Ladies and gentlemen, welcome to the Rheinmetall AG Q3 2026 conference call. I am Yusuf, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star followed by 1 on your telephone. For operator assistance, please press star followed by 0. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to CFO Klaus Neumann. Please go ahead, sir.

Good afternoon, ladies and gentlemen, and welcome to Reimertal's third quarter conference call. Before I start, please kindly take note of the disclaimer shown here. As you are probably aware, we adjusted yesterday our full year 2026 guidance I will come later back to it in our outlook section. Our third quarter 2026 delivered again very satisfactory financials. Our top line grew year on year by 36% to more than 3.1 billion euros. The operating result increased by 62% resulting from our positive operating leverage effect. The operating result margin in the third quarter even exceeded that of the second quarter and came in at 17.5%. That is a very impressive improvement of 270 basis points year on year. Our operating free cash flow improved significantly compared to the second quarter and was only marginally negative at and others. Unfortunately, we did not receive some of the advance payments for the Romanian package until early October. That would have pushed cash flow into the positive range. At the end of September, the Rheinmetall backlog was with 78 billion euros on a similar level at the end of our second quarter. I will elaborate on this a little bit later. CAPEX spending was at We continue with our expansion strategy and important projects like the UK Gun Hall and the Albacete medium caliber production saw their recent opening. Lastly, we continue to see very strong interest on the job market. Until the end of September, we received more than 250,000 CVs worldwide. It shows that the defence industry and Rheinmetall in particular are seen as highly attractive employers. So we are very confident that we will be able to hire all the talents that we need to achieve our ambitious growth path going forward. Allow me now to walk you through some of our operational highlights on page 4. If we look at what happened in the third quarter, there are some projects that really stood out. Let's start with the United States. We successfully began handing over the first of eight XM30 prototypes to the US Army. These vehicles will undergo rigorous customer testing with a formal decision or clear indication expected in 2027. Based on the positive feedback received to date, we remain optimistic regarding our chance We expanded our engagement with the US Armed Forces. The US Marine Corps selected our autonomous mission master SP platform for testing. We have successfully delivered 12 of these unmanned ground vehicles under this contract. While modest in initial value, At just over $7 million, this deployment serves as an invaluable operational reference and underscores the promising ramp-up in demand we foresee ahead for our autonomous systems in key allied markets. Next up, Germany and the Netherlands exercise an option for 69 additional Jekyll infantry fighting vehicles on top of the existing contract for 222 placed in 2025. On the space front, we started the production of the first SAR satellites together with ICI and our converted sites in Minois. The targeted production run rate is several dozen satellites per year as we continue to see strong demand for the SAR technology. On top of that, with fulfilling the initial operational capability, we reached a key milestone in the new SPOC-1 satellite program for the German Army in October. For ammunition, we booked a significant contract for 155 mm from an international customer in the low triple-digit million euro range. Our capacity expansions for weapon and ammunition are well on track. Just last month, our subsidiary Biometall Expert Munitions successfully commissioned our new, highly automated medium caliber production facility in Albacete, Spain. With a targeted annual capacity of roughly 3 million components covering projectiles and cartridge cases from 20 mm to 35 mm, this facility marks another key milestone under our group-wide firepower project. Financially and operationally this project underscores our disciplined capital allocation. We invested around 20 million euros with a short time to market execution while expanding the local workforce by nearly a third from 210 to 300 employees. It directly supports our long-term targets to reach 4 million rounds of medium caliber capacity by 2030. Turning to our Naval Systems Division, we are seeing continued strong momentum and customer trust, underscored by recent high-level announcements. During the key-laying ceremony for the third Type 424 class fleet service vessel at our Pehne shipyard in Wolgast, the German Defense Minister, Boris Pistorius, announced the government's intention to order a fourth signals intelligence vessel This prospective order reinforces our long-term partnership with the German Navy and provides good visibility into our future order intake and backlog within our naval portfolio. Building upon this momentum and expanding our international maritime footprint, I am also pleased to report that Galmetall, together with our partner MSC, has successfully secured The bid to acquire the Mangalia shipyard in Romania. With a joint purchase price of 138 million euros, this strategic acquisition establishes a robust dual-use production hub for both civil and military shipbuilding in Southeast Europe. Beyond expanding our industrial capacity, the Mangalia site will play a pivotal execution role, directly supporting the delivery of four recently commissioned naval vessels for the Romanian