Ferrari N.V. (RACE) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Ferrari 2026 Second Quarter Conference Call and webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Thank you, Nadia, and welcome to everyone who is joining us. Today, we plan to cover the group's Q2 2026 operating results, and the duration of this call is expected to be around 45 minutes. The call will be hosted by the Group CEO, Mr. Benedetto Vigna, and Group CFO, Mr. Antonio Piccon. All relevant materials are available in the Investors 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 on Page 2 of today's presentation, and the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.

Thank you. Thank you, Nicoletta, and thank you to everyone joining us. We are pleased to share with you the results of another important quarter for our company. The key message is clear. Ferrari continues to execute its plan with focus, discipline and consistency, keeping the client at the center and blending heritage and innovation in a distinctive way. In this call, we will address 3 key achievements I would like to sincerely thank all the stakeholders for. One, we delivered another strong set of results. Two, demand remains solid with an order book that covers the entire 2027; and three, we continue to evolve our product offering through a consistent commitment to innovation, an innovation process that starts from human emotions, not from technology push. We are a strong believer of emotion-driven innovation. But let's go step by step. Let's start with our financial performance. In the quarter, we delivered revenues at EUR 1.94 billion, EBITDA of EUR 755 million and industrial free cash flow generation of EUR 275 million. This performance was supported by strong mix and personalizations, which once again performed very well and allowed us to raise our full year guidance, and Antonio will provide you more detail shortly. Moving to the second point, the order book. We continue to experience a healthy demand across all geographies with an order book that covers the entire '27. This gives us strong visibility and confidence. Across the portfolio, several models, including the 296 Speciale and the 12Cilindri families are already sold out for their production run, underscoring the strength of demand. And now the third key achievement, our product offering. As anticipated at the beginning of the year and during the AGM a few months ago, 2026 is proving to be a key year for product innovation at Ferrari. With the presentation of Amalfi Spider, Purosangue Handling Speciale, Ferrari Luce and 12Cilindri Manuale, today, we have the most complete and diversified product offering ever. It includes combustion engine cars, natural aspirated and turbo, hybrid 6- and 8-cylinder models and Ferrari Luce. This makes our product offering unique. We are the only luxury company able to offer sports car able to deliver any kind of propulsion that the client is willing to experience. We can address different client desires from collectors, repeaters, new clients and future generation of Ferraris and expand our offering in terms of product architecture, performance, design and driving experience. From now onward, Ferrari is able to offer all the 3 powertrain technologies fully in line with our technology neutrality and horizontal product diversification strategy. We committed. We committed to this path, and we have delivered consistently and allow me to be very proud of the team and all the partners in the world that help us to make it possible. In Q2, we unveiled our first electric Ferrari, Ferrari Luce. It represents a milestone in the history of the Prancing Horse, a true sports car and an addition, I repeat, an addition to our product portfolio. It is a statement of innovation and design, a car conceived to be forward-looking in every respect. It is a masterpiece of engineering and technology with more than 60 new patents, testifying to Ferrari's technical excellence across electric propulsion, vehicle dynamics and system integration. They are all combined with a distinctive design language and a human-centric way to interact with the car, including the traditional paddle-shift for torque-shift engagement and authentic sound of our 4 electric traction engines. Every choice we made served a single purpose to deliver a true Ferrari driving experience. The Ferrari Luce is a sports car in every sense with Ferrari performance, handling and emotion behind the wheel while being the most versatile model in our range, extending Ferrari ownership into different moments with its 5-seaters configuration. 2 months after the world premiere in Rome, and we can share 3 clear points: one, we are very much satisfied with orders that are coming in, in line with our plans. Two, initial orders are currently coming from repeaters and new clients. Three, we are engaging those who are genuinely interested in Ferrari Luce according to our commercial and marketing plan. But Ferrari Luce is only one example of how our lineup continues to evolve. On July 3, at the culmination of our Cavalcade event, we presented the Ferrari 12Cilindri Manuale, a limited edition special series of the 12Cilindri producing only 1,499 units, each fully allocated to our clients. After the 599 GTB Fiorano 2006, we reintroduced the manual transmission, bringing back an even more direct interaction between the driver and the car. This was made possible, thanks to the new Manuale by-wire system designed in-house, patented and inspired by the Winch-by-Wire system developed in our Hypersail racing project. Yes, it may seem strange, but open innovation goes hand-in-hand with lateral thinking and cross-pollination between worlds apparently completely disconnected. It combines the driving emotion of a manual gearbox and the precision of electronics. The 12Cilindri Manuale isn't about recreating the past for the sake of nostalgia. It's about recognizing that the greatest Ferraris have always been defined by the relationship between the driver and the car and finding a modern way of preserving that connection, that conversation. It is a celebration of engagement rather than a celebration of nostalgia. In a single quarter, Ferrari Luce and 12Cilindri Manuale have provided 2 clear examples of how Ferrari combines tradition and innovation in a distinctive way. They demonstrate the strength of our strategy and our commitment to technology neutrality, but most importantly, to our emotion-driven innovation where emotion matters much more than numbers but more is yet to come. Two more models are to be unveiled by the end of this year. And before that, let me also highlight the successful activation delivered by our lifestyle team during the quarter. Indeed, leveraging the emotional resonance of our racing heritage, we continue to nurture our clients through unique experience and events, just seeing the 24 hours of Le Mans and the Goodwood Festival as well as the capsule collection developed for Monaco and Silverstone Grand Prix. To conclude, the progress we are making in racing, thanks to both our drivers and the entire team, continue to remind us what makes Ferrari stronger, focus, determination and team spirit. These values guide us every day, every day while keeping the 4 wheels on the ground. And on this note, I'd like now to hand over to Antonio to review the Q2 results.

