Fincantieri S.p.A.

Good morning, this is the Chorus Call Conference Operator. Welcome and thank you for joining the Fincantieri Fulia 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 might 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 2022 Financial Results Conference Call. This set of results shows a solid top line with revenues up by 12% to €7.4 billion, in line with expectations and with the development of the backlog. EBITDA stands at €221 million with a margin of 3% impacted by first half lower marginality, especially in infrastructure, as a result of the thorough risk analysis carried out by the management in the second half of the year, by no recording items of the period and by inflationary pressures due to the macroeconomic scenario. In 2022, we delivered 19 ships from nine different shipyards. This underlines once again how sturdily are our industrial and production capabilities. Order intake came at 5.3 billion euro, well above last year figures, thanks to a revamp in cruise vessels demand. As a matter of fact, during the second half of the year, we signed three different agreements with green and next generation cruise ships, strengthening the partnership with consolidated clients and welcoming newcomer luxury brands. On the defense side, the US Navy exercised the option for the third frigate, renewing the full trust in our franchise. Turning on net debt, since the first half of the year, it improved as anticipated during the last conference call in November. Net loss for €324 million, hit by extraordinary and non-recurring items for €238 million, of which Euro 164 million non-cash items, namely goodwill and intangible assets impairment. Giuseppe will give you further details on the main financial and operating performances of the period later on. Let's now move to slide 7 for some business updates. Our operating performance has been consistently positive throughout the year. Indeed, the group's shipyards are running at full speed with 14 vessels delivered in 2022. On cruise, in the sole fourth quarter, we handed over three ships, namely one for Viking, one for Virgin and one for MSC. On the latter, the MSC Seascape is the largest and most technological advanced cruise ship ever built in Italy. She is the fourth for the client as part of a 7 billion euro investment package for up to 10 ships and stands at the forefront in terms of environmental sustainability. On naval, we delivered the third corvette to the Qatari Ministry of Defense and the multipurpose offshore patrol ship to the Italian Navy. Indeed, construction activities for the ongoing programs are continuing as agreed with our main clients. In offshore, the subsidiary VARD confirms its leading position in deconstruction of service operation vessels, with 10 total units in backlog. Besides, in the fourth quarter, a new order came in for a second cable-lying vessel for Prismian Group. In addition, in January, our US subsidiary has signed a contract with Crest Wind, to design and build a service operation vessel while last week we signed a contract worth 250 million euro through the subsidiary VARD for the construction of four SUVs units for a new client EDA Wind. This confirms Fincantieri as prime mover in the sector of offshore wind support vessels with a market share of around 38% regarding SUVs. We set very ambitious targets to further validate our commitment to become an even more sustainable company, as well as acknowledged already by major rating agencies and institutions in Italy and abroad. It is worth mentioning the A- score we have received for the third year in a row by CDP, formerly Carbon Disclosure Project. that recognizes our commitment in fighting climate change. For the second year, Sustanalytics, part of Morningstar, which evaluates how companies manage ESG risks, positioned Fincantieri in the low risk range with a score of 17.3, now ranked 11th out of over 400 companies in the machinery sector. During 2022, we delivered 19 vessels from 9 shipyards, highlighting the global outreach of our operations. We recorded €5.3 billion in new orders with a book-to-bill ratio at 0.7. In the medium-long term, we confirmed our delivery plan up to 2029. With 31 vessels in portfolio, offshore guarantees the production of the next few years. Please note that it is typically a fast-moving business with a quicker turnaround and shorter production times. We are confident it will benefit from an increased demand for offshore wind specialized vessels driven by the decarbonization and higher investments in renewable energy. The total backlog coverage secures 4.6 years of work compared to this year 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, ladies and gentlemen. I'm moving now to page 11, discussion on total backlog and order intake. We closed with a total backlog of 34.3%. billion euros in line with the first half and this includes 10.5 billion euros in soft backlog thanks to the recent order achievements in the cruise and offshore businesses. We have a total of 109 ships of which 88 vessels in backlog and 21 in the soft backlog. 