Ferrari N.V. (RACE) Q4 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to Ferrari 2021 Full Year Results Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to our first speaker today, Nicoletta Russo. Please go ahead.

Thank you, Nadia and welcome to everyone who is joining us. Today, we plan to cover the Group's full year 2021 operating results and 2022 guidance. In light of this, the duration of the call is expected to be around 60 minutes. Today's call will be offered by the Group CEO, Mr. Benedetto Vigna; and Group CFO, Mr. Antonio Picca Piccon. All relevant materials are available in the Investors section of the Ferrari corporate website. And at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on Page 2 of today's presentation, and the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.

Thank you, Nicoletta, thank you everyone, for joining us today. Three months have passed since last time we met digitally all together and many things have happened within our company. Today, I will be delighted to take you through the 2021 results and I will provide a little taste about what's happening in our company. Our performance in 2021 was very robust, from both a quantitative and qualitative point of view. Numbers first. We closed the year setting new records in terms of results across all metrics posting double-digit growth and above pre-pandemic level. The results were higher than the targets we had already upgraded when we shared our third quarter results. Five excellent results to remember. First, €4.3 billion revenues materially exceeding for the first time in our history the threshold level of €4 billion. Over 11,000 cars shipped with significant growth in all regions. In China, our deliveries doubled year-over-year. 35.9% exceptionally strong EBITDA margin reached at record levels. Impressive €640 million industrial free cash flow generation, mainly thanks to the advances collected on the special series and thanks to the discipline in timing of CapEx spend, and all this with no impact on our product plan. The last point is we have the strongest ever order book in our history at double digit versus the prior years and covering well into 2023 with all regions showing significant growth. How did we achieve these excellent, these five excellent results? Firstly, we have to thank our incredible customers, both existing and new, and all the women and all the men of Ferrari for their outstanding work. Secondly, it was possible thanks to the strong margin contribution of the Monza, SP1 and SP2. Thirdly, this was further boosted by our decision to seize commercial opportunities on certain models in line with our order intake evolution. We also benefited from the reverse of the SF90 Stradale being moved to 2021 from previous year 2020. And last, but not least, we have capitalized on a strong economic climate as evidenced also by the solid performance of our pre-owned business and on the enthusiasm of our customers whose delight in sharing their Ferrari passion with us has been so evident at our event. After these five excellent results, the five key priorities we focused on, on all the year 2021; product excellence, customer experience, motor racing, brand diversification and carbon neutrality. Let's start with product. Last year we unveiled four new models demonstrating our leadership in technology, in design, in driving experience. They all received an enthusiastic response from the market and worldwide acclaim. In May, we unveiled the 812 Competizione and the 812 Competizione Aperta, our latest special series with its revolutionary aerodynamics, and they were all sold out prior to the official launch as a testament to the vigorous demand for our V12 models. Just a month later in June, we launched the accelerating 296 GTB featuring our latest hybrid powertrain combining a V6 turbo and electric motor. It exceeded previous models order intake over the same relative period and now a solid pipeline of experiences for our customer is already planned for the current year, further fuelling our ambition for this model. I drove this car several times and the gokart filling and a fun to drive experience you can have are really unique believe me. A few weeks ago in November, the new Icona, the most powerful V12 ever made, whose unveiling I had the pleasure of attending in Florence, surprised our most loyal Ferrariste. I am talking about the Ferrari Daytona SP3, a masterpiece of craftsmanship, performance and design, already awarded internationally and limited to 599 units, which have all been allocated in advance or which premieres and we've untapped demand way, way exceeding the limited series plan. So we enter this year 2022 with considerable momentum, thanks to two factors. One, the strongest ever order book, and two, a broad portfolio of models. The order book first. It has never been so strong. The positive trend characterized the whole year and continued in Q4 when we experienced impressive order intake despite our decision to close the order collection on certain models. Second, the new product portfolio. Not only do we have the broadest, most innovative and most beautiful range of cars ever offered to our customers, but we also plan to further enrich these with two further launches this