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 First Quarter 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 and Sustainability. Please go ahead, sir.

Thank you. Good evening, everyone, and welcome to Fiera Milano's First Quarter 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 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 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 the Q1 2025 results. Please, Francesco, go ahead.

Thank you, Vincenzo. Good evening, everyone. It's a pleasure to welcome you to Fiera Milano's First Quarter 2025 Results Conference Call. Today, we present our performance for the quarter, the key highlights of the period and the 2025 outlook. Let me start by saying that the underlying performance we delivered in the first quarter of 2025 was solid, especially considering the challenging comparison base. As you know, Q1 2024 included, Mostra Convegno Expocomfort, one of the largest hosted exhibition in our calendar, covering approximately 86,000 square meters. This event is biennial, and so it will not take place in the current quarter. This was the main factor behind the revenue decline we recorded in the quarter. Despite this expected calendar effect, our core business lines continued to perform well, showing encouraging signing of organic growth. Let's take a look at the main figures. Revenue stood at EUR 63.7 million, down by EUR 8.7 million compared to Q1 2024. The negative calendar effect mainly related to the absence of Mostra Convegno Expocomfort accounts for EUR 14.2 million. Excluding this one-off effect, we recorded a plus 10% like-for-like increase, equivalent to EUR 5.5 million of growth. The performance was driven by plus 4% in organized distribution area, plus 4% in hosted distribution area, plus 7% in physical and digital services, plus 27% in congresses. This results confirm the resilience and the momentum of our recurring activities. Compared to Q1 2023, the most recent seasonally comparable period with revenue stood at EUR 48.1 million, we recorded a growth of 32%. Looking at profitability. EBITDA was EUR 12.1 million, down by EUR 13.7 million. The decrease reflects in large part the missing contribution of Mostra Convegno estimated in EUR 11.3 million at EBITDA level. However, if we look at the most recent seasonally comparable period, Q1 2024, we actually see an improvement. EBITDA in Q1 2025 was higher than the EUR 9 million recorded 2 years ago. Net income was negative by EUR 3.2 million compared to a profit of EUR 7.6 million in Q1 2024. This result too is in line with the calendar driven effect observed in revenue and EBITDA. On a more positive note, our financial position before IFRS 16 improved significantly with a net cash position of EUR 111.5 million end March 31, 2025, up from EUR 77.8 million at year-end 2024. In a complex and uncertain macroeconomic context, these results show that our business is solid. Our model is flexible and our portfolio is well balanced, giving us a strong foundation to face the rest of the year with confidence. Looking ahead, 2025 presents itself as a year of further growth, supported by a particularly strong exhibition calendar and a favorable seasonal effect, typical of odd number years. A key driver of this momentum is the return of several measured biennial exhibition, including Host, Sicurezza, Made as well as the Innovation Alliance featuring the multiyear event Ipack Ima. We are also strengthening our portfolio with new events such as Net Zero and Host Arabia, Saudi Arabia. Additionally, we are pleased to welcome back important international traveling exhibitions like Gastech already hosted in Milan in 2022 and to introduce a new event to our hosted lineup, Artigiano in Fiera - Anteprima d’'Estate. Despite the ongoing macroeconomic uncertainties, the strength and flexibility of our business model allow us to confidentially confirm the 2025 targets set out in our strategic plan. For 2025, we expect revenue in the range of EUR 320 million, EUR 340 million. EBITDA between EUR 110 million, EUR 120 million. Net cash between EUR 100 million, EUR 110 million. This projection fully aligned with the 2024-2027 strategic plan. Do not include the potential upside from Olympic-related opportunities, which could further support medium-term performance, particularly in services area like setup, logistics, hospitality and venue management for Milano Cortina 2026. So further strengthening our outlook, we recently completed the acquisition of a 51% stake in Expotrans S.p.A, a leading logistics company for exhibition and congresses and events sector. This transaction is fully in line with the direction of our 2024-2027 strategic plan. It allows us to internalize logistic operation, improve goods flow efficiently within the Rho exhibition center and expand our service offering to both exhibitors and organizers, reinforcing Fiera Milano's position as a provider of integrated event solution. For more details on the acquisition, I will now hand over to Massimo De Tullio.

