Ferretti S.p.A. (9638) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the Ferretti Group First 9 Months 2025 Results Webinar. Thank you all for joining us. We appreciate your time and interest in Ferretti Group as we share an overview of our performance over the past 9 months and discuss the outlook for the future. Before we begin, let me introduce our speakers. Mr. Alberto Galassi, Chief Executive Officer; Mr. Marco Zammarchi, Chief Financial Officer; and myself, Margherita Sacerdoti, Head of Investor Relations and Sustainability. Today's agenda will cover the key highlights for the 9 months, business dynamics, financial results and final remarks, followed by a Q&A session. [Operator Instructions] With that, let me hand it over to Mr. Alberto Galassi to get us started. Mr. Galassi, the floor is yours.

Buongiorno, good afternoon, everybody. So I'm very pleased to highlight a very strong positive momentum for Ferretti Group. We have been experiencing incredible results, and the sharp increase in the order intake and the net backlog is the outcome of it. So we start from the order intake to EUR 771 million, so 4.6% higher than the first 9 months of 2024. The net backlog of the company increased by 4.5%, EUR 795 million versus the EUR 761 million of the previous -- of the quarter that ended the first half, I would say, 30 June of 2025. Now the revenues of the company increased by 2.5%, EUR 887 million versus the EUR 863 million (sic) [ EUR 865 million ] of the previous 9 months. But interestingly enough, also the EBITDA increased to EUR 142 million with 2.5%. Now what is driving this, I would say, outstanding results? First of all, let's put things in the context. The market is not going at the speed. The market is actually a 2-speed market. Now we had an increased attendance in the boat show seasons and the private preview that Ferretti Group does every year. You have to remember that Ferretti Group every year, the beginning of the month of September in Monaco privatized the yacht club with 26, 27 boats and invites the most important clients and prospects from all over the world. This year, we had an incredible attendance of 960 guests coming from all over the world with plus 14% versus previous years. The trend is confirmed also in Cannes, where in Cannes Boat Show, we had a 6% plus of attendance. Of course, it's less than Monaco because if they come to the private yacht show of Ferretti Group, there's no need to come to Cannes. But then we had a 35% more attendances in the Monaco. Monaco Yacht Show is for the made-to-measure and super yacht size. So from 30 meters up to the maximum size that Ferretti Group manufactures today, which is 95 meters. Also Genova, the Italian boat show increased by 12% of our attendances in our event. Now consider that in the quarter, we had a 36% more order intake versus the same quarter of previous year. So we had EUR 304 million of orders. Considering that not a single super yacht has been sold in this quarter, the number is outstanding. It's really -- it shows that the market is back to stability. It shows that the uncertainty that drove the first -- as we always knew, the wealth is there. Wealth didn't disappear from the planet. We sell in 71 countries and wealth is not finished. On the contrary, in some areas of the world is increasing. What happened was the uncertainty driven by the tariffs, the uncertainty driven by the combination of wars in Middle East, of continuing the tension and war in Ukraine. So that uncertainty drove all our clients, no matter which kind of industry, which kind of business they were in, they were focused on the core activities of their investments or their life, and they were not diverting their attention to boating industry. Now that things are stabilized and we have things more than under control in the U.S., now we are stabilized with the 16.5% tariffs and anyone took the measures on the potential threat and impact on the industry and their business back not to normal, but back to, I would say, a certain way of managing the possible threat and menace, the market is back. The market is back basically where we invested. The market is back where we wanted the market to be back in the most profitable segment of our industry, which is the made-to-measure. Let me remind for the new investors, made-to-measure from 30 to 45 meters in fiberglass. So that segment itself increased by 32% in the 9 months of this year and 185% versus the previous quarter. So, we are talking about the magnitude where this segment plays a role of around, we will deep dive that into these numbers. Just to give you a little bit of flavor, it represents 55% of our portfolio. What about the negotiations? Well, we're still waiting for the big American season that starts in Fort Lauderdale in October 29 up to November 2, and we're waiting for the Asia Pacific season that starts in Hong Kong, December 4, and we will go on in -- sorry, in November in Australia, sorry, Australia would be before. Well, we have pending negotiation for EUR 430 million without the American season and without the Asia Pacific boat show. And last year, if you compare apples with apples, we were at EUR 290 million. So what is Ferretti Group giving? Which kind of message are we giving in general to the investors, to our stakeholders, and I gave it to my Board today. Is that in a market where the small is not selling unless you have a top brand, in a market where we are facing a lot of discounts from the competitors expressly and especially from U.K. manufacturers, I do understand it because they do manufacture in pound, they buy components in euro and they sell in dollars. So I understand they're struggling. Even in this context and this complicated scenario, Ferretti Group is positioned, thanks to the brand, thanks to the size, thanks to the design of being exactly where we are with the CapEx cycle investments that we have done in the position when the market is back and freed from uncertainties is calling us, is ringing our bell. So thank you for your attention, and let's go and see what we've done as business dynamics. So we splashed 3 important products. One is a range update of an existing model is the Ferretti 800. We splashed the brand-new Riva 54 that starts the new EVA -- the new era, sorry, of Itama. We will have 3 new versions coming in the next 4 years. The Ferretti 800, we sold 8 units. It's been presented at the Monaco preview at the beginning of September. The Itama 54, we sold 4. And most important, in terms of range expansion, we have the brand-new Riva 54 meters and we sold 4 units. The Riva 54 meters is priced EUR 41.7 million. This is the first one that goes to Middle East, 3 more are already sold and the manufacturing and the delivery date of the next available one is 2028. In the third quarter, also we announced 3 other products, which are not already in the water. One is a range expansion is the Riva Caravelle, 42 meters. It's the biggest Riva in fiberglass displacement yacht. It's the beginning of a new family of products. It's a displacement yacht that brings Riva into the segment in a lower range -- price range than the Riva 50 before and the Riva 54. The Caravelle, we sold 1 unit. It's been sold to Middle East, and it's a EUR 24.7 million boat without options. So this is where we are positioned now. And also custom line, which is a backbone of our revenues and profit-making companies, we presented the brand Navetta 35. It's is a EUR 15-point-something million boat. We sold 2 units. And the custom line site, we have the Navetta series, which is the displacement lines and the Saetta, which basically is an arrow in English. It's the planning yachts, the 128 that replaces the 120, we have 2 units sold, and it's a EUR 17 million boat. So I'll give some -- a step back, and I'll give some data from Margherita will explain you and guide you through the market, the sales and the composition.

