Avio S.p.A. (AVIO) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Avio 9 Months 2025 Results Web call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Nevio Quattrin, Investor Relations. Please go ahead, sir.

Good morning. Good morning, everyone, and welcome to 9 months results conference call of Avio. I'm here, as usual, with Mr. Giulio Ranzo, CEO of Avio; and for the first time, the newly appointed Chief Financial Officer of Avio, Mr. Roberto Carassai. In a moment, we will go through the presentation we just released on our website. And as usual, in the end, we will welcome your questions. Thank you for your attention, and I leave the floor to Giulio.

Thank you, Nevio, and good morning to you all. So thanks for joining the 9 months results conference. In the interest of time, I will jump to Page 4 of our presentation, which provides a summary of what we've done in the course of the first 3 quarters. So in a nutshell, I would say results are on track, except that we are ahead of schedule with our backlog. So the backlog exceeds what we had expected. The launch activity is on track. The third Vega launch is scheduled by year-end, I would say, by end of November, very first days of December. Ahead of that, we'll have another Ariane 6 launch next week. So I would say the launch activity is as planned pretty much. In the Space business, I think what is very relevant for the first 9 months is the launch of another Vega C launch service with SpaceLaunch. We'll talk a little bit about that, and a new contract with the European Space Agency for a reusable upper state. On the Defense business, we have reported to you, not too long ago, the signature of a contract with Raytheon to expand the collaboration for the qualification of the Mk 104 solid rocket motor for the Standard Missile 6, very relevant development. And also, earlier than that, we had signed a multiyear agreement with the U.S. Armed Forces for manufacturing assembly and integration, which overall consolidate a little bit our efforts to grow in the U.S. defense market. As you know, the capital increase resolution was approved by shareholders last week with a very ample majority. So the rights offering is expected to be completed by year-end. We are awaiting the last green lights from authorities to actually launch the transaction effectively. Regarding the financials, as I said, the backlog is ahead of schedule, is exceeding EUR 1.8 billion, which, by the way, is a record high of all times. So it's a very relevant development, I would say. Revenues and EBITDA continue to grow at a rate of about 26% versus last year. But as you know, the first 9 months are just a relatively small fraction of the overall 2025 financials. Nonetheless, we confirm, of course, the guidance of 2025. So if we move to Page 5, some of the contractual developments in the Space business. First and foremost, I'm very happy to report we signed a new launch service agreement with SpaceLaunch in our new capacity as launch service provider, as you know. I am very happy about that because this was an open international competition [ on commercial ] customer, whose name is still undisclosed. We will be able to disclose that in the course of 2026, but no earlier than that. But it's very important because it proves that Vega C is a competitive product when sold in and outside Europe in competition with other solutions. In parallel, as you know, we have signed a contract with the European Space Agency for EUR 40 million for the very first phases of technology development of a reusable upper stage. As you know, we are placing lots of efforts to continue developing our technologies for upper stage, even our efforts with Vega E first and with the other activities on liquid oxygen methane technology. At some point, it will be very important to see whether we can have a fully reusable upper stage for it to be even more competitive for the future. On Page 6, Ariane 6 is getting ready to launch. Here, you see some pictures of our boosters and -- sorry, of the central core stage getting ready for launch. In fact, by now, I think the rocket is fully integrated on the pad. It's an important launch is an Earth observation satellite Sentinel-1D. We're quite happy to see that Ariane 6, as I had reported earlier, it's staying on track with its launch frequency as expected. And in fact, as you can see on Page 7, this is pretty much what the manifest will tend to look like towards the end of the year. So a total of 4 launches for Ariane and 3 launches for Vega C, which represents a significant improvement with respect to last year launch frequency. So I would say this goes pretty much in the direction of what we expected, meaning the growth in the flight base. Now, in terms of what we have in backlog for both Ariane and Vega, Ariane continues to have more than 30 flights in backlog containing mega constellations, sub pumps such as project Kuiper, the Galileo constellation and some military satellites with the possibility of soon closing the loop with the IRIS2 opportunity. Regarding the Vega C launches, we have, give or take, 15 launches in backlog, which include obviously the Copernicus constellation for the satellites for the Copernicus constellation. The IRIDE, Italian constellation. PLATiNO, the Italian satellite and some more opportunities around the world that are in pipeline that we hope to be able to announce soon. Now, switching gears on Page 8 on the technology evolutions. We have reported to you about our efforts in liquid oxygen methane. Now we are at a very important point. Our liquid oxygen methane technology demonstrator is being ready for flight -- for experimental flight next year. So here, you can see a glimpse of what we're doing on the engine itself on the cryogenic tanks, on the faring, on the avionics that we have developed. This is a very first opportunity for Avio to develop its own launcher technology with a lot of in-house new technologies of, I would say, next generation. So it's by our intentions, an experimental vehicle. It will