Ferrari N.V. Common Shares

Good day and thank you for standing by. Welcome to the Ferrari 2024 Q1 Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, one, one on your telephone. You will then hear an automatic message advising your hand is raised. To answer your question, please press star, one, and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicoleta Rosso, Head of Investor Relations. Please go ahead.

Thank you, Sandra, and welcome to everyone who's joining us. Today we plan to cover the group Q1 2024 operating results and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the group CEO, Mr. Benedetto Vigna, and group CFO, Mr. Antonio Picca Piccon. All relevant materials are available in the Investor section of the Ferrari corporate website. And at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement, included on page two of today's presentation. And the call will be covered by this language with that said, I'd like to turn the call over to Benedetto.

Thank you, Nicoleta, and thank you, everyone, for joining us today. I just came back from Miami, where I spent one week together with our clients, the fans, the sponsors, including HP, our new title sponsor, and all brand enthusiasts. You should have been there with me and all Ferrari colleagues. You would have been experiencing the brand powers of the Prancing Horse. Indeed, for the first time in our history, the Prancing Horse company, racing, sport cars, and lifestyles, have been working in unison together to provide all the people in Miami a truly unique experience. But before sharing with you more detail about this fantastic event, I would like to thank our Ferrari colleagues for their outstanding work and dedication, our clients for their loyalty to our brand, and all our partners, suppliers, dealers, and sponsors. Without their tireless effort and dedication, the strong result we present today would not have been possible. So let's start with the financial result of the first quarter. We can say that is a strong start to the year with double digits grow on key metrics, thanks to an even more robust product mix and a strong trend in personalization. Three are the key highlights. One, total revenues reached approximately 1.6 billion euro with flat deliveries. This, once again, pays testament to our strategy of value over volume. Two, we enjoyed a strong profitability with EBDA at 605 million euro. And three, industrial figures for generation reached more than 320 million euro in the quarter. The order book on our current models continues to be very strong with a normalization in line with our expectation, with almost all models substantially sold out. And in the last week, we opened the order book for the Dodici Cilindri, coupe and spiders. For the first time for our range models, we unveiled the coupe and the spider together because we want to leave the freedom of selection to our clients. The first feedback from our two new models has been extremely positive. Several clients have said, it's not a matter of either or, we love both. I talked with the clients from all over the world, from China, from Korea, from US, from Europe. They were all astonished by both models. Our new Dodici Cilindri are amazingly beautiful and high performance. They are the perfect blend of tradition and innovation, elegant and sportiness. Our clients' opinion are obviously paramount, but I am also proud to say that the Roma Spider has been recognized with a Road Dot Award, best of the best in the product design category. And the Ferrari SF90 XX Stradale and one off KC23 have also been awarded Red Dot Awards. All these are truly innovative vehicles enabled by our R&D innovation. And in fact, in 2023, just in Italy, we submitted 181 patent applications, one every two days. And always on the subject of innovation, last month we inaugurated the E-cell Lab in collaboration with University of Bologna and the NXP Semiconductors. This laboratory will make a significant contribution to research in electrochemistry and the project reflects the importance of collaboration between the academic and the business world. But there is much more in it. This lab will foster innovation in our local area and help us to build the skills of the future. Talking of technology collaboration, we have renewed our partnership with SKON, a leader in the field of high-performance cell manufacturing with whom we have collaborated for many years. And we will continue to innovate further. As you can see, we are fighting on all cylinders in the execution of our business plan and product development. But perhaps I should instead say we are charging ahead because in 2024, we will set another significant milestone in our electrification journey. In fact, on the 21st of June, exactly two years since our last Capital Market Day, and as we promised you during all our previous calls and meetings, we will inaugurate our new E-Building. These -the-art and highly flexible plans will assure us of the flexibility and technical capacity in excess of our needs for years to come. Here, we will end craft the dedicated electric axles and the batteries that will power future Ferraris, exactly like we promised you two years ago. A special thank goes to all the colleagues that have been able to maintain the building schedule despite all the difficulties we experienced in these turbulent times. It has not been easy, believe me, but then maybe it happened. Moving to the next page, the picture show clearly the essence of one Ferrari ethos. And believe me, there is no better way to simplify it than our recent activities in United States. As I told you at the beginning, last week, Ferrari hosted an unforgettable series of brand experiences in Miami, which immersed international clients, sponsor, Tifosi, dealers, and the brand enthusiasts into the Ferrari universe. It began with Cavalcade International, one of our most prestigious driving events, which attracted about 70 Ferraris and their owners from all over the world, as they drove together through the scenic landscape of Nashville in Tennessee first, and later in Florida. The journey culminated in Miami with the world premieres of the Ferrari 12-cylinders and the Ferrari 12-cylinders spiders, our new two-seater Berlinetta powered by front-mid naturally-acquired V12. These motors are the perfect embodiment of the prancing horse DNA, offering incomparable performance and handling with sophisticated design. You should have seen the emotion of all our clients. My words would never be capable to transmit to you those emotions. These events were accompanied by a privileged view of the latest fashion capsule collection inspired by the history of racing on American tracks and the vibrant energy of Miami. The capsule collection had a warm reception. It was nice to see most of our clients wearing many pieces of our lifestyle collections during the long weekend. And last but not least, a fortunate few clients had the opportunity to leave the Miami Grand Prix to its fullest with exclusive and elegant hospitality of Casa Ferrari right at the heart of the race. I'm also proud to say that the Miami Grand Prix was the start of a new partnership. HP has become our title sponsor with a multi-year collaboration that encompasses a shared commitment to innovation, trust and excellence, as well as commitment to sustainable futures, from carbon neutrality to the education of the next generation. In HP, we have found the same values which make it an ideal partner. I know them since more than 20 years, and for both our companies, people are the center of whatever we do because it is only people, it is only people who are able to blend together the tradition and innovation. Not all of our clients, T-Force and Brand Enthusiast were able to attend the event in person. Thus, we reached them through social media channels to nurture their sense of belonging. Lastly, before moving on, I would like to thank you, our shareholders, for your continued trust, and among you, I'm delighted to welcome around 4,700 new shareholders among our dear colleagues. Indeed, around 98% of our employees have taken advantage of the broad-based share ownership plan launched by Ferrari that I described to you a few calls ago. This initiative demonstrates our desire to foster the sense of belonging that makes us unique and underlines once more how we continuously strive for excellence. And on this note, I hand over to Antonio to review the Q1 2024 financial result.