Thank you, Mr. Galassi. So let's have a look at our order backlog and net backlog. As Mr. Galassi just mentioned, the order backlog increased from the 30 September 2024, almost 13%, thanks to the incredible order intake, especially in the third quarter this year, plus 36%. But also the net backlog increased compared just to June 2025, plus 4.5%. This is why we have good visibility over the end of the year and beyond 2025, and we are confident in confirming the guidance. Mr. Galassi, Mr. Zammarchi will give you more details going forward. Also important to highlight that we delivered 193 units in the 9 months, and we took 140 new units in the order. So this is a confirmation of the shift we are witnessing toward larger-sized model, more customizable that brings along a higher marginality. If we look at the order intake, we see -- so in the -- we left you in July with an order intake of the first half that was minus 9.2%, and we inverted the signs. So we are plus 4.6% over the 9 months, thanks to the incredible order intake of the third quarter that, as Mr. Galassi mentioned, doesn't include any super yacht. Why is it so? Well, we noticed that the clients are back. They got used to the new international environment, and there is more clarity over the macroeconomic condition, more clarity over the tariffs. So all these help us getting them back into negotiation and concluding the negotiation. Uncertainty is the worst enemy for us. Book-to-bill ratio is very high, 1.2x when we exclude the Composite segment and above 1x, including Composite segment. And as of today, negotiations are very high compared to last year, EUR 430 million versus EUR 290 million. Again, this gives us a good sentiment over the upcoming season in the U.S. If we look at the order intake by segment, we can see that the mix was very good. Made-to-measure increased 32% and only in the quarter, EUR 185 million. Now Made-to-measure represents 55% of our order intake. Composite was almost in line with last year, but very important to highlight that more than half of the composite intake was above 80 feet. So again, this is the high composite and the marginality of high composite is similar to that of Made-to-measure. If we look at the geography, we can notice that Europe was the main character of this quarter, thanks to the boat show season. Europe performed plus 32% compared to the last -- to the 9 months last year and plus 89% quarter over quarter 2024. Middle East, if we exclude the Super Yacht that we took last year in the third quarter, Middle East would have performed well, plus 18%. So it's a tough comparison. And America was in line. Again, it wasn't the quarter of America. So this give us good sentiment over the upcoming season. Asia is still small, represent 2%. It was up 13%, but overall, it's still a small area for us. Now I'll hand it over to Mr. Zammarchi for the revenue.