government, including offshore, patrol and dive support vessels, while creating a scalable foundation for future defence programmes in the region. All in all, Q3 reflected meaningful operational progress as well as our disciplined performance and execution. Ladies and gentlemen, let me dive into the financials. Looking at the performance across our five segments, we are seeing a very strong operating leverage across all segments with air defense and weapon and ammunition leading the way. Vehicle system sales increased by 9.6% to nearly 1.5 billion euros. This increase was mainly driven by a high sales share of logistical vehicles to the German customer. In addition, our service business and sales from tactical vehicles contributed positively. The operating result margin improved to 13.0% year on year due to more favorable product mix effects. In the weapon and ammunition segment, we have seen a continued strong demand and robust revenue growth of 37%. The operating profit margin remained at a high level of 22.9%. A key factor here was a change in the product mix due to a significantly higher growth in the direct fire segment, coupled with the expected ramp-up costs for the expansion of our new plants, as well as headwinds from currency and derivatives. In the air defense segment, we saw excellent operational performance with significant increase in turnover of around 100 million euros. The main drivers of this growth were sales to the MENA region and Western Europe. Earnings benefited from public funding in the area of research and development. The segment has demonstrated strong scalability whilst maintaining disciplined cost management. Digital system sales were up by 39% to €509 million. Here, the main contributors were Tavan and the further ramp-up of the F-35 fuselage production, which pushed the operating margin to 10.7% in increase of 1.5 percentage points. Naval system sales came in at 345 million euros. The main drivers here were the contracts with Germany on a fleet service vessel, the COVID-K130, as well as a repair and service business. The operating result reached 38 million euros, which resulted in an operating margin of 11.1%. To wrap up the segment view, sales in our non-divisional consolidation line showed an increase from minus 243 to minus 374 million euros as inter-segment sales intensified. The operating result from the non-divisional consolidation line improved to minus 8 million euros due to the positive contribution from ad equity investments. Let's turn to page 7. When we look at our Rheinmetall nomination in Q3, we see a slight decline compared to prior year. This is mainly because, as was the case over the last years, we expect to receive the majority of our orders in the final quarter of the year. The Rheinmetall nomination for the third quarter was 2.9 billion euros. One point that really stood out was the lion's share of the Rheinmetall nomination figure was attributable to fixed order intakes. The main orders were the previously mentioned Jekyll-Borcosters for Germany and the Netherlands, the GCAP modular camp for the German Brigade in Lithuania, and an artillery ammunition order for an international customer. At the end of September, the Rheinmetall backlog rose by 38% compared to the previous year and came in at 78 billion euros, A 70% fixed order share, up from 58%. This figure is reflecting the adjustment of the F126 contract of 2.1 billion euros that we already reported during our Q2 call. Let's move on to page 8 for a detailed look at our cash flow and working capital development. The operating free cash flow and working capital developments reflect our preparations for a strong year-end rally. Working capital continued to rise and was nearly 2.2 billion euros at the end of Q3. Here, weapon and ammunition and air defense account for most of the increase in working capital. With order and delivery momentum increasing, we expect this to reverse in the fourth quarter. The Q3 operating free cash flow figure came in at minus 82 million euros. This figure included customer prepayments from orders that we signed in the second quarter. Unfortunately, we did not receive part of the advance payments for the Romanian package until early October. Had we been able to recognize this advance payment in the third quarter, cash flow would have been positive. Following our CAPEX plan for 2026, the Q3 CAPEX is in absolute terms on previous year level. Let's move to page 9. We successfully renewed our syndicated credit facility at head of schedule and doubled its size This additional financial flexibility supports our continued growth trajectory and further strengthens our financial position following the successful bond issue in May of this year. At the end of September, the net financial position totalled minus 2.9 billion euros and the equity ratio was at 28.3%. As said before, we revised our 2026 full-year guidance. Previously, sales were expected to range between 13.7 and 14.2 billion euros. Following likely postponements for the signing of the Aminius Boxer project as well as an acceptance test for 155 mm ammunition, we are now expecting to reach a sales level of around 13.2 billion euros. Our operating margin is expected to adjust by 50 basis points to 18.5%, which is on prior year level and still leading among the European primes. On the cash flow side, we are now guiding to a positive operating free cash flow after previously expecting a cash flow conversion rate of at least 40%. This updated guidance does not include any prepayments from the Armenians program. Ladies and gentlemen, that wraps up my presentation for today. Many thanks for your kind attention. Let me now open up the floor for our Q&A session.

