Q3 2020 Ferrari NV Earnings Call

[music].

Ladies and gentlemen, thank you for standing by welcome to the third robbery third quarter Twentytwenty results Conference call.

At this time all participants are in listen only mode. After the presentation. There will be a question and answer session toss a question. During the session you will need to press star one on your telephone.

I must advise you that this conference is being recorded today Tuesday, the third of November 2020.

Now I would like turn the conference over to your Speaker today Nicoletta Russo. Please go ahead.

Thank you, Mike Dean and welcome to everyone Who's joining today's call will be offset by the group CEO Lee kindly Maddie and group CFO I'm, telling you pick up because well have relevant lucky it S out available in the Investor section of the fed Lottie cost, but at the website and at the end of the presentation, we will be available to answer your question.

Before we begin let me remind you that any forward looking statements we might make during today's call are subject to risks and uncertainties mentioned in the Safe Harbor statement included on page two of today's presentation and the call will be called then by these language with that said I'd like to turn the call over to Louis.

Thank you Nicholas and welcome everyone. We are pleased that you've joined us.

All in all I would characterize our third quarter results as robust, particularly in terms of our income performance.

As Antonio will describe shortly our volume and topline performance was affected by the simultaneous impact at the end of the lifecycle of certain models.

The ramp up of the new ones, particularly the EPS. That's 90 started already and the Ferrari Romano on our production planning.

And deliveries were affected by supply and certainly no didn't mind.

Absent any potential dislocation caused by the resurgence of because its 19 pandemic.

We are now confident that we will meet the top end of our previously released guidance for the full year across all measures.

This implies a very strong fourth quarter, reaching record quarterly levels in terms of absolute volumes revenues and EBITDA.

Well, it's proof that we're now running on all cylinders and.

And I have overcome the embryonic issues that we announced supply as faced with the industrialization phase of the S 90 stroke Valley.

The key dynamics of our business model remain exceedingly strong and the momentum I refer to back in August remains in place with a record order book robust residuals and the low level of cancellations.

Indeed orders are received this October exceeded the average pretty cove, its first quarter monthly intake by some 30%.

I'm were essentially in line.

With the average that we received in the fourth quarter of last year, which witnessed several new modules.

This is a testament to the success of the digital activities that were implemented a much more recently the very significant number of individual test drives that garnered WRECO direct quest and attendance levels.

Clearly a key watch out is the effect of any further lockdowns.

For example, today in the United Kingdom, All show rooms have been closed and that for some 81% of our dealers in Europe have now closed their showrooms and that reflects 74% on a weighted basis.

We also have somewhat concerned that the test drives and dynamic activities that we had planned may be somewhat curtailed or even a ball too.

The quarter witnessed the launch of the latest addition to our family of modules, the Poulter Pheno and EM.

M. standing for multi decata.

With a redesigned power train a brand new age speed gearbox and numerous other design and technical upgrades.

In keeping with the times. It is the first ever Ferrari to be previewed exclusively through vivid digital activities that have triggered very positive feedbacks today.

We are pleased with the reception that the Ferrari Romo continues to generate across the world.

Ill, particularly note today is a very strong orders emanating from China, Japan and Korea.

The fact that it is attracting a higher percentage of new to Ferrari customers.

The Ferrari Portofino.

And the younger cohort augurs well for the future.

China in particular is exciting.

Orders are currently running at 50% above the portofino in the equivalent time span since their respective launch.

We're also encouraged by the demographics of the S 90 Star Darling.

As in terms of its current order book, the new to Ferrari customers are the youngest across all the models that we offer.

Whether or not this is related to the fact that is our first range hybrid model remains to be determined but it is certainly an exciting prospect.

This latter point hybridization allows me to segue to a matter that dinos is of considerable interest to everyone on this call, namely carbon neutrality.

As I have alluded to in recent calls in answer to direct questions on the matter.

We have undertaken a significant company wide exercise to determine our total carbon footprint.

While many focus on carbon emissions alone. We firmly believe that this is only part of the equation, especially with regard to our products that on average only clock are very low and your mileage.

We have studied the entire carbon footprint from cradle to grave or more accurately from the mine to the effective end of views across our entire activities, including formula one.

This allows us to focus on the critical elements that compose our footprint.

Which in all honesty have led to some surprising findings not least with regard to the impact of specialty metals and battery components on our overall footprint.

It is my sincere hope that prior to the end of next year, we will be in a position to publish a third party certified Ferrari carbon footprint.

And a clear path plan to meet our ambitions to ultimately become carbon neutral through actions taken directly and indirectly.

