Everybody, and welcome to our analyst call following the closing of the ESG acquisition. Thank you for joining us today at such short notice. I'm Veronika Endres, Head of Investor Relations at HENSOLDT, and with me today is our CFO, Christian Ladurner. Christian will start with a brief introduction of ESG, followed by an overview of the post-merger integration activities and identified synergy potentials, before giving an update on our short and midterm guidance. The presentation will be followed by a Q&A session. With that, I hand over to you, Christian. Thank you very much, Veronika, and a very warm welcome to all of you from my side. Let me start with a brief reminder of the transaction. The acquisition of ESG is a great transaction, a compelling strategic rationale, attractive value creation with prudent financing in line with disciplined capital allocation policy. As you see on this slide, the transaction terms are unchanged. At this point, I want to state clearly that multiples in the defense sector increased significantly between the signing date in December and today, making this an even better deal than before. ESG is a high-growth company with a low double-digit annual revenue growth, which has potential to increase to a teens level in some years. We can confirm that the company achieved their full-year targets for 2023, with revenue of around EUR 330 million and an EBITDA margin of around 14%. Let's now have a look at what ESG is doing and why we are convinced that this deal is not only financially attractive, but also very compelling in its strategic rationale. ESG is one of the leading German companies for the development, integration, maintenance, support and operation of complex safety-relevant systems, mission equipment, software, and IT. Their portfolio of solutions and services covers the overall life cycle of weapon systems. They do concept development, system design, and architecture studies. They're critical to system integration and software engineering activities to certify and integrate new platforms, like the new heavy transport helicopters or Arrow 3, into the German Armed Forces' overall system environment. They are the selected partner for in-service support, logistics, training, and long-term sustainment of the electronic systems of platform procured over U.S. Foreign Military Sales. ESG capabilities in cyber and data analytics are trusted by key decision-making customer authorities in Germany. All in all, it will create new opportunities in platform lifecycle services, deepening HENSOLDT's offering across training, logistics simulation, and maintenance for own and third-party installed bases. I'm convinced that the combined company will also be a strong sustainment partner for systems procured by the German government, such as in the U.S. and in Israel, ensuring long-term system support and further development in Germany. As you can see, the company is highly complementary to our portfolio and fully plays into our sensor solution strategy. To wrap up this slide, we will have more platforms, we'll have more sensors on these platforms, and we will also capture more of the life cycle of these systems. In the last weeks, we launched a holistic post-merger integration project with the key objective to efficiently integrate ESG into the HENSOLDT group, based on clear guardrails and within a limited but manageable timeframe towards completion. The main focus was so far on day one readiness and developing an integration plan for the first 200 days post-closing. This effort included setting up a comprehensive project structure, ramping up the PMI program with various work streams, focusing mainly on central functions, joint creation of PMI master plan, and definition of critical milestones to be achieved by year one and between day one and day 200. What exactly happened on day one, and what will happen in the next days? First and foremost, we made sure that on day 1, the business at ESG was continuing as before, without any disruptions, and all legal requirements are met. We succeeded in this ambition. Second, we have decided to integrate ESG as a division in the HENSOLDT group in the Sensors segment. The division will be represented in the executive committee by the ESG CFO. Third, we are ramping up teams to work on confirming the synergies. This includes cost synergies and also revenue and business development work streams, as these were restricted so far, given customary antitrust restrictions before day 1, we are now starting our work in this area. In the period until day 100, we will focus on developing a sound integration and value capture plan to ensure we realize the full synergy potential of the combination. By day 200, it is our objective to have implemented all of the measures identified, following agreement with the respective employee bodies. Please keep in mind, both companies are growing, and synergies are mainly driven by efficient use of central functions, resources, and an under- proportional cost increase compared to revenue growth. In conclusion, we have a clear plan in place for the PMI of ESG that will make the combined company stronger and more competitive than before. We will keep you updated on the progress. Let me give you now some color on synergies, both revenue and cost synergies. Cost synergies are mainly determined by a growth-driven increase of operating leverage and not by cutting costs. We see a run rate of cost synergies of EUR 19 million by 2028. Please keep in mind