We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you press star and then 2. Participants are requested to only use handsets while asking questions. In the interest of time, please limit yourself to two questions at a time. Anyone who has a question may press star 1 at this time. Our first question comes from Alessandro Pozzi, Mediobanca. Please go ahead.

Hi there. My first question is about broadly on guidance in general. We all appreciate you guys going much faster than almost anyone else of your size and it's going to be always difficult to provide precise guidance on revenues, also given the lumpiness of some of your revenues as well. But when you look back at 2026, of course, you've changed guidance twice now. Do you think it's just one-offs or do you think there is a need to be a bit more conservative with the guidance going forward and thinking about when you go out eventually with the 2027 and whether you need to have more contingencies there or it's just the nature of the business that makes revenues more unpredictable? And then if you can give us maybe an update on where we are with regards to any target for backlog and timing also of the Boxer contract when you expect to have that finalized, whether it's going to be in the first part of Q1 or it's going to be later on next year. Thank you.

Okay. Yeah, thank you for all your questions. Let's start with the guidance. The adjustment that we announced in July this year was definitely a one-off event. The customer not continuing with one of the biggest naval programs in its history is a really unusual event, and that's something we definitely did not foresee. The situation at the end of 2026 now is somewhat different. We have the delay, or the likely delay of the signing of the Aminius contract. I will come back to the situation a little bit later. And then the issue with the final approval and acceptance of already produced ammunition lots. As of today, we don't see that this will all happen or it's still in 2026. And for that reason, we had to adjust the 2026 guidance. It does not change that we have producers, that we have the orders. It's just that we will not, from today's perspective, be able to deliver and recognize the associated revenue. Regarding the update going forward, I have to ask your patience. We will communicate more. Thank you very much. Thank you. Go through a phase of price audits and challenge the calculation in detail. This may take and is likely to take longer than would allow an approval by the German Bundestag by the end of this year. As of today, we expect that it will be pushed into the fourth quarter.

Into the fourth quarter of... First quarter of 2027. First quarter of 2027, yeah. And I think my first question on the guidance was, I was not really looking forward for the 2027 guidance, but whether maybe there was a change in the way you are approaching the guidance, and perhaps you will provide maybe guidance with more contingencies to reflect the fact that some of the revenues can slip between quarters,

The guidance that we provide for 2022-2026 is our best assessment as of today for what we can achieve this year. In terms of basic and general adjustment, I wouldn't say that it's different in a way than guidance we provided before. What we are trying to do is to basically, when we see that things have significantly changed to guidance B4, that we update the market as soon as possible.

And on Q4 revenues, is there any element that potentially could slip into Q1 on the new guidance?

Now we have evaluated all, you are rightly highlighting that we are in a situation with some lumpy businesses and some deliveries. The guidance that we provide basically has evaluated all the risks and opportunities that we still have for the end of the year and gives you the best bit point that we currently have.

All right. Thank you very much.

The next question comes from Sam Bucharest, Goldman Sachs. Please go ahead.

Thanks very much for taking the question. Good afternoon. Can you just help us split the 500 million reduction in weapons and ammunition sales guidance between that artillery acceptance delay, destinus, or any other factors? Just help us get a sense of the moving parts there. And on the artillery ammunition acceptance, just to be clear for investors, is this an existing contract that has had a timing issue rather than a delay to a government call-off? That would be very helpful to know. Thank you.

Thank you for the question. Let's start with the second question. It's not in relation to any delay in call-offs, it's all in relation to existing contracts. What is happening, and I think maybe this is important to explain, we are building up new facilities and we are ramping up production at several sites. That also impacts the way we basic structure our supply chain. The customer has now asked us to go through more rigorous testing depending on the structure of each individual by the supply chain going into a single lot. So that is now taking more time than anticipated and is also somewhat limited due to limited availability on the customer side of doing this kind of test. So it's really just a timing issue and the production for the products has already happened, but the acceptance and the final approvals by the customer is what is still pending. And we are now assuming that for a significant amount, and this is in the three-digit range for artillery ammunition, this will be delayed to future periods. So this is also one part of the answer to your first question. We did anticipate revenues in the lower three-digit range as a potential, and that is, as of today, also definitely not happening in 2026, as discussions have not yet reached a stage where we can basically take and execute orders. Then there are some other issues that we otherwise would have been able to compensate, but the mix of all the different elements together forced us to reduce the guidance for 2026.

