Racing Force S.P.A. (RFG) Earnings Call Transcript & Summary

So good morning, everyone, and welcome to the 2024 Racing Force Group Results Presentation. I'm Paolo Delprato. I'm Chairman and CEO of Racing Force Group. And today, together with me, there are Stephane Cohen, our Co-CEO; Alexandros Haristos, our Group Chief Operating Officer [Audio Gap]. In 2024, we increased our base of customers. Now we have more than 4,000 customers worldwide. We sell our products in 84 countries, and we reinforce also a little bit our team. We have 570 people coming from 39 different nationalities. And last but not least, 2024 was a very important year also for the cash generation. We had 72 cash percentage [indiscernible]. And this permitted us to reach a net debt equal to 0. So before leaving the floor to [indiscernible] to give you more details on these figures, I wanted to point out that [Technical Difficulty] for completing the investment program that we launched in 2021. In 2021, we went [indiscernible] [Technical Difficulty] with a significant improvement compared to the prior year. Cash flow from operations was equal to EUR 7.6 million with a cash conversion on EBITDA of 72% and a net financial position at year-end, which is close to 0. The Board of Directors of Racing Force S.P.A met yesterday and resolved to propose a dividend of EUR 0.09 per share. Moving to Slide 7, on sales. In 2024, sales increased by 4.8% compared to the prior year, while the compounded annual growth rate from 2020 to 2024 is equal to 18.1%. Excluding nonrecurring orders for nontechnical racing spirit branded apparel, 2024 sales have grown compared to prior year by 6.1%. In the second half of the year, particularly, sales growth was very strong, reaching double digits, driven by sales of driver equipment, including helmets across all major countries, particularly in the U.S. and in Europe. The increase in sales was achieved despite a macroeconomic landscape, which continues to be characterized by significant uncertainty. Looking at group sales for the full year in terms of product categories, sales of drivers equipment in 2024 increased by EUR 3.2 million, plus 7.2% compared to the previous year, driven by growth across all major product categories and particularly due to the strong performance in racing suits and helmets. Revenue from car parts ended the year with a slight decline of 1.9%, primarily due to a few months' delay in the production program of some major racing car manufacturers. The segment Other recorded a slight increase compared to 2023 despite the impact of the aforementioned nonrecurring orders, excluding which the segment grew by 22%, driven by the growth of racing spirits sales to corporate customers. In terms of geographical areas, the group has strengthened its leadership position in both EMEA and Asia Pacific macro-regions with a growth of EUR 1.9 million in EMEA and EUR 0.6 million in Asia Pacific. Revenue in the Americas recorded an overall increase of EUR 0.5 million, plus 3.2% compared to prior year, driven by the growth that began in Q2 and accelerated during Q3 and Q4. Growth in the U.S. was distributed almost equally across both OMP-branded racewear and Bell-branded helmets. Dealers continue to represent the primary sales channel for the group, accounting for 60% of total revenue in the fiscal year. Revenues from Team & Car manufacturers marked a significant increase of EUR 1.8 million, plus 11.7%, driven by key partnership agreements signed by the group in major World championships and nationwide competition, including the one with Team Penske, NASCAR, and IndyCar. Sales to customers classified as other grew by EUR 0.8 million, plus 9%, thanks to the implementation of new websites aimed at enhancing e-commerce. Moving to Slide 8. Adjusted EBITDA amounted to EUR 10.5 million with a margin on sales of 16% up from EUR 9.6 million in 2023 with a CAGR of 18.1% from 2020 to 2024. Adjustments to EBITDA are due to the value of rights accrued for the stock grant plan amounting to EUR 400,000. Gross margin recorded an increase in absolute value of EUR 1.4 million compared to 2023, driven by higher sales. In percentage terms, marginality was slightly lower than in 2023, mainly due to some partnership agreements in place against higher visibility for our brands and stock write-offs booked under the cost of goods sold in 2024, while they were booked below EBITDA in previous years. Other income was higher by $0.8 million, mainly due to R&D services related to the development of customized helmets integrated with zero-noise communication systems and higher sales of raw materials to suppliers. Selling and distribution expenses were $0.5 million higher than previous year, mainly due to higher expenses for technical partnership agreements and higher royalties on sales of mini helmets and replicas, partially offset by better freight out, thanks to higher efficiency and better management of logistics. General and administrative expenses are EUR 0.8 million higher than previous year, mainly due to salary increases applied during the year across the group's companies, driven by the mandatory renewal of the collective labor agreement applied to personnel in Italy. The increase in payroll cost is also linked to the hiring of new managerial figures and specialized technician in 2024 as the group decided to internalize some activities, particularly those related to the R&D and manufacturing of custom-printed racewear and apparel. Next Slide #9 is on net income margin. Adjusted net income margin increased by 23%, passing from EUR 4.8 million to EUR 5.9 million in 2024 with a net income margin on sale equal to 9%. Variance compared to prior year is mainly due to EUR 0.9 million higher EBITDA, 0.5 million better financial results, mainly due to EUR 0.3 million gain on foreign exchange differences recorded in 2024 against a EUR 0.3 million loss in 2023. These differences are mainly unrealized and related to intragroup loans. EUR 0.2 million lower bad debt accrual as in 2023, a significant provision was accrued to cover expected losses on a single deal. EUR 0.5 million higher depreciation due to the increase in CapEx in current and previous fiscal year. And finally, higher taxes for EUR 60,000. Please note that this adjusted net income does not include the positive effect coming from the tax benefit recognized under the patent box tax regime for an amount of EUR 316,000 related to fiscal years from 2020 to 2023. The calculation of tax benefits related to 2024 is ongoing, and it will be recognized in the 2025 financial statements as well. Slide #10 is about CapEx and net working capital. In 2024, the group invested EUR 9.1 million in CapEx, of which EUR 5 million for the expansion of group's main headquarters with the aim to increase logistics and production capacity and also create additional space office. EUR 1.4 million were spent in machinery, industrial equipment and with the goal to increase both the production capacity of O&P products in Ronco Scrivia and the production of helmets in the factory in Bahrain, following also the construction of the second floor at the Bahrain facility. Investments in R&D amounted to EUR 1.7 million, of which EUR 0.7 million related to motorsports and EUR 1 million related to the development of helmets for the defense industry. Finally, EUR 0.7 million this spend in software, mainly due to the implementation of a new ERP system in our subsidiaries and the new websites aimed at enhancing e-commerce. Excluding investments related to the group's expansion plan, total CapEx in 2024 is approximately EUR 4.1 million, amounting to 6.2% of total sales, which is almost in line with historical rate of the group's capital expenditure, which is around 5%. The main reason of the variance, the slight variance is related to the aforementioned implementation of the new website and ERP system. Net working capital is EUR 2 million higher at the end of the year compared to December 2023 as a combination of the following effects. 0.4 million increase in trade receivables due to higher sales in the last quarter of the year. Trade payable decreased by 0.4 million due to higher payments for purchases made at the end of 2024, EUR 2.3 million higher inventory, mainly due to a combination of 2 effects. The first one is EUR 1.2 million increase in raw materials and semi-finished products linked to helmets in preparation for the production of new models compliant with the new FIA evaluation standard and EUR 1 million increase in finished products, primarily due to rising spirit branded products, which were not in stock at the end of 2023 for which the group held advanced payments to suppliers at the end of 2023, among other receivables. And as a consequence, other receivables at the end of December 2024 are EUR 1.1 million lower than prior year. Slide #11 is on cash. Cash flow from operation was equal to EUR 7.6 million with a cash conversion of EBITDA adjusted of 72%. Variance compared to 2023 is mainly due to the higher EBITDA and the better management of net working capital. Prior fiscal year 2023 was influenced by liquidity absorption due to the need to increase inventory to a level deemed appropriate to support the growth and reaching a high level of operating cash flow was one of the main goals at the beginning of this 2024 fiscal year, and we can say it was met, showing our robust ability to generate cash. This achievement reflects the strength and the resilience of our business model as well. And looking ahead, our goals remain to maintain a high level of cash generation even in the upcoming period, ensuring long-term financial health and flexibility. The net financial position at the end of December is close to 0, while net debt as of December 2023 was equal to EUR 3.2 million. The improvement in the net financial position for EUR 3.1 million is mainly due to EUR 10.5 million adjusted EBITDA generated throughout the fiscal year, plus EUR 7.3 million net amount from the share capital increase completed in June 2024, subscribed at 14% premium with Axon Partners Group Investment and Bahrain Mumtalakat Holding as corner store investors. Net of EUR 9.1 million CapEx, EUR 2 million absorption from working capital, EUR 2.3 million dividend paid to shareholders, EUR 0.7 million lease payments, and EUR 0.5 million of other items, which include also paid interest. The current financial availabilities allowed the group to expand its production and logistics capacity, starting from Italy and Bahrain with a goal to support both the expected growth in Motorsport and the implementation of the diversification program. Now I give the floor to Mr. Alex Haristos, our Group CEO, for the diversification.

