Fiera Milano S.p.A. (FM) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Fiera Milano results as of the 30th (sic) [ 31st ] of December 2024 Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Vincenzo Cecere, Head of Investor Relations and Sustainability. Please go ahead, sir.

Thank you. Good evening, everyone, and welcome to Fiera Milano's Full Year 2024 Results Conference Call. This is Vincenzo Cecere speaking, Head of Investor Relations and Sustainability. And I'm here with Francesco Conci, CEO; and Massimo De Tullio, CFO of Fiera Milano. The presentation of today will be structured in 4 sections. During the first section, Mr. Francesco Conci will give you an overview of the business and an update on the progress of the strategic plan, 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 Q&A session with the management available for your questions. At this point, I leave the floor to Francesco Conci for the key messages of full year 2024 results. Please, Francesco, go ahead.

Thank you, Vincenzo. Good evening, everyone. It's a pleasure to welcome you to Fiera Milano's full year 2024 results conference call. Today, I will present to you our performance for the year, highlighting key achievements, financial results and our outlook for the future. Let's begin with a high-level overview of our financial performance. If I may start with a general comment on the year, 2024 has been a year of strong execution and exceeding expectations. As you know, even years usually bring a less favorable calendar effect for our business. This is mainly due to the absence of key biennial events, including our flagship exhibition Host and Tuttofood as well as the multiyear ITMA and Plast. Despite the structural factor, our 2024 performance has been outstanding, demonstrating the strength of our business model. Revenue reached EUR 273.2 million compared to EUR 283.8 million in 2023. The EUR 10.7 million decrease versus 2023 was due to 2 positive effects. First of all, a performance effect of plus EUR 52 million, this reflects the strong like-for-like growth of our business, 13% increase in sold exhibition space, 35% rise in services, 30% growth in the Congresses business. The combined calendar effect of minus EUR 62.9 million. As expected, 2024 was impacted by the absence of biennial and multiyear event, I mentioned earlier. This was partially offset by the presence of biennial exhibition such as Mostra Convegno Expocomfort, Transpotec & Logitec. This confirm that our business is strong and continues to grow despite biennial cycles. EBITDA reached EUR 83.6 million compared to EUR 97.1 million in 2023. The EUR 13.6 million decrease was mainly due to the calendar effect, but was largely offset by strong performance, lower energy costs and optimized personnel expenses. Net cash stood at EUR 77.8 million compared to EUR 80.9 million in '23. The result of the year also confirm that we have fully surpassed pre-COVID levels even in even years. Even when looking at 2018 EBITDA, including the IFRS 16 effect, we see that we have exceeded pre-pandemic financial performance. Now let's take a closer look at our performance against expectation in 2024. This is a key message today. We didn't just meet expectation. We exceeded them across all key financial metrics. Revenue reached EUR 273 million, exceeding our initial guidance of EUR 255 million to EUR 265 million. EBITDA closed at EUR 84 million, surpassing the upper range of our EUR 75 million, EUR 80 million guidance. Net cash stood at EUR 78 million, significantly above our EUR 65 million, EUR 70 million target. On the basis of this strong result and our solid financial position, we are proposing to increase the dividend per share from EUR 0.14 to EUR 0.20, an increase of nearly 14% compared to our initial proposal, reaffirming our commitment to delivering value to our shareholders. [Technical Difficulty] in 2024 [Technical Difficulty] The execution of our 2024-2027 strategic plan is well underway and in several areas, we are progressing ahead of schedule. In line with this, we have accelerated several key initiatives. We launched 2 new exhibition [Technical Difficulty] ahead of schedule, reinforcing our leadership in high-growth sector. At the same time, we have expanded our global reach, introducing new events in Brazil and forming a joint venture to bring Host to Saudi Arabia. [Technical Difficulty] we continue to secure top-tier international event. A key milestone was the return of Gastech in Milan, confirming our venue as a global app for industry leaders. We have also included [Technical Difficulty] through the strengthening of one of the most [Technical Difficulty] ensuring broader and more digital offering. Looking ahead, [Technical Difficulty] reinforcing our ability to host a world-class event. Looking ahead [Technical Difficulty] biennial exhibitions such as Host, Sicurezza and Made Expo, we anticipate [Technical Difficulty] macroeconomic uncertainty, the strength of our business model alone are to confirm the 2025 targets [Technical Difficulty]. For 2025, we expect revenue in the range of EUR 320 million, EUR 340 million, and EBITDA between EUR 110 million, EUR 120 million. With a rich calendar, strategic expansion and continued diversification, we are confident that 2025 will be a year of acceleration and value creation for Fiera Milano. Sustainability remains at the heart of our strategy and is becoming an increasingly important source of competitive advantage. One key indicator of our progress is the plus 37% improvement in our ESG rating since 2021 issued by Sustainalytics, a testament to our growing commitment to responsible growth. At the same time, all our key environment, social and governance metrics, ESG metrics are showing positive trends. These improvements, along with our broader sustainability initiatives will be detailed later in the presentation by Vincenzo. At this point, I will leave the floor to Massimo for the business and financial review.