essentially enable us to demonstrate if our technologies are as competitive as we think, but it's greatly improving our competitiveness for the next decade, I would say. Moreover, on Page 9, we can report a successful completion of a number of tests of our multipurpose green engine. The multipurpose green engine is an orbital propulsion system. So it's a part of the propulsion we use when in space to allow for orbital maneuvers and potentially for reentry from space. So you see all the parts of what we're doing are now connecting with each other. So this technology, the hydrogen peroxide technology is a very innovative one that a few around the world are developing, and it's very promising because it's very simple in a way and quite flexible to perform orbital maneuvers. We are very glad that this is a genuine Avio design, all done in-house, and it's working pretty well. So we will keep on reporting to you progress. But for now, we can say the first tests have been very successful and therefore, very encouraging. On Page 10, on the Defense side, as we have reported some time ago, we have signed with Raytheon an agreement for up to $26 million to continue the engineering work to prepare the Mk 104 solid rocket motor for qualification. What does that mean? It's essentially preparing ourselves to manufacture the solid rocket motor in the U.S. Ahead of kicking off production by sometime in 2028, we need to be able to demonstrate that what we manufacture is essentially meeting 100% of specifications. So unless you start this activity well ahead of time, we won't be able to manufacture them. And the fact that we are doing this well ahead of the start of manufacturing is what essentially secures that we will be able to manufacture that in the U.S. plant as soon as the U.S. plant is available. It also testifies the intention of the customer to essentially prepare the production phase ahead of time with some activity that is conducted for the time being in Italy, that paves the road for successful manufacturing thereafter. In fact, on Page 11, you can see that the backlog on the defense side continues to grow extremely fast. If we were to measure the compound annual growth rate of the defense propulsion backlog over the last 6 years, you would come to something like a 60% compound annual growth rate. So extremely fast. Therefore, what we will see in terms of the defense propulsion production, which we are now better off measuring in tons of propellant per year will be certainly observing a significant growth rate. We do prefer to measure that in terms of the amount of tons of propellant produced per year because as you will appreciate, this is a mix of different products, some of which are small, some of which are large. So it's very difficult to measure them by the units, so much better to measure them in terms of the overall tonnage, let's say, per year. Now, as soon as we start overlapping the European forecast of deliveries with that of the U.S., we will see an extremely rapid ramp-up with definitely a double-digit growth also in terms of volume. And in the very near-term, meaning '26, '27, we will observe also a rapid growth only of the European part, by the way, to which the U.S. part is starting to overlap because, as you know, what we will be manufacturing for U.S. Army will be first carried out in the Italian facilities until at least 2028. So that means that we will add to the growth side, some of the U.S. customer work performed in Italy until the U.S. plant is actually ready. Now, let's go back to the U.S. plant for one moment on Page 12. We have presented to shareholders in the context of our pitch for the capital increase. We have presented our plans for erecting a plant in the U.S. We have explained that we are chasing pretty much 3 customers to perform against 10-plus programs with an overall capacity that will be in the range of about 700 tons of propellant per year to be ready by 2028. On this project, we have identified the site. We have signed an exclusivity agreement for us to work on. And we have completed the preliminary design. We are kicking off the design and the early procurement activities to be able essentially to serve our current customers, so namely Raytheon and potentially the U.S. Army, but also some other customers with which we are entertaining final negotiations hopefully lead very soon to an announcement of other agreements of long-term nature. So what we are aiming to do is to reserve a portion of the capacity of this plant to each of these customers such that by the time the plant is ready, it will be essentially nearly filled with demand coming from each of these customers. So each customer will have, what we call a portion, a share of reserve capacity against which they will commit to transfer to us production orders. And we will, therefore, aim at a good capacity utilization of the plant from the very beginning. Through interaction with investors, we have received lots of questions as to how ready are we to erect such a big plant from scratch on a greenfield project, which represents undoubtedly a challenge. So we, on Page 13, wanted to recap for the benefit of investors and analysts, some of the past experience that Avio has had in erecting new solid rocket motor manufacturing plants. In particular, between 2018 and 2022, we have been refacilitizing all of the Ariane 6 and Vega C solid rocket motor facilities, both in Europe and in French Guyana. Here, you see some of the photos of the activities we have carried out in this period. We have built factories for an equivalent of 60,000 square meters with an overall investment in the range of about EUR 300 million financed by the European Space Agency in this case. And we have put in place a capacity that today exceeds pretty much 6,000 tons per year. So this is something of an order of magnitude larger than what we are aiming to do in the U.S. Why do we highlight this point? This is important because it's inevitably a risk factor, erecting a new plant in execution is a risk factor. And we