Okay, thank you. That's very helpful. If I could just have one quick follow-up on the ammunition timing point. I mean, does this higher threshold for government certification or acceptance have implications for next year or the year after, or is it something you expect to be able to address?

No, this is now basically quite an intense process because we are starting new production sites and new ways of production. So the tests by the customer are more rigorous than it will be in the future once production has stabilized.

Understood. Thank you very much. That's very helpful.

The next question comes from the line of Sebastian Grohe, BNB Paribas. Please go ahead.

Hi Klaus, hi Dirk. Thanks for taking my questions. The first one is a quick follow-up to the sales guidance question. And firstly on the artillery ammunition. So from the earlier comments I would take that it's fair to assume we can add that very sort of slippage back to 27, right? And similarly here for the Arminius-related POC revenue delays, is there any risk of a spillover to outer years? And I have one more on fricasse flow, please.

I will not comment specifically on 2027. I think this is a discussion we will have later this month. But it's important that this is all, in terms of the artillery, it is contracts that we already have that we are in the process of execution. In terms of our mean use, the situation is that we basically pre-ordered and started production or preparatory works for the program. Basically relying as we've done with some limited contracts in the past on basically the customer executing the order. So technically that will basically then will be revenue in 2027. But in terms of getting a total number for 2027 and future years, I will need to ask you to be patient for our capital market thing.

Let's move on to free cash flow then. You still see apparently a free cash flow positive in 26, so that would require 10 billion or more in the fourth quarter. At the same time, as has been said before, you are no longer providing an order intake bridge. So given the importance of down payments to achieve the target, I was hoping for at least a bit more color around what you have baked into that bridge. So what are the working capital tailwinds that you would assume here and how should we think about order winds and also capex in particular for the fourth quarter, please?

So the cash flow that we provide does not include the aminos contract, any prepayment on that contract. I think that's quite clear. We do see lots of payments coming from contracts that are already in execution. So it's some large level of payments For contracts that we already have, about overall higher three digit number we anticipate from contracts that we anticipate to sign in the fourth quarter. And as mentioned earlier, we did already receive a significant premium from the Romanian package of around 150 million that is not included in the cash flow as of the end of September. We did not provide more detailed guidance or information for the end of the year because it will be difficult to really pinpoint it to the end of the year. Some information on the contracts that we still We see coming towards the end of the year, whether with prepayments or not, we are very optimistic on the signal intelligence boat that basically the German defense minister himself basically wants to push through this year as he has commented publicly. We are working on an additional order for trucks and some boxer programs for European countries. So there is a number of larger programs, but the cash flow does not, to a large extent, depend on new contracts.

And finally, can you just quickly say something around capex, how to think about this, particularly with quarter four?

We have updated our cash flow guidance in July during our Q2 call. As of today, we don't see any change to the guidance, so above one billion for the full year. All right. Thank you.

The next question comes from Sven Bayer, CBS. Please go ahead.

Good afternoon. I have two questions, please. I'll ask them one at a time. The first one is just coming back to Destinos. Obviously, the company has now teamed up also with Helsing. I was just wondering how you see the future of the joint venture with Destinus. Is there still going concern or should we not assume this JV to go ahead anymore?

Destinus has now set up arrangements with Helsing. This is one of the reasons why negotiations or conversations we still have with destiners have not resulted in any concrete agreement. As those discussions continue, obviously with this situation we can be less certain that it will come into fruition than before, but it is not finally decided where it's going.

The other question I had was just You know, coming back to the first question on your guidance approach, right? Because I guess we've now seen in quite a number of years that there are always delays and mostly customer-induced and some eventualities there. I mean, isn't that a lesson learned for you in terms of how you approach guidance in general to make a bigger kind of safety discount when you guide? And I mean, regarding the 2030 targets, at the moment, you have a point value target of 45 billion organic. Would it not make sense to have a range and suppliers also with the building blocks of this guidance, what you need in terms of projects to get there? Should we expect something along these lines from the CMD?

