Sustain delivery of 2018 targets, on the way to another strong year

Publication date: 
05 Nov 2018
  • Total shipments of 2,262 units, up +10.6%
  • Net revenues at Euro 838 million, up +0.3% or +2.2% at constant currency(1)
  • Adj. EBITDA(2) of Euro 278 million, up 4.7% or +11.9% at constant currency(1)
  • Adj. EPS(2) of Euro 0.78 (+5.4%), excluding Patent Box benefit related to 2015-2017
  • Solid industrial free cash flow(2)  generation of Euro 100 million (which excludes the positive impact from the Patent Box benefit for 2015-2017, which will be realized in Q4)
  • Net industrial debt(2) at Euro 372 million (Euro 342 million excluding share buyback, already in line with full year guidance

Results

Maranello (Italy), November 5, 2018 – Ferrari N.V. (NYSE/MTA: RACE) (“Ferrari” or the “Company”) today announces its consolidated preliminary results(3) for the third quarter and nine months ended September 30, 2018.

Shipments(4)

Total Shipments

Shipments totaled 2,262 units in Q3 2018, up 216 units or +10.6% vs. prior year. This achievement was driven by a 11.4% increase in sales of our 8 cylinder models (V8), while the 12 cylinder models (V12) grew by 7.9%. V8 performance was led by the ramp up of the Ferrari Portofino. The V12 performance was mainly led by the 812 Superfast, partially offset by lower sales of LaFerrari Aperta that is finishing its limited series run.

Growth in shipments happened across all regions: EMEA(4) grew 11.3%, Americas(4) increased by 4.6%, China, Hong Kong and Taiwan(4), on a combined basis, were up 6.6%, Rest of APAC(4) up 27.5%.

Total net revenues

Total Net Revenues

Net revenues for Q3 2018 increased to Euro 838 million, up 0.3% at current currency and up 2.2% at constant currency(1). Revenues in Cars and spare parts(5) (Euro 616 million, +1.9% at current currency or +3.8% at constant currency(1)) were supported by higher volumes led by the 812 Superfast, as well as the ramp up of the Ferrari Portofino, together with pricing and deliveries of the strictly limited edition Ferrari J50. Mix was negative due to higher V8 models, as well as lower sales of LaFerrari Aperta that is finishing its limited series run. Engines(6) revenues (Euro 70 million, -19.9% at current and constant currency(1)) posted a decrease in sales to Maserati due to lower engine volumes. Sponsorship, commercial and brand(7) revenues (Euro 128 million, +3.4% at current currency or +6.5% at constant currency(1)) were up thanks to higher 2017 championship ranking compared to 2016 as well as stronger revenues from sponsorship, partially offset by lower sales generated by brand related activities.

Adjusted EBITDA(2) and Adjusted EBIT(2)

Adjusted EBIT

Q3 2018 Adjusted EBIT(2) was Euro 203 million, +0.4% at current currency or +9.9% at constant currency(1). This was a result of higher volumes (Euro 23 million) thanks to the 812 Superfast, as well as the ramp up of the Ferrari Portofino. Mix / price was negatively impacted (Euro 12 million) by strong performance from V8 models as well as lower sales of LaFerrari Aperta that is finishing its limited series run. This was partially offset by pricing increases along with deliveries of the strictly limited edition Ferrari J50. Research and development costs / industrial costs slightly decreased (Euro 5 million), mainly due to lower spending in F1 activities. SG&A was lower than prior year (Euro 4 million) mainly due to lower costs related to the 70th anniversary celebrated in 2017. Currency(1) negatively impacted (Euro 19 million) mainly due to USD depreciation versus Euro.

The tax rate in the quarter was significantly reduced as a result of the advance agreement on Patent Box signed on September 11, 2018 with the Italian Revenue Agency. The benefit for the three-year period 2015-2017 was recognized in the quarter for Euro 141 million, of which Euro 139 million from direct and Euro 2 million from indirect use of copyrights, patents, trademarks, designs and know-how.

As a result of the items described above, earnings per share reached Euro 1.52 up 105% vs. prior year. Adjusted earnings per share(2), excluding the abovementioned Patent Box benefit were Euro 0.78 up 5% vs. prior year.

Industrial free cash flow(2) for the three months ended September 30, 2018 was Euro 100 million, driven by strong adjusted EBITDA(2). This was partially offset by solid capex of Euro 155 million to support broadening and hybridization of our product range.

Q4 2018 industrial free cash flow(2) will benefit from the three-year period 2015-2017 Patent Box.

