Minerals Technologies Inc. Price & Performance (MTX)

The market environment remains favorable for the A and D sector. We expect to see robust passenger and cargo traffic throughout 2025 MTU. IATA forecasts passenger traffic to grow by 8% and cargo traffic by 6% MTU. While demand for new aircraft remains very high, the level of new aircraft deliveries is still lagging following ongoing supply chain challenges. This allows the delivery and sale of more spare and lease engines Further, it led airlines to expand the services to extend the service life of older aircraft beyond their original plans. Leading to increased demand for maintenance and spare parts. The already limited MRO capacities are facing an environment with high demand and supply chain constraints. This opened pricing opportunities for MRO services MTU is well positioned in all of these areas and has benefited accordingly in 2024 MTU. We witnessed limited growth in new aircraft deliveries allowing an increase in spare lease engine deliveries. And additionally, we saw solid MRO demand for mature engine programs Gen X G90 or CF34. The spare parts business performed quite well in 2024 MTU. Particularly for narrow body, and mature wide body engine platforms. Moreover, our MRO business benefited nicely from the strong results of our engine lease and asset management business in Amsterdam MTU. [indiscernible] With these market trends and MCU's strategic positioning, we are confident to continue our success story in 2025 MTU.

Let me now focus on the GTF fleet management plan. Firstly, I'd like to emphasize that it is no longer an emergency or crisis plan. It has evolved into a well structured set of measures that are being executed accordingly. [indiscernible] Notably, we have seen a significant increase increase in powder metal output by RTX. As mentioned before, on time spare parts availability the key and allows us to reduce turnaround time well below one hundred days. However, we will continue to feel MTU effects of this plan in 2025 and 2026 both in terms of operational impact in our shops and financially on our free cash flow. Anyway, we do see available capacity increase and with that the ability to support our customers. The market confidence in the GTF engine is is evident through the strong orders placed in 2024 MTU. Including over two twenty GTF engine, orders at the Farnborough International Airshow. And from the operation side, we reached a milestone GTF engine assembled at MTU here in Munich. The GTF advantage program is on track to receive its final FAA certification in H1 2025 with first deliveries expected within the year. Additionally, the first A321XLR MTU with PW 11,000 G engines is expected to be handed over to Wissier in Q1 twenty twenty five.

Let me switch to some highlights from our business segments. In the commercial MRO sector, we secured contract wins totaling $5,600,000,000 mainly for narrow body and mature wide body engines in 2024 MTU. With over forty five years of experience, we have completed over 25,000 shop visits. Demonstrating our expertise To meet growing demand, we expand our global MRO capacities including a new shop in China dedicated to V2V and GTF engines. We have important projects on the agenda. Very favorable environment for the Eurofighter aircraft with Spain and Italy ordering 49 Eurofighters. Germany is expected to follow with an order for 20 Eurofighters. Further interest from various export countries could lead to further Eurofighter engine orders. Beyond that, are concentrating on the Phase Ib development work for the new generation fighter engine. Negotiations for Phase two demonstrate the work are expected in 2025 with flight demonstrator work to start in 2026 MTU. [indiscernible] Additionally, we established the EURA joint venture for Europe's next military helicopter generation [indiscernible] Our industry is actively pursuing improvements towards more sustainable flight the ultimate goal of emission free flying. In 2024, we made good progress the development work for both further improvements on gas turbine technology as well on the flying fuel cell.

The latter includes successful tests on a liquid hydrogen fuel system or the establishment of a new test facility for the flying fuel cell at our Munich site. The flying fuel cell is also a focus of the EU technology program, called HEROS. Maybe say some words our upcoming management train change in 2025 MTU. Already in our Q3 call, elaborated on my personal decision of leaving my professional home, MDU, and taking on a new role at Airbus. In the meantime, our Supervisor Awards nominated Johannes Busman as my successor at the helm of MTU MTU. Johannes is an esteemed aviation expert with extensive high level management experience. He has been a trusted companion for MTU over many years His former role at Lufthansa Technic as well as a member of our Supervisory Board. We know, respect and appreciate each other and will ensure a smooth transition between us However, time off this transition is still work in progress. Johannes will assume his role as CEO at MTU in the course of 2025 specific date is not yet fixed. The reason is that currently Johan is serves as CEO of a certification specialist to Fuzut Aguer, and the company is currently in the process of finding a successor for him.

Independently from my decision, Peter has also decided not to extend his contract which expires by the end of this year. After over twenty five years at MTU, including eight successful years as CFO, he wants to move on to the next phase in his career, In the future, he plans to focus more on Supervisory Board mandates. In January, the Supervisory Board choose Katya Garcia Villa a sixth successor as our CFO Katya joins the aerospace world after a long track record in the automotive industry. She served twenty seven years in various functions at Continental AGE including the role as CFO. She will join MCU already in April. '1 and take over as CFO on July 1, 2025 after an intense transition period with Peter. I know this is more change on board level than MDU had in the past. Nevertheless, MTU is an outstanding company our successors deserve your full support. I'm speaking also on behalf of Peter when I express our full commitment to ensure a smooth transition to Katya and Johannes. Both of them can rely on a stable very capable and performing organization. We are sure that they will continue to enhance MCU's operational and financial performance on the path of profitable growth.

In the remaining time, Pete and I will continue to drive MTU forward working together with our colleagues to set the course for a positive, constructive and value based future. Let me now hand over to Peter for the financials. Yes. Thanks, Lars. 2024 was indeed another exceptional year for MTU. We achieved for the first time an EBIT exceeding €1,000,000,000 one year earlier than anticipated. I will provide you with the driving factors in a few moments. This impressive performance combined with our positive outlook for 2025 was also reflected in our share price which reached a new all time high of almost €350 at the January. As part of our 2025 outlook, we announced our dividend proposal for the fiscal year twenty twenty four. We intend to propose a dividend of €2.2 per share at the upcoming AGM on 05/08/2025 MTU, This represents a $0.2 increase compared to last year's dividend. It is important to note that our dividend proposal this year between the financial obligations associated with the GTF fleet management plan and the promising outlook for MTU MTU. Furthermore, in September MTU, we successfully launched our largest corporate bonded history, raising €750,000,000 The bond carries a coupon of 3.875% and has a seven year term.

