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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much here for the introduction and to everybody listening to today's call, a warm welcome. I see the list of the attendees in front of me. I guess, we're all happy that you are here. Thank you for attending.
And I guess I can start with a very simple statement: wow times, thrilling times. Never in my lifetime or at least working time, I've seen such a sequence of, I would say, changes within the economic environment, changes which can be tough sometimes to digest or to see consumer to work with; on the other hand, which gives a lot of changes. When we talk about Montana Aerospace, I can tell you upfront that, yes, it's sometimes really mean is much work to find solutions for the topics which occurred in the last 12 months, let's say, in the last years and finally also in the last 9 months. But on the other hand, they gave us opportunities we never have dreamt off.
So let me start with today's earnings call. I will give you an overview of the development, how we, as a management or we as a company see the situation or an outlook of what to expect for the fourth quarter 2022 and what does it mean at the end also for 2023 as aerospace in our business is obviously more long-term development business. Therefore, also a guidance, a bit of introduction what to expect for 2023. And then later, we should have enough time for Q&A and detailed questions on certain topics.
This chart is a chart I've put -- we've put on purpose. You see the air travel and the development over the last, yes, 40 -- almost 45 years. And there were some times impacts, which gives a downturn of the development, mostly very short term, talk about goods prices in the Iran and [indiscernible]. At the end, there were slight movements in the curve, which was always going constantly up.
With COVID, it came down rapidly but came up also extremely fast. And this fast increase right now offers us opportunities because it's more or less leading with the downturn upfront to consolidation of the business as we have never seen it upfront before.
And to give you some of the, I would say, highlights of what you have to work with in our business, and I'm sure you do but in different shapes, here's some snippets out of, I would say, some of the most crucial issues we have to face with on a daily basis. We have tailwinds, like, yes, the energy crisis, as we call it, on the one hand, brought us a headwind, which is immensive . In many cases, gas rose by a fact of 30 on the megawatt hour, and we use a lot of gas and electricity also for recycling.
On the other hand, it pushes worldwide as never before the energy transition to new development, more efficient ways of increasing also the electricity production. And this drives our business in the segment of energy as never have seen before. It's a good outlook for the -- not only next year, but I would say, even for the next 5 to 10 years.
It drives on the other hand, also the electrification of the E-Mobility business, which is on both ends important for us. On the one hand, the -- in the segment of energy where we produce the copper course for the net more than 100,000 cars on the street on a unit basis, which are driving the, I would say, the core for the E-Mobility. And on the other hand, the sector E-Mobility, where we build the battery packs and where we could deliver more than ever due to the changes.
On the other hand, I don't have to tell you the headwinds we faced this year sometimes really challenging for the companies. There's a war for talent. HR is not easy. If you build up workforce in search for talent, it's worldwide, not an easy issue. And you have to work around with different means. I guess with our global footprint, we have quite some good solutions even though sometimes on a daily basis, quite challenging.
On the other hand, we have seen a rapid ramp-up of the build rates of Airbus and Boeing, even though maybe the ramp-up is not as announced maybe in some times of Boeing and the Airbus, but it's still extremely fast growing up from the low rates we have seen 1 or 1.5 years ago. And this is pushing the supply chain in a way we have never seen upfront before and sometimes gives chances, which we also have not dreamt off. And for this case, for instance, we can announce and we will announce it later on that in the meantime, we have an order -- contracted sales or order backlog of more than EUR 5 billion on contracted sales, definitely also one of the highlights which we achieved during this year.
With all those tailwinds and headwinds, where are we? We have taken a path a couple of years ago, where we said, okay, based on our setup, we're investing heavily. 2016 to 2022 is the investment phase. Based on a high win of market share on high contract, this is the contracted sales. We reinforce our global footprint and the local-to-local structure we have because we saw it and still think and I guess, we are more than encouraged by the present situation. This is the right approach to face the future demands and also challenges of this business. And we have this investment sales.
And then later on, as a very reduced CapEx because it's long-lasting investments which we do. And they're lasting in many cases, 10, 20, 30, 40 years or even larger and build up on the contracted sales growth, a very, very profitable business on a global footprint. Right now, I would say we're right a bit more going this year from the light yellow left part today now building the foods area we're right now in the transition.
The fourth quarter 2022 will be, I would say, the first one that we can definitely say we're now bearing the fruits of what we have invested in the years before. And we are emphasized by the development of these global changes.