believe that our recent past experience with equipment suppliers with the construction of these type of plants provides a very relevant mitigation to this execution risk. A second point I wanted to focus on, on Page 14 and on which we've had lots of questions is, what is the degree of vertical integration with the supply chain? Many of the investors have asked about our ability to ramp up with volumes so quickly and whether or not the supply chain will follow, okay? So one point we want to clarify is that, our solid rocket motor manufacturing activities are already quite significantly vertically integrated, okay? Here, you see a snapshot of some of the things we do in-house that are typically done by external suppliers instead. So for solid rocket motors, we manufacture and produce our own polybutadiene material, which is the main glue that puts together all of the ingredients of the solid propellant. So it's a very important chemical. It's a fundamental chemical for the mixing of the propellant. We also manufacture our own thermal protection material, which, by the way, it's a patented material. It's an Avio patented material. And similarly, for the pre-preg carbon fiber material that we use for the solid rocket motor cases, we use our own formulation and patented formulation of the resin, and we have our own impregnation factory. So this is just a glimpse, but to just convey to you the message that we plan on mitigating the risk of such a rapid ramp-up by integrating vertically within the supply chain as much as we can. We cannot integrate 100%. But, of course, we tend to integrate ourselves on the most critical sources of materials that will otherwise become bottlenecks in our quest to reach a high volume increase. A quick pick up on Page 15 for all of you on -- which are the revenue targets. The revenue targets are essentially moving from the current, give or take, EUR 500 million in revenues that we are targeting for 2025 as per our guidance to something in excess of EUR 1.2 billion by the end of 2035. So if we go along this route, we will be cruising at an annual compound growth rate of about 10% or actually exceeding 10%. And this will happen by shifting the mix of the revenues, essentially moving the contribution of the Defense revenues from the current 20% to something that will be well in excess of 50%, probably closer to 60% share. And also, as you may appreciate, more focus will be on production than what we have today, where revenues are equally shared between production and new research and development activities. Geographically, revenues will tend to be at least 35% to 40% from the U.S. whereas today, we have less than 5% probably. On the long-term EBITDA targets on Page 16, one important point here. The European activities will continue to grow, as you know, both for Space and Defense. And we expect as we move towards the future years to have an increasing operating leverage, and therefore, a growing European EBITDA as we move along. However, in the meantime, we'll have to ramp up the U.S. business. So between now and 2028, we will not be able to generate a positive EBITDA from the U.S. Rather, we will have costs, but not yet revenues, okay? So what we expect when we add up on these first few years, we expect an overall flat EBITDA until the midterm or, let's say, 2028 time frame when we actually start to have the plant in operation and then a rapid growth in the U.S. EBITDA that will imply an overall EBITDA at group level growing at more than 20% all the way to 2035. So as you may appreciate, the peak of the investment happening in the U.S. will be between now and 2028. The EBITDA will grow as a function of the new volumes and improved operating leverage, although as you know, in our activities, particularly in solid propulsion, the operating leverage is somewhat limited because the fixed cost is relevant. And as you grow in volume, also the fixed cost [Audio Gap] but the overall EBITDA will improve because the mix of different businesses will be improved with respect to that. So more focus on propulsion activities versus system level activity will provide a better EBITDA margin. So by 2035, we should end up with an EBITDA that is essentially fivefold what it is today. On Page 17, one rapid touch on the capital increase. So the result of the shareholders' meeting was that we had 2 resolutions. One was a EUR 400 million capital increase by way of a rights issue. So with preemptive rights to existing shareholders. This has been approved with an overwhelming majority of 99%, which I think is very encouraging because I believe that this means that shareholders are fully aligned with the targets we have in mind and that we need to invest in order to capture this growth opportunity. As you know, we also have a second resolution to potentially further increase the capital by another 10% within the next 5 years at the discretion of the Board of Directors with the exclusion of pre-emptive rights. In this case, also the majority was 77%. So again, I think there was an overwhelming majority of positive votes on this. And this, as you know, is the flexibility that we are keeping in the system, should we find in the future further opportunities for growth, should we aim an even better business plan for the future. We want to be quick in raising more capital, making more resources available, invest more for the benefit of all shareholders to get a better result. So overall, that's what we have done in the first 9 months. We've covered a lot of ground. Now I will stop here and pass the word to Roberto Carassai, our new Chief Financial Officer, to whom, by the way, I wish best of luck on his new mandate, and now he will report to you our results. Once again, one word of big thank you to Alessandro Agosti, who has been with us for a long time, as you may have recall, he has been instrumental also in a very smooth transition with our new CFO. And so, we want to take once again the opportunity to thank him for his excellent professional performance. So, Roberto, to you.