These funds will be utilized to refinance and use existing corporate bond and for general corporate financing. Additionally, in April, we secured a promissory note of €300,000,000 Now let's move on to the key financials of 2024. And let's kick off with a comparison of our full year 2024 numbers versus our initial guidance the year. Adjusted revenues came in at the higher end of our guidance range. Showing the robust growth across all of our business segments. With EBIT adjusted slightly exceeding 1 EUR1 billion, we have already achieved our midterm target one year earlier ahead of schedule. The corresponding EBIT margin stood at 14% MTU. [indiscernible] Our free cash flow adjusted of €183,000,000 met our full year expectation. It was primarily influenced by payments for the GTF fleet management plan and the volatile supply chain leading to a higher level of working capital. In addition to that, we see an impact of higher receivables on the GTF program. They are built on our balance sheet when shop visits are performed earlier than initially anticipated triggering payments at a later point in time. The cash conversion rate stood at 24% MTU. Turning to the page and comparing adjusted figures to 2024 with those of Total adjusted revenue showed an 18% increase in both.

Euros and U. S. Dollars reaching a new record high of approximately €7,500,000,000 This growth was driven by all of our business segments, EBIT adjusted saw a 29% increase to €1,050,000,000 resulting in an EBIT adjusted margin of 14% MTU.

This positive performance was supported by a favorable business mix across all segments.

Net income adjusted grew as expected in line with EBIT adjusted and improved by 29% to €764,000,000 And free cash flow adjusted, as mentioned, stood at EUR 183,000,000, down 48% MTU expected by the as expected, impacted by the effects mentioned earlier.

So now let's move on to the business segment and starting with our OEM segment. Total OEM revenue saw a 14% increase to more than €2,500,000,000 In military, revenues grew 14% to €12,000,000 in line with our full year guidance. The main drivers behind this growth were the increases in funded development work for the next generation fighter engine as well as higher volumes for the TP400 and EJ200 engines. Commercial business revenues in euros and dollars rose by 15% to €1,900,000,000 And within that, organic OE revenues in dollars increased in the low 20% range in line with our guidance. The main growth drivers were higher GTF engine deliveries in the healthy mix of spare and lease engines. On a quarterly basis, OE sales also grew in the low-twenty percent range, Organic Stafford sales in dollars increased in the low teens. Main growth drivers were material widebody platforms and narrowbody engines. On a quarterly basis, spare parts sales experienced high teens growth. EBIT adjusted benefited from the favorable business mix mentioned earlier, resulting in a 26% increase to €612,000,000 The corresponding EBIT margin improved to 24.2% MTU. Moving on to the MTU segment. MO revenues experienced a 20% increase reaching nearly €5,100,000,000 we saw solid demand across all engine platforms.

Main drivers of revenue growth in our core MRO business were G90, the V2five, the Gen X as well as our leasing and asset management business in Amsterdam. The share of GTS MRO revenues accounted for slightly below our fully expectation of 35% MTU. Throughout 2024, we experienced lower material intensity, while the number of shop visits was in line with expectations.

EBIT adjusted showed a strong growth of 33% to €438,000,000 resulting in a margin of 8.7% MTU.

The higher average margin was supported by the robust leasing and asset management business and in addition a better contract mix in the independent MRO business as well a lower share at material intensity as mentioned of the GTFMO. [indiscernible] At this point, I would like to hand back to Lars to summarize our guidance for '25.

Peter, thank you.

The results of the year 2024 demonstrated that MTU MTU well positioned in the market and will accordingly benefit from the ongoing market trends. This gives us confidence in the outlook for 2025 MTU.

Compared with the numbers we issued in late November at last year, of last year, we can confirm the organic growth rates and basic assumptions while we adjust the guidance to the changed FX environment. We're now guiding based on the U. S. Dollar FX rate of 1.05 compared with 1.1 Therefore, we expect group revenues to grow stronger to a value between €8,700,000,000 and €8,900,000,000 Within that, we expect the military business to grow in the mid to high single digit percentage range mainly driven by increasing deliveries of the EJ200 and T48 engines as well as by growth in funded development work for the new generation fighter engine. The commercial new engine business is expected to be up in the mid teens percentage range mainly due to higher production volumes for the GTF engines Gen X and the delivery of the first G9x engines Compared to 2024, we expect a normalized ratio of spare and lease engines compared to installed engines.

Commercial spare parts business is expected to grow in the low teens percentage range. Benefiting from strong demand narrow body engines. Especially the V2 V engine will benefit from robust market demand and higher utilization.

Commercial MRO will experience growth in the low to mid teens percentage driven by increased GTF MRO work high demand for freighter engines, and strong contributions from our Engine Lease and Asset Management business.

Overall, this should result in a mid teens percentage increase in adjusted EBIT in absolute numbers compared to 2024 we expect some normalization in the delivery of spare and lease engines as well as some slowdown in the asset management contribution from MLS in Amsterdam MTU. Adjusted net income will grow in line with adjusted EBIT. And the free cash flow for 2025 will be significantly influenced by payments for the GTF fleet management plan and the volatile supply chain. Therefore, we guide again for a low triple digit million euros number but we're aiming at the upper end of this range as the underlying business is growing profitably. Thank you very much for your attention and we are ready now to answer your question.

Thank you very much. We will now begin the question and answer session. We will take our first question. David Perry from JPMorgan. May we have your question?

Yes.

Hi. Good morning. Peter, Lars and Thomas, Rich.

You're all well. You're going to hate me starting the Q and A like this. I apologize There's just a few accounting things I'm a bit confused by this morning. So I'd like to start with three questions, maybe they're all for you. Peter. Apologies Lars.

The first one is can you just on Slide 21 MTU, your free cash flow, The €96,000,000 the acquisition payments in program shares, could you just clarify what that relates to please. The next one is the Slide 23, I think it is, with your net debt. There's a few numbers there that came out quite differently to what I expected. So in particular, the due to program participations feel sort of financial lease liabilities went up. If you could just comment on that. But I think those three things I've just asked about seem to lead to a net financial debt a lot higher than certainly I expected, maybe bad housekeeping by me. Then just the third one, on the other side of the balance sheet on Page 24 MTU, Can you just explain the big jump in receivables, please? Thank you.

Okay. Then let's start with acquisition of the cash flow statement. So we made in Q4, we made an investment in, let's say, further business opportunities where we cannot really talk about. So we will disclose that in the coming Weeks and months, maybe in Q1, '25. So that's nothing to communicate at the current point of time. But these are positive positive investments into further business opportunities. I don't know if you were to add anything last, but Okay. Then on the net debt page, so going to financial lease liabilities, you know in Amsterdam MTU, we in some cases, we buy engines or used engines and in some cases, we also lease in used engines So we leased in a lot of engines in MLS. And under IFRS 16, you know what you have to do when you lease engine. You have to capitalize the value of use on the on the asset side of the balance sheet and this net present value of all the new payments of the future you have to account for on an adept. So that is it's not it has not an impact on cash flow. It's just an accounting issue, as you said.