that only cost synergies were included in its determination of the enterprise value and therefore part of our financial model. In addition, we also have identified three categories of revenue synergies. First, we see increased win rates and thus order intake for HENSOLDT campaigns through strengthened portfolio and customer relations. This includes extended work shares for FCAS or opportunities related to air defense platforms like Arrow 3 and the European Sky Shield Initiative. To be clear, this does not include potential from increased win rates of the ESG pipeline, but we might see further upside potential. Secondly, we expect additional growth in the service segment through, for example, overhaul, maintenance, and repair of platform-independent third-party products for international OEMs in Germany, which lack local support staff. We also see further opportunities for trainings and certification. Thirdly, we expect new potential for a joint portfolio through an attractive positioning for future platforms like, for example, combat cloud or command and control capabilities. All in all, we see an annual EBITDA potential through revenue synergies of the same magnitude than cost synergies. Ladies and gentlemen, let me now present our updated guidance, including also the contribution of ESG. Starting now with our guidance for 2024. For book-to-bill, we continue to expect strong order intake performance with a book-to-bill ratio for the group between 1.1 and 1.2 in 2024. We confirm revenue to grow organically to around EUR 2 billion in 2024. And please be reminded that with the continued strong growth in core revenue and a smaller share in pass-through sales than in the years before. We expect ESG to contribute with around EUR 300 million for the remaining three quarters, 2024, resulting in a group revenue of around EUR 2.3 billion. For adjusted EBITDA margin, we expect adjusted EBITDA margin before pass-through between 18% and 19% for the whole group. This is based on our unchanged organic guidance of a margin between 19% and 20%, and an ESG margin of 14%. For adjusted free cash flow, we keep cash conversion of around 50% unchanged. Please note that due to its business profile, cash contribution of ESG will be rather small in 2024. As mentioned in the last analyst call, net leverage will be at a level of 2x for 2024. The dividend payout ratio will be unchanged between 30% and 40% of adjusted net income. Let me also give you some color on our adjustment items. As already mentioned at our Capital Markets Day in November, we will move our Optronics business in Oberkochen to a new site, reflecting our strong order book and significant growth prospects. For the move and the setup of the new building, we expect special items, mainly CapEx, of around EUR 40 million this year. Transaction and integration costs related to the acquisition of ESG will sum up to around EUR 30 million, and we plan with the same amount for the S/4HANA transformation. In total, we expect one-off cash items of around EUR 110 million for 2024, but fully considered in our net leverage calculation.... Also, for 2025, we see orders to grow faster than revenue. As a result, we confirm an annual organic revenue growth of 10% with a further decline of pass-through revenue. ESG will contribute with around EUR 400 million, resulting in a low double-digit percentage growth rate for the whole group on a pro forma basis. For adjusted EBITDA margin, we expect a margin between 18%-19% before pass-through. For the adjusted free cash flow, we expect 50%-60% cash conversion, resulting in a further decline in net leverage to around 1.6 times. The dividend payout ratio will remain at between 30%-40% of adjusted net income. Concerning one-off costs, we will conclude the move to the new Optronics building beginning of 2025, and therefore expect special items, again, mainly CapEx of around EUR 15 million. For the integration of ESG, we expect costs of around EUR 8 million, and we plan with around EUR 40 million for S/4HANA. Overall, we expect one-off cash items at a level of around EUR 70 million in 2025. Let me again reiterate, this is also fully considered in our net leverage target. We are convinced of the sustainable decade-long growth potential which lies ahead of HENSOLDT. This is reflected in our medium-term guidance. We expect a continuously higher order intake over the next years, with orders to grow significantly faster than revenue. As a result, we see an annual revenue growth of 10% on average for the medium term. We expect the adjusted EBITDA margin to increase again to above 19% before pass-through revenue for the medium term, reflecting further economies of scale, as well as the materialization of synergies. Together with strict working capital discipline, we will generate a cash flow conversion of 50%-60%, so that we will be in a position to pay out 30%-40% of our adjusted net income to our shareholders, while maintaining a conservative financial profile. Before I close, let me summarize the key takeaways. The acquisition of ESG is an excellent fit with our strategy and will take our business to the next level. The strong growth and cash conversion of ESG will further support our growth ambitions. And we are well equipped for a successful integration of ESG, and can already build on a long-standing relationship and great cultural fit. Thank you very much, ladies and gentlemen, and now we are happy to take your questions. