Good morning, everyone, and thank you for joining. I've recently joined the CSG team as Head of Investor Relations, and I look forward to speaking with many of you over the coming weeks.

It's a pleasure to welcome you to the call to share our first set of results as a newly public company. Today's speakers are Michal Strnad, Chief Executive Officer and Chairman of the Board, and Zdeněk Jurák, Chief Financial Officer.

Michal will start by covering our financial highlights, along with demand trends and our visibility on growth. Zdeněk will then take you through the strength of our business model and provide a more detailed review of our 2025 performance.

After their remarks, we'll open the line for questions. We ask that you take a moment to review the disclosures on slide 2, which outline important information regarding forward-looking statements and the use of non-GAAP measures.

With that, I'll hand over to Michal.

Good morning to all of you. I am pleased to share what has been a very successful year for the CSG.

In 2025, we delivered operationally, we continued our strategic expansion, and we achieved excellent financial results. Let me start the presentation with the headline numbers for the group.

These demonstrate strong performance across all key metrics. We delivered revenue of €6.7 billion, above our expectations set at IPO.

This represents underlying year-on-year growth of 30%. Our main measure of profit, adjusted operating EBIT, reached €1.6 billion.

This resulted in a margin of 24.1%, fully in line with our IPO outlook. This margin performance places us at the top of our European defense peer group.

Our total backlog and the pipeline under negotiation reached a record €42 billion. This provides exceptional revenue visibility and evidences the long-term structural demand we see in the market.

The group remains highly capital efficient. Net leverage at year end was 1.7 times, or 1.3 times including IPO primary proceeds.

We maintained strong cash conversion at 87%. CapEx intensity was 3.3%.

We have remained disciplined in our capital allocation, but we have also invested significantly in the production capacity expansion, modernization, and the robotization. Adjusted net working capital as a percentage of revenue was 24%, once again, firmly in line with expectations.

Looking at the revenue composition, defense systems drove close to 80% of group revenue. This segment includes our medium and large-caliber ammunition and land systems businesses, which made up 61% and 16% of total revenue, respectively.

Our other business segment, Ammo+, contributed 21%. From a customer perspective, NATO countries represent 65% of revenues, Ukraine 27%, and other customers 8%.

This diversification supports a long-term resilience and growth opportunities for the group. 2025 was also a year of strategic execution.

We were successful in winning major long-term contract awards. We were also active in targeted M&A and secured partnership to strength our production capabilities and self-sufficiency.

Overall, I am very pleased with the progress we have made across the business. The results reflection decisions we have been making over the past few years.

We are now seeing these investments translate into performance. Demand in our markets remain very strong, and CSG is very well positioned to capture this.

We enter the new year with good momentum, and we remain focus and continued growth, a long-term value creation. On the next slide is a recap of the structural demand that underpinned the business.

Ukraine has been a visible near-term driver of growth. However, the fundamental drivers are broader and longer dated.

NATO and partner nation budgets continue to raise. We are seeing commitments that extend well beyond current conflicts.

Global instability reinforce the prioritization of defense spending across multiple regions. Ammunition replenishment cycles are long.

The stockpiles that were depleted need to be rebuilt. This is a multi-year structure requirement.

CSG is strategically positioned in the areas that NATO and partner nations have identify as priorities. The map on this slide shows expected European defense spending growth from 2025 to 2030.

Many countries are projecting total growth of over 100%, with others in the between 50 and 100% range. After decades of underinvestment, we are seeing the big shift in defense priorities.

Evidence of demand and our ability to capture it is seen in our recent strategic wins. We have secured major long-term contracts and agreements.

Just some of these includes as follow: a seven-year framework agreement with Slovak Ministry of Defense, up to €58 billion of medium and large-caliber ammunition, which is kind of European platform where other countries can buy medium and large-caliber ammunition. Next one is a contract valued at several hundred million US dollars to supply small-caliber ammunition to the Ministry of Defense of Southeastern Asian state.

The acquisition of 49% stake in Rába Automotive, a deal that positions CSG as a long-term partner of the Hungarian defense industry. Also this past month, we signed a cooperation agreement with PGZ, Poland's leading defense company, that deepens cooperation across unmanned systems and missiles, ammunition, and modern land platforms.