Thank you very much, Giulio. Thank you very much, Nevio, and good morning, everybody. So now we can move on Slide 19 and then we can comment on the backlog performance of the company. The company has achieved this record high backlog reaching EUR 1,860 million and this astonishing performance has been possible thanks to the very strong order intake during the first 9 months. The company booked more than EUR 480 million, most of them EUR 250 million are related to the Vega program as the result of the transfer of the activity from Arianespace to Avio for the launch service provider activities. But the launch position of the order intake is also due to the defense propulsion for over EUR 200 million and this is the result of the orders we booked from both the European and U.S.A. customers. In terms of composition of the backlog, Vega still represents 50% of the overall backlog. But with the defense propulsion that has increased to reach 32% of the total. And in terms of composition, the production activities accounts for 60% of the backlog with remaining 40% related to technological developments. If we move to the next slide, Slide 20, we can comment here the revenue performance. The company has generated EUR 351 million of revenues in the 9 months, significantly higher than last year, maybe the increase of 26%. This is due to the strong contribution comes from Ariane 6 and -- but mainly by the Vega program as well. This is due to the higher production rate that is related to the increased flight cadence on both products. And also the defense propulsion contributed with almost EUR 60 million and generating this important result for the 9 months. In terms of composition, the revenues have been generated for 58% by production activity with an increase of 4 percentage points compared to last year with the remaining 41% coming from the technological developments. If we move to the following slide, Slide 21, here we can comment the overall performance of the company and we have already commented the backlog this has achieved. I think once again the EUR 1,860 million in the 9 months. The net revenues achieved EUR 31 million with significant increase by EUR 73 million compared to last year and in percentage terms by 26%. This huge increase in the revenues led to a -- has led to a very positive result in terms of EBITDA reported despite an increase of the energy cost with and EBITDA reported that in the EUR 15.2 million with an increase of EUR 3 million compared to last year. This performance EBITDA level generated a positive EBIT reported of EUR 0.2 million despite higher depreciation cost mainly related to the higher flight cadence of the Vega program and the new IT improvement projects. This enhancement of result of reported result generated a corresponding increase in the adjusted result as well. In terms of the net financial position, the company closed 9 months with a positive net financial position of EUR 47 million. This is declining from the EUR 90 million booked at the year-end 2024. This is the result of the flow down -- mainly to the flow down to sub-contracts and suppliers of the advance payment that the company booked in December last year, and benefiting from the EUR 10 million coming from exercise of Space Holding warrants. Moving to slide -- the following slide, Slide 22, we can here comment the quarterly evolution of the EBITDA reported and net financial position. On the top of the slide, you can appreciate the linear growth of the EBITDA until -- during the 9 months achieving the EUR 15.2 million September end. It was highlighting that the performance and various quarters has been always better compared to last year. And as typical for the company is the company's experience also from the last exercises that is the large part of the EBITDA that is expected to be generated in Q4 as a result of the revenue growth in the fourth quarter. In terms of the net financial position, again, we achieved EUR 47 million of positive net financial position at September end. Again, in the previous quarters as well as in the third quarter the net financial position has been higher -- much higher compared to last year. And this will position the company to have a positive net financial position at the end of the year. Moving to the last slide, based on the 9 months result that we have just commented, the company confirms the guidance for the year-end, specifically with the backlog that will be in the range of EUR 1.7 billion to EUR 1.8 billion. The year-end revenues between EUR 450 million and EUR 480 million. EBITDA reported between EUR 27 million and EUR 33 million with an EBITDA adjusted of EUR 30 million to EUR 36 million considering EUR 3 million of recurring costs and with a net income of between EUR 7 million and EUR 10 million at the year-end. Thank you very much. I leave the floor again to Nevio.