For the CMD, definitely. We have heard this feedback on several occasions and I fully understand it and it will be one The key part of our implementation is to explain not just what the number is, but also how we want to get there. The building blocks, as you mentioned. In terms of 2026, I can only say I don't want to have another profit warning this year or next year. So this is really the best assumption that we currently have based on all the opportunities and risks that we see.

Because you would probably also agree that things like on the ammunition side can always happen without this having a greater meaning, whether Germany still wants to buy ammo or not. But I guess if you build in contingencies from the outset, we don't need to have this discussion, I guess.

The guidance that we presented earlier this year was also Based on production programs and production schedules, contracts that we had already booked and some that we were anticipating to sign during the year, there is a situation for 2026 that unfortunately two extremely big programs did either not come like F126 or are now likely to be delayed as Arminius and that then has an impact that we did not plan ahead for. Maybe going forward, that's something to think about how to deal with such big events, also in terms of the guidance, but that's what happened this year and as of today, the information we provide is to our best knowledge.

Yeah, I guess the shortage on staff, on the client is also something that happened on the truck side, so it seems that German customer isn't growing as fast on the staff side as you guys.

That is also one issue that basically increased production and basically increased deliveries to customers also hitting limits on the acceptance side of the customer. I think for trucks it is an ongoing issue. Here, as I explained earlier, it's driven by the one-time ramp-up of new production facilities that also come with a broader supply chain than what we had in the past. And all basically happening in a short period of time. I think that kind of issue will not appear again in future years.

Understood. Thank you, Klaus.

You're welcome. The next question comes from the line of George McWhitter, Birnberg. Please go ahead.

Good afternoon. Thank you very much for taking my questions. I've got two, please. I may have missed it. Can you please outline what you expect on the ammunition contracts in Q4? For instance, on the medium caliber smart ammunition and artillery ammunition. And the second question is on In terms of ammunition, I assume that you are referring to order intake. We are still in discussions and have put out

German customer and other countries for all different kinds of ammunition types, including smart, medium caliber and artillery. But we won't go into more detail about the size and the scale and the timing of these contracts. But these contracts do not significantly, that we have not yet signed, impacted significantly any result for 2026. In terms of ROCKET and the cooperation with DESTIN in Lockheed Martin, I explained in terms of DESTIN-ness that the discussions are continuing but have not resulted in either a goal or a no-go final decision. In terms of Lockheed Martin, discussions are also progressing and continuing, but we are not in the stage to make any more detailed announcements.

Thank you very much. The next question comes from the line of Saschtusa, our agency partners. Please go ahead.

Oh, thank you very much indeed. I would just like to follow up on the delayed artillery lots, just to make sure that we understand. Have you been mixing supplies from different suppliers, maybe of powder or explosives or fuses, into the same lots for delivery to your customers? Or is the customers worry more that you have had a quality escape and they can't

Yeah, I can explain that. We have not mixed lots, but now we are basically producing more lots from the same facility because, as you mentioned, we are using basically material from different sites that go into the final product. So we are not mixing these products into a single lot, but we now have more lots coming out of the same facility, and that creates more work in that acceptance.

Right. Okay. Thank you very much, Ndiaye.

You're welcome.

The next question comes from Marie Angiarrigio, Morgan Stanley. Please go ahead.

Hi Klaus, thanks for taking my question. The first one is on the BOXER contract. You mentioned that basically you had a 100 million cut linked to the BOXER contract this year because you expected to recognize percentage of completion revenue is signed in December 2026. So just doing basic smite, and I will confirm that it's not perfect, but is it fair to assume a run rate of 100 million revenue per month for 27, or probably just to frame it in a different way and taking a bare approach here? What could be the impact per month of delay from now? So that's the first question of Boxer. The second question is on your 26 backlog target, because Until now, it's still above $100 billion, but when we look at your nine-month order intake, it will imply a Q4 above $25 billion. So, Prebi, what's your level of confidence to achieve that, and what are the main contracts you expect to bridge the target? Thank you so much.

Okay. As the last target, I don't think that we will reach 100 billion order backlog by the end of the year without the amine countering suddenly or against our current assumption still being signed in 2026. I mentioned earlier that we have some orders that also for the German Council that may may also find it hard to be on the agenda for approval this year. So that's why we are not providing you more specific guidance. We see a strong interest in our process. We have lots of discussions reaching the final stages. But without Arminius suddenly still being signed in 2026, we won't reach 100 billion.