Good afternoon. Talking about revenues after the order intake that is feeding us the revenue trend, we have an increase of 2.5% versus prior year. I remember that when we released the half year result, it was plus 1.5%. So we are moving forward to our guidance that we do confirm also in consideration of the backlog that will provide an additional visibility and also supported by the very high volume of negotiation in place. If we analyze this 2.5% increase versus prior year, we have also to highlight the different contribution, the different breakdown amongst the segment. In fact, now the contribution, the increase, the support provided by Made-to-measure increased by nearly 14% and Super Yacht, including -- that include not only the full bespoke ships, but also the branded Super Yacht. So I'm referring to the, for example, to Riva 54 that Mr. Galassi mentioned before, generating an increase of 33%. So we believe that the branded Super Yacht will continue to feed our revenue trend in the future. In terms of profitability, we have the same increase has further revenue, so 2.5%, reaching EUR 142 million versus the EUR 138 million of prior year. So we are not at the moment in -- close to our guidance, but we elaborate how we expect to meet such guidance. First of all, in -- we are experiencing a lot of pressure, aggressive pressure from many competitors, especially in the composite segment. We have some sample of competitors that are discounting 40%, 45% versus the list price. And we decide not to follow them because it's a suicide move. But for sure, to provide some additional discount in order to maintain our market share. And this is quite important. On the other hand, we have already implemented and now it's already 4 months that we have implemented some cost-saving initiatives, especially in industrial overhead area. That means the fixed cost of operation and also in terms of SG&A, especially in marketing because we decided to skip some minor boat show that do not provide a lot of support to our revenue generation. Say that also waiting for the American season that usually provide higher marginality, we believe that the guidance that we provide in terms of EBITDA of 16.5% is still our target. Moving to the CapEx. The CapEx of the first 9 months of this year, it was EUR 64 million. And so we are in line and we confirm our guidance to be below EUR 90 million of CapEx or capital expenditure for 2025. And what we wanted to remind is that we also believe that having -- we believe that in 2025, we closed our second CapEx cycle. So we think that from 2026 onwards, the -- our need without including any M&A activity, our need of capital expenditure will be around 5%, 6% on total revenues. Also in consideration that what we -- the second CapEx cycle was driven by our necessity to increase production capacity. And with Ravenna, we fulfill this target. Now the production capacity, the production utilization of our shipyard that at the beginning was 97%. I mean, I'm talking about 2024, now is 80%. So in a nutshell, we have now enough space to continue to grow to our revenues. For example, in Ravenna, we go to produce high size, larger sized boat like the Riva Caravelle that we presented before. So we have made our -- enough space in this facility to continue to grow without spending more money in capital expenditure. In terms of net financial position, the net financial position is still positive, EUR 65 million with a net working capital at 15.9%. Trying to elaborate a little bit about this figure. Usually, the third quarter is a quarter that in our industry absorb cash because we have to build up inventory for -- not only for the American season, but also for the larger boat for the European season. What we want to remind that last year, in the same quarter, the absorption was -- it was EUR 87 million. And so we are managing very carefully, our finished goods inventory and also the need for the composite season for the U.S. What we expect for the end of the year is to be back over EUR 100 million in terms of net financial position in consideration of the order intake, the release of inventory, especially for the U.S. market. So we should be quite happy of this target. So I'll leave it to Mr. Galassi for the final remarks. And so please go.