Hi, everyone. Let's have a look at our business and what is happening outside of the traditional perimeter of our company. So first of all, we start with a very positive note on the Driver's eye technology. We have signed an agreement with FOX Sports to provide the driver's eye service to IndyCar in the U.S. This is very important for us. This year is going to be a selected event. There was a historical change within the IndyCar media rights landscape. And FOX Sports, one of the major broadcasters in the U.S. was the one acquiring the rights. They are investing to enhance the show and the drivers eye is one of the pillars of their investment plan. We will start in a couple of weeks at the same time of the Formula 1 Grand Prix Bahrain, we will be in Long Beach to provide our service on the street race. We will be covering also the iconic race of Indy 500. So we expect a very good coverage, and this is a very good prospect for this year and the next few years as well. On the Sears eye, and today, I brought one of the first prototype that was showcased at the Ski World Cup in Val Gardena in December. The driver's eye technology was spinned off into a technology that doesn't require the car. So all the technology now is wearable. The ability to acquire the image, the video, but also to transmit live the video feed to the broadcasting to provide it to the TV production is now wearable by the athlete. That was a major step in the technology that is opening up other opportunities outside of motorsport. And although we don't have a financial agreement with the FIS, with the Federation or the broadcasters of the Ski World Cup, we are in conversation with them and with the Olympics for next year. The ski is very important for us for a number of reasons, but most of all, it provides a very good platform for this technology to be featured in other sports. Now that we have the ability to run the same service without the car and without all the infrastructure of motorsport, but providing our own end-to-end service that is, one, on the athletes. And second, on a private 5G network that we developed last year, we are able to take all other disciplines. There is a lot of interest in this technology. A, sports that they want some exposure, they want to provide this immersive experience to their audience. And so we are testing also in other sports. So this is a great opportunity, but probably the best opportunity of application for this technology doesn't lie in sport. And we will see more in a few slides. But as you can see here, what we are talking about is defense. And as our diversification project in that area becomes more mature, also this becomes a great opportunity. So let's say, on the borderline between Motorsport and other sectors, you are familiar with our lifestyle brand and what we were set to achieve when we started this line of corporate apparel for main players in the motorsport arena. Now the brand is growing, but also our client base is expanding outside the perimeter of motorsport. The affinity and the similarity of another performance of sport like sailing is providing new growth for this product line. And we were able to, within the space of the corporate apparel grow our customer base by 110% this year. We have a revenue increase, but this is just the start of racing spirit in an area that is outside of motorsport. So what we are expecting is further growth in this segment with our lifestyle performance product. I'll leave the floor to Stephane on the other diversification projects.

