Fincantieri S.p.A.

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the Fincantieri 9 months 2022 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Folgero, Chief Executive Officer and Managing Director. Please go ahead, sir.

Good morning, ladies and gentlemen. Thank you for joining us and welcome to Fincantieri 9 Months 2022 Financial Results Conference Call. This set of results shows revenues up by 17% to 5.3 billion euro, in line with expectations and with the development of the backlog. We recorded positive performances across all segments. In particular, the offshore and specialized vessels business increased by 86% year on year. This progression streamlines a potential window of opportunity that the wind offshore market may offer in the upcoming years for Fincantieri. EBITDA stands at 172 million euro, with the margin at 3.2%, impacted by first half lower marginality and the persistence of macroeconomical and geopolitical instability. Net of the first semester one-offs, EBITDA margin would have landed at almost 7%. In the first nine months of the year, we delivered 12 ships from eight different shipyards, highlighting how we are keeping the production pace in operations. On top of this, order intake came at 3.3 billion euro, well above last year figures, up by 41%, thanks to a revamp in cruise vessels demand. Let me remind you that in the sole third quarter, we signed three different agreements with three different ship owners. I will come back to it in a moment. Moreover, since the first half of the year, net debt improved by over 200 million euros, consistently with what we anticipated and committed to in the last conference call and aligned with production volumes, capital expenditure and the delivery schedule. Giuseppe will give you further details together with the main financial and operating performances of the period later on. Let's now move to slide seven, for some business updates. In the first nine months of the year, we witnessed a sound business operating performance. Along with the positive resumption in cruise orders, and I will do a deep, deep dive in a few seconds, in the third quarter we delivered two ships for a total of four in the first nine months of the year. Namely, and chronologically speaking, one for Princess Cruise, two for Viking and one for Norwegian. On the latter, the Norwegian Prima, first of the six new generation Prima class. It is based on a prototype project to enhance flexibility, ensuring an elevated customer experience and to set the technological benchmark with the specific attention on energy savings, emission reduction and high performances. On Naval, we are continuing to develop programs for our main clients, the Italian Navy, the Qatari Ministry of Defense, and the U.S. Navy. In 2022, we have already delivered the first and the second PPA, Multipurpose Offshore Patrol Ship, from our Italian naval shipyards. The program for the Qatari Ministry of Defense is also continuing at full speed, with three deliveries in the period. including two OPV offshore patrol vessels and one corvette. Moreover, earlier this year, the US Navy exercised the option to build the third Constellation-class guided missile frigate for a value exceeding half a billion dollars. On top of this, in mid-October, We signed with Naviris, Naval Group and Navantia a preliminary consortium agreement for the development of the modular and multi-role patrol corvette to maximize synergies, long-term efficiencies and cooperation among European shipbuilding industrials, while avoiding duplication in defense spending. The European patrol corvette will be a smart, innovative, affordable and flexible vessel designed to meet a wide range of future missions in a continuously evolving global context. The positive business operating performance sets the stone for forthcoming opportunities in our core business. Back to cruise order intake, during the third quarter we have signed major cruise agreements with three ship owners. The turning point now is the high performance and future-proof quality of the products we are developing and building. Green, innovative, flexible, forward-looking solutions that promptly anticipate the regulatory requirements. We continue to consolidate our relationship with long-lasting clients while exploring opportunities with newcomers' luxury brands. We strengthened the long-lasting partnership with Viking, with four additional cruise ships. Two are orders and two are options. To be delivered by 2028 and designed for hydrogen fuel cells propulsion and equipped with the most modern safety systems. Secondly, the memorandum of understanding with MSC, which envisages the construction of two additional hydrogen powered cruise ships for the new luxury niche brand, Explorer Journeys. Four cruise ships out of six will now be equipped with liquefied natural gas engines, which today is the cleanest marine fuel available and it can contribute to the cut CO2 emissions by up to 25% compared with standard marine fuels. Hydrogen fuel will power a six megawatt fuel cell to produce emission-free power for the hotel operation and allow the vessels to run on zero emissions in port with engines turned off. Finally, we build a ship for a new client in the sector, Ford Seasons, which is entering the cruise industry for the first time with an ultra luxury vessel offering ultimate privacy and spaciousness in all on-suit residential settings. During the first nine months of the year, we delivered 12 vessels from eight shipyards, highlighting the global outreach of our operations. We recorded 3.3 billion new orders with a book-to-bill ratio at 0.6, up compared to the 0.4 in the first half of the year. Let me underline how execution and the capacity to closely stick to the delivery schedule as agreed with the ship owners are key strengths of our business across all segments and that outlines the distinctiveness of our franchise. Looking at the medium long term, we confirm our visibility up to 2029, both in cruise and naval. As for the offshore segment, given the fast moving sector, we are confident it would afford a potential upside also driven by energy transition. The backlog coverage ensures more than five years of work compared to 2021 revenues, confirming the operational reliability of our business. Now I will hand it over to Giuseppe, who will discuss our financial results. Please, Giuseppe.