Although it represents a very small part of our footprint.

This plan will also include Formula one as we work with all the interested parties on the power unit of the future.

Currently slated to come into Vega in 2026.

Before I hand over the call to Antonio I need to correct. The statement I made just in case.

81% of our dealers are open now Chuck sorry about that.

So now I'll hand, it over to Antonio who will review, our quarterly results and guidance for the full year.

Thank you Lori and good morning, or afternoon to everyone, who is joining us today.

Starting on page four in the third quarter of Twentytwenty witnessed the resilience of our car business, leading to a very solid set of results across all metrics, which compares well with peers in the luxury domain.

The core business, excluding formula one branded related activities and engines for Maserati performing in line with our plans and our margins were enhanced by the full deployment of the cost containment measures adopted since last March.

We also benefited from the improved forecast thought that's one revenues received from the commercial the right order, which nevertheless remains significantly down compared to last year.

Our shipments in the third quarter were 2003, I don't and 13 units, 6.5% less than in Q3 19.

Group net revenues were 800.

An 88 million euro down 3% compared to prior year outstripping, our shipment guidance. Thanks to the deliveries of the Ferrari Moms, UHS SD Wan NSP, do which and reached our mix.

[noise] EBIT da and please note that in this quarter, all adjusting madrassas coincides with the reported ones and since there were no unusual items came.

Came in at 330 million Euro up 6.4% with robust margin of 37.2%.

EBIT was 222 million euro essentially in line with prior year embedding I our DNA.

Net profit was 171 million euro slightly increase versus Q3, 19, and the resulting in a diluted EPS of 92 euro cents compared to 90 euros sense of prior year.

Industrial free cash flow for the quarter was back into positive territory totaling 77 million Euro.

Moving to page five you can see the details of the third quarter, Twentytwenty shipments, which degrees C, 6.5% driven by the cadence of the Companys full year production plan with some models gradually phase out and the new ones ramping up.

I remind you that our full year production plan projected recovery or 500 units out of the 2000 loss following the seven week production suspension due to the Cogs 19 pandemic.

This obviously assumes that our manufacturing plans will remain unaffected by measures that may be taken to combat the pandemic.

Going back to the deliveries of the quarter deviate models were down 12.8% and on the other end the V. Two hours were up 15.4%.

Yes, eight spider and Yatela GTS are in the ramp up phase, reaching mainly EEMEA gradually upsetting before 88. This the family and the Ferrari Portofino that arrives at the end of their life cycle.

The Ferrari mom does continue to be that lever as originally scheduled.

As a consequence quarterly shipments were affected by the deliberate geographical location driven by the phasing pace of Hindustan Motors, resulting in EMEA increased by 12.7%.

Americas declined by 34.7%.

Mainland, China, Hong Kong, and Taiwan posted a decrease of 25.2% also considering that the third quarter of 2000, and Dean was still somewhat flat that divide anticipation of our phase before the introduction of the new emission regulations.

Why the leveraged threats to fight back were in line with prior year.

I remind you that yes, if lancaster about indifferent aroma, we'll start the deliveries in Q4 Twentytwenty actually they started deliveries in Q4.

Finally within the end of the year, we will invade on additional new model. The eight out of the 15 planned although our planned period when king team Twentytwenty two.

Turning to page six you can see here display the walk of our group net revenues for the third quarter of Twentytwenty.

Revenues from cars and spare parts were up 2.4% that cost and currency.

Such growth in spite of the volume decline reflects the positive mix price, mainly thanks to the pheromones I see one NSP too.

This was partially offset by the phase out of the 488 Feaster family, which in turn implies a lower contribution from personalization from a volume perspective.

Also the personalization rate on cars and spare parts revenues were slightly lower than last year.

And James revenues were substantially in line with prior year.

Revenues from sponsorship commercial and brand were down 43 million euro significantly impacted by the COVID-19 pandemic, resulting in a lower number of formula one races, and corresponding lower revenue accrual as well as reduced in store traffic and museums visitors.

For the sake of clarity our revenue grew up for F. One sponsorship and commercial was based on full year estimates the updated in the third quarter and improved compared to the first half of 220.

Currency, including translation and transaction impacts as well as foreign currency hedges at the mine are positive contribution of 2 million Euro mainly the U.S. dollar.

Moving to page seven.

Let me review with the change in our EBIT, which was 222 million euro essentially in line with prior year minus 2.1% or minus 4.1% at constant currency, where they didn't margin at 25%.

The negative variance at constant currency remains mostly the COVID-19 impact on formula one.

