Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Montana Aerospace AG (XSWX:AERO) achieved net sales of over 1 billion, reflecting a growth of more than 18% compared to the previous year.
• The company reported a 56% increase in adjusted EBITDA for the first nine months, showcasing strong operational performance.
• The energy segment experienced a record high EBITDA of 25.5 million for the first nine months, driven by strong demand and pricing.
• Montana Aerospace AG (XSWX:AERO) successfully divested its immobility segment, which will contribute to a positive cash flow in the fourth quarter.
• The company maintains a strong equity ratio of over 45%, indicating financial stability and resilience.

Negative Points

• The company faced non-cash impacts from foreign exchange fluctuations, resulting in a slightly negative operating result for the third quarter.
• Boeing's production issues and strikes have led to increased inventory and potential revenue impacts for Montana Aerospace AG (XSWX:AERO).
• Airbus has adjusted its build rates multiple times, causing planning challenges and potential revenue impacts for the company.
• The company's net debt remains high, although it is expected to decrease by the end of the year.
• Montana Aerospace AG (XSWX:AERO) faces uncertainties in projecting 2025 outcomes due to ongoing industry challenges, including supply chain disruptions.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with XSWX:AERO.

Q: Can you explain the impact of the Boeing strikes on your operations and cash flows? A: The Boeing strikes have significantly impacted our Vietnam site, which is 100% Boeing-focused, and our Romania site, which is 30-40% Boeing-focused. We are managing increased inventory levels and are in discussions with Boeing and Spirit to understand future demand and adjust our operations accordingly. We are trying to retain our skilled workforce to be ready for a restart, which will impact revenues and EBITDA in Vietnam and Romania. - Unidentified_2

Q: Are you part of the supply chain bottleneck affecting Airbus, and do you require more investment to fix it? A: We are not a bottleneck for Airbus. The demand adjustments from Airbus have been challenging, but we are seen as a reliable partner. We have had some minor issues, but we are managing them and are not a major cause of delays. - Unidentified_2

Q: What is your outlook for net debt and the potential for a dividend? A: We expect a positive net income and high free cash flow, with net debt expected to be slightly above 200 million EUR by year-end. We are still planning for a dividend in 2025, based on the positive cash flow and net income. - Unidentified_1

Q: What is the status of the potential sale of the energy segment? A: We are still in discussions with interested parties for the sale of the energy segment. We will only proceed if the offer is accretive and reflects the growth potential of the segment. If not, we will continue to develop the segment internally. - Unidentified_1

Q: What are the main reasons for reducing your revenue outlook for 2025? A: We are expecting a flat development in build rates from Boeing and Airbus. Boeing's current build rates are capped, and it will take time to ramp up after the strike. Airbus has adjusted its build rates multiple times this year, impacting our planning. - Unidentified_2

For the complete transcript of the earnings call, please refer to the full earnings call transcript.