Earnings Call Transcript - RACE Q3 2025

Operator, Operator

Good day, and thank you for standing by. Welcome to the Ferrari Q3 2025 Results Conference Call and Webcast. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Nicoletta Russo, Head of Investor Relations

Thank you, Rezia, and welcome to everyone who's joining us. Today, we plan to cover the group third quarter 2025 operating results, and the duration of the call is expected to be around 45 minutes. Today's call will be hosted by the Group CEO, Mr. Benedetto Vigna; and Group CFO, Mr. Antonio 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 covered by this language. With that said, I'd like to turn the call over to Benedetto.

Benedetto Vigna, CEO

Gracias Nicoletta. Thank you, everyone, for joining us today. The past few months have been rich with important milestones for our company, among which the launch of the Ferrari Amalfi, the 849 Testarossa family, the first step of the reveal of the Ferrari Elettrica and the Capital Markets Day. Let's start from the Capital Market Day. On October 9, in Maranello, we gathered together and we shared our ambitions and plans for the future with investors, journalists and the entire world. In this current uncertain world, we shared an ambitious financial floor for the end of this decade, EUR 9 billion of revenues, 40% EBITDA margin and 30% EBIT margin. What did we say? What did we say at Capital Market Day exactly? Two things. We highlighted that Ferrari is a unique company, which combines 3 dimensions: heritage, technology and racing. It has a dual identity, both inclusive and exclusive, capable of engaging with tifosi, royalty and brand values across generations and geographies. We have set ambitions for each soul with an unwavering goal to keep our brands strong for the longer term, well beyond 2030. In racing, we aim to win; we want to continue to be successful in Endurance and come back to victory in Formula 1. We owe this to our P4 to fuel the passion and inclusive side of our brand. In sports cars, we continue to focus on managing and crafting the exclusivity of our product through a horizontal product diversification strategy, which ensures custody for each single model. We confirm our innovation pace. We will continue to offer our clients an average of 4 new models per year between 2026 and 2030 across the 3 different powertrains: ICE, hybrid and electric to address different clients and different client needs. In 2022, we told you that the 2030 breakdown of powertrain offering would have been 20% ICE, 40% hybrid and 40% electric. Our plans were based on the environment in 2022 and our expectations about its evolution. Today, in 2025, we have deliberately recalibrated our powertrain offer to be 40% ICE, 40% hybrid and 20% electric. Why did we decide this? Two are the main reasons. One, market dynamics. We have always believed in electrification as an addition, not as a transition. Overall market adoption of electric technology has been more gradual than anticipated in 2022. At the same time, demand for thermal and hybrid models has been more sustained. Two, client centricity. We put our clients always at the center of what we do. We are very flexible and agile to adapt our product plans to the evolving environment, developing and offering models that best address our client needs and meet their preferences. Regardless of the powertrain, we will keep on harnessing each technology in a unique and distinctive way, enhancing the driving emotions and staying true to our belief that we have to be innovative, adapting to the changing times. That is what our founder did since 1947, when he dared to develop our first cylinder engine, although nobody believed in it. It's our responsibility to keep alive this will to progress. This technology neutrality approach is something we have chosen. We have planned for and invested in also from an infrastructure point of view. The e-building, our new facility in Maranello capable of manufacturing the 3 powertrains is the perfect example of this flexible approach. Our research and development efforts will not only focus on powertrain performance, but also on vehicle dynamics, experience on board and the new materials, all of which make our product unique. Moving to clients. We will continue to grow our Ferrari families, which today counts 90,000 active clients and to foster their sense of belonging in community through an ecosystem of unique experiences from track to road to brand. Lastly, lifestyle. This is the soul that is instrumental to enrich the client experience and to widen