Partially offset by the strength of the core business.

More precisely.

Volume growth and negative variance over 19 million Euro you to register deliveries.

Mix price value and was positive for 46 million euro. Thanks.

Thanks This already among the few one and if you do.

I fully offset by the lower contribution from personalization programs due to their degrees of shipments and the gradual phase out or the 48 is the family.

Industrial costs research and development costs decreased 5 million euro due to the spending cadence, particularly in formula One racing activities for the current season, partially compensated by higher depreciation and amortization as the production lines for the new models started being operated.

As DNA decreased 18 million euro, reflecting fewer marketing initiatives as well as cost containment measures.

Hi, there was down 60 million year on year to the already mentioned COVID-19 impact on the F. One racing calendar as well as lower traffic for brand related activities.

That although net positive impact of currency was 5 million year over year on year.

Turning to page eight industrial free cash flow for the quarter was 77 million Euro positive.

The improvement in the quarter was essentially driven by the EBITDA growth.

I should have set by the continuous investment to fool, our long term for other development with capital expenditures of 158 million Euro.

And the adverse working capital impact due primarily to higher raw material and component inventories as well as the reversal of the Friday Monger steel one and if they do advances already collected in 2018.

Net industrial debt as of the end of September was 715 million euro compared to 776 million Euro as of June end.

At the end of the third quarter Twentytwenty total available liquidity, including Undrawn committed credit lines for several hundred million Euro was 1.879 billion euro.

Which compares with approximately 1.250 billion euro as a class end of December.

Moving to page nine on the back over the third quarter results were revising our guidance to the top end of the range communicated in August assuming trading conditions remain and affected by far the restrictions or impact from the Cogs 19 pandemic.

That may have the pace of production and deliveries.

Net revenue is greater than 3.4 billion euro.

To reflect a drop in the liver is off nearly 9% compared to 2000 and dean.

The positive view revised assumption on the F. One championship.

The pace of restart of our brand activities and demand for engines for mine from Maserati.

Adjusted EBIT da at approximately 1.125 billion euro with percentage margin of 32.5%.

Adjusted EBIT close to 700 million Euro targeting an EBIT margin of 20%, which reflects the eye or DNA. Following the capex increase of most recent years.

Adjusted diluted EPS of circa 2.8 euro per share assuming at 20% tax rate substantially in line with when thinking.

And after a free cash flow in the region of 150 million Euro.

Capital expenditures of around 750 million Euro.

It goes without saying that we are not immune to what happens around us anyway.

And he may be assured that our top priority remains to protect our people.

However, barring any restrictions that would he be it our ability to keep operating diligent Lee as we are currently doing that we believe we are well positioned to reach the targets that I've just outlined.

[noise] targets that we consider a remarkable in such a disruptive here.

With that said I turn the call over to Nicoletta.

Thank you Antonio lasting we are now ready for the Q and a session. Thank you.

Thank you, ladies and gentlemen, if you wish to ask a question on this call. Please press star one and wait for a name to be announced if you wish to cancel that request. Please press the husky. So once again Thats star one if you wish to ask a question.

And your first question today couple of line of actual fuel Bank of America.

Please go ahead your line, though [laughter].

Good afternoon everybody.

I.

Just wanted to ask a first question on on product cadence 'cause it doesn't seem like there has been any.

Beach gets your whatsoever on on product launches. So I'm just curious if you can confirm that and if you can just remind us how the order book builds around new product launches because it seems like that's very very important in the book building on the Weightless building.

Sorry, John I'm not sure I understood. Your question product cadence relative to two new modules.

Yes, I really given the disruption around Iran. Cobot has any anything changed or been delayed on your product cadence or the product launch cadence.

In terms of actual launches I'd presentations, it hasn't really changed.

As we said back in August and you know the calls it did disrupt our supply chain and the industrialization phase, particularly the <unk> of the S 90.

So thats been somewhat delayed relative to.

Beginning of the year plans.

As you know for coal they need we've also said the at least two occasions.

But we've been prudent in terms of our investments.

And certain models going forward that being delayed by three months and others by nine months.

Ah so nothing really.

Very material there have been delays John.

I don't know if that answers your question.

That does and and the correlation with those.

Launches and the wait list it appears to be relatively high. So I'm just curious it sounds like you're getting less orders quote for the waitlist I'm. Just curious has that changed anything with the wait list, where it's either shrink or may be growing as people are willing to wait longer.

Well the waitlist has obviously increased.

And that's something that we will need to address.

Particularly on the modules, where we have rather ambitious plans.

