Fincantieri S.p.A.

from the pain you drive into the heart of me the love we share seems to go nowhere and I've lost my light for I toss and turn I can't sleep at night once I ran to you now I'll run from you this tainted love you've given I give you all Now I know I've got to run away. I've got to get away. You don't really want any more from me. And you think love is to pray But I'm sorry I don't pray that way Once I ran to you Now I run from you This tainted love you've given I give you all a boy could give you Take my tears and that's not nearly All tainted love I cannot stand the way you tease I love you though you hurt me so Now I'm gonna pack my things and go Tainted love Tainted love Tainted love Tainted love Touch me baby, tainted love Touch me, baby.

I can feel it coming in the air tonight Oh Lord And I've been waiting for this moment for all my life Oh Lord Can you feel it coming in the air tonight Oh, Lord. Oh, Lord. Well, if you told me you were drowning, I would not lend a hand. I've seen your face before, my friend. I don't know if you know who I am. I was there and I saw what you did. I saw it with my own two eyes. So you could wipe off that grin. I know where you've been. It's all been a pack of lies. I can feel it coming in the air tonight Oh Lord I've been waiting for this moment for all my life Oh Lord I can feel it coming in the air tonight Oh Lord And I've been waiting for this moment all my life. Oh, Lord. Oh, Lord. Oh, Lord. Well, I remember. I remember, don't worry. How could I ever forget? It's the first time, the last time we ever met. But I know the reason why you gave me silence. No, you don't believe. The hurt doesn't show, but the pain still grows. Some strangers Oh Lord I've been waiting for this moment for all my life Oh Lord I mean, yeah. Amen.

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© BF-WATCH TV 2021 And that would wipe the smile right from our face Do you remember when we used to dance?

And incidents arose from circumstance One thing led to another, we were young And we would scream together, songs unsung It was the heat of the moment

Good afternoon, this is the conference operator. Welcome and thank you for joining the Fincantieri full year 2025 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 afternoon, ladies and gentlemen, and welcome to Fincantieri's full year 2025 results call. We are proud to share with you the outstanding results achieved in 2025 which highlight Fincantieri's ability to capture the opportunities offered by the favorable micro trends in our markets while maintaining financial discipline and ensuring flawless execution of our backlog. In 2025, we deliver tangible progress in the implementation of our strategy, exceeding expectations and creating significant value for all our stakeholders. This provides an exceptionally strong foundation on which to build a group's growth trajectory set out in the new 2026-2030 business plan. We achieved a double-digit revenue and EBITDA growth and strong margin expansion supported by continued efficiency initiatives and a profitable business mix, leading to the highest net profit in our industry at 117 million euros. more than four times higher than 2024. We also recorded a new all-time high in both order intake and total backlog, confirming the strength of our commercial positioning and remarkable growth potential. On the financial front, the group continues to make rapid progress in its deleveraging path, with net debt to EBITDA up to 2.7 times ahead of 2025 guidance provided last February at the Capital Markets Day. And there is more to come with new cruise and underwater orders already secured in early 2026 and a robust defense pipeline expected to translate into major contracts in the coming months. We also recently completed a rights issue of 500 million via an accelerated book-building process that allows us to further enhance our financial flexibility and provides optionality to support our selective inorganic growth strategy, also through M&A opportunities, as well as to bring forward our leveraging targets. It is worth noting that this capital increase was approved by the EGM in June 2024 in conjunction with the approval of the 400 million rights issue completed in July 2024. And it's also to be noted that the free float as a result is now up 36%. Let's move to page four for a summary of the financial and commercial highlights of the year. In 2025, we exceeded all targets set out in our guidance, further revised after Capital Market Day, demonstrating the group's ability to deliver on its commitments and consistently outperform expectations. Revenues increased by 13% year-on-year, reaching approximately €9.2 billion, supported by strong market tailwinds in the shipbuilding segment and by the rapid expansion of the underwater business. EBITDA margin grew significantly to 7.4%, vis-à-vis 6.3% at the end of 2024. This increase is the result of the structural evolution of Cruise into a profitable and cash-generative business, and by the increasing contribution of defense and underwater to the revenue mix. The net debt EBITDA ratio improved to 2.7 times, well ahead of the guidance provided at the end of 2024 and better than the revised guidance provided in February 2026. Finally, net profit reached the record level of 117 million, demonstrating the remarkable turnaround achieved over the past three years and confirming the structural growth in profitability of the group. These results confirm The remarkable turnaround achieved by the group over the past three years, okay, our revenues between 2022 and 2025 grew with a compounded average growth rate of 7.3%, while our EBITDA increased by three times over the same period. Our net income is now structurally positive. Lastly, our leveraging process has been impressive, reaching 2.7 times with further significant reduction projected going forward. Turning to page 6, we delivered an outstanding commercial performance in 2025 with a record high order intake at €20.3 billion and the book-to-bill equal to 2.2 times compared to 1.9 times in 2024, underscoring the strong demand in our core businesses, especially in shipbuilding, which posted an impressive 42% year-on-year growth. As a result, total backlog reached an all-time high of 63.2 billion euro, equivalent to approximately 6.9 years of work based on full-year 2025 revenues, ensuring strong visibility on the future growth. Let's now move to page seven to have a look at our order book. 2025 was also marked by the flawless backlog execution with 24 units delivered. We have a full slate of deliveries scheduled through 2036 with visibility further extended to 2037 thanks to the already mentioned order by Norwegian Cruise Line secured in early 2026. As of year-end 2025, our backlog includes 97 units, 36 in cruise, with the first two jumbo ships scheduled for delivery in 2029 and 2030, 20 in defense, five in underwater, and 36 in offshore and specialized vessels, providing solid and long-term visibility for the years ahead. Let's move to page eight for an overview of the commercial opportunities ahead. The current macro trend offers significant growth opportunities in all of our business segments, which are actively monitoring as we speak. Of more than 500 commercial opportunities we have looked at, we have selected a number of these to pursue. through our participation in tender processes for an amount of approximately 32.5 billion euro. In the past months, we have already successfully secured a number of orders, including important orders from NCL, Crystal, Viking, and Tui in cruise, orders in naval from the Italian Navy, and order in offshores for four vessels from Ocean Infinity. And the largest order ever for bus, for torpedoes from the Saudi Navy. As I mentioned in our Capital Market Day, we also see short-term opportunities in Naval in the coming months for approximately €5 billion from the Italian Navy, DDX, EPSICO II, LSS III, from export countries for frigates from service contact for the Middle East countries and from new programs from the United States Navy. Notably, last month, the United States Navy issued a request for proposal for a vessel construction manager to oversee the construction of the new medium landing ship class. Identifying Fincantieri Marinette, our USA subsidiary, as one of the two shipyards to be awarded for deconstruction, with an initial allocation of four vessels. Moving to our outlook for 2026, we confirmed the guidance provided during the capital market day with revenues in the range of 9.2 to 9.3 billion euro, EBITDA of approximately 700 million euro, with an EBITDA margin of around 7.5%. Adjusting net debt to EBITDA ratio at approximately two times, which equates to 1.3 times, including the capital increase completed in February, 2026. Finally, net profit is expected to be higher than in 2025. Turning on slide 10, Let me provide some color on the recent capital increase via ABB we successfully completed in February. As we communicated, the 500 million euro capital increase is intended to further enhance our financial flexibility and provides optionality to support our selective inorganic growth strategy. also through M&A opportunities in particular in relation to unconventional underwater solution where we see significant opportunities to expand our position. We are looking at the selected number of potential targets which we will update you on the incoming months. Now I will end over the call to Giuseppe who will discuss 2025 financial results in more detail. Please, Giuseppe.