Where are we concerning our total development? We have increased our top line quite significantly with 62% over the -- in comparison to the last year, Q3 2021 to Q3 2022. EBITDA, I come to that one in detail, also increased but in a growth rate which is around half of the growth rate of net sales, which is partly due to the mix and partly due to the fact that we increased our, I would say, footprint in Aerostructures also with the acquisition of ASCO. I'll come to that one a bit later on. And we always calculated with ASCO with the fewer EBITDA contribution this -- margin this year. So therefore, it's slightly dilutive on Aerostructures.
Upfront, we will give a guidance, which is slightly at least from our -- in any case, confirmed on the upper range, which we gave. And we even have the potential and think that we can overachieve this one in the fourth quarter 2022. And the main driver then is in all the areas to be searched and found. And then you will see that the adjusted EBITDA in comparison to the net sales is also increasing, at least in the plus/minus in the area of the growth of sales for the total year.
Breaking it down into our 3 segments. I would like to start and give an overview with energy on the right-hand side. Energy, we have seen a growth of 21% in comparison to last year, the first 9 months. Definitely over the development of the industry, there is -- we had an -- September is definitely a milestone concerning also the energy segment. We have closed the transaction in Sao Marco, Brazil, which is extremely important for us to have this global footprint and also have more capabilities in recycling and also the, I would say, market share in Americas.
But for the 9 -- first 9 months, only the balance sheet of the transaction is in there, so let's say, the purchase price and not the sales yet. So sales consolidation is starting with the 1st of October 2022. And I would like to give a bit of a glance to this transaction.
We took over the company by paying at least partly only -- by taking over oil assets and trade working capital, but we paid only the -- it didn't take over the liabilities but took over inventory and receivables and paid partly for that one. So it's a highly accretive transaction. And with the help of this transaction, we are able to materialize immediately from the first day on as we have the chance to use the capabilities they have -- the capacities they have in recycling. We have the material, and therefore, also with other action items, we think that we can almost pay off the half of the transaction by the year's end already.
Energy is an area where it's a project-based business. So this project-based business, on the one hand, gives you good visibility for the months to come. But on the other hand, that's something we always guided. There is a time lag concerning the pass-through of costs in case of inflationary or high volatile costs. That's exactly something we have faced this year. So the high energy costs mainly and also HR increases inflationary costs will show the positive impact. The negative impact in the first 9 months, but the positive impact by high increases of the prices in the fourth quarter to the fact that those contracts are now coming to sales.
And therefore, also for energy, together with the Sao Marco transaction and the fact that with the help of the Sao Marco transaction also, we can highly increase the EBITDA margin, so the margin level in Americas to a more detailed construction on -- so that we can discount or deduct the VLT.
Finally, I not have to see enough costs. So we think that energy will overproportionately also grow in EBITDA in the fourth quarter.
E-Mobility, here, we faced a very difficult year. You know that in E-Mobility, we are not only producing those battery packs for mostly E-Mobility, but we have a very long value chain, starting with the recycling capabilities for both the aluminum and special alloys. It's an energy-intensive business at the end, recycling. And as it is situated in Europe and the European energy development was horrible, to say, we faced a heavy increase in gas and electricity prices, which also brought us to the situation that we had to sometimes even reduce the capacities in recycling.
But still here, we managed with the possibilities of the total segment and the strong demand, good development in sales. And as you will see later on the next chart, a doubling of the growth rate in EBITDA. And also here for the fourth quarter, we expect a very strong growth in EBITDA also with the help of some subsidies we should generate for the electricity and gas price increase in the last months and generate in the fourth quarter.
Aerostructures, 120%, I guess this one also hopefully for you, is outstanding in comparison to our peers. And we are extremely proud that more or less underlines what we always tried to also explain that we not only won market share but also constantly deliver this market share on the sales. Of course, sales growth is, on the one-hand side, part of the market share. It's part of the wind of additional, I would say, packages, which we are materializing right now. It's, on the other hand, explainable by over the M&A transaction, ASCO, which is integrated since approximately half a year and part of the sales growth and, of course, also by the ramp-up of the build rates of the OEMs for their commercial airplanes.