In terms of attracting new to Ferrari customers.

And I think those are somewhat vulnerable to very long waiting list.

As opposed to a normal customers, who are who are a climatized to a longer waiting list.

But essentially I think we enter 21 was a very strong order book.

Oh and as I'm, telling you just mentioned barring any dislocations or because of the pandemic.

Yeah, we should have a pretty good year, obviously off a week base, but nevertheless ah.

A pretty strong year.

Okay. That's helpful. And then second question just on the EBITDA margin hard not to get excited when we see 37.2% I think that's one of the highest if not the highest that you guys have ever.

Frankly, it at least in in guest we have public data.

I'm just curious if you think about the puts and takes in the quarter and as we go forward.

What would actually potentially not be repeatable either on on cost containment or mix or is there something we can think about.

Potential for the future and EBITDA margin.

Well, it's it's.

It's driven by a very strong performance in the core business the car business.

Where the EBITDA margin I'm looking at I'm, telling you know, but I believe it was about 45% in terms of the coal business.

So that's driven a lot by mix and particularly by the Monza.

As you know in the fourth quarter, a we will face a comparison, where we had moms as last year.

So that huge uplift won't be there.

But it was still nevertheless be pretty strong because of the advent of the S 90.

The full ramp up of the a 12 GTS that is performing strongly.

So we feel very good about the margin.

I think from the Maserati perspective.

As that becomes low that obviously has a favorable impact on our margin.

Because you can imagine that the margins on the Maserati engines are quite low.

Brand margins are high they're having a very difficult year for obvious circumstances.

And then hopefully next year, we'll be able to really start implementing the plan that we had announced I guess this time last year.

Okay. That's very helpful. And then just lastly, you when you talk about mix.

Highlighting the positive mix for him from the monsters, which.

Certainly appreciate but when you look at the V 12 versus the V. Eight mix with the Twelves up 15.4% gets down 12.8% on unit shipments.

Not a significant driver of a positive mix up as well and I'm. Just curious why you haven't sort of stated that as part of the positive mix.

Well because.

Simple reason the pull to see you know and the peace are ending their lifecycles and that being replaced by the Roma and the pulled Pheno EM.

So those will be coming up and being part of our volumes. So that's why I didn't mention it.

Okay, but in the quarter itself I mean that was there was it was always definitely either quarter, absolutely, but I saw you were looking more in terms of the future.

Yeah, No I'm, just trying to understand because it seems like that that simple not simple, but I mean that straightforward comparison of the 12 versus the eight quarter was very very strong. It. Obviously includes the margins to some degree but it wasn't highlighted as part of a significant driver of positive mix in the quarter as explicitly at the margin. So I was just.

Trying to understand if I was missing something there.

Well because the margin on the piece the post piece does Pfizer in particular is pretty attractive.

I think that's what you're missing in your equation.

Gotcha, Okay, alright, great. Thank you very much I appreciate it thank you.

Thank you. Your next question today comes from the line of Adam Jonas of Morgan Stanley. Please go ahead. Your line is now open.

Hey, <unk> Louis I got a bit of a longer dated strategic question for you on <unk> bees.

So if I look at your Cogs cost of goods sold on a per unit basis.

For Ferrari you know, we get close to 150000 euros per unit and I'm thinking.

I'm thinking or roughly half of that.

It could be related to the power unit or the Amgen transmission fuel delivery exhausted all the supporting our electronics electronics now.

I'm thinking if this is transitioned hypothetically to a 100% BV power unit, including.

Including the battery.

He motors charger, invertors et cetera that there should be substantially less complex less exquisite and lower variable cost per unit compared to todays I see powertrain could this create.

A very large cost efficiency opportunity for Ferrari, while still providing your customers with the highest performance experience that they would expect from a Ferrari. Please tell me Lilly, where I'm, where I may be wrong with this logic.

I understand why you're going I don't.

Don't necessarily agree with you.

I think that the way you said it less complex and less exquisite is where you potentially de rail.

Because in fact to achieve the objectives that you just mentioned.

Which is to retain the Ferrari DNA.

The E V will actually be significantly more complex than you are assuming.

And that's clearly something that we're working on.

But just to have a stand a D.V. and put the Kibali you know on it is about what we're all about.

So the day, we come out with the Navy or what we call above.

HM It will be a pretty complex machine.

And Furthermore, there are a number of elements are that we will have to put in.

Which are very costly.

If I look at the S 90 started outlay.

And the cost aspects of the electric aspects of the hybridization and the electric axles and the front axle. The those are pretty expensive considerations.

Having said that [noise].

