THLEF - Thales S.A. (THLEF) Q4 2023 Earnings Call Transcript

2024-03-06 00:57:20 ET

Thales S.A. (THLEF)

Q4 2023 Earnings Conference Call

March 5, 2024 02:30 ET

Company Participants

Alexandra Boucheron - Vice President and Head, Investor Relations

Patrice Caine - Chairman and Chief Executive Officer

Pascal Bouchiat - Chief Financial Officer

Conference Call Participants

Christophe Menard - Deutsche Bank

George Zhao - Bernstein

David Perry - JPMorgan

Aymeric Poulain - Kepler Cheuvreux

Tristan Sanson - BNP Paribas

Chloe Lemarie - Jefferies

Ian Douglas-Pennant - UBS

Presentation

Alexandra Boucheron

Good morning, everyone. Welcome and thank you for joining us for the presentation of Thales 2023 Full Year Results. I am Alexandra Boucheron, the Head of Investor Relations at Thales. With me today are Patrice Caine, Chairman and CEO and Pascal Bouchiat, CFO of Thales. As usual, the presentation will be in English and followed by a Q&A session. It is webcasted live on our website at thalesgroup.com where the slides, press release and consolidated financial statements are also available for download. A replay of the call will be available in a few hours.

With that, I would like to turn over the call to Patrice Caine.

Patrice Caine

So good morning, everyone. As usual, let’s start with the highlights of 2023 and I am on Slide #2. So starting with the commercial dynamics which was really strong across the entire portfolio and drove a new record for both order intake and backlog, our sales growth stands above the top of the guidance range set for this year at plus 7.9% on organic compared to a guidance between plus 5% and plus 7%. Strong achievements in terms of profitability as well with an EBIT margin at 11.6%, up 60 basis points compared to last year.

And last, but not least, on the financials and of course Pascal will come back on it, cash generation has been very robust once again. Two highlights on the strategy side. First, we accelerated the deployment of our capital. We have been active in the rollout of our M&A strategy with three main acquisitions announced in 2023; Tesserent, Cobham Aerospace Communications and Imperva; as well as the disposal of our aeronautical electrical systems business. We have also successfully derisked our balance sheet from our UK pension obligations and we have conducted so far 92% of our share buyback program. And finally, we continued to progress in ESG ratings and performance, you will see that in a minute.

So let’s move now to Slide #3 and looking at our financial performance in a few charts. At €23.1 billion, order intake stood once again above €23 billion and the Bouchiat book-to-bill ratio was significantly above 1 reaching 1.26. And please note, 2022 was a high comparison year as we booked one jumbo contract, the Rafale order from the U.A.E. for 80 aircraft. As mentioned, organic sales growth reached a very high level above the top of our guidance range, plus 7.9%.

EBIT outpaced sales organic growth growing by more than 10% while EBIT margin improved to 11.6%. At €1.768 billion, adjusted net income grew by 14% and free operating cash flow remained very strong at €2 billion, that’s even after the capital deployment I mentioned. Last chart on the slide, the dividend. This new year of strong financial performance is leading our Board to propose to the next AGM in May a 16% increase higher than the net income to €3.40 per share....

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