So, probably just a quick follow-up on this one before moving to the BOXER contract. So, the 100 billion included the Aminus. So, without that, let's assume like a guidance between 85 or 80 to 85. Correct. Okay.

So, 80 to 85. Thank you. Correct. That always included some part of the Aminus contract. In terms of the BOXER, yeah. The rate in terms of scale makes sense because we are in the ramp-up phase. We started acquiring and procuring products and also started preparatory work so that we could achieve the deadlines and timelines that the customer is still requesting. and that we would have been able given upon signing the contract really starting bringing this into production and then achieving a lower three digit million revenue before the end of the year. But that requires obviously a contract being signed and not being signed on the last day but at least a few weeks before the year end and that now seems unlikely to happen.

So just to confirm, you said that the scale of basically lower triple digits per month is quite a fast option?

Yeah, the rough type, it makes sense because deliveries, real final deliveries at scale would only start in 2028.

Yeah, but I mean, going forward in 2027. Yeah, okay. So in 2027, assuming a lower triple digit value per month, it's pretty like right assumption, just to confirm that I understood correctly.

Yeah, we never really provided more detail, but I think in terms of when to model it, it's not too far off.

Okay, perfect. Amazing. Thank you so much, Klaus.

You're welcome. The next question comes from Afonso Osorio, Barclays.

Please go ahead. Hi, thank you for your time. Can I just follow up on this margin guide, please? Looking at the implied guidance for Q4, it looks like vehicles margin is lower sequentially and also versus last year. And if you look at the recent track record, margin has been going up sequentially in year over year in all the quarters this year. So just wondering if there is any particular reason for that Q4 dip. And then the second quick one is on air defense as well, on margin. Were there some one-off benefits in Q3 that we should know? I think the new guide implied margin being lower again in air defense. So I think it's quite unlikely. So just curious to hear your thoughts. Thank you.

Yeah. Let's start with air defense here. We did increase the guidance for air defense. On revenue, but not yet on profitability. We will see whether there is some potential to basically be more on the upper end of the implied range. In Q3, we did see support from the R&D programs that we have signed with the Italian government that provided We don't know for certain if it will provide an additional benefit to profitability. That is not a program that is consistent over time, so whether it will provide the same benefit in Q4, we don't yet know for certain.

A quick follow-up if I have you on the line.

The benefit, I think maybe that helps, is in the range of 10 million euros.

Okay, that's super helpful. Thank you, Klaus. And one final one for me, if I can. I know it's still price negotiations and all is still going through for the Voxer next year, but can you comment more broadly on the articles in the press talking about 20 billion fixed price for this Voxer contract initially, of which 10 billion would roughly go to you? That's below what you said previously. So is there any comments you can tell us at this point?

I can tell you as much that the 20 billion is not evenly split between KNDS and Rheinmetall, we would get a larger share.

Perfect. Thank you so much, Klaus.

The next question comes from Christoph Laskawi, Deutsche Bank. Please go ahead.

Good afternoon. Thank you for taking my questions. Two follow-ups only, really. The first one on the lot acceptance test, and sorry to come back to that, is this relating to several customers or essentially one? Just wondering, because if it's only one, then once it's resolved, you could obviously generate the revenues quite quickly. If it's several, that might spread over a couple of quarters. And then just on your comment that Germany basically moved to more detailed price analysis or pricing checks on the Boxer. Do you see this as general behavior of the customer also on other contracts? Are there any contracts which slows down the approval and signing or is this basically because it could be the largest contract they will ever sign or at least today's and it's more specific to this one contract?

Let me comment first on the second question. Now, the one key element is the biggest contract that they basically have awarded for the army. So there is more scrutiny, and we always expected that there would be more scrutiny on those contracts. What we also see, and whether that is important here, we don't know, is that the customer is now looking more at value for money. And he wants to be certain that he gets a good product at the right price. So that's what's happening. But I think the main driver is definitely that it's the largest program that is being negotiated. And the other point in terms of the lots, it is mostly one customer. But as I explained earlier, there are several lots due to basically different The structure of the supply chains going into the final product. And that basically requires several acceptance tests even if it's just one customer.

And could those be done relatively soon after one another or does it generally require more preparation before one can follow the other?

It depends on the availability of shooting ranges and staff and people on the customer side to basically be present and approve the testing. It's not that you can do everything on one day, even with the same customer.

Helpful. Thank you very much.