Over the longer term and that's what we're talking about.

You would hope that there would be cost savings I'm not sure they wouldn't be as extravagant as you imply.

But they should be cost savings longer term as battery technologies improve as well.

However, my own sense is that.

As to sort of say, 100% electric.

That's pushing things hi, I really don't see Ferrari ever being at 100% easy and certainly not in my lifetime will it reach even 50%.

That's great color thanks for that.

Just as a follow up I don't know, it's Michael liters on the call today.

Oh, no it isn't but ask away.

You can do your best Michael leaders imitation How's your Jhirmack that I have I think high cat, Okay right. Okay [laughter], they're good yeah.

So, okay remind us remind us and I know you've addressed it before but I imagine that this is evolving.

Particularly as as other more strict internal combustion.

Engine manufacturers move to E V is not 100%, but you know maybe 50% remind us how.

Ferrari is thinking about the sound of a Ferrari without an exhaust system and I didn't know if you had if you could maybe address how you addressed it on that on the S. 90, Strada <unk> I might have missed it when it's an easy mode just to give us some things to think about because I think in your own materials you mentioned.

Sound isn't D D SNP sexuality, the passion and the whole you know spirit at the brand it starts with sound and that's that's got a lot of investors attention. Thanks, [laughter], yes and [noise].

That's one element that we are working on obviously for competitive reasons I'm not going to give you the details.

But that's something that we are quite comfortable that we can achieve.

And it's it's really the depth of the sound and Ah gradation of the sound that key.

You're right sounds it is in terms of all the consumer research. We we have is one of the key elements.

Clearly it is a big priority.

We've done a lot of work on that and and we feel comfortable that that is certainly one of the aspects that we can.

Address.

Thanks, Larry.

Thank you thank.

Thank you. Your next question today comes from the line of Suzi people deal few yes. Please ask your question.

Hi, there. Thank you so much for taking my question and so I haven't you and so one black Knight Acacia because you are still planning to make up for the 500 units. This year. So it doesn't mean that you're still piloting a minus 9% volume decreased four or liquid.

Yeah like you mentioned in the previous call.

Correct.

Okay. So basically it implies that Q4, we're going to see quite strong double digit growth in terms of volume, which correct I guess, that's what implied okay.

When it comes to the <unk>.

Tom I see most of that is implied in your guide.

And you mentioned you look to see what they can do the next.

An exceptionally strong level because of the money.

But I was just wondering by any chance they might any why no. Maybe we think opex that drove such strong margin expansion and then and what exactly is happening then Q4, because the guidance does imply a margin construction or do you see how should be.

Versus last year.

Yeah, I think it was really driven by mix as we said in the first question.

Mix was very very strong in Q3.

And we will continue to be pretty strong in Q4.

Oh, so that's what's driving it.

I don't think there's much I can add because there's no other one time as in the distillate.

Distorting the picture in one way or another.

Okay, and and when it comes to these locked down to Europe, which obviously, we availability if and if there's no downside just limited to a few market. Then you say, there's 80% of fish apparel bank and are you able to sort to shuffle volumes within either countries in Europe.

Because I suppose when it comes to Q4 and usually have Danish as shipments of this study <unk> and and that Omar typically there will be directed to you up so if I like portion of Europe is closed.

How how would you react to that because I guess deliveries to U.S. or Asia, they usually come with that and he lives.

So how do you think that you can manage the situation and intends to loved ones you up.

Well it very much depends on the actual regulations.

So the UK the showrooms are close but deliveries continue.

I'm sorry.

In terms of deliveries per se.

As as rules stand today, they can continue.

The showrooms, however have an impact on the on the ability to drive the orders obviously.

But I think as long as rules stay the way they are in the UK probably has the most stringent at the moment.

Ah deliveries.

Our possible.

Furthermore, as you noticed in Q3, Europe's volumes were actually pretty strong.

Potentially in anticipation of issues in Europe.

And I would say that in the fourth quarter will have stronger performances in other geographic areas.

So we do have some flexibility in terms of.

Logistics and end markets, which I think was the Genesis of your question.

Yes. Thank you. Thank you so much thanks.

Thank you very much.

Thank you. Your next question today comes from the low enough to do pick a total of excess please ask your question.

Hi, everyone. Thank you for taking my question just a the first one I.

I mean, it does change a lot of change since a little dining together in Europe Manila factor in a in 20 Athena. So I'm just wondering if you are willing to to recall some of the things. They do talk I guess or if if there are any changes that you might have to to make so those are I mean, I guess or on on a headline basis, I guess more than more than on a margin basis.

