Exor N.V. (EXO) Earnings Call Transcript & Summary

Welcome, and thank you for joining Exor's Half Year 2026 Results Conference Call. Please note that the presentation materials and the related press release are available for download on Exor's website, www.exor.com under the Investors and Media Financial Results section. And any forward-looking statements made during this call are covered by the safe harbor statement included in the presentation material. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to turn the conference over to Exor's Chief Financial Officer, Guido De Boer. Sir, you may begin.

Thank you for opening this call, and welcome all to the half year 2026 results for Exor. 2 main highlights that we would like to present -- we announced last year that we will progress with simplifying our portfolio, and we've progressed at speed we're doing the most sizable 1 Iveco almost closely where earlier in the half year, the sale the defense business completed and also a few weeks ago data form relaunched with standard offer for Iveco with closing in 2 months. Also during the period, we completed the divestments of GEDI, LifeNet renewal. And I'm pleased to tell you that our space we signed an agreement to sell our stake from Welltec, where we've owned the company to a business cycle managing very well way with the price, which will be substantially in line with position our fair balance sheet, which returned a mark of 2.4x and we expect that to close in the first half -- so that leaves us in an extremely strong position in turbulent times and leaves us in a good position to benefit from those turbulent times. With the balance sheet, there is extremely solid for the deployable cash -- so to give you the bridge of that, we started the year of EUR 1.4 billion in cash. The proceeds from these divestments and some other divestments like reinsurance vehicles and distribution to deliver around EUR 2.7 billion of proceeds. And then with some net cash inflow on dividends and some capital calls we make for got will end up approximately EUR 4 billion of cash, of which we'll use EUR 0.5 billion in the buyback to execute for 6 months, and we'll speak a bit further about the nature. So moving on to the key figures. During that period, our NAV supplied by EUR 1.2 billion. We'll go into the detailed sources of cases from Well, our loan-to-value strengthened quite a bit, obviously, with the increase in cash position. Net per share fundamentally moved in line with our NAV as we did not find back in the period, and our total shareable return was below that because of the widening Composition of our portfolio changed of a few important items. Ferrari strengthened a bit from 3 to 4 important move of CNH as well with a very strong performance in the period, moved from 2 to 10. And obviously, also cash up to 6% during the period. If we then move to the breakdown of the change in GAV. There's a lot of numbers on this slide. The key 1 that explains the performance in the period is the change in value of our listing. We'll break down all the other buckets in detail. So we want to be extremely transparent and show you the leaders of performance. So we'll dive into a further, but all of them late in the period, an increase from cash and cash equivalents of EUR 1.4 billion to EUR 2.2 billion. And as mentioned from EUR 300 million of investments, largely gone commitment ingot, and half of the disposals, the dividend we did -- and in other changes, the EUR 676 million is the dividend inflow that we have less expenses. So we then move to the core bucket of investments that we have are listed companies. There you see the key driver of our performance was a strong decline in the share price -- the other 3 big companies almost performed well with the notable mentioned for G&A. Iveco seems like a weak performer here, I would like to note that they distributed the EUR 427 million of special dividend following the divestment of Leonardo. So for TSR and a great performance. Events and or weak during the period via transportation with recently IPOs, and they showed to similar kinds of many Spec companies with IPO and real have now since we done underlying strong results. So we will then move on to unlisted companies. We disposed in the period at JD and Neal. And after the period, we also sold LifeNet and Walter just mentioned. So in total, around EUR 900 million of reduction of these unlisted companies and shifting more to a listed portfolio. The change in value you see in timeliest let also about the garden in Dome because the change in value of intent largely driven changes of the listed deal. Then moving to Lingotto and others. The intersection funds declined by EUR 367 million approximately -- you might recall that last year, they went up EUR 1.2 billion. So this is a logical volatility that for us in the market and very confident even that they've never had been done yet before and we'll also lies to posts. Lingotto Horizon was good positive surprise where they have 1 investment in that portfolio, which saw a uniform around and because we were 1 of the early investors very nice list. Value debt portfolio and the others move. The investments we did were existing commitments for Horizon innovation in Music, and we invested in a very posing new granted that's slightly lag from capital of EUR 2 million that's different in the experience. They only have the bucket of other assets, which before at the start of the period amounted to EUR 2.3 billion. We've been disposing quite a bit of assets in that category as well and that's an ongoing process we plan to do. Key proceeds in the funds managed by third parties were EUR 55 million of reinsurance vehicles and less from the partner in disposal and EUR 38 million of distributions from our global perform mix ventures on. Other assets were loans extended to JD and as part of the sales JV for -- on the changes in value also on the venture capital arm, they've made investments in some of the early AI and companies both in AI business themselves as well as in infrastructure and these all look to the noninvestment that's driving a strong upward revision of valuation of Oral Global. Listed companies down by EUR 237 million. EUR 180 million of that is related to be in Materan also for the on the back of the weakness in automotive less. The latest was down change. So that's for Tordis of the performance of our portfolio, and let me answer. Second question in -- as I mentioned, the change in cash and cash equivalents the breakdown I showed you at a high level before EUR 861 million of dividends. We received a bit more dividends that we chose to take half of the dividend fills in shares, but that you won't see here in the cash increase expense rate between dividends and dividend receive. The disposal is here that we just mentioned, investments and shareholder distribution to equal dividends in this period. Given our sizable cash position, we also repaid all of our private placements, just to make sure we treat investment -- interest returns as efficient as possible, and these borrowings were carrying a higher interest rate and a cash position. So that's why we pay that and then onto the cash. On the debt side, not much to report, as I like it being prudent from our debt position. So we have a debt position of EUR 3.7 billion in line with what we had last year. May we see a bit of movement in other financial liabilities, EUR 140 million. That's just the timing of an FX transaction we did, which started at the end of the period and complete in the first day of July accounting and trade the bottom line number is EUR 3.7 billion. We have no redemptions anymore in 2026 nor in 2027. So in these turbulent times, capital markets and fully on that side and first redemption to follow in 2028 with a very well spread out metspar for the coming next 12 years. So that said, on the debt side. Let me now turn to the capital allocation decision we took in the Board yesterday. -- doing a EUR 500 million on-market buyback and we'll execute in the next 6 -- you'll see also in the announcement that we are very explicit at both because the shares trade at a substantial discount to our NAV and don't reflect our assessment of the intrinsic value of portfolio, we made this decision. We also said before, we do this because it has a substantial discount as or not because we feel that this is a good base allocation, investing at our portfolio, which we like and half of the cost is an investment that makes a lot of sense. We also chose to make this statement a bit stronger because I think we're actually in a situation of the discount is at a very high level, at 56% is set. Our companies are at depressed levels, and we have a cash position that is well utilized. So we feel this is part of our tool books, but also part of our ongoing toolbox that we continuously evaluate -- it's not an opportunistic transaction. We will score not to do this as a tender of market program, which has started today and which will continue until full year results in 6 months. It's important for us because we are committed to driving NAV per share growth as we've already done outperforming both on an absolute and relative basis. And as I mentioned, buybacks are intellipath market. So with those closing remarks, I would love to hand it over to Q&A.