Thank you, Pierroberto. Let's move on on page 11, where we can comment order intake. Again, like we said before, 20.3 billion euros, all-time high, with a growth of over 32%. and a book-to-bill ratio well above revenues, 2.2 times. This reflects the sustained growth in Fincantieri commercial pipeline that is supported across all segments by strong demand. Shipbuilding among these segments continued to deliver strong order intake, reaching almost €18 billion, up 42% compared to last year. Of course, this very strong order intake brings Another record total backlog at 63.2 billion, and I'm moving on page 13, that covers almost seven times 2025 revenues. And these results confirms the impressive growth trend already seen in 2024 and further increases long-term visibility of the business. Backlog grew by almost 33% to 4%. 41.1 billion euros up from 31 in 2024. And we also have a very strong soft backlog that increased to 22.1 billion euros compared to 20.2 of 2024. We delivered 24 units from 11 different shipyards, five for cruise, seven for defense, and 12 for offshore. On page 14, financials, revenues reached almost €9.2 billion, up 13.1% year-on-year, with a strong contribution from shipbuilding that posted a 15.1% growth compared to 2024. Within shipbuilding, cruise revenues grew by 12.5% year-on-year, with production levels characterized by capacity saturation on the current shipyard footprint and reflecting the significant backlog acquired. Also, the defense segment recorded a 20.7% increase year-on-year, partly driven by the finalization on the first quarter of 2025 of the contract for the sale of two PPA units to the Indonesian Ministry of Defense. Those two units were both delivered in the second half of the year. The underwater segment posted as well a sharp increase in revenues, up 88.2%. And this comes from the consolidation of vast submarine systems from January 2025, but also from the very strong performance of Remazelli Engineering that had a revenue growth of 25% year on year. and together with the accelerated advancement of the U212 NFS submarine program for the Italian Navy. As with the offshore and specialized vessels and the equipment systems and infrastructure segments, they both were substantially in line with 2024. On the following page, EBDA, well, at that group level, rose sharply by almost 34% year on year to 681 million euros. with a margin up to 7.4% from 6.3% reported in 2024. Shipbuilding EBDA grew by 29.3% to 451 million euros, with an EBDA margin of 6.8%, up 0.8 percentage points compared to last year. And this comes thanks to very favorable pricing dynamics and improving efficiency in the cruise business, As a whole, the cruise business has improved also in terms of networking capital, thanks to the better payment terms. And of course, on top of it, there is the increasing contribution of the defense business. The underwater, as expected, I would say, delivered an EBITDA of €117 million, with a margin of 17.6%. And this confirms the sector's premium profitability that we discussed on the underwater day in May. The offshore specialized vessel EBDA reached 72 million euros with an EBDA margin growing to 5.3%, consolidating its positive path to margin improvement. The equipment systems and infrastructure segment delivered a strong contribution to the group's profitability with EBDA rising by 33% and EBDA margin reaching 8.2% versus 6.1% in 2024. Drivers of this growth are, in particular, a significant contribution by the mechatronic business and higher margins in the electronics and digital product cluster. And of course, last but not least, the infrastructure cluster improved as well. On the following page, Net profit, well record level 170 million euros, the highest ever recorded by Fincantieri and over four times the results we reached in 2024. This record result reflects the material growth in EBDA, partially offset by the increase in DNA, But this is mainly driven by the purchase price allocation following the acquisition of vast summering systems completed in Q1 2025. Of course, the effect will diminish throughout the years on this. EBIT increased to €368 million from €246 million in 2024. And last but not least, thanks to our very strong financial discipline, the group benefited from a reduction in financial expenses. And this, of course, comes partly from the lower average debt recorded during the year. And also a positive contribution was provided by the decrease in the asbestos-related litigation cost, which declined for the third consecutive year. on the following page, the leveraging path and debt maturity profile. At the end of 2025, adjusted net debt amounts to roughly 1.3 billion euros. And of course, in order to ensure full comparability with 2024, this figure includes non-current financial receivables, notably the loan granted to Virgin Cruises, previously included in 2024 net debt. and reclassified as non-current following the maturity extension agreed in December, excluding these non-current financial receivable net debt stats at €1.8 billion, roughly. The leverage ratio, net debt over EBITDA, improved to 2.7 times, significantly lower than the 3.3 times recorded as of year-end 2024, and further improving on the 2025 guidance provided in the Capital Markets Day, which was 2.8 times. The leverage ratio, including non-current financial receivables, stands at 1.9 times EBDA. As we have previously mentioned, we have generated in 2025 significant cash flow from operations, which excluding the cash outflow for the purchase of VAS in early 2025, translates into a free cash flow generation of more than €250 million. We have a very well distributed debt maturity profile with no significant long-term debt maturities until 2028, and we can rely on a solid capital structure with no covenants and roughly 90% fixed rate liabilities obtained through derivatives. Furthermore, the senior unsecured shoe shine placement for €395 million completed in July 2025 contributed to extending our maturity profile and reducing our average interest rate. After that, I will now hand the call back to Pierroberto for his closing remarks. Thank you.