Well, Jerry as you said a lot of things have changed since 2018, not least of which has been there is a very side and and disruptive coded.

And we're now seeing a resurgence as you know.

I.

I'd say that it's a bit early to talk about 2020 two other than say that.

What I said earlier.

In terms of all of our plans.

We have delayed a number of modules by three months and some by nine months.

So obviously that has a longer time impact going forward.

But we still very much remained a focus on the plan a that was given but some some models will slip or others will be delayed by a quarter or two.

But you know I mean next year, we should have a strong year and I think that will form the base going forward and we'll give you obviously more details relative to 2021 at our next call, which will be in February a which point, we'll have a much better sense of where the world stands.

In terms of this cove, it which you know regretfully.

It does create a lot of uncertainty.

<unk>.

Okay well. Thank you. Thank you and then the second question on the on your hybrid targets feel about 2022, you had 60% a hybrid mixed I get to about trying to answer what I think you'll find that you're spending also throws off for lightbridge range of mid engine like support cost by 2021, I'll just I guess your body, then or what does what does it mean for <unk>.

Uh huh.

Well again, we are we are pushing for hybrid assets 90 Strada is obviously the first one there will be others.

Some maybe slightly delayed.

But you know we're talking well.

We're talking six to 12 months were not talking two or three years Julio.

But clearly we want to.

Address hybridization, because we think it has huge benefits.

But I think also that when you see the carbon footprint.

People tend to just look at emissions, we look at the entire carbon footprint.

And hybrid relative to an internal combustion engine, it's not necessarily.

That much more favorable so it's something we're working on very carefully.

Yeah, and I thought that I agree with you that people should be looking more at carbon footprint, but it doesn't seem to be the case at least when I. When we look at a regulatory decisions at the local level. For example, if you look at the French mother scheme that does Ah basically been been rising you over that 20000 euros fine. This year are going up to 30000 40000 50000 in phase two.

Oh, Oh this I'm just penalties affecting you or your sales into these markets that you're afraid of more countries kind of adopting a similar type of scheme because of course all of your cost except for the sub 90, I mean more than two underground subsea too.

Yeah.

You're right, they're adding I guess that sort of excise taxes.

I think the whole car industry needs to really educate.

The regulators because to look at emissions and even then to look at just static emissions.

I think it's wrong from a scientific perspective.

And the car industry needs to do a much better job at explaining the entire carbon footprint and I think they will do that going forward. We are already have a role in that and we obviously have to do our job.

And I think as I said in my opening remarks to come out with the detailed.

Detailed carbon footprint.

Will form the basis.

To really start explaining the various aspects.

Because if you take out the 12 Ferrari that only run 3000 kilometers a year, probably has less emissions and a very small car that runs every day.

Yep.

Great. Thank you very much.

Thank you.

Thank you. Your next question today comes from the line of Monica Bosio of it just Oh Pozo D. So it's a good question.

Hey, Yeah. Good afternoon, nice money come back at how many kids are compiled on thanks for taking my question.

The first one is on the personalization that I'd have to say that if they you Larry let me know where I'm at work there that could you. Please quantify the lab. They left and then these are not bought a projection for the full year and the next one.

The second is on the Capex that do you still come from my side I know that doesn't 50, maybe another topic Mike.

Right, Yeah raises that.

And the second question is more one Jay Nevada, [laughter] could we please come back to that statement regarding your last name of the customer base, there and the fact that that that that he's a high penetration of younger people that.

I would like to have more color on the maybe.

Well. So if you will we know for the last time, if it's possible. Thank you very much.

Maybe I'll start first Monica some personalization, we were just a touch lower income in percentage terms compared to last year, which was if I remember correctly above 20%.

And in terms of capital expenditure, I said 750, more or less profit at this stage.

What's your question in that respect I am sorry I.

And the question then the second question that was the only allowed to name the customer base that I.

The in Danish or state means that that yeah penetration up yet.

[noise] I got your question on any kind of thank you Hi, Ukulele walk you know one of our one of our important strategies going forward is to attract new customers and ideally younger customers and also to expand our agenda balance.

So to attract women as well, which today is still a very low proportion of sales.

I take was we've made progress as I mentioned in the opening remarks.

And it is something we're very much focused on so far the numbers.

Are moving in the right direction.

And I think the various activities.

Our in place predominantly in terms of digital activities, but also all the test drives.

And generally the whole positioning of some of the models will attract new customers and hopefully younger customers.

Roma is one example of the.

Yes, that's 90 has attracted young customers as well.

