Sanlorenzo S.p.A. (SL) Earnings Call Transcript

Gentlemen, thank you for coming to our press. We just finished the Board meeting, and we are pleased to introduce the Q3 numbers to you. I take the opportunity to explain what is in the picture. That picture is the hull of the first Nautor Swan Maxi in aluminum, the 44 meter. It has been finished in Holland. The hull is now moved to Rotterdam to be ready to go on the ship and come to Italy, to La Spezia for the starting the fitting out. The product is magnificent. We have a fantastic 3-millimeter tolerance on the alignment of the metal. That means that we can produce the boat and paint the boat without adding too much filler and reducing the weight in order to premium the speed and the performance of the boat. So what we have been promising is now a reality, it's the first Nautor Swan 44 alloy, which is a new range of products that will help us to boost the top line of the company in the near future. So I will move the floor to Attilio for the numbers.

Thank you, Massimo, and welcome to everyone. So we can start from 9 months 2026 highlights, showing the continuous solid expansion of the group Sanlorenzo, thanks to the unique business model based on controlled volumes than scarcity, excellence in craftsmanship, innovation and tailormade design moving beyond the global context. We can now analyze figures starting from net revenue new yachts growing 3.1% year-on-year at EUR 711.3 million, led by strong performance of the Superyacht and yacht divisions and great result of APAC and America regions. EBIT increased 2.5% year-on-year at EUR 132.2 million and EBITDA margin was 18.4% with the not relevant dilution from the process of integration of Nautor Swan. EBIT at EUR 99.4 million grown 1.8% year-on-year, considering also the incidence of Nautor Swan consolidation and the related D&A. And the group net profit grew up 4.1% year-on-year, with a total amount of EUR 79.1 million with a double-digit margin of 11.1% of net revenue new yachts. The organic investment at EUR 27.6 million, especially related to new industrial capacity and product development with an incidence on net revenue new yachts at 3.9%. And then the net financial position at EUR 56 million net cash end of September 2026 after dividends paid for EUR 37.1 million and EUR 2.2 million of extraordinary acquisition, with the cash generation pre-dividend of EUR 73 million in the last 9 months, 2026, also considering the evolution of the order intake. Now we can analyze figures more in detail, starting from the top line that continue with a sustainable growth of 3.1% year-on-year on net revenue new yachts. And this evolution is consistent with the 2026 guidance. Superyacht division performance remained robust, plus 8.9% year-on-year driven by the steel line considering the innovative content also in terms of well-being and longevity solutions and represent 31.8% on the group net revenue overall. And then the yacht division generated more than 50% of the total revenue and increased 4.2% compared with the 9 months 2025 mainly related to the market segment above 30 meters and the success of the new models launched in the boat shows. Bluegame generated EUR 66.4 million revenues, plus 1.5% year-on-year, confirming the strong resilience in the particularly challenging segment of yachts below 24 meters and was a success, the launch of the new BG64. Then Nautor Swan division reported revenue new yachts of EUR 59.4 million, minus 17.6% year-on-year, reflecting a softer selling market condition while continuing to advance a new product development and commercial strengthening initiatives set up in the business plan. In terms of breakdown by geography, APAC region grown up 57.5% year-on-year considering the structural advantage of the Simpson Marine direct platform and from the contribution resulting from entry into new markets. Americas region has grown plus 34.5% year-on-year, considering the positive dynamic in the region, especially for yachts above 30 meters and the sales generated by newly appointed brand representative. And EMEA region increased 12.9% year-on-year, supported by orders in previous quarters. Europe market shows a solid performance also considering the high comparison baseline 9 months 2025. So the market evolution confirms a better