Thank you, Giuseppe. Let me now summarize our key takeaways on page 18. During 2025, we have delivered record commercial and financial results with net profit, order intake, and total backlog reaching an all-time high. These results provide a strong foundation for the years ahead in the execution of our 2026-2030 business plan. Margins further improves year on year thanks to the structural evolution of Cruise into a profitable and cash generative business and to the higher contribution of defense and underwater to the revenue mix. We benefit from an impressive backlog visibility further extended to 2037. This supports our margin profile through working capital optimization, capacity saturation, and improved procurement efficiency. The current global geopolitical environment offers substantial growth in defense, which we expect to translate into new significant orders in the coming months. We are consolidating our position as the leading orchestrator in the underwater domain expanding both our product offering and business development capabilities also through targeted acquisitions and strategic partnerships. The successful completion of the capital increase last February demonstrates strong market confidence while providing additional financial flexibility and optionality to pursue this selective M&A strategy. We are only at the beginning of a secular growth trend, and we are ready to capture this opportunity. With that, we are now open to take your questions.

Thank you. This is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We can't be asked to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Antonio Gianfrancesco of Intermonte. Please go ahead.

Good morning and thank you for taking my questions. I have two. The first one is on the year-to-date cruise orders from Norwegian and Viking. Could you give us some indications on the margin profile of these new contracts compared to the current backlog? And more broadly, even on cruise business, at Capital Markets Day in February, you indicated a profitability for the shipbuilding division at 7% for 2026. Could you give us an indication about the evolution of the profitability in the cruise segment for the coming years? The second one is on the recently announced memorandum of understanding with Navantia on the European patrol corvette program. Could you please help us to better understand how you see this translating into actual order intake? And in particular, I was wondering if you consider this memorandum of understanding as one of the key building blocks behind the 5 billion defense pipeline in six months you indicated that Capital Market Day. Thank you.

