Fiera Milano S.p.A. (0EGH.IL) Earnings Call Transcript & Summary

Good afternoon. This is the chorus call conference operator. Welcome, and thank you for joining the Fiera Milano First Half 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Vincenzo Cecere, Head of Investor Relations of Sustained. Please go ahead, sir.

Thank you. Good evening everyone, and welcome to Fiera Milano's first half results conference call. This is Vincenzo Cecere, Head of Investor Relations and Sustainability. And I'm here with Francesco Conci, Chief CEO; and Massimo De Tullio, CFO of Fiera Milano. The presentation of today we will be structured in 4 sections. During the first section, Mr. Francesco Conci will give you an overview of the business, main financial highlights and 2025 outlook. Then Mr. Massimo De Tullio will go through the divisional results and financial figures in greater detail. On a final note, an update on sustainability will also be provided. At the end of the call, you will be invited for a tuning session with the management available for your questions. At this point, I leave the floor to Francesco Conci for the key messages of the H1 results. Please, Francesco, go ahead.

Good evening, everyone. It's a very pleasure to welcome you to Fiera Milano's First Half 2025 Results Conference Call. As a general comment on the semester, I will say that the first half of 2025 marks a milestone in the execution of our strategic plan 2024-2027. And I'm proud to say it's been a semester of strong growth, solid performance and [indiscernible]. We have seen double-digit organic revenue growth, a robust EBITDA and strong cash generation, confirming the strength and the resilience of our diversified model. But it is not just about the numbers. In just 7 months, we have closed 2 strategic M&A transaction. We have been ordered a 30 million Olympic contract which recognize the quality and adaptability of our menu. We have successfully launched new formats and international events, while [indiscernible] from a favorable calendar that included measured by [indiscernible]. With this momentum and increased visibility on the second half, we have upgraded our 2025 guidance a clear sign of confidence in both the market and our execution, especially considering the still uncertain macroeconomic environment we are all facing. But let's now more closely at the numbers with the main highlights of the semester. Our revenues reached almost EUR 178 million that's a plus 23% increase compared to H1 2024. And more importantly, we are also well above H1 2023, which is the last comparable year semester. This shows a strong underlying momentum. The like-for-like revenue growth was plus 14%, meaning that behind the calendar effect. We are also growing the core business organically, thanks to solid volume increase in both for nice and also dedication and continued strength in services. Our Congress segment performed particularly well, up plus 52%, also thanks to international event returning as [indiscernible]. The [indiscernible] calendar effect was also a positive driver. We also measured by annual such as TUTTOFOOD and Innovation Alliance, which were not present in 2024. EBITDA showed EUR 63 million in the first half with a 16% increase compared to last year. This reflects both revenue growth and good cost discipline. From a financial standpoint, we believe the strong cash generation with over EUR 40 million generated in the first half, bringing our net cash position close to EUR 120 million. So overall, this is not just a strong semester compared to 2024. It's a clear improvement also compared to 2023 across economic and financial KPIs, and it gives us a very solid base for a busy and promising second half of the year. Looking ahead, H2 2025 present itself a semester of total growth, supported by a particularly strong distribution calendar and unfavorable seasonal effect, typical of our numbers. In H2, we lost some of the group's most important [indiscernible] resolution, including lost, [indiscernible], which are among the largest and most [indiscernible] in our portfolio. In the second half, we are also adding 2 important highlights to our calendar. First, we are launching our first international edition of with [indiscernible] taking place in [indiscernible]. This marks an impact in international development of our proprietary brands. Second, we are coming back just one of the world's leading energy solution. It is an event that we already hosted successfully in and we are proud to [indiscernible] again this year. The first half in the year was also marked by a strong M&A momentum with 2 strategic transactions complete, fully aligned with our 2024-2027 strategic plan. Now for more details on the 2 acquisitions, I now hand it over to Massimo De Tullio.