Thank you, Giulio. Thank you, Roberto. I think we are ready to open up the Q&A session.

[Operator Instructions] First question is from Martino De Ambroggi, Equita.

The first question is on -- Giulio, on the interview on Sole Ventiquattrore today. You mentioned that one of the 2 U.S. clients, the new ones is in advanced negotiation. Obviously, I do not ask you anything in particular, but should we expect a similar timetable to Raytheon with 18, 24 months of development, and thus, production after 2028 or could be a different timetable? And the second question, I know I cannot ask you for the amount, but what is the reasonable timetable or the timing for the government grants to be obtained? And third question is on the Ministerial Conference. What are your best expectations for the upcoming event?

Yes. Martino, thank you for your questions. So, on the new customer time line, yes, I expect something similar as to what we have done pretty much with Raytheon. So we need to kick off some activities that proceed manufacturing, so qualification of the production lines, which we might as well be able to do in Italy, I believe. This largely depends on what type of program you are engaging on. Typically, in the U.S., you will have 2 types of programs. One that can be shared in terms of technology disclosure also in Europe where we can help from here, or there might be some specific programs that will be for U.S.A.s only. And in such case, we will have to work only with U.S. people and U.S. citizens. And in this case, we will have to wait until we ramp up also the team and the personnel in the U.S. I think there will be plenty also with other customers of work to be done in Italy ahead of time before the production in the U.S. This is also in the interest of the customers to get ready sooner for production. So I expect a similar time line. Now, timing of grants, very good question. So first of all, grants will be split in 2 different pursuits. On one side, you have the state grants relative to the place where we plan to erect the plant that we hope to be able to announce very soon, okay? These are similar to what we have even in Italy. These are somewhat automatically proportional to the number of people you hire to the overall investment you place and so on, and they come in the form largely of tax cuts and funds for the training of new personnel, okay? This, I think, will have a relatively shorter time frame. Whereas on the federal government level, the answer is, I don't know, because as you know, the new U.S. administration has largely changed the practices and the relevant interfaces. So we are interfacing with the new administration. The dialogue is active and our requests are on the ground. But since the administration changed, of course, we need to deal with new practices. So this may take a longer period of time. I am unable to forecast how long this may take. But what I can tell you is, we are in active discussion for this part as well. Now, on the Ministerial Conference of 2025, so our expectation is good, something probably like we had in the previous Ministerial Conference or even slightly less would already be a good success for us. You may recall that at the last Ministerial Conference, we had a very substantial contribution. In this case, I'm not sure we can achieve the exact same amount, but close to. So, I think the support from the European Space Agency will be essentially on 2 fronts. On one side, the support for the exploitation of Vega C, as you know, with all kinds of concurrent funds supporting the obsolescence of certain technologies, the activities for maintenance and operations of all of our assets on the low side and so on. And this will enable essentially our expectation for growing the flight cadence of Vega C or in one way, securing flight rates compatible with market demand. On the second -- on the other front, the Ministerial Conference will focus on extending our development programs, in particular, on the liquid oxygen methane technology for the future. As you know, also coming from the previous Ministerial Conference and from the projects we received out of the Next Gen EU, we have a number of different programs on liquid oxygen methane technology development. So what we will try to achieve with this Ministerial Conference is a consolidation of all these programs, Vega E, the liquid oxygen methane demonstrator, the M60 engine, the reusable upper stage to make them all converge towards a consistent and organic preparation of next-generation launch, which may have a significant portion in liquid oxygen methane. Now, of course, you are talking about the far future because Vega C has just entered in service, so we will likely be in service for 10 to 15 years. So this effort will continue across the years. And at some point, we will most probably overlap Vega E. And then further on, we may feel something even more sophisticated than Vega E. So overall, I have a good expectation for this Ministerial Conference. I understand that the different countries are projecting to invest a lot, potentially more than in the previous Ministerial Conference, but we will not know until November 25, I believe. So as we have traditionally done in the past, we will convene a conference call with investors and analysts the day after the Ministerial Conference to report to you the outcome and provide you with our read across on the outcome. That will be essentially very telling of the type of orders that we should be getting through 2026 and beginning of 2027. So I think that by the end of the year, we will have a picture, not only of the content of the Ministerial, but also a good hint of what the orders might be in the course of '26 and beginning of '27.