Thank you for your questions. To his orders, NCL and Viking You know, we are not accustomed to disclose precise margins. We would rather prefer to let you appreciate what is behind this pickup in the percentage margin in this profitability. So basically, as we have been saying and doing and pursuing, the cruise business is going in the direction of saturation Saturation meaning perfect, quote unquote, absorption of fixed costs on the one hand. On the other hand, long-term visibility and backlog provides for long-term partnership with supply chain and vendors. So we can achieve, I would say, optimization in the terms and condition pricing, for example, of what we can achieve from supply chain. So the more we go in that direction, the more we see reinforcement of profitability in the cruise, which is, you know, also benefiting from an additional dynamics on the revenue side, on the pricing side. So on the cost side, saturation and procurement optimization. On the revenue side, there are positive developments in terms of pricing. So the scarcity effect, is allowing us to increase our bargaining power with shipowners and somehow improve our negotiation position. Let me also add that there is a third dynamic increase, which is not, again, related to the cost, which is not related to the revenues, but is related to the risk profile. So the beauty of this long queue of order intakes has to do with the fact that are not prototype ships, but are repetitive ships. So many of the latest announcements, many of the latest awards are repetitive of an existing ship, repetitive version of an existing ship. which, you know, it's a terrific source of de-risking, and conversely, it increases the possibility to convert contingencies accrued into extra margins at the right moment. So there is a series of concurrent effects that are driving our expectation on cruise better and better. Let me add the fourth information, which has to do with terms and conditions, payment terms and conditions. So we are also succeeding in improving to the maximum possible extent payment conditions in the direction of improving the working capital dynamics accordingly. Which dynamics is, as you may know, already improved by the stabilization of volumes, which is the prerequisite in order not to absorb working capital. So no precise answer, sorry for that, for commercial reasons, for strategic reasons, but as many side information as possible in order for you to appreciate what is behind this enhancement in profitability. Similarly, we believe that the cruise for the years to come, which was your second question, will continue to improve margins. So the multiple engines I was describing before are expected to gain pace, gain traction, change gear, and give us more and more satisfaction in the years to come. So we are definitely convinced that this, I would say, environment is truly healthy for Fincantieri Cruise Division. On your second question about Spain, about EPC, about Navantia, I think it's a very important step. It is not an MOU only. It is beginning of a new, I would say, phase in the European cooperation. The EPC program, which is a corvette, is in the process of moving to the second phase, which is the second call from EDF, from European Defend Fund, which is the relevant entity that is supporting with specific grants the development of this European corvette. Italy and Spain and France are already there. Other nations are expressing interest, namely Romania, namely Greece. So it is expected to be, let me say, a kind of airbus of the sea. which will be remarkably powerful for European demand, but at the right moment also for exports out of Europe. So it's a way to align requirements among different navies with the aim of optimizing costs, the absorption of non-recurring costs, and creating an interchangeable, interoperable platform that could be very competitive also at export level. Your question is if the ship is going to be ordered tomorrow morning, which is not the case, because the EPC program is going from the initial engineering to the engineering for construction. step. What is very important is that all the nations are respected, or the founding nations, namely Italy, Spain, and France, are respected to soon express their commitment to order their number of ships to this new entity. So very soon, We are going to move this platform from a paperwork to a construction exercise with commitments, which by definition will be for many units, with commitments coming from the founders, from the founding nations. I think that's it.

very, very clear. Thank you. Thank you very much.

The next question is from Marco Vitale of Mediobanca. Please go ahead.

Good afternoon. Thank you for taking my question. The first one is on the outlook. It would provide us some sort of indication in terms of what you expect by divisions. We noted that Your safe target implies a flexish revenue trend and I was wondering if you could add some few details on what are the key say underlying dynamics across business lines for your 2026 outlook. The next question is on the new US program, the LSM that you previously mentioned. We had read a few articles. If you could add some details on the potential timing in terms of both order collection and also P&L impact that you expect from the new program. Last question is about, say, more general in terms of supply chain and discussion you had with the main cruise operators. We noted that the current rising geopolitical conflicts are also triggering, as a side effect, lower tourist volumes for cruises. I was wondering if you could share any insight in terms of a discussion you had with the main cruise operators that could reassure your long-term business pipeline that you have with them. Thank you.