Good evening, everybody. Thank you, Francesco. So before we get into details of the performance effects and calendar effects at the consolidated level, which will help you to understand the dynamics of this full year results, 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 Congresses, providing what we call the divisional legal entity view at Slide #10. So starting from the Italian exhibition business. As anticipated, the Italian Exhibition business was, let's say, affected by the less favorable calendar typical of this even year, which means that we didn't have basically in our calendar, the positive impact of Host, the most important organized events by Fiera Milano, and we couldn't also leverage on the presence of [indiscernible] as well as we didn't leverage on the presence of hosted events -- important hosted events like Tuttofood, ITMA and Plast. So despite this, the division remained resilient, supported by the strong performance in annual exhibition and key biennial events that did take place. So revenue declined by 10.3%, primarily due to the negative calendar effect. However, the segment benefited from the strong performance of Mostra Convegno Expocomfort, Transpotec and CPhI, which helped mitigate the impact. EBITDA declined by 25%, reflecting the expected revenue drop, but was partially offset by lower energy costs and reduced personnel expenses. While this year was impacted by the biennial cycle, the fundamentals remain solid, and we expect a strong rebound in 2025. Regarding then the Foreign Exhibition business, our foreign market, especially Brazil, delivered very remarkable results, reinforcing the success of our international expansion strategy. Revenue grew significantly by more than 100%, driven by the strong performance of the biennial exhibition Fisp, which on the contrary of the Italian Exhibition division. Let's say, Brazil can leverage on a more favorable calendar in the even year. So in 2024, we had Fisp, biennial exhibition, which grew by more than 20,000 square meters now compared to last exhibition. Exposec grew by 10% in occupied spaces, solidifying its position as a leading event in the security industry. And then we had also the successful launch of a new exhibition Fruit Attraction, which was launched in cooperation with IFEMA MADRID. In South Africa, the Cape Town Art Fair saw a plus 6% increase in occupied space, further strengthening our footprint in the region. So a very positive result from our foreign exhibition business. And this was also the case for our Congresses division. So the Congresses segment continued to deliver outstanding results. Revenue grew this year by almost EUR 14 million, which means 29% almost increase driven by a mix of recurring and international events. So the key contributors to this growth were Salone del Risparmio, Salesforce and AWS Summit, which continued to grow in attendance and revenues. And then we had also the positive impact of the new international congresses such as IAC, International Astronautical Congress, ENLIT Europe and EASL, The Home of Hepatology. So EBITDA in this segment grew by close to EUR 5 million, so EUR 4.7 million, which means that EBITDA grew by 35.3%, fueled by revenue expansion and cost efficiencies. The strong performance of our Congress Business confirms that -- confirms Fiera Milano role as a premier international destination for large-scale events. Now looking at consolidated level. I think it could be useful to move to Chart #11 in order to better understand the calendar effect and the like-for-like growth of both the hosted, organized and service division. So moving from a legal entity view to a business line perspective, we can see that despite we have this EUR 10.7 million reduction in revenues, if we consider a calendar -- a negative calendar impact of almost EUR 63 million due to the absence of the most important exhibition present in the whole year. Basically, if we consider this EUR 63 million negative calendar impact, we closed with a performance effect, so an increase compared to the last edition of the exhibition or the last result of the division, we closed with a performance effect of plus EUR 52 million. Now if we look into detail, we see that, for instance, the organized business line scored minus EUR 39 million. But if we take out the calendar impact, this means that the business line grew by more than 25%. If we look at the hosted business line -- hosted event business line, here, the calendar effect was very, let's say, neutral. And so we scored a plus 9% in terms of like-for-like growth, which amounted to a positive EUR 5.6 million variance. When looking at the services, despite it looks like Physical and Digital services grew in absolute value, not in a significant way. So they grew by EUR 1.1 million. Reality is that if we take out the calendar impact, we scored the plus 35% like-for-like growth. So again, another very significant increase compared to the last edition. The Foreign business, as I was mentioning before, EUR 4.7 million was fueled by the very impressive performance of Fisp, the biennial exhibition, then we have the increase of almost 30% of the Congress Business line. So we see here a close to EUR 14 million increase just in this division. And finally, we have also the positive impact driven by the new launch division, Entertainment division. So this is just the result generated by the initial concerts that we hosted during the summer. And as you know during our -- in our strategic plan, we forecasted a continuous growth of this division in the coming year that will accelerate this growth starting from 2026, when we will leverage also on the new Pavilion 13/15. As usual, we can provide just to give you an idea of what was, let's say, causing and what was impacting, what was creating this plus 25% increase on the organized events or plus 9% increase on the hosted events, we can mention some of the most performing events. So moving to Chart 12, we can see that basically looking at the organized events, we had significant growth in terms of square meters from Games Week & Cartoomics, Milano Fashion&Jewels that grew by 12%, Milano Home plus Quick&More that grew by almost 70% compared to 2023. The BIT, the Borsa Internazionale del Turismo that grew