Regarding [indiscernible] we had that, I think also I think one year ago.

We have two accounts. So we have agreed with with price on our long term payment plan for certain certain payments we have to do. I mean, we have we are a program partner in DG in the GDF engine. So and have to contribute 18% of all costs And in some cases, when you contribute only, let's say, 50% or % of manufacturing cost you have to compensate the consortium for the shortfall of manufacturing cost. And in the past, they were part of working capital. But when you agree on a long term payment plan, which goes beyond the twelve months, you have to account for that as a financial life part of working capital anymore, it's part of financial liability. So it's a pure reclassification of their respective liability. And then receivables, so we had yet I mean, you have you cannot only look on receivables here, you have to look on the net value of receivables and liabilities. But what we saw is, I mean, we had a very, very strong Q4 That's That's the one thing. So when you have a very strong say, December revenue, everything you book in December, you find it in receivables. [indiscernible] So the U. S. Dollar moved significantly in December.

So going from to 103 at the end, so receivables were valued upwards And we have the receivables also reflect the high workload in our MO shops I mean, it's not part of inventories. If you have some unfinished engine in the shop, it's part of receivables. So these are so called percentage of completion [indiscernible] let's say, GTF GTF shop visits were the payment comes at a later point of time. As I said in my statement, So the work is pulled forward and the payment in the Street Management plans come at a later point of time. That is reflected as a high receivable on the balance sheet.

Okay. Thank you for being so patient explaining all that. If I can just be greedy and ask two follow ons. I mean, should we assume some of these issues like the receivables could reverse then in 2025 MTU, mean, the guidance is the same on free cash flow, a low double digit figure. I would say that. So in 2025, in 2024 MTU?

There will be some reverse effect yes. I mean, as Lars mentioned, so we our target for 2025 free cash flow is rather at the upper end of the low triple digit range. [indiscernible] significantly better than the 2024 free cash flow, yes.

That will be excellent.

Let's say an unlucky combination of different factors, especially in Q4, as I just as I just mentioned, yes.

Thank you so much. Thanks, David.

Thank you. We will take our next question. Ian Douglas Pennant from UBS. May we have your question.

Hi, yes. It's Ian Douglas from UBS. I hope you can hear me. My line's been a bit crackly. I've got two questions, please. The first on both of you leave in quick succession, obviously a blow for your investors. Are you able to speak on behalf of the Board What criteria were prioritized in the search for your replacements? And I guess, especially I'm thinking of Peter here, given that that was more recent news. And how long this transition has been planned for please, at least at the supervisory board level?

The second question, I'm afraid I'm going to go back to David's question, because I think it's important there's been a lot of accounting style questions in the engine space recently on both sides of the Atlantic. So I think it's important to get on top of this. Can you help us understand why exactly there's lots of GTS shop visits happening today where the payment comes later? Is this yes, I mean, maybe you could just go in a little bit more detail on exactly how that mechanism I mean, the pull forward of shop visits is predominantly triggered by the GTF fleet management plan. So that you do the work today when you get the engine in the shop, but the payment comes at a later point of time. This is not a regular shop visit. So that leads to a buildup of receivables. You do the work and the payment comes at a later point of time now.

And that work that you're doing then is not captured within the $6 to 7,000,000,000 program revision that was taken.

The program provision, so our share, the €1,000,000,000 we built up we booked in Q 2023. That's purely the support payments to airlines. So that has nothing to do with the shop visits work. So the material, the labor, transportation costs and so on. So the physical work we do on the engine, So but the payments for the fleet management part are purely support payments to airlines. For their AOG situation.

Thank you. And sorry, what were the support payments made in 2024? Can you just raise that for us, please? Against that 1,000,000,000 Sure. It was in the high US300 million dollars range. So US380 million dollars US390 million dollars So that's [indiscernible] I call €1,100,000,000 and you can say they have roughly 51% program share of the 18, so you can scale it down, it's more or less the same.

Thank you. [indiscernible] number for NTU. And the majority happened in the fourth quarter of twenty twenty four. That's why the cash flow in the fourth quarter is slightly negative.

And then the other question on the priorities of the Board, if you could if you're able to comment, please.

Not really. I mean, transition we have named Katya is coming in in the April 1, transitioning with Peter. For three months and then the change of responsibility will happen on July 1. And the Board needs to speak for itself. But obviously, we were looking for an experienced CFO both on the financials, but also on the IT environment that is the responsibility that Peter currently holds. We believe we have found a a decent successor, if that is ever possible. The big shoes to fill. Thank you for having me on. Appreciate Thank you. We will take our next question. Robert Stallard from Vertical Research.

Thanks so much. Good morning. A couple from me. First of all, on the leasing business. I was wondering how much EBIT or cash flow is generated in 2024 MTU? Ballpark number, if you could provide that. How much capital is tied up in this business? And do you expect a normal level to be? Because that's what you've included in your 2025 guidance. And then secondly, on the GTF fleet management plan, can you give us an update of your latest expectations on what the cash payments will be on this program during 2025 and 2026 MTU.

Thank you.

So I mean, we don't split that really down. I don't What we say on MLS MTU asset leasing management business is that that business contributes roughly €500,000,000 of gross revenues in 2024 and roughly €100,000,000 of EBIT. So that's the contribution and that's all part of our of consolidated MRO revenue and EBIT figures. And I mean, that is a very, let's say, optimistic business. You scan the several hundreds of engine every year and you do transactions on a very limited number. So it's a very opportunistic business. Yes. So in part, we buy the engines, in part we lease in part we basically trade engines to buy it and sell it more or less immediately and so on. So it's [indiscernible] But what we can say is that we really want to invest into the business because it's a very good business. And we want to grow the business significantly in the coming years. Regarding TTS fleet management plan, I just said that we had an impact of $390,000,000 in 2024.

That's the pre tax number, I have to say. And we expect a similar impact in 2025 MTU. And some spillover, so the remaining portion then in 2026 MTU.

So the impact 2026 will be far lower compared to the 2025 impact.

Change to previous guidance.

Exactly, unchanged to our previous guidance.

Okay.

Peter, just a quick follow-up on the leasing business. You said you expect a normal level. Activity in the guidance. What is a normal level? Is it half what you did last year?

Just some ballpark there?

We would miss, I believe, with normal beta means that the rates are normalizing because we used to have a very good several rates for the engines after COVID.