our audience beyond our tifosi and Ferrari. I personally believe the team did a great job in bringing brand consistency. We then cultivated everything I just said with the help of Antonio, and let me underline and highlight a couple of elements. One, we continue to grow our business to new heights in an organic and consistent way. We look at the 2030 target as a floor of our ambitions, always acting in the long-term interest of our brand, safeguarding exclusivity above all. The macroeconomic environment remains uncertain and extremely volatile. However, the visibility and solidity of our business model allowed us to commit to an ambitious plan of 6 years of growth, which we will execute with focus and discipline as we did for the previous one. We will continue to deliver on our promises. And then we concluded the Capital Market Day with our renewed decarbonization commitment. We have already achieved approximately 30% reduction in our Scope 1 and Scope 2 emissions and approximately 10% reduction per car in Scope 3 emission in 2024 versus 2021. We will capitalize on this achievement with a clear target to reduce our Scope 1 and Scope 2 emissions by 10x in 2030 versus 2021 and to decrease by 25% the absolute Scope 3 emissions in 2030 versus the past year 2024. Moreover, the day before the Capital Markets Day, we unveiled the technology of our Ferrari Elettrica. This represents the first step of the wheel, which will be followed by the look and feel of the interior design concept in Q1 2026 and the complete car in Q2 2026. As leaders, Ferrari takes its innovation responsibility very seriously. The Ferrari Elettrica is a new opportunity to reaffirm our will to progress as it has happened many times in the past with the introduction of innovative concepts such as with turbo engines, hybrid powertrain and most recently with the Purosangue; there is great anticipation to experience the driving emotion of the Elettrica. After the Capital Market Day, I met several clients in the U.S.A., in Korea, in China and in Italy. And all of them appreciated the way we present the model. This is what they told me. The electric cars are generally heavy as elephants and not fun to drive. You did well to invest in an active electronic system to transform the elephant into a horse and to engage the drivers with paddle shift like in all Ferrari. We are looking forward to driving it. We can continue to be innovative if we keep the pace of change and having the 3 powertrains in our portfolio is a clear advantage, especially in front of younger generations. With the first step of the reveal of the Ferrari Elettrica and unveiling in September of the 849 Testarossa, coupe inspired, we have concluded the 6 launches we had announced 1 year ago for the entire 2025. I met many clients in Europe, in the U.S.A. and in China, who are in love with the Testarossa. Last week in China, I met a young female client, younger than 40 years old, and she told me, 'Testarossa is the perfect harmonious blend of design and engineering, elegance and craftsmanship. I'm eager to own one and drive it.' In the past few months, almost all range model in production were substantially sold out. The launches of the Testarossa family and Amalfi and the great traction in clients are initially contributing to the order intake. Indeed, the order book extends well into 2027. Over the next few quarters, we will have a significant changeover of models. Indeed, in January 2025, only 15% of our lineup was in ramp-up phase of production, while we will close the year with 35% of the lineup in ramp-up phase, and this is the result of all the activities of development that we did in the past years. Moving to the quarters, Q3 2025 saw continued growth. Just a few key numbers to highlight. One, total revenues reached approximately EUR 1.8 billion, a 7.4% growth year-over-year with flat deliveries. Two, strong profitability with EBIT of over EUR 500 million. And last but not least, industrial free cash flow at EUR 365 million. These are solid business performances. This solid business performance allowed us to revise upward the 2025 guidance during the Capital Market Day in October. Our revised guidance exceeds the profitability target we had originally set for 2026 in the previous business plan, 1 year in advance. Moreover, the decision to complete the current share repurchase program within this year, once again 1 year earlier than planned, also reflects such progress and strong confidence that we have in the future. And now I will leave the stage to Antonio to explain the quarter in more depth.