Thank you, and good morning, everyone. So first of all the brand that you see on the upper right corner of this slide, HPS is the brand that we are going to use for the police and military protection helmets. We have participated already to 2 trade shows this year. And we had obviously a strong interest from potential prospects from all over the world. The first show to which we went is called SHOT Show. It's an enormous show in Las Vegas. We were there in January. As you can see, more than 2,500 exhibitors, a huge crowd attending. It's really -- I'm a motorsport person originally going to such show was really eye-opening, especially with the American culture. And our product cut a lot of interest, not only from Americans, but people from all over the world, Australians, Canadian, et cetera, expressed interest, and we made a lot of very good contact. Very quickly after that show, we were in Europe in Nuremberg at N4 stack, different type of crowd, but I would say same results, same interest, some people that we already saw in Vegas came back. And obviously, a lot of other new contacts from Europe, but also from all over the world. In the coming months, we will be here in Paris at the Milipol Show in November and early next year, we will be at the World Defense Show in Saudi Arabia in February. A quick word here about that last one, Saudi Arabia and the Middle East. Obviously, with manufacturing being based in Bahrain, taking into account the excellent relationships of Bahrain with all the neighbor within the GCC, I think once the products are ready it would be only normal and logical that all these countries of the GCC start sourcing their Riot police helmets and the SWAT teams helmets from the company from the GCC. We are the only one making these products in the GCC, not to mention that these products are not just locally made. They are state-of-the-art at world level. So they would have really no reason to go buying these somewhere else once we are ready with the production in Bahrain. The next slide, a little update on the Lift USF Forge helmet. So as most of you know, we have applied there a transfer of the technology that we use in Formula 1 to aircraft helmet to be won by fighter pilots and pilots in the U.S. Air Force. So going from Formula 1 pinnacle of Motorsport to the U.S. Air Force, probably pinnacle of any Air Force in the world using a lot of the technology that we developed in F1, but also a different approach compared to the traditional approach of the defense industry. The reason why we were able to obtain this contract is the speed at which we developed the product, not only the product was superior, but we successfully passed and the last test was passed a few weeks ago, all the certification tests required by the U.S. Air Force. We were ready much faster than the competitors and the incumbent American supplier. The next milestones for this is a very progressive production ramp-up with most probably significant quantities supplied to the U.S. Air Force from 2027 onwards. So now we are in a phase of ramping up the production. It's not a major challenge for us. We have done that with auto-racing helmet. It's a technology that we master as well. So we do not have any problem. We do not encounter any major problem in this manufacturing process for the lift helmets. Next slide. So the police riot helmet. We are developing this product according to the TR 2011 standard. It's a German standard. It's probably the most serious and difficult standard to achieve in that space. The result is a high-quality protective helmet with a communication system and a respirator mask. We have developed, again, using the technologies that we use on auto racing helmet, a lightweight composite shell with a fire-resistant coating that produced that delivers excellent shock absorption and stab protection qualities. The police force in the modern world are characterized by a very different type of policemen. You can find nowadays tiny women who are part of the riot control police force and very big men. So we have to cover an extremely large size of headset conference and in order to optimize that, we did not hesitate to make no less than 3 different shelf size. It's not making the task easier, but it's the only way to come with a state-of-the-art product for all sizes and shapes of heads. The product has another few interesting characteristics like antibacterial interior flame retardant lining. The chin strap is also flame retardant and with a very easy system for the fastening of the chin strap. Finally, the Visor is a little bit unique in that world also. We have incorporated not only the manufacturing process that we use for the auto racing helmet but also anti-fog and anti-scratch coatings. And the result is a Visor that gives the police officer a very comfortable vision, probably of a higher level than most of the other products on the market. The key 2025 updates. So we have now gone to these trade shows with prototypes of pre-series products and we have launched the HPS website as well as distributing some communication to the specialized media. Since we participated to this show, we are in the process of establishing a network of agents and dealers and we are going to deliver to these dealers a series of samples in the many, many available sizes in order for them to try and engage the market in their respective countries. We have obtained the quotation of this helmet. Let me go a little bit more in-depth here in terms of homologation and certification because in many cases, there is a bit of confusion. So the homologation consists in going to a series of independent test laboratories which test various specific characteristics of the helmet. For example, the shock absorption characteristics are tested in one lab. Then you go to another lab for fire resistance and fire retardant tests. So you have to go with all your different shelf sizes to different labs for a series of tests. This is what you call the homologation. And once you have satisfied all the tests of the TR, the technical regulation to which we want to comply, you can say we are homologated. And this is the process that we have now completed. And in the coming quarter, we will certify the product with a gas mask. Again, as per this regulation, we will have external auditors that will double-check all the results that we have from the test lab. It's more of a formality and finally confirm the compatibility of our helmet with a specific gas mask. Once we have that, we will be certified. And as far as we know today, there is not one actor on the European market who has this level of certification. In Q3 of this year, we are going to make the first production batch of this helmet. And in Q4, we start and intensify our commercial activities. And again, we participate in the trade show in Paris in Milipol as well as progressively ramping up the production. Piece for the end, [indiscernible] which is the helmet for the SWAT team. For example, in France, the GIGN or the RAID are potential users for this product. We had in the initial phase of this project, some discussion here in [ Villaupler ], the headquarters of the RAID to discuss with the various officers their need and what they wanted from the next-generation helmet, and we have tried to incorporate all this in this product. So here, it's same story in terms of the technical regulation that we want to meet. We are going to use the German police technical regulations because they are the most stringent and advanced technical regulations for this kind of product in Europe. We will also meet VPAM and NATO standards for this product. We have optimized the design of the shell to be fully compatible with the radio communication headsets, obviously, to be also of classical protection for chemical, biological, radiological, and nuclear protection masks. So the integration with the mask, a little bit similar to the one we have for the police Riot helmet. A few accessories of the helmet have been also optimized such as the state-of-the-art shout for the night vision. Finally, we have worked a lot on the way the visor of this helmet opens and closes. It seems not so important, but actually, again, our experience in the world of Formula 1 and the discussion that we have had not only at the RAID but also with other SWAT teams in Belgium and in the Middle East, means that we came up with a product where the weight of the visor, you have to realize that the helmet like that weighs more than 4 kilos. And the weight of the visor is attached on the helmet in as central position as possible to try to keep the helmet balanced on the head of the officer wearing the product. We also incorporated other small elements of the Formula 1 helmets such as the chin strap, the antifog, and anti-scratch technologies on device. '25 update. So same as for the Riot, we have introduced this helmet on the 2 trade shows that we have already done this year. We are also in discussion with various potential importer dealers, agents all around the world. And in terms of the technical characteristic, we have passed most of the tests, not all of them, but most of the tests with the first shelf size, which is the most challenging. And once we will have finished with the first shell size during the second quarter of this year, we will start developing the larger shell under the same approach and principles. We expect to be fully ready in Q4 to proceed to homologation and certification of this helmet to start the commercial activities, again, participating in trade shows and producing from end of Q4 2025. Next one. The next one is not for me for Mr. Delprato.

