Earnings Call: Q2 2021

Sep 10, 2021

Good afternoon. This is the Chorus conference operator. Welcome and thank you for joining the Agios 2021 First half Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Giulio Rondo, CEO of Mario. Please go ahead, sir. Thank you very much and thank you all for joining the first half results call. I hope you all have the presentation we uploaded on the website. So I will jump directly to Page 3 on our agenda. I will cover an initial part with highlights and then the main events of the 1st semester. And then Alessandra Rossi, our CFO, will go over the details of the financials. And then I'll come back to cover a bit of the outlook for 2021 and beyond. So jumping on Page 4, if I have to summarize what happened in the first semester, I would say we have suffered softer economic performance as a consequence of the effect of the failure we suffered in November, which caused us to work a lot to resume flights. But we improved our order backlog and that is extremely important because it seems visibility is increasing and so it's trending out towards the future. So during the Q1, we worked a lot to restore full flight ordinance in our activities of assembly integration and testing. Following the failure we suffered in November, we put together with the European Space Agency a plan to cover flights number 18, 19 and 20 to make sure they will be perfectly flight worthy. And so we aggressively work on that, especially in the 1st 45 months. As a consequence of that, we had a very significant slowdown in the 1st part of the year and the progress on development activities. Amid of course a persisting COVID-nineteen set of challenges that you can imagine in conducting our operations that certainly did not help. At the same time, we accumulated new orders for Vega E development, which was something already announced, but of course we negotiated the contract and we closed that pretty well while we worked on the first anticipated part of the contract. And also we received a contract for the propulsion systems of our near term trial that was actually beyond our expectations in size. As a result of that, we also started to hire people, more resources to strengthen our ability to deliver in operations according to various flight work procedures and also to prepare to execute on this incremental backlog. Because if we now accelerate and try to recoup some of the time we have unfortunately lost and spent on restoring our capabilities, then we need to have more people on the ground. And so we restarted hiring people. So backlog ended at $835,000,000 up 30% with respect to year end. Revenues were down 24% and EBITDA was down 47%. Towards the end of the year, we'll talk more about that. We were tougher softer economic performance, we cannot completely recover in the second half of this year. But as I said, we will likely exit 2021 with an improved business visibility. And so we hope to be with a backward between €850,000,000 €900,000,000 on revenues anywhere between €330,000,000 €330,000,000 which means pretty much having a visibility equivalent to 3 years, which is a good visibility to plan for the future and to ensure we restore a growth path as we used to have pre failure and pre COVID effects. So EBITDA should fall anywhere between EBITDA adjusted between €35,000,000 and €37,000,000 down 16% versus last year. So in terms of the outlook, I think that the key takeaway are that Vega and Ariane launch activities are back on track. We executed 2 launches with Vega rapidly in sequence, and we'll cover that. We are preparing for the Vega T maintenance flights in the Q1 of 2022 and for the maintenance flights of Line 6 anywhere between the second and Q3 of 'twenty two. The P120 production, the P120 motor production is running as expected in preparation of course of the Vega C and the R and D 6 main flights and the subsequent commercial flights are already booked. The news in the last very few weeks is that the European Space Agency Member States has voted a resolution to secure for Arianne and Vega a good portion of the European government launch demand until the end of the decade. That is very important when you launch new programs knowing that your government will certainly buy a certain number of launches. It helps prepare the future. So it was an extremely positive news over the last few weeks. And then new development opportunities, new but potential for new contracts and development activities emerge when Italy launched each portion of the European recovery plan. So quite a substantial amount of resources will be devoted to space. And among this, there will be resources for access to space that we will teach and this opens up a new incremental opportunity that wasn't there. So all in all, if I have to summarize, the Q1 as the negative of the software economic performance, but the positive of a much better visibility and our store credibility on delivery. So jumping to Page 6 with the key highlights. As I said, we performed 2 missions in sequence with Vega, both of which were for Airbus primarily with their Neo constellation, a very innovative earth observation type of satellite. It's a mini constellation of 2 to 4 satellites. So in a matter of about 3 months, we launched them both very successfully. And in combination with these main payloads, we leveraged our technology for multi payloads delivering orbit. We launched 5 more auxiliary payloads on the 18th slide and 4 more auxiliary payloads on the 19th flight. So that's good because it has established and let's say a systematic way of doing multi payloads delivery, of being flexible, adding customers even at the last minute and that has also optimized revenues, which obviously helped in this very complex. Now we have one more flight scheduled by the beginning of November. And then immediately after, we will jump on the launch pad to prepare for Pega C. It will take time until probably end of Q1 to prepare for the launch setup, the launch pad with all the new systems we have prepared to support Pega C. It will be very exciting. The hardware will be shipped at the beginning of November. So it will be a very intense time preparing for the maintenance life. In terms of the Nanonets activities, we