The Board of Directors of Sanlorenzo S.p.A. (“Sanlorenzo” or the “Company”), which met today under the chairmanship of Mr. Massimo Perotti, examined and approved the periodic financial information as of 31 March 2024.
Massimo Perotti, Chairman and Chief Executive Officer of the Company, commented:
«Sanlorenzo starts 2024 with a first quarter performance in line with forecasts and our strategy of sustainable and profitable growth over the long term. Backlog as of 31 March remains in the region of €1.2 billion, with a 2024 Guidance coverage of over 70% after only one quarter, and approximately €560 million of net backlog relating to subsequent years; 88% is already sold to end customers, so we are keeping sell-in-sell-out dynamics always under control, confirming Sanlorenzo’s unique business model within the international yachting scene.
With the acquisition of Simpson Marine Group closed on 5 March, we have started to work quickly on integration, especially at a commercial level, in terms of optimising the product portfolio but also in the global development of services such as chartering, synergically with the international hubs of Sanlorenzo Group. We continuously invest in product innovation, from concept design to the latest green technologies. As proof of the ambitious “Road to 2030”, in March we launched the BGH-HSV – the America’s Cup chase boat with dual foil-fuel cell technology – now undergoing sea trials to be delivery to the New York Yacht Club’s American Magic syndicate. At the same time, the 50-metre fuel cells Superyacht is ready for launching on 18 May at the La Spezia shipyard. It is the first in the world with the futuristic Siemens reformer-fuel cell methanol green for the production of 100kw for hotellerie and reduced autonomy in hybrid version, with the only waste product being residual water vapour, 100% sustainable, which returns to the sea.
In parallel, we invest in strengthening direct distribution and production infrastructures, reinvigorating every day the competitive advantages which underpin our leadership position. The Group maintains, even after acquisitions, enviable equity soundness and liquidity, which will allow us to promptly assess and seize any further opportunities, also in terms of growth by external lines».
CONSOLIDATED NET REVENUES NEW YACHTS
Net Revenues New Yachts 1 in the first quarter of 2024 amounted to €194.8 million, up by 6.0% compared to €183.7 million in the same period of 2023.
The Yacht Division generated Net Revenues New Yachts equal to €114.8 million, substantially in line with the first quarter of 2023, as well as the annual budget targets. The performance of the Superyacht Division, with Net Revenues New Yachts equal to €58.9 million, up by 27.0% compared to the first quarter of 2023, is outstanding, thanks to the Alloy line and the X-Space, launched in 2023. The Bluegame Division also generated excellent results with Net Revenues New Yachts of €21.0 million, up by 5.8% compared to the first quarter of 2023, thanks to the BG54 model, the range’s best seller. The breakdown by geographical area shows the continuous expansion of the Middle and Far East markets, proving to be particularly interesting areas in terms of growth potential.
CONSOLIDATED OPERATING AND NET RESULTS
EBITDA2 amounted to €34.1 million, up by 9.5% compared to €31.2 million in the first quarter of 2023. The margin on Net Revenues New Yachts is equal to 17.5%, up by 50 basis points compared to the same period of 2023, as proof of the solidity of the Group’s business model, as well as its ability to keep selling and executing successful projects.
EBIT amounted to €25.7 million, up by 6.5% compared to €24.2 million in the first quarter of 2023. The margin on Net Revenues New Yachts is equal to 13.2%, in line with the same period of 2023, in spite of a 20.2% increase in depreciation and amortisation that stood at €8.4 million, following the implementation of major investments made to develop new products and to increase production capacity, as well as the additional effect of recent acquisitions.
Pre-tax profit amounted to €27.3 million, up by 14.0% compared to €24.0 million in the first quarter of 2023. Group net profit reached €19.7 million, up by 14.3% compared to €17.2 million in the first quarter of 2023. The margin on Net Revenues New Yachts is equal to 10.1%, up by 70 basis points compared to the same period of 2023, also thanks to an increasingly optimised treasury management.
CONSOLIDATED BALANCE SHEET AND FINANCIAL RESULTS
Net working capital was positive for €38.3 million as of 31 March 2024, compared to a negative figure of €34.9 million as of 31 December 2023 and a negative figure of €28.6 million as of 31 March 2023. This result shows a return to the normal business seasonality, with particular reference to: (i) intense yacht fitting activity as delivery season in the Med approaches, as well as (ii) order intake normalisation according to the typical first quarter levels, thus lower compensating effect from advance payments on new contracts compared to post-Covid.