Thank you, Stefan. So a few slides on the outlook for 2025. We start from Motorsport. So what to expect from 2025. The answer is easy, another year of growth. This is what we expect. We are going to close Q1 sales in line with 2024, but we are going to close Q1 with a high single-digit order book. This is a very important signal. This means that market like our products. The difference of timing between sales and orders is due to the fact that for helmets, we allocation within 2024, but for some models late 2024. So we started the production only at the end of 2024 and for some models in January this year. And so we were able to produce these helmets a little bit late. And so we expect to have a second quarter of the year, so Q2 with a sales increase as well as all the other quarters. So at the end, the target is to reach again a new all-time record for our sales. At the same time, we are developing the new 2025 helmets that is the homologation standard for the American helmets. We are aligned with our plan. These helmets can be sold only starting October 1. So we expect to have these helmets, most of these helmets in U.S. in our warehouses ready to be sold for that date. At the same time, we have also a new revenue stream from communication service, but Alex will give you more details about this. And there is another important point. We are exploring the possibility to use the Bahrain factory for some productions. We already started with some products, and we expect to produce the first batch of OMP products within this year. And this is a very important milestone for Racing Force. Before entering in the other outlooks for 2025, I want to point out that Motorsport is growing. Formula 1 is the pinnacle of Motorsport. Formula 1 represents motorsports. And Formula 1 is attracting really, really a lot of people. Here in the presentation, you have some numbers. So TV viewers are growing as well as Formula 1 is attracting, for example, a lot of women. Today, 41% of passionate people are women, Formula 1 as well as Formula 1 is attracting young people, 16, 24 age group showing the fastest growth. At the same time, Formula 1 and in general motorsports, but mainly Formula 1 is attracting a lot of sponsors. Here, we put in this presentation only a few names, very important names that decided to enter Formula 1 in 2025, Louis Vuitton, Moët & Chandon, UniCredit, TAG Heuer, LEGO, et cetera, and many others. This brought -- this attention for Formula 1 brought a very important colos, very important sportswear brand like Adidas joining Formula 1. Starting 2025, Adidas entered in Formula 1. And they decided to enter with a partnership. They decided to enter with the partnership with a racewear manufacturer. And they entered with one of the top team in Formula 1 with Mercedes Formula 1, even if the plan is to have more than one team in the coming years. So at the end of a very long scouting, they decided to choose OMP, so our brand as a racewear supplier. So we closed this deal with Adidas, where we are official supplier for Adidas in Formula 1. This is bringing us a lot of visibility for our brand with a very positive result for OMP. Last but not least, in June 27 or June 23, there is the premiere of the new Formula 1 movie. Formula 1, FOM, and Apple Studios, the producer as well as Warner Bros that is the distributor. They are pushing a lot for this new movie. There is a lot, really a lot of attention on this movie. This will create, again, a lot of interest on Formula 1. There is one of the main actors is Brad Pitt. And the interesting point for Racing Force is that the active supplier of racewear and helmets, and also clothing is Racing Force Group with all our brands, so OMP, Bell, and Racing Spirit with a huge visibility for our brands. So all these things will create more traction for Formula 1 in general for Motorsport. We are seeing this because the base of drivers -- of young drivers reaching Motorsport is growing. We see this with the numbers of young guys starting from carting. So we are going to have a lot of positive results, thanks to all these things. I leave the floor to Stephane, I think, again for the outlook for the report.