As I said that may be linked to hybridize Asian, we will see.

But it's something we're very focused on and and there has been progress and I am.

I'm confident we will continue to progress and I think if you look at our market share is a worldwide in the segments in which we participate we are gaining solid share points.

Across most geographies and so that in itself I think is a good sign.

That's correct.

Yes, perfect. That's it thank you very much attention. Thank you.

Thank you. Your next question today comes from the line a fiscal years of Goldman Sachs. Please ask your question.

Thank you for taking my questions first question I had was just with respect to the dealers being closed and you mentioned in the UK that you can actually still deliver because based on the law slow down or do.

Do you find that your customers are happy to take delivery or indeed want to take delivery without having the full showroom experience or in general is the showroom experience part of the excitement and the threat of collecting your brand new Ferrari. This.

The second question I had was just on the catch up of the 2000 units lost this yeah, obviously, you've referenced the 500, but in theory and this is really hypothetical not not asking if you will do but in theory. If you wanted to catch up the remaining 1500.

All in Twentytwenty, one are there any capacity issues that would prevent you from doing so or is that something you could manage with incremental shift or change in shift happens. Thank you.

Thank you George.

I think our customers was rather have the deliveries and then two white I think the whole showroom experience certainly part of it is the delivery, but I think the real excitement is the old ER ER and all the elements of personalization.

Choosing the colors and all the various elements I think the showrooms from that perspective are really part of the whole thrill of purchasing of Ferrari.

I think the most people a month the cars in the deal or they want to see it and they want to enjoy it and drive it so.

Suddenly nobody is complaining about the fact that they're getting a delivery without seeing it in the showroom a showroom is more too.

Get the thrill of the old Oh and to trigger the orders Oh, So [noise].

The concern there is relative to orders going forward rather than deliveries are going to start the dresses a one of your questions.

It's always difficult to talk about hypotheticals.

Because we are there are capacity constrained.

And [laughter], we will focus our volume very much based on the waiting list.

The mix of products on that waiting list or mix in terms of both models and geography.

So.

Hi, I, just I don't think I could really answer in terms of total capacity I think in terms of total capacity utilization.

If there was.

A constraint its people and the time it takes to train them.

Especially with regard to new models.

Especially with things that are very complex like the S 90.

Which you know has 2000 new components, so putting those on the production line takes a bit of time to ramp it up to full capacity. That's just one example.

Great. Thank you and if I if I may just slip in one quick final one obviously, obviously sebastiane is leaving you did at the end of this season and [noise].

I just wanted to ask as a four times world champion, presumably he was being very well written humor rated.

Will that be a savings that will flow through your PML next year, assuming that he was really numerated largely by Ferrari rather than by sponsors.

Hi, I think that's a fair assumption.

And I think going back to the earlier question in.

In terms of attracting youth.

To have two drivers like Chiles and Carlos.

I think that's gives us added equity.

In terms of attracting a young people.

Having said that said has done a phenomenal job for Ferrari in the past and you know he will always be part of the family.

Great. Thank you very much thank you.

Thank you. Your next question today comes from the line of Michael Binetti of Credit Suisse. Please ask your question.

Hey, everybody. Good afternoon. Thanks for taking our questions. Just a quick near term ones are the models and I had a follow up but on.

On slide nine you know the DNA component in this in the third quarter I guess, the EBITDA margin was up a lot over 300 basis points either it was only up 20, you know when we started the year I think you noted a pretty meaningful step up in DNA as a as a hold back to the margin guidance for the year as you started to develop I started to sorry started.

To amortize a lot of the develop minister Dolly I think earlier in the year you thought extra value would start to ship in third quarter I just want to look ahead to fourth quarter as Youve now started to ship Sturdily do we see is that when you see a significant step up in the DNA impact to the margin in fourth quarter and I guess another way to ask that is last.

Sure, though the mix was a significant positive Lou you pointed that out in fourth quarter. It stirred Alley is is that it could you just tell us is that creative so the gross margins and EBITDA margins in fourth quarter to the company.

Yes.

Hi, I had something to speaking I'm sorry.

DNA you should not see that as a as correlated to the numbers of guy that T cells, but most of the time. It seems that the car is introduced is go it goes to the PNM leniently from then on.

Okay.

It's it's reality, albeit I wasn't just I wouldn't also just ascribe the investments to the EPS that's 90.

There's a whole slew of other things related to future technology or.

Innovation that will eventually find itself or themselves in modules going forward. So it's not specific to one module per se.

Gotcha.

Your second question was.