The business itself is growing top line. But the rate leasing rates and this will be non sliding over the years. We've seen that already in 2024 starting.

Okay.

You very much.

Thank you.

We will take our next question Chloe Lamare from Jefferies. May we have your question? Yes, good morning. I actually had a follow-up from David's question.

If I look at the your free cash flow, the CapEx was quite higher than what I expected, but a relatively large chunk of it was retreated out of your free cash flow in Q4.

So Could you confirm that this these were entry fees that you paid? And I guess we'll need to weigh further disclosure to know which program it is. But But is that really the driver or anything else you can share with us to kind of understand what drove that? And then second question would be on the evolution of turnaround times. In your shop. If you can update us on what you saw into the end of the year, that would be great.

Thank you.

Chloe, first question, entry fees I can confirm that. So we paid roughly US100 million dollars in Q4 twenty twenty four for as just mentioned, different business opportunities, So you find it in the line net investments in intangible assets that's the jump from €80,000,000 to €181,000,000 And it's adjusted in according to our policy, which we also described in our annual report. It's adjusted for calculating the free cash flow. So that's That's the story. Turnaround houses of GTF, we see continuous decrease of turnaround times we are well below an average below one hundred days. And it all depends on material availability But as we have communicated previously, seventy day plus turnaround time is also possible material is available.

Very clear. Thank you. Thank you.

We will take our next question Ben Heelan from Bank of America.

May we have your question?

Yes. Good morning, guys. Thank you for taking the question. I've got a few follow ups on some of the questions already asked as well, unfortunately. So on the program acquisition costs, can you confirm whether or not this is an actually a new engine program? Or is this a payment associated with a program like the GTF? Because my understanding is there are still payments that are due on the GTF advantage. I think some of your peers have are paying payments on that over the next couple of years. And when we think about this program acquisition, cost, can you talk about what this line is going to look like in [indiscernible] two to three years and what we should be adding in because it was a definitely a step up versus versus what I was assuming. Secondly, on kind of your PPE CapEx was also a decent amount higher than what I was expecting. So if there's any color that you can give us around that as well? And then a third, just quickly again, sorry, on these receivables to kind of lay by the point. I mean, you've talked about some payments for GTF shop visits.

Coming in late or later than the work being done because of the GTF program.

But how late are these how late is it going to be for these payments to be received, right? Is this something that you will receive in in 2027, 2028? Or do you think actually the catch up effect that you talked about with David, is that going to be something that happens in twenty twenty twenty five and 2026? Just any color you can give us that will be helpful. [indiscernible] latest question. So that is a difficult endeavor because I mean, that's a mixture between let's say sixty, seventy different fleet hour contracts with different airlines and it's very so the point of of payment is very different. The distance between payment and actual performance of the shop is very different in a different in each and every fleet hour agreement. So I would rather expect so over the next one or two years, a slight moving up of the receivable position. You get payments, but you do also additional work. So it's and as the number of shop visits increases, so the position will rather increase slightly over the next one, two years.

And then it will rather go down. So that is the rough shape of that receivable curve.

Then your You referred to the I think to the net debt page, the compensation payments due to program partners that has nothing to do with the payments for GTFA or a new programs, but that is especially for the GTF program, as I said.

We are an 18% program partner and maybe deliver only 15 or 60% of the manufacturing costs. And so that is the compensation therefore and that that line will rather will be paid over the next two, three years. So that will go down over the next years now. But the payment term is longer than longer than twelve months So that's why part of it that's why it's technically part of net debt.

Yes, no. So I was kind of talking more, Pete, sorry, about the €96,000,000 payments of program shares. Over the next two to three years, what does that line look like There will be additional payments, but later. [indiscernible] Okay. Do you have any view around how It's not the GTFA. Definitely not the GTFA. [indiscernible] Are already program partner in the MTU, so there are no more for the entry fees.

Okay. And just quickly on the kind of PPE CapEx costs, which stepped up?

A good chunk comes from acquisition of Lease Engine at MLS. So the case where we buy engines ourselves and have it on the balance sheet.

Okay. Okay, cool. All right, awesome. All right. Thank you, Peter. Thank you.

Thank you.

We will take our next question Christophe Manard from Deutsche Bank. May we have your question?

Yes.

Good afternoon. Thank you for taking my question. I have three quick ones. The first one is on turnaround times. I mean, one of your clients complained about turnaround times above three hundred days recently filed something in The U. S. It I mean, it comes a little bit in contrast to what you said. So just want to have your view on this. And I heard you on turnaround times being down So my question is also does it mean that we could have a reduction [indiscernible] Turnaround time. So it means that the engines are less grounded than they initially thought. The second question is, times on the call you mentioned volatile supply chain. Can you just explain a little bit more what it is because it seems to be impacting your working cap? And the last question is just for better understanding. You say your free cash flow guidance low triple digit million and you're more at the high end of this. What I mean, what does it mean? I mean, does it mean €300,000,000 or €400,000,000 just trying to understand the English here?

Thank you.

So maybe Christophe, on the first one, yes, we said the shop turnaround time at MTU and other shops average below one hundred days. But we always talked about the wing to wing turnaround time, which will be higher because of ongoing capacity increase over these three years.

So that means that there's a longer time above these one hundred days that the engine is going back and forth between the customer and our six So that is the natural data.

And some of them, as the customer said, we need to expect that this is a proper timing. And while there is still wing to wing time, higher, don't see any reason now why we should decrease charge. So we are in line with our expectation.

Okay. Then supply chain, I think predominantly in our MO business, we have seen across the board higher turnaround times compared to, let's say, the pre corona level as part supply but also the performance of our outside vendor network is not as it should be. So and that drives working capital upwards. So the general type in our shop is maybe 30%, 40% higher compared to pre corona levels now. And that means higher work in progress in all of our MROs.

So we carry excess working capital on the balance sheet. Free cash flow guidance, I mean, what is low triple digit? Low triple digit, we consider something between €100,000,000 and €300,000,000 at the upper end This has been somewhere between €250,000,000 and €300,000,000 or so. Thank you, Andrei.

Thank you. This concludes today's question and answer session. I'll now hand back for closing remarks.

Yes, thank you, Heidi, and thank you all participants. Thank you, Lars. Thank you, Peter.

For further questions as usual, reach out to us and yes, see you soon.

Thank you. We want to thank Mr. Lars Wagner and Mr. Peter Kamasheretz. And all the participants of this conference. Goodbye.

Good morning, ladies and gentlemen. Welcome to our conference call for MTU's preliminary full year results 2024 MTU.