year, completing the 15 launches promised at the Capital Markets Day in 2018. In this year, in 2022 we will unveil the much anticipated Purosangue, which I'm confident will exceed our customer expectations. I drove it several times in the hills around the Maranello, the day and night for the test, and I can testify that the driving experience is really astonishing. But I do not want to say more to avoid to spoil such a surprise. Now, after product customers' experience. In the course of 2021 It has been really liberating to be able to start arranging events with them again. To mention a few of them, we marked Cavalcade's 10th anniversary with a very special event in Sicily for Classiche and Modern drivers, and we've started our Tribute [ph] and Corse Clienti activities culminating in the Finali Mondiali at Mugello, where I met so many of our customers in France, all passionate about Ferrari. Now, our motor racing activities. 2021 was our best ever season in GT racing with Ferrari winning the Drivers and Manufacturers, world titles in FIA World Endurance Championship, and with victory at the 24 Hours of Le Mans with our 488 GTE ever. The Formula 1, 2021 season also showed encouraging sign toward its end with third place in the Constructors' championship. 2022 is the first year with a complete new set of technical roles in our new car will be presented in a few days on February 17. We are also redefining our strategic partner along three direction; one we welcome back Banco Santander; two, we tap current segments with new partners, such as CEVA Logistics in the transportation space; three, we strengthened our relationship with leading edge technological partners, such as Amazon Web Services and Velas to be at the forefront of digital technologies and Web 3.0. Such stronger partner portfolio confirms once again the continued allure of the most successful team in F1 history, Scuderia Ferrari. And what about the brand diversification? Well, last year we made excellent progress in extending our brand into exciting new territories. In June, we launched the first ever Ferrari fashion collection. In July we reopened the iconic Cavallino Restaurant in the heart of Maranello, and in the second half of last year, we renovated our stores in Italy and USA. In 2022, we plan to move forward, and the first important milestone will be the upcoming fashion show in Milan later this month. Last, but not least, carbon neutrality by 2030. In a further step towards our goal in Q4, we received ISO 14064 certification for our calculation of the Group's carbon footprint. This certification has been really an important step forward. In addition to our electrification journey, we are also committed to addressing both direct, indirect emission, with a focus on energy and material across all our entire value chain. As always, our focus was not only on external stakeholders. We continued to invest in our employees true to our founders believe that Ferrari is made above all by people. We invested in training for our employees, caring for their well being and nurturing the diversity of talent in our company. Our efforts were rewarded in 2021 by Equal Salary certification for the second consecutive year in Italy and for the first time in the United States. The year has been really outstanding, thanks to the passion, the dedication of Ferrari people and to reward their achievement in line with the company's strong performance indicators, I'm really pleased to announce the company, the yearly competitive award up to slightly over €12,000 for our employees. And now, after the 2021 highlight, let's have a look at the future, at our future a small taste [ph] before providing the full picture on June 16, when we meet here. We are targeting 2022 to be a solid year on the trajectory to reach the 2023 EBITDA target of €1.8 billion to €2 billion as announced in 2018. How do we want to do this? How do we want to achieve this goal? Well, there are three clear directions we identified. Number one, we will carefully manage a vibrant order intake in line with our strategy to pursue controlled growth to preserve our brand exclusivity. Two, we will manage the Monza's phase out whilst the Daytona's deliveries will start in 2023. Three, as I already explained in the last call, innovation requires partners and it is what we start to do; [indiscernible], Amazon, and Velas, just to mention a few of them. In some others, some other important technology partnership will follow up in the near future. 2022 is a very important year for us. It's not only the 75th anniversary of our company, it also sets the foundation for a new business plan, which will be presented at our Capital Markets Day on June 16 here in Maranello. This will also be the occasion to meet in person some members of our new organization recently announced and achieved through both, the promotion of home grown talents in the number of key strategic externalize. The new organization is designed to further foster innovation, optimize processes, enhance agility and increase collaboration. People are the soul of our company and I am confident we will seize the opportunities ahead of us in this fast evolving environment. I will now handover to Antonio, who will review the 2021 result and 2022 guidance.