Good morning, everybody. We move on to page 11. but we can see how the order intake came in at almost 3.3 billion euros. That is more than double what we did in the first half of the year. Of course, with a very positive contribution from the shipbuilding segment, thanks to the order acquired that were mentioned before by Pierroberto. And we also had a year-on-year increase of over 40% in offshore. This order intake brings the total backlog at approximately 34.5 billion euros, with a total backlog including the soft backlog, of course, with a backlog of 24 billion euros. And not only we had positive signals in cruise orders, But as Pierroberto underlined earlier, we're now taking orders for next generation and innovative and greener vessels in a niche sector, the luxury sector of the cruise business. Also for newcomer brands that are expanding their operation into cruise. As with page 12, revenues were, group revenues were up 17.2% year over year with 5.3 billion and this is thanks to positive contribution across all segments. With a particular race recorded in the offshore year over year, we grew in the offshore and specialized vessels of over 86% compared to the same period of 2021. And this results confirms the successful repositioning strategy towards more promising markets like the offshore wind industry. Also, shipbuilding grew by 9.1%, thanks to high production volumes in the group Italian shipyards. And within shipbuilding, cruise accounts for 50% of the total revenues, whilst the defense vessel revenues came in at 22% of total revenues. The positive result is also attributable to efficiencies of the engineering and production processes launched in the past years. Of course, now our revenues, as you know, are supported by the Qatari Ministry of Defense program and the Italian Navy construction activities. Also in the equipment systems and services, we had revenue growth of about 25%, and this was driven by operations in the mechanics and complete accommodation businesses. Finally, 80% of the revenues were generated from international clients, and this confirms the vocation towards experts that our company has, our group has. Some comments on EBDA on page 13. We ended up the third quarter at 172 million euros of EBDA with an EBDA margin at 3.2%. And this, of course, has been impacted, the nine months, of course, have been impacted by the lower marginality in infrastructure and shipbuilding, mainly due to the non-recurring items that we have already reported in the first semester. And of course, we are still experiencing increase in, and this is focused in the U.S., increase in raw material prices and labor market shortages within our U.S. operations. In offshore, EBDA margin increased compared to nine months of 2021, and this is again due to the good revenue growth and the effective repositioning strategy towards the offshore wind sector. On page 14, the improvement in net financial position compared to First half of 2022 is of course consistent with the delivery schedule. We do expect a stable net debt levels towards the end of the year. Of course, this is still affected by the payment extension strategy granted to clients, partly affected, and this amounts at 132 million euros as of September 30th. Networking capital is positive at roughly 1 billion euros and main changes are related to the increase in construction contracts and client advances to work in progress. This is due to the delay in the delivery mentioned in the first half result, which we will most likely deliver at the end of November. We also had a slight increase in trade payables thanks to the production volumes registered in the period. We have also spent 183 million euros to support further efficiencies and to address the new production scenarios. This is to scale up Italian and US shipyards. As with the market outlook and the expectations for the end of the year, I leave the word to Pierrobert.