What do we expect in the Aerostructures also for the next year -- for the next quarter? This, again, a strong quarter, not only concerning sales. As the ramp-up of the build rate is continuing and the work package is long-lasting, the market share increase is constant but also a very, very strong EBITDA months. Why? Because we always declare that in all 3 segments, we are sometimes with time lags, but we are able to pass through a good portion of our costs, inflationary costs, either materially on a more or less invoice basis -- daily basis. But sometimes it's calculated on a quarterly or on a unit basis or negotiated over part of the contracts. And when we come to Aerostructures, this exactly is happening in the fourth quarter that the costs we had in the first 9 months are now, in many cases, passed through with additional, I would say, markups. And of course, this brings not only good sales development and operation and daily business, but also the positive impact for the costs we had in the first 9 months. And therefore, we expect a very high EBITDA also in comparison to the last quarter in Aerostructures.
Where are we? If you look at the overview of those 3 segments, we talked about the sales growth in the different areas. On the EBITDA margins, E-Mobility over proportional growth. Energy, I would say, plus/minus in line. But we will see a very strong growth in energy EBITDA development in the fourth quarter due to the 3 impacts I just explained, which is the transaction and the payback of the transaction in terms of recycling capabilities of the possibility to finally or the C4 Americas, the VAT, not as costs, but finally, as a pass-through possibility or deducted and then mainly also by the possibility that the most impact that we have increased our prices due to the inflationary costs now affected, their impact will be shown in the sales and the higher sales and the higher EBITDA.
In the Aerostructures where we have the positive impact of the pass-through and the capitalization of the market share wins, and therefore, the better utilization of our capabilities. A bit more in detail concerning the longer part of the P&L. And I guess, you have seen, hopefully, all the press releases and the detailed documents we have sent out. Sales growth over 60%, but on a EUR 350 million change; adjusted EBITDA, plus/minus, I would say, in total hopefully in our guidance. We always said that we are increasing on a quarterly basis.
CapEx. Most of the CapEx, which is including also any if I ease as we call it, or capitalized the costs, the programs are more or less finished. So the large CapEx project is something we can say is done. So the capacity installed, which is good for at least EUR 2 billion, maybe even EUR 2.2 billion to EUR 2.3 billion on total sales is installed, and therefore, is going more into the direction of sustainable capital.
Trade working capital, yes, again increased. Looking into the details that already have seen, the highest peak in September in all 3 segments. But as Sao Marco was a trade working capital on the transaction, it increased once again in energy area segment, our trade working capital. But we should see a quite decent reduction within the last 3 months of this year. So our expectation is that with this EUR 503 million, this is the peak we have seen at Montana Aerospace, now going down quite constantly and permanently.
And pick more deep dives into the different areas. The result for the period impacted by high depreciation, which is in around EUR 100 million, but also by the financial result. Here, we have a one-off also due to, I would say, the VAT ship we discussed upfront. But all in total, we think that also concerning the fourth quarter, we should see on a quarterly basis in 2022 already for the consolidated level a positive net result, not yet on a yearly basis but on a quarterly basis, definitely on a higher range.
Production performance increased personnel expenses slightly under proportional. Here, we have, of course, received quite some headwind as many companies also due to the lack of qualified people worldwide. For instance, the -- yes, we could produce more in the U.S., but still here, it's tough to get qualified people in all the other areas. Now also in the U.S., we help ourself with our global footprint, for instance, Indian and also Vietnamese workers, people, colleagues working in Romania, and hopefully, in future also in the U.S. This helps a lot. But of course, the inflationary cost is something which is passed through then in the quarters in the future.
What did we calculate with? Yes, we calculate it with a certain increase. So it's not that far away, and it's something which is almost part of the calculation of our products in the future. Other operating expenses, mainly here driven by flight and energy costs, and this gives a very good view of how heavy the impact of those issues was there is. And therefore, I guess, we are quite fine with development. And I'm happy then to show the results of the fourth quarter, where we are mostly then passing through and get paid back a good portion of those inflationary costs.
Net debt increased on a year-on-year basis. Main impacts are threefold. It's the transaction of ASCO, it's the transaction of Sao Marco now in September in the balance sheet; and of course, the heavy increase of trade working capital, where we have seen the peak by September 2022. The number of increase at constant growth under proportional, the most growth we have in Romania and Vietnam. And this will be also the future growth areas, mostly in comparison to the other regions.
Trade working capital. The main impact we have with the trade working capital is, of course, out of the inventories. And we always tried to explain that the material crisis, the transportation crisis, maybe this call is not something which came up this year. It came up in mid-2021, at least that was the starting point for our very heavy increase of trade of inventory increase worldwide to not fall in any shortcut when the ramp-up of the build rates and the sales are going up and not having enough material. Even though it's a high-cash demand linked to that one, we think that it was more than the right decision as it's paid back by the trust of our customers. And at the end, also within this consolidation phase, the trust for future rate packages, which we won and win on a permanent basis.