Thank you. So the main target of 2025 in terms of the Milipol products is to obtain the certification for the 2 first products, the Riot and the Gladiator in the second half of 2025. And as I explained earlier, to start the commercialization activities in the various regions of the world. The next step, obviously, we will try to create an extended portfolio of customers all around the world, increase the offering of head protection systems to the military business. Let's be conscious that at this stage, the 2 products we have been talking about are police products. The very, very big business is in the military space, especially in the current geopolitical scenario. And so you have to realize that when you take the gladiator helmet, you have the top of the pyramid. It's quite easy to kind of detune this product and transform it into a military product, which is simpler than a SWAT police helmet. Finally, we are looking at extending the offering with additional safety and protective equipment. That means other types of helmets in that sector, but also potentially clothing, et cetera, et cetera, because, again, coming from the automobile racing world with fire retardant products, we could imagine supplying products to police SWAT teams, et cetera, et cetera. It's not very different from what we already do. And we realize that these clients would greatly benefit from a higher level of service compared to what they currently have. The approach, again, is talk to them, see what they want, and not put on the table a product that has been defined without their input. And as it is customary in that industry very often or too often. And finally, one of the most exciting areas that Alex already explained earlier is the integration of driver's eye into the police and military helmet. And there, you can freely think about all the possibilities. The first thing is contrary to a body cam as used currently by police, it is located inside the helmet. So it will give the point of view of the officer wearing the product. So the image generated will show exactly what the policeman is seeing. This can be used for legal matters, but also for tactical matters. And thanks to the technology that we have developed for ski where we have this transmission through 5G networks or other types of transmission, we can come up with a very, very unique product for Riot police and SWAT teams equipped with this micro camera and with transmission capabilities in real-time to a post of comment or whatever. Alex?