by 7% compared to last edition and the biennial event, Next Mobility Exhibition that grew by 10%. But we can see that also the hosted division was scored positively in terms of increase compared to the last edition. So you see that Eicma Moto reached almost 130,000 square meters occupied. This means that this event is one of the largest events that now we are hosting in our venue. You see that also the Mostra Convegno Expocomfort biennial events grew by 11% compared to the last edition that was hosted in 2022. And then a significant -- a very impressive and significant increase from Milano Unica that increased year-on-year by 26% in terms of square meters. And then for sure, also Artigiano in Fiera with an increase of 7%, and MIDO, the exhibition on the eyewear that increased by 21%. Now I will move to the next chart to provide you with an in-depth overview of our economic and financial performance, presenting Slides 14 and 15. So in 2024, as you've already seen, revenues reached EUR 273.2 million compared to EUR 283.8 million in 2023. This is reflecting a decrease of EUR 10.7 million. However, as I was mentioning before, this decline was entirely expected and driven by 2 opposing factors: a positive performance effect that accounts for plus EUR 52.2 million. And this basically corresponds to a like-for-like growth of 24%, demonstrating the strong organic momentum of our business. This growth was driven by, as I was mentioning before, plus 13% increase in sales of exhibition space particularly in Mostra Convegno Expocomfort, I Saloni, MIDO, Quick&More and BIT, a 35% increase in Physical and Digital service revenues confirming our ability to expand beyond traditional exhibition offering and a plus 30% growth in the Congresses sector, reinforcing Milan's position as a global destination for major events. On the opposite side, again this positive performance effect of EUR 52.2 million, we accounted for the negative calendar effect of almost EUR 63 million. As expected, the absence of the biennial and multiyear events, including Host and Tuttofood powered by Cibus, ITMA and Plast had a temporary impact on revenue. This was partially offset by the strong performance of the events that were hosted in 2024 like Mostra Convegno Expocomfort, Transpotec and CPhI, which helped to balance the calendar impact. EBITDA came in at EUR 83.6 million compared to the EUR 97.1 million in 2023, making a decrease of EUR 13.6 million. However, this was, as already mentioned, entirely driven by the biennial calendar effect and was also already the result of a very impressive performance effect. The calendar impact affected not only our exhibition business, but also our joint venture with Deutsche Messe due to the absence of PTC Asia and CeMAT. Additionally, Fiere di Parma, for instance, was impacted by the absence of the biennial Tuttofood and multiannual Cibus Tec. Despite these calendar-related challenges, EBITDA was partially offset by strong performance in other areas as well as lower energy costs and personnel expenses. On the financial management side, we saw a positive impact of plus EUR 1.4 million, mainly due to a decrease in interest expenses. This resulted from a lower average debt position across both short and medium to long-term maturities. Net profit from continuing operations stood at EUR 19.1 million, down EUR 9.8 million from EUR 29 million in 2023, and this was primarily due to the aforementioned calendar effect and revenue impact. The total net result for 2024 decreased by EUR 26.3 million compared to '23. However, it's worth mentioning that 2023 results included EUR 16.5 million related to the discontinued operations, specifically the capital gain from the Tuttofood transaction. Moving now to the balance sheet and cash flow. It's worth mentioning that our net working capital has decreased from EUR 98.2 million at the end of 2023 to EUR 85.9 million by the end of 2024. This change of EUR 12.2 million is primarily due to an increase in trade and other receivables. Specifically, we have seen a rise in unexpired receivables related to events that took place in the later part of 2024, alongside increased invoicing for future events. However, this impact was partially offset by an increase in payables to suppliers. So moving to our net financial debt, we note the shift from a net cash availability of EUR 80.9 million at end of 2023 to almost EUR 78 million at the end of 2024. A key aspect to highlight is that the decrease of EUR 3.1 million is mainly linked to a cash generation coming from the year results that then was offset by a change in the rent payment terms, the distribution of the dividends that we did in 2024 by approximately EUR 10 million and then the purchase of shares for our employee share plan approximately EUR 1.2 million. Now looking at the guidance for 2025. As Francesco has already anticipated, 2025 is set to be a year of further growth for Fiera Milano, driven by a strong distribution calendar and a favorable odd-year seasonality effect, thanks to the major biennial events like Host, Sicurezza and Made. This year will also benefit from an expanded event portfolio, including the new launch Net Zero in Italy, Transpoquip, a new exhibition that will take place in Brazil, and Host Arabia that will take place in Saudi Arabia, along with the return of high-profile events such as Gastech that will come back in Milan after last edition that took place in 2022. And we will also host the new launch exhibition of Artigiano in Fiera. The Congress sector as well is expected to remain stable compared to the very good performance of 2024, supported by the opportunities linked to the Milano-Cortina 2026 Olympics. Meanwhile, development of services and entertainment offerings will continue with an extended outdoor event season from May to September. So in a nutshell, despite the macroeconomic uncertainties, the group confirms its strategy and its 2025 targets aligned with the 2024-2027 strategic plan, reinforcing the resilience of its business model. So by the end of 2025, we expect revenue confirmed in the range of EUR 320 million, EUR 340 million and EBITDA in the range of EUR 110 million, EUR 120 million. I will now leave the floor to Vincenzo for a brief note on sustainability.