As countries invest more heavily in defense and security, CSG is proving it's well placed to meet this demand. Now I will pass to Zdeněk, who will talk through our market positioning and performance in more detail.

Thank you, Michal.

Thank you, Michal. It's Zdeněk Jurák speaking.

I will start with the slide number 8, where we are presenting our backlog and pipeline. It has been mentioned €42 billion in a total, and it's pretty much divided into the €15 billion of the of the backlog and €27 billion of the of the pipeline.

The backlog grew rapidly from €11 to €15 billion year on year, and it's just giving us and illustrates a very strong revenue and profitability visibility for us. To be mentioned here, the backlog does not consist any commercial revenue or backlog coming from the from the small-caliber ammunition on the commercial market.

On top of that, there is approximately €1.4 to €1.5 billion a year coming from the small-caliber ammunition commercial business. Here, I would like to underpin what you can see on the on the left side, left-hand side of the of the graph.

I would like to highlight a few comments here. First one is that you can see already Ammo+, the small-caliber ammunition, coming into the defense business and into the backlog.

That is simply confirming our strategy, what we were thinking as we acquired the Kinetic Group in the in the US, to bring the US the the defense contracts into the small-caliber ammunition production. Second note I would like to underline is the growth of the land systems.

That is that has been also one of our strategy, and we've provided within within our guidance that we expect land systems grow rapidly in the mid term. This is one of the one of the confirmation we can provide you with within the backlog and the increase of there.

Pipeline to be commented that it's an advanced stage of the negotiation, and it's a reasonably achievable, will be converted into the backlog going forward. The conversion ratio is is very high, and we we say that throughout our monitoring, it's far above the 90%.

Summing up, backlog and pipeline all together bringing a very exceptional visibility over the revenue and profitability going forward, and at the same time, bringing our strategy into life in terms of the small-caliber ammunition and the growth in the in the land system. On the slide number 9, I would like to briefly go through the business segments and and our portfolio.

I would like to also underline a few points here. First would be that we are top two European player in terms of the medium and large-caliber ammunition production with the accelerating scale.

Second, what I would like to mention is, again, the growth in the in terms of the land system production and our strategy we've provided within the within the guidance. Third point I would like you to take away from this slide is the newly established advanced system segment as a production of one of the critical components for the missiles and drones and anti-drone systems.

That's one of the our critical component of our strategy. The last, but not least, is that we are global number one player in the small-caliber ammunition, if we are talking about the the Western world.

We are increasing in defense, as I mentioned on the previous slide, and fulfilling our strategy in there. We are enjoying that we are best-in-class in terms of the cost of production in the in the small-caliber ammunition, and I will talk about it later on throughout the the deep dive into the segments.

On slide number 10, and before I turn to financials as such, I would like to recap our focus on vertical integration as a key driver of our future margin expansion, but more importantly, also as a driver of the security of the supply and the security of our further growth. Throughout the element of each critical components here, we've set up a plan how to be by end of 2027 fully vertically integrated.

That should allow us to, and it's giving us a pricing power as well as a value for the customers in terms of the security of delivery. For this particular case, and for medium and large-caliber ammunition, as I mentioned, we we are targeting the full vertical integration to be done by end of 2027.

The propellants are to be maintained through the M&A we have done already in 2025 in Germany, and that for the critical constituent, which is the energetic nitrocellulose, which we are currently converting from the commercial one, which we acquired, to the so-called energetical or defense one. The the conversion is going according to plan and according to our expectation.

The the explosives should be covered through our newly established joint venture in Greece, where we are recommissioning the the the old decommissioned facility. Again, the plan is to start the operation by end of 2027.

I can only comment that the plan that the the recommissioning is going according to plan and we are fulfilling the strategy and the CapEx spendings according to our plan. On the slide number 11, let me take you now through the the the performance in detail.

We reported more than €3.9 billion in 2024 and €5.2 billion when adding the Kinetic Group and account revenue on a on a pro forma basis. From that, we grew to more than €6.7 billion as a pure organic growth by end of 2025, which represents 30% year-on-year growth on a on a pro forma basis.