The next question comes from the line of David Perry, JP Morgan.

Please go ahead. Hi, Klaus. I'll ask three questions. If you don't want to answer them all, you can choose which one to drop. They're all a bit philosophical. The first one, just curious about the overall relationship with the German government. It's one customer, big customer, but lots of different contracts. And I just wondered philosophically whether every contract is negotiated in isolation. What I'm essentially asking is, does the conversation ever go like this? Offer us, we'll pay this much for the boxer, but we want you to charge us less for the ammunition. Or are these discussions always separate? That's the first question. The second, shall I let you answer?

I can, from all I know, many contracts are negotiated by different departments at the procurement agency, but if further detail can be answered better by people who are really involved in sales, I'm in no position to give you more specific information on that.

Okay. The second question is, I may have missed some, but based on all your announcements, I think you've announced 21 JVs since October 24. I just wondered roughly how many of these JVs are actually up and running? How many of them do you think might not get to fruition? And are they a meaningful contribution to the guidance you gave us at the CMD last year?

I don't have now the exact number, but the joint venture that you mentioned is a mix of different kinds of cooperation. So some is where we basically are in a fully consolidated A working relationship where basically the former owner is still a minority shareholder, others are actual joint ventures that are already in place, and others are basically in the process of being put into action. Overall, one of the ones that basically contributes most significantly is the BACnet acquisition where we still have a joint venture partner and we only earlier this year basically took over the majority that contributes already significantly. We acquired Docking as an example this summer, it's still a joint venture company that is Now starting to provide lower million numbers in terms of revenue, but we see great potential due to their capabilities in the autonomous vehicle area. The biggest contribution by far is BlackNet. The others are areas where they either are still in the For example, the German company ICI is only now starting to generate significant contributions, but they will provide technology and basically a foundation for the growth in coming years.

Okay, maybe you'll update us at the CMD. My last one, if I may, is, This year now with the new guidance, if we take out the naval acquisition, your organic growth is probably 22%. Last year it was 25%. As the companies get bigger, most companies struggle to have accelerating growth rates. It's just difficult. But you've still got this guidance of 25% to 35% organic growth through to 2030. Just given that customers will always want to inspect things, you're growing, you're diversifying, supply chain's more complex. Are you still comfortable with this framework of 25 to 35% organic growth over five years?

I won't comment on that. I also beg your patience for the upcoming CMD for more clarity on our expectations for the years to come. All right.

Thank you, Klaus. Appreciate it.

You're welcome. The next question comes from the line of Benjamin Heelan, Bank of America. Please go ahead.

Yes. Afternoon, Klaus. I hope you're well. I had a couple just to follow up to the first one on Arminius. There have been some comments, I think Armin made some comments in the past couple of months as well about changes in scope of the contract and there have obviously been some news articles indicating lower pricing for Arminius. So could you give us a bit of an update? Where are you seeing the scope of the contract and is that potentially One of the things that has caused the decision to be pushed to the right. That would be the first one. And then the second one on this artillery slowdown, you've mentioned these increased supplier investigations, but similar to the comments that you made on Arminius, where the customer's looking for more value for money, The question I have is, is the customer starting to look at artillery and discuss more value for money? And that's part of what the supplier investigations, you know, assessments are about as well. And then I get, sorry.

The artillery is based on all of the prices and agreed prices for long-term frame contracts. And the customer has always looked for, basically, to structure to make sure that he gets a good price. So that delay that we talk about has nothing to do with scrutiny or new scrutiny on prices whatsoever. It's really down to basically the mechanics of getting the The Amino Contracts Discussion in terms of the scope that Armin mentioned it was mostly in terms of how to structure basically the options and additional additional packages that are part of the negotiations that do not relate to the main Thank you.

Okay, one quick follow-up and then my third question. Back on artillery, the order momentum has slowed a lot in the last 12 months. Could you talk a little bit about how you see the pipeline for artillery and what the kind of opportunity set is that you see today? And then my final question is coming back to a similar sort of question that David just asked, but my view of the JVs when they were being announced at the time was that It's a way of companies like Destinus or Lockheed, et cetera, leveraging Weimertal as a way to get into Germany. And that's what a lot of the joint ventures were kind of gauged at. Do you feel that part of the reason some of these joint ventures are taking a lot longer to materialize or just aren't materializing at all is that companies are getting opportunities to just sell into the German customer I don't see this being a driver for the delays.