Thank you, Massimo. [Technical Difficulty] 40% or for example, the increase in renewable sources, I think, from 38% to 65% and also the incident of women in managerial position is increasing a lot from 46% to 49%. And as a conclusion, we would like [Technical Difficulty] compared to 2021. So we conclude this presentation, and we are available for your questions.

[Operator Instructions] The first question is from Emanuele Gallazzi of Equita.

I have a couple of questions so -- actually 3. The first one is on the Italian Exhibition business. If you can just comment on the performance so far of the events held in the first quarter and maybe some, let's say, early comment on the booking level for your events like Host. The second question is on the Winter Olympics game. When do you expect to have visibility on the potential servicing contract for the Winter Olympics? And the third one is on the guidance. First of all, if I'm not wrong, in the business plan target for 2025 revenues and, say, in EBITDA, you included a small contribution from M&A that did not materialize basically so far. So is it correct that by confirming the guidance, you're assuming a slightly better organic performance for 2025? And still on the guidance, if you can just provide a guidance or an indication on the net cash position by the end of 2025?

So coming to your first point, in terms of current trade, in Q1, we see a positive performance from the annual events that took place in the first 2 months. And this is the case both for organized events and also events where we see in terms of square meters and revenues approximately around 5% increase compared to the last edition. Clearly, we have some events that are scoring better than what we expected, some others that are even now scoring a little bit in a lower way with lower results. This is the case, for instance, of some events in the fashion industry that are scoring a little bit suffering, the impact of what is happening in the macroeconomic scenario and also in the sector itself, but this impact is compensated by other sectors that are better. And I would say that anyway, when projecting and forecasting our results [Technical Difficulty] slowdown in some industries. So we are fully aligned in this moment with our projection for 2025. Second question was, if I remember well, on the -- no, sorry. I was probably related to the sales rate on our major events like Host. I would say that so far, we are at 80% of our target for 2025, which is consistent with what happened in the last edition. So again, we are fully in line with our 2025 target. Regarding Olympics [Technical Difficulty] we are expecting news to come earlier. [Technical Difficulty] at the end of March. So basically, end of March will be the period in which [Technical Difficulty] for the tender or at least the tender we participated. So we have to wait. And then the second question -- the additional question was about net cash. In terms of net cash, we can anticipate basically a guidance of EUR 100 million to EUR 110 million, so this is the range that in a very safe way we see in this moment for 2025 post dividend payment and without any kind of M&A impact. Further question was about the M&A and the impact of the M&A in our 2025 projection in terms of EBITDA. You're right in our strategic plan, we included an impact on the EBITDA coming from potential M&A [Technical Difficulty] in this moment, we are confirming that guidance without leveraging on this, which means that basically, we see an increase of our [ performance ] compared to what we anticipated in [Technical Difficulty].