Thank you, Francesco, and thank you all for being with us. So let me walk you through the key elements of the Expotrans acquisition. As announced on April, we have signed by the end of the April month, and we have completed the acquisition of Expotrans S.p.A., a leading Italian logistics provider for exhibition, congresses and international events. The company brings with it over 30 years of experience in the sector and has long been a trusted partner of Fiera Milano. Expotrans headquarter is in Rome and operates across several strategic locations in Italy, including Milan, Bologna, Parma, Rimini and Vicenza and Singapore as well. In 2024, the company generated revenues of $28.7 million with an EBITDA of 2.2 million and a net cash position of $3.8 million. This transaction fits fully within the priorities of our 2024-2027 strategic plan and strengthens the Fiera Milano positioning as a provider of integrated services. The rationale of the acquisition is clear. By bringing logistics in-house, we can improve operational control, increase efficiency in goods handling at our Rho exhibition district and capture margins currently outsourced to third parties. Let me take a moment to outline the core business area of Expotrans. The main area, which generates approximately 40% of the revenues is the event logistics. This includes activities like moving goods inside the exhibition halls, storing materials and renting the equipment to support exhibitors during setup and dismantling phases. The second area of business is the exhibition shipments, which accounts for 34%. This covers shipping services for exhibitors, both within Italy and internationally, helping them move their materials to and from trade shows safely and on time. Then there is the general cargo, which represents 18% of revenues. This includes logistics solution behind the exhibition world. And finally, about 5% of the business comes from the fine arts transport, a highly specialized service focused on the secure handling of artworks, including customs packaging and transport under very strict and safety conditions. From a strategic perspective, we see meaningful synergies emerging from this integration. These include better support to organizers and exhibitors through direct logistic management, improved service quality, broader commercial reach and stronger contract development, greater loyalty from international clients and last but not least, more effective control of traffic and logistic flows inside our venues. Now let's move to the financial structure of the deal. We have acquired the 51% of the company for a EUR 6.3 million payment with a price adjustment mechanism linked to the net financial position at the closing. The entire transaction will be financed through available cash, and we expect the deal to be completely closed also in terms of this price adjustment by the end of Q2 2025. The agreement also includes a pool and call option on the remaining 49% [exercisable] in 2029 with a maximum valuation of EUR 13.7 million, bringing the total payment value of the transaction to EUR 20 million. This structure allows us to fully consolidate the company, while ensuring operational continuity and retaining the current management team, which is a key factor in securing a smooth and effective integration. Now before moving on the detail of the quarterly results, I'd like also to highlight an important step we have taken in the area of the sustainable finance. On April 29, we signed 2 sustainable -- sustainability-linked loans, each worth EUR 10 million, one with Crédit Agricole Italia and the second one with Banco BPM for a total of EUR 20 million. These 5 years loans are designed to support the investment outlined in our 2024-2027 strategic plan, particularly in digital and technological infrastructure, while also helping us optimizing our financial structure and maintaining liquidity for the future growth. What makes these instruments particularly strategic is that they are directly linked to 2 ESG KPIs fully aligned with our integrated sustainability plan. The first one, an environmental target, increasing renewable electricity to 73% by 2028 as part of our 2030 decarbonization plan. And the second one, a social target with a commitment to allocate at least EUR 1 million per year in free shares to employees to our employee share ownership plan, reinforcing engagement and alignment with long-term value creation. The margin on these 2 loans will be adjusted annually by plus or minus 6 basis points based on the performance against these 2 KPIs. This initiative reflects also our commitment to embedding sustainability into all the dimension of our strategy, including how we finance our growth. Now before we get into the details of the performance effect and calendar effect at consolidated level, which will help you to understand the dynamics of this quarter. 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 as Francesco already highlighted, the comparison with the Q1 2024 is significantly affected by the absence of Mostra Convegno Expocomfort, one of the largest hosted events in our calendar, which was not scheduled in Q1 2025 due to its biennial nature. This clearly impacted both the Italian exhibition business and our consolidated performance. Looking at the divisional breakdown by legal entity, including so at this point intercompanies, we can comment in this way. So about the Italian Exhibition business, the main factor, again, that is the main driver for the revenue decrease compared to the previous year is the different exhibition calendar. As I already mentioned, is the absence in the year of Mostra Convegno Expocomfort. That said, the solid performance of the annual exhibition and Congress of the annual exhibition together with higher