Ferrari: Strong Results, With Demand Heading Into 2025
May 04, 2023 at 06:58 AM EDT
FERRARI: STRONG RESULTS, WITH DEMAND HEADING INTO 2025
“Another exceptional quarter for Ferrari. Double-digit growth across the main parameters, with EBITDA margin at 37.6% reaching a new high and net profit up to Euro 297 million,” said Benedetto Vigna, Ferrari CEO. “Our order book already extends into 2025 with an award-winning product portfolio. We have decided to reopen orders for the Purosangue, suspended due to an initial unprecedented demand, and launched the Roma Spider to further enrich our offer. We are on track with our electrification journey on the development of both sports cars and infrastructures in Maranello”.
1 Refer to specific paragraph on non-GAAP financial measures. There were no adjustments impacting EBITDA, EBITDA margin, EBIT, EBIT margin, Net profit, Basic EPS and Diluted EPS in the periods presented.
Maranello (Italy), May 4, 2023 – Ferrari N.V. (NYSE/EXM: RACE) (“Ferrari” or the “Company”) today announces its consolidated preliminary results(1) for the first quarter ended March 31, 2023.
Shipments totaled 3,567 units in Q1 2023, up 316 units or 9.7% versus the prior year.
The product portfolio in the quarter included nine internal combustion engine (ICE)(4) models and four hybrid engine models, which represented 65% and 35% of total shipments, respectively.
The increase in shipments during the quarter was driven by the Portofino M, the 296 GTB and the 812 Competizione. In the quarter the first deliveries of the 296 GTS and the 812 Competizione A commenced, while the F8 Tributo reached the end of the lifecycle. The Daytona SP3 was in the ramp up phase in the quarter.
Quarterly deliveries reflected the pace of introduction of new models in the various regions. EMEA(4) was down 12.0%, Americas(4) increased 46.2%, Mainland China, Hong Kong and Taiwan was up 38.9% and Rest of APAC(4) grew by 19.5%.
Total net revenues
Net revenues for Q1 2023 were Euro 1,429 million, up 20.5% or 17.9% at constant currency(1).
Revenues from Cars and spare parts(6) were Euro 1,241 million (up 23.2% or 20.6% at constant currency(1)), thanks to higher volumes, richer product and country mix as well as the contribution from personalizations and pricing.
Sponsorship, commercial and brand(7) revenues reached Euro 130 million, up 15.2% or 11.1% at constant currency(1) mainly attributable to the better prior year Formula 1 ranking and the contribution from lifestyle activities.
The decrease in Engines(8) revenues (Euro 33 million, down 11.5%, also at constant currency(1)) was attributable to lower shipments to Maserati, as the 2023 contract expiration gets closer.
Currency – including translation and transaction impacts as well as foreign currency hedges – had a positive impact of Euro 28 million, mostly related to US Dollar.
Adjusted EBITDA(1) and Adjusted EBIT(1)
Q1 2023 Adjusted EBITDA(1) reached Euro 537 million, up 27.0% versus the prior year and with an Adjusted EBITDA(1) margin of 37.6%.
Q1 2023 Adjusted EBIT(1) was Euro 385 million, increased 25.3% versus the prior year and with an Adjusted EBIT(1) margin of 26.9%.
Volume was positive (Euro 28 million), reflecting the shipments increase versus the prior year.
The Mix / price variance performance was also positive (Euro 85 million) mainly reflecting the increased personalizations, the enrichment of the product mix and the positive country mix sustained by Americas and Mainland China, Hong Kong and Taiwan and pricing. This was partially offset by lower deliveries of the Daytona SP3 compared to the Monza SP1 and SP2 in Q1 last year.
Industrial costs / research and development expenses increased (Euro 47 million), mainly due to higher depreciation and amortization as well as raw materials cost inflation.
SG&A also grew (Euro 22 million) mainly reflecting communication, marketing and lifestyle activities, as well as the support to the Company’s organizational development.
Other changes almost in line (positive for Euro 6 million), mainly reflecting the better prior year Formula 1 ranking and higher contribution from lifestyle activities.
Net financial charges in the quarter were Euro 4 million, versus Euro 8 million of the prior year, mainly reflecting higher interest income on liquidity held by the Group.
The tax rate in the quarter was approximately 22%, mainly reflecting the estimate of the benefit attributable to the Patent Box, the Allowance for Corporate Equity (ACE)(9) and deductions for eligible hyper and super-depreciation of machinery and equipment.
As a result, the Adjusted Net profit(1) for the quarter was Euro 297 million, up 24.0% versus the prior year, and the Adjusted diluted earnings per share(1) for the quarter reached Euro 1.62, compared to Euro 1.29 in Q1 2022.
Industrial free cash flow(1) for the quarter was strong at Euro 269 million, driven by the increased Adjusted EBITDA(1), partially offset by the negative change in working capital, provisions and other of Euro 99 million and capital expenditures(10) of Euro 150 million.