It just as we look yeah, I know you had a big mix tailwind on the EBIT bridge in the fourth quarter last year is it stirred Ali comes on it seems like the biggest year over year change in the fleet in fourth quarter.

And is that accretive to gross and EBITDA margin in fourth quarter.

Yes.

Teradata is accretive to the average yes.

Okay.

I guess so.

Well the longer term you know so we have a pandemic. That's obviously disrupted your path to the original 2022 plan you talked about that a little earlier the all seven new Concorde agreement signed that gives you visibility on part of the business there through 2020 fives.

As you look at this is it is it time for another capital markets day, how are you thinking about you know keeping.

Keeping updated targets for the long term.

Well, that's something we've discussed internally.

As to when we'll have our next capital markets day.

The time will come for us to have one obviously, we can't have one now.

Because we would like to have won which is face to face so.

Used to come but I guess.

We will have one or in the not too distant future.

Okay, and then if I could ask you just one last one I know you talked a little bit about electrification, but there's been there's been some interviews from people that say that as noted a formula one shifts towards synthetic fuels and biofuels as an answer to some of the environmental concerns coming up and there's even some that have mentioned that they expect Ferrari will be co.

Investing in those initiatives I know I know you have one eye on electrification, but is.

Where do you see biofuels synthetic fuels as you know part of the answer for the S.G. initiatives that you talked about earlier as you look you know over the longer term.

I think that potentially have a big role to play, particularly in terms of biofuels.

As opposed to synthetic fuels.

But clearly they have a role to play big time, probably start with Formula one.

It provides now as of.

2023, it has to have a tempus and Oh, sorry, 2022 has to have a 10%.

Biofuel, a percentage, which is the start of the if I may obviously wants to increase that.

As I mentioned, there's a new power unit that has to come into Vega as of Twentytwenty six.

So defining that power unit is going to have to be done.

In the very near future.

A modest that define who will be able to figure out a lot of the components will be and particularly with regard to the fuels.

Thanks, a lot guys congrats on a nice quarter. Thanks.

Thank you very much Michael.

Thank you. Your next question today couple of line of Thomas Piss off campus.

These costs are closed.

Oh. Thank you much we'll have two very quick ones.

First.

On on the mix would you mind, giving us.

Liberal full moon globe deliveries in Q3, EPS and tell us if it was the biggest coffee up tall oil.

But there are before and seconds.

On your small engine business.

It was oh.

Usually strong compared with what we've seen in Q1 Q2.

Could you could you explain why and what we should expect in Twentytwenty, one specifically for the but there'll be a minority parties are still going to be a.

Any business left and Oh with always its links with Formula one that has seen a it what you do pick up here. Thank you.

In terms of mountains as it was approximately 50 units in the third quarter year to date one Tony.

And in terms of Maserati, it's really a reflection of the orders we received.

Oh, we anticipate that next year or the volumes will decline.

Very good thank you very much thank you.

Thank you and your next question today comes the line of Steve right, one offs associated with leases to question.

Hi, good afternoon living units anyway, I have two questions. Please first of all I was intrigued by your comments about the high did increase it oldest you've seen on the road American pets at Portofino in China, especially China has not been in the market for the two seaters, but.

Do you think let's say, you're seeing potentially a way to crack that market, even before you launch a pure software.

And my second question is about the it's a funny sturdily, there's such a fear on another option are you limited and what percentage of sales when you build supply with that option on what does demand painful that because obviously, it's a significant upgrade in terms of cost of supposed supposed profitability.

Thank you Yeah, I was very encouraged by the Roma up to now in China.

You know, we're very encouraged by the level of orders we're receiving.

And the demographics, so that's a good sign.

And yes, potentially it could start.

Start.

The process of really penetrating the Chinese market and in a material manner than weve been able to.

Obviously, the two plus two is an attractive.

Combination.

So that's one of the EPS that those hirano, yes generates a higher margin than the S 90.

We've actually been very encouraged by the level of orders on the OSAT, though a significantly higher than we had expected.

It is running around 40% of total orders.

We do not really have capacity constraints.

In terms of hauled via setup hirano.

It takes time for us to apply as to gear up.

Bugs overtime, a we don't have capacity constraints.

On that one it really is.

Not an issue I don't think.

Does that count as personalization as well.

Correct.

Thank you very much.

Thank you.

Thank you there no further questions at this time the.

Nicholas Please go ahead.

Thank you everyone for joining us today, yes, Tina will be soon available to us at all your follow up questions. So thank you bye bye bye everyone. Thank you bye bye.

That does conclude teleconference for today. Thank you for participating you may now disconnect.

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