are currently running hardwood in the loop preparation activities of main flights, so running let's say simulation of the nation. And we are conducting the formal ground qualification review, which is basically the last review process with the EMEA Phase Agency prior to flight. With Day 18, we signed a development contract in July. We had signed an initial portion of it earlier on, but this is $120,000,000 more or less contract that will cover the development of the aerogenic upper stage. So very important because in parallel, we also completed the construction of our propulsion test facility, which will be instrumental for us for the development of Agave because this is where we will test our new liquid oxygen methane engine. So that the facility is completed, it's currently under commissioning and parts are being shipped to the site to be assembled such that by year end we should be able by test the first article of the M10 fully integrated engine. So that will be a very important milestone, we really look forward to each. On Page 7, we reviewed also our performance and I can say we have established a better than average reliability track record. On the right side of the page, you see the performance of many launches across their first 19 missions because this is a way to compare loans performance on a like for like basis in a way. And as you can see, Vegas performed 19 missions with 2 failures. So therefore, a failure rate on average of about 10.5%, which is slightly less than the average of the peer group. So as time goes by, of course, these statistics consolidate, but I think we are now back where we wanted to be. We definitely look forward to execute more license sequence with good success. But I think this was important to regain customer confidence across the board and make sure that we support also the commercial activity. This was done by implementing a massive set of over inspection across the activities of manufacturing, assembly, integration and testing. We have devoted a lot of time to redesign the process very accurately to train resources properly and make sure that everything is checked extremely well. What is good about it is that the performance of the last two flights were exceptionally good in terms of orbital injection accuracy, extremely accurate, which means that we have a product that once we integrate properly as we should, it's extremely performing extremely well performing and we are very, very encouraged by that. On Page 8, we show the advancements of Vega E as I just anticipated. Here you see when I signed the contract back in July, Vega E will be very exciting as a program. It will give yet another dimension of performance and flexibility by 2026. I remind everyone that this launch of version will feature the reduction from 4 to 3 in terms of propulsion stages. So it will be greatly simplified with respect to the current Vega C version. We feature a little bit of oxygen methane up per stage, which would be more capable. So we provide more performance and more flexibility. And ultimately, this will result in a lower cost per kilogram transported to space, which means reaching another dimension in terms of market competitiveness. What you see on the right side are the different parts of the engines being ready for assembly at the test facility, which you see in the bottom of the page, which is now being commissioned. And then by year end, we'll start firing the engines for testing at this facility. This is an extremely important milestone if you look across the different set of competitors. What really matters is when you can measure the performance of your systems on ground prior to flight. And so this facility will be instrumental to do that. On Page 9, a quick recap of where we are with Arian. So I am 5, as you know, is on its pace down part. It has flown once this year and we'll have 2 more flights by year end. So it has successfully flown on July 30th, I was there, base flight. Then there will be another double loan GTO in October. And then by December, by mid December, I am 5 relaunched James Webb Telescope, a major, major event for European loaners. This is a very A very special payload for Arie Undoubtedly. Meanwhile, the IL-six loan set has been completed. I think it's being inaugurated this week or next. And so everything is being ready for an I and P's main slide in the back half of 2022. So that's our set of key highlights for what happened in the 1st semester. As you can imagine, it was very intense, but it allowed us to restore credibility and move back on a growth path after a very painful first half of the year. Maybe Alexander, you can follow with the details of the financials. Thank you, Julio. Good afternoon, everybody. Here we hope to Page 11, we have summarized our key financials. In the 1st month of 2021, as Ruth said before, the activities required to implement the recommendation issued by independent to inquire a commission in the sale of last November required a significant effort with the consequent postponement of certain development activity originally expected in the first half of twenty twenty one, particularly in Vega C and Bigel E launches with effect on the revenues and margin associated with these activities. This was the main factor causing the lower result in our year 2021 with respect to our year 2020. However, we see a postponement of results, not alone. We will cover these developments in the second half of twenty twenty one and beginning in 2022. Revenues were also influenced by expected Ariane V sales, only partially balanced by the ramp up of ARION 6 in this 1st semester. As you can see here, decrease in EBITDA is mainly attributable to reduction of course in revenue and lower absorption in the fixed cost, which has been only partially offset by the fees out stability of the entire M5 and the containment of general and administrative expenses. The higher decrease on EBIT, more or less a couple of years is due to the increase of the risk related to previous year's CapEx on particularly on the production of P120 engine. Between the quarter and adjusted figures included a non recurring cost of about $2,400,000 substantially in line with Raio Cementa were $3,000,000 mainly due to