Indra Sistemas SA Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nicolas David - ODDO BHF Corporate & Markets - Analyst : Yes. Congrats for this very impressive set of Q1 earnings. Just maybe talking about the outlook in the press release you just reiterated annual guidance for this year. How should we read that? Should we read that as a way you expect a way softer growth in the coming quarter? Or is it just your internal processes, which makes you push you not to upgrade it while you see a better -- actually a better outlook than what is in your guidance? And we understand that Q1 was probably the strongest quarter of the year, but notably because FCAS comps are going to be tougher going forward. But could you please highlight some other potential exceptional item, which pushed the growth in Q1, and we shouldn't see in the rest of the quarter, notably air traffic management? How sustainable is the growth -- the organic growth you have now notably in those countries you mentioned? And when the big contracts you signed in Canada and Colombia are going to ramp up? And I have a second question is, could you please update us on the process to dispose a stake in Minsait? Where do you stand now? There were some rumors in the press that you were more open to sell a majority stake. And when should we expect an update on that official?

Question: Nicolas David - ODDO BHF Corporate & Markets - Analyst : Understood. And on the inside beyond the rumors, I mean, is it true that you are in the phase of receiving offers yet or it's really too early in the process? And -- yes. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 06, 2024 / 7:00AM, IDR.MC - Q1 2024 Indra Sistemas SA Earnings Call

Question: Laurent Daure - Kepler Cheuvreux - Analyst : Yes. A couple of questions from me as well. Starting with Minsait. Could you give us an update on what you see on the market on your key region in Spain and LatAm as you probably saw most of your competitors are not growing anymore and you are still delivering a 10% organic growth? So I know Spain has been more resilient. But do you see the first sign of weakness? And more particularly, you were boosted by the public sector. Do you expect the same inflows of revenue from a large government contract for the rest of the year? So that's the first point. Second question is on the election business. It's always very hard for us to forecast. So if you could give us your best guess for 2024 versus 2023 on this business? And my final question is back to your -- the good working cap control in the first quarter. I was wondering if the shift towards more defense business can have an impact going forward, not only this quarter but for the next years. On the speed of cash collection in other words, the receivables, I think there's quite a difference between IT and defense. So if you could clarify a little bit on the topic that would be useful as well.

Question: Laurent Daure - Kepler Cheuvreux - Analyst : Okay. And the last point was on the working cap.

Question: Carlos Iranzo Peris - BofA Securities - Analyst : I actually have 3 questions. The first one on free cash flow, very strong quarter, your regulated guidance. So I just wonder how should we think about free cash flow generation in the next 3 quarters. Is 2024 a year in which you are not going to generate most of your free cash flow in the last quarter of the year? Then second question on defense, 70 bps of margin expansion at the EBIT level despite the strong contribution from FCAS. So just wonder if you can give a bit of color on the revenue mix and how have you been able to increase margins despite the strong contribution from FCAS. And then last one, if you can help me in terms of modeling on air traffic management? Could you please give us the inorganic contribution from Selex and Park Air, please?

Question: Carlos Iranzo Peris - BofA Securities - Analyst : Very clear. And on ATM and the inorganic contribution?

Question: Ben Castillo-Bernaus - BNP Paribas Exane - Analyst : Congratulations as well from me on the strong start. On Space, what's the significance of creating the stand-alone company? And can you make any comments on the press speculation regarding Hispasat? And secondly, on Minsait, the revenues are obviously strong, but headcount was flat year-on-year. Does that suggest a lot of the growth was products, subcontracting, maybe the election business? Because normally, we'd see a stronger margin drop-through if headcount was flat on that sort of growth rate.