Please, Antonio. Thank you, Benedetto, and good morning or afternoon to everyone joining us today. Starting on page five, we present the highlights of the first quarter results of this year. As you can see from this page, the first quarter saw shipments last was the prior year, while revenues and profitability grew double digits. As Benedetto mentioned earlier, the robust mix was the main driver. Let me briefly go through the main highlights. Revenues of ,000,000 euro up 11%, adjusted EBIT of ,000,000 euro up 15%, with a .9% margin, 100 basis points higher than last year. Net profit of ,000,000 euro, leading to an adjusted diluted earnings per share of 1,95 euro up 20%. Adjusted EBITDA of ,000,000 euro up roughly 13%, with a solid margin at 38.2%. And finally, strong industrial free cash flow generation of 321 million euro. Moving to page six, we can now add more color to the shipment number of the first quarter. As usual, the geographic breakdown reflected our choices of what volume and product allocations in the different markets. As a result, deliveries increasing in EMEA by 39 units, in America by 35 units, rest of APAC was almost flat, and allocations to mainland China, Hong Kong, and Taiwan decreased by 79 units. Moving to the product portfolio overview, during the first quarter, the Roma Spider continued its ramp up phase, while the Puro Sangue reached global distribution. Deliveries of the 296 family continued, sustaining the 46% average share. The allocations of the Raitona SP3 increased in the quarter in line with our plans, and above the average for the rest of the year. Lastly, some models were approaching the end of their life cycles, namely the SF90 Stradale and the A12 GTS. The SF90 XX Stradale, the SF90 XX Spider, and obviously the newly launched Dodici Cylindric Coupe, with the start contributing at their respective pace this year, while the 12 cylinder Spider was from 2025. On page seven, you can see the Net Revenue Bridge, which shows a 13% growth versus prior year at constant currency. The increasing cars and spare parts was the most relevant contributor, driven by the richer product mix and country mix, as well as higher personalizations. In the first quarter, personalizations came in strong, and in line with our expectations of approximately 19% in proportion to the revenue from cars and spare parts. The main contributors were the Puro Sangue and the Total Carburet Finish for the Daytona SP3. Sponsorship commercial and brand increased thanks to the higher sponsorship for our racing activities, partially offset by the lower Formula One ranking achieved in 2023 compared to 2022. With regard to sponsorship, the additional contribution is provided both from new sponsors and different phasing of sponsor signs last year. Other revenues were flat, with improved contribution of financial services offset by the decrease of the sales of engines to Maserati, whose supply contract expired at the end of 2023. As previously flagged, within the other revenues, we have now reclassified any residual sales of engines to third parties, whether for sports cars or racing. Currently, as a negative net impact of approximately 25 million euro, mainly due to the adverse dynamics of the Chinese Yuan, Japanese yen, and US dollar versus the euros. Moving to page eight, the change in adjusted EBIT is explained by the following variances. Volume, slightly negative, mainly reflecting lower range models deliveries. Mix and price, positive for 123 million euro, thanks to the robust product mix sustained by the Daytona SP3. As a reminder, we show in this bar the whole contribution from the Deico and Appilla, including the volume variance. The increased contribution from personalization and a positive country mix, mainly driven by Americas. Industrial and R&D expenses grew 29 million euro, led by innovation expenses, mainly for our sports car development, as well as higher depreciation and amortization. As V&A increased 12 million euro, and mainly reflected the ongoing development of our digital infrastructure and organization. Other positively contributed for 6 million euro. The increased contribution from sponsorship and the release of private car environmental provisions in the USA, the latter worth approximately 10 million US dollars, were partially upset by the lower Formula One ranking achieved in 2023 compared to 2022. Lastly, the total net impact of currency was negative for 23 million euro. Turning to page nine, in the first quarter, our industrial free cash flow generation was strong and reached 321 million euro. It reflected the increase in profitability, partially upset by capex for 195 million euro, 45 million euro higher than last year, and in line with the pace of development of our product and infrastructure. Capital expenditure during 2024 will develop more linearly compared to our usual cadence, particularly as we start spending for the new Span Shop. And second, a moderate increase in networking capital, mainly led by trade receivables. At the end of March, the company was in a net industrial cash position for 38 million euro, notwithstanding 136 million euro share purchases occurred in the quarter and residual impacts from currency and IFRS 16. Following the annual general meeting approval in April, the dividend distribution of approximately 440 million euro was paid on the 3rd of May, thus impacting the balance sheet of the second quarter. Finally, let's move to page 10, which confirms the guidance for 2024. We are really pleased by the solid Q1 performance, the continuing strength of the order book and the positive business trends, also emphasized by the enthusiastic reception of the D'Odice Cilindri and the great partnership started with HP. On this basis, we do look with great confidence at the next steps in the execution of our plan for the current year and beyond. I thank you for your attention and I now turn the call over to Nicoletta.