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone with a question may press star and one at this time. The first question comes from David Perry from JP Morgan. Please go ahead. Yes, thank you. Hi, Veronika and Christian. So just one quick clarification, Christian. So when we model the cash flow, you're saying, say, for 2024, we take 50% of adjusted EBITDA, but then we would deduct 110 from that? Is that what you're saying? The one ten is not included in the 50% of EBITDA. Am I understanding correct? Yes, you are correct, David, and maybe to give you some more clarity on this, the EUR 110 million are cash efficient items to be subtracted then. And in terms of EBITDA, we see around EUR 60 million of one-off costs in terms of EBITDA for the mentioned three major topics we have in front of us this year. Okay. And sorry, I didn't—I managed to get the 110, the items you gave for 2024. I didn't get the 70 for 2025. Could you just say the numbers again for me? Yeah. Sure. We will conclude our move to Oberkochen in 2025. This will cost another EUR 15 million. We will then also conclude the ESG integration, which is around EUR 8-10 million. And we will have around EUR 40 million of the S/4HANA transformation, but this does also then include ESG, because also ESG will have to move from the SAP R/3 to S/4HANA, and this in total makes the EUR 70 million in 2025. And also note from 2026, we will see a steep, steep decrease again of one-offs to a normalized level. All right. That's very clear. Thank you. The next question comes from Carlos Iranzo from Bank of America. Please go ahead. ... Hi, guys. Good afternoon. Congrats for the closing, and thanks for taking my questions. I actually have two. The first one, how should we interpret the change on the midterm margin target from 19%-20% to more than 19% now, after including the ESG in your guidance? And then the second one on the cost synergies, how should we think about the phasing of these EUR 19 million of positive impact at the EBITDA level by 2028? Is it going to be, back-end loaded? Thank you. Hi, Carlos. Thank you for your question. So first, your question regarding the midterm margin. So we had this 19%-20% in. Of course, there will be, due to the ESG margin profile, a little bit of dilution percentage-wise, but not in absolute terms of margin. This is why you see a little bit lower margins in this year and also 2025 in percentage terms. But with the start of the synergies, plus also some economies of scale, we see ourselves in a good position to be above 19% midterm. Again, regarding the cost synergies, we see a more or less linear spread of cost synergies across the years, beginning with next year, 2025. This will be rather limited. This is how you should think about it. Okay, very clear. Thank you. The next question comes from Christian Cohrs from Warburg Research. Please go ahead. Yes, hello. Good afternoon. Thanks for taking my questions. I actually have three. First of all, it looks like to me that the ESG acquisition is very much driven, or the benefit is very much linked to the employees, to the workforce. So is the workforce of ESG since the announcement of the deal and now the closing unchanged? And do you have an employee loyalty program in place, or are you thinking about these measures to ensure that the workforce remains in place? Secondly, you mentioned a lot about the opportunities of the combined platform. I tend to agree, but maybe could you also share, from your CFO perspective, what are the two biggest risks related to the deal? And thirdly, just as a clarification, you mentioned one-offs, you mentioned the Optronics CapEx as a one-off. Just to get my model clear, could you help us, what is the regular CapEx or the total CapEx you expect then for the HENSOLDT group now after the ESG acquisition in the current and the upcoming year? Thank you. Thank you, Christian, for your questions. First of all, employee retention. Of course, there will be some measures, for core group, regarding retention. I think what we also will do this year, and it's just my-- the first remarks for that, we have the ECHO program in place for, the HENSOLDT, employees. And since ESG employees will be, from this year onwards, also be HENSOLDT employees, there will be some topics also for ECHO and participation in our, in our share, ownership program. But in a nutshell, yes, there will be retention loyalty programs in case. And what I've seen until now and what we have received on the feedbacks, of ESG employees, that they are really happy that now to join HENSOLDT group. I can also say that the week before, last week, we were already there as the complete management board, meeting the first employees, and there will be also a big meeting, end of next week. People are really looking forward meeting us and to work together. We should also not forget that we did already work together in some programs, and people know each other since we are both located around Munich. This is the first question. The opportunities... Yeah, absolutely, in the platforms, I see the risk is rather limited. You see, ESG is much more in the system architecture, in the software engineering, so I see the risks really limited. Also from my perspective, we are very, well in place. We have a good pipeline view of around EUR 5 billion. ESG confirmed last year's figures, so this is well in place. So I cannot see currently big risks on the horizon. And the third one, yeah, you should assume the CapEx when I go for a normalized CapEx in this business. Yeah, we