Hensoldt (HAG) Q2 2024 earnings summary

Executive summary

• Record order backlog of €6.6 billion and order intake up 27% to €1,359 million, driven by radar and air defense contracts and the ESG Group acquisition.

• Revenue increased 17% year-over-year to €849 million, with Sensors segment showing significant growth and Optronics performing as planned.

• Profitability improved, with adjusted EBITDA up 26% to €103 million and adjusted EBIT up 15% to €52 million, reflecting economies of scale and cost management.

• ESG integration is on track, contributing €82 million in revenue and €9 million EBITDA in Q2, with all planned synergies for 2024 confirmed.

• Management transition saw Oliver Dörre become CEO in April 2024, with further board changes announced for August.

Financial highlights

• Order intake: €1,359 million (+27% year-over-year); revenue: €849 million (+17% year-over-year); order backlog: €6,553 million (record level).

• Adjusted EBITDA: €103 million (+26% year-over-year); adjusted EBITDA margin: 12.2%; adjusted EBIT: €52 million (+15% year-over-year).

• Net income: -€26 million (impacted by special items and higher amortization); adjusted net income: €9 million.

• Adjusted free cash flow: -€145 million, reflecting planned investments and ESG acquisition.

• Net leverage at 2.8x (1.5x excluding ESG acquisition debt), with further deleveraging targeted by year-end.

Outlook and guidance

• 2024 guidance confirmed: revenue around €2.3 billion, book-to-bill between 1.1 and 1.2, adjusted EBITDA margin before pass-through at 18%-19% (mid to upper end expected).

• Cash conversion expected at 50%, net leverage at 2x, and dividend payout ratio between 30%-40% of adjusted net income.

• 2025 and medium-term guidance confirmed: 10% average annual revenue growth, adjusted EBITDA margin 19–20%, and further deleveraging.

• Further major contracts and order growth anticipated in H2 2024, especially in Optronics and air defense.

• Overall outlook remains unchanged from year-end 2023.