CSG (CSG) Q3 2024 presentation earnings summary

Q3 2024 financial performance

• Year-to-date revenues reached €2,519.6m, up 129% YoY, with the defense division contributing 79% of Q3 revenues.

• Operating EBITDA for YTD was €671.0m, a 191% YoY increase, with a margin of 27.9% and defense accounting for 92% of EBITDA.

• LTM revenues were €3,153.9m (+82% vs. FY 2023), and LTM operating EBITDA was €878.8m (+100% vs. FY 2023).

• Net leverage stood at 0.9x and gross leverage at 1.4x, reflecting cash invested in working capital to support rapid growth.

• Pre-tax operating cash flow was negative due to significant working capital absorption, expected to normalize in the next 3-6 months.

Business drivers and market context

• Revenue growth was driven by strong market demand, especially in defense, with robust backlog and pipeline.

• NATO business remains the largest segment, with non-NATO revenues increasing, particularly in Indonesia and Ukraine.

• Organic growth was the main driver of revenue and EBITDA increases, supported by operational efficiency and capacity expansion.

• The company executed both organic and inorganic growth strategies, capitalizing on global geopolitical trends and rising defense spending.

• Continued focus on delivering high-quality, reliable products for defense industry clients.

Capital structure and working capital

• Gross financial debt saw a minor increase in Q3, with ongoing deleveraging efforts.

• Net leverage increased temporarily due to seasonal working capital needs, expected to normalize by year-end.

• Working capital rose sharply in Q2 and Q3 to support growth and backlog, with normalization anticipated in Q4.

• Cash and cash equivalents decreased from €501.5m in June to €435.2m in September.

• Net financial debt increased from €738.4m in June to €814.7m in September.