Thank you, Benedetto, and good morning or afternoon to everyone who is joining us today. Let me start on Page 7, where you can see the highlights of the 2021 earnings. A very strong year, which shows high double digit growth on all metrics compared to 2020 and more meaningfully, remarkable increase versus pre-pandemic levels. Our shipments reached 11,155 units, up 22% versus the prior year and 10% versus 2019. Group net revenues were €4,271 million increased 23% versus prior year and 13% versus 2019, driven mainly by volume and stronger product mix. EBITDA came in at €1,531 million, up 34% versus 2020 and close to 21% versus 2019. The EBITDA margin reached a record level of 35.9% boosted by the contribution from the Ferrari Monza and an otherwise very rich product mix. EBIT was €1,075 million, up 50% versus 2020 and 17% versus 2019. The improvement of both operating margins compared to our latest guidance mainly reflects the upward revision of the commercial revenues from the F1 commercial right holder recorded in Q4. Adjusted net profit was €833 million, up 56% versus 2020 and 19% versus 2019, resulting in an adjusted diluted EPS of €4.5 improved by 56% versus prior year. Industrial free cash flow for the year was exceptionally strong at €642 million, supported mainly by the collection of the advances for the 812 Competizione. Turning to Page 8, you can see the details of the shipments of the full year 2021, up 22% versus 2020. Sales of 8 cylinders were up about 35% while 12 cylinders were down 16%, mainly due to the reduced volume of the 812 Superfast which was phased out in the year. Our deliveries were driven by the range models, the F8 family, the Ferrari Roma and SF90 Stradale which reached global distribution, the Portofino M and the SF90 Spider in ramp up phase. Shipments of the Ferrari Monza SP1 and SP2 were higher compared to the prior year in line with planning and reaching the end of production. All geographic regions posted double digit growth. Moving to Page 9, you can see the walk of our Group net revenues up 26% at constant currency. The increase in revenues from cars and spare parts up almost 29% of constant currency was supported by higher volumes and strong enrichment of the product mix, along with personalizations. Revenues from personalizations were higher than the prior year in absolute terms sustained by volumes. They were in line with historical average at around 18% in proportion to revenues from cars and spare parts. Engines revenues were up about 26%. The improvement is related to higher shipments of Maserati and to a lesser extent, to the rental of engines to other Formula One racing teams. The increasing sponsorship commercial and brand up close to 13% at constant currency was attributable to the more favorable Formula One calendar and brand related activities partially offset by lower prior year ranking. This increase reflects also the upward revisions of the commercial revenues from Formula One that I mentioned before. Currency including translation and transaction impacts, as well as foreign currency hedges had a negative contribution of €80 million, mostly related to the U.S. dollar and the Japanese yen this quarter. Moving to Page 10, let me review the change in our EBIT bridge explained by the following variances. First, volume was positive for €220 million, reflecting the shipments increase. Second, mix price variance was also positive for €212 million, boosted by a richer product mix, thanks to the SF90 family and the Ferrari Monza, SP1 and SP2, along with personalizations, partially offset by the ramp up of the Ferrari Roma and the Portofino M, and the reduced contribution of the 812 Superfast. As already mentioned by Benedetto, the product mix in 2021 was further boosted by our decision to seize commercial opportunities on certain models in line with order intake evolution, and also benefited from deliveries of the SF90 Stradale being moved to 2021 from 2020. Third, industrial R&D expenses increased €65 million, mainly due to higher D&A, product innovation activities and Formula One expenses net of technology related government incentives, as well as start up costs. Fourth, SG&A were negative by €14 million, mainly reflecting communication and marking activities of model unveilings and lifestyle events, as well as the company's organizational development. Lastly, other increased €83 million reflecting the more favorable Formula One calendar and higher contribution from brand related and other supporting activities, partially offset by the impact of the lower Formula One ranking of 2020. The total net impact of currencies was negative for €77 million. As a result of what I just mentioned, EBIT reached €1,075 million, up 50.2% versus the prior year with an EBIT margin of 25.2%. Turning to Page 11, industrial free cash flow generation for the year was remarkable and equal to €642 million, sustained by the strong growth in EBITDA and the collection of advances on the A12 Competizione. The working capital dynamic, including the above mentioned advances, provisions and other receivables and payable, was almost neutral also due to the cadence of our capital expenditure, which stood at €737 million. The capitalization ratio was approximately 39% for the year and in line with the prior year. Net industrial debt as of the end of December 2021, was €297 million compared to €543 million at the end of 2020. It's worth mentioning that excluding the dividend distribution of €152 million and €231 million of share repurchases, we would have been cash positive at year end. Let's move on to Page 12. Here we explained the main drivers of our guidance for 2022 which targets a solid growth and continues to demonstrate the EBITDA progress on the trajectory to reach our 2023 EBITDA target of €1.8 billion to €2 billion as announced back in 2018. While in 2022 our profitability will continue to expand in absolute terms, carefully leveraging our record order book, percentage wise the marginality will be flattened by a product mix which will be richer, but not enough to offset the negative impact of the Monza phasing out and of the Daytona deliveries starting in 2023. More diversified, but lower revenues from sponsorships and a step up in D&A in line with the start of production of new models which will start the deliveries in 2023 or which contribute marginally in 2022. On the industrial free cash flow side, the generation will be robust, supported by the strong operating results, and the collection of advances on the Daytona SP3. This will be partially offset by capital expenditures of approximately €800 million as we expect the lower CapEx seen in 2021, to rephase partly in 2022, but also by much higher taxes commensurate to the very strong results posted in 2021. Page 12, we show the progress that we aim to achieve based on our guidance since our starting point of 2018 until the end of 2022. In essence, as of the end of this current year, we want to be very close to what we promised at the 2018 Capital Markets Day for the cumulated EBITDA and fully on target in terms of cumulated industrial free cash flow generation over the plan period, albeit with a different time profile. And we want to achieve such results despite the impact of this pandemic. Subject to meeting our ambitions, I believe this will prove once again the resilience and strength of our business model based on brand exclusivity, product excellence, leading edge technology and innovation. Such awareness allows us to look at the future with great confidence. With that said, I'll turn the call over to Nicoletta. Thank you.