Grazie, Benedetto, and good morning or afternoon to everyone. On Page 4, we show the highlights of the second quarter, another quarter with solid revenues and profitability growth, coupled with significant industrial free cash flow generation and remarkable shareholders' remuneration. We continue to benefit from a strong sports car mix. Personalization exceeded our expectations and racing revenues increased their contribution. Let's look at the results in more detail. On Page 5, we present the Q2 shipment breakdown and model changeover that we are continuing to execute as planned. In the quarter, the Amalfi, the 849 Testarossa and the 296 Speciale family increased their contribution, continuing the ramp-up. The deliveries of the 12Cilindri Spider and the Purosangue continued steadily. The F80 increased just very modestly as per our plans, while the 296 GTS and the Roma Spider decreased in line with their phase-out path. Lastly, the SF90 XX family also decreased as we are approaching the conclusion of their limited series run. The overall model phasing I have just mentioned supported a richer product mix, which we will discuss in a moment. From a geographic mix perspective, EMEA experienced the strongest growth during the quarter. Consistent with our usual cadence, closer markets are served first, while deliveries of the new models to the other geographies will ramp up progressively in the coming months. On Page 6, net revenues grew 11% at constant currency and 8%, including the headwind from currency, mainly related to the U.S. dollar and Japanese yen. The increase in cars and spare parts was driven by the richer product mix and higher personalization. Personalizations were higher than expected, about 20% of total revenues from cars and spare parts and were particularly relevant for the 296 Speciale family. The adoption of carbon and paints continue to drive revenues growth. Sponsorship, commercial and brand also increased, thanks to higher sponsorships, which were partially offset by lower commercial revenues linked to last year Formula 1 ranking. Other revenues were also positive, mainly in relation to the rental of engines to other Formula 1 racing teams. It is worth noting that the recent strengthening of the U.S. dollar mitigated the negative currency impact compared to our previous expectations. Moving to Page 7. The increase in EBIT was driven by the very strong mix price variance, which includes the positive product mix and the strong personalizations that we just commented. In detail, the product mix was sustained by the increased contribution of the F80 and the 12Cilindri family and the lower deliveries of the 296 range family, partially offset by lower deliveries of the SF90 XX and the ramp-up of the Amalfi. The mix price variance was only marginally offset by volumes deliberately planned lower as required to effectively manage the model changeover, higher industrial costs and marketing expenses and higher costs implied by the better Formula 1 in-season ranking assumptions compared to last year. The latter are included in the other variance. In the quarter, D&A was temporarily lower in line with the ongoing model changeover since the decrease implied by the phasing out of certain models is only partially offset by the gradual additions from the models that are entering the start of production. In H2, we expect D&A to grow progressively. Percentage margin stood at remarkable levels, including the headwind from FX, with EBIT margin at 31.2%, slightly up versus last year and EBITDA margin at 39%, slightly down mainly as a consequence of the better Formula 1 ranking assumptions. On Page 8, our industrial free cash flow in the quarter was strong, driven by the increase in profitability, partially offset by a negative change in working capital, mainly linked to the inventory increase implied by the seasonal production planning. Cash taxes and capital expenditures, which were mostly focused on product and infrastructure development, mainly the new paint shop whose construction is proceeding at pace. Net industrial debt at the end of June was EUR 131 million, reflecting the dividend payment, which occurred in May and the share repurchases executed in the quarter. Turning to Page 9. We increased our guidance for the year, thanks to the continued strong trend of personalization and a more favorable FX environment. More specifically, our updated assumptions include personalizations accounting for more than 20% of cars and spare parts revenues and the U.S. dollar to euro exchange rate of around 1.16 and the contribution of all additional hedges now in place. Looking ahead, we remain focused on the execution of our plan. The confidence in the strength of our strategy and our ability to deliver long-term value remains the foundation of everything we do. Thanks for your attention, and I turn the call over to Nicoletta.