Thank you, Antonio. We are now ready to open the Q&A session. Please, Sandra, go ahead.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 and 1 again. We will now take the first question. Coming from the line of George Gallier from Goldman Sachs, please go ahead.

Good afternoon and thank you for taking my questions. The first question I wanted to ask was just to help provide some clarification about the order book. You talked about some normalization, but you also in the opening marks referenced the order book being very strong. Could you just help us understand what normalization means? Is this just the fact you have more slots available now, going into 2026 and with the Duodice Cilindri, or is there another element to it? And could you just confirm you haven't seen any pick-up or abnormal behavior with respect to cancellations? The second question I had was around innovation. And, Benedetto, obviously you referenced the large number of patents that you continue to file. Just with respect to the patents and the innovation, is there any one area where you are particularly active today, such as Aero or Chassis Dynamics, software or electric powertrain, or is the innovation really across the board and all of the different technologies obviously in play at Ferrari? Thank you.

Thank you, George. Thank you for your question. I will start with the first one. Stabilization is a normalization. What does it mean? And so, let me say in this way. It's a simple math, okay? Because we are in a situation where a lot of our models are sold out, and we have the two new models that were announced last week. And thanks for the effort to pronounce well in Italian. Thank you. The Duodice Cilindri, well, the orders of these two cars are not yet in our portfolio. So, normalization for us meant that, as we said also at the beginning of the year, in February, we were expecting the product portfolio to go a little bit down because there was not too much for the client to order. And this question, I would like to take this opportunity to clarify something important. The order book that we have goes well into 2026. This is very important. I want to clarify this because we have models that are, let me say, for which we have a longer waiting list. The second point, no abnormality of cancellation. We saw less order coming from China. That's true, but we don't see an abnormality of cancellation. We don't see any pattern either in terms of country or in terms of models. We see some clients that want to have some more model and they have to wait longer because there is a long wait time, like, for example, the Burro Sangue. The other point was about the IP. The IP is the innovation, let me say, that we are running and we are patenting, it goes across the board. There are some areas that are, let me say, a little bit more present. What is related to the driving trails? So if you come, let me say, in our patent portfolio, we'll not find many patents about things that are not strategic for us, like autonomous driving. But when it comes to anything related to the driving trails, or planning and these interacting with the cars, well, over there, that one is an area of attention and focus for our patenting activity.

Great. Thank you very much.

Thank you. We will now take the next question from the line of John Murphy from Bank of America. Please go ahead.

Hello, everybody. I just had two questions. The quarter was a very Ferrari-like quarter, with volumes flat, very significant revenue growth from price and mix and personalization. So it was really, it approved out the model. But I think if we look at the two walks, I was just wondering if you could give us some information on our color on the EBIT change versus the revenue change, because it was a very clean quarter with volumes almost flat year over year, but EBIT up 123 million versus revenue up 166 million, which would give you a 74% contribution margin, which I think is not being appreciated necessarily in the stock at the moment. So I don't know if you can talk about that on a relative basis, but if you could give us sort of color of how we should think about contribution margin, X volume, because it was very strong in the quarter, about 74% as far as I can tell. It's

a nice question. I would like

Antone to... There

are three main elements that contribute to the increase in contribution margin. The first one is the product mix, whereby it's important to flag the role of the Icona. Actually, I think I said in my comment on the bridge that the Daytona contributed higher than they would do over the course of the rest of the year in the first quarter. Secondly, personalization. Personalization is very strong. So it's above the 19% that we had for the rest of the year. It's slightly above. The third is country mix. Obviously, we China down that helps in terms of even of the marginality. I don't know whether it is a sufficient color. There are a couple of other elements that also contribute. The 499P also had a couple of models sold in the quarter, but that's what explains the strength of this contribution of mix and price.