As usual, we will start with a review presented by Lars. Peter will give you the financial overview, a comparison to our initial guidance as well as a more detailed look into our OEM and MRO segment. Following that, Lars will walk you through the updated guidance for 2025 MTU. This will end the presentation part we will open the call for questions.

Let me now hand over to Lars the review.

All right. Thank you, Thomas, and welcome from my side to all.

Let me start with some words on the market environment. The market environment remains favorable for the A and D sector. We expect to see robust passenger and cargo traffic throughout 2025 MTU.

IATA forecasts passenger traffic to grow by 8% and cargo traffic by 6% MTU.

While demand for new aircraft remains very high, the level of new aircraft deliveries is still lagging following ongoing supply chain challenges. This allows the delivery and sale of more spare and lease engines Further, it led airlines to expand the services to extend the service life of older aircraft beyond their original plans. Leading to increased demand for maintenance and spare parts. The already limited MRO capacities are facing an environment with high demand and supply chain constraints. This opened pricing opportunities for MRO services and lease equipment. MCU is well positioned in all of these areas and has benefited accordingly in 2024 MTU.

We witnessed limited growth in new aircraft deliveries allowing an increase in spare and lease engine deliveries. And additionally, we saw solid MRO demand for mature engine programs Gen X, G90 or CF34. The spare parts business performed quite well in 2024 MTU. Particularly for narrow body, and mature wide body engine platforms. Moreover, our MRO business benefited nicely from the strong results of our engine lease and asset management business in Amsterdam MTU. [indiscernible] With these market trends and MCU's strategic positioning, we are confident to continue our success story in 2025 MTU.

Let me now focus on the GTF fleet management plan.

Firstly, I'd like to emphasize that it is no longer an emergency or crisis plan. It has evolved into a well structured set of measures that are being executed accordingly.

We Notably, we have seen a significant increase increase in powder metal output by RTX. As mentioned before, on time spare parts availability [indiscernible] and allows us to reduce turnaround time well below one hundred days. However, we will continue to feel the effects of this plan in 2025 and 2026 both in terms of operational impact in our shops and financially on our free cash flow. Anyway, we do see the available capacity to increase and with that the ability to support our customers. The market confidence in the GTF engine is evidently evident through the strong orders placed in 2024 MTU. Including over two twenty GTF engine, orders at the Farnborough International Air Show. And from the operation side, we reached a milestone the delivery of the 1,000 GTF engine assembled at MTU here in Munich.

The GTF Advantage program is on track to receive its final FAA certification in H1 2025 with first deliveries expected within the year.

Additionally, the first A321XLR MTU with PW 11,000 gs engines is expected to be handed over to Wissia in Q1 twenty twenty five.

Let me switch to some highlights from our business segments. In the commercial MRO sector, we secured contract wins totaling $5,600,000,000 mainly for narrow body and mature wide body engines in 2024 MTU.

With over forty five years of experience, we have completed over 25,000 shop visits demonstrating our expertise To meet growing demand, we expand our global MRO capacities including a new shop in China dedicated to V2five In our military business, we have important projects on the agenda.

Very favorable environment for the Eurofighter aircraft with Spain and Italy ordering 49 Eurofighters.

Germany is expected to follow with an order for 20 Eurofighters MTU. Further interest from various export countries could lead to further Eurofighter engine orders.

Beyond that, we are concentrating on the Phase Ib development work for the new generation fighter engine.

Negotiations for Phase two demonstrate the work are expected in 2025 with flight demonstrator work to start in 2026 MTU. [indiscernible] Additionally, we established the Jura joint venture for Europe's next military helicopter generation with the Vafran helicopter engine. Our industry is actively pursuing improvements towards more sustainable flight the ultimate goal of emission free flying.

In 2024, we made good progress the development work for both further improvements on gas turbine technology as well on the flying fuel cell.

The latter includes successful tests on the liquid hydrogen fuel system or the establishment of a new test facility for the flying fuel cell at our Munich site.

The flying fuel cell is also a focus of the EU technology program, called HEROS. Me say some words on our upcoming management train change in 2025 MTU. Already in our Q3 call, elaborated on my personal decision of leaving my professional home and taking on a new role at Airbus.

In the meantime, our supervisor reports nominated Doctor. Johannes Busman, as my successor at the helm of MTU MTU.

Johannes is an esteemed aviation expert with extensive high level management experience. He has been a trusted companion for MTU over many years. In his former role at Lufthansa Technic, as well as a member of our Supervisory Board.

We know, respect and appreciate each other and will ensure a smooth transition between us.

However, time off this transition is still work in progress. Johannes will assume his role as CEO at MTU in the course of 2025 specific date is not yet fixed. The company is currently in the process of finding a successor for him. Independently from my decision, Peter has also decided not to extend his contract which expired by the end of this year. After over twenty five years at MTU, including eight successful years CFO, he wants to move on to the next phase in his career, In the future, he plans to focus more on supervisory board mandates. In January, the Supervisory Board choose [indiscernible] as our CFO, Katya joins the aerospace world after a long track record in the automotive industry. She served twenty seven years in various functions at Continental AGE including the role as CFO. She will join MDU already in April. One and take over as CFO on July 1, 2025 after an intense transition period with Peter. I know this is more change on board level than MDU had in the past. Nevertheless, MGU is an outstanding company and our successors deserve your full support. I'm speaking also on behalf of Peter, when I express our full commitment to ensure a smooth transition to Katya and Johannes.

Both of them can rely on a stable very capable and performing organization. We are sure that they will continue to enhance MCU's operational and financial performance on the path of profitable growth. In the remaining time, Pete and I will continue to drive MTU forward working together with our colleagues to set the course for a positive, constructive and value based future. Let me now hand over to Peter for the financials. Yes. Thanks Lars. 2024 was indeed another exceptional year for MTU. We achieved for the first time an EBIT exceeding €1,000,000,000 one year earlier than anticipated. I will provide you with the driving factors in a few moments. This impressive performance combined with our positive outlook for 2025 was also reflected in our share price which reached a new all time high of almost €350 at the January. As part of our 2025 outlook, we announced our dividend [indiscernible] We intend to propose a dividend of €2.2 per share at the upcoming AGM on 05/08/2025 MTU, This represents a $0.2 increase compared to last year's dividend. It is important to note that our dividend proposal this year strikes a thoughtful balance between the financial obligations associated with the GTF fleet management plan and the promising outlook for MTU.