replying COVID-nineteen costs. Net result is substantially in line with EBIT due to the limited impact of financial expenses and taxes as usual. So if you move to Page 12, we reported some details on net order backlog which continues to grow. In the semester, we had 230,000,000 of order intake, basically around about €100,000,000 for development and the reduction in beta C and beta E and €80,000,000 to cover production activities around the decade with effect of the booster, our sales and 30 booster production in capital business. Even considering revenue, which as you know, download the backlog in line in the last year's semester, the backlog would have increased anyway by 8, about 8%, 10% in the semester, thanks to these new figures of RMB200 1,000,000. Growth of RBS200 1,000,000. Now we move to Page 13. We have reported revenues affected by the Golar and Vega Fee development activities. On the right side of the chart, we have reported the revenue by Diamond Business and on the right side by Production Development Bank. Vega had a decrease in the production for oil supply as we commented before and in development for our postponed Vega CFT. Adyen showed a decrease in development, a delay basically of the transition of to Avian 6. Fixed between production and the growth cycle remain substantially unchanged. On Page 14, we have reported the main shoes and uses. Net acquisition, as you know, seasonal trend and typically the trend tends to decrease in the middle of the year and raise the gate towards year end due basically to the dynamics of the working capital. However, in this semester, the contribution of working capital is better than last year semester due a stable collecting profile versus slowdown in activities as described before. If we move to Page 15, we have reported the bridge on the cash between end of 2020 June. As you can see, the operating cash flow totaled about €15,000,000 basically for CapEx and non operating cash flow include the lithium distribution of June of May following the approval of 2020. Finally, on Page 16, we have a report that we paid on our recurring current cost by Ester. As you can see, the most the main part is represented by the cost for the supply for Rufus 18 and the COVID protection devices and other related costs. And especially in the growth in Uozu for opportunities and outlook for the rest of the year. Thank you, Alessandro. So following the view of the first half, we thought it would be useful to provide some view of what follows. So what we do in this section is we review the outlook, not only for 2021 but actually also beyond. So on Page 18, first of all, some details on the European Trade Agency resolution adopted by all of the 22 European member states upon obviously the very imminent first flight of legacy and IM6. The member states have decided to award IM6 and legacy minimum amount of launches that year to be used for European government paybacks. So what they have agreed is that they will secure 4 launches every year for government purposes for Arian and 2 launches every year for legacy. So that you can consider a minimum amount of volume guaranteed in a way that will apply from 2025 onwards. Now keep in mind that between now and 2025, most of the capacity is already in backlog for both Ariane and Vega. And as such, this model applies very well to the portion of the backlog beyond our current debt we believe. So allow me to say that this resolution is extremely important during longer term visibility with respect to what we have so far. Not only that, the European member states agreed on a package of support to maintain operational activities beyond the minimum annual volumes to provide option of course for much larger flight rates for each of France and Beganese. And this is extremely important to each say that the annual flight rates that we have in our target that are obviously beyond these minimum levels. What is interesting to note is what is on the right side of the page, which is the European Safe Agency forecast for European institutional missions. As you can see in the period 2025 to 2030, so towards the end of the decade, they estimate anywhere between 45 bomber and payloads for Ayan, which matches pretty well with the guaranteed launch demand. While they forecast around 4 launches every year for Vega, which is twice at a guaranteed demand. Now this is important because it means that regardless of commercial opportunities and export, which we will obviously pursue in priority, then we see a portion of market is way more accessible to us than others and that is there, will be there and will be fueled by the many programs that the European Space Agency and different space agencies in Europe including the European Commission have already launched and for which they already have the Nabil towards the end of the decade. So that supports in our view a pretty good growth towards the end of the decade if we successfully execute of course on our programs as discussed. In fact, on Page 19, if we look more broadly at the loans at the end, not only for European government purposes, but in general all around the world for government and commercial purposes. We have reported here the expectation for world total mass of launch. And we have started back from 2015 when we started. I remember when I started as CEO of Adio, we had an it was back in 2015 and we had an expectation for 2020 for the total NASDAQ launch to reach about 3 50 tons in a year. Now in 2020, the actual wells well exceeded the expectation that we had back then. And in fact, in 2020, the actual mass of launch exceeded £500. Now looking towards 2025 and 2030, we now have an expectation to double the size of this cement to about 1,000 tons every year by the end of the decade. I hope we will observe exactly what you have seen in the past that we will most probably even exceed this demand growth. Now why that? Because in certain sectors of this demand, let's say by the use case, we see higher growth, in particular in the telecom industry, in science and exploration and in earth observation. We tend to see a relatively a trend towards an acceleration of growth with respect to just what we used to forecast a few years ago. And this is very important