And therefore, on the right-hand side, also the increase of the contracted sales, which is maybe a good indication of this trust we had. Cash flow, negative. As said, the main point is the acquisition and the high inventory acquisition, which is in Sao Marco's case, receivables in inventory only but increased it by around 70% -- EUR 70 million, the trade working capital. And on the other hand, also the acquisition of ASCO, which had some free cash flow negative impact. CapEx is that our guidance was around EUR 90 million. But the most CapEx projects are close to finished, capacity installed, so not too much amount to be expected by the year's end. And from then on, 2023 onwards, it's more or less in the area of, I would say, sustainable maintenance capital in the area of around half of our depreciation for the next year to expect.
And with that, I would like to give an outlook for the year 2022. If not done already, we guided for a sales of EUR 1.16 billion. We will be slightly above. We have a very good October, and the fender is running great. So let's see what December is bringing up, most with the question mark concerning still aerospace, how long they keep on producing and the same in E-Mobility, but definitely a bit higher than EUR 1.16 million -- billion, excuse me.
Out of this one, the majority is, of course, organic, inorganic. For the year, it's ASCO, the transaction, which amounts around EUR 120 million for the first consolidation months; and Sao Marco, starting this -- October 2022.
Segment guidance, the fastest growth in Aerostructure, followed by E-Mobility and Energy, all growing, but the main growth is coming out of Aerostructures who changed. Now the picture if you compare it to last year, and therefore, the largest segment of the 3, not only in assets and growth but also in sales.
EBITDA, we guided for a plus 7.5% EBITDA margin for this year. And due to the impact, which I would like to, once again, shortly summarize, we think that we will be over 8% EBITDA margin for the updated 2020 -- year forecast 2022, mostly to a very strong Q4 2022, where the main impacts are subsidies where we get some reimbursement of the high costs we have. Most of the impact is the pass-through in different shapes, depending on the segments of the high inflationary costs to our customers in Energy, in E-Mobility and also in Aerostructures of the impacts on the deduction of the VAT in Brazil out of the transaction. And of course, the payback of this Sao Marco as we can immediately start with the first day with the recycling and the material we have and the capacities right now are also so-called green copper, which pays back quite quickly and gives a good impact also to the EBITDA margin.
With the CapEx, therefore, we guide for lower than EUR 90 million for the year-end. And for 2023 and onwards, yes, we reiterate and we assure that we guide for another, I would say, overproportional growth by another 20%. But with an overproportional growth of EBITDA and next year, a massive CapEx reduction around to the half of the depreciation, and therefore, also on a constant basis for the total year positive free cash flow. And our clear goal is a good portion of positive net income, and therefore, has a positive development also for the future as a starting point.
That's from our side, an overview of the development, and we are happy to answer all the questions concerning our first 9 months 2022 results. Thank you.
[Operator Instructions] And our first question comes from Virginia Montorsi with Bank of America.
I just had a quick question on energy. First, it's a clarification, have your costs so far tripled or quadrupled? Because I think in the slide, there is a [ 3-4 ]. So I just wanted to clarify on that. And then could you help us understand a little bit how to think about 2023 for the energy cost? Do you still expect them -- basically any color you can give on that and how to think about the phasing?
Virginia, thank you. From our slides, 2021 to 2022, it's around the tripling of -- a bit more than tripling, to be fair, almost 3.5, I would say, to be exact, concerning our energy cost for the total year. Of course, the year is not yet finished. And then we have, at the end, on the energy cost also maybe to deduct the subsidies. We might get on those energy costs, but it's not yet clear. In some of the states and European Union did some activities in this respect. So it's between 3 and 3.5 depending on subsidies.
Okay. And on next year?
I think I answer differently. Sorry to say. The most challenging topic is not a high cost but volatility. If no one really knows what is happening today -- the next day. And if you have looked at the energy prices, which is more or less not something you can fix for a long period of time, in the meantime, it's only on the spot market. The spot market in some weeks doubled or tripled within a day, and then went down again the day afterwards. This volatility is the hardest to do. We calculate with constantly high prices on energy out of different reasons, but I guess we can discuss it on a separate discussion point. And we have, in the meantime, for most of our contracts the pass-through clauses concerning the energy costs. We calculate with over around EUR 150 per megawatt hour on energy for next year on a megawatt hour.