First question about 2026 outlook. You know, our business is very beautiful because it depends on the backlog. So 2026 revenues are not going to be disclosed by Fincantieri, but will be self-disclosed by the deployment of the backlog existing at the end of 2025. So that's the beauty of being a project-driven company. So with respect to 2026, we have the production curves coming from the backlog we have already secured. And 2026 will be the year in which, in terms of expectations, we expect a kick-in, quote-unquote, of the defense order intake, which, you know, we experience in 2025, as we experience in 2025. It's a process of finalization and, you know, materialization, which is a little bit bureaucratic, Uh, but it is, uh, there it is there. So that's what we, that's why we expect 2026 to be so visible in terms of order intake. And obviously it will become revenues accordingly as you deploy, as you, I would say, uh, project backlog for the future. So there's nothing weird. There's nothing, uh, unclear. It is, I would say, very visible and very, you know, it's the schedule. It's the schedule of production. And again, 2026 will be, at the same time, very interesting for the rest of the profit and loss. So I believe it's already clear that our percentage margin is, in the process of improving and also the net result, as we have already appreciated 2025 versus 2024, our net profit is showing signs of, I would say, vitality. So I wouldn't call it flattish. Revenues, you know my point, revenue is vanity. it's much more important that you look at what is happening at margins and what is happening at the bottom line. And at the same time, what is happening in terms of order intake, which is the most interesting part of my answer. Moving to the geopolitical part of your question. Yes, we are aware that when you talk when you discuss, when you elaborate about tourism, the concept of war, the concept of instability is, I would say, a typical case of concern, but never happened. So people continue to travel, obviously, not exactly in the overrated place. So obviously, if you have a resort in an overrated place, it is not going to be fully booked, but the tourism can somehow adjust their, I would say, trajectory, itinerary, in a way that is smart enough to find beautiful places to go and cruise. So that's my overall elaboration about your point. Practically, we are not experiencing any negative feeling from the side of ship owners. Conversely, we continue to see a lot of energy, a lot of interest in occupying future slots for the sake of a long-term growth. Let me also add that we are securing orders in the cruise business, which is the touristic or import business, all the way to 2037. So we strongly believe that from that time on, the situation will be stabilized. U.S. On U.S., we received, as the rest of the market, very positively, the announcement of the U.S. Navy procurement with respect to the expected awards of the LSM series of ships, two Fincantieri Marinette as one of the two, I would say, dedicated, nominated shipbuilders. The process of transforming this announcement into an order, is I would say expected to be very fast in the very short term. So let me say discussions are happening while we speak. Again, we don't rely in the short term on U.S. for volumes. So the agreement we achieved with U.S. is an agreement whereby we are kept harmless. So for the time being, it is not a business of volumes. So we don't look for volumes there. We don't need volumes there. Having said that, the agreement has multiple legs. One of the leg is the allocation and award of new classes of ships to the shipyard. And, uh, you know, the agreement was achieved in the end of 2025 and we are receiving this communication from the Navy. So, so early and so quickly. So let me say, we are very, uh, positive with respect to yes, to us. Uh, we are very happy that we have created a new baseline. clearing all possible risks of the past. We don't need volumes. We need to procure that the already achieved agreement translates with the velocity that we are experiencing together. But that's what we want to see. So we are very positive. And to cut the long story short, we believe that the contractualization is going to happen very, very soon.

Okay, thank you.

The next question is from Emanuele Gallazzi of Equita. Please go ahead.

Good afternoon, everybody. I have three questions. The first one is a follow-up on the geopolitical topic, very clear. your explanation on the shipowner side. I was wondering if you can discuss also on your cost side which dynamics are you seeing on your input cost. The second one is on the capital increase or the M&A. You clearly mentioned that you are looking at some opportunity. If you can just discuss a little bit more on your strategy if anything has changed post or with the capital increase and should we have to expect a big deal or are you looking more at small and selective deals adding technologies or know-how to your portfolio? And the last one is on VAS. We have seen two important orders coming from India and Saudi. Can you discuss more on this and have you seen an acceleration in the last month of the same negotiation or tenders for VAS and generally speaking for the whole underwater business? Thank you.

Thank you very much for your question. On your first question, we are in full control of the variables. of the economic variables that can be affected by the geopolitical issues, or the famous geopolitical issue, in the sense that the energy prices of Incantieri are fixed for 2026. The same, more or less, is with gas procurement, gas oil procurement. So with respect to energy, we have the coverage in place for 2026 in order not to receive any, I would say, negative impacts. When it comes, if we move to steel prices, it is the same in the sense that we have already fixed Procurement costs, prices for approximately 90% of the quantities. So once again, we are in good shape. So energy and steel are the two major components with respect to which we are tolerant and with respect to which we are continuing to monitor the situation. On your second question on M&A, we are very active. We have many dossiers in our hands. We have very clear ideas of what we are looking for because we have been tasting and shaping the market for this acceleration in the underwater in the last couple of years. What kind of transactions? There are different possible transactions. For sure we are, you know, calling it, naming it selective M&A, meaning that we don't want to, we are not looking for transformational M&A. So it is not something that is going to change the face of the company. but it's something that will visibly accelerate the expansion in the underwater. So it has to do with the key technological blocks of the underwater, for example, propulsion systems. It has to do with another key component, which is the electronics of the underwater. So any kind of software from command and control to telecommunications. And it has to do also with access to markets, including non-defense markets and business models. So we strongly believe that we can put on the table a lot of new technologies, and we are thinking in terms of M&A in order to envisage how to transform as quickly as possible those technology into integrated technologies. So our technology integrated with other technologies and how to accelerate the commercial reach in the direction of clients. not necessarily only on the defense side. So we will get back to you, but we are working hard in that respect. So we have a large business development and M&A team, which is being, working, and preparing since many months. And now that we have the capital increase ammunitions, we will be more than happy to translate all this preparation into execution. On your third question, Vaas is doing fantastically as Remazel is doing fantastically. So we are immensely happy of both acquisitions. Both companies are doing better than expected in any respect and are perfectly fitting with the rest of the group. creating synergies on the one hand and expanding markets and giving access to adjacent market to Fincantieri commercial proposition. With respect to us, India and Saudi are very emblematic, are very indicative of the first and most evident item of the defense procurement in a moment like this, i.e. ammunitions. So the world realized that in the last years, many submarines or many naval assets were built, but with very limited, I would say, ammunition warehouses. So the defense expenditure is first of all an exercise of replenishment of warehouses. And in this respect, torpedoes are very clear and very evident. We are doing more than that. So we are evolving the product, thinking of how to adapt this kind of product to the world of drones. For example, in this respect, I think that Vaas is ahead of the other competitors. So Vaas is already able to supply drones with very light, very light torpedoes, which is the new generation of surface drones. So yes, you want them to perform intelligence surveillance and reconnaissance. That's the way military people call it. the first task of water drones, underwater surface drones, sorry, surface drones. But at the end of the day, you need also to go to a second phase, a second step, which is the step where the drone is also armed in order to be able to react on top of detecting the threat. This is what is happening also. So let me say Vaas is remarkably centric, remarkably focused in this dynamic, and then is working on the agencies. So what to do on sonars, how to be, you know, very effective on certain kind of sonars applications, such as demining, which will be another priority, unfortunately enough, of the world. So it's going very well, and we are very happy with BAST. uh we are working in also also in order to expand the production capacity of us so capacity boost is the title of the book for the new fincantieri business plan and is consistently in a coherent way also the name of the book invest so we are working in order to expand capacity because it's having a lot of demand and we need to increase capacity accordingly.