On the right-hand side, you can see a similar graph for the adjusted operating EBIT, and that grew up 31% year on year on a pro forma basis, ending up with more than €1.6 billion of adjusted EBIT. Adjusted, in our case, means only one-off adjustment which has been caused by the acquisition of the Kinetic Group.

I can confirm and comment only that there are no other adjustments made into the EBIT which we are presenting here. The market-superior margin ending above 24% is driven maybe mainly by the quality of execution and very disciplined cost cost control.

I will comment more this by segment in detail in the coming slides. On the slide number 12, just to repeat, coming back to the margin and underpinning the superior position when comparing to the other players on the market.

The key drivers are basically the product mix, the operational excellence and efficiency, and vertical integration strategy and position we've we've taken. Again mentioning that except of one-off, only one one-off coming from the acquisition of the Kinetic, there are no other adjustments in in the margin.

On slide number 13, now going to each division separately, deep diving into the defense system division. For defense systems, I wanted to highlight a few important points here.

€1.5 billion EBIT with 28% EBIT margin reflects really the operational leverage, and particularly in the medium and large-caliber ammunition we do have. Secondly, land system portion of the revenue is growing rapidly, according to our expectation, the guidance, and our strategy we are following.

Thirdly, performance and the growth by more than 55% year on year was underpinned by the continued strong demand across the NATO and the and and the allies and the group's scale manufacturing, which is supported by high volumes and capacity expansion with, of course, benefits to leverage. On the slide number 14, I will be focusing now more into the subsegment, particularly medium and large-caliber ammunition, which is the biggest revenue driver.

It's, what you can see, the 39% year on year, it's a pure organic growth. The growth is pretty much reflecting the execution of our backlog, our modernization, our increase of the production capacity, and and the efficiency which we bring into the into the production.

The NATO require requirements remained very strong, and restocking and rearmament supposed to drive the business in the in the mid term, as you can see on the bottom right side of the of the graph, of the slide, where we are presenting the new NATO standards and the demand and the and the stockpiles coming from that going forward. I would like to also highlight here a significant expansion in in US within the medium and large-caliber ammunition business we we do.

That is that I can present $630 million contract with the US Department of War to build up the US Army future artillery complex in Iowa. This is a significant milestone and a and a footprint in terms of medium and large-caliber ammunition in a US, again fulfilling our strategy, not only for the increase of the efficiency, but also a geographic expansion.

On slide number 15, we will be talking a little bit more about the land systems as a next very important subsegment of our business. Revenue growth 35% year on year, as you can see, is again a pure organic growth.

Few notes to be also highlighted here, if not repeating of those, but on top of what I already said about our strategy to increase in that, we have relatively young portfolio of the land systems application, and our clear strategy is now to increase our applications in use worldwide with the NATO customers and NATO allies. We expect that after the warranty period, and this will go beyond our guidance we've provided, but that is our strategy and expectation, is the MRO, spare parts, and overall after-sale market coming into our numbers as well.

We keep pushing on the vertical integration here as well. We have few examples of those, either through M&A or through our CapEx programs.

Throughout M&A, we've recently done a deal with, and we acquired the hydraulic systems for the and, for example, a military steel producer. Capacity and geographic expansion is another topic what we were focusing on in this area, and we can mention here the the deal with the 4iG and Rába Automotive, which we've recently signed.

In addition to that, we are focusing here particularly on the R&D and on the line design and developing a new platforms going forward to be best in scale and best in the new technologies for our partners. On slide number 16, we are deep diving into the aerospace and defense electronics and the advanced systems.

Going from left to right, within the aerospace and defense electronics, it's a following pretty much the land systems as a significant integral part of the production for the land systems and the significant vertical integrator in terms of the defense electronics and the applications for the land systems. At the same time, therefore, you can see 20% growth is a pure organic and it's pretty much following the land systems as such.

Establishment on the advanced systems back in 2025, which is presented on the right side, is a is our one of our strategic moves and it's bringing us to UAVs and counter-UAVs and and currently being one of the most demanded components, which are the turbojet engines. Starting with already the production, it is expected that the production will ramp up in the mid term and delivering mid to high hundreds millions of revenue with the same marginality as the group is presenting in these days.