The next question comes from Ross Law with Berenberg.
I've got 3, so I'll ask them one by one. The first one is on the margin. You've obviously today confirmed your guidance for the full year, but you've also specifically stated that the margin for the full year to be around 8%. That base implies, of course, a very big step-up in the margin in Q4. I think on your revenue guidance, it implies 16%. And you've also said that you can beat that. So I'm just wondering, at that exit rate, what does that mean for 2023? How much of what you're doing in Q4 is a one-off? And yes, in general, if you could provide some color on your expectations for EBITDA and margin in '23. That's the first one.
Thank you very much, Ross. A good point with the one-offs. Please let me explain it once again. It's mostly the subsidies which we have. And subsidies, we only partially know whether they are coming for sure or not within the fourth quarter already. But on the other hand, there are one-offs in the fourth quarter, but we had the costs already 9 months upfront. So that's why I won't see them too much as one-offs in this respect. So therefore, not too much one-off out of it. On the other hand, yes, we have a onetime massive impact out of the capacities this quarter, which we can generate out of the Sao Marco transaction. This will continue for the future, but not, of course, with this first, I would say, high wave we have for the fourth quarter of [ 2024 ]. So most of it, I would say, is continuous basis also for the future. And therefore, we expect to end the next year on a, I would say, broader range between EUR 130 million and EUR 150 million EBITDA.
Okay. So you're confident with double-digit margin next year, EBITDA?
Yes.
Okay. Second is on build rates. Obviously, Boeing had their CMD last week, and they published their updated assumptions. I'm just wondering if you've made any changes to your internal assumptions. I think the 737 rate that they put out for 2025 is slightly below where you were at previously. So if you can give some color on how that's impacted your assumptions but also the contracted sales basis as well.
2023 is something different to answer than 2024 and '25. If you take a look at the next 3 years, I guess, this is also the guidance which was given by the OEMs mostly. Why 2023 is different. Never forget that we are part of Aerostructure, so the prime structure of the airplane. So it's mostly the starting point. Usually, the -- excuse me, lead times, which are over 1 year, if you're not in a business like we are, that we have it in a very integrated way. So therefore, the orders are out. Therefore, we can give quite exact numbers already from our side, what we know quite exactly what are the pull rates for us. What are the PED rates, what has been delivered from Airbus or Boeing to the market, it might be slightly different. But we expect something that, for instance, for Boeing, the announcement like 38 build rate for 2023. We are slightly below. Midterm, they calculate with -- here we are in around 50 to what they plus/minus also announced now. We know that they announced a couple of weeks or a month ago, 57 to built in '25 which we've always said that we're not believing also the 60s we never believed. We said always there will be constraints on that point to now to 2025. We are almost plus/minus with the 50 as it's in the range of what they have also in their guidance for the 8 -- for the 737, sorry. For the other plane types, there's the one which is, I guess, also for us, very important is we have a good market share here is the 787. We've seen very low build rates this year, between 1 and 2. Boeing is pushing hard to increase it fast. We have definitely lower rates than what they announced. So in our calculation of financial guidance, almost half of it. I would wish to see the 10 they have announced, but we don't expect them in the years until 2025. We expect them lower. A320 family, nothing changed to our last, I would say, guidance in this respect. We know that Airbus is trying hard to get to 75 by 2025. We have a low 60s here. And for next year, we calculate also with high 50s.
Great. Final question is just on debt, more specifically, parent company MTC debt. So obviously, we had the VAT profit warning a few weeks ago. So just wondering what your internal assumptions are for MTC's leverage at year-end and obviously, how that compares to the covenant at 3.85x. And also in this scenario that MPC would breach its covenant, what are the options available to the parent company? And how could that potentially impact Montana Aerospace?