Antonio Piccon, CFO

Gracias Benedetto, and good morning or afternoon to everyone joining us today. Starting on Page 4, we provide the highlights of the third quarter, which once again delivered consistent growth and demonstrates solid progress. Product mix and personalization, along with rising revenues were the main drivers of revenue and profitability growth with shipments in line with the previous year. This resulted in strong industrial free cash flow generation in the period. Let me underline that such results were accomplished notwithstanding the impact of the incremental U.S. import tariffs, which became visible in Q3, greater foreign exchange rate headwinds and lower deliveries of the Daytona SP3, which was phased out in the quarter. On Page 5, we deep dive into our shipments. They were driven by the 296 GTS, the Purosangue, the 12Cilindri family, which continued its ramp-up phase and the Roma Spider. The SF90 XX family increased its contribution. The 296 GTB decreased approaching the end of its lifecycle and the SF90 Spider phased out. Deliveries of the Daytona SP3 were lower than the prior year and concluded their limited series run. As anticipated by Benedetto, in the quarter, we started a significant changeover of models, which will be also visible in the next quarter. The SF90 family and the Roma were already phased out and the 296 family is approaching the end of its lifecycle. Indeed, those models will be progressively replaced starting from next year by the 849 Testarossa family, the Amalfi and the 296 special series, respectively, a record number of new models introduced at the same time. On Page 6, the net revenue bridge shows a 9.3% growth versus the prior year at constant currency. This translates into a 7.4% growth, including the headwind from currency, mainly related to the U.S. dollar dynamics. The increase in cars and spare parts was driven by the richer product mix as well as higher personalization despite the lower delivery to Daytona SP3, which followed our plan. Personalizations accounted for approximately 20% of total revenues from cars and spare parts and were particularly relevant for the SF90 XX family and the Purosangue, also supported by the adoption of carbon and special paint. Sponsorship, commercial and brand also increased, thanks to higher sponsorships and the improved performance of the lifestyle activities as well as higher commercial revenues linked to the better prior year Formula 1 ranking. Moving to Page 7. The change in EBIT is explained by the following variances: Mix and price was positive, thanks to the enriched product mix. Indeed, despite the phaseout of the Daytona SP3, the product mix was sustained by the higher end of our product offering, namely the SF90 XX and the 12Cilindri families. The mix was also supported by the increased contribution from personalization. Please note that the impact from incremental U.S. import tariffs as well as from the update of our commercial policy in response are included in the mix and price variance. This resulted in a margin dilution at constant currency, particularly visible in the third quarter since the majority of our shipments in the United States was represented by model good price that were protected under the updated policy. Industrial costs and R&D were lower year-over-year, in line with model life cycles, partially offset by higher development costs for racing. SG&A were also higher, reflecting racing expenses and brand investments. Other was positive, mainly thanks to racing and lifestyle activities. Percentage margins continued to be strong in the quarter despite the dilution from increased import duties with EBITDA margin at 37.9% and EBIT margin at 28.4%. Turning to Page 8. Our industrial free cash flow generation for the quarter was strong at EUR 365 million and reflected the increase in profitability, partially offset by capital expenditures, which were mainly focused on product development and the progress in the new paint shop construction and the negative change in working capital provisions and others, mainly due to the reversal of the advances collected in previous quarters. Net industrial debt was EUR 116 million at the end of September, also reflecting the share repurchase program executed in the quarter, which is approaching its completion by year-end, as reminded by Benedetto, 1 year in advance compared to our plan as announced in June 2022. Moving to Page 9. We confirm our 2025 guidance, which was revised upwards during the Capital Markets Day on October 9 on the back of the solid business performance and reflecting improved sports car revenues, including personalization, a lighter-than-expected cost base despite a greater headwind from foreign exchange rate and increased U.S. tariffs. And with this in mind, for Q4, we project lower deliveries year-over-year, as we already told you in the second quarter call, and this is in connection with the changeover of models, as I mentioned earlier on, and a positive product mix, although sequentially tighter, in line with the phaseout of Daytona and the first unit of F80, higher SG&A and a seasonal step-up in racing R&D expenses as well as higher SG&A dictated by the start of production of new models. Looking at 2026 and beyond, let me remind you that the introduction of the F80 will be gradual. As usual, it will take a couple of quarters to ramp up the production and the life cycle is expected to be around 3 years. The guidance of the F80 and the model changeover will imply a more back-end loaded 2026 and will shape the product and country mix throughout the year. Such developments are consistent with our plans to deliver in the year to come as smooth and as linear as possible expansion of our profitability in absolute terms. Be assured that we continue to execute on this plan with discipline and focus, and today's strong results provide once again the evidence of our continued commitment. Thanks for your attention, and I turn the call over to Nicoletta.

Nicoletta Russo, Head of Investor Relations

Thank you, Antonio. Rezia, we are now ready to take the questions. Please go ahead.

Operator, Operator

We are now going to proceed with our first question. And the questions come from the line of Michael Binetti from Evercore ISI.

Michael Binetti, Analyst

Just a couple for me. Antonio, I think you're saying that the mix impact in the second half will be a little bit better than what you anticipated. I saw that mix added about EUR 25 million in the quarter. I think last call, you said mix would be neutral for the second half. So can you just help us think what's driving a little bit of that upside? And maybe how much we can think about in fourth quarter from mix relative to the third quarter? And then I guess just as we think about the personalization comments you made about 20% now. You guided to personalization being closer to 19% longer term. It's like it's a little counterintuitive to us with the new tailor-made studios and the paint shop coming online next year. Maybe just walk us through what drives the moderation there?