Okay, maybe just one follow-up to that. I mean, basically, what you're saying is this 74% contribution margin, X volume, is the kind of number we should think about in the future. And then just one follow-up on Parasangua.

There is one element you should take into consideration. The Daytona is higher this quarter than the rest of the year.

Okay, and then just on the Parasangua success. I mean, that form factor obviously is somewhat unique. But Benedetto, you're having incredible success there. Could we see a successor to that in the next couple of years? And what would that mean for the business?

Look, it's also another interesting question. I can tell you that, yes, Parasangua is having a lot of traction and the order book is very strong, it goes well ahead. But I don't want to comment on... I cannot, I would like, but I cannot, because secrecy is a way to feed the ability of what we do. Clearly, clearly, there is... We are learning a lot from this model, and usually, let's put it this way, we like to use what we learn. But I don't want to say if there will be a successor or whatever.

That's very helpful. Thank you very much,

guys. Sorry about this, John.

No, understand, but thank you very much. That's good color. Thank you.

Thank you. We will now take the next question. From the land of Tuoy, Nara Yan from RBC Capital Market. Please go ahead.

Oh, yeah, thanks for taking the question. The first one I have is on China. You mentioned it was down a little. Just curious, maybe, if there's something driving that. I know that there are some just inherent reasons to not be as aggressive there with CO2 restrictions there and tariffs and such. Just would love to hear maybe a little more on what's happening in China, if there's anything, any commentary there first. Thanks.

Thank you, Tom. I would like to share with you some color about China. That is pretty interesting. So, we did some analysis. It's funny to see that if you go in China, and if you compare what was happening one year ago and this year, basically, there are two numbers that are swapped in terms of a car that we shipped to mainland China. Okay, we're talking about mainland China. Clearly, if I see versus one year ago, there is a stronger traction of hybrid model. One year ago, we were shipping more ICE than hybrid. This year, we are shipping more hybrid than ICE. And this brings also, since the hybrid model are basically sold out, a little bit is left to be sold. This is an impact and is also, let me say, gives you more color about the meaning of normalization in that country. So, I wanted to share a little bit more color because this China has a different meaning for us versus the other luxury brands acting in that region. It has a different meaning because for us, since the beginning, since the Capital Market Day, as Antonio said, we want to keep mainland, sorry, greater China, so ABC, mainland China, Taiwan, and Hong Kong, below 10%. Because we want this market to get more acquainted with our brand. To be in the family of Ferrari, you need some time. And you need to give time to the client in a country to understand what does it mean to be our client. So, having said that, it's clear that, let me say, in China, we had this kind of normalization that was also our, if you want, deliberate choice because the number of models we can sell there are not so many. And we wanted to keep always below 10%.

Thank you for that. And a quick follow-up on personalization. The guidance is to stay at that 19%. That was the same amount in 2023. So, effectively flat. Pure Sangui is coming in. I think you also said Daytona above that level. So, I guess the question would be, is there upside potential to that 19% to your guidance in 2024? Or maybe it's because the initial folks who are getting the Pure Sangui are more likely to personalize because they are maybe more VIP, et cetera. So, just love to hear more on your thoughts on... No, I think the trend of

personalization is not specific of a model. What I can tell you, let me say, another lesson learned, we like to register to report at least to us, what are the lessons learned and to share with you, is that this year we increased the price of personalization. You may remember last call we said we increased the price of the new model and we increased the price of personalization. Well, what we saw that, yes, there was an increase on the price of the price of personalization, but there has not been any impact on the ratio of personalization. So, this is a lesson learned. We increased the price of the personalization, but if the client wants to personalize, they keep personalizing. And this is also the reason why when the previous colleague he asked the contribution year over year to the edit, Antonio was telling, contribution from personalization, product mix, a country mix.

Also, if I may add, the higher the average price of car, the lower the percentage, it's just a mathematical formula. So, the more we sell Daytona.

Yeah. Understood. Thank you.

Welcome.

Thank you. We will now take the next question from the line of Monica from Interessa, San Paulo. Please go ahead.

Good afternoon, everyone. I hope you can hear me and thanks for taking my questions. The first one is the question of the year. The question is on the 12C. I was wondering if the 12C might carry a higher ratio of personalization or if there are any particular features that might carry an higher personalization content not only on the price side, any color is appreciated on this side. And my second question is on the country mix, which was favorable in the first quarter. Should we expect a similar impact also in the coming quarters? Thank you very much.