Very clear, thank you.

The next question is from Gabriele Gambarova of Intesa San Paolo. Please go ahead.

Yes, good afternoon. Thank you for taking my question, Roberto Giuseppe. Just three from my side. The first one is on the safe program, the European safe program, the 150 billion program. I was wondering if you have any update on this program because it seems to me that it is a little bit in delay. This is my personal perception, but I don't know if you have any any insight on this. The second question is again on naval. I saw a slowdown in the top line in the fourth quarter 2025. I know that the backlog is very healthy, so I was wondering if you could give me some more detail on this trend we saw at the end of 2025, if there is an explanation, particular explanation. The second question, this is for Naval. The second question regards the reverse factoring. I saw that it grew by 200 million euros in 2025 to 850 million euros. So I was wondering what could we assume for 2026, what is embedded in your guidance basically. And the last one regards M&A and infrastructure. I saw that the business is doing very well, is recovering after you closed the Miami, let's say, job order. I was wondering if you considered if it's something that you would, let's say, assume to sell this business, which is doing well, but I think is not core business. Thank you.

Very good, thank you. On the SAFE program, let me disagree with you, or partially agree with you in the Anglo-Saxon way, in the sense that SAFE is expected to be a fast track process. You know that there is a gate expected for June 2026, and we see all the horses running according to the race. So we don't see delay. And again, it's for sure a big rush because June is tomorrow morning. But all the, I would say, condition precedents for SAFE to be activated on time are there. So I don't see your point. Again, it's a program that is asking nations to finalize a huge amount of contracts in a very limited timeframe. So it is very difficult that you do it in advance. So the deadline is June. On the NAVAL, again, all the production curves driving the revenue recognition are going according to expectations. So this is absolutely physiological. We have to consider that there is a change in the revenue curve of US, which is for sure to be considered when looking at last part of 2025 and 2026. Again, on the NAVAL, the point will not be the revenue level, but rather the materialization of all the orders that we are expecting. On the factoring, I will leave the floor to Giuseppe, but let me remain with the microphone for an extra minute for the infrastructure. So the infrastructure business is, you know, a source of satisfaction because of the turnaround we have achieved as a management team. So I think we did very well finalizing the bad experience in Miami, you know, digesting all the details, and at the same time, preserving our reputation delivering impeccably what we had to deliver. So it's a sign of industrial strength, resilience, reliability, which is not obvious at all. The infrastructure business is therefore getting rid of Miami-Dales and therefore expressing, evidencing good margins, thanks to the discipline, thanks to the quality of our people. Let me say that the infrastructure business, or at least a good part of it, is proving to be, I would say, functional. Two things can carry strategy when it comes to naval bases. and when it comes to protection of ports. So Fincantieri infrastructure is a reality in marine works and in the era of defense, in the era of expansion of defense infrastructure, and in the era of expansion of protection of critical infrastructure to have a group of people that can take care of those jobs as a kind of end-to-end offering is proving to be interesting and successful. So let me say, at least a big part of Fincantieri infrastructure is living a second life, in a sense, helping the fence business of Fincantieri with an end-to-end offering and at the same time being the entry point of, for example, Fincantieri underwater when it comes to protection of poles and protection of key marine and maritime infrastructure. So obviously we retain all options opened. So we will leave also without Fincantieri infrastructure. It's not a vital component of Fincantieri business model, but you know, as of today, we are very happy of having Fincantieri infrastructure in our group because we are exploring and pursuing very interesting business model whereby we integrate end-to-end the ship in the naval base in terms of infrastructure works And we use them to, you know, enter the business of infrastructure protection with Fincantieri Next Tech technologies, for example, on ports. On the factoring question, I leave the ground to you, Giuseppe.