Antonio Piccon, CFO

Yes, Antonio. Thank you, Michael. On the first question, yes, the mix in the second half of the year has been slightly better than anticipated. So I remember I answered you in the second quarter call that we would have expected the mix more neutral in the second half. Now this is slightly improved at least based on the third quarter results. And this is mainly due to personalization that remains very, very strong. With respect to your second question, we said we have prepared the plan on the basis of a 19% longer-term penetration of personalization. In this respect, the contribution of tailor-made and in particularly the tailor-made center, bear in mind that have been taken into consideration mostly to come closer to our clients. So the overall consideration on the penetration of personalization takes that into account with a view to be close to our clients also in countries where such tailor-made personalizations are particularly relevant, such as Japan and the Western Coast of U.S.A.

Michael Binetti, Analyst

Okay. Can I ask for clarification? You mentioned that the F80 will be rolled out over three years. Is that longer than the typical timeline for a limited or supercar model like this? Is there a specific strategy behind extending it? Normally, I would expect to see most of those shipments in about eight to ten quarters.

Antonio Piccon, CFO

We are focused on the ICONA project, considering the total number of cars involved and the startup phase needed to reach our production run rate.

Operator, Operator

We are now going to proceed with our next question. And the next questions come from the line of Stephen Reitman from Bernstein. It looks like the person just disconnected. We are now going to proceed with our next question. And the next questions come from the line of Flavio Cereda from GAM.

Flavio Cereda, Analyst

So my question is, I'm taking you back to the Capital Markets Day and your projections of top line growth to 2030. So a very simple question, volume price mix, volume, you got control it, mix to a point. And I was just wondering on price, your pricing power, given all that's been done and the great results that we've seen in recent years, Benedetto, where do you think you stand on this? Do you think you're coming to an end here? Or do you think there's more to come?

Benedetto Vigna, CEO

Thank you, Flavio, for the question. It's not at all an end. Actually, we feel confident that with all the innovation that we have to delight our clients, we do not see any weakening in our pricing power. We will continue to offer Flavio, cars with a different positioning. All of them will benefit from the pricing power because this pricing power, just to be clear, is not coming because we will just increase the price for the same, let me say, product as it is. No, we will make richer and richer innovative, more and more innovative products so that by delighting the client, we are confident that we will keep our pricing power. And this is what we are working on. This is the goal of all the money that we invest in R&D, in innovation with all the team here.

Flavio Cereda, Analyst

So aligned to more models, fewer volumes?

Benedetto Vigna, CEO

Yes.

Operator, Operator

And the questions come from the line of Thomas Besson from Kepler Cheuvreux.

Thomas Besson, Analyst

I have two questions, please. First, regarding hybrids, I believe the share was at its lowest in a couple of years. Is this related to the product changeover, or is it due to a strategy to lower the overall hybrid share to manage excess deliveries in some markets and improve residual values? That's my first question. For my second question, could you provide the delivery figures for Q3, and how many F80 units you plan to launch in Q4?

Benedetto Vigna, CEO

The first question depends on the offer we have in our lineup for clients. The number of hybrid cars we're offering is decreasing due to a model change, so there's nothing surprising about that. It's a result of our car launch strategy. Please don't try to read any trends into this, and it's not related to the propulsion aspect. For the second question, how many F80s are we planning to launch for sale?

Antonio Piccon, CFO

Just the initial few units, Thomas, not its number. And I expect 40 in the third quarter.

Operator, Operator

We are now going to proceed with our next question. And the next questions come from the line of Stephen Reitman from Bernstein.

Stephen Reitman, Analyst

Apologies I had a problem with connection. And I apologize also if this question has been asked before because I was cut off, so I had to redial in again. So thank you for your comments about the contribution of 849 extending the coverage of your order book into 2027. I'd like to know if demand is similar for both the Coupe and for the Spider. And I know you don't comment on the order intake on a model-by-model basis. But could you talk about the level of interest you're seeing in the Amalfi? Is demand strong for the entry products as it is for your higher-end products? And my second question is regarding also on the hybrids. You've given us some detail in the past about the penetration rates you're seeing for your extended warranty program for the battery program and the like. And I think the last figure we had was running at about 15% to 20%. Obviously, that's a very good way of improving the residual values of these vehicles and making these Ferrari cars last forever as your intention. So could you update us on where you are with that program? How well is it's understood?