Thank you, Monica. I think the first one, the second, I leave it to Antonio. Let's say two things for the Dodgy Chilindri, OK, coupe and spiders. Actually, three things. One, as I said, that the client like love, sorry, love both of them. Two, I've been talking maybe around 60, 70 clients, spending time with them in the two evening we had in Miami. I saw a strong interest of the client for new colors. So Arctic white as well as Verde Toscana. So there was a strong, with the many clients telling, I will take, I will order these colors. Some client asking for two different color on two different cars, the coupe and spiders. What I can tell you that the last important point is that we agreed, I mean, we increased the price. As you have seen, the price is 395,000 for the coupe and 435,000 for the spiders. The number of the personalization, let me say, what will be the trend, we'll discover together. But I think there are enough personalization option for the client. And as I said, there is a lot of interest for the new colors that let them get in love even more. There are many dimensions we can explore over there, Monica. But we wanted to start from a price that is higher than the predecessor of this car. The second one I would like to, Antonio, if you can.

Thank you. As far as the country mix is concerned over the course of the year, would expect a modest positive impact. Sorry, can you speak, Antonio?

A modest positive impact. Okay, thank you very much. Okay. Yes.

Welcome.

Thank you, Antonio.

Thank you. We will now take the next question from the line of Adam Jonas from Morgan Stanley. Please go ahead.

Ciao, everybody. A couple of questions. First, can you remind us of your sales today by unit volume? What percentage of your volume are delivered to clients that already own a Ferrari and how that changed in recent quarters?

I have a follow-up. We were waiting for only this question. I have

a follow-up. I

can ask it now or wait.

We were taking notes on a piece of paper. Maybe you can go. One is the percentage of repeaters. The second?

Yes. Again, the first question to be clear is what percentage of your volume are delivered to clients that already own a Ferrari or were existing owners replacing a Ferrari, if that makes sense. Very clear. The second question, Benedetta, is you have been making efforts downstream with your dealers and franchise dealers on trying to capture more of the recurring revenue and establish a more intimate relationship, if I can say so, with your clients, including things like increasing your hit rate on repurchasing a secondhand vehicle. I know there are other efforts you are doing, but if you could give us an update on how that is going, since you kind of re-emphasize the efforts there, that would be appreciated. Thank you.

Grazie. The first question is very simple. Adam, they say the repeaters, what we call the repeaters, the people that are already clients, it depends a little bit on the model. So you have models where the repeater is in the range of 10, let's say 30, sorry, 30, 35 percent, the situation where the repeater are going to around 80 percent, 85 percent. So it is an average, in the year 2023, 74 percent of our new cars were sold to existing clients. Thank you. This is the answer. The second, the dealers. What we are doing together with the dealers is to push, to make the relation more intimate. As you said, we are working on two dimensions. Number one is the personalization, the personalization so that we can personalize more the cars. And the second is the Ferrari approved. In these days, I mean last week actually, we launched in USA the Ferrari approved program. It is something that allows, we want to link more and more, we want to nurture more and more the pre-owned market. And to this we launched the Ferrari approved initiative that is intended to link, to bring more in the family the clients, to avoid them going, let me say, to use gray workshop or gray dealers. And for this we agreed with our dealers some activities so that there is an incentive for our client to go back and to stay in the family. So these are the two things we are doing.

Adam.

Thank

you.

Please. Adam. Thank

you. We will now take the next question. From the line of Michael Vinetti from Evercore ISI. Please go ahead.

Hey, thanks guys. Benedetto, first I want to say congrats on the 98% of the employees participating in the stock program. I know that is something that has been important to you since very early on in your time here.

Thank you.

I guess a question on the margin cadence through the year as we think about the puts and takes, particularly in second quarter. I think you said there will be less Daytona after the first quarter, but I think here we are in May. I think the SF90XX models start to shift in the second quarter with the coupe and then the Spyder later in the fourth quarter. I know those are high price point cars, and it sounds like they are very heavily personalized. I think the question is, as we look at that mixed bridge, does that flow because there is less Daytona through the rest of the year, and does the margin lift from Daytona flow through the year, or does the XX pick it up and that can be more linear through the year? And then I guess secondly, maybe just on some of the new items, how does the HP sponsorship flow into the P&L, which lines and what is the timing around when you start to record that, if that's a new addition to 2024 guidance. And then I guess my last one is, Benedetto, on the E-building, I know that that's an important input to the EV that you've announced for next year. Will we see the output from that building start to show up in your commercial activities before the EV, and maybe what that would look like?

Well, I think, thank you, Mike. I think the third one, and Antonio will elaborate on the first two. So the E-building, as I said, will be, let's say the electric cars will be done in the E-building, but in these buildings, because we always give priority to flexibility, we will also have other cars assembled over there, the hybrid. So yes, we will have some hybrid cars that will get out, will be manufactured, assembled, let me say, in this E-building. But the electric cars, the plan for electric cars stays as we committed two years ago, and the E-building will be inaugurated the 21st of June, as I said before. So don't expect, let me say, any electric cars to get delivered before what we told you. I mean, we stick to our plan. We are in line with that. For the other two, the HP sponsorship flowing in the P&L and the

margin cadence. Yeah, I go. Hi, Mike. The first one, in terms of the cadence, the cadence is partly dictated, the margin cadence is partly dictated by that of the deliveries of Zaitona, which we expect to be higher in the first half compared to the second. Even if in the second half, at some point, we'll get also the SF90XX Stradale for delivery. And the, but we expect anyway, the overall mixing price impact to remain above 10% compared to last year in terms of growth. And as far as the HP sponsorship flowing into the P&L, it will start from the second quarter. And do not disregard the fact that this is just a portion of the year. So it's not a full year sponsorship, this one. And as these things do not happen overnight, as you may imagine, we encompass that already largely in our guidance for the year, the beginning.