Next question is from Gabriele Gambarova, Intesa.

The first one is on IRIS2. In your slide, you mentioned a major upside. Is it possible to understand what could this program mean to you? I mean, how many flights it could entail for Vega or Ariane? This is the first question. The second one is on the space alliance between Leonardo, Thales and Airbus. Does this change anything for you? Do you think it can benefit, let's say, the overall situation in Europe? And the third one is on the results, the 9 months results, we saw a very nice, let's say, growth in the top line without -- almost without operating leverage. So you mentioned energy costs. Is it possible to understand better how energy costs impacted margins? And what are you doing to protect them -- to protect margins in the future?

So, Gabriele, on IRIS2, we have limited visibility of what the launch schedule would be. What we know for the time being is that, this is 280 satellites of medium size. We don't know what is their deployment strategy. And to be honest with you, I think not even the customers would know. We would have to see exactly how they want to deploy them. I expect the majority of them will represent an important opportunity for Ariane 6 to launch them. And this will mean that we will have more opportunities to manufacture boosters at the end of the day, which is, as you know, profitable for us. And the more we grow the rate of production, the more we utilize the capacity, the better we are in terms of margin. Therefore, we see this as a positive and relevant expectation for the future also because it may pave the way for the possibility of growing the currents of production for boosters beyond what we have installed capacity for, okay, by another, say, another 20%. We may debate this at the next Ministerial Conference. So I hope that this Ministerial Conference also this subject will be on the table. And if this were to be the case, I think this will represent incremental opportunity because if we were to go for an even higher production of boosters, I think at some point, the operating leverage will show up, okay? Now let me go to your third question. The growth in the top line without much of an operating leverage. The operating leverage, by the way, is difficult to fully exploit in the first 9 months. As you know, we accumulate most of the profit in the last quarter, unfortunately, and this is due to the fact that most suppliers push their costs through the last quarter because almost none of them is listed, so they don't care about the quarters. They tend to wait until the year-end to push all the costs out. I think we should see this year a modest improvement in the operating leverage. We are not yet where we would like to be in terms of capacity utilization rates, but definitely better than the year before. And as you correctly pointed out, with a better situation on energy costs than we had anticipated. In fact, this year, starting from March this year, we have consistently seen energy prices somewhat below what we had expected. So unless nothing changes between now and year-end, which we don't think, we should have a positive surprise towards the end of the year, which may lead to some good improvement of the operating leverage. But I want to be cautious and see what the numbers turn out to be in the last quarter to finalize on this. But let's say, it's a positive expectation. On the space alliance, I don't know. I have read the press release just like you. I am not completely into this project. I don't know much about it. What I know is that, before this becomes an industrial reality, it would be a couple of years, at least. And therefore, we will see the effects of this not immediately, but maybe in some time. Overall, my tendency would be to believe that this is somewhat neutral to launch service providers. Both ourselves and Ariane Group are not part of this joint venture. We provide launch services. We used to work well with Thales Alenia and with Airbus. Now that they are joined, we hopefully will work well with them join. So we -- ex ante, we don't see any reason for it to change much for us in the future. Therefore, we wait to see how this joint venture shapes up. I think to a large extent, the intent of the joint venture is to extract synergies within the satellite manufacturing activities, some of which are under severe loss reportedly. Therefore, if they succeed in extracting the synergies and become more successful, we will be somewhat happy to see that and hopefully continue working with them as we have done in the past.