5.3 billion euros of order intake with a very positive contribution from shipbuilding segment and offshore, plus 65% year over year, with 10 new specialized vessels ordered. And in order intake, not only we witnessed positive signals in cruise orders, which came in earlier than previously expected, but as Pierroberto underlined earlier, we are now taking orders for next generation, innovative and greener vessels in a niche sector, luxury, for newcomer brands that are expanding their operations into cruise. Revenues are up almost 12% with a positive contribution from offshore and specialized vessels. We landed at 7.4 billion euros in revenues. The contribution was good across all segments but offshore, year on year, came at plus 64.7%, which is a very important increase, and this is thanks also for the pickup in demand for wind offshore vessels. Shipbuilding grew 4.5%. We had high production volumes in the Italian shipyards of the group, both in cruise and naval vessels. Cruise still accounts for almost 50% of total revenues and defense revenues account for 22%. The result is also attributable to efficiencies of the engineering and production processes launched in the past years together with the high production volumes. Moreover, defense revenues will reflect the progress in the Qatari and Italian and US naval construction activities. The growth in offshore up almost 65%, as we mentioned before, is again a result of the successful repositioning strategy we have implemented towards the offshore wind sector. We also had an increase in the equipment systems and services revenue, 18%. This is driven by the operations in the mechanics and complete accommodation businesses. Still a very large share of revenues, 87% are generated from international clients and this confirms the unparalleled leadership with a highly diversified backlog and a global client portfolio. On page 13, EBDA. ABDA stands at 221 million euros. As we mentioned in the first half conference call, we said that second half would have been better, and it was better than the first half. Although ABDA margin for 2022 dropped at 3%, and this comes from the impact of the lower marginality in infrastructure and in shipbuilding, due to non-recurring items already reported in the first half, raising raw material prices that further increased in 4Q2023, along also with some inflation pressures and shortages we had in the U.S. labor market. And notably in shipbuilding, the causes of the The decrease in EBDA was particularly hit by high inflation rates and energy costs, and also a write down of work in progress due to the reassessment of a client credit rating, which we already had in the first half of this year. Offshore EBDA margin came at 2.9%, a slight improvement compared to 2.1 in 2021. While finally in the equipment systems and services, the reduction, the sharp reduction in marginality comes from the infrastructure business that has recorded a negative EBDA of 126 million euros with revenues of 262 million euros. And this is the result of the risk analysis we undertook in the first half of 2022, especially on a couple of projects. And of course, commodity price inflation as it across all the segments. On page 14, net loss at 324 million euros, and of course, this comes after the EBDA at 3%, the EBDA margin at 3%, but we also had, one-off items in the period, 238 million euros, and these include 52 million euros of asbestos, related costs for asbestos litigations, 164 million euros of impairment, goodwill impairment, and 22 million euros of write-offs for offset agreements. Moving to balance sheet items. We had an improved net financial position compared to, as expected, let me say, compared to the first half of 2022. We closed with a net debt at 2.5 billion, thanks also to the deliveries we had in the second half of the year. We had an implied net cash generation of roughly 765 million euros. We are moving with net financial position, we're moving consistently with production volumes and delivery schedule. And the situation as of 12-31 fully reflects networking capital evolution in the cruise business. We are going to have three vessels be delivered in the second quarter of 2023. Of course, we still suffer from the deferrals we granted to clients during the pandemic. At this point in time, we have roughly 94 million euros in vendor loans granted to clients. Networking capital is positive at 618 million. It was 440 as of the end of 2021, and the main changes are related to the increase in work in progress, construction contracts and client advances, and also this increase has been partially offset by the increase in trade payables, roughly 200 million euros. We have spent roughly 300 million euros in CAPEX to support the strengthening of our asset base and to improve technological standards, which are essential features to pursue the sustainable growth strategy of the group. In 2021, this number was 360 million euros. In the last three years, we almost spent a billion euros, 960 million, And these CAPEX have been directed towards production sites both in Italy and abroad in order to optimize production, strengthen our positioning, and adjust shipyard facilities to sustain the sizable backlog acquired in recent years. Now I give the word back to Pierroberto for the outlook and the concluding remarks. Thank you.