balance in terms of mix by geography, with the Europe's impact above 50% on overall revenues where the largest loyal and resilient customer club is based. About profitability, the EBITDA 9 months 2026 grew by 2.5% year-on-year and reached a margin of 18.4% of net revenue new yachts considering the strong pricing power, the success of the models introduced and the effective execution at all level. The EBIT was 1.8% up year-on-year, and EBIT margin was 14% of net revenue new yachts impacted by higher D&A incidence of Nautor Swan mainly due to the smaller scale production and legacy investment before acquisition. The group net profit grew up 4.1% year-on-year and the margin increased 11.1% of net revenue new yachts then about 10 basis points more supported also by an improved net financial results and with the positive effect from tax benefit. Then the group expansion is driven by the continued growth of backlog with the order intake consistently growing now for 9 consecutive quarters. Remarkable result, reaching a challenged global context and related to the Sanlorenzo unique business model, which can show resilience and better results, especially in more complex scenarios. Characterized by scarcity, innovation, craftsmanship excellence, tailor-made product experiences, direct distribution to the customer club and in general, the reputation of the group. And a very significant order intake of Q3 2026 at EUR 307 million, plus 13.5% compared with the third quarter 2025. So significant is order intake of 9 months 2026 at EUR 803 million, then plus 16.4% compared with the first 9 months 2025 and book-to-bill on 9 months 2026 is increased above 1.1x. This evolution of the order backlog reached a level of over EUR 1.8 billion last September 2026, that confirms a dynamic market for the group, especially in the segment above 30 meters and net backlog achieved almost EUR 1.1 billion in acceleration compared with September 2025. You can see about EUR 75 million more. Furthermore, backlog is very consistent and high quality in consideration that it is sold 89% to final customer. And this solid backlog gives to the group an extraordinary visibility for the future also in terms of result. In fact, we had a portion of EUR 924 million related to 2026, representing approx 92% coverage of net revenue in new yachts midpoint guidance, 2026 and in addition, with EUR 881 million related to 2027 and beyond, considering the long waiting list we have. About the net working capital and net financial position, you can see that the end of September 2026, the net working capital was EUR 112.6 million. So below the ceiling we defined in the business plan was 12% and the reduction compared with September 2025. Therefore, net cash end of September 2026 of EUR 56 million shows a cash generation of EUR 69.9 million from September 2025. The net financial position bridge, cash generation, we have in evidence EUR 73 million pre-dividend, considering the positive contribution from the operational business and [ light ] absorption in terms of the working capital and CapEx. About CapEx continue the organic investment program that reached the amount of EUR 27.6 million end of September 2026, 86% related to the group expansion, in product development, EUR 15.3 million and new industrial capacity, EUR 8.5 million dedicated to all divisions. The incidence of organic CapEx on net revenue new yacht has decreased to 3.6 -- pardon, 3.9%, it was 4.4% last 9 months 2025, considering the capital-light business model. Overall, net investment of EUR 29.8 million, considering the change in perimeter of EUR 2.2 million referring to the Mast Italia acquisition to support the production of yachts above 30 meters in the Viareggio industrial complex and net invested capital end of September 2026 remain under control at EUR 512.8 million. In fact, it was up only approximately 1% year-on-year. And then to summarize considering the solid 9 months 2026 results and given the high visibility from the backlog, the 2026 guidance is fully confirmed as is the related outlook 2028. So it's confirmed once again the resiliency of the Sanlorenzo business model even and especially in a global complex environment. Well, that's all for the financial result, and I leave the floor to Massimo for the closing remark.