penetration of the value-added services has partially offset the impact of this, let's say, calendar effect, confirming the underlying strength of our recurring business. On the EBITDA side, the negative variation is mainly due to the calendar effect already mentioned. But on top of that, we have also to highlight 2 additional impacts. The first one is the impact of the sponsorship agreement signed with Fondazione Milano Cortina. Clearly, this is a nonrecurring impact or let me say, this impact will recur for 2025 and 2026 and clearly is affecting the comparison of the result of 2025 compared to result of 2024. So we are accounting in our first quarter EBITDA results, clearly for the costs already incurred for the sponsorship. And second, we have also additional costs compared to 2024, driven by all the actions that we have taken in order to enhance our relationship and the loyalty of our employees. And I'm referring specifically to the health insurance costs that has started in 2025 extended to all the employees. And the second impact is driven by the share plan, the free share plan that we launched at the end of 2024. Clearly, we are projecting in our results the expectation of achieving the figure to give this free share to our employees for the second year in a row. And is also, as I already mentioned, one of the key driver and the key performance indicators linked to our sustainability linked loan. So very important for us. Going to the foreign exhibition business, revenues reached EUR 2.2 million in Q1 2025 with an increase of EUR 1.3 million, which was mainly driven by the presence in Q1 of the second edition of the Fruit Attraction São Paulo, which last year happened in the second quarter. So this is a calendar effect, a positive calendar effect, clearly a smaller one compared to the one we mentioned before related to Mostra Convegno. On the profitability side, EBITDA decrease slightly by EUR 0.2 million. This notwithstanding the good performance of also the other exhibition that we run in South Africa, which is Investec Cape Town Art Fair. So this 0.2% decrease is mainly due basically to, again, a kind of calendar effect because our JV [we done over] MESSE [didn't] leverage this year on the commission linked to the exhibitors that are both from China to an exhibition that's normally happened in Germany, which is called Domotex Hannover. This exhibition this year became a biennial exhibition, so didn't happen in 2025. It happened in 2024. So all the commissions related to the business of bringing exhibitors from China to Germany this year, clearly were not present in the P&L. And this created a little bit slowdown in the Q1 results of the foreign division. Finally, Congresses. Congresses segment continued to deliver outstanding results. Revenue reached EUR 10.5 million in Q1, up to EUR 1.2 million compared to the Q1 2024. The increase is mainly driven by the good performance of recurring congresses, such as those held by Zurich and Allianz and by higher revenues from nonrecurring international events, including BIO Spring Europe and Intergraf. I would also highlight that in Q1, the Congress legal entity couldn't leverage on the results and revenues and margins, particularly coming from a fair exhibition, which is [BIT] the events organized by Fiera Milano that was posted in the Rho venue. This clearly doesn't create any kind of impact at the consolidated level. But when we look at the Congress legal entity view, clearly, this created an impact of reduced revenues, but more importantly, reduced margins because this activity was highly profitable if we consider just the legal entity view. And this is one of the reasons the EBITDA decreased by EUR 1.7 million, going from EUR 2.8 million to EUR 1.1 million this year. So this reduction is due, first of all, to the absence of [BIT], which was really profitable for the legal entity. But again, I highlight, there's no impact at consolidated level on this point of view. But on top of that, Congress had to face clearly the setup cost of the new venue. We know that Congress started using from January 1, the new Pavilion 1 and 2. These were completely renewed by Fondazione Fiera Milano. So the landlord completely restructured these 2 Pavilion. But in order to start business and to start hosting exhibition and congresses in these 2 Pavilion, clearly, we had to face some setup extraordinary maintenance costs, accounting almost for [EUR 0.6 million]. And on top of that, we have to consider that, again, the insurance cost, the share plan. So there are additional costs linked to the human resources. And also, there has been a growth in terms of number of employees. We know that Congress is increasing its turnover here after year. So we need also to grant a solid structure to maintain and to further develop this growth. So looking at consolidated level, I think it could be useful to move to Slide #11 to better understand the calendar effect and the like-for-like growth of both the hosted and organized exhibition. So moving from this legal entity view to a business line perspective, so excluding the impact of the intercompanies, we can see that all the business line grew compared to the comparable result of the redistribution the hosted, the organized events grew by EUR 0.5 million in terms of revenue, which accounts for a 4% increase. The hosted division net of the calendar effect grew by 4%. Clearly, the hosted division is the one affected by the calendar effect because Mostra Convegno is an hosted exhibition. The revenues from services increased, again, in a like-for-like perspective by 7% and congresses grew by almost 27%. As usual, we can also provide in Slide #12, some example of the selected case study of square meters growth within our portfolio of organized events