OK, thank you very much.

Welcome.

Thank you. We will now take the next question from the line of Stephen Reitman from Bernstein SG. Please go ahead.

Thank you very much. I have some

questions about the Pura Sangue at about the 12th cylinder. First of all, on the Pura Sangue, you say it has reached global distribution. So that means that it's also reached the production cadence that's equivalent to the 20% target you would normally have for the vehicle over the lifetime of the product. Secondly, on the 12th cylinder, could you comment first of all on your thought process and how you came about the pricing on this vehicle, obviously, which is a 30% uplift on the A12 Superfast and I believe a 27% uplift on the A12 GTS, obviously big increases. And secondly, also on the 12th cylinder, the fact that you're launching the two vehicles together, although as you mentioned, there is a delay before the Spider comes out, is a release to customers. Does that indicate a higher degree of flexibility you now have within your production system that you can actually develop these vehicles in tandem and have them out in a very short space of time compared to in the past when there was a quite long gap between these kind of vehicles? Thank you.

Thank you, Stephen, for your question. So coming to the first one, the Pura Sangue, well, we can say that in Q1, the deliveries of Pura Sangue were below 16% of the volume we shipped. So we are not yet at the 20%. You can assume for the year that will be around 18% overall. So coming back to the 12 cylinders or dodgy cylinder, like we like, well, the dodgy cylinder, the price, let's say we agreed to have a higher price, a substantially higher price than the previous version, because we believe there is a lot of innovation, a lot of activities have been done by the company, by all the team to put together traditional innovation. And also, let me say, when you try it, because we tried several times with Antoni and all other colleagues on the track and on the road, there is the right mix between driving thrills, elegance and sportiness. So let me say, I think this price is what the cars deserve to have, also for all the work that has been done. I have to say that also during the two nights, the world premieres, we have been talking about the future of the cars. Some clients were telling, I do not believe you have been able to reach such high performances in a car that was already high performance. We're thinking about four-steering wheel that is really unique and brake by wires. A lot of innovation has been done on this car, mainly on aerodynamics, on the power control, on the power units. So also on the interior side, the central display. Yes, one thing that the client appreciated a lot is that we listened. We have the command, we have a central display that is very high-end, very easy to be used. You said, well, I mean, the reason why we launched the two models together, the coupe and spiders, is the first time that we launched this for our range cars is because we want to give more freedom to clients. It means that we have higher flexibility in-house. So we prepared ourselves to have this higher flexibility in-house because it's something that is also, I mean, we met several times. We have to learn to know more our clients. And this is a way also to learn from our clients how they react when they see the two models together.

We are ready because we have a flexible manufacturing line.

Thank you.

If I go back again about the pricing

on the Dodici Cilindri, I apologize in Italian. If the price increase, does that give us any idea of the future direction of when you launch also replacements for the next series of vehicles? We could be expecting this kind of degree of price uplift on these vehicles. Obviously, with the 296 GTB, it was about a 14% increase. I think on the Roma Spider versus the Porsche Porta Pino M, it was about 16%.

This is the other interesting question. I think that it's clear that there are two things that we have to balance. One is the old innovation that we are offering to our client. And number two, the willingness they have to pay an higher price. What I can tell is that, yes, there is, as we said in several meetings, there is an upward, a lift upward of our prices, as you have noticed, well, for the 296, for the Roma Spiders and for the Dodici Cilindri. I think this is important. I mean, we always said, we want to grow. We want to give priority to value over volume. If you see also the derivatives of these quarters, basically they've

been flat. That was one year ago. Very well, Claire. Thank you very much. Thank you, Stephen.

Thank you. We will now take the next question. From the line of Anthony Dick from Odo VHF, please go ahead.

Yes, thank you. Just a follow up question on the HP title sponsorship. So quite a significant partnership you signed there. So I was just wondering how that affects the profitability profile of the F1 business. Is this something that could actually improve the profitability of the business, or is it just made largely to cover any cost increases that you might expect in the coming years, maybe especially in 2025, with like decent and higher wage expenses? And then a second question on the paint shop. Just wondering if you could update us on the development of the paint shop and what kind of investments and ramp up could we expect for that new building? Thank you.

Okay, the first question, yes, it improves. Very simple answer. The second, the paint shop, yes, we laid down the foundation in the last quarter in Q1. And let's say the total investment is a part of the investment plan we declared to you two years ago. You remember we said 4.4 billion euro. So that means

2022, 2026.

