provide your feedback in order the management team better understand your views and expectations. This will only take a few moments to complete, and it's greatly valued by the company. On behalf of Philippe and the team at Theon International plc, I would like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.