Thank you, Antonio. Nadia, please we are now ready to start our Q&A session.

Thank you. [Operator Instructions] The first question comes from the line of Michael Binetti from Credit Suisse. Please go ahead.

Hey, good morning, guys. Thanks for all the details today and for taking our questions. I guess, I'm trying to think about the structure of the guidance you laid out for 2022 relative to where we were at. I know you guys have been focusing us on the 2018 Analyst Day and helping explain the differences and similarities as you pushed up to €1.8 billion to €2 billion next year, but this year you've got revenues in line at €4.8 billion with the low end of that original plan, but EBIT below by maybe €100 million at the low end of the plan. Maybe you could just help us understand what's different on the same revenue base that drives EBIT a little bit lower this year, and if it's, I think you originally said maybe a few units of Purosangue would start to ship in 2022. Today, you clarified that that will be in 2023. So maybe it's a tiny mismatch. But I wonder how much of it might be attributable to the profitability of Purosangue relative to the overall fleet? Is that a car that you view as a accretive to corporate margins or to the rest of the fleet?

Antonio, can you help me with it?

Thank you, Michael. If I get your question right, I think the difference compared to the guidance we gave back in 2018 is largely due to the different timing of introduction of the cars compared to what we modelled at that time. Obviously, we are seizing the commercial opportunities that we are having. So the significantly strong order books on V8 and remodel is resulting in that respect. While as we mentioned, I think the gap that we have between the phase out of the Monza and introduction of the Daytona, is impacting the level of the margins, both EBIT and EBITDA. In addition to that, as far as EBIT is concerned, we have this D&A impact, which is the fact that we start producing new cars that are coming in, in the next one. I don't know whether this is enough or I think in terms of color this should help.

Let me follow that for one second. You have Daytona and Purosangue confirmed to start shipping next year after what you described as a headwind from mix this year, largely Monza. But if the guide is now €1.8 billion to €2 billion for next year, the low end of that guide assumes EBITDA growth will slow to about 6% in 2023 from 11% in 2022. How should we think about the top end versus the bottom end of the guidance in that range? What scenario do you see that would explain a slowdown to an EBITDA growth next year? Maybe there's some phasing of investments as you guys look out to big initiatives like electric and those kinds of things, I'm just curious if you could help us think about that?

Yes, I think volumes will keep on growing anyway with better margins with mix a little bit stronger, which is supported by the new Icona coming in. And this isn't the -- as far as the contribution of our core business and then we had the other businesses that we expect also to grow. I mean, brand is still very low in 2022, we expect it to be better. In terms of a one, there are some elements including the budget cap introduction and that's of course, in terms of the cost side.

Okay, thanks and congrats on a great year, guys. I appreciate it.

Thank you.