So bear with me for the last slide. So a few years back, we had a target. It was actually one of our M&A targets. We wanted to enter a specific segment of the market, still like technology services. We went about this, but the M&A didn't go through. We saw a very interesting situation in the market, a segment that was populated by only 2 players for decades. And we are talking about motorsport. We are talking about mainly like the European-based championship. So let's -- we leave aside the U.S. and the rest. That is very similar, by the way. So only 2 players, very similar technologies, technologies that has been there for decades, radios, UHF radios, and a certain level of complacency in the service because there are only 2 players, a certain level of frustration from the clients as well. So perfect conditions for us to come in to bridge the gaps that we would find in the market with both the technology and the service. And of course, when we were looking at like this actively about this M&A, we looked into the numbers. And what we found is very good margins as well. So we have been waiting for, I think, now 3 years, and then we decided to enter the market. We decided to do it with a partner. With a Spanish company that is called Al Kamel. Al Kamel, they are the world leader in timekeeping in motorsport. So basically, their business model is very close to the service that we launch in the market, and I will tell you about it in a second. So what they do is they do -- they provide all the data of the timing that you will see on a screen when you watch a Formula 1 Grand Prix, for example. And in order to do that, they have to deploy infrastructure on a circuit, transponders in the car, so devices in the car, they have to gather the data about the telemetry and about the location of the cars in the circuit. And then they use this data and they distribute them into the race control to the teams, to the circuit, and so on. Here, we are talking about radio communication services. And I'm sure that every one of you that watch like a race will see people wearing like the headset and pushing buttons on a panel in front of them to be able to communicate with some people or some others. And these are feature devices that characterize a lot of motorsports because the headset, they are pretty bulky. So they are part of like the picture of the people there. Well, in order to have that, there are companies that will come with the infrastructure. So they will put up antennas on a circuit. They will set up like all the network. They will provide the products, handheld radios, the headset, all the accessories, the panels in the teams on the walls of Formula 1. And then they will take everything away to the next event. This is the service that we are talking about. And together with our partner, Al Kamel, we are ready to take all this market. As soon as we started even thinking about it, we won a tender. So we are already providing this service. And our first client is called E1. E1 is a championship in the ecosystem of a Formula E is electric offshore, is an international championship that covers 4 continents, and we are providing exactly the service that I described for them. There are a lot of opportunities in the market, I would say, at every level in motorsport. But of course, this is a service that can be provided also outside of this perimeter to events and sport events in general. Our aim here is to set new standards. So both Al Kamel and Racing Force, they are companies that innovate the service the technology. With the zero noise in racing force, we develop communication devices for audio and video. So our aim is to develop the new generation of products for this sector. And with the zero noise communication services, we will provide the services using this technology. Now let me elaborate a little bit more on what we have seen already in a couple of slides and what Stephane was talking about before, the steer eye, the driver's eye, the eye technology that we can use also for other applications and in defense. So we started with motorsport. Motorsport, safety was probably one of the biggest challenge and then acquiring the image was a very big challenge. So very small camera, very light. So number one, acquiring the image, that was motorsport. Now the other sports, the other sports is not just about acquiring the image, it's about transmitting the image as well. So this is 2. Now in defense, this is not enough. I mean it is clear that in sport, the value that we provide lies in the content that we give to the TV production, and that is enough. The audience gets the content. It's an immersive content, and this is where the story ends basically. But in defense, there is a little bit more. So our ability to transmit live the image will feed back somewhere. Imagine riot context. People on the front line wearing like a helmet with the integrated camera. Some people at the back in a van is receiving that feed and can select like the different users. They can see what they are seeing. But this is not enough. You get a lot of feed. You enter a TV production. And actually, you wonder how they can manage to understand what camera to play first. They have to understand what they are seeing. They have to know the show, but they don't know the show. In a riot environment, they do not know the show. So you need some aid. You need to understand a little bit more. So we said, first, acquire the image; second, transmitting the image. Third, defense, analyze the image. So this is happening not on the head of the user. This is happening on the lending side. So features today that we can actually operate live, like the face recognition, like identifying objects, like identifying dynamics. This can happen where we can deploy more computational power on the lending part. So there are a number of applications that we want to explore. But for sure, we see -- and we have seen already in the exhibition where we featured like this technology in the defense area, there is an interest, and it can be one of the main USP of like our helmets to have that technology already integrated and to let like our clients to use that power of analyzing the image and to tweak it to their needs. We see a very good potential in this. So what we are here to say today is that we will embark into this development project, and we will deploy this technology adding also the #3 feature of analyzing the images. Thank you very much. I think this is the end. So we are open to questions.

May I start with a quick one? 2 questions on my side. Regarding the CapEx, can we have an outlook for 2025? We saw that in 2024 and even before the new headquarters represented a big share of the CapEx. You talked about the completion of the investment plan in 2025. Can we have an idea of the size of the CapEx that we should expect in 2025? And then another small question. Can we have an idea also of the selling price of the Riot and the different elements?

Do you want to buy it?

No. The question behind is that if you receive an order and you communicate about, I don't know, 10,000 units, it could help us to have an idea of the price.

Stephane, do you want to answer the price?

Yes, I can answer for the price, knowing that there are multiple possible configurations for these helmets. So we can go for a very basic version or for a version receiving different types of accessories. So talking about the Riot helmet, we're talking about EUR 350 to EUR 700 piece also according to the quantity, and talking about the gladiator helmet, we're talking of prices anywhere between EUR 2,500 and EUR 4,500 per unit.

