Fincantieri S.p.A.

Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the Fincantieri 9-month 2024 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. Fulgero, Chief Executive Officer and Managing Director. Please go ahead, sir.

Good afternoon, ladies and gentlemen. Welcome to Fincantieri's nine-month 2024 Financial Results Conference Call. We are very satisfied with the results achieved, both from a commercial and financial standpoint. We recorded a solid top-line growth with revenues up 3.7% year-on-year, reaching 5.6 billion euros. Thanks to the virtuous path pursued by Fincantieri over the last couple of years, we have been able to deliver a significant increase in profitability with EBITDA margin at 5.9%, materially higher than the 5.1% reported in the first nine months of 2023, and 5.2% at the end of 2023, with improvements in all our segments. EBITDA in absolute terms rose by 19%, compared to first nine months of 2023 to €328 million, almost doubling versus the €172 million recorded two years ago, confirming the validity of our efficiency initiatives. The net financial position was negative at €2.59 billion, including the temporary effect of the rights issue completed in July 2024. Excluding this effect, The net financial position is negative at 2 billion 440 million euro with an improving trend compared to the same period of 2023. In the first nine months of 2024, we delivered 12 ships and as we speak, we have 95 ships in our portfolio with deliveries up to 2032 supported by robust backlog of 26.4 billion euro. The nine month performance which is fully aligned with 2024 growth expectation, allow us to rise our year-end guidance with revenues expected in excess of 8 billion euros, leverage ratio skewed between 4.5 and 5 times, including positive effect of the capital increase and EBITDA margin at around 6 percent. Let's move to page five for a detailed review of our nine-month results for 2024. Revenues increased by 3.7% year-on-year to €5.583 billion, with the offshore and equipment system and infrastructure divisions confirming the growth of the first half of the year. Building the production and delivery schedule is expected to accelerate in the fourth quarter, when the contract signed in March with the Indonesian Ministry of Defense for the supply of two PPA units for a total value of €1,180 billion is expected to become effective. EBITDA recorded a significant growth of 19%, reaching €328 million, with margin at 5.9%, a material increase compared to 5.1% reported in the first nine months of 2023, and 5.2% year-end 2023. as a result of the higher margins recorded in all business segments. In shipbuilding and offshore, we are seeing the benefits of our operational excellence initiatives, while in equipment systems and infrastructure, we have turned around the business thanks to the refocus and de-risking in our infrastructure business and the accretive effect of the Remazel acquisition. As mentioned before, net financial position, excluding the temporary effect of the capital increase completed in July 2024 to support UAS acquisition from Leonardo is negative at €2,440,000,000, improving significantly compared to the first nine months of 2023. Thanks to initiatives aimed at working capital optimization and increasing cash generation, including the effect of the capital increase, the net financial position amounts to €2,059,000,000. On the commercial side, on page six, we achieved impressive results with order intake at 8.5 billion euro, more than twice the orders acquired during the first nine months of 2023, and higher than orders recorded in the entire 2023, with a book to bill equal to 1.5 times 2023 revenues. As a result, the backlog reached 26.4 billion euro, up 14.3% compared to full year 2023, with the total backlog including the soft backlog reaching an impressive 40.1 billion euro, in line with the record levels achieved in the first half of 2024, and equal to 5.2 times full year 2023 revenues, supported by a strong commercial acceleration in all business segments. In the third quarter, we also signed new major contract, which, not being effective yet, are not included in the backlog as of the end of September 2024. The contract for the two Frem Ivo frigates for the Italian Navy, 1.5 billion, and the second contract with Carnival Corporation for three mega cruise ships, the largest ever built in Italy. The results of the first nine months are tangible evidence of the solidity and underlying strategic planning efforts that confirm the vision expressed in our business plan. The solid performance, supportive micro trends in all sectors, and clear visibility we have on our business outlook allow us to further improve our year-end guidance for 2024 with revenues expected in excess of 8 billion euros. levered ratio between 4.5 and 5 times, excluding the positive effect of the capital increase, and EBITDA margin confirmed at around 6%. Moving to page 8, our commercial pipeline in the first nine months remained strong, underscoring our solid market positioning. Our portfolio benefited substantially from the acquisition of new orders, consolidating Fincantieri's leading position in naval technological advancements and its expansive global reach across all business segments. Let me share with you a few of the most relevant achievements for each business segment. In cruise, Norwegian Cruise Line announced the forthcoming construction of six next-generation vessels scheduled for delivery between 2026 and 2031. These ships represent the pinnacle of technological progress and underscore the company's unwavering commitment to environmental sustainability. Additionally, an agreement has been finalized with Carnival for the construction of three LNG mega cruise ships, which will be the largest ships ever built by an Italian shipyard. In the naval business, Horizonte Sistemi Navali has signed a contract with OCAR for the construction of two new frame EVO frigates. These vessels will represent the latest in the novel military technology and performance, leveraging significant technological advancements from recent programs under the Defense Act and the midlife upgrade project for the Horizon-class destroyers. The Italian Navy will receive two new frigates equipped with cutting-edge technology, advanced system, anti-drone capabilities, and operational management of unmanaged systems across three dimensions, surface, sea, and subsurface, ensuring superior operational performance. Lastly, in the offshore sector, Fincantieri's subsidiary VAR was awarded the contract for the second hybrid powered ocean energy construction vessels for island offshore. The new unit will be tailored to support a wide range of subsea operations, including inspections, maintenance, and repair, pipe laying, subsea infrastructure construction, installation of diving support. Let's move to page six for a detailed review of our order book. As you can see, in the first nine months of 2024, we delivered 12 units and we have a full slate of deliveries scheduled for the medium to long term up to 2032, offering a clear visibility on our top line for the years to come. Continued work to increase the depth of the backlog with orders for the Italian Navy, Island Offshore, and Carnival will extend this visibility to 2033 and beyond. As of September 2024, crews accounted for 26 vessels in portfolio, defense for 34 units, and offshore for 35 vessels, for a total of 95 ships in backlog increasing by 10 units compared to the end of 2023. Overall, the commercial performance was strong in all segments, with further significant opportunities coming from the underwater domain, as I will discuss in further detail later on in the presentation. Now, I will end the call over to Giuseppe, who will discuss our financial results in more details. Please, Giuseppe.