Furthermore, in September MTU, we successfully launched our largest corporate bonded history, raising €750,000,000 The bond carries a coupon of 3.875% and has a seven year term. These funds will be utilized to refinance and use existing corporate bond and for general corporate financing. Additionally, in April, we secured promissory note of €300,000,000 Now let's move on to the key financials 2024 MTU let's kick off with a comparison of our full year 2024 numbers versus our initial guidance Adjusted revenues came in at the higher end of our guidance range. Showing the robust growth across all of our business segments. With EBIT adjusted slightly exceeding EUR 1,000,000,000, we have already achieved our midterm target one year earlier ahead of schedule. The corresponding EBIT margin stood at 14% MTU. Our free cash flow adjusted of €183,000,000 met our full year expectation. It was primarily influenced by payments for the GTF fleet management plan and the volatile supply chain leading to a higher level of working capital. In addition to that, we see an impact [indiscernible] They are built on our balance sheet when shop visits are performed earlier than initially in this triggering payments at a later point in time.

The cash conversion rate stood at 24% MTU. Turning to page and comparing adjusted figures 2024 with those of [indiscernible] Total adjusted revenue showed an 18% increase in both. Euros and U. S. Dollars. Reaching a new record high of approximately €7,500,000,000 This growth was driven by all of our business segments. EBIT adjusted for a 29% increase to €1,050,000,000 resulting in an EBIT adjusted margin of 14% MTU. This positive performance was supported by a favorable business mix across all segments. Net income adjusted grew as expected in line with EBIT adjusted and improved by 29% to €764,000,000 And free cash flow adjusted, as mentioned, stood at EUR 183,000,000, down 48% MTU expected by the as expected impacted by the effects mentioned earlier. So now let's move on to the business segment and starting with our OEM segment. Total OEM revenue saw a 14% increase to more than €2,500,000,000 In military, revenues grew 14% to €612,000,000 in line with our full year guidance. The main drivers to have this growth were the increases in funded development work for the next generation fighter engine as well as higher volumes for TP-four hundred and EJ200 engines. Commercial business revenues in euros and dollars rose by 15% to €1,900,000,000 And within that, organic OE revenues in dollars increased in the low 20% range, in line with our guidance.

The main growth drivers were higher cheap engine deliveries and a healthy mix of spare and lease engines. [indiscernible] On a quarterly basis, OE sales also grew in the low-twenty percent range MTU, Organic Stafford sales in dollars increased in the low teens. Mainly driven by our mature wide body platforms and narrow body engines. On a quarterly basis, spare parts sales experienced high teens growth. [indiscernible] EBIT adjusted benefited from the stable business mentioned earlier, resulting in a 26% increase to €612,000,000 The corresponding EBIT margin improved to 24.2% MTU. Moving on to the MTU segment. MO revenues experienced a 20% increase reaching nearly €5,100,000,000 we saw solid demand across all engine platforms. Main drivers of revenue growth in our core MTU business were the G90, AC25, the Gen X as well as our leasing and asset management business in Amsterdam. The share of GTS MRO revenues accounted for approximately 31% slightly below our fully expectation of 35% MTU. [indiscernible] Throughout 2024, we experienced lower material while the number of shop visits was in line with expectations. EBIT adjusted showed a strong growth 33% to EUR $438,000,000, resulting in a margin of 8.7 The higher average margin was supported by the robust leasing and asset management business and in addition, a better contract mix in the independent MRO business as well as a lower share at material intensity as mentioned [indiscernible] [indiscernible] At this point, I would like to hand back to Lars to some insights on our guidance for 2025.

Peter, thank you.

The results of the year 2024 demonstrated that MTU was well positioned in the market and will accordingly benefit from the ongoing market trends. This gives us confidence in the outlook for 2025 MTU. Compared with the numbers we issued in late November at last year, of last year, we can confirm the organic growth rates and basic assumptions while we adjust the guidance to the changed FX environment. We're now guiding based on the U. S. Dollar FX rate of 1.05 compared with 1.1 Therefore, we expect group revenues to grow stronger to a value between €8,700,000,000 and €8,900,000,000 Within that, we expect the military business to grow in the mid to high single digit percentage range mainly driven by increasing deliveries of the EJ200 and T48 engines as well as by growth in funded development work for the new generation fighter engine. The commercial new engine business is expected to be up in the mid teens percentage range mainly due to higher production volumes for the GTF engines Gen X and the delivery of the first G9x engines Compared to 2024, we expect a normalized ratio of spare and lease engines compared to installed engines. The commercial spare parts business is expected to grow in the low teens percentage range benefiting from strong demand for narrow body engines.

Especially the V2 V engine, which and higher utilization. Commercial MRO will experience growth in the low to mid teens driven by increased GTF MRO work high demand for freighter engines, and strong contributions from our Engine Lease and Asset Management business.

Overall, this should result in a mid teens percentage increase in adjusted EBIT in absolute numbers compared to 2024 we expect some normalization in the delivery of spare and lease engines as well as some slowdown in the asset management contribution from MLS in Amsterdam MTU. Adjusted net income will grow in line with adjusted EBIT And the free cash flow for 2025 significantly influenced by payments for the GTF fleet management plan and the Bottal supply chain. Therefore, we guide again for a low triple digit million euros number but we're aiming at the upper end of this range as the underlying business is growing profitably. Thank you very much for your attention and we are ready now to answer your question.

Thank you very much. We will now begin the question and answer session. We will take our first question. David Perry from JPMorgan. May we have your question?

Yes.

Hi. Good morning.

Peter, Lars and Thomas, if you're all well. You're going to hate me starting the Q and A like this. I apologize Just a few accounting things I'm a bit confused by this morning. So I'd like to start with three questions, maybe they're all for you. Peter. Apologies, Lars. The first one is can you just on Slide 21 MTU, your free cash flow, The €96,000,000 the acquisition payments in program shares, could you just clarify what that relates to please.

The next one is the Slide 23, I think it is, with your net debt. There's a few numbers there that came out quite differently to what I expected. So in particular, the due to program participations I feel sort of financial lease liabilities went up. If you guys comment on that. But I think those three things I've just asked about seem to lead to a net financial debt a lot higher than certainly I expected, maybe bad housekeeping by me. Then just the third one, on the other side of the balance sheet on Page 24 MTU, Can you just explain the big jump in receivables, please? Thank you very much.

Okay. Then let's start with acquisition of the cash flow statement. So we made in Q4, we made an investment in, let's say, further business opportunities where we cannot really talk about. So we will discuss Weeks and months, maybe in Q1, 2025 MTU.