Net industrial debt(2) at September 30, 2018 – after Euro 30 million of share buyback already accomplished during the first quarter – reached Euro 372 million, (-21.4%) vs. Euro 473 million at December 31, 2017.

Confirming 2018 Guidance

The Group targets the following performance in 2018:

  • Shipments: > 9,000 including hypercars
  • Net revenues: > Euro 3.4 billion
  • Adjusted EBITDA: ≥ Euro 1.1 billion
  • Net industrial debt: < Euro 350 million, including dividends already distributed to the holders of common shares and excluding any share buyback
  • Capital Expenditures: ~ Euro 650 million

3Q 2018 highlights

Capital Markets Day: on September 18, 2018, Management outlined the plans and initiatives to achieve its key financial targets and its financial policy to 2022.

Formula 1: Scuderia Ferrari is working diligently for the 2018 season and the results are: 22 podiums in 19 races, with Sebastian Vettel winning 5 races and Kimi Räikkönen 1 race so far.

488 Pista Spider: The 50th open-top model produced by the Prancing Horse, is the company's highest ever performing Ferrari spider, with a record power-to-weight ratio of 1.92 kg/hp.

It combines the finest race-developed technological solutions with the joy of en plein air driving to deliver an exhilarating experience behind the wheel.

The model’s engine, dynamics and aerodynamics are derived from two track cars: the 488 Challenge and the 488 GTE. The latter won the GT class of the FIA World Endurance Championship in 2017, thus giving Ferrari a total of five GT Manufacturers’ titles since the championship’s inception in 2012. Furthermore, this model has very clearly benefited from the extensive development work done to produce the coupé version, the 488 Pista.

Ferrari Monza SP1 and SP2: The Ferrari Monza SP1, together with the Monza SP2, are the forerunners in a new concept, known as ‘Icona’ (Icon), that taps into a leitmotif of the most evocative cars in the company’s history to create a new segment of special limited series cars for clients and collectors. The intention is to use a contemporary aesthetic to reinterpret a timeless style, with technologically advanced components and the highest performance possible through continuous innovation.

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 foreign currency transaction and translation impacts and foreign currency hedging.

Total Net Revenues

Adjusted EBIT at constant currency

Adjusted EBITDA at constant currency

EBITDA is defined as net profit before income tax expense, net financial expenses and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

EBITDA

Adjusted EBITDA

Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”) represents EBIT as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

Adjusted EBIT

Adjusted net profit represents net profit as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

Adjusted net profit

Adjusted EPS represents EPS as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

Adjusted diluted EPS

Basic and diluted EPS

Diluted EPS (in Euro)

Net Industrial Debt, defined as total Net Debt excluding the funded portion of the self-liquidating financial receivables portfolio, is the primary measure to analyze our financial leverage and capital structure, and is one of the key indicators used to measure our financial position.

Total debt

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 net cash generated from operations less cash flows used in investing activities. Free Cash Flow from Industrial Activities is defined as Free Cash Flow adjusted for the change in the self-liquidating financial receivables portfolio.

Free Cash Flow from Industrial Activities

On November 5, 2018, at 3.30 p.m. CET, management will hold a conference call to present the Q3 2018 to financial analysts and institutional investors. The call can be followed live and a recording will subsequently be available on the Group website http://corporate.ferrari.com/en/investors. The supporting document will be made available on the website prior to the call.

(1)The constant currency presentation eliminates the effects of foreign currency transaction and translation impacts and foreign currency hedging
(2)Refer to specific note on non-GAAP financial measures
(3)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
(4)EMEA includes: Italy, UK, Germany, Switzerland, France, Middle East (includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait) and Rest of EMEA (includes Africa and the other European markets not separately identified); Americas includes: United States of America, Canada, Mexico, the Caribbean and Central and South America; China, Hong Kong and Taiwan includes, on a combined basis: China, Hong Kong and Taiwan; Rest of APAC mainly includes: Japan, Australia, Singapore, Indonesia, South Korea, Thailand and Malaysia
(5)Includes the net revenues generated from shipments of our cars, including any personalization revenue generated on these cars and sales of spare parts
(6)Includes the net revenues generated from the sale of engines to Maserati for use in their cars, and the revenues generated from the rental of engines to other Formula 1 racing teams
(7)Includes the net revenues earned by our Formula 1 racing team through sponsorship agreements and our share of the Formula 1 World Championship commercial revenues and net revenues generated through the Ferrari brand, including merchandising, licensing and royalty income
(8)Primarily includes interest income generated by our financial services activities and net revenues from the management of the Mugello racetrack