Thank you, Antonio. Nadia, we are now ready to open the Q&A session. Thank you very much.

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Henning Cosman from Barclays.

First question, perhaps slightly philosophical one. Would you share the observation that you enjoy more pricing power in the more traditional type of vehicles? So obviously, the Manuale by-wire are now really strong showing the special 50% priced above the range. But just in general, do you feel there's more enthusiasm and by extension, pricing power on these types of models? And do you -- would that affect your propensity as to which models you would launch going forward? And if you could remind us what your flexibility there is for how far in the future is your product cycle plan set already? Or would you let yourself be influenced by customer desire and pricing power for these, if you want more traditional type of models? That's the first question. Second question on volume growth. If you could just -- I know you don't like to talk about volume, but if you could just conceptually discuss if I'm not mistaken, we were expecting broadly stable volumes for this year. That now implies a bit of growth in the second half. Perhaps you could confirm if you share that. Is that a function of just the product cycle? You have the Amalfi now ramping up 296 Speciale series. So would you always allow yourself to have more volume growth based on the product cycle plan? Or do other things play into that as well, like stabilization of residual values, for example? Is it just a phasing you always have periods of expansion and consolidation, where do we stand there? If you could at all talk about volume just a little bit. And then finally, if I can squeeze one on the margin, right, where we're getting now and your midterm margin ambition of a floor of 30%. There's obviously not much in between. It looks like there's going to be a lot of F80s next year. Testaross, Manuale by-wire all looks like it's driving the mix up and probably the margin. So we could see a margin exceeding 30% next year, which technically would imply margin contraction for the rest of the plan. If you could just remind us your thinking about the margin trajectory '27% to '30. Sorry, that was a lot.

Thank you. The ink of the pen, I almost finished, nut that's. I'll take the first 2 questions, and then Antonio will elaborate on your third question about the margin. So the first question, the philosophical one, I would like to say this that our clients understand fully what does it mea,n, emotion-driven innovation. And I think that when in 1 quarter, our company unveiled 2 products very innovative, one more in the future, one reading the past with the eyes of the future. I think it's a demonstration that, one, we listen to them. Two, we are also able to delight and surprise them. I was with them at the Cavalcade in Athens when we unveiled the 12Cilindri Manuale as well as I was with them in Rome for the Luce Premiere, and they were literally, can I say, happy, astonished about the ability of our company to put together traditional innovation, but always putting them at the center, but most importantly, their emotion, driving their emotion at the center. So this is about the first philosophical question because the rest, the purchasing power, what you were referring to is a consequence of 2 things: number one, our ability to innovate. Number two, our ability to delight and surprise them. The second question is about scarcity and exclusivity. '26 is a year where we have a significant changeover model. We have a lot of new models. We have the ramp-up of a very innovative model for which we have a very high degree of personalization. But we always keep one thing in mind, Henning, is scarcity and exclusivity. For us, what is important is that we deliver unique product to our clients. And our North Star is been -- always has been -- it is and will always be scarcity and exclusivity. The third question about the margin, Antonio.

Yes. With respect to that question, I mean, the capital market targets are unchanged as a way they were presented and based on the assumption we outlined at that time. So on that, we are proceeding at pace according to the smooth and linear development that we already outlined since that time.

Now we're going to take our next question. And the question comes from the line of Edouard Aubin from Morgan Stanley.

So first of all, in terms of the mix, so your share of special series was, I think, about 13% in the first half, which is obviously substantially higher than the recent history. What do you have in mind in terms of the second half in terms of the contribution to the percentage of shipment from the special series? So that would be number one. Number two, in terms of the Americas and the U.S., so shipments were down year-over-year quite a bit. And obviously, Antonio, you explained why in terms of the rollout of newness and all of that. But I think still that was down more than expected by the market. Is there any issue with demand in the U.S.? Or is it really exclusively a supply issue in the U.S. and shipment should normalize pretty soon? So that would be question number two. And then Antonio, question number three, in terms of could you just help us kind of model the impact of FX on EBIT for H2 and your first thoughts about what could be the impact on 2027?