So I'll give you a little bit of market outlook and final remarks. Our strength, the 7 brands, our strength, the 70 countries where we sell. We also have a range of boats from 8 to 95 meters. And there is no crisis in luxury super top brands like Wally, like Riva. And we're not premium. We are really talking about luxury here. So -- and we have a different regional momentum globally that enable us to catch opportunities worldwide. The most important thing, you've seen in the fluctuation of our numbers quarter-by-quarter, you see there's some kind of compensation from regions and others. I remember when Margherita mentioned before that the first half results, we were, I would say, minus 9.2% in the order intake. And I remember that I kept saying to the audience, well, listen, it's just basically talking about 3 yachts. 3 Made-to-measure yachts are making the difference. Well, the 3 Made-to-measure yachts became many, many more in the quarter. And it's -- that's the nature of our business, where we do play, where we do compete, one sale can play a difference quarter-to-quarter. But on the overall, the picture is always a positive one because what we are saying is that we are positioned where the competition is less furious. As Marco said -- I received a contract last night from a dealer that imports British ships in the U.S. and it was offering 45% to the end user, to the client. You cannot survive. There's no chance you can survive in this business if you offer 45% discount to the client. So that segment is not the segment we are in. We can compete sometimes, but we leave the negotiation because we are focused in a different arena in a different scenario. So we are an increased presence where the most profitable segment is from above 80 feet, 24 meters. And we have a very good visibility above and after 2025. As Margherita said, 55% of our order intake is in the Made-to-measure segment. It was 44% in the previous 9 months of last year. And more than 50% of the new orders that we are referring to are coming in the segment from 24 meters up. So how is it possible? Because we made investments in CapEx, but the CapEx plan is finished. So -- and it will go below guidance, and we will have free cash flow generation out of it. But if we didn't make the investment in Ravenna, there was no space to manufacture the Caravelle. If we didn't invest in expansion of Mondolfo on the Adriatic coast where the Pershings are built, there's no chance to increase the new custom line site the line planning boats 106 and 125, 128. So that is driven by design. Now what's the future outlook? This is a number that makes me very confident. If I compare the negotiations that the company had in the previous -- last year at this date, we were at EUR 290 million of negotiation, and we've seen the year that we achieved this year. Now we are at EUR 430 million. So we have a very good visibility and the American season is way to come. U.S. market pays more in our players list. We do control. We do import ourselves. We are not in the hands of a distributor of a dealer. So we are the owner of our own destiny in the United States market. So we can -- we know how to manage the prices. We always have positive surprises out of America at the last quarter. If there is nothing new because our industry this year has been on/off, on/off, on/off, completely unpredictable because there has not been consistency in the news coming to the market. All of a sudden, 100% tariffs and then 0 tariffs, we moved -- let me remind you, in April, we moved from 1.65% to the U.S. to 15%, exactly 16.65%, then 25% plus 1.65%, then it was 51 days. So if that is out of the picture, is out of the table, we know that the market is there. We know that wealth is there, and we know that the market is appreciating our products. So the guidance, A, we will confirm. The net revenues without pre-owned is EUR 1.220 billion, EUR 1.240 billion. Let me remind you the pre-owned expectations are around EUR 56 million this year. So it's 4-plus percent at least. Adjusted EBITDA, it's from EUR 201 million to EUR 207 million, 5.8%, 8.9%. The EBITDA margin, Marco spent some time on it, 16.5% is our expectation. And CapEx, we are -- I would say, we are below, and we confirm that we are below the EUR 90 million. So if there's any questions, we are all here for you. Thank you.

Thank you for listening to our first 9 months 2025 presentation. We are now ready to start the Q&A session. We will start by live question and later move on to the written questions. The first question is from Adrien Duverger from Goldman Sachs.

Adrien Duverger from Goldman Sachs. So the first question would be if you could please comment on the consumer outlook you're seeing in the different regions? And if you can comment on the early October trends and how that compares to the third quarter and more particularly on the progress you've made so far in the U.S. The second question would be on your EBITDA margin. So thank you for providing some of the building blocks with how you intend to reach the guidance for the full year. And can you also please give us some indications around how you think you can improve it further to reach your midterm guidance or maybe the different building blocks. And the last question would be on the M&A pipeline and some potential acquisitions or expansion of factories. I think you had mentioned it in your last couple of releases. Could you please give us an update?