Thank you. The next question comes from the line of Adam Jonas from Morgan Stanley. Please ask your question.

Thanks very much. And I cannot wait until June 16. That's going to be really, that's going to be so special. So I look forward to meeting you all in person. Maybe that's -- when you, you guys recently struck a deal with the Swiss blockchain company Velas Network. How should investors think about the potential for the Ferrari brand in the metaverse or in the NFT, or digital space?

Thank you for the question Jonas, and also looking forward to meet you in person on the 16th of June. I think that as we said, it is important that we look and we see how the new technologies can help our brand. For sure, the digital technologies, the Web 3.0 technologies that are using the blockchain and the NFT is an area that is, can be interesting for us. It deserves some attention. There are many as you know, there are many -- there is a lot of movement on the market about this. Some companies even changed the name and I think this is an area that where we have to put our attention and that's the reason also why I put the -- we have in place if you've seen in organization a department that is called a Digital & Data, because I mean, it's an important dimension that we as Ferrari, we have to evaluate to consider for the future.

Okay, I look forward to learning more about that Benedetto. My follow up is, do you believe electric vehicles expand the addressable market for the Ferrari brand and if so, how?

So do you think that the electric vehicles will expand the brand?

Do you think that as Ferrari brings forth all electric vehicles that that grows the addressable market and revenue potential for the brand, and if so, how do you see that happening or why?

Okay, I think the point is the following. I mean, electrification is one technology, like the digitalization, that we will harness always in our unique Ferrari way. As you know, we already started to hybridize our model a few years ago. We have already, three models on the road, that are pretty much successful, SF90 Stradale, Spider and 296 GTB. And I believe that the electrification is a way, is a technology in a way that can help our brand to keep the pace with the time. That's what I believe, Adam.

Okay, thanks.

Thank you. The next question comes from line of Susy Tibaldi from UBS. Please ask your question.

Hi, thank you for taking my question. So, my first one would be just to go back on Michael's question on the ‘22 guide. So, your revenue guide for 2022 is quite high and so, given that the mix is going to be not that strong, it kind of implies a good step up in volume. And so, I was wondering if this is a correct assumption or if there is something else that will contribute meaningfully to the top-line, because you mentioned that also in terms of some sponsorship is a little bit lower. So, it seems like good increase in revenues should come mostly from the volume growth? So, I just wanted to check if that's the right way to think about it.

Hi Susy, Antonio speaking. Your assumption is correct. Volume will be higher, so we’ll grow there and this is because of the order book is significantly higher than we’re used to and it’s covering well into 2023. It's not true that the mix is weak. I mean, actually the product range mix is high. It's simply not enough improving compared to the loss of the month and the introduction some months later of the Daytona. Okay? But basically year-over-year volumes will be positive and mix we expect to be slightly negative overall.

Okay, got it. And on pricing, so in ’21, it was the first time that you pushed through like for like price increase about 2%, if I remember correctly was mostly due to the inflation. And given that inflation for the moment is not really going away, should we expect something similar for ’22? Like are you planning to potentially push through some price increases to offset the inflation or was it a one off in ’21?

Yes, this is an important point. I mean there is some pressure on the energy on the aluminium cost and we will apply this price increase to consider for that, but we will also leverage other important levers, when it comes to the pricing of the new model and selected, I mean the price increase of selected model and also the personalisation. So, this is an important factor we are factoring in, Susy.

Okay, very clear. And very quick just to follow up on your free cash flow. So, in the slide that you showed you basically you’re in line, you achieved the 2.4 to 2.8 cumulative cash flow as promised. So, basically the fact that you were guiding previously to $1.1 billion to $1.25 billion industrial free cash flow, is just a matter of phasing, right? Because it feels like that has been just phased differently due to the phasing of the models or was there some kind of advances for a future maybe hypercar, which now been change in timing?

You got it right, Susy. Phasing is the exact answer.

Okay, perfect. Thanks a lot.

Welcome.

Thank you. The next question comes from line of John Murphy from Bank of America. Please ask your question.

Good afternoon, everybody and thanks for the time. Just one of the follow up on that pricing discussion. I mean, obviously, there’s cost inflation that’s going on, but you’re talking about your order book being longer than it ever has than before. So, is there a greater opportunity to take price, explain it to your customers if there’s costs inflation to you, they are relatively sophisticated to offset that, but then also to maybe help balance out the supply and demand in the business? It’s a very high-class problem, but it seems like there might be a greater pricing opportunity than you’ve ever even had before.