Inventories were equal to €105.9 million, up by €20.4 million compared to 31 December 2023 and €36.0 million compared to 31 March 2023. The increase compared to the year-end figures is mainly due to raw materials and work-in-progress products, reflecting the progressive increase in backlog. Finished products for pre-owned boats were equal to €29.4 million, up by €7.3 million compared to 31 December 2023. It should also be noted that such inventories include €5.0 million of products acquired in March 2024 as part of the Simpson Marine transaction.
Organic net investments made in the first quarter of 2024 amounted to €6.8 million, substantially in line compared
to €6.0 million in the same period of 2023, of which approx. 90% dedicated to production capacity increase and
to develop new models and lines. The incidence on Net Revenues New Yachts, amounting to 3.5% in the quarter,
mainly as a result of an ever-expanding revenue base, given a substantially stable average amount of investment
needed for a new model development. Including the effect of the inclusion of Simpson Marine Group in the scope
of consolidation, total investments amounted to €19.4 million.
Net cash position as of 31 March 2024 was equal to €73.7 million, compared to €140.5 million as of 31 December
2023 and €108.1 million as of 31 March 2023. The evolution of the Group’s net financial position in the first
quarter of 2024 shows a temporary cash absorption due to the following main effects: (i) closing of Simpson
Marine Group transaction, which had an impact on the net financial position of €22.3 million, without which it
would have amounted to €96.0 million as of 31 March 2024, as well as (ii) normalisation of net working capital
following intense yacht fitting activity as delivery season in the Med approaches and order intake returning to
typical first quarter levels compared to post-Covid.
BACKLOG
As of 31 March 2024, backlog3 amounted to €1,209.8 million, compared to €1,239.7 million as of 31 March 2023.
The order intake in the first quarter of 2024 is equal to €168.2 million (€170 million in the first quarter of 2023), marking a return to the typical business seasonality.
The amount of the gross backlog referred to the current year, equal to €648.6 million, allows an excellent visibility on the expected revenues in 2024, with a coverage ratio of already 72% as of 31 March compared to the disclosed mid point Guidance. Visibility on future years’ revenues is significantly high, with orders totalling €561,3 million, with sold deliveries up to 2026 for the Yacht Division and up to 2028 for the Superyacht Division. Bluegame enjoys sold deliveries up to 2025, a distinctively long timeframe for its reference market segment below 24 metres in length.
BUSINESS OUTLOOK
Sanlorenzo Group starts 2024 with a first quarter characterised by a revenue growth rate in line with the harmonious growth, consistent with the Guidance communicated to the market for the current year. Geographically, APAC and MEA drive growth, with robust increases of around +30% and +25% respectively, confirming themselves as the greatest potential areas given their lower degree of maturity. Europe and the Americas, on the other hand, recorded a level of revenues substantially in line with the first quarter of the previous year, a positive figure in any case considering that in Europe a consolidation phase of the record levels reached in 2023 is physiological, while the Americas (+2.8%) reversed the negative trend that had characterised the entire previous year. The management team of the Company continues to closely monitor the dynamics of the American market, which remains one of the world’s leading boating markets, in order to promptly assess whether the trend reversal of the first quarter should be considered structural or not.
At the business area level, the performance of the Superyacht Division stands out (Net Revenues New Yachts at +27% compared to the first quarter of the previous year), demonstrating the greater resilience of demand in the higher average price market segment. Net Backlog, exceeding the billion, is substantially in line with the level at the end of 2023, at an all-time high, once again highlighting its great quality (88% sold to end customers). A high level of visibility on revenue and margin trends for the coming quarters is therefore maintained, with ample benefits in terms of future planning even in a context of macroeconomic and geopolitical uncertainty. The Book-to-Bill, i.e. the ratio of Net Backlog to Net Revenues New Yachts in the last 12 months, remains in the region of 1.2x, with a coverage level of 2024 Guidance (and half of the range) at 72%, and over €560 million of Net Backlog referring to the following years.
In terms of distribution, the closing of the acquisition of Simpson Marine at the beginning of March 2024 further strengthens the relationship and the ability to intercept the needs of the end customer, current and potential, in a
capillary manner, while offering a 360° service in a one-stop-shop logic. Today Sanlorenzo boasts direct plug-andplay distribution in several key countries in the APAC area, namely Hong Kong, Singapore, mainland China (Shenzhen and Sanya), Thailand, Indonesia, Malaysia and Taiwan. This extensive network has a strong strategic value for Sanlorenzo’s long-term growth in the APAC region, which is expected to experience the highest UHNWI growth worldwide in the coming years, as well as a higher yachting penetration rate among the ultra-wealthy population, given the significantly lower base compared to historical markets such as the Mediterranean and the Americas.