Thank you, Francesco, and good evening, everybody for being with us. So let me walk you through the key elements of the 2 M&A deals that we recently closed. As already announced in April, we have completed the acquisition of 51% of export fronts, a long-standing logistics partner of Fiera Milano and a leader in exhibition and event logistics in Italy. The total sale transaction was EUR 7.2 million. And together with the current value of the put option, it has already been accounted in the net financial position as of the 30th June of 2025. Expotrans brings over 30 years of experience and generated EUR 28.7 million in revenues and EUR 2.2 million in EBITDA in 2024, with a net cash position of EUR 3.8 million. This operation, let me say, is fully aligned with our 2024-2027 strategic plan. and allow us to internalize logistics, a critical part of the value chain, improving control, efficiency and client service while also retaining margins previously. This structure allows us also to fully cost the company while ensuring operational continuity and retaining the care management team, which is a key factor in securing a smooth and effective integration. The second transaction that we closed is the acquisition of the 35% of EMAC, the organizer of Milano AutoClassica, one of the Italians most important to events in the classic and sports car sector. The deal is part of a broader strategic lab with Italian Exhibition Group and Mosaico S.r.l. as a company linked to Andrea Martini. The new shareholding structure will follow. Fiera Milano will log the 35% of the shares IEG, the 35% as well and Mosaico 30%. These 3-way partnership will govern EMAC jointly with the aim of creating a national champion for the vintage car industry, combining the strength of 2 events. On one side, Milano AutoClassica, which is held annually at Rho venue since 2012. And the Vicenza Classic Car Show, a new exhibition launched in 2024 and now integrated into EMAC. With the structure we secured strategic continuity and the long-term development for Milano AutoClassica, an event that work over 30,000 visitors and showcased more than 4,400 vehicles in its last edition. The last also a lot synergies and possible opportunities in content, audience and visibility while strengthening the industrial cooperation between the 2 leading listed exhibition operators in Italy, also in the congress area. We are also very proud, and we are now moving to Slide #8. So speaking about the -- we are also really proud to share the [indiscernible] as well the contract for the temporary infrastructure works for the Milano Ice Park, which we lost the speed skating and ice hockey competition of Milano Cortina 2026 [indiscernible]. This project has a total value, let's say, of EUR 30.7 million and was assigned to us by the Milano Cortina following a public consultation. The scope includes the design of additional management and demanding of temporary structures needed to transform our exhibition oils into Olympic venues. In terms of economic impact, we expect the project to be accounted for across 2 financial years with approximately 1/3 of revenues [indiscernible] in 2025 and 2/3 of revenues in 2026 based on the time line of this execution. As for profitability, we estimate an EBITDA margin between 10% and 20%, which is in line with the nature of the service contract and in line with the event, which is informational and, let's say, very important to that. Finally, let me bring you to the -- as already Francesco was mentioning upgrade, which is on Slide #9. So -- as already mentioned, we had a solid -- or a solid organic performance in H1 across all the business lines. Congresses business grew by 52% year-on-year. Services division by 9%, So -- and all the, let's say, some very important exhibition for us like TUTTOFOOD scored result over the expectation. So based on this and based on the impact that now we can consolidate so the one at the contribution of expertise turnover also for and also the impact of the Olympic Games, the services that we will provide for the temporary infrastructure with an approximately, I would say, EUR 10 million, EUR 11 million revenues accounted in H2 of 2025. Based on this, we have been able to raise our guidance for revenues from the original EUR 320 million, EUR 340 million to EUR 350 million, EUR 370 million and to raise our EBITDA guidance from the regional trend, EUR 120 million to EUR 115 million, another EUR 125 million. And despite it seems that we have kept unchanged, the net financial position, we remain at EUR 110 million in terms of range. We have to account the fact that this net financial position now discount also the full impact of the acquisition of exports, which means that basically, there has been a substantial improvement of the net financial position compared the previous guidance, considering that the acquisition of expertise was not accounted previously in our [indiscernible]. Now before we get into the case of the performance and calendar effect at the consolidated level. I will now move to Chart #11, which will help you understand the netting of the semester. So let's first take a brief overview of our divisional performance. We will briefly cover the Italian and foreign exhibition business as well as the convenes, providing what we call the divisional legal entity view, as I was mentioning at Slide #11. So starting from the Italian exhibition business. This business remains the group's core engine because of results. It's accounting of the total revenue. As you can see, revenues grew by over EUR 18 million, thanks to solid performance across major shows and the contribution of biannual events such as Innovation Alliance and TUTTOFOOD -- sorry, Innovation Alliance is not a biannual, it's a multi and event, but anyway, did had a positive contribution in terms of growth comparison. It's worth to mention that any way also on the Italian exhibition business, we benefit in this semester from a positive calendar effect, which we can be accounted for close to EUR 5 million. The EBITDA improvement of EUR 6.5 million reflects the strong top line performance despite higher personnel and sponsorship costs related to the 2026 [indiscernible] and the launch of the employment employee share ownership plan. Regarding the foreign excision business revenue remained stable at EUR 2.3 million while EBITDA saw a slight contraction due to the performance of the China joint bank. So what's happened is that an international event, which is organized by our partner batch mass was changed is the currency. So it became a biannual event. So basically, the event didn't happen in 2025 compared to what happened in 2024. And this had an impact on the commissions that our JV is getting from bringing exhibitors to this the Chinese exhibitors to this event, which was happening last year in Germany and the year even [indiscernible] because of this change in terms of seasonality. Regarding the Congresses. The Allianz MiCo contributed 20% of total revenues with a year-on-year absolute grow EUR 11.1 million. This was driven by both recurring events like [indiscernible] and Netcomm and major international congresses, such as the ADB, the Asian Development Bank and EHA, European Hematology Association by then in line with revenue growth and excellent operational execution. Let me add on this that it was not easy to grow compared to 2024, which was already a record year for Congress business. So being able to grow by EUR 11 million, which will be -- we will see later accounts for something like 50% growth. It has been a very impressive result also for us. And finally, introduce also the new segment, Other. In the new segments, other sector, basically, we now include Expotrans and all the subsidiaries controlled by Expotrans, which are even logistic team and Expotrans Singapore. And so in this sector now we see the contribution in terms of revenue and EBITDA based on 2 months of consolidation, so