Thank you. I think this is what you say, its important and we are considering, I mean we are applying the price increase and we are monitoring carefully what’s happening on these two dimensions of energy and aluminium. And again, as I said, we will introduce also a new model and we will apply in the right way the pricing. So, this is an important dimension that we are careful about, also because we don’t know what is the pressure that there is in the supply chain all over the world. On the other side, I have to say that we have also, on the supply chain, I mean, we have some good partners, reliable partners we can leverage on.

Okay, and maybe just a second question on the transition to EVs, it's very interesting that Daytona is a V12 naturally aspirated engine, that sounds great to me, personally. But, obviously there’s a push towards EVs. Given your close relationship with your customers and you kind of build, your design engineers build what they want, what are you hearing from your customers at this point on this transition? I mean, many other companies are slaves to guessing at where EV penetration will go and what they should do with their powertrain investment. But you have direct access and good discussion and relationships with your customers. So, what are they telling you? Because on the Daytona it seems like they’re saying, hey, we probably don’t want this right now, but the reality is some people might. So, I mean, what are your customers telling you right now?

I think we have different kinds of Ferrariste, each one with its own preferred let's say models and propulsion, so we have Ferrariste that I have seen them in Florence when we launched the Daytona, and they were extremely, extremely happy and delighted to see such a beautiful car. I have seen also customers trying the 296 GTB. That is a kind of different car with different feelings. So, I think that if you want to get my feedback from the customer, is that we have customers with different feelings, different needs, different perceptions and even the same customer for different moment can prefer the V12, the spirited one, or the V6 hybrid. So, there is a mix of different customers with different feelings and different needs, different emotions.

But is it fair to say that you're not guessing at this. You're having these discussions with your customers, so what you're introducing and you're building is what they want. You're never going to going to, you mis-estimate the EV penetration on the models, right? I mean, this is something that's well known by you through that order book and your discussions with your customers, is that a fair statement?

I'm saying that there is a clear trend and we will work on for sure on electric vehicle and we will see the strategy line up here in June 16. What I want to say is that there are customers, different customers that prefer different kind of propulsion scheme. So, we are aware obviously of what's happening. We have planned for that, but we are also aware of the different feelings and different emotions the customers want to get with different proportion schemes.

Okay great. Thank you very much.

Thank you.

Thank you. The next question comes from line of Giulio Pescatore from BNP Paribas, Exane. Please ask your question.

Hi, thanks for taking my question. I just want to follow up on the previous point. In your answer, did you mean that as long as customers will want combustion engines, you would be willing to provide them, even if we think about 10 or 20 years down the line?

I think that the technology is useful as far as it address the customer needs. We have to delight the customer. We have to -- I mean this is important for us. So if we are moving piston or we are moving other things, that's what we want to do.

Okay, thank you. And then the second question on the order book for the 296 GTB, which you said builds faster than the previous processor of that vehicle. Does that mean that, that car could potentially do the same type of volumes that attribute or say as far as they did in the past? And can you maybe talk about the difference in demographics between that vehicle and the 488?

Maybe you can go into that, Antonio. I think you have...

When provided the forecast on volume lifecycle. However, as Benedetto said before, the feedback has been very strong in terms of order compared to our previous internal benchmarks. The other element, yes, I think you are addressing the fact that the -- our customer base for this car is slightly younger and this is true.

I mean, really, you need to drive it to experience it. It's...

Oh, I ask you to provide a driving experience that your [indiscernible], I'll be more than happy.

We will, the car is here.

Fantastic, I'll get there. Maybe just one last one before I pass on to the next speaker. On the free cash flow for 2022, I really started to bridge your guidance, which feels very, very conservative at the lower end at least. I understand the step-up in CapEx. I understand that there are going to be higher taxes. But can you maybe help us with the amount of deposits that we should expect from the Daytona and how many deposits did you receive last year for the Competizione, because it's really difficult to bridge the two numbers?