Net Industrial Debt(1) as of March 31, 2023 was Euro 53 million, compared to Euro 207 million as of December 31, 2022, also reflecting share repurchases(11) of Euro 97 million. As of March 31, 2023, total available liquidity was Euro 2,059 million (Euro 2,058 million as of December 31, 2022), including undrawn committed credit lines of Euro 618 million.
Confirming 2023 guidance, based on the following assumptions:
Q1 2023 highlights:
Forward Looking Statements
The Group expressly disclaims and does not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this document or in connection with any use by any third party of such forward-looking statements. Any forward-looking statements contained in this document speak only as of the date of this document and the Company does not undertake any obligation to update or revise publicly forward-looking statements. Further information concerning the Group and its businesses, including factors that could materially affect the Company’s financial results, is included in the Company’s reports and filings with the U.S. Securities and Exchange Commission, the AFM and CONSOB.
For further information:
Capex and R&D
Non-GAAP financial measures
Operations are monitored through the use of various non-GAAP financial measures that may not be comparable to other similarly titled measures of other companies.
Accordingly, investors and analysts should exercise appropriate caution in comparing these supplemental financial measures to similarly titled financial measures reported by other companies.
We believe that these supplemental financial measures provide comparable measures of financial performance which then facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions.
Certain totals in the tables included in this document may not add due to rounding.
Total net revenues, EBITDA, Adj. EBITDA, EBIT and Adj. EBIT at constant currency eliminate the effects of changes in foreign currency (transaction and translation) and of foreign currency hedges.
EBITDA is defined as net profit before income tax expense, net financial expenses and amortization and depreciation.
Adjusted EBITDA is defined as EBITDA as adjusted for certain income and costs, which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities.
Adjusted Earnings Before Interest and Taxes or “Adjusted EBIT” represents EBIT as adjusted for certain income and costs which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities.
Adjusted Net profit represents net profit as adjusted for certain income and costs (net of tax effect) which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities.
Basic and diluted EPS(14) are determined as per the table here below. Adjusted EPS represents EPS as adjusted for certain income and costs (net of tax effect) which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities.
Net Industrial Debt, defined as total Debt less Cash and Cash Equivalents (Net Debt), further adjusted to exclude the debt and cash and cash equivalents related to our financial services activities (Net Debt of Financial Services Activities).
Free Cash Flow and Free Cash Flow from Industrial Activities are two of management’s primary key performance indicators to measure the Group’s performance. Free Cash Flow is defined as cash flows from operating activities less investments in property, plant and equipment (excluding right-of-use assets recognized during the period in accordance with IFRS 16 — Leases), intangible assets and joint ventures. Free Cash Flow from Industrial Activities is defined as Free Cash Flow adjusted to exclude the operating cash flow from our financial services activities (Free Cash Flow from Financial Services Activities).
On May 4, 2023, at 3:00 p.m. CEST, management will hold a conference call to present the Q1 2023 results to financial analysts and institutional investors. Please note that registering in advance is required to access the conference call details. The call can be followed live and a recording will subsequently be available on the Group’s website https://www.ferrari.com/en-EN/corporate/investors. The supporting document will be made available on the website prior to the call.
1 These results have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as endorsed by the European Union
2 Excluding the XX Programme, racing cars, one-off and pre-owned cars
3 EMEA includes: Italy, UK, Germany, Switzerland, France, Middle East (includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait), Africa and the other European markets not separately identified; Americas includes: United States of America, Canada, Mexico, the Caribbean and Central and South America; Rest of APAC mainly includes: Japan, Australia, Singapore, Indonesia, South Korea, Thailand, India and Malaysia
4 It includes one ICE track car model
5 Includes net revenues generated from shipments of our cars, any personalization generated on cars, as well as sales of spare parts
6 Includes net revenues earned by our racing teams (mainly in the Formula 1 World Championship and the World Endurance Championship) through sponsorship agreements, our share of the Formula 1 World Championship commercial revenues, and net revenues generated through the Ferrari brand, including fashion collection, merchandising, licensing and royalty income
7 Includes net revenues generated from the sale of engines to Maserati for use in their cars and from the rental of engines to other Formula 1 racing teams
8 Primarily relates to financial services activities, management of the Mugello racetrack and other sports-related activities
9 Also known as Notional Interest Deduction - NID
10 Capital expenditures excluding right-of-use assets recognized during the period in accordance with IFRS 16 - Leases
11 Including repurchases in relation to the Sell to Cover practice under the equity incentive plans
12 Calculated using the weighted average diluted number of common shares as of December 31, 2022 (183,072 thousand)
13 Capitalized as intangible assets
14 For the three months ended March 31, 2023 and 2022 the weighted average number of common shares for diluted earnings per share was increased to take into consideration the theoretical effect of the potential common shares that would be issued under the equity incentive plans
15 Free cash flow from industrial activities for the three months ended March 31, 2023 includes Euro 5 million related to dividends to NCI expected to be paid in the following quarters