Ongoing public and private initiatives in the region, such as marina development projects for yachting in Indonesia, Vietnam and the Philippines, as well as along China’s southern coast, with the rise of Hainan as a new global luxury hub, reinforce optimism about the huge potential for market expansion in the long term. Simpson Marine’s contribution to 2024 first quarter results is limited to the month of March only; it is believed that a significant contribution, particularly in terms of margins at consolidated level, will be made from 2025, the first full year of consolidation and once the integration process is complete.
More generally, Sanlorenzo continues to benefit from a robust performance in its traditional markets and from the competitive advantage deriving from its peculiar business model: highend brand positioning, exclusive yachts purely at the top end of the market segment between 24 and 75 metres in length, built solely to order and distributed directly or through a small number of brand representatives, always at the forefront in terms of sustainable innovation.
All these aspects are essential to ensuring that virtuous dynamics experienced so far continue into the long term.
A RESPONSIBLE PATH
GREEN-TECH SOLUTIONS FOR A SHIFT IN YACHTING PARADIGM
According to the new “SYBAss Economic Report 2023”, up to 75% of potential buyers are interested in making their yachts more environmentally friendly. The combined pressure stemming from the increasingly sustainabilityconscious and responsible demands of customers and a more restrictive regulatory framework in terms of emissions from the maritime industry as a whole has instilled in Sanlorenzo a firm belief that implementing a serious, long-term strategy on sustainability in luxury yachting is no longer optional.
Thanks to the exclusive agreement signed in 2021 with Siemens Energy, the yacht segment above 40 metres in length will see the integration of fuel cells powered by hydrogen reformed directly on board from green methanol to generate the power needed for hotellerie. The first installation is planned on a 50Steel Superyacht already scheduled for delivery in Summer 2024, and whose fuel cell system was certified by Lloyd’s Register at the end of September 2023.
In the segment of yachts under 24 metres in length, Bluegame is committed to building the first chase boat, a 10- metre vessel with exclusively hydrogen propulsion and the use of foils to reach a speed of 50 knots and a range of 180 miles with zero emissions, together with American Magic, challenger in the 37th edition of the prestigious America’s Cup, in 2024, in co-sponsorship with the New York Yacht Club, as well as the French Orient Express Racing Team, with which the agreement announced on the eve of the Cannes Yachting Festival in September 2023 was signed.
SUSTAINABLE AND PROFITABLE GROWTH
After three years of post-pandemic above-trend growth, with rates of over 25%, Sanlorenzo is consolidating its turnover, returning to a low-double-digit organic growth rate in 2023, and settling for 2024 and subsequent years on a high single-digit organic growth as a sustainable level over time.
Focused on steadily increasing margins, the Company can rely on a unique business model more akin to luxury than yachting, as well as on a prudent investment policy that ultimately results in a high return on investment and a substantial cash generation capacity.
Possible lines of development in addition to the core business of selling new boats are:
i) vertical integration: upstream, to support the growth of the supply chain in step with the growth of the Group, by entering into the capital of suppliers (e.g. Duerre, Sea Energy, Carpensalda, Arbatax); downstream, to have a direct relationship with the end customer and internalise the retail margin in highly strategic geographical areas in the long term (e.g., Simpson Marine in the APAC region);
ii) development of services, which have enormous potential that is only minimally exploited today; in particular, a significant development of chartering is expected in the short term, which can drive the further spread the Sanlorenzo customer experience, exploiting the direct distribution network from East to West that is already in place, linking the APAC markets in which Simpson Marine boasts a capillary historical presence, with direct offices in the Mediterranean in Monaco, Cannes and the Balearic Islands, as well as direct offices in America
in Fort Lauderdale and in the Hamptons;
iii) acquisition of high-end niche brands in market segments that do not overlap with those where Sanlorenzo is already present and in which it is not considered strategically appropriate to use the Sanlorenzo brand, as was done in the yacht segment below 24 metres with the Bluegame brand, and as may be in the sailing market. The Group evaluates opportunities in line with the Sanlorenzo philosophy, and with clear synergies in terms of technology and geographical distribution.
2024 GUIDANCE
In light of the results as at 31 March 2024 and taking into account the subsequent development of order intake, the Company confirms the 2024 Guidance5, disclosed at the approval of the 2023 Annual Financial Report on 15 March 2024, in line with the growth strategy of the main metrics at a sustainable rate over time.