Of course, both of these subsegments are focusing also to the next generation of the defense requirements in terms of the technology. On the slide number 18, we will be discussing a little bit about the Ammo+ division, the so that's our small-caliber production.

Here, it's a key focus area where we would like to address that the market has been relatively soft back in 2025, but we were able to still achieve a healthy adjusted operating EBIT margin. At the same time, we started a ramp a cost efficiency program back in 2025, and what we can currently see is a positive trend in terms of the market recovery in the United States.

This is something what we are expecting going forward, and I I believe the positive trend will be confirmed within the 2026 numbers. At the same time, we are fulfilling our strategy and bringing a defense contract into the small-caliber ammunition business next to the commercial one.

We can see a significant growth there, and we have been presented that presenting that we signed a more than $1 billion contract for the production of the small-caliber ammunition for the Southeast Asian customer. On slide number 18, I will be talking a little bit more about the working capital and the seasonality.

The seasonality is pretty much visible from the graph we are presenting, but here I would like to mention that the key focus, that this is the key focus and and key area where we are really focusing to manage the supply chain and addressing the backlog and the pipeline. The increase in the in the net working capital in terms of the comparison to the revenues is pretty much following our guidance.

That is according to our expectation and as we planned and guided, and ending up below 25%, as we as we guided and as we expected where we should end in 2025. The reason is pretty much that we are getting ready for the vertical integration in 2027, at the same time, addressing the high demand and including the new product mix, whereby I can comment that the shift between the medium, large-caliber ammunition and the land systems is also requiring a higher demand on the inventories and the raw material coming into the production.

I will be talking about that later on, but we are keeping the guidance going forward that net working capital in terms of the percentage of the revenue should decrease going forward below 20% already in 2026. On slide number 19, that's a following slide pretty much connected also to the net working capital I have been presenting on a previous slide.

I can only comment that we are keeping a very high cash conversion at 87% level when talking about EBITDA minus CapEx, I'm sorry. CapEx intensity relatively low at 3.3% of revenue level now.

Guidance has been somewhat higher, but I can only comment that total number of the CapEx spendings is according in accordance to our plan, and we are keeping focusing on that going forward and clearly monitor. CapEx for expansion and increase of the capacities has been, even though expensed immediately, as well as the R&Ds, so that is one of the reason why we end up with a relatively lower CapEx intensity than obviously guided.

On the slide number 20, we are coming to the debt and capital allocation policy. The net leverage is continues to be very healthy, in accordance and or beating our expectation and the guidance we've provided.

We the guidance has been mentioning that we should end up by end of 2025 below 2 times. The current net leverage position is 1.7 times, and we were guiding the market that post-IPO, the net leverage position should be below 1.5 times, and it's 1.3 times post-IPO.

We have relatively young capital structure, but coming also from the fact that in July 2025, we've successfully issued $1 billion and €1 billion in bonds. Post-IPO, we've received an investment grade update by the rating agency on such bonds, which is giving us possibility, and we are look eye on a further optimization of the capital structure mostly in terms of the cost of the debt and, as I mentioned, the IG structure of the capital of of capital structure going forward.

In terms of the capital allocation policy, we have the following priorities for 2026 and and onwards. Clearly, it's an organic growth CapEx to support the expansion and address the the backlog and the pipeline, clearly focusing on current running programs for the vertical integration.

Of course, another important point is a disciplined M&A, in case any, that always has to be a value accretive and it has to be bring a strategic capabilities for the group. We will be keeping and we will be focusing on maintaining the leverage together with the working capital going forward and as according to our guidance we've provided.

That is bringing me to the slide number 21, where we are recapping the guidance we have provided. Here, I would like to summarize again.

The revenues for 2026 is expected to end up between €7.4 and €7.6 billion. Adjusting operating EBIT margin 24 to 25%, at the same level as we are presenting now.

The reason is the shift between medium, large-caliber ammunition and the land system, clearly driven by the product mix. CapEx intensity somewhat higher at 8.5%.

We expect majority of the CapEx is for the vertical integration programs coming in in year 2026. Net working capital, as I mentioned, we are focusing on that to be decreased below 20%.