Ross, thank you. And to some which maybe not that aware of this situation, let me shortly explain it, Why does VAT has a potential impact to our net debt. The outcome is as follows: the VAT and Montana Aerospace and also Aero-Flex that all 3 listed companies, have a majority shareholder, which is MTC AG, our old parent company, holding in all the 3 companies more than 50% of the shares. They have own business also, but the minority interests in some industries in real estate. But besides that, no other segments. And Montana Aerospace that was the youngest on the stock exchange, of course, had -- in the past was financed by so-called promissory notes. And those promissory notes were then -- had covenant criteria, which are calculated on the MTC level and we have also a guarantee of the MTC AG concerning our financing. So what happens is what Ross just pleased with this statement and question is that VAT, our sister company, for everybody, a bit unexpected after a very good year 2021 in the last weeks announced that they will not meet their consensus in guidance. And to be very fair, this, of course, was definitely something to look at very decent where it can -- on the other hand, it's also challenging for the covenant criteria of the MTC AG, which could then indirectly potentially 2x contribute also impact Montana Aerospace. And here, I can tell you that if I take the consensus, of course, then we are far away from any carbon breach by the year 2022 or 2023, if any -- if I take even half of -- I would say, 1/4 even -- not even a low double-digit amount of EBITDA from VAT, assuming that they are not producing any, only negative EBITDA for the month in September, my calculation, let's say, straightforward. And even in this case, with the development of MTC, which has a very strong quarter for the fourth year -- for the fourth quarter, Aero-Flex. But in our performance, there won't be any -- breach of any covenant criteria. Independent from that point, but if -- even if there would be a case, then we would call for the guarantee and then Montana tech components AG would need to emit whatever do to either pay off one of the sale to have one or the other noncore business real estate. But in any case, like I said, it's not the case concerning our simulations of any covenant structure we have calculated. Nevertheless, we take this also as a rate starting point to achieve and because it's something we announced earlier than what was from our side announced or as expected, I guess, from the market to be cash-positive and reducing heavily our net debt by the year's end in the first quarter. And that's something we follow up since then at this point quite heavily to make us also concerning our financial structure completely independent from any potential issues of the MTC, which then should be followed up by 2023, a clear cut of the -- any guarantees or whatever and be independent from that point. Hopefully, this answers your question. I know it's a bit complicated, but hopefully it answers.
It does.
Next question comes from Aymeric Poulain with Kepler Cheuvreux.
Just following up on this debt reduction process. In Q4, you mentioned the working capital having peaked. So potentially with low CapEx and improved EBITDA, that means you may even closing on a positive free cash flow for debt reduction. So what's the scale of the working capital reduction you would anticipate in Q4? Will it be mostly also from the inventory consumption as you build up excess inventory, the buffer throughout the year? Or will it be through some financial monetization of, let's say, trade receivable or other items in the working capital? That's the first question. And the second question is regarding the acquisition of Sao Marco. You said it didn't have an impact on sales in Q3. Also, you consolidated the consideration and the balance sheet in Q3. And I think you gave a guide for the contribution of acquisitions to sales of about EUR 150 million for the year. But if I look at the EUR 120 million that you mentioned for the 9 months, it doesn't look like Sao Marco does make a big contribution. And again, it doesn't make a lot of sense to me given the fact you said it should make a decent contribution to the EBITDA in Q4. So could you give us the exact contribution you would expect from Sao Marco in Q4?
Yes. Of course, I'll start with the [ TVC ], if you allow with the first question. Yes, you're right. Of course, we expect a EUR 3 million to [ EUR 6 million ] year amount to reduce the [ TVC ]. The main impact is out of the inventory. You're correct. I mean, I don't have to tell you. We have in the Q3 2022 for total Montana Aerospace almost EUR 400 million in inventory. Most of it is material but also work in process, which has been -- or finished goods, which has been delivered in the fourth quarter. This is a decent high amount -- extremely high amount, to be fair, but was mostly strategically intended and also linked also to the ramp-up, partially. And therefore, there is a heavy increase on that point. Of course, that by the year's end, there will be some -- or there -- case for resistors and some liabilities not paid [ before the U.K. ] But the main impact is coming out of the inventory. And in total, we expect a 3-digit million year amount out of this impact in comparison to what we see in the September results. Concerning Sao Marco, we have this pre distinguished, not to get mixed up. We had 2 transactions this year. The one is ASCO in the field of aerostructures, which we consolidate since April, so since the second quarter 2022. We expected here a bit lower EBIT -- sales contribution for the total year. We said there was a run rate of around 50 per quarter. We have to see right now on a good performance on sales, there is a run rate of around 60 per quarter. So right now, they stand up in the sales of the Q3 results for around EUR 120 million on total sales, and it is going to increase by another good portion of around EUR 40 million by the year end at least, yes? This is ASCO. Sao Marco is different, it was closed in the end of September, so which means the full balance sheet is in but not the sales. As with the consolidation date, it only starts with the sales consolidation. And here, we expect for the total year, Sao Marco is good on a stand-alone basis of around EUR 80 million on total sales. So here we expect EUR 20 million out of Sao Marco, the contribution for the last 3 months 2022. But please note that it's not including the sales number, our internal monetization of the capacities they have concerning recycling, which has mainly EBITDA, but not a sales impact, a massive EBITDA, but not a sales impact. But for the total year and next year, we have -- we may calculate with Sao Marco out of this acquisition, as I said, at least EUR 80 million on total sales and out of the ASCO transaction, a good portion of far over EUR 200 million, more in the direction of EUR 250 million.