Next question is from Andrea Bonfa, Banca Akros.

Can you hear me?

Yes, we can hear you now.

Very quickly, my question, some of my questions have already been answered, but I would like to, let's say, expand a little bit further on the potential 2 new U.S. clients, in particular the one with the advanced stage. Can we expect some news flow in terms of potential order backlog or size of the initial contract by year-end? And if this client is in the same potential sales as Raytheon, just to give an idea.

Andrea, we didn't get the second part of your question.

No, the second part of the question was if you can also comment or elaborate on the potential size of this potential new client, if he's of the same potential size of Raytheon or if he's smaller or even bigger, just to sense a potential dimension on this.

They are equally big and capable, one of the large U.S. OEMs. So in terms of potential comparable prospect as to Raytheon. In terms of new orders, we have other things in pipeline, by the way, that we need to accomplish, in particular order for the P160. The P160 we have to recharge, so to speak, the order book for the P160 now that we are ramping up. As you know, we haven't bothered to close the loop on new orders for P160 because in that, it did not fly. There was no need to work on a contract now. They are consuming the stock pretty quickly and now we have to work on that. So I would expect earlier to see orders coming on that front. And we expect we will see, there might be something more coming since we are working on. So between now and the first quarter, these would be the things to watch.

[Operator Instructions] Next question is a follow-up from Gabriele Gambarova, Intesa Sanpaolo.

It is on the Danish SAMP/T contract. I mean the country announced it shows the SAMP/T system 1 month ago, something similar. I wonder if you have any idea of when the contract could be signed, what is the size of the missile component? And even if this contract, which is EUR 8 billion contract for the overall system was included or is included or not in your projections?

The honest answer is that, I don't know, Gabriele, we don't know exactly what the slowdown might look like. We have started to hear this from MBDA, but we don't have the figures yet. We anticipate that this may be quite significant. And therefore, I mean, for example, last year, on a completely different project for CAMM-ER with Poland, we have had, as you may recall, a very important slowdown. I believe that this contract for them may be of similar relevance. But honestly, we don't have the numbers yet. And we have interacted with MBDA, but this is not yet clear.

Okay. And just as a reminder, the CAMM-ER Polish contract, what was the size for you?

It was EUR 150 million order of magnitude.

[Operator Instructions] Next question is a follow-up from Andrea Bonfa, Banca Akros.

Now my question is basically, I'm attaching to the one of Gabriele. Thales is, let's say, keeps mentioning that there are potentially other orders similar to the Danish one. And I was wondering if you -- I mean, are part of this negotiation, if you can see these orders coming and if the magnitude can be of the similar size of Denmark or bigger or smaller?

No, Andrea, we don't have this honestly we don't know. We know that there is an expectation for growth that is when the commented here and there from our institutions, the other institutions as a consequence also of the [ SAFE ] program. But this has not yet been defined at the level of ourselves, which we represent. Our supply chain has not yet been defined in quantitative terms. As soon as we have an understanding of that, we will promptly report that.

[Operator Instructions] Mr. Quattrin, gentlemen, there are no more questions registered at this time.

Thank you. Thank you, everyone, for joining this call.

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