Thank you, Attilio. Then I take a few minutes of your time. As you know, we always speak about the Sanlorenzo business model. So I thought it was interesting for you to understand a little better what we mean for that. And one point is our in-house yacht structure and fitting out, which we consider a barrier hard to replicate. Often, we are asked, what is the Sanlorenzo equivalent in the in-house engines that sets a great automotive market apart? Well we think there are 2 points. The production of the structure of the hull and superstructure, built in-house, both in composite and steel and aluminum, refined over decades to a level that is hard to replicate. And the second point is the fitting out of the interior and the system. Craftsmanship, proprietary technology, the teamwork to design and organize every fit out with made-to-measure versatility. Both comes to the outcome, our client feel, which is the maximum comfort, minimal vibration, deeper silence, greater efficiency. All products, Sanlorenzo, Swan, Bluegame are solidly built, thicker steel, composite interior decking material deliver a very high stability and comfort at sea. Our customers are defined as true connoisseur, the difference is evident from the moment clients step on board, driving them into Sanlorenzo community, what we call The Club. So what the voice of its engine is to a great Italian sports car, silence, smoothness and well-being at sea are to Sanlorenzo - to be shared with family and friends. Recently, we have been in Porto Cervo for the 60th anniversary of Swan. We had 170 Swan, which has been a record for the ClubSwan event. The 170 yachts came from 30 different nations. Aside of that, we show you as the first picture that the first 44 meter, which is the largest one ever built in aluminum is finished and is coming to Italy for the fitting out, and it will be delivered for summer '28. We started already the second boat, which is a 50-meter always designed by Malcolm McKeon with interior from Axel, a designer from France. And the third boat is under design, which will be probably a 60-meter ketch. Recently, a few days ago, we introduced to the market the second Explorer. It's 1,150 gross tonnage, 60 meter. It -- the boat will be in the water early '27. The first one is sold, and we are close to sell the second one and we'll -- we expect this to have the same success of the first 500 Explorer. Just to remember you, all this product has been launched in the market already. But recently, we had the 74Steel Silver Fox delivered last March. We have the second 74 in delivery end of November. And SHE, the hybrid Sanlorenzo Heritage yachts, we sold so far 9 units and The Missing Link between 54 and 74 is the new 64 Bluegame. We had the last event in Casa Sanlorenzo in Venice connected to Homo Faber, and the name of the event was Homo Faber in Citta in the city of Venice in Casa Sanlorenzo linked with Fondazione Giorgio Cini. I think that's about all. We will pass the floor to you for any questions are welcome.

[Operator Instructions] First question is from Natasha Brilliant, UBS.

I've got three questions. Firstly, just on the order intake in Q3. If you could give us a bit more color between Swan and Sanlorenzo or maybe yachts and superyachts. Just any more color you can give us on that order intake? And second question, I guess, related is how the yacht shows in terms of overall attendance, behavior from customers in terms of conversions, things like that? And then finally, if you could give us an update on where we are on the Italian Sea Group bids, please? And when we might hear any more news flow on that?

Well, the order intake is mainly coming from the yacht division, thanks to the Cannes and partially Genoa and Monaco show, which has been pretty good, as we announced in our last meeting. Swan was relatively low. You can see in our press release a few minutes ago, we have a reduction in the Swan order intake, but we are pleased to announce you that in the last month of October and half of November, we have been recovering pretty well the Swan sales. So we do expect the order intake for Swan to get the budget within the end of 2026. Regarding the second question was the boat show. Well, as we said, September boat show, Cannes, Genoa and Monaco has been very good. We did not close superyacht sales because as you know, Monaco is the last show. It's the last week of September, and we take -- it takes normally 30 to 60 days to make a formal contract out of the superyacht and we are now negotiating a few very strong deals that we expect to convert in contract by the end of the year. So boat show has been good even Fort Lauderdale. Consider Fort Lauderdale started on the 28th of October until the first of November. And 2 days later, there was the midterm election. So normally, when a boat show is a few days before election, who we have, unfortunately, a reduction of emotion towards purchasing of yachts. In spite of that, there was less people than last year, but were -- they were pretty much interested. So after a couple of weeks from the boat show, we can confirm to you that we managed to convert some customers to contract already. And we consider America stable in respect of the last 6 months. Regarding TISG, I think you read on the paper, we get out of the deal because I made an interview with Sole Ventiquattro Ore a few days ago. If you will remember, we did a proposal a retail offer in -- on the 20th of July for EUR 150 million for the whole business of TISG. Today, the 2 entities on the table made an offer of EUR 220 million and EUR 210 million. And yesterday, we got the news that one of the two dismissed the tender. So there is only one on the table now, which is EUR 220 million, which we consider way above the market value of the company. And that is the reason why on the normal prudent approach, we like to keep in our business model, we decided more than one month ago to get out of this.