So that's nothing to communicate at the current point of time. But these are positive positive investments into further business opportunities. I don't know if you were to add anything last, but Okay. Then on the net debt page, so going to financial lease liabilities, in Amsterdam, we in some cases, we buy engines or used engines and in some cases, we also lease in used engines. So we leased in a lot of engines in MLS. And under IFRS 16, you know what you have to do when you lease engine. You have to capitalize the value of use on the on the asset side of the balance sheet and the net present value of all the new payments of the future you have to account for on an adept So that is it's not it has not an impact on cash flow. It's just an accounting issue, as you said. Regarding [indiscernible] [indiscernible] We had that, I think also I think one year ago. [indiscernible] agreed with the press on a long term payment plan for certain payments we have to do. I mean, we have we are a program partner in the GDF engine. So and have to contribute 18% of all costs And in some cases, when you contribute only, let's say, 50% or 60% of manufacturing cost you have to compensate the consortium for the shortfall of manufacturing cost.

And in the past, they were part of working capital.

But when you agree on a long term payment plan, which goes beyond the twelve months, you have to account for that as a financial liability. Part of working capital anymore. It's part of financial liability. So it's a pure reclassification of their respective liability. And then receivables, so we had I mean, you have you cannot only look on receivables here, you have to look on the net value of receivables and liabilities, But what we saw is, I mean, we had a very, very strong Q4 that's that's the one thing. So when you have a very strong let's say, December revenue, everything you book in December, you find it in receivables, [indiscernible] So the U. S. Dollar moved significantly in December. So going from to 103 at the end, so receivables were valued upwards. And we have the receivables also reflect the high workload in our MO shops. I mean, it's not part of inventories. If you have some unfinished engine in the shop, it's part of receivables. So these are so called percentage of completion receivables. And so we have also a lot of, let's say, GTF GTF shop visits where the payment comes at a later point of time.

As I said in my statements, So the work is pulled forward and the payment in these fleet management plans come at a later point of time. That is reflected as a high receivable on the balance sheet.

Okay. Thank you for being so patient in explaining all that. If I can just be greedy and ask two follow ons. I mean, should we assume some of these issues like the receivables could reverse. Then in 2025 MTU, mean, the guidance is the same on free cash flow, a low double digit figure. I would say that. Factor in 2025, in 2024 MTU.

There will be some reverse effect, yes. Mean, as Lars mentioned, so we our target for 2025 free cash flow is rather at the upper end of the low triple digit range. [indiscernible] significantly better than the 2024 free cash flow, yes. [indiscernible] unlucky combination of different factors especially in Q4, as I just as I just mentioned, yes.

Thank you so much. Thanks, David.

Thank you. We will take our next question. Ian Douglas Pennant from UBS. May we have your question.

Hi, yes. It's Ian Douglas Fenits at UBS. I hope you can hear me. My line's been a bit crackly. I've got two questions, please. The first on Management turnover. Look, I'm very sorry to see both of you leave in quick succession.

Obviously a blow for your investors. Are you able to speak on behalf of the Board what criteria were prioritized in the search for your replacements? And I guess, especially I'm thinking of Peter here, given that that was more recent news. And how long this transition has been planned for please at least at the CFO's report level? The second question, I'm afraid I'm going to go back to David's question because I think it's important there's been a lot of accounting style questions in the engine space recently on both sides of the Atlantic. So I think it's important to get on top of this. This. Can you help us understand why exactly there's lots of GTF shop visits happening today where the payment comes later? Is this yes, I mean, maybe you could just go in a little bit more detail on exactly how that mechanism works? Thank you.

I mean, the pull forward of shortlist is predominantly triggered by the TTF management plan, so that you do the work today when you get the engine in the shop, but the payment comes at a later point of time. This is not a regular shop visit. So that leads to a buildup of receivables. You do the work and the payment comes at a later point of time. And that work that you're doing then is not captured within the $6 to 7,000,000,000 program revision that was taken.

The program provision for our share, the €1,000,000,000 we built [indiscernible] 2023, that's purely the support payments to airlines. So that has nothing to do with the shop visit work. So the material, the labor, transportation costs and so on. So physical work we do on the engine. So the payments for the fleet management plant are purely support payments to airlines. For their AOG situation Thank you. And sorry, what were the support payments made in 2024? Can you just raise that for us, please? Against that 1,000,000,000?

Sure. It was in the high $300,000,000 range, so US380 million dollars US390 million dollars So that's I mean, raising investment said on the ALC €1,100,000,000 and you can say they have roughly 51% program share of the 18%. So you can scale it down, it's more or less the same.

Thank you.

Scaled down to three ninety That is the number for NTU. And the majority happened in the fourth quarter of twenty twenty four. That's why the cash flow in the fourth quarter is slightly negative. And then the other question on the priorities of the Board, if you could, if you were able to comment, please.

Not really. I mean, the transition we have named Katya is coming in on the April 1. Transitioning with Peter for three months and then the change of responsibility will happen on July 1. And the Board needs to speak for itself, but obviously we were looking for an experienced CFO both on the financials, but also on the IT environment that is the responsibility that Peter currently holds And we believe we have found a a decent successor, if that is ever possible.

The big shoes to fill. Thank you for having me on. Appreciate Thank you. We will take our next question. Robert Stallard from Vertical Research.

Thanks so much. Good morning. A couple from me. First of all, on the leasing business. I was wondering how much EBIT or cash flow is generated in 2024 MTU? Ballpark number, if you could provide that. How much capital is tied up in this business? And do you expect a normal level to be? Because that's what you've included in your 2025 guidance. And then secondly, on the GTF fleet management plan, can you give us an update of your latest expectations on what the cash payments will be on this program during 2025 and 2026 MTU.

So I mean, we don't split that really down. What we say on MLS MTU asset leasing management business is that business contributes roughly €500,000,000 of gross revenues in 2024 and roughly €100,000,000 of EBIT.

So that's the contribution and that's all part of our of the consolidated MRO revenue and EBIT figures. And I mean, that is a very, let's say, opportunistic [indiscernible] every year and you do transactions on a very limited number. So it's a very opportunistic business. So in part, we buy the engines part we lease them in. We in part we basically trade engines to buy it and sell it more or less immediately and so on. So it's But what we can say is that we really want to invest into the business because it's a very good business. And we want to grow the business significantly in the coming years.

Regarding TTS fleet management plan, I just said that we had an impact [indiscernible] 2024. That's the pre tax number. I have to say. And we expect a similar impact 2025 MTU.

And some spillover, so the remaining portion then in 2026 So the impact 2026 will be far lower compared to the 2025 impact.