Thank you, Roberto. I move now quickly on page 11 for some more color on the order intake. As we said, it doubles versus the first nine months of 2023 with a book-to-bill at 1.5 times of revenues. $8.5 billion, seven of which coming from shipbuilding. with the big project for NCL, the new frigates for the US Navy, the submarine for the Italian Navy and the offshore patrol vessels for the Italian Navy. Also offshore and specialized vessel drives the growth at 1.1 billion euros and as we will see later This growth in ordering offshore pushes revenues further up. Equipment systems and services close at 28 billion euros of revenues, 50% coming from the infrastructure business, and a substantial contribution from the electronics business. On page 12, the backlog. Record total backlog at 40.1 million euros, 5.2 times 2020 revenues. We still keep record levels in the same record levels we had in the first half of 2024. And, of course, this is supported by a strong commercial acceleration in all business segments. Backlog, in fact, increased at 26.4 billion euros and a soft of almost 14 billion euros. We delivered 12 units in the first nine months from eight different shipyards, three in the cruise business, three in the defense business and six offshore units. On page 13, revenues, that stood at almost 5.6 billion euros, increasing 3.7% year-on-year, and of course in line with our growth expectations. Strong performance coming from the offshore and the written systems and infrastructure segments. while shipbuilding revenues were marginally down, although this is consistent with our production and delivery schedule. In this segment, notably, we expect an acceleration in Q4 with the contract for two PPA units to the Indonesian Ministry of Defense, which is expected to become effective, but as a matter of fact, the client is fulfilling progressively all the conditions precedent that are necessary to claim this contract effective. And let me say that what's left is only clerical or bureaucratic condition precedence. 70% of the group revenues come from shipbuilding, whilst offshore and specialized vessels account for 15%. With the growth of almost 30% year on year. And then this is driven by the growing demand in the market, particularly for offshore wind support equipment. ESS, Equipment Systems and Infrastructure represented 17.1% of total revenues with an increase of almost 32% year over year, thanks to the strong performance across all the clusters. The mechatronics cluster also includes factors in the consolidation of Remazel that contributed with the 67 million euros to the revenues of the period. On page 14, EBITDA up 19% year-over-year, 328 million with an EBITDA margin up 0.8%. at 5.9, thanks to the performance of offshore and equipment systems and services, but also shipbuilding has improved by 0.3%. With an EBDA of 257 million euros, that is roughly in line with 2023, but an EBDA margin of 6.2%. And this is thanks to the impact of the operational efficiency programs that we deployed and implemented throughout the year consistently with our business plan. 45 million euros the EBITDA of offshore increased by 47.1%. Of course, this is in line with growth expectations that we envisage in the business plan, and it is really sustained and driven by the market, by the order acquisition, but also by the strategic initiatives for operational efficiency that we implemented as well in this segment. In the equipment systems and infrastructure business, EVDA increased threefold. compared to St. Peter from last year, reaching 63 million euros and a margin of 6.1%. That is more than double of the 27% recorded in September 2023. This improvement is mainly, of course, reflects the turnaround that we successfully performed in the infrastructure cluster. that closed the first nine months of 2024 with an EBITDA of 23 million euros, whilst last year it was negative by 4 million euros. And this is a result of the risking initiatives that we have carried out in the past year, in the past two years, I would say. The acquisition of Remezero, of course, was accreted to the DBA or the Degatronics cluster for 12 million euros. On page 15, a net financial position and capital structure. So net working capital in the first nine months of 2034 was negative at 198 million euros, slightly up compared to the negative 118 of December 2033, And this is mainly due to the progress in the cruise construction contracts and deliveries. Here I have to say that we expect the delivery of three large, very large cruise vessels in the first six months of next year. So this is a time in which, let me say, the cruise segment requires networking capital. But notwithstanding that, net financial position is negative 2 billion euros excluding the effect of the rights issue of this summer we stand at 2.4 billion euros so I would say that we are stable and this is a remarkable result considering the current production pipeline in the cruise of course, the net debt is still affected by the residual of the strategy to support ship owners during the COVID-19 pandemic outbreak. We guide for a leverage ratio at the end of 2024, as we said, between 4.5 and 5 times EBITDA. And this is 3.7 times 4.2 times including the proceeds of the capital increase. Back to Pierroberto for the market trends and concluding remarks.