Let me start with the flavor of the month of October is an excellent flavor. The month of October is confirming that the negotiations that we had in place are becoming contracts. So as I said, the EUR 430 million are turning into existing contracts. Also America is giving some good results. Middle East is giving good results. Don't forget that we've been at war in Middle East for like 2, 3 months in a row. And some markets like the Gulf area are very, very important for us. So that also that trend of peace is helping a lot our expectations. So geography-wise, the only disappointment I have, and I'll be honest with you, is in Asia Pacific because Asia Pacific is a flat trend of order intake, which doesn't reflect in our opinion, the potential. So if I have to say where we are, we guilting something, I would say, honestly, yes. We should do better in Asia Pacific because we are now investing in a new dealer network. We are thinking and considering to expand areas like Indonesia and Malaysia with super wealthy individuals. Indonesia is investing in marinas over there, and we've been a little bit ignoring that part of the world. Greater China is affected by the fact that whoever wanted to buy a boat in the past history, I've been only here 11.5 years, has been more likely a real estate developer and real estate is suffering a lot. So most of the boats that were in Shenzhen are now sold to Hong Kong. But there's a new market. There's a new kind of owner, the new kind of wealth also in Asia Pacific coming up from AI, from this new generation. One thing you don't have to forget, we have 44% of our order intake is coming from repeating clients. They don't move from Ferretti Group because of the 7 brands we have or because they've been happy with the satisfaction they had in the pleasant journey with us. But the other more important thing, even more important than that is the average age. The young generation is buying Ferretti Group. The young generation is attracted by our brands. Don't underestimate the power of brands. Brands are the game changer. Design and brands are the game changer. They need to be beautiful. So the new generation in Asia Pacific is looking at us, are we attracting them? Are we approaching them in the right way? This is something that will enable us to unleash a potential in 2026. I bet on the better results in Asia Pacific than what we have seen in 2025, 100%. Now on the U.S. market, I think I gave you the flavor. The boat show is coming. The season is coming. So far, the news are good news, but the competition is insane. In some competitive environment like the composite where you don't have to play with a super brand, but you play with a top premium brand like Ferretti Yacht, well, you have competitors discounting 35%, 40%, 45%. Then you have 2 options, either you play the game, which don't. or we decide to diversify our production to other areas and not to have in the boats waiting for the war of discounts. I mean you have to be very fast. Today's world, in my opinion, at least as the lesson I learned in 2025 is not the big fish that eats the small one, it's the fast fish that eats the slower one. You need to be fast. You need to react quickly. I mean, like an Air Force pilot, you need to be in quick reaction alert mode. This is the picture I've seen. On the M&A, finally, we hope to sign an exclusivity right with the potential targets that we have. There are actually 2 and enter into due diligence process. It's a long process, but that's what we are waiting for and aiming for. Again, I can't tell you more than that, but you can see the smile on my face. Marco, on the EBITDA, sorry.

Okay. About the EBITDA, as I said, we -- we are starting from 16% in 9 months. We still believe that 16.5% at the year-end is achievable. And our consideration is based on 2 facts that till now, the effect of discounting policy is roughly 60 basis points that we are planning to more than recover, thanks to some cost containment, as I said before, especially in industrial overhead. So working on the fixed cost of manufacturing. On top of that, we also find some opportunity in decreasing our product cost, thanks to some volume discount with our main supplier. I remind you that we are the biggest customer for many, many brands, especially engines, generators and other high-value equipment and also some cost containment measure in SG&A, especially in marketing. On top of that, we also believe that the contribution for the U.S. market -- because usually the U.S. market has different -- is a better contribution than the European one. And the first sign that we have seen in this quarter are quite promising. Just to give you an idea, as we speak, in October, we have already collected more than EUR 80 million of order, of which 50% are coming from the U.S. So taking into consideration all these factors, we believe that 16.5% is really achievable.

The next question is from Emanuele Gallazzi from Equita.

Basically from my side, 3 questions. The first one is on the -- basically, when we look at the EUR 430 million ongoing negotiation, you mentioned, if I'm not wrong, EUR 180 million already achieved in October. But can you just give us a little bit more color on the segment mix, the geographies, specifically on the ongoing negotiation? And how do you see the super yacht, let's say, market evolving given the fact that clearly in the third quarter, you didn't get order in the super yacht segment. So the order intake was particularly strong in the third quarter if we consider the fact that no super yacht were included. The second one is clearly on the pricing side because you clearly provide a lot of details about the current pricing competition and the environment. Just would like to understand a little bit better about the secondhand market for your brands? And how do you see the current offer dynamics and the pricing in the secondhand market? And the last one is on the net working capital. Do you still expect the net working capital on sales ratio to be around 10% by year-end?