Thank you, Edouard. I'll take the second one. So the reason you are referring to, we don't have, one, no issue of supply chain. Two, we have a significant model changeover as we have been highlighting in the Chart #4, I think. And the other point is that when you have cars with high degree of innovation and high personalization degree, okay, then this is having clearly an impact on the number of cars that you deliver because there are some cars as we have said at the beginning, the personalization content of our car keeps increasing, and this has clearly some effect on what is the number of cars you deliver. So this is the question number 1 and 3, Antonio.

On the mix of special series, it is true that this year, there is a bit more than we were used to. We follow the life cycles of the car. So I don't expect a significant change for the second half. But as I said, it's driven by the product life cycle. Impact of FX for H2 is based on the assumption I just outlined and the fact that in addition to that, we have hedging in place already for approximately 80% of the exposure. On 2027, it is far less covered by hedging and will very much depend on where the spot exchange rate will stay.

And the next question comes from the line of Michael Binetti from Evercore ISI.

Congrats on a great quarter. Really happy to see it and really exciting launches in the quarter, really fun to watch. Just maybe a couple for the model. I think you said last call that ASP would be similar in second to first half, Antonio, but it was up a lot in the second quarter. Would you just help us understand what happened there, how to think about that in the second half? And then on the ASPs, it sounds like you only shipped maybe 30, 40 F80s, at least not many more than what you shipped in the first quarter, but the average price per car that we watch accelerated a lot. It seems -- especially when we pick down to it and take out the currency, it seems like the average selling price for the fleet, excluding the Supercar, improved quite a bit. That's with the SF90 XX declining as you told us. Could you talk a little bit more about what some of the biggest drivers were of the underlying acceleration in the fleet and maybe connect that to your comment last quarter that profitability would be the same in second half as first half?

Michael, this is a question for Antonio that he is -- he will give you an answer.

Yes, Michael. In terms of the ASP, it is still true that H2 is similar to H1, just maybe slightly better and better than we had previously anticipated, considering the penetration of personalization. That also explains why the ASP for the fleet, excluding the supercar has improved. Actually, we see the trend of personalization improving across the board, better than improving, staying high across the board, even higher than we had expected. As far as the number of the F80 we shipped in the quarter, as you know, we do not go into the details. I just said, really modestly higher compared to Q1.

Is there something about the remaining fleet that's seeing better personalization than prior generation? Maybe just help us click into what's helping...

Yes.

With the personalization.

That's probably a fair assessment.

Okay. And then I didn't hear -- I thought the question came up earlier, but is it still fair to think about units flat for the year? Or is that assumption...

As Benedetto commented before, we don't want to go into that discussion on volumes. We are managing the manufacturing for the year, considering the complex changeover and increased level of personalization and doesn't make a big difference, very honestly.

And the question comes from the line of Michael Tyndall from HSBC.

I'm going to mess the name up here but, Manuale, given the success of that model would it make sense to do similar across the rest of the range or is there a particular reason why it would make sense? And then the second question, and you're probably going to tell me nothing's changed but with your upgraded guidance, you're now talking to us at an 8% growth in EPS. And if I go back to last year, the CAGR was 6% to 2030. So we are moving above that line. I know Henning has asked this in a different way, but where are we on that roadmap to 2030? I wonder if you could talk about what's going as planned, what's going better, what's going worse, because it certainly feels as if personalization is going better.

The question number one is simple. We don't disclose what we are going to do in the future. We do not even disclose what will happen in the remaining of the year when I said the 2 other model will be embedded. So the Manuale, as you know, we have this limited edition, the 12Cilindri Manuale. We'll discover altogether at a due time what is the future of this important technology. For the second one, for the guidance, Antonio is here ready to go.

Yes. You touched the point. Actually, personalization is doing better than we had assumed for the rest of the plan. And the second element, you should not disregard the assumption with respect to the currency. That helps in terms of the nominal development of the EPS compared to the -- what the CAGR implied in the guidance.

Sorry, just to be clear, currency is better, yes?

Yes. And the last point I should mention is obviously the buyback program that is proceeding at pace and is reducing the number of shares over which you divide the net profit.