At the same time, we believe that we are able to secure the supply chain and the visibility and covering the backlog and the pipeline we do have. At the same time, we slightly changed the guidance for the net leverage.

We are keeping the net leverage below 1.5 times, we are now replicating the previous guidance post-IPO net leverage. It's giving us quite a nice headroom, and it's a prudent approach in this case.

For the medium term, I can only confirm what has been already stated within the prospectus and throughout the IPO process. In the medium term, mid-teens organic CAGR growth for the for the overall group expected; 40 to 50% CAGR growth for land systems; 20% CAGR growth for medium and large-caliber ammunition in terms of our own production; and significant growth also in the defense electronics and the and the newly established advanced system.

CapEx intensity to be normalized in a mid term between 4 to 5%, still keeping split between the CapEx for the expansion and for the maintenance. That is bringing me to slide number 22 with the with the overall summary.

Let me please summarize the key takeaways from 2025 and what we've presented here. The first point I would like you to take away from this is that we delivered a strong top-line growth above expectation with the industry-leading margins.

Secondly, I would like you to take to take away that our growth growing order intake and backlog provide exceptional multi-revenue visibility, whereby with the €15 billion of the backlog and €42 billion of the total opportunities when including also the the pipeline is a is giving us a clear line of the sight to sustain growth. Third point I would like you to take away from this is that we enjoy a diversified customer base that position us for long-term program participation and reduced concentration risk.

Fourth point, fourth point is that we are well positioned in a priority defense segment as a European rearmament accelerates and ammunition stockpiles are replenished. Those are structural and multi-year trends.

The last point I would like you to take away is that our partnership, acquisitions, and targeted investment are strengthening our capabilities, advancing the vertical integration, and expanding our production capacity. I will repeat the the Michal's words that for this, we see CSG has a strong momentum into the 2026 and beyond.

It's bringing us to the end of our presentation. Now we are happy to answer any question you may have.

Hi. Good morning, Michal and Zdeněk and Peter.

Thanks for taking those questions. The first one would be around the guidance.

You reiterated the range of €7.4 to €7.6 billion for group sales, which after a stronger-than-expected sales in '25 implies growth of around 10 to 13%. Can you help us understand why that growth in '26 should be below the mid-teens growth ambition that you reiterated for the mid term, especially now where the firm backlog has further climbed to €7 billion?

Related to this, can you also provide some color on the expected growth dynamics within the defense system segments, the ML ammo, the land systems, and advanced systems pieces? Thank you.

I would have one more.

I will start with the revenue growth. We are keeping our guidance.

We believe that the shift within the product mix may be driving the answer to your question. It is expected that the land systems contracts are longer term than the medium and large-caliber ammunition.

Moving that together with the vertical integration, we believe it may be slower in 2026, as you mentioned, but overall CAGR should be reached throughout the mid term.

Can you be a bit more specific, how do you think about the growth dynamics then in ML ammo as opposed to land systems and also the advanced systems parts?

As I said, the growth in the medium and large-caliber ammo is expected to high single digit and 20 and 20% approximately 20% CAGR when talking about our own production and ramp-up of our own capacities. The land systems are expected to grow 40 to 50% CAGR.

That product mix is coming starting 2026, as you can see in the backlog. The land system is increasing rapidly.

We are at the same time increasing our capacities in terms of the land systems. You have seen the announcement about the 4iG and Rába.

That is all about the expansion of the production capacities. It will be driven by the product mix pretty much.

At the same time, the CSG Advanced Systems is just starting, the production capacity ramping up is expected in the mid term. As I said, it is expected that in mid term, it will be delivering mid to high hundreds millions of euros into the revenues from CSG Advanced Systems, turbojet engines particularly, and all the systems.

If I understand your comments correctly, then I would conclude that you would be fine with around 10% growth in ML ammo probably this year, and then higher apparently in land systems, and, well, because of the base effect, much higher in advanced systems, at a fair reflection?

Again, I would refer to the guidance I just said.

Fine. Then I would move on to Ammo+ quickly.

Apparently, we have seen the segment reach in a high-single-digit margin in the year '25. That is, however, less than half of what the Kinetic Group achieved in the better years.