and also of hosted events. So you can see that on the organized side, we registered positive growth from Milano Home+ Quick&More, which grew by 5%, both international tourism BIT, which grew by 8% and also the [mall] exhibition PTE that grew by 4%. But also the hosted events grew by -- compared to the last year. So MIDO grew by 5% in terms of square meters. Milano Unica, an impressive growth accounted for 25%, highlighting once more again that this exhibition, Milano Unica is winning this competition with all the main competitor in Europe. In the same sector, MyPlant & Garden, which grew by 21%. Now I would, at this stage, considering that we have already highlighted all the main impact for all the division, I would move to the balance sheet and cash flow. So I will start commenting on the main driver for the changes in our balance sheet. And in particular, I would analyze the net working capital, which moved from EUR 86 million negative to EUR 121 million almost at the 31st March 2025, showing a change of EUR 35 million in the quarter. This variation is mainly the result of 2 opposite effects: an increase in current assets and an even more significant increase in the current liabilities. On the asset side, we saw a rise of EUR 21 million, primarily due to EUR 22.8 million increase in trade and other receivables, reflecting higher receivables from customers and organizer, which is consistent with the typical invoicing cycle as of major events in the spring. On the liability side, current liabilities increased by EUR 56 million, and this is due to a combination of 2 factors. First, we had EUR 18 million reduction in trade payables related to payments made to suppliers from services linked to the events held in late 2024. At the same time, we had a EUR 43.4 million increase in customer advances, driven by advanced invoicing for events taking place in the upcoming months and particularly for a key exhibition like Saloni that happened in Q2, also that will happen in Q4, Ipack-Ima and Tuttofood that again happened in -- Tuttofood happened already in Q2 and Ipack-Ima, that is going to happen in the coming days. Third impact, a EUR 32 million increase in provision and other current liabilities, mostly due to higher payables to organizer. Around EUR 10 million and to deferred income related to the INWIT telecommunication infrastructure company contract, which alone accounts for around EUR 16 million. Overall, this evolution of working capital -- sorry, EUR 11 million. Overall, this evolution of working capital reflects the seasonal and operational dynamics of our business model, which with strong prepayments ahead of major exhibition and normal timing differences between revenue recognition and cash collection or payment. But it also highlights a healthy advanced booking trend, which supports the strong free cash flow we reported and underlines the confidence of our customers and clients in the upcoming trade calendar. Let's now turn to our cash flow and financial position. We remain solid and supportive of our strategic flexibility. As of 31st March 2025, our net financial position pre-IFRS 16 showed a net cash position of more than EUR 110 million, precisely EUR 111.5 million compared to EUR 77.8 million at year-end 2024 with an increase of almost EUR 34 million over the quarter. This improvement is primarily due to the strong cash generation from advanced payments received from -- for events scheduled in the coming quarters, like I already mentioned before. Looking -- so at the free cash flow generation of EUR 33.7 million, this clearly can be summarized into an EBITDA of EUR 12.1 million, offset by the rental -- the normal rental payment of EUR 13.7 million. And then we have to account for the aforementioned working capital contribution of EUR 35 million. So overall, this cash performance confirms that the resilience and efficiency of our financial management, and it allows also to sustain future growth initiatives, including the recent Expotrans acquisition without compromising on liquidity or strategic optionality. Coming to our guidance. So we can -- we repeat, we can leverage this year on a very strong exhibition calendar, which is typical of the year seasonal effect, let's say, and this is clearly due mainly to the presence of exhibition organized by Fiera Milano,HOST, Sicurezza and Made, all biennial exhibition. Here, we also benefit from the expanded event portfolio. So we launched new events. Net Zero will be opened to the tomorrow. Host Arabia will happen in November of 2025, along with the return of high-profile events in Milan like Gastech and the new launch spring edition of Artigiano in Fiera. The Congress sector is expected to remain stable compared to the very important and impressive performance of 2024, supported by the opportunity linked to the Milano Cortina 2026 Olympic. Meanwhile, the development of services and entertainment offerings will continue with an extended outdoor event season from May to September. So despite all the macroeconomic uncertainties, the group still confirms and even increased confidence in its 2025 targets, which are clearly aligned with the strategic plan. So we confirm without considering the impact of Expotrans that we still are in the revenue range of EUR 320 million, EUR 340 million and in the EBITDA range of EUR 110 million, EUR 120 million. And we confirm also the net cash position in between EUR 100 million and EUR 110 million. We will clearly work on a review of our guidance in the second quarter. So during the second quarter, very soon, we will disclose the impact of the acquisition of Expotrans. So the impact that clearly will affect the period May, December because the acquisition happened at the end of April. And so I will now leave the floor for Q&A.