And also in the discussions, it's not just basically people bringing into the market in Germany and just opening the door. What we are offering in this context is that the partner brings We basically provide not just the presence, the access, but also the capability to produce and scale up production in Germany together with the existing production and technological capabilities that we already have. So we don't see that it makes sense for, in many senses, to basically say, okay, I go directly The Artillery Pipeline We have long-term contracts or framework agreements for artillery with many customers in Germany and Europe. But it was correct that we would like to see faster drawdowns on the existing frameworks. That's something that we are highlighting towards our German customer because the need to basically restock and procure the product is still there. It may not be at the same level as maybe two years ago, but it still is an intense need to restock and replenish inventory with the products that are still being used. Okay.

Very clear. Thank you, Klaus. Appreciate it.

The next question comes from the line of Joel Orscher, Rothschild & Co. Please go ahead.

Good afternoon. Thank you for taking my question, Klaus. I've got one about the acquisition of the shipyard in Romania. It seems that Darman is challenging the sale process and there'll be a court hearing about that in December. So my first question is, is that correct? And then the kind of the follow up to that is, I guess, sort of why did you decide to announce the acquisition publicly when there is still this legal process

That needs to play out. Yes, there have been legal challenges. It's a different matter. We don't see that they have a basis, but that's for Romanian legal institutions to decide. We were not the first to announce the result. We basically acquired or basically who got the award in an auction and the company who ran the auction announced the result the same day. So we basically followed in order to explain to the market why we entered into the process, why we acquired the business and what we intend to do with it together with our partner. Okay, thank you.

The next question comes from the line of Rory Smith, Oxgap. Please go ahead.

Afternoon, it's Rory from Oxgap. Thank you for taking my questions. I've just got one, please, and it's related to David's questions on the JVs. I guess what I'd like to know more of is what kind of processes and controls you actually have in place when you sort of go out to do your diligence on some of these. JVs and partnerships because I've been to quite a lot of defense tech companies and to be rather blunt about it they are all quite immature in terms of or somewhat so certainly are in terms of their own internal processes manufacturing capabilities etc etc so is there anything that you can tell us from the inside you know things that we can't see that gives us a little bit more confidence around the kind of outlet across that kind of JV partnership piece On, I guess, maturity. That would be really helpful.

Thank you. Any acquisition or any joint venture goes through the due diligence process on our side. We look at all the different aspects, legal, production, technology, tax, all the different aspects before we enter any contract. In some cases, Yeah, you're right, the level of maturity of the organization is not where we want Agmetall entities to be, but these entities may have technology or production capabilities, ideas that can benefit us, and for that reason we factor in the cost to bring the organization to our standard into our business case before we decide. Thank you so much. You're welcome.

The next and last question for this call is a follow-up question from Sven Weyer, UBS. Please go ahead.

Yeah, sorry, just one quick follow-up on the Boxer, actually. I was just wondering, because on the truck side, right, when we had the delays, I think you were still producing the trucks even before you had, like, the official call-off. I mean could we imagine you do the same with the Boxer right that even before the official decision is being made that you start you know production or would you definitely wait until you have the final order now for for contracts on our vehicles we generally do not start before we have the contract in production what we

What we sometimes do is to start procuring products if basically we are in the final stages of negotiations and we have to order products or components that we can use also for other programs. In case of the Arminius contract, due to the kind of desired timeline of the customer, we went further than we would otherwise do for any other customer. And that's why we basically were in the position to really generate progress directly after signing a contract for in 2026. Now that it is likely that the signature of the contract is delayed, we will not be able to generate revenue from basically preparatory work that we have started.

And there is further work you do from here. So I guess the number that you generate as a revenue once the contract is being signed is then bigger than what you would have had in 2026. Is that right?

There is a limit of how much we will do without the contract and that is something we have made quite clear to the customer. And yes, the work that we have only started doing, our preparation work, would basically add to the revenue we would otherwise generate on a run rate.

Understood. Thank you, Klaus.

You're welcome. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to CFO Klaus Neumann for any closing remarks.

Ladies and gentlemen, Thank you for joining our Q3 earnings call today. If you have any further questions or remarks, please get in touch with Dirk and his team. Have a great day and I hope to see many of you at our Capital Markets Day in Hamburg later this month. Take care and goodbye.