It's very simple. You can easily expect the same amounts and the same levels we reached in 2025. Reverse factoring is something that helps our suppliers to finance themselves within their networking capital requirements. We expect to refactor in the same levels as of 2025.

Okay, thank you very much, Roberto and Giuseppe. Thank you.

The next question is from Lorenzo Di Patrizzi of Bank of America. Please go ahead.

Hello, thank you for taking my question. So the first one on Navy Sapiens, so you delivered your first vessel in February. Could you give us more color on the margin differences versus similar past vessels and what we should expect from the Navy Sapiens program in the next one, two years. And then secondly, so on the naval pipeline, actually on the pipeline in general, so you gave this figure 32.5 billion. Can you give us more color on the pipeline outside of the 5 billion in naval? And also, for example, I'm thinking of India in particular. Is there an update there? And could you give us more details on what the country has in store in the next few years in terms of investments that you could benefit from? Thank you.

Thank you very much for your question. But let me say Navisabians is a transformational product. So the piece of news is that there is a ship sailing today while we speak, which is having on board this new brain, which is a combination of new hardware and new software that is being validated by a ship owner in real life, in regular life. So this is the big news. This is the breaking news. It's transformational in the sense that It gives distinctiveness to Fincantieri offering simply because thanks to this new instrument, quote-unquote, this shipowner will benefit from improvement in the behavior of the ship and therefore in the cost profile of the ship. So the first effect is that we are positioning Fincantieri product in a different way. So when you buy a Fincantieri ship, you will always buy a ship with a brain. Then it will be up to you to leverage on this, and it will be up to you to install over the air all the new applications. For example, for optimizing routes and consumptions, or for optimizing maintenance, and other key activities in terms of OPEX and costs. So consider it as a strategic step, which is, let me say, prolonging in the future, way ahead in the future, the distinctiveness of Incantieri product. Then obviously it represents itself a product for our next tech, which is the technological pole inside Fincantier organization. You know that we have created a joint venture with Accenture 7030, which is, you know, practically writing the codes of this new system, which is made of a data platform, you know, according to the latest architecture, laid upon our own automation systems. So in Next Tech we have a company that is taking care of automation system and this company is now having on top of the layer of the automation system, this platform system. And the business model of Next Tech will be to host on this platform as many third party products as possible on top of selling internally produced products. internally developed applications to be sold to the ship owners on the platform. So it's a new concept but the beauty of the story is that this concept is being adopted by one client and it is on the air and is working very well and we have in our business plan a somehow ramp up of this product and we have quite an extensive team working on that and the initial results are very encouraging and we are very happy with that. Second question is more color about naval order intake. I think there is no secret about the fact that the Italian Navy is expected to move the DDX program from the engineering study into construction. We are working relentlessly with the Navy, with Horizonte Sistemi Navale, with Leonardo, in order to quickly move forward in this respect. Then there are other initiatives. with the same Italian Navy, for example, the LSS3, which is the third of the logistic ship class. And then there are a number of very hot non-Italian Navy prospects on which we are working a lot with respect to which we are very positive then obviously the market is big there are many opportunities again we have a lot of tenders out in the short term obviously it has to be something that is already in the oven so it's already in the kitchen but you know in the surroundings of the kitchen there are many, many, many opportunities. So it's very important that this good momentum kicks in, in terms of tangible orders. But again, we are not at all worried about what we're gonna do in our naval shipyards. As you may know, we are already working in order to double our capacity. And again, if a couple of things happens, We are already fully booked even after doubling the capacity. India. India is an immense market with a very specific business model, which is the business model of making India. We are, I would say, well known in India. because we built two ships for them, two logistics ships for them, something like 10 years ago, more or less. There are many programs. We are in association with many local shipyards. The system is different because, you know, the naval construction of ships by law is to be awarded to state-owned shipyards. So it's very important to team up with the relevant ones. That's what we are doing. And then the second peculiarity of India is that in order to provide packages in terms of material, for example, you have to co-operate produce locally with partners. So this is something we are already doing. We are already working since years in the co-production and co-manufacturing of, for example, certain components of the propulsion systems. So the business model, it's a business model whereby you sell design packages, you sell material packages, and then you cooperate in the construction with the local shipyard with a kind of construction management assistance. There are many programs that are going to be awarded in the next months. There is one that is very, very interesting, which is an LPD, which is a kind of small aircraft carrier. kind of a big ship. They have a big tender for LPD, but this is just an example of what we have been doing and how we are taking care and looking after the Indian market.

