Ferrari N.V. (NYSE:RACE) Q2 2019 Earnings Conference Call Transcript

Aug 02, 2019 • 09:00 am ET

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Ferrari N.V. (NYSE:RACE) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
Louis Camilleri

for those on this cal,l generates a margin that is above that of the 812 Superfast. Not surprisingly, its order book has been filled at a very fast clip and we are optimistic that orders will accelerate in the months to come. Next month, we will host a two-week event here at the Fiorano Track, the Universe of Ferrari. We plan to unveil two new models as we had flagged at our Capital Markets Day last September. Several thousand existing clients and key prospects have been invited to attend this exciting event that will showcase all that Ferrari stands for. And a further new model will be launched before the end of the year.

One final word before I hand over the call to Antonio. The second quarter was also marked by an increase in our dividend of 45%. The finalization of the first tranche of our share repurchase program and the announcement of a second tranche to be executed within the July to December period. In keeping with our strategy to reward shareholders and enhance shareholder value. We also just finalized two transactions that together improve and extend our debt maturity profile at attractive rates.

Finally, we continue to enhance our infrastructure and resources with judicious investments and expenditures to retain our competitive edge for the longer term.

Antonio will now take you through the details of our second quarter performance. Antonio?

Executive
Antonio Picca Piccon

Thank you, Louis, and good morning, or afternoon to everyone.

Starting on Page Five, as Louis highlighted, Q2 2019 posted the solid set of results with revenues and operating profitability up more than 8%. EBITDA and EBIT margins showed marginal improvement in Q2, and as previously announced, we will see a significant step up in Q4 with first deliveries of the Monza. I should point out that in Q3, we will continue to grow in absolute values versus 2018, but margins will suffer slightly in comparison with the high level achieved in Q3 last year. Our shipments increased by 208 units versus prior year supported by the Ferrari Portofino and the 812 Superfast.

Group net revenues grew 8.6% to EUR984 million. Adjusted EBITDA increased to EUR314 million, improving by EUR24 million, or 8.7%. EBITDA margin was 32%, up 10 basis points versus prior year. Such a result includes a EUR5 million uplift from the adoption of IFRS 16. Adjusted diluted EPS was up 13.9% to $0.96, still benefiting from the Patent Box agreement signed last year.

Industrial free cash flow reached EUR139 million positively impacted by the Patent Box benefit, as well as by the receivable collection of initial advances on the Monza SP1 and SP2. The industrial free cash flow for the quarter together with the EUR150 million cash impact of the share repurchases executed in the first half of 2019 and the dividend distribution of EUR195 million, led net industrial debt to EUR353 million as of the end of June.

Turning to Page Six. Total shipments for the quarter increased by 8.4% versus prior year,