[Operator Instructions] We will now take the first question. Please. First question is from Alberto Villa from Intermonte.

Actually, 2. One is related to the situation at Stellantis. There is a plan and a recovery expected in the fourth quarter and the coming years. But the situation in terms of cash of the company, has deteriorated. So I was wondering if there is a scenario in which Stellantis might need to raise cash, what is the position of Exor as a shareholder on that. I've read that there is a lot of commitment on -- in the report on some investments like Ferrari and so on. I was wondering what is the commitment on Stellantis. The second question is on the performance of Legato was very positive last year. not so positive this year. I was wondering if there is any specific reason behind that.

All right. Thanks, Alberto for the questions. On Stellantis, we fully endorse the plan that has been announced by the management, and we're very confident in the execution of it. Yes. It's an uncertain market. How they will do on their cash position and the capital increase. I'm not aware of any of those brands and honestly, also not really a question I can answer these are more topics to race to do still on this no view on these CapEx. Lingotto I think no particular reason. The performance last year was very strong from the back of the hedge fund. Hedge funds have volatility, and we are very happy as a long-term investor to embrace volatility if the long-term performance is in. So this fund has returned since inception, I think an IRR of 24%, calculate those numbers since 2018, the stellar performance. So if there is a lift in 1 month, there's no concern. This is this the volatility that's inherent with such a strategy. So for intersection, that's just par for the course for the type of strategy as it is. I was very encouraged to see the strong performance of Horizon. Horizon is a fund investing in private investments. It's now fully invested in the monetization period. So that's usually the moment where you start seeing the large value step-ups and seeing our investors that lingo for delivering on this is very encouraging. So this answers your question.

Okay. Thank you. If I can an additional one, you performed various divestments in the first of 2026 and also afterwards. I was wondering if there is any opportunity for further divestments between your listed and unlisted companies.