The next question is from Simonetta Chiriotti of Mediobanca.

A couple of questions from my side. The first is on M&A. If you can give us an update on what is happening on this front. So if there is still the possibility of some deals closed by year-end? Second question on CapEx. You have confirmed a CapEx plan of EUR 53 million over the period of the plan. In 2024, you spent EUR 5 million. So apparently, there should be a pickup in the coming years. So if you could give us a bit more color on how these resources will be spent. And finally, on what is happening in terms of macro and geopolitical turmoil. Will you -- can you comment if you expect impact from what is happening? And in particular, if this [Technical Difficulty] expected in a lower number? And in general, how -- can you comment what is happening on this front?

So regarding the CapEx, we anticipate a plan which basically [Technical Difficulty] CapEx were a little bit lower because we didn't spend as much as we planned in terms of [ software ] basically, but this doesn't mean that we will probably recover what we didn't spend this year. So I confirm for the next year, EUR 7 million per year average spending. This can be considered a reasonable assumption for the moment. And in terms of impact on the geopolitical situation on our business, I mean, as I was anticipating, there are some sectors which probably will suffer a little bit more due to the uncertainty and instability or due to the increase in prices due to the strategies announced by Trump and the transform measures taken by Europe. But anyway -- I mean, we see this business quite resilient. And anyway, we have a very diversified business. So we don't leverage only on some areas like U.S. in terms of exhibitors and visitors. So we can leverage on other regions that will probably be less affected by this kind of impact. And at the same time, normally, mid and small companies like our exhibitors, the exhibitors of our main exhibitions, will never shut down investment to participate to trade exhibition because this -- the participation to trade exhibition is the way they communicate and do deals and collect orders in a very efficient way compared to other communication or marketing investments. So anyway, we remain quite positive in this moment also because we have seen also in the previous year, this kind of dynamics. And to be honest, we didn't suffer in a very important way. So...

The next question is from Andrea Bonfa, Banca Akros.

I mean some of my questions have already been answered, but I got a couple of one remaining. So first of all, if it's possible -- I'm looking at your slide in Page 8, if it's possible to have an idea of the seasonality of the EBITDA for this year. I can see that -- I mean, of course, July and August are very weak months, but you got the Gastech in September, also in October. So an idea of how the EBITDA will evolve throughout the quarter, if it's possible? And the second one is, I mean, it's quite impressive your like-for-like sales performance plus 24%. Is that possible to have the same calculation at EBITDA level [Technical Difficulty] if possible you can share with us?

So in terms of 2025 expected seasonality, I mean, I could anticipate probably -- that we will probably benefit from, I would probably say, EUR 30 million impact on the organized events. So this is what I can anticipate due to the presence of [ Borsa ] and other biennial events. And we cannot provide you further calculation at the EBITDA level in this moment so the increase -- the percentage increase that you are asking.

[Operator Instructions] the next question is a follow-up from Simonetta Chiriotti from Mediobanca.

Yes, a couple of additional questions. The first is on M&A so if we can expect deals in the year? So if the market is liquid, if there are potential targets for you? And the second question on the Congress business that was so strong this year. And so what can we expect for 2025?

I'm sorry, Simonetta, I forgot to reply to your question about the M&A. So, yes, we are still working on M&A. We anticipated this during the previous call, and it's still the case. So our target is to close at least one M&A deal during 2025, but we have a clear commitment to go further during the plan. So there are some targets on which we are working now, but we are still scouting for additional opportunities and the commitment is to clearly allocate part of our cash flow and net cash availability for this kind of development and growth. And regarding congresses, we expect basically to maintain the same performances of 2024, but we have to consider that anyway, we will progressively release our Allianz MiCo pavilions to the Olympic Foundation because as you already know, we closed the venue agreement and to us basically in our Allianz MiCo premises, the broadcasting and media center. So this means that we cannot achieve with the solely Business Congress what we achieved last year, but we will probably achieve the same kind of EBITDA or result leveraging on the Congress business and on the revenues and margin coming from the venue agreement with the Olympics Committee. So the expectation is to stay at the same profitability level, let's say, which is an outstanding result because I would just remember that we reached in 2024 a performance that we were probably projecting and forecasting for 2027. So confirming in 2025, what we achieved in 2024, it's already, let's say, a better result compared to what we forecasted in our plan.

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

So thank you, everybody, for joining the conference call. And should you have any other questions, please do not hesitate to contact us at Investor Relations team. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.