THLLY - Thales S.A. (THLEF) Q1 2024 Earnings Call Transcript

2024-04-30 11:05:26 ET

Thales S.A. (THLEF)

Q1 2024 Earnings Conference Call

April 30, 2024 2:30 AM ET

Company Participants

Alexandra Boucheron – Head-Investor Relations

Pascal Bouchiat – Chief Financial Officer

Conference Call Participants

Victor Allard – Goldman Sachs

George Zhao – Bernstein

Olivier Brochet – Redburn Atlantic

Christophe Menard – Deutsche Bank

Ben Heelan – Bank of America

Aymeric Poulain – Kepler Cheuvreux

Presentation

Alexandra Boucheron

[Call Starts Abruptly] Thales Q1 2024 order intake and sales. I am Alexandra Boucheron, Head of Investor Relations at Thales. With me today is Pascal Bouchiat, CFO of Thales. As usual, this presentation is audio webcasted live on our website at thalesgroup.com, where the slides and the press releases are also available for download. A replay will be available soon after the end of the event.

With that, I would like to turn over the call to Pascal Bouchiat.

Pascal Bouchiat

Okay. Thank you, Alexandra, and good morning, everyone. Before moving on to the numbers, as usual, I wanted to highlight a few items. I'm now on Slide 2. First of all, let me come back on the quite strong start of the Defence & Security segment commercial activity in Q1 2024, with four large contracts over €100 million and especially two contracts above €500 million. These new commercial successes illustrate Thales' unique positioning to capture major opportunities across a wide spectrum of activities in the growing defense markets. And I will come back in greater details on those contracts during the presentation.

Second point I wanted to highlight is the closing of the Cobham acquisition, which will be consolidated in our accounts from Q2 2024 as expected. This addition to our existing Avionics business will establish a game changer in the very attractive and fast-growing communication and connectivity market to the benefit of a more sustainable aerospace future. And we are happy to welcome this highly skilled team of aerospace communication experts within the group. Last point and I'm sure you saw plenty of communication on the topic already. Thales has announced last month the creation of cortAIx, an internal organization dedicated to artificial intelligence, gathering over 600 AI experts and bringing together the company's AI capabilities in research, sensors and systems.

So let's now have a look at our Q1 headline numbers. I'm now on Slide 3. New orders amounted to €5 billion, up 46% on an organic basis. Hence, a very strong start of the year in terms of commercial activity, which I will further comment in the next slides. Sales came to €4.4 billion, up a solid 7.9% on an organic basis, above full year guidance. This level of sales represents a new record high for our first quarter. Looking now into details at our order intake, I'm now on Slide 4. As you can see, the strong 46% organic growth is fueled by both large and medium-sized orders. Four large orders above €100 million have been recorded in the first half, all of them in the first quarter, all of them in our Defence & Security business, reaching a total of €1.6 billion to be compared to three large orders in Q1 2023. That represented €400 million.

Two of these three large contracts in Q1 last year were related to space in observation and explorations and one contract was for an undisclosed large military customer. Orders between €10 million to €100 million were up 46% with Aero up 56% and Defence & Security up 50%. Smaller orders decreased slightly organically as anticipated due to the very high comps in smart cards in Q1 2023. But overall, a very strong first quarter in terms of order intake and a new record high for Q1....

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