Yes, we're always evaluating our portfolio mentioned that in previous calls, we always look at all of our investments. We are long-term investors, so we're not going to invest in divestments, but we always look at -- are we the best on like these businesses for the long term? Or is there a good opportunity. So that's always the case and understand you a generic answer rather than a specific one. But you've seen that we've been very action.

We will now take our next question. This is from Jon Perez from Kepler Supra.

Jones from Kepler. Just 1 question from me on portfolio construction in the context of the next investment. So the press release mentioned about EUR 4 billion of cash rate to be deployed -- in the past, I think you recall the sectors that were mentioned were health care, luxury and tech. I would be keen to hear about how you think of portfolio construction considering the rest of the current portfolio and whether there are specific thematics that you would be happy to get exposure to with your next investment. How we think about long-term moat in the current environment and whether there are specific risk factors that you would like to avoid? And any clue on the time line would be welcome as well.

Thank you, Jon, for these thoughtful questions. So portfolio construction is obviously a critical part of what we do. During partner disposal as these are the 3 sectors. There are still factors that we like a lot and where we have a lot of domain expertise and we know where the hidden gems are having. But it doesn't mean that we will only invest in these sectors. What we're primarily looking at is a large list of companies in which we can acquire a shareholding of 15% to 20% for an investment of at least EUR 2 billion, EUR 2 billion being approximately 5% of our growth as -- so the thinking of that is we want to have the right level of diversification in our portfolio at 5% is an investment makes an impact. So that's why we have a lower threshold of EUR 2 billion -- but it's largely in listed companies where we have there an influence similar as we have in our other listed companies. And it's what can we contribute as a shareholder being an active shareholder where we can add value either in turbulent times to offer long-term stability to the company or in companies that do very well that need a shareholder also to keep the management sharp and driving rate -- so that's overall what we look at. And then we look at individual sectors where there's structural tailwinds and within those sectors, companies that have the right to win and where there's also a fit with the ownership structure we drive value creation. So that, in general, our philosophy around searching for the next large. We are patient shareholders, but we're also patient investors. And as I mentioned in my opening, these are quite turbulent times and turbulent times bring opportunities for the. So we are not in a rush to deploy. It is about finding the right company at the right price. So I will not give any timing on when we envisage the next investment. Obviously, sooner or than later, obviously, we want to deploy capital that's the patient to wait for the. I hope that answered your questions, Jon.

We will now take our next question. Next question is from Philippe Pegus from Deruta.

Yes, Guido, thanks for taking my questions. I actually have 2 today, if I may. The first one, maybe building on the previous question in terms of portfolio composition. And my question is specifically with regard to concentration risk. So today, if we look at Ferrari, it's about 39% of your GAV so that's -- it's your largest position. And you have always positioned the Ferrari investment, and I fully concur with that as a luxury brand. It's not a car manufacturer, which is good today because we all know challenges that the car industry is facing. So it's a luxury brand that has performed very well for you. But at 38%, I wonder how you feel about that 38% because - if you look at some other players in the luxury brands segment today, LVMH, Hermes, if we had said at the beginning of the year, these companies could be down almost 40% in market cap year-to-date we would never have believed it. So it's a great brand, it's a luxury brand, but it's 38% of your portfolio. How do you think about that? If you could kind of walk us through that in terms of how you evaluate that at the Board meetings. I just would love to understand that a little bit more, if you could help me here.

Great. And did you have another question? Or was this.

Yes. Yes. The second question, Gil. So in the letter from your Chairman -- our CEO development, was a reference made to an approval reach we felt, which would open the way to a potential increase in your stake holding? If you maybe can just kind of elaborate a little bit on that. I would imagine that would be within the constraints of what you just shared before, meaning large listed companies between 15% and 20%. Does it fit within that context that we should look at that potential increase in the Philips stake?

Yes. No. maybe to take on I think the renewal of the partnership with Philips is, I think, a testament to our investment working well and our partnership with the company working well as adding value to the government of -- that has been evidence also with the company opening up to increase our stat. So previously, we had a limit of 20%, but now increased -- it doesn't mean that there is any action now taken to increase that or imminent, but we have the opportunity, and we see that as a vote of trust from Philips that they value our ownership. So I would say that, that is the key takeaway from that investment from that.

Okay. And that's what happening that would happen in the form of open market purchases if you were to decide to increase that? Or how you look at the block trade or yes okay.

So we have not decided anything on if and when does happen -- the first -- and then when we do as we use -- a we need a bit small.

Okay. Fair enough.