May and June. So we have EUR 7 million of revenue, EUR 1 million of EBITDA. Now looking at consolidated labor, I think it could be useful to move to Slide #12 to better understand the calendar effect and the like-for-like growth of both the [indiscernible] exhibition as well as the services and commences. So moving from a little view to a business line perspective, and so basically [indiscernible] companies. Let me start commenting on the performances of the organized and posted events. So the organized depends basically remain in absolute value stable. But if we look at the like-for-like comparison, so excluding the calendar effect by almost 3%. Regarding the hosted events, there was a growth in terms of absolute value of EUR 5 million. But again, if we exclude part of the net, let's say, very impacted positive in this case, calendar impacts. It remain anyway, a positive growth of 4% compared to the previous addition. Again, it's very positive for us to see in terms of services, a growth of EUR 9 million in absolute value, which even discounting the calender impact stands at a 9% growth compared to the previous edition. So putting together services and Congresses, which at business level business unit level grew by EUR 12 million, which comes for more than 50% growth. We have the 2 real engine of growth in this model for the company. So the fair sector, it's quite stable. It's growing slowly, but it's growing. The ones that are growing very fast in a faster way, are clearly services and congresses in this moment. And then for sure, you have the impact at consolidated level of the acquisition of Expotrans, which accounts for plus EUR 5.5 million. What is different from the EUR 7 million that we are reporting in the other sector? It's different because Fiera Milano already had revenues and margin versus Expotrans [indiscernible] once we consolidate Expotrans, this margin need to be beds this is the net addition coming from the acquisition of Expotrans in terms of revenues. And clearly, the addition in terms of EBITDA the same. Now moving to the Chart 13, I will just highlight some example of selected case studies which highlight the square meters growth. So we are in I would say, quite stable as slowly growing scenario, but we had some example of organized and on events which are going faster than others. For instance, in the -- for the organizing that we can mention the growth that we realized on Milano Home thousand square meters growth compared to the previous vision, which accounts for plus 5%. Both [indiscernible] grew by another 2028, which accounts for 8% and promotional trade exhibition grew by 4%. Looking at the tenants, we see more relevance in absolute value growth. First of all, and the most important one is the growth of to full the food grew by almost 20,000 square meters, which represented 33% growth compared to the previous solution, which highlights the good results of the operational strategy that we put in place we feel into getting a share stake of [indiscernible] of TUTTOFOOD. So TUTTOFOOD is managed from [indiscernible], which is also managing achievers. And this was the first real year of management from [indiscernible], showing a very positive result. MiCo, another important exhibition for us is an exhibition grew by 5% and Milano Unica and other very important exhibitions in a really good shape in this moment, and it's showing 8,000 square meters growth compared to the previous year accounting to 25%. Now when speaking about the trade fair industry performance is we need to take into account what is acting in the macroeconomic scenario of these taxes and business minimum tariffs teams that were [indiscernible] has not created a very stable environment for this industry and for as well for the fare industrial sector. So having core the result in H1 is clearly a positive sign for us that we really resides yes. So it's another part message and input for us. Now I would move shortly to Slide #15 in order to give additional information about the profit and loss by antis compared to the previous years. So revenues reached EUR [ 170 ] million, approximately in marking a increase of EUR 33.5 million compared to the same period of last year, which is a 23% growth. The result is particularly not worth given the current economic context that was mentioned just now I need to reflect not only strong like-for-like performance, but also the positive effect of the favorable calendar solution. that, as I was mentioning before, it's most will do side. Now if we look at the key [indiscernible], again, we see a solid a of the organized lens of 3% in that view, as I mentioned, by 4% and services by 9% and then congresses by [ 2% ]. It is also important to highlight that we posted a new event in the semester, which is [indiscernible] staff organized by JP, the same organized in [indiscernible], which is an addition boost our revenues with a EUR 2.5 million impact. And clearly, we had also the impact of the consolidation of excavator was bringing additional EUR 5.5 million to the EBITDA, which reached EUR 63 million, an improvement of almost EUR 9 million versus H1 2024 when this increase is driven by the strong revenue growth that I already mentioned. And I would say that the calendar impact was basically completely of by the presence of the EUR 4 million of sponsorship agreement with Milano Cortina. So which means that taking aside the EUR 1 million coming from export brands EUR 7.5 million rent like-for-like growth compared to previous year in terms of EBITDA. Finally, net profit of the [indiscernible] at EUR 23.1 million, which is slightly higher than last year, but this is just because 2024 first half was benefiting from a very, very low tax rate impact. And this was just technical and this was due to the weight that dividends had in 2024 for results and no dividends that we get from subsidiaries are already taxed. And so they are not easily paying additional taxes and the very high way that the dividend in 2024 for creating this really low tax rate I can already anticipate that basically the last of it that we reached in this first semester is basically very close to half of what we expect to reach at year-end. Now moving to Slide 16. So the balance sheet and cash flow and I would direct go to the cash flow. I would highlight that we had a very strong cash generation in this semester. So we improved our net financial position by almost EUR 41 million -- EUR 41.3 million for the that number. And this is coming from the operating cash flow which wasn't ready excluding any kind of net working capital impact plus EUR [ 32 ] million already considering the IFRS 16 cash out, let's say, accounting for the rent that [indiscernible]. So on top of this EUR [ 32 ] million coming from the EBITDA that we have created generated in the first half, we had also a very positive impact of net working capital, almost EUR 46 million, which basically reflects the future revenues that we are going to generate in the next semester in line to the advances that we got from customers of the exhibition that we take year. And also it's related to the started to take from Milano Cortina for all the contracts that now we have some which are already full contracts. So we have 2 menu usage agreements are for a [indiscernible]. We have a sponsorship agreement. And now finally, we have also an interim [indiscernible] for the -- for providing the deep infrastructure and temporary sales. I would say that, again, it's important to highlight that we're confirming our net financial position at year-end and already in the net financial position that we see at the 30th of June, we have already discounted the impact of the M&A acquisition of Expotrans and also the impact of the dividend distribution. So clearly, again, a very positive result for us. Now in -- having said that, I would leave the floor to Vincenzo already covered the guidance points for the in terms of sustainability.