I've noted your commentary on pricing adjustments across the selected product categories. Could you comment on the expected growth and also margin outlook for the segment, and in particular, that question because of the weak consumer confidence in the US on the one side.

On the other side, you also highlighted the small-caliber contract with the customer in Southeast Asia. I just want to better understand the dynamics both on the top line and also on the margin front going into '26,

please. We can see a positive trend in terms of the recovery of the commercial market, but we are not waiting for that, as I said.

We are bringing a defense contract into that. We expect a growth in the defense contract.

We would like to definitely end up, and we've provided this guidance, to increase to 30 to between 30 to 40% of the revenues from small-caliber ammo coming from defense in the mid term, with the margins accurate to the group margins we are presenting.

That would then also entail that you would see already a growth rate which is meaningfully accelerating again in '26. I don't know if you are ready to provide any more color around the growth dynamics on the segment in the year '26, but I guess I'm not the only one who would appreciate any more color.

Well, '26 will be driven by the contracts we just signed with the Middle East countries, so that is the production starting. Ramping up of the production is expected in the coming years, beyond '26 as well.

At the same time, we should be finishing already the certification of the small-caliber ammunition of the US brands in Europe, in the second half of 2026, we expect to be participating in a European tenders for the small-caliber ammunition as well in defense.

Okay. Thank you very much.

Yes, good morning. Thank you for taking my question.

I'll have two if I may. The first one will be on the framework agreement with Slovakia on large-caliber ammunition.

Just to clarify, is any of it already reflected in either the €6 billion framework backlog that you provided or in the pipeline seen at the end of 2025? How should we think about the potential phasing of firming up that framework agreement for your share of the business?

My second question would be on the impact of the situation in the Middle East. You very helpfully provided in your release that you don't see any kind of business implication, but could I maybe check with you in terms of your sensitivity to energy cost, how much of your cost base is actually tied to energy, and how protected are you in terms of the contracts you have, and how could it impact 2026, please?

Okay. Starting from the back, energy costs.

Energy costs are not significant part of our production, not in medium and large-caliber ammunition, nor in land systems. It's approximately 10%.

We are using also hedging, for us, the impact from the energy price increase is immaterial, if any, in this sense, very marginal. Coming to your second point about the Middle East conflict, well, what we can say that it is expected to come here.

Middle East countries are one of our customers already. We believe that the biggest potential, in our case, is within the CSG Advanced Systems and the turbojet engines and the demand which is expected for the air defense applications.

Remind me please, what was the first question?

Framework.

Framework contract in Slovakia. Yes, got it.

Yes, it is visible already in the pipeline. Approximately a billion.

Okay. Thank you very much.

Going forward, how quickly do you expect the next tranches to be recognized, maybe?

Look, we have to remind ourselves that it's including a SAFE program, which is for the rearmament. Until we are still under the conflict in the Ukraine, where the artillery ammunition is the most demanded, this will come most probably it's coming by stages for the rearmament and for the replenishment of the empty stocks.

It is expected that it will come more, but I cannot comment upon now what should be the number.

Perfect. Very clear.

Thank you.

Hi, good morning, everyone. Thanks for taking my question.

Just to come back on the pipeline, it's increased by €9 billion. It'd be great to get just a better understanding of what's driving that.

Obviously, as you mentioned, Slovakia is €1 billion, but what was the rest? Then the second question is just on CapEx.

It came in quite a lot lower than guidance, which was around 5% of sales. It came in at 3.3%.

I'm just wondering what the reason for this is and whether it's just timing. Thanks.

Okay. Starting with the pipeline, well, I've commented in the past that I expect the pipeline to be more balanced between the medium and large-caliber ammunition and the land systems, and this is exactly the case.

Since we expect a higher growth in land systems, that is driven the pipeline growth mostly. About the CapEx, yes, we end up lower than expected, but I commented that in terms of the total volumes and total spendings, we are according to our plan.

We maybe plan to push up front some of the CapEx programs which we plan for 2026, but this haven't happened, it end up by 3.3%. All the CapEx plans and programs are running on time and according to our expectations.

Okay. Thank you.

I'm not sure if anyone else didn't hear the end of it. My line seemed to crackle a bit, but I'll come back after the call.

Thanks.

Yes. Hello, Michal, Zdeněk.