Okay. Thank you. Well, Marco said EUR 80 million, not EUR 180 million. Maybe I misunderstood your point. Of the EUR 430 million negotiation, EUR 80 million became already orders in the month of October. Yes, including United States, but it's global. It's global. We had a sale in Asia Pacific. We had many sales in Europe. We had sales, of course, in Middle East. So it's a global trend. It's a [ leopard-skin ] because it's not globally the same, but definitely, it's global. On the secondhand to be honest with you, it's not worrying us at all. Not today, Ferretti Group as an internal policy is very limited. I think we had a threshold of Marco, how much is it? I would say, EUR 50 million. So for us, it's basically irrelevant in the big picture. And we had very good results of selling trade-ins in the quarter, so between June and September. So that is not worrying. Don't forget, scarcity is the driver. We are not manufacturing 100 pieces, 100 units exactly the same. We're not manufacturing -- we delivered -- to give you a number, we delivered 195 boats in 9 months. Okay? They are not 195 boats exactly looking like the same or maybe 3 different models with huge production compared, of course, in comparison to the kind of industry we are. We're not in automotive here. The driver is scarcity, a few units divided by brands, globally. So that -- you cannot have a huge amount of secondhand boats in the market because simply you did not manufacture them when they were new. So it's by design. And we have only maybe 2, 3 units per brand on that specific segment. That will not bring you to have a complete fallout of boats manufactured in a standard manufacturing line, as you can see in other competitors. That is a different championship. You have to try to read the industry with 2 speeds. This industry is not going entirely collectively at the same speed. With some competitors, the only thing we have in common is that we both manufacture things that float. All the rest is different. Marco, there was a question on the...

Yes. Okay. First of all, let me elaborate a little bit more about the orders because you mentioned Super Yacht division. First of all, as Mr. Galassi said, the first available slot for the branded super yacht is 2028. And for full custom, full bespoke boat is 2029. So -- and just to give you an idea, now the revenues generated by the Super Yacht division is 20% and the occupancy rate of our production is 100%. So we have not available slot. So maybe we also -- we have to start thinking how to expand this segment. What we can say about it is that we are not worried because we have no additional opportunity to grow up. But we have -- we are quite confident to bring some additional order by year-end, at least a couple of orders, one in full bespoke and one in branded super yacht. Then following the net working capital, yes, I agree with your conclusion. We believe that at the year-end, we will be very close, if not below 10%. As I mentioned during my -- when I commented this slide, it was that we expect to be over EUR 100 million of net financial position. And this will be in consideration of, as we said, we have some product already finished in the U.S. part of them, as I mentioned before, has been sold and the same will happen also in Europe. On top of that, the constant inflow of order intake where we require at least a 10% nonrefundable deposit for every order will contribute to these dynamics. So yes, we do confirm to be confident to reach at year-end a 10% ratio between net working capital and revenues.

The next question is from Niccolo Storer from Kepler.

Can you hear me?

Yes.

Two questions, please. The first one is on discounts. So you said that basically, you have been accommodating your clients with some more favorable pricing. I was wondering how this is accounted for. So basically I already see this on intake, which is, I mean, lower by this discount you are granting to your clients and then this is turning into lower revenues? Or is there anything else in the accounting of this process we should be aware of? Second thing is about, again, working capital, in particular, comparing Q3 this year with Q3 last year your position, if my calculations are right, has worsened by over EUR 100 million. But Q3 last year, you were already, let's say, having on your books a good amount of finished product for the upcoming North American season, which then have not been sold. But still, the situation seems very similar, yet we have had such a sharp deterioration. If you can comment on the moving parts? And also on your target to get to, let's say, more than EUR 100 million in cash at year-end. I think that if you're able to bring working capital to sales at around 10%, probably you could be well above EUR 100 million. So what am I missing here? If you get to 10%, let's say, which is a level very similar to previous year, why should be just a bit above EUR 100 million, not much above EUR 100 million, also considering that CapEx is not as high as last year. We know about dividends, et cetera.

On the first one on discounts, in fairness, I didn't get it properly, but I don't know if Marco got it.

No, could you repeat, Niccolo, please?

Niccolo, the first one was a little bit difficult to understand.

Just has the accounting of this is working?

How are they accounted the discounts? Is the question?