[Operator Instructions]
I think there are no more questions. We'll wait for another minute for -- maybe let me shortly before we stop the call once again give a bit of a picture of this industry we are in. And it's amazing how fast the consolidation process is taking place right now. We see it on a very, very intensive way. We've never before had the chance for so many attractive work packages offered by the OEMs. We see never as before so many companies not being able to supply our competitors in the different tier levels of the value chain. Then the positive impact to find solutions, concerning reduced value chain structures in the supply chain from the OEMs and also concerning the cost level. The awkward situation is that what we have seen in the last months was extremely challenging, annoying, frustrating. If you try to fix something like, for instance, energy prices in the next day, you see everything more or less pushed against the wall because the prices change. But on the other hand, it helps in many areas to come from a customer-driven market pricing to a supplier-driven market pricing with a high impact from the market demand. And therefore, we are quite optimistic also beside it stays still challenging also for the future. That's from our side, then there's another question coming in. So maybe we quickly.
Our next question comes from Beltran Palazuelo with DLTV.
Michael and Marc, congratulations for the solid results. Maybe a more philosophical question. It's good to see that we have confidence on the free cash flow generation this quarter and we have confidence on next year regarding, of course, sometimes markets are irrational. But all the strong work you're doing operationally and commercially, at some point, is it on the card your visibility on free cash flow generation, important free cash flow generation next year and the year after next year? Is a buyback -- a little buyback to show confidence on your words and also to show the market that Montana is very disciplined on its capital allocation, not only buying companies but also buying back its own shares at a huge discount?
Hopefully, I understood you correctly. So the confidence is keeping on for the year 2024 onwards, and this year there -- that we are no more or less fully booked for the year 2023, '24 and '25. There are some capacities, for instance, in some of the plants at ASCO. It received today good -- that we have also received a good order in this case there. Free cash flow is the main impact we are focusing on for Q4 2023 onwards and want to stay for now on forever. No, I don't know. But at least for the period, for the next years, I can overlook free cash flow positive and reducing constantly our net debt level. So I would say in a short -- medium-term period, we want to have a net debt level of less than 2.5x. And then I would see a good net debt level of 2x, depending on, I would say, the general worldwide situation, but definitely not more of it. This is the one topic is -- at least what is on our long-term or midterm intent with a free cash flow-positive business in our clear guidance also to our, I would say, company segments believe we have the 1/3-1/3-1/3 regulation, which means 1/3 payout ratio, 1/3 CapEx for strategic projects and 1/3 for reduction of debt. And therefore, for the midterm, I also want to have not only our segments to us, let's say, to Montana Aerospace but also Montana Aerospace to its shareholders to show this ratio, which means a payout ratio of 1/3, which we would like to achieve, hopefully, sooner than later, but definitely not this year, not next year, but hopefully, 2024.
If a share buyback topic and to be very frank on this point, we have discussed it internally 150,000 times. Marc can write a book on that point. Of course, that why it's very attractive. But still, of course, there's a lot of discussion, is it speculative or not. I think it would be quite entirely accretive for the company. But to be very open at this point, we didn't get any post resolution on this issue and therefore, it's not a topic for the Montana Aerospace.
All my support for a share buyback with my side.
Thank you very much. And what -- if there's no share buyback by the company, still the offices has asked the C-level and also the management is able to buy shares, and it's something we constantly dip in and also keep on going, I guess.
There are no further questions at this time. I hand back to Michael Pistauer for closing comments.
Thank you very much for attending. Hopefully, see you soon. We are traveling a lot also keeping on going to keep our contract to our investors, researchers. We have also seen in the last quarter, first, I would say, effort to have a capital-based approach. We want to continue. And I'm happy to stay in contact and hopefully as here and see you soon. Thank you.