Thank you, Massimo. Just a quick and final note on sustainability. Fiera Milano was awarded [indiscernible] amongst more liked companies in corporate entity that's showing the capacity of the company to integrate sustainability within the business model. So we are very proficient results with you. I believe we are continuing with the presentation and we can start in the Q&A session. Thank you.

[Operator Instructions] The first question is from Simonetta Chiriotti of Mediobanca.

So I would start from the change in the guidance, you said that it refers to both the positive trend in the organic growth and the consolidation of Expotrans and the new contract for Milano Cortina. Is it possible to have a bit more details on, and how much comes from the consolidation of the events from Expotrans and Fiera Milano Cortina? And second question, you have mentioned that there is one event in China that became by annual. I've seen that there are 3 areas that did not take place with the aspect to last year. So if you could just help us understand if they have been listed to another quarter or if they have been that have been canceled. And these are my questions. .

Thank you, Simonetta. So regarding your first question about the contribution to the guidance upgrade, I can -- I like again what already somehow mentioned in my previous speeds. So we expect Expotrans to doing at least I would say on like EUR 15 million this year in terms of contribution to the revenues of the group, considering the period in May, December. And in terms of EBITDA margin, I will consider a range between 5% and 10%. Regarding the contribution from the...

Can you repeat the number for the revenue? I didn't catch it.