Yes, over five years. Out of which, let me say 1.1 billion was for infrastructures. And the paint shop and the building are part of this 1.1 billion euro over the

five

-year cycle. So nothing new, Anthony. We are moving according to the plan. The building will be announced next month as per plan, and the paint shop started in Q1 as per plan. And all is part of this basket

of 1.1 billion euro.

Thank you. Thank

you.

We will now take the next question from the line of Martino Leandrogi from Equita. Please go ahead.

Thank you. Good afternoon, everybody. Sorry to bother you on the profitability in Q1 and customizations. But you mentioned that customization was higher in Q1 than the 19% projected for the full year. Am I right in assuming 21% first? And second, you also mentioned the higher is the price, the lower is the customization. Martino, can I

just stop you on this one just to avoid any misunderstandings? We guided the market to 19% for the full year, and I just said in Q1 we are slightly above 19%. So that is it. That is not significantly different.

Okay. Okay. And the second part always on this question is you mentioned that the higher is the price, the lower is the customization as a percentage of sales. But you also mentioned that the – It's a simple math fact. Yeah, yeah. But you also mentioned that the Puro Sangue is ramping up, and the Daytona had a higher contribution in Q1 than the rest of the year. I remember you mentioned in the previous call Daytona was expected to deliver 60 units in this quarter, so maybe it was a higher. And the two things together show that probably it is not in this quarter that the relationship, the higher is the price, is the customization for the overall picture. So I don't know if

– Maybe I – You think it was a – So you're right in the sense that the first quarter we had higher deliveries of the Daytona, and the Puro Sangue is ramping up in our global distribution, but it's not yet at 20%. When we said at the beginning we are guiding to a 19% average, obviously take into account that we do not have full visibility of personalization over the rest of the year, because the decision on personalization is taken by the clients toward the end of its waiting time, a few months before delivery. So it's actually an assumption, the one. We are not in a position to project on a precise map for the following quarter, particularly as we go towards the end of the year. I think 19% on average is a fair assumption.

Okay, thank you. And the second question is on costs. Probably referring to the previous question on HP sponsorship, am I right in assuming it is offsetting the Hamilton contract? And just to have an idea of the Formula One contribution going ahead, regardless of the ranking you will have this year, which is probably higher than last year.

We said before, Martino, it improves. This was the same question that we got, no?

No, but the Hamilton contract in the middle, I know you do not disclose the precise figures and so on, but I suppose this helps to cover the Hamilton contract that will come

next year. No, but your question is very clear, and our answer is yes, it improves. We don't disclose detail A or B, the plus and the minus or the equal, but it improves. Okay, thank you. Thank you, Martino.

Thank you. We will now take the next question from the line of Gianluca Bertuzzo from Inter Montezim. Please go ahead.

Hi everybody, and thank you for taking my question. I'm sorry to bother you on the partnership with HP. Are we talking about triple digit sponsorship here, such as the previous long-standing title sponsor? And second or third question are about volumes. Can we expect an acceleration of volumes delivered throughout the year, or can we assume a stable evolution? And on cost inflation, did you change expectations or did the development align with your thinking at the beginning of the year? Thank you.

I think the first two and the cost is, Antonio, will help us to go through. So, HP, we never disclose the numbers, also because in the contract, if you see the contract we signed with all our sponsors, we cannot disclose information confidential. So we cannot disclose away the number if it is one, two, three, four, five digits, whatever measurement unit you are thinking to. The second is the volume. We said since ever that we value, we give priority to value. Over volumes. So let me say, you know how many car we did last year? We also said that the growing volume will be very limited. You see that Q1 basically we did, to be precise, seven units less than last year. So let's say we do not expect at all any acceleration of volume. This is not what a brand like us should do. And that's also the reason why, if you remember the previous question of Stephen, Stephen was saying why you have been, what is the rationale behind this strong price increase? Because we want to give always priority to value over volume. For the cost inflation, Antonio, can you guide us? Yes,

it's very simple. We haven't changed our assumptions for the rest of the year, actually.

OK, thank you very

much. Welcome. Thank you.

We will now take the next question from the line of Thomas Besson from Kapler Chevrolet. Please go ahead.

Thank you very much. I'd like to come back to the seasonality of earnings and talk a little about the seasonality of CapEx and Fregash Road, just to make sure I understood correctly. What I understood is that earnings would likely follow the shape of your deliveries for the Icona. So you likely have a better first half than the second half. I just want to confirm that. And I think you said as well that CapEx would be more linear this year than in previous years where it would have been more back-end loaded. Is that correct?

Maybe just clarify on the first one. I commented the development of the gross margin, the contribution margin, if you wish, which is dictated by the decadence of the Daytona. When you look at the entire P&L, obviously there are other seasonalities that cross over the top part of the profit and loss. Overall, I would not expect significant differences over time. But for probably Q3, that could be, as it normally happens, a bit lower. With respect to CapEx, you're right. I said usually we experience an exponential growth of capital expenditure over the course of the year. In 2024, we expect the growth to be more linear because several projects are already well advanced. We are basically finishing up on the development of the E-Building and we have the ramp up of the expenditure on the new paint shop.