Benedetto Vigna, CEO

Thank you, Stephen. I understand that electronics have faced some challenges in the past, which is why we pay close attention to them in our cars. Regarding the Amalfi, it's progressing better than the previous model, which is encouraging. On October 21st, I was in China and witnessed the first two Amalfi models sold to new clients under 40 years old. Additionally, over 40% of those interested in buying the Amalfi are new to the brand, which aligns with our goal of attracting new clients. As for the hybrid warranty, uptake continues to increase and is now over 20%. However, we have noticed that while some dealers effectively communicate its benefits, others have not yet done so adequately. We are working on retraining some of our dealers to ensure they can properly convey the advantages of this warranty scheme. We see progress, but there is potential for further improvement if all dealers can explain it correctly. Thank you, Stephen.

Operator, Operator

And the questions come from the line of Thomas Besson from Kepler Cheuvreux.

Thomas Besson, Analyst

I think I've already asked my question. So I think you can pass on to the next speaker.

Benedetto Vigna, CEO

In fact, I was surprised.

Operator, Operator

And the next questions come from the line of Robert Krankowski from UBS.

Robert Krankowski, Analyst

Just 2 questions from me, please. And just maybe starting with the Q3. Like I think we are expecting that it's going to be the weakest quarter in the year. So obviously, something went better and maybe we heard that it was personalization. But maybe if you could talk specifically about the U.S. Back in Q2, you mentioned that there is some change in consumer behavior because of the tariffs. Have you seen it normalizing right now after we have more clarity on tariffs? And maybe the second one also related to the U.S. Obviously, there is a lot of conversation about residuals and there is some kind of concern about potential increasing order cancellations. Have you seen any unusual or any pickup in orders cancellation in the U.S. as consumers are a bit worried about potential change in residual values in the market?

Benedetto Vigna, CEO

I'll address this question, Robert. Firstly, in the U.S., business continues as usual. Secondly, the only change we notice in the U.S. is that, compared to the last call when tariffs were at 25%, they are now set at 15%. This reduction is now confirmed at 15%. That's the only difference we observe. As we mentioned previously, once we received official confirmation, we updated our commercial policy accordingly. We initially indicated a price increase of up to 10% when tariffs were at 25%, and now we are adjusting that to a price increase of up to 5%. That's the sole change in the U.S., and otherwise, business is proceeding as normal.

Antonio Piccon, CFO

And regarding Q3, which was initially expected to be the weakest quarter of the year, the explanation is straightforward. The level of personalization was greater than we anticipated, which positively impacted revenue. Additionally, as I mentioned when we updated our guidance, the cost base ended up being lower than we initially expected.

Operator, Operator

And the questions come from the line of Tom Narayan from RBC.

Gautam Narayan, Analyst

My first question, Antonio, I didn't catch it, but could you please review the transition from Q3 to Q4? I know the Daytona's are accounted as zero, but maybe go over the R&D and SG&A as well. I have a follow-up after that.

Antonio Piccon, CFO

Yes. With respect to Q4, Tom, I said that there will be lower deliveries year-over-year. That's a point that we already mentioned in the Q2 call. This is to be read in connection with the changeover of models that we discussed. Then I said there will be a positive product mix, although we expect it sequentially lighter in line with the phaseout of Daytona and the first unit of the F80. And the last point is that we expect higher SG&A and a seasonal step-up in racing expenses for development of the applications for the car as well as higher SG&A that are dictated by the start of production of new models.

Gautam Narayan, Analyst

Got it. Okay. That's very helpful. I have a broader question. In the past, you mentioned that when a new form factor is introduced, such as the Purosangue, which was quite different from previous vehicles, there tends to be an initial margin headwind compared to your standard products at the same price point. How should we view the Elettrica in this context? Since it is a completely different form factor, can we assume there will be a similar margin headwind compared to models produced at a much larger scale that require less additional spending? Is that a reasonable assumption?

Benedetto Vigna, CEO

I think, Tom, you have a good memory. That's what we said about Purosangue, but we said it when everything was announced and everything was clarified. So I don't want to look like I'm being impolite, but if you are patient a little bit, then we will be more precise on that. But before I said, like you remember, we told you everything when the shape was visible and not only the shape.

Operator, Operator

We are now going to proceed with our next question. And the questions come from the line of James Grzinic from Jefferies International.