Okay, thanks a lot.

The next question is from Sriram Krishnan of Deutsche Bank. Please go ahead.

Hi. Can you hear me well? Sure. Can you hear me? Yeah, okay, perfect. So I've got a couple of questions. The first one is actually on the equipment division, particularly the electronics cluster. Sorry, can you hear me? Hugo, Hugo, thank you. Okay, I just wanted to conclude that question which I had. So the question was on the equipment divisions, particularly on the electronics cluster and the infrastructure. Clearly, despite a modest growth in the top line, I think the margin was very impressive with the electronic business. And in a very similar way, even in the infrastructure business, top line actually declined and the margin was pretty impressive. So I wanted to understand first if there are any one-off items within this one in 2025 and how should we look at a sustainable margin of both these businesses in 2026 and going forward. That's the first question. The second question is to do with the U.S. order potential. the landing ships related stuff. We understand that you have received an order for four ships and the potential long-term is well over 30. So can you confirm if there will be only two shipyards involved in this program or there are more shipyards which are likely to be inducted into this? And as a follow-up or a very similar one, can you give us any update on that? NGLS program as well in US and which you are competing as well. Thank you.

On the US part of the story, the US Navy announced its intention to award for LSM to Fincantieri USA and the contractualization is expected to happen according to contacts and negotiations that are going on in these weeks, in these days. As far as we understand, but it's not up to us, the construction strategy of the US Navy is to select two shipyards, simply because according to their long-term planning, the expected number of ships is, if I don't go wrong, more than 30, more than three zero. So they want to have at least two parallel shipyards working together, which is good, which is important because it means that you create specialization, which is the prerequisite for performance and for reciprocal and mutual satisfaction. On the NGL program, which was part of your second question, can you tell me more, please?

So this is, I understand, I think, FinCountry's Canada business apparently has some sort of design and construction order with regards to the next generation logistics program. I think we Overall size of this program is to procure somewhere around 12 to 13 ships in the long term. So I just wanted to understand where this leaves you. Are you the only company who is involved in this one for the U.S., or how many ships are you envisaging as an order flow from this contract and so on?

Let me say, United States, we have a shipyard that is concentrated on civilian shipbuilding. and they are very active in barges and in other kind of ships. And then on top of it, we have a company in Canada, it's called Bar Canada, which is very good in design packages, either for coastal, littoral ships and for, I would say, commercial ships. So obviously both entities are engaged in all the possible dynamics and projects in that part of the world. So I can, in general, confirm that there is a lot of action, a lot of movement, and a lot of, I would say, interest and commercial activity also in that segment, also in that quadrant. On your first question on electronics, I would rather give the floor to Giuseppe for some more detail.

Yes, thank you, Piero Betto. Well, speaking of 2025 results vis-à-vis 2024, It's the other way. I mean, 2024 was affected by some one-offs and some write-offs that we did on certain projects. And therefore, the EBDA margin that we achieved in 2025, 6.9%, is more, let me say, representative of what you're going to see in the coming years and in the business plan with potentially, of course, some slow but steady pickup throughout the years, thanks also to NaviSapiens and all the innovation and deployment of new technologies that we envisage in the business plan.

And if I may just follow up on that one, how do you envisage the top line for improv business? We understand that things have stabilized a lot. Should we expect some sort of a pickup in business in intro, or should things be largely stable?

I'm sorry, the line is very bad. Can you repeat the question? We really can't hear you very well. My apologies. Is it any better now?

Yes, yes, better. All right, sorry about that, my line. No, I just was following up with the infrastructure part as well. Do you think that this is going to be a largely stable sort of revenue for the infrastructure business going forward, or how? Just wanted to view on the infrastructure business at the top-line level.

The infrastructure business is, you know, having good prospects in front. again, driven by the backlog order intake, which is becoming more and more evident. We have projected in the business plan, I would say, disciplined growth in terms of revenues, capitalizing on the, I would say, good returns and stable returns that we are, that we have experienced in 2025. So the market is there in terms of money works, uh, and other businesses of the company. You know, the company is also focused on the steel fabrication. So steel structures, which are needed for multiple purposes. not only for shipbuilding, but also, for example, for bridges, things like that. So that's the second business of the company. They continue to experience stable demand, and so we are projecting it. Again, it is not where we want to put all our entrepreneurship. Our core business is elsewhere. But we're very happy that they are, you know, in good shape. And in particular, we are very happy when we can use them, as I was describing before, in order to increase the end-to-end offering of Fincantieri when we are interacting with a new Navy, with an international Navy, but also with our Navy. Whenever there are needed some marine works, in order to accommodate the new fleet and also the new, I would say, technological infrastructure on top of physical infrastructure. So sensors, anti-drones, and whatever is needed when you enlarge your base, your military base, on top of your naval asset.

Thank you so much, and apologies for the bad line.

Thank you. It was very good at the end. Thank you.

Gentlemen, there are no more questions registered at this time.

Thank you very much to all. Goodbye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.