are at around 2-2.5%, which makes on a normalized basis around 60-64 million euros for this business. And now we will have an a one-off impact of around EUR 110 million in cash, and you should assume that around two-thirds are CapEx. Yeah. That's clear. Okay, understood. Thank you. Thank you very much. ... The next question comes from Sash Tusa from Agency Partners. Please go ahead. Thank you very much indeed. Good afternoon. I have two questions, please. The first, I just wanted to check that my understanding of your guidance for ESG is correct. You're guiding for its contribution to HENSOLDT this year to be around EUR 300 million. Presumably, that is for the nine months that it will be included, and then for next year to be around EUR 400 million. Now, clearly, there's some leeway on either of those numbers, but that would imply that on a pro forma basis, ESG does not grow in 2025 because, if you added back the three months before you integrated it in 2024, it would presumably be doing around EUR 400 million this year as well. I just wondered if that was a correct understanding of the business. And then the second question I've got is much more about how you integrate and how you report ESG. You said that you're putting it into the Sensors segment. I'm slightly confused or perplexed, because the Sensors segment effectively is HENSOLDT. It's 85% of the entire company's revenues, including ESG. And I wonder whether you have considered or would consider trying to split out either the product business or platform integration or customer support. Because having one division that is 85% of the business and then Optronics, which is a sort of bit of a rump holding of 15%, doesn't seem to. It seems to be a pretty uneven balance, and maybe a rather uneven balance at board level as well. I don't know. Hi, Sash. Thank you for your question. So regarding your first question, we have EUR 300 million in, indeed, for nine months, and when you go for a pro forma figure for 2024, you should assume around EUR 360 million-EUR 370 million in terms of revenues. We have also mentioned that the profile of ESG is more balanced at the HENSOLDT revenue picture, but not completely balanced, so this means EUR 360 million-EUR 370 million is a good figure for this year's ESG. And then you see when you compare this to EUR 400 million, that it is quite in line with our expectations of a low-teen double a low-teen growth in revenue terms. And the integration as such, yes, it is. We see it as part of the Sensors segment due to technology. And there are two answers in this regard. Since the company is growing year by year, of course, we have to rethink how we structure our segment reporting going forward, but we are not at the end of this thinking, but you're right with your remarks that there should be some discussion around. But what I can tell you that at least in the first year, and let's see if we also can do it for the second, we will report what is the contribution out of this M&A deal. Midterm, there will be synergies at both ends. This will be then not even possible anymore, but in the first periods, I'm quite sure that we will report also on the contribution of ESG as such. Great. That's very helpful. Thank you so much. Thank you. The next question comes from Aymeric Poulain from Kepler Cheuvreux. Please, go ahead. Yeah, thank you very much for taking my question. Good afternoon. The first question is on the order backlog. What would be the combined order backlog of the entity, so ESG plus HENSOLDT at this stage? And then, I see that you haven't really seen any improvement in the book-to-bill for 2024 after the integration. Similarly, the organic growth remains around 10%. So that is despite, you know, the backlog and the cross-selling synergies that you highlighted as a potentially EUR 135 million top line to get the EUR 19 million EBITDA benefits. So why is that? Do you expect the revenue synergies to be much later and or the backlog that you integrate is also kind of a long-duration type of program? Just to clarify how these revenue synergies start to influence the growth profile of the group. Hi, Aymeric. Thank you for your question. So first of all, in the backlog, we've stated in the year-end that we were at around EUR 5.6 billion for organics, so Hensoldt Group before the acquisition, you should assume that we at year-end, if this would be a pro forma year-end 2023, including ESG, that we will be, would be above EUR 6 billion, something like that. Also, in terms of order intake, we have seen a good year for ESG, and in the Q1, which will be published in a few weeks, you will see even an increase of the backlog, which is then also in line with the overall industrial figures. How does it now be projected forward? So, I see in the revenues in total, we are more cautious than we are in the cost synergies, for sure, and we expect revenue synergies in the same magnitude, but more back-end loaded towards 2028, because it will take some time to materialize in the proposals, and also to get the respective contracts into the combined company now. But the opportunities lie in the market. The demand is very high for combined sensor solutions, and this will push us forward. Okay. Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Veronika Endres for any closing remarks. Yeah. Thank you all for listening today. Should you have any further questions, as always, the IR team is around to follow up. With that, have a great day. Thank you and goodbye.