James Grzinic, Analyst

I have a philosophical question for Benedetto to follow up on Flavio's point. Benedetto, you've clearly indicated that you expect a continued higher rate of innovation to support your pricing power for the brand. However, when I look at your 2030 plan, it appears that you believe this pricing/mix factor will be less significant than it has been in the past. Should we interpret this as an indication that the expected rate of innovation over the next five years will decrease, aligning with the diminished importance of the pricing/mix factor compared to the past four years?

Benedetto Vigna, CEO

No, I believe that the rate of innovation will not slow down. We have several innovations ready to implement across different models, each tailored for its specific market position. If we were to hold back on innovation, we wouldn't truly be Ferrari. My response to Flavio Cereda highlights that we have various avenues of innovation beyond just traction. This includes vehicle dynamics, user interfaces, and architectural innovations that we are confident will enhance the driving experience. Once we integrate these into our models, we will be able to exceed customer expectations and effectively leverage our pricing power. I want to emphasize that we are not raising prices arbitrarily. We increase prices because we are adding innovative features that enhance our products and delight our clients. This is a key point. Over the past years, Ferrari has uniquely increased prices not on the same product but by introducing new innovations. Due to our high level of innovation and customer satisfaction, we have successfully utilized our pricing power. This approach will continue moving forward.

Operator, Operator

And the questions come from the line of José Asumendi from JPMorgan.

Jose Asumendi, Analyst

Just one question, please. I guess frequently asked the question after the Capital Markets Day with regards to, I think, very exciting future, I think right products that you're launching into the market, but they also require some investments such as the launch of Elettrica. I think some lesser investments like the paint shop and I think all the credit facilities we saw during the Capital Markets Day. The question is to create a stability of margins in the business model, how can we think about the offsetting elements, the positive contributions you're going to have in the medium term to create that margin stability? And there might be some doubts in the market about the margin stability of the business model. How can we think about that balance between investments and then the opportunities you have to maintain and create that margin stability that you've shown in the past years?

Benedetto Vigna, CEO

Let me clarify my understanding, José. If this question is directed at me, my answer is similar to what I said before. We are living in uncertain times, which is not unusual when we look at history. The best approach we can take is to continue innovating to provide something unique for our clients, whether in performance, engineering, design, or process. Our initiatives, like the paint shop and the e-building, are aimed at ensuring our manufacturing process stands out, regardless of whether we are producing internal combustion, hybrid, or electric vehicles. We're also introducing innovations in a gradual manner with the Elettrica to ensure that the hard work of our engineers is effectively communicated to our clients. In the past, we've noticed that some innovative features in our cars weren't adequately explained, and that's an area we need to improve. Whenever we implement something new—whether it be technology, design, or engineering—we must take the responsibility to clearly communicate it to the public, as it represents the efforts of numerous people. Ultimately, our goal is to ensure that all our innovations are unique, which we believe is essential for the long-term sustainability of our operations. We are confident in our outlook for the end of this decade because of the distinctiveness of what we offer.

Operator, Operator

And the questions come from the line of Michael Tyndall from HSBC.

Michael Tyndall, Analyst

Two questions, if I can. One for Antonio. Can we talk about the F1 budget for next year? So headline number, if I'm not wrong, is USD 215 million from current USD 135 million. From where you're sitting, is that just an incremental $80 million of cost or does the scope change mean that actually the impact on your P&L is considerably lower than that headline number? And then the second one is just around can you talk a bit about FX on the order backlog? What scope do you have? And how much do you really want to push in terms of trying to offset what's going on with currencies on a backlog that now runs into 2027?

Antonio Piccon, CFO

Thanks, Michael. The first one really the fuel cost increase. That's an element we need to take into account. So if the F1 budget grows, this flows into our cost, and this is to be taken as a cost increase. On FX on the order backlog, based on the agreement that we have with dealers is in principle, we could change pricing with a 90-day anticipation, I guess. So that's something that in principle is possible. We decided on a country-by-country basis and depending also on the move in terms of the exchange rate on the size of the move.

Operator, Operator

Thank you. Given the time constraint, this concludes the question-and-answer session. I will now hand back to Benedetto Vigna, CEO, for closing remarks.

Benedetto Vigna, CEO

Thank you for your time today and for all your interesting questions. We remain focused on executing our plans for the rest of this year and are confident in building the next phase of our new business plan. This is an ambitious plan, and we are highly confident in its success. We will deliver on our promises as we have so far. I wish you a good morning or afternoon, and thank you again for your attention and questions. Thank you.

Operator, Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good rest of your day.