- EBITDA Growth: Increased by 21% compared to 2023.
- EBIT Growth: Increased by 27% compared to 2023.
- Net Income Growth: Increased by 26% compared to 2023.
- Backlog: Exceeded EUR7 billion.
- Net Debt: Reduced to EUR70 million from EUR233 million in September 2023.
- Revenue Growth: 13% increase driven by all business segments.
- Defense Revenue Growth: 25% increase, driven by FCAS and integrated systems.
- Air Traffic Management Revenue Growth: 35% increase, with contributions from Colombia, UAE, Belgium, and acquisitions.
- Mobility Revenue Growth: 16% increase, notably in Mexico, Peru, and the UK.
- Minsait Revenue Growth: 6.5% increase, driven by public administration and healthcare.
- Third Quarter Revenue Growth: 9% increase.
- Third Quarter Net Profit Growth: 24% increase.
- Free Cash Flow: EUR25 million generated in the third quarter.
- Organic Growth: 11% for the first nine months of 2024.
- International Revenue: Accounts for 50% of total revenue.
- Revenue Per Employee: Increased by 9% annually.
- Defense EBITDA Margin: Above 20% for the first nine months.
- Defense EBIT Margin: 17.9% for the first nine months.
- Air Traffic Management EBIT Margin: 12.3% for the first nine months.
- Mobility EBITDA Margin: Improved to 4.4% from -2.8% in the first nine months of 2023.
- Minsait EBIT Margin: Improved to 5.6% for the first nine months.
- Free Cash Flow (Nine Months): EUR94 million.
- Net Debt to EBITDA Ratio: 0.1 times.
- Gross Debt: Reduced to EUR539 million.
- Cash Position: EUR469 million at the end of September.
Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indra Sistemas SA (ISMAY, Financial) reported significant financial growth with EBITDA up by 21%, EBIT by 27%, and net income by 26% compared to the previous year.
- The company's backlog has surpassed EUR7 billion, indicating strong client trust and a robust pipeline.
- Net debt has been significantly reduced to EUR70 million from EUR233 million the previous year.
- The company has made strategic acquisitions, including TESS Defense and MQA, to bolster its capabilities in defense and digital solutions.
- Indra Sistemas SA (ISMAY) is expanding its global presence, particularly in North America and APAC, with new contracts in air traffic management.
Negative Points
- The Minsait division experienced slower revenue growth in Q3 compared to previous quarters, partly due to the absence of election-related business.
- There is uncertainty in the business environment, which could impact future growth, particularly in the Minsait division.
- The integration and expected revenue contribution from TESS Defense remain unclear, with no immediate impact on EBIT or EBITDA levels.
- The company faces challenges in maintaining profitability in newly acquired businesses like Selex and Park Air due to lower initial margins.
- Currency fluctuations, particularly in Argentina, Brazil, and Mexico, have impacted financial results, contributing to a EUR25 million forex impact.
Q & A Highlights
Q: What are the main programs driving defense growth in 2025, considering FCAS growth is expected to slow down? Also, could you clarify your position on entering the launcher business in the space sector?
A: (Jose Vicente De Los Mozos Obispo, CEO) For defense, we expect FCAS sales to be EUR200 million in 2025. Additionally, we are expanding international sales with contracts in Poland and Vietnam, and growing our defense business in Latin America. Regarding space, we aim to develop end-to-end capabilities, focusing on ground segment specialties and partnerships, but entering the launcher business is not a short-term priority.
Q: Can you provide details on the operational performance expected from TESS Defense and the rationale behind its acquisition?
A: (Jose Vicente De Los Mozos Obispo, CEO) The acquisition positions Indra as a leader in land vehicle defense, crucial for participating in European programs. (Miguel Forteza, CFO) TESS will account for revenues from the production of the 8x8 combat vehicle, with normalized margins expected as new tranches are produced. Valuation was supported by standard industry methods and fairness opinions.
Q: What is the contribution of the payments division to Minsait, and what are the wage inflation expectations for 2024 and 2025?
A: (Luis Abril, Managing Director - Minsait) Payments division revenues were EUR155 million for the first nine months of 2024, growing at 7%. Wage inflation is expected to be around 4-5% in 2024, lower than the 8% seen in 2023. For 2025, it's too early to provide specific figures, but we do not anticipate significant inflation.
Q: Could you clarify the revenue expectations for TESS Defense in 2025 and the conditions for the EUR30 million earnout?
A: (Miguel Forteza, CFO) Revenue will depend on the number of 8x8 units delivered, with around 100 units expected in both 2025 and 2026. The earnout is linked to the delivery of these units, but initial sales will have no margin embedded.
Q: Have there been any changes in business dynamics for Minsait over the last three months, and what are the free cash flow expectations for Q4?
A: (Luis Abril, Managing Director - Minsait) No significant changes in business dynamics; we remain on track to meet revenue guidance. (Miguel Forteza, CFO) We expect more than EUR260 million in free cash flow for 2024, with typical strong cash generation in Q4, similar to past years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