Change to previous guidance.

Exactly, unchanged to our previous guidance.

Okay. And please just a quick follow-up on the leasing business. You said you expected a normal level. Activity in the guidance. What is a normal level? Is it half what you did last year? Just some ballpark there?

We would miss, I believe, with normal speed, I mean, that the rates are normalizing because we used to have a very good federal rate for the engines after COVID.

The business itself is growing top line. But the rate leasing rates and this will be normalizing over the We've seen that already in MTU Okay. You very much.

Thank you. We will take our next question Chloe Lamami from Jefferies. May we have your question? Yes, good morning. I actually had a follow-up from David's question. If I look at the your free cash flow, the CapEx was quite higher than what I expect retreated out of your free cash flow in Q4. So Could you confirm that this these were entry fees that you paid? And I guess we'll need to weigh further disclosure to know which program it is, but Is that really the driver or anything else you can share with us to kind of understand what drove that? And then second question would be on the evolution of turnaround times. In your shop. If you can update us on what you saw into the end of the year, that would be great.

Thank you.

Chloe, first question, entries yes, I can confirm that. So we paid roughly US100 million dollars in Q4 twenty twenty four for, as just mentioned, different business opportunities. So you find it in the line net investments in intangible assets that's the jump from €80,000,000 to €181,000,000 and it's adjusted according to our policy, which we also describe in our annual report, it's adjusted for calculating the free cash flow. So that's That's the story. Turnaround times of GTF, we see continuous decrease of turnaround times we are well below an average below one hundred days and it all depends on material availability But as we have communicated previously, seventy day plus turnaround time is also possible material is available.

Very clear. Thank you.

Thank you.

We will take our next question Ben Heelan from Bank of America.

May we have your question?

Yes. Good morning, guys. Thank you for taking the question. I've got a few follow ups on some of the questions already asked as well unfortunately. So on the program acquisition costs, can you confirm whether or not this is an actually a new engine program? Or is this a payment associated with a program like the GTF? Because my understanding is there are still payments that are due on the GTF Advantage I think some of your peers are paying payments on that over the next couple of years. And when we think about this program acquisition cost, can you talk about what this line is going to look like in The next two to three years and what we should be adding in because it was definitely a step up versus versus what I was assuming. Secondly, on kind of your PPE CapEx it was also a decent amount higher than what I was expecting So if there's any color that you can give us around that as well. And then a third, just quickly again, sorry on these receivables to kind of labor the point. I mean, you've talked about some payments for GTF shop visits.

Coming in late or later than the work being done because of the GTF program.

But how late are these how late is it going to be for these payments to be received, right? Is this something that you will receive in 2027, 2028? Or do you think actually the catch up effect that you talked about with David, is that going to be something that happens in 2025? And and 2026? Just any color you can give us that will be helpful. Thank you. [indiscernible] your latest question. So Dennis, this is difficult endeavor because I mean it's that's a mixture between let's say sixty, seventy different fleet hour contracts with different airlines. And it's very so the point of payment is very distance between payment and actual performance of the shoppers is very different in a different each and every fleet hour agreement. So I would rather expect so over the next one or two years, a slight moving up that receivable position. You get payments, but you do also additional work. So it's and as the number of shop visits increases, so the position will rather increase slightly over the next one, two years. And then it will rather go down. So that is the rough shape of that receivable curve. You referred to the I think to the net debt page, the compensation payments due to program participation that has nothing to do with payment for GTFA or new programs.

So that is especially for the GTF program, as I said. We are an 18% program partner and maybe deliver only 15% or 60% of the manufacturing costs. And so that is the compensation therefore. And that that line will rather will be paid over the next two, three years. So that will go down over the next years now. But the payment term is longer than the longer than twelve months So that's why part of the net net that's why it's technically part of net debt. [indiscernible] talking more, Pete, sorry, about the €96,000,000 payments of program shares. Over the next two to three years, what does that line look like?

There will be additional payments later.

Later dedicate Okay. Do you have any view around how It's not the GTFA. It's definitely not the GTFA.

Okay. [indiscernible] Okay. And just quickly on the kind of PP CapEx costs, which stepped up?

A A good chunk comes from acquisition of Nissan and MLF.

So the case where we buy we buy engines ourselves and have it on the balance sheet.

Okay. Okay, cool.

Thank you. We will take our next question Christophe Manard from Deutsche Bank. May we have your question?

Yes.

Good afternoon. Thank you for taking my question. I have three quick ones. The first one is on turnaround times. I mean, one of your clients complain about turnaround times above three hundred days recently filed something in The U. S. It I mean, it comes a little bit in contrast to what you said. So just wanted to have your view on this. And I heard you on turnaround times being down. So my question is also does it mean that we could have a reduction in the cash payment versus the initial expectation because you're reducing the turnaround time. So it means that the engines are less grounded than initially thought. Second question is several times on the call you mentioned volatile supply chain. Can you just explain a little bit more what it is because it seems to be impacting your working cap?

And the last question is just for better understanding. You say your free cash flow guidance low triple digit million and you're more at the high end of this. What I mean, what does it mean? I mean, does it mean €300,000,000 or €400,000,000 Just trying to understand the English here. Thank you.

So maybe Christophe, on the first one, yes, we said the shop turnaround time at MTU and other shops in average below one hundred days.

But we always talked about the wing to wing turnaround time, which will be higher because of ongoing capacity increase over these three years.

So that means that there's a longer time above these one hundred days that the engine is going back and So that is the natural delta. And some of them, as the customer said, we need to expect that this is a proper timing.

And while there is still wing to wing time, higher, don't see any reason now why we should decrease the charge So we are in line with our expectations.

Okay. Then supply chain, I think predominantly in our MO business, we have we see across the board higher turnaround times compared to, let's say, the pre corona level as part supply but also the performance of our outside vendor network is not as it should be. So and that drives working capital upwards. So the general type in our shop is maybe 30%, 40% higher compared to pre corona levels. And that means higher work in progress in all of our MROs.

So we carry excess working capital on the balance sheet. Free cash flow guidance, I mean, what is low will consider something between €100,000,000 and €300,000,000 at the upper end This has been somewhere between €250,000,000 and €300,000,000 or so.

Thank you, Alberto. Thank you very much.

Thank you. This concludes today's question and answer session. I'll now hand back for closing remarks. Yes. Thank you, Heidi. And thank you all participants. Thank you, Lars. Thank you, Peter.

For further questions as usual, reach out to us and yes, see you soon. Bye bye.