Fincantieri S.p.A.

Good morning. This is the Corusco Conference Operator. Welcome and thank you for joining Fincantieri Full Year 2023 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's full year 2023 financial results conference call. First of all, let me say that in the first year of our new business plan, we achieved excellent results. for which I would like to thank all the people at Fincantieri who have demonstrated their commitment to success by contributing day after day to the growth of the company. We have exceeded all the targets we provided in May thanks to strong tailwinds in all of our businesses. We achieved a solid top-line growth with revenues exceeding €7.6 billion in 2023, ahead of our full-year target. We delivered a significant increase in profitability with an EBITDA margin of 5.2%, with 20 basis points improved over our guidance. And our net debt improved significantly compared to 2022, leading to a leverage ratio of 5.6, 5.7, with a leveraging path well ahead of business plan target of 7, 7.5. Thanks to a sound financial discipline, the solid business performance of shipbuilding, both defense and cruise, as well as a strong rebound in the offshore and specialized vessel business, which drove EBITDA and EBIT growth, we were able to achieve an adjusting net result almost at break-even, which is two years ahead of our business plan target. Our improved working capital dynamics enabled us to generate a positive net cash flow of €201 million, delivering a strong turnaround versus a negative cash flow in 2022. In 2023, orders stood at €6.6 billion, up 24% compared to €5.3 billion in 2022, supported by a strong contribution from defence and offshore, which marked an acceleration in December. Moving on to page six, let me walk you through our year-on-year growth. We achieved a solid top-line growth with revenues up 2.8% compared to 2022 and exceeding 7.6 billion in 2023. We also delivered a significant increase in profitability with EBITDA growing by 80% year-on-year, approaching 400 million euros. Our net financial position, negative by 2,271,000,000, improved significantly by 10.3% compared to 2022. And lastly, we delivered 26 ships during the year despite the challenging industrial scenario. As we speak, we have 85 ships in portfolio with deliveries up to 2030 and a robust backlog of 23.1 billion euros. Let's now move to the next slide for our guidance for 2024. On page seven, we have highlighted our targets for 2024, which represent the confirmation of our business plan for top-line and marginality, but represent a significant acceleration of the leveraging path. For 2024, we expect revenues at approximately 8 billion euro, up by 4.5% year-on-year, and EBITDA margin of about 6%, steadily increasing as per the plan, and the net financial position to EBITDA ratio of 5.5 to 6.5. Let's now move to the next slides for a more granular view of our business. Our business performance has been consistently positive throughout the year, and our unique competitive positioning across all business segments, our long history of industrial excellence, the top-notch competitors of our people put Fincantieri in the best position to seize market opportunities. During the year, the group shipyard ran at full speed with 26 vessels delivered from 12 shipyards. As for the cruise segment, the performance has been underpinned by the rebound of the cruise industry long-term growth path, sustaining new orders and unlocking new opportunities to lead the digital and green transition. Over the year, we signed contracts for three new ships, including two new hydrogen-powered ships for MSC, ready by 2028, reflecting the growing vitality of the cruise sector. These offers us another strategic opportunity to lead the digital and green transition in the shipbuilding industry. In 2023, we delivered six ships, and it's worth mentioning that we started 2024 with the delivery of Sun Princess, the first in Princess Cruiser class, which, at about 178,000 gross tons, is the largest ship ever built in Italy, as well as the first LNG, liquefied natural gas cruise ship ever built by Fincantieri. Moving to the next slide, we can observe on page five that also the naval business made a significant contribution to the new orders over the year, mainly driven by the increasing focus on defense spending. In 2023, we signed contracts for six new vessels, and given the current geopolitical scenario, demand is expected to grow. Among the new orders, it is worth mentioning the third submarine of the U-212 near future submarine program, where we are able to design, we are both design authority and prime contractor. The submarine is a unique strategic and industrial asset, combining shipbuilding at its highest standard with the underwater domain, a crucial sector going forward. We delivered five vessels, of which one for the Italian Navy, one for the U.S. Navy, and three for international clients, demonstrating our competitive global reach and recognized capabilities worldwide. Moving to offshore. In the offshore segment, we are market leader in terms of order book for the construction of SOVs and CSOVs. The order intake for 2023 has been strongly supported by offshore, with a total of 14 new orders, out of which three new cable-laying vessels ordered in December alone, when the segment reported a significant acceleration. In 2023, we demonstrated that we are able to offer increasingly innovative solutions, and we have the capabilities to expand our customer base also in the Far East. thanks to the international leadership achieved in cable-laying vessels, as proven by the order for a hybrid power cable-laying and construction vessels in Japan for Toyo Construction. Out of the 26 deliveries we finalized in 2023, 15 are for the offshore sector, including five marine robotic vessels for ocean utilities, five SUVs for three different clients, two Coast Guard vessels for the Norwegian Coast Guard, two stern trawlers, and one cable-laying vessel. Just a few comments on our order book on slide 12. As you can see, we have a full slate of deliveries scheduled for the medium to long term up to 2030, offering a very good visibility on our top line. Cruise accounts for 23 vessels in portfolio, defense accounts for 32 units, and the fast-moving offshore business accounts for 30 charter vessels, for a total of 85 ships in backlog. In offshore, it is worth mentioning that as of December 2023, the global CSOV fleet amounted to 40 vessels, and the order book to 52 vessels, with Fincantieri accounting for approximately one-third of the market. Overall, we delivered a very solid commercial performance in all businesses, and we see further significant opportunities ahead of us. Now I will hand the call over to Giuseppe, who will discuss our financial results. Please, Giuseppe.