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

I have 3 questions. If you prefer, we can go one by one.

Yes, Emanuele.

Okay. The first one is my usual question about the second quarter events. Clearly, the first quarter was strong with an organic growth of 10%. Can you just comment on the performance of the second quarter events, including clearly Tuttofood?

So we had as you -- so thank you, Emanuele. We hosted in the second quarter so far, Salone del Mobile. I will just mention the primary events. Made in Steel, Lamiera, Tuttofood. The results were, all in all, considering all the exhibition fully aligned with our expectation and budget. So some exhibition did perform as -- slightly less compared to the budget, but other ones performed in a better way. One of the one that performed in the better way is Tuttofood, just closed that happened in the last week. Tuttofood performed with almost 80,000 square meters net area sold to exhibitors. So it was an impressive growth compared to the previous exhibition. A growth that anyway it's better than the budget and it's better compared to our expectation, but it was expected in somehow. So it was part of the -- all the operation that we performed with Fiere di Parma. The main goal was to develop Tuttofood as being one of the most important international exhibition in Europe. So in this perspective, the plan is working and also the results that Fiera Milano is getting as the open venue are fully aligned with our expectation, even slightly higher compared to what we expected. So Q2 is very positive. Another important indicator for Tuttofood is that the organizer, Fiere di Parma has already announced a kind of 70% rebooking rate which means that 7 out of 10 exhibitors already at least sign on paper, I don't know if they already -- I mean, they already confirmed the participation to the next event that, by the way, will happen in 2026. So Tuttofood will happen again next year. So it's not granted. It was not granted that a 70% rebooking rate for an exhibition that normally is a biennial exhibition. So where exhibition normally come after a few years, having 70% rebooking knowing that exhibitors will come back again next year is a very astonishing result. So also for us, it's a very positive news.