Well, I did not comment on the degree of conservatives of the estimate, but basically, our cash flow is really simple. I mean, we have the EBITDA and you know what the guidance is. You know what we said about CapEx. I think the -- your question is about the working capital, where we include in the wider definition also the impact of the advances on the limited series cars. So the Daytona, we are talking about more than €200 million more or less in terms of current estimate. The other element is not underestimate is the impact of taxes. Because we are obviously paying taxes, both in terms of the balance and the advance on the basis of the results of 2021 and it makes a big difference compared to what we paid in 2021 based on the results of 2020 that were impacted by the pandemic. All of this provides you a better understanding of the detail.

Yes, but you're still benefiting from the button box, right?

The button box is helping, but not in terms of cash, nor at the level it did at the very beginning, because now the law provides for the benefit cash-wise in three-year installments. So this has been already visible in 2021, and it will be obviously in 2022.

Okay, thank you.

You’re welcome.

Thank you. The next question comes from the line of Martino de Ambroggi from Equita. Please ask your question.

Thank you and good morning, good afternoon everybody. My focus is on CapEx, which is a portion of the lower free cash flow for the current year. So the €800 million may be considered a sort of peak for CapEx or should we expect they will go beyond €1 billion annually going forward? And when you talk about partnerships, I remember you also mentioned partnership in order to reduce CapEx. I clearly understand you cannot talk about something that was not announced, but just to elaborate a bit on this in order to understand what could be the magnitude of the reduction in CapEx, if any?

Thank you, Marco. You remember well, the partnerships are an important way forward for us, and as I said also before, there would be some partnership that is an important partnership for us, we will announce in the near future. I think that I mean, it's important that is always also what I said in my previous life to keep strong discipline about CapEx and to keep the momentum and to make sure to do something innovative. It's important we decide what we do internally, and we decided and what we want to do with partners outside. So the two words are partnership and discipline. And as I said, in the near future, you will hear about an important partnership on something that is important for our car, but for which, let's say, we believe the best way forward is partnership.

And on the amount of CapEx, €800 million could be considered as a peak?

You can consider it is more or less a good number to think about, because we will use, as I said, the partnership to optimize and to be disciplined.

Okay, thank you. And talking about volumes based on what you commented before, I would expect higher volume growth than the usual, let's say, average 6% we saw in the last few years?

Yes, it is a bit a result of the significant net order intake increase that we have seen this year. So we need to serve this one. Obviously, we'll be very careful, because the concept of cars remains crucial to our business model and this is an element of significant attention. We'll play all leverages to manage this one.

And for sure, the broadest portfolio, the broad portfolio we have is helping to protect also the brand exclusivity, because in this year, we have a lot of models that are in production.

Thank you.

Thank you. The next question comes from the line of Stephen Reitman from Société Générale. Please ask your question.

Yes, good afternoon. Thank you for this. I understand what you're saying about the mix in 2022. So just to dig a little more detail in that, first of all, is it my understanding that you'll still be selling Monza in the first quarter of 2022, so we could see maybe some impact? And my second question is about the [indiscernible] deliveries of the 812 Competizione [ph] and how many would you expect to be delivered in 2022?

You are having, there is a lot of noise on the background. We are having trouble to understand your question. I don't know, it seems there is someone unmuted. I don’t know.

I'll try again. Sorry, okay I'll try again. Sorry about that. Yes, I'm sorry, no. I just wanted to ask, first of all, I understand that you will be selling some Monza's in the first quarter of this year, this final model, will that have an impact expected in the first quarter of this year still? And secondly, could you talk about the cadence of deliveries of the 812 Competizione, obviously, a very high-margin car for you in the quarter of 2022? Thank you.

Hi, Stephen. I think in terms of the Monza, we'll complete the deliveries of the Monza in Q1. However, then the absolute number will not be as high as it has been during the last quarter of this year. The 812 Competizione and Competizione Aperta will be spread quite evenly across the fourth quarter.

Thank you.

Welcome.

Thank you. The next question comes from the line of George Galliers from Goldman Sachs. Please ask your question.

Thank you for taking my questions. Yes, the first question I had was just on the volumes. Obviously, you're now above 11,000 units. I think in the past, previous management mentioned that max capacity was about 15,000 units on the existing industrial footprint. Is that still roughly the right number to think about? And in order to get that, presumably, you'd have to add shifts. What's the kind of lead time from a trading perspective to add incremental shifts? The second question I had was with respect to the carbon neutrality by 2030. Do you still expect e-fuels to play a prominent role in reaching that target? And then finally, obviously we had significant management changes and some exciting promotions and external hires during the quarter. Perhaps you could give some insights into the skill sets you were looking to promote as part of those management changes? Thank you.