Congrats on the IPO and the results. I've got three questions, please.

The first one, maybe for you, Michal. Could you just give us a little bit more information on 4iG Space & Defence Tech?

I'm not quite sure. Is that the listed company, or is that a subsidiary of 4iG?

Just if you can share any financial info and what this is adding to the group. Then I've got two questions, please, for Zdeněk.

The first one is, could you help us understand a little bit the evolution of the minorities? I think you're expecting the minority charge to drop quite a bit in '26.

Can you just confirm that, and also whether there's any related cash flow to that as minorities reduce their stakes? Then my third one, please, is just Zdeněk, on your guidance for leverage being below 1.5.

You've given us the building blocks for free cash flows, and that would suggest much lower leverage. There's something happening, I think, between free cash flow and change in net debt.

Presumably, that's related either to buying out minorities or other plans. If you could just fill out the bridge there between free cash flow and the change in net debt for '26, that would be really helpful.

Thank you.

I will. Yeah.

I will try to answer the first question. So 4iG itself, it's a publicly listed company, but we have created the partnership with 4iG in their, I would say, subsidiary and daughter company level, where we have 49%, and this SPV acquired Rába Automotive.

That's the structure of the transaction.

Okay. You talk about thousands of vehicles.

Is that why the pipeline has gone up? Is it Hungary that's changed the pipeline?

Hungary is not in the pipeline, no. Because, first of all, we are not consolidating the entity.

Second of all, there is no the concrete order yet.

Okay. Thank you.

Yeah.

Okay. Now coming to your first point about the minority stake, I can confirm we expect a decrease in the minority.

We are not expecting any cash-out connected. This is what I can confirm clearly.

It will be pretty much driven by the minority stake which the Slovakian government is owning, as well as the other small minorities we are still keeping. No cash flow expected to go out from that.

In terms of the leverage, it's a very good question. We've made an internal calculation, if I can go through it with you.

We expected the gross debt to be between €4.5 and €5 billion. It depends pretty much on the working capital lines and when we are able to collect the cash, very late revenues in December.

Coming from that, we expect €7.4 to €7.6 revenues with the 24 to 25% EBIT margin. We are ending up approximately to €1.8/€2 billion EBITDA.

With the 8.5% of the CapEx intensity, we should decrease 700. I am expecting between 200, 250 million to be an interest expense on top of that, we are ending up pretty much into the number of approximately €1 billion.

Then keeping the taxes roughly between 3 to 400, we are coming back to €600 million, and it's a very rough calculation. Then, of course, I need to work with the change of net working capital, stating that it will decrease by 5% of the revenues.

It's giving me 250 to 300 roughly back, if I'm not mistaken. Ending up back to 8, 900 million on top of generated.

With the 4 to 4.5 to €5 billion, and I am keeping some headroom, let's consider €5 billion minus €2.3 billion of the cash, 2.7, with the €2 billion of EBITDA, 1.35. Was I too quick, or does it make sense?

Yeah. If I followed all of that, I think 800 to 900 of free cash flow, which I think is kind of around the consensus on Bloomberg for '26, and obviously you have the primaries as well.

Doesn't that get you to leverage more like 0.7 or something like that, or am I missing something? The free cash flow bit is crystal clear.

I'm just wondering if there's something else that we're missing.

No, I was counting that the coming from the gross leverage. Look, I expect that we should end up somewhat Oh, it's gross leverage.

I'm sorry. That was 4 to 4.5 to €5 billion gross leverage, I was counting.

Okay.

On a net basis? Net debt to EBITDA?

I was counting net debt approximately 2.7, 2.8. For

the end of '26?

Yeah.

Okay. I'll take it offline with Peter.

I thought it would be a bit lower, given net debt where you ended, the primary, and the free cash flow for the year. Yes,

I commented that I am keeping some headroom. That's true.

If we can end up approximately at the same level as we are now post-IPO. Yes, that's correct.

We are keeping some headroom.

All right. Thanks a lot.

Hi. Thank you very much for taking my question also.

My first one, I think you already alluded on the capital structure optimization that when you had previously issued your bonds, you were an unlisted company. You were high-yield rated, but now you're a listed company, sizable market cap, and there's an IG rating.