I will take the question on CapEx. We will have the completion of the expansion project, as you mentioned. At the end of December 2024, we reached almost, let's say, between 60% and 65% of the total of works. The original plan was announced for EUR 13 million. So we expect between EUR 4 million and EUR 5 million still to be spent in 25 to complete the plan. And on top of this, we will have what we call recurring CapEx that we can reasonably estimate a percentage of 5%. So this is the CapEx that is important in the first half of 2025. [Technical Difficulty] The working capital. So we increased the percentage of sales in the [indiscernible] because of the new helmets. Can we expect this increase to disappear next year? And I'm thinking about cash conversion after that. And the second question would be on the U.S. Do you witness the same growth pace in terms of book orders? And since we know that by the end of the year, is it driven by more than [indiscernible]? As regard inventory, we expect a significant absorption by the end of 2025. You know that first, we had a seasonal trend during the year in our stock. So in this moment of the year, we've been seeing a decrease in the amount of stock. And then when we are close to the end of the year, stock usually go a little bit higher. But it will depend on the level of sales of the last quarters of the year and the timing of deliveries, but I don't see significant increase in stock. As regard the growth in the U.S., we can expect the order intake also from U.S. in a very significant way, especially from racewear and OMP products. So far, so good. And then you have to consider that starting from Q4, we expect a significant increase in sales of helmets in U.S. due to the new homologation standard.

Which kind of companies manufacture or we manufacture helmets? [Technical Difficulty]

We produce internally all the helmets in Bahrain, both the motorsport helmets as well as the helmets, so the and also the helmet for the U.S. Air Force. We produce racewear in Italy in Ronco Scrivia, our main headquarter. And then we have also a third production plant that is in Pisa, where in Italy, where we produce all the electronic components. So these are the products we produce internally. Absolutely. We want to produce more products internally. This is the plan. We want to use the Bahraini factory. In fact, we are evaluating the possibility to have a second factory also in Bahrain because we want to produce products that now we don't produce internally. We want to bring this kind of production internally because we saw during COVID, but also after COVID that if you have the total control of the value chain is the best solution for a company like Racing Force.

A few questions. Maybe first on the order intake. Can you have a sense of basically some details on what it's looking like in terms of different geographies, potentially the share of the order intake is coming from new FI standardized helmets as well as some details mostly on the geographies? We've seen a pickup in the orders in second half of last year in the U.S. Is this seeing basically the macro outlook grading basically in the U.S. is something that you're seeing actually week by week, keeping up the pace?

So in 2025, we are seeing, as I said, a high level of orders. And in general, from all over the world, there is a specific geographic area that is growing more than others. Okay, there are some small differences, but not big differences. The big difference is that in Europe and Asia Pacific, we are receiving orders for all the products, including helmets because in these regions, they mainly use the FIA standard. And so we already have the helmets. In the U.S., what we are seeing is that we are growing with the orders, but the main reason is thanks to the OMP products. We have a double-digit growth for the O&P products in terms of orders in the U.S. At the same time, we are seeing a decline in terms of helmet sales, even if not so big as expected. But we expected this because in the U.S., we are going to have the newnel 2025. And so until October 1, we cannot sell the new helmets. So we expect low sales for the helmets in the U.S. until October and then a big peak starting October. But in general, we don't have any specific area where we are growing more or less.

And just because you're used to communicating on the growth in the order intake, can we have a sense of the amount of order intake you have at the beginning of the year?

This year, you mean?

Yes, because you're communicating on the order intake and growth levels, but can we have the nominal amount of the orders you have right now in hand, let's say?

Yes. We don't disclose this number usually. I can tell you that we have a very high single-digit growth for the orders. Last but not least, an important point, if we look at our customers, you know that we have customers divided among dealers, carmakers, teams, and others. We are seeing that we are growing in terms of orders, we are growing a lot with dealers. And this is a very important point because with dealers, we have a high margin. And then we are growing with others because in others, we have a lot of customers coming, for example, for Racing Spirit and helmets and other things. We received orders from carmakers. But compared to last year, these orders are splitted on more months. So for example, some car manufacturers last year, they asked and also the previous years, they asked products like seats, harness, et cetera. In the first quarter [indiscernible] products in the first half on more months to [indiscernible] compare last year.

Okay. And can you remind me how many car manufacturers you're working with? Like is there a significant concentration in number of OEMs you work with?

We don't work directly with OEM business because we don't produce any OEM product. We sell racing product to car manufacturers. So the products we sell are racing products like racing seats or racing harnesses or these kind of things.

The client is companies...

Are European carmakers. I think the most important carmakers in Europe, they work with us.

Okay. There's no concentration. And speaking a bit about the defense, obviously, you mentioned price point, this new range. Can we have a sense of typically, is this one helmet per I don't know, let's take the example of RAID. Is this helmet per person or basically what order sizes can we expect if you sign, for example, somebody in the green?

The RAID and GIGN combined is 1,200 heads. So the same number of helmets.

Can you just repeat?

1,100 to 1,200 for a country like France.

That's one per person.

One per person, yes.

And what is because you have like first batch of orders, I guess, if you sign and then there's renewal of the fleet, right? Basically, renewal rate you have on December.

Couldn't comment on that at this stage. The SWAT teams are a little bit of a -- they benefit from a special treatment, let's put it this way. So when they identify a superior product, they will want it. And then they may keep it for 5, 6 years before starting renewing.