Yes. Very clear. The second one is on the, let's say, your recent acquisition, Expotrans. First of all, thank you for all the details on the, let's say, strategic rationale behind it. Maybe, let's say, a little bit early, but can you just discuss on the expected contribution on your 2025, 2026 P&L from the acquisition? And just a clarification, is it included in the current guidance or not? Guidance for 2025?

I start from the last part of your question. It's not included the impact of Expotrans in the confirmed guidance for revenues and EBITDA. I can anticipate that we expect an additional contribution in terms of revenue for the period May, December of almost EUR 20 million coming from Expotrans in terms of revenues and around EUR 1.2 million, EUR 1.3 million in terms of EBITDA additional to what was our initial budget. Clearly, this doesn't mean that it's additional to our guidance, at least for the EBITDA. I can anticipate that we will probably be completely additional in terms of revenues. For 2026, I cannot anticipate at this stage the expected results for Expotrans. So let me run the first budget of the company also in order to give you my personal view on the expected results. I would say that we will not be so far from the historical result of the company. I mean, so if you look at what Expotrans achieved in 2024, I mean, that's the baseline. On top of that, clearly, we will work to get all the possible synergies. But if you want to have an idea about what was -- what will probably be added on our guidance in terms of revenues and EBITDA, I mean, the 2024 results can be a reference for you.

Fair. The third one is a quick one on the Winter Olympics games. Just to understand when do you expect to have visibility on the services tender?

Okay. So we have nothing to be communicated officially, but we are confident to get contract signed by the end of the second quarter. We are working on 2 contracts, probably the one -- the first one will be signed. I mean, I would like to be optimistic, I think, probably in the next 2, 3 weeks. And then the second one will be hopefully signed by the end of June. That's one of the reasons why we are also waiting in order to understand which kind of update we have to give to our guidance in this moment.

The next question is from Simonetta Chiriotti of Mediobanca.

Well, my question has been basically already answered. If you could just repeat the impact on revenues of Expotrans that I didn't catch the number. And more in general, looking at Expotrans data for 2024, did the company report growing numbers in '25? Should we expect further growth in '26 or flat numbers from these acquisitions? And looking at -- well, the events, so you have underlined that Tuttofood performed very well. If we look at the sectors that are weaker at the moment also like fashion and so on, could you give us your view on how this segment performed and is performing based on the events that you are hosting and organizing?

Thank you, Simonetta. So first question was about Expotrans. So Expotrans performed in 2024 revenues around EUR 29 million and EBITDA of approximately EUR 2.2 million. We expect that Expotrans in the period May, December will bring to Fiera Milano additional EUR 20 million revenues and EUR 1.2 million, EUR 1.3 million EBITDA. And for 2026, I was mentioning before, I would -- in this moment because we have -- I repeat, we have not even run the first budget process with the new management, with the management of Expotrans. I would consider EUR 30 million revenues as a reference for 2026 and again, an EBITDA in the range of EUR 2.5 million to EUR 3 million, something like that, which probably will include already some synergies that we hope we will start creating in 2026. Again, also Expotrans is now probably working on and will be possibly impacted positively by opportunities arising around the Olympic Games. So at this stage, we are not able to evaluate and to this possible impacts. So in the coming months, we will have probably more clarity on this as well. And second question was about the sectors. So the fashion sector, which is suffering at general level. We had in our Q1 results, clearly, we have consolidated the results of the main exhibitions from the fashion industry. So we hosted Milano Unica, we hosted MIDO, we hosted Micam. And as I already highlighted, MIDO grew by more than -- if I remember well, it grew by more than 5%. Milano Unica grew by 25% compared to last edition. And some other exhibition like Micam, basically confirmed the performances of 2024. So despite generally speaking, the sector, the fashion sector is suffering, the exhibition were solid and were some keeping their performances, other, as [Andrea] has mentioned before, so even improving their performances compared to 2024.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

So thank you, everybody. And should you have any other questions, please do not hesitate to contact Investor Relations contact. Thank you.

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