Can you please maybe elaborate a little bit more here, how you are thinking on the capital structure? I understand the key purpose is to minimize the cost of funding and your cost of capital.

It's just trying to understand a bit more on the timing, when can you actually optimize this, and how are you thinking about this? Is it more like, do you take out all the bonds outstanding and then think of something like IG kind of funding, which can be at a lower rate?

That is my first question.

We would like to prepare the capital structure for the IG structure going forward. We just executed the bonds back in July 2025.

To be honest, does not make economic sense to refinance those now. Those are under the non-call period, probably would be not in a cost-benefit side, but definitely we would like to be ready for the capital structure, combination of the working capital lines together with the bonds.

Let's see that structurally. We don't have the documentation, especially with the term loans, ready, and that's what we are working on now.

Thank you. Is it fair to say, before the call date of July '27, the capital structure stays probably as it is now, both on the loans or you can do some bond issues and replace the loans with that?

Under the current circumstances, I think it's a fair assumption.

Thank you. That's very helpful, and that's all.

Good morning. Can you hear me?

Yes, we do.

Thank you. Thank you for taking my questions.

One technical, if I understood correctly, you are not going to fully consolidate the 4iG joint venture in Hungary? Second

Correct.

Sorry. Go on.

No, I wanted to confirm. Yes, we are not going to consolidate.

Okay. Then there was an announcement about the joint venture with Evrenco in Slovakia.

Can you give us a bit color on what we can expect from that, whether it will be more an impact, for example, on the product mix or you expect some impact on the margin? Also, the multiple recent announcements about the joint ventures, if it's all included in your CapEx guidance of this 8.5% of revenues or is there something on top of the guidance?

I speak about the announcements after the year-end '25.

Starting with the joint venture with the Evrenco, this is not to be consolidated as well. We expect this as a strategic partnership.

This should allow us to secure our supply chain throughout the combination with the Evrenco, whereby we expect to source them by the nitrocellulose, and we expect them to source us with the final product. Yes, there will be a margin increase as a secondary implication from the sourcing, and that is clearly our goal in terms of the Evrenco.

Hello, good morning. Thank you for taking my questions.

I have three. One is on the margins for defense systems.

Can you help us understand what the drivers behind the margin expansion mid terms are, especially by a segment, and in terms of operational efficiency, vertical integration, and pricing? Are you at all concerned about the pricing sustainability if more capacity comes to the market as is expected?

Then could you tell us more on advanced systems? If I'm not mistaken, you were guiding before for mid-100 revenues, and now it's more mid to high 100 revenue.

Has anything changed there? What do you see as the key growth drivers there?

Also, how much growth are you expecting from M&A versus organic?

I will start with the defense systems margin. The expansion we've provided for the mid-term guidance is pretty much driven throughout the vertical integration, whereby the majority of the product cost is driven by the propellants and the explosives.

Overall, all together is approximately 70% of the production costs, meaning both propellants and explosive together. Throughout the vertical integration, I think we've presented that we will be able to save more than 70% of the explosive costs and approximately 50% of the propellant costs.

This is including all the previous questions about the Greek deal and all the strategic partnership, as well as our own nitrocellulose. This is the key driver.

What we assumed for when we were preparing the guidance is that we are assuming a fixed pricing, and it is one of our key advantage when talking about this, because throughout the vertical integration, we are able already now to fix the price for whatever customer is requiring. The requirement from the customers is quite high because they would like to know what the cost of the product will be going forward, and they are trying to fix it as much as possible.

This is what we are experienced now and what we can see in the backlog pipeline. Therefore, we assumed a fixed price.

That is probably answering also your question about the sustainability, right? Throughout the fixed price and the vertical integration, we will be able to protect our margin and increase those in the defense systems particularly.

For the advanced systems, true, we've provided guidance for the mid-100s. I can only comment it pretty much depends on the product mix what we will be operating.

The product mix we've guided are the mid-100s. If we are considering the now demand coming also from the Middle East that what we see and where we are more experienced, that may be shift between the product mix, and then we can slightly ramp up the revenues going forward.

Okay. Thank you, everybody, for your questions.

I look forward to speaking to you soon.