Typically very long contracts in terms of what is the 5, 6 years of the contract. If you sign the new contracts for how much time is it like secure?

Well, normally, for that amount of helmets, it's a one-time supply, one shot and then they may order a few more here and there, but nothing significant until they renew again their full inventory. Yes. The same for GIGN . I wanted to tell you something more about the relationship we have with the car manufacturer with an actual project that we have this year that is pretty significant and it's very representative of what we can do as a group. The project is public. You can look at on the Internet. If you look at like the Mercedes AMG Pure speed, you will find the YouTube, they are promoting the cars and everything. What this car is a speedster with no windshield with a halo and it's a high-performance car, but it's still a commercial car. Price point around EUR 1 million a piece, 250 cars that are going to be produced starting now. They are starting the production now. What are we providing them with? We are providing them with a custom helmet and a custom communication system for the car. There is no windshield. So they need a helmet. And we use the base of one of our helmet, of course, but then we designed together with the Pininfarina and with AMG, the final helmet. And we developed for them a very custom communication system so it can be integrated with the car and so on. This is a very custom project, 250 cars. So it is not a racing project. It is not an automotive project. It's when the automotive car manufacturer, they play limited series, very high-end. Something similar we did with Aston Martin in the past, Dell did it with McLaren a few years back. So we have this kind of relationship with the car manufacturers of like rolling sort of project that will happen every now and then. And this is alone what is the OMP relationship with others. OMP will provide only like the racing part to the racing cars of the car manufacturers like the seats, for example.

And just maybe last question on the commercialization of the right and the riot and gladiator. So this goes through dealers if I understood correctly. I mean is that something I think it's new you mentioned on the slides that you have like dealers working with you. Can we have just a clarification on what is currently the sales channel?

Well, there are several possibilities. You have companies acting as dealers or importers in some countries. You have people acting as agent or you may encounter circumstances where you're going to submit offer for tenders. So all scenarios are possible. There is no fixed or defined scenario as far as we are concerned.

It's not mostly tenders...

No.

[Technical Difficulty] So first in which other sports do you see potential applications of D Eye? What kind of revenue do you expect from D Eye in sports?

The application in other sports. Well, we are seeing very different things. As I mentioned before, now we have an agreement with Fox Sports. So usually motorport, we have a contract with the series and not Disney with the because they will have a much more sort of intuition on other application as well as like the Olympics. So the Olympics, for example, they ask us to for other disciplines of like minor sports that come to live with the Olympics and for a number of different reasons, they want the speed for both like the broadcasting or technical reasons. When you are talking to major broadcasters like FOX Sports, of course, they will look at like major sports, like, for example, NFL, and I felt it certainly interesting because they wear a safety device like the helmet. So this will facilitate, of course, the installation. I think now it's a matter of featuring this technology of the Skier's Eye using the skiing as a marketing platform of what we can do. The broadcasting of skiing is pretty old school and the Skier's Eye can have a very major impact and showcasing this will open up the door to other applications. Saling was also interested about it. So we had different requests. We have to make a peak to develop like the base and the foundation of this and then being able to go and showcase it into other sports. The potential of the technology, we think that it's that is a high potential. We never disclose precise numbers on this contract for now. In Motorsport, it didn't generate big volumes, but the contribution to the bottom line of the group is very significant proportional to the revenues, meaning that the net profit of these activities is extremely, extremely high.

Can you give more color with respect of your expectations of revenues in the airflow spaces?

Yes. Well, as I said, the bulk of the order will come in 2027. So for the moment, it's rather a pre-series or small series production and a bigger number will be reached in 2027.

In compliance with the NEA agreement you have in places, it will be paramount to highlight some of the numbers for defense, police and military. The presentation is very general and overall high single-digit growth expectation is a bit general. Okay. So can you discuss about the tariff issue and your position compared to competitors? I think it's more about those parts.

Yes. This is a very important point also considering what happened yesterday. We have different locations as a Racing Force Group. We are located in Italy, we are located in Belgium. We have a headquarter in the U.S. and we have locations in the U.S. and we have an important headquarter in Bahrain. Bahrain has an FDA, so free trade agreement with the U.S. So this is one of the reasons why we are exploring also the possibility to manufacture some products in Bahrain because on one side, we have to increase our production capacity thanks to the level of orders we are receiving. So we have to increase our production capacity. But on the other side, we are exploring the possibility, for example, with the second factory, the possibility to have the production, this kind of production or some of these production in [indiscernible] to avoid any problem in terms of tariffs.

And we have the last one. Do you need acquisitions for enhancing AI capabilities in new drivers integrated product?

I think now this is not on the table. I think now is the time that the landscape of this technology is changing so fast that not necessarily an acquisition is needed. A strong partnership with some exclusivity lock. I think this would be the best way to go. And then going forward, of course, other scenarios can open up. But I don't see right now the acquisition as the easiest way to acquire like the know-how and the technology that we will need to deploy. [Technical Difficulty]

Someone asking the stock price is lagging and has had a very disappointing [indiscernible] over the [Technical Difficulty].