Thank you. My second question, I know you want to keep some surprise. I look forward to visiting it. This E-Building, when we come there, are you already making something in it? Are we going to see something or is it just going to be to present your projects in more detail when it comes to both the components you're going to make there and the cars? Or are you already manufacturing something in the building?

We told you we were not clear in the past. In September, we started to get the first equipment. In December, we started already to assemble some components for our cars. So now we'll see how to manage it the best we can. But it's not an empty shell. We don't do this inauguration with an empty shell. There are people working over there. There are components made already over there.

I would have been prepared to come for a religious visit as well, Benedetto. Last question on Forex, please. The headwind was a bit larger than I thought in Q1. Can you give us an indication of what we should expect for the full year?

Well, we said we expect the dollar to stay in the area of 110. Then let's see what happens. It's rather unpredictable. For example, the impact of Chinese Yuan and the Japanese Yen both last year and the current year is negative and larger than we would have bet on. As you know, we edge our currency exposure on a 12-month rolling basis. So this is more than a bit the impact. But overall, I would expect this to be negative for the rest of the year.

OK. Thank you very much. You're welcome. Thank you, Daitona.

Thank you. We will now take the next question from the line of Gabriele Gambarova from Banca Acros. Please go ahead.

Yes. Thanks for taking my questions. Just a couple left for me. Is it possible to know the precise number of SP3 Daytona delivered in Q1?

Approximately 80.

80.

Wow. Yes.

And another question again on price and mix. Very strong in Q1. The balance between this 80 and 123, am I right, assuming that is made of bigger deliveries of puro sangue?

I don't understand. Can you please repeat the question?

I was just wondering if the puro sangue had an important role in the improvement of price in mix in Q1. OK. Sorry.

OK. We do not give the details of the overall product mix impact. I told you that overall the product mix impact is positive and this is because of the Daytona. The other significant contributor remains personalization. And the third one is country mix.

OK. Thank you very much. Very last question. Just to check, Antonio, if I understood well.

Just for the sake of clarity, puro sangue in terms of contribution is average compared to the rest of the range, percentage-wise.

Very last question. I understood right. You said you expect price and mix to give a higher than 10% contribution across the rest of the year.

I said that the increase of price and mix, as you can measure it, as the ratio of the average selling price compared to last year, is expected to be above 10% on the full year basis.

OK. Perfect. Thank you very much. Welcome.

Thank you. We will now take the next question. From the line of Henning Kosman from Barclays, please go ahead.

Yeah. Thank you so much for squeezing me. And I have also one more clarification, I'm afraid. But I'm still trying to reconcile your comments with respect to high number of Daytonas. I think very strong personalization makes on the first person was to be delivered perhaps on your modest geographical mix effect in the course of the year, perhaps a little bit less than Q1. So I would have thought these comments also add to thinking that the Q1 margin is more towards the top end of the range that we can perhaps expect across the quarters for 2024. But then again, you know, similar to the previous point that the colleague made, if the revenue per unit stays at above 10% or price mix stays above 10%, I'm struggling to reconcile that. How that would be consistent with a full year margin of below 28%. I mean, perhaps you can help us one more time to reconcile that. And then on another topic that hasn't come up, the second question is residual values. If I'm not mistaken, you had made comments around the degree of residual value normalization in the context of better availability of new cars. I don't know if you wanted to share anything there. I just wanted to give you an opportunity if you wanted to share something on residual values. Thank you very much.

I think the first one, maybe Antonio, you can add some more color and I will comment about the second. So I start from the second also for the business of discussion. The residual value, there are, let me say, the residual value keep pretty well. There has been one country that has been suffering a little bit for one specific model. But the situation is coming basically to is recovering. So we don't see any any strange pattern over there. Coming to the first question, I'm going to elaborate more. What I would like to underline is that we are not changing the guidance.

I mean, we are asked about color for the development of product of price and mix over the rest of the year. And I'm trying to simplify what I said before, meaning price and mix has been particularly strong in Q1. These have been supported by the number of deliveries of the Daytona, which is higher compared to the average for the rest of the year. And the other element that contributed positively was personalizations. And obviously, as I said, the other information that I put is that we expect on average price and mix to be growing 10 percent or above that in the course of 2024 compared to last year. This means that over the course of the quarter in terms of contribution margin, depending on the cadence, the actual cadence of Daytona will probably be slightly lower compared to the first part of the first quarter of the year. Does it help?

I might follow up with the team afterwards, but thank you. OK, OK. Thank you.

Thank you. I would now like to turn the conference back to Benedetto Vigne for closing remarks.

Thank you. Thanks for your time. Thanks also for all your questions. The strong Q1 result and also the strong brand desirability are fueling our confidence for the development of the year and also forward. This is the key message that we wanted to pass to you. And I wish you a good afternoon and thank you again for your attention. Grazie. Thank

you. This concludes today's conference call. Thank you for participating. You may now disconnect.