Yes, good morning, everyone. We now move to slide 14, and, you know, some more comments on the order intake, which was very strong with the book-to-book ratio at almost one. Please note the solid order intake on shipbuilding, on which we saw the acquisition of three new cruise vessels, two ships for MSC, and also a ferry. Uh, and the second, the second vessel for, for seasoned yachts. We also have inflows in the novel in the defense business with first submarine for the Italian Navy, three new OPVs for the Italian Navy as well. The continuation of the constellation program for the U S Navy and, uh, an SOV to be done in the United States. What came out very, very strong is the order intake in the offshore business that more than doubled compared to the previous year at 1.8 billion euros. And this accounts for roughly 27% of the total order intake for the whole group. This brings us to a total backlog on page 15 that covers roughly 4.5 times the revenues of 2023 and stands at 34.8 billion euros. As of December 2023, backlog stays at 23.1 billion and a soft backlog of almost 12 billion euros. We confirm our delivery plan up up to 2030 with 85 ships in portfolio, of which 23 ships for cruise, 32 for the defense business, and 30 for the offshore business. A total of 26 ships delivered in 2023 from 12 different shipyards. Moving on to revenues, on page 16, revenues stands at 7.6%. billion, up 2.8 percent compared to last year. The overall increase is mainly driven by the strong recovery in the offshore and special vessels business, in which revenues were up 42.5 percent, and the growth of the equipment systems and infrastructure business, improving by 20 percent. Shipbuilding accounts for 70 percent of group revenues, and it's led by the contribution of crews, almost more than 48%, and the defense business for almost 25%. Of course, going back to the offshore business, growth reflects Fincantieri positioning as a leading player in the offshore wind sector, as well as the increase in demand for cable lane vessels. We've signed three new contracts, as mentioned before, at the end of the year, with a very important acceleration in orders recorded in December, mostly. Plus, we have the contribution of the production activities carried out in our remaining yards, now part of this segment. In the equipment systems and infrastructure segment, we recorded a 20% increase, and this is due to the pickup in the activity of the infrastructure business, mainly the development of the order for the construction of the Miami Terminal MSC expected to be completed in 2024. Let's comment EBDA on page 17. 397 million euros, up 80% year-on-year, which is a remarkable result, compared to the 221 million recorded in 2022, with a margin of 5.2%. Last year we were at 3% and we are roughly 20 basis points above the guidance. Shipbuilding stands at 367 million euros with a margin of 6% and this confirms the improving trend in this segment. This segment not only performed better than previous year but also exceeded our estimates and these results were achieved despite the very difficult production environment and the very high number of deliveries that we carried out this year, deliveries of ships that were engineered and of which the construction has started during COVID. So this is truly a remarkable result for us. Offshore amounts to 52 million euros, and this more than doubles the results of the previous year, with an EBITDA margin of 4.9%. And this falls through fully in line with the margin recovering path of VAR, which became profitable as a company in 2023. Equipment systems and infrastructure stand at 24 million euros, improving, of course, significantly when compared to fiscal year 2022. In 2022, in the summer, I remind you that we performed a thorough strategic and cost review of all the projects in this business, specifically in the infrastructure business. And now you see the results, we were able to stabilize the margin in this business. Moving on to page 18. Of course, I have to note, and this is a very good result from our perspective, that we reached almost breakeven on an adjusted net result basis. And this result is well ahead our expectations and our business plan. Of course, net result still has the burden of the asbestos claims, but we confirm with this result our solid path to recovery. Moving on on page 19, net debt, 2.2 billion euros. And the ratio between net debt and EBITDA has halved with respect to year-end 2022. And net financial position, of course, on an absolute value, improved significantly compared to last year. We generated 201 million euros of net cash. Of course, net financial position is still affected significantly. by some deferrals granted to clients after the COVID-19 pandemic. And as of December 2023, the group has in place non-current financial receivables granted to clients for roughly 630 million euros. Of course, we expect these financial receivables to turn into cash sooner rather than later. This is giving us further upside on the deleveraging path. Networking capital stands negative at €360 million in line with the delivery schedule and higher cash inflows reported in the year. As I said before, the leveraging is well ahead and with a further potential upside. As you can see in slide 20, of course, our debt levels are solid in terms that we do not have any significant debt maturities until 2027. All the maturity wall for 2024 has already been refinanced in advance last year. We have no covenants. And as with the interest rates, our hedge ratio is roughly at 80%. So net debt levels under control and, let me say, a healthy net financial position. Now I will hand the call back to Pierroberto.