Thank you. I'll start from the last one. The management change and the carbon neutrality and the first one, Antonio will take it. So let's start from the management change. Yes, we did a big change at the beginning -- end of last year, beginning of this change -- beginning of this year and we did along two directions, if you have seen. On one side, we promoted our internal talents that I had the pleasure to see, because I talked to a lot of people in the company and those will externalize. I think what the common thread that we wanted and I wanted to push within this new organization are the four following ones. Number one, the strong willingness to cooperate. Number two, is about attention to innovation and number three is the focus to bring these things, especially in a transition area to make the right choice, the right decision with right timing and to move forward. And number four is very important, especially nowadays, this is becoming very important for all the companies, is this continuous learning approach, because we have to be open to listen at the other point of view, other people's point of view and also the supplier's point of view, the partner's point of view. So these are the features that I want to boost with the new organization, again organized with homegrown talents and also external hires. This keeps for granted, let me say, competencies that are all these people are bringing in the game. Coming to the second question, the carbon neutrality, as we said, the carbon neutrality, we will show you a clear plan in -- when we meet here in Maranello. The target is to become carbon neutral by 2030. We want to do it looking at all the carbon emission we generate directly as well as the carbon emission that gets generated along the value chain. And we want to do in a scientific way -- scientific way. And so that's the reason why we are also proud if you want of this ISO certification we got in Q4, because it testifies that we are substantiating these numbers with a scientific approach. I think that if we want to tackle this properly, we needed to be, to do it scientifically and that's what we will do and that's what we will show you in June. Now the first question, Antonio, you can take that.

Yes, George. On the first one, yes, 15,000 units is the level of capacity that we have. There has been no change in that respect. And the second one, we are working on to shift, and we predict to be there even for 2022. Hope this helps.

All right, thank you. Yes, very helpful. Thank you very much and looking forward to the CMD.

Likewise.

Thank you. The next question comes from the line of Monica Bosio from Intesa SanPaolo-IMI. Please ask your question.

Hi, good afternoon everyone. I hope you can hear me. My first question is on the volume growth in 2022 on the back of the strong order book the ramp-up of the new enter models seen in 2022. The volumes impact would be significant over the current year. I was wondering if these could bring to some phase out of some models such as the S8. And as for the price mix, I was wondering if you can elaborate on what do you expect in terms of personalization for 2022? And my second question is -- are housekeeping questions. As for the advances from the Daytona, should we assume an impact mostly in the first part of the year, is it correct? And in terms of taxes, you mentioned that the taxes will be higher at the cash impact level in 2022, can you give us some highlights at the P&L level? Thank you very much.

I'll take the part of the phase out of the model. As I said, in Q4, we stopped -- we did not take order anymore on some models and this is done for the sake of brand exclusivity. The personalization gives a good contribution to our top line. And for the Daytona and the taxes, maybe Antonio, you can take it.

Sure. Daytona is significantly contributing in terms of cash flow with the advances in Q1. Maybe you'll remember what happened back in 2019 with the Monza. And in terms of taxes, yes we are currently projecting something like approximately €200 million additional cash out for taxes during the course of 2022.

€200 million. Thank you very much.

Welcome.

Thank you.

Thank you very much. Dear participants, thank you very much for all your questions and now I would like to hand the conference over to our main speaker today, Mr. Benedetto Vigna for closing remarks. Go ahead.

Thank you so much. Thank you. Thank you so much, and thanks all for your time this afternoon and also for all your questions. Let me close by underscoring three things; one, our excellent 2021 financial result with an exceptional EBITDA margin; two, our record order book covering well into 2023; and three, our broad innovative and beautiful product range with two new launches to come in this year in 2022. Today, I realize, I mean we provided a little taste of what's happening in our company. I realized that you want to hear more and we are as eager as ever to seize these opportunities ahead of us and to share with all of you the full picture on June 16 in Maranello at Capital Markets Day. So, good afternoon, everyone. Thanks again for your attention and talk to you in the next quarter. Thank you.

That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.