for us because if you think about it, the telecom business has been historically business of Arian, which Allianz has been quite successful. Today, this business is being, let's say, shared with a number of competitors, but the pace of growth is such that there will probably be way more opportunity than in the past. Science and exploration has also been traditionally our captive core business with the European Space Agency and Earth Observation, which happens to have the largest expectation for growth rate has been the everyday business for Vega. So all in all, I think that the prospects for the demand in the business have improved in the very last 12 to 24 months. And the pace of growth has probably grown quite substantially. On top of this, so I would say the expectation for growth is good on the production side, on the delivery of lawn chairs in general. But now let's review what happens also on the possibility to generate revenues with customers to develop new technology, new rockets and so on. So on Page 20, I report a very brief summary of what has been communicated so far in Italy on the application of the European recovery plan. The European recovery plan is obviously a European wide initiative to support countries to grow after the effects of the pandemic. Italy is the largest recipient of the European recovery plan in Europe and has devoted substantial resources to space, order magnitude €2,400,000,000 in the period 2022, 2020 6. The Italian Space Agency has been tasked to identify where to invest these resources and they have communicated that they have 4 main areas of investment that they are looking at. 1 is satellite telecommunications for IoT and quantum communications. One is the Earth Observation, where they intend to build a high revisit rate Earth Observation constellation for national purposes and protection of assets. Then they have one initiative in in orbit servicing, which is a segment that is presently developing and is quite attractive. And then they have a 4th area of interest, which is called space factory that partly addresses the digitalization of industrial production, but largely addresses the development of new green high draft engines and demonstrators, which is essentially the core of what we do and is fully complementary with the programs we're actually doing within the European Space Agency. So in the bottom of the page, we have tried to gauge where we hold most interest in this type of program. In Earth Observation, we will not have a direct development activity, but the Earth Observation constellation needs to be launched. And so we think we have a pretty good chance of playing a crucial role in the launch of this Italian Earth Observation constellation in this period of time. In the proposed space factory initiative, we definitely have an opportunity to have a complementary budget to accelerate the development of our liquid oxygen methane technologies. And then within in order services, we can start to improve along the lines of what we are doing with the Phase Driver program within the ESA framework. So we think that all in all, this program is well executed and if we succeed in capturing this opportunity, it shall provide incremental opportunities with respect to what we just used to have a year ago. And so that is definitely important in combination with the prospects for the production business. So if we put this all together and we look at the guidance for 2021, on Page 21, we have summarized the key elements of the effective guidance for the year. We expect to increase the backlog even further, okay, and we're in between €850,000,000 €900,000,000 depending on how things go. I wouldn't be very picky on the number. Some orders may leave a few weeks, may not fall within the year, doesn't matter. But the expectation for sure is of a growing trend on the order backlog for the many reasons we have set before. Revenues this year will fall anywhere between $300,000,000 $330,000,000 We'll try to catch up on the progress of the development activity, but we will not be fully in the position to recover all of the ground that we have unfortunately lost in the first half of the year by executing so many activities for removing the flight. As a consequence of that, EBITDA reported will fall anywhere between $30,000,000 and thirty 2,000,000. We expect a charge of about 5,000,000 in our recurring costs. So this means that the adjusted EBITDA will be anywhere between 35,000,000 and 37,000,000 This obviously the non recurring costs will contain part of the costs incurred for restoring and resuming flights work in it. And partly to address the COVID-nineteen different challenges we have in running operations under pandemic. As a result of that, we will have a net income anywhere between $10,000,000 $12,000,000 with some marginal effect of financial charges expectation, which as you know are typically very low in our accounts. 2021, just because of what we have said, is not very important at the end of the day, because as we know the play is well beyond 2021 and I would say it looks well beyond 2022 or 2023. So it is important we spend some time to think about what will happen beyond 2021. We probably try to be more precise to you towards the end of the year, but at this stage I'd like to give you at least some qualitative points around what we expect beyond 2021. So on Page 22, we observed that, first of all, the strong backlog and cash position helped us growing the business back at pre COVID level all across the period 20222023. Between 20222023, there's nothing from a commercial point of view that can change The best thing is the numbers because most of it is already in backlog, actually probably 95% of it is in order backlog. So it will stay without a busy in execution to regrow the revenues and consequently also the profit back to pre solid and pre failure levels, okay, back to 2018 or so. Meanwhile, the market and the commercial opportunities are growing more than anticipated. As we have seen, the market will be twice the current size by 20%. So we have a fantastic win of opportunity to build more back for the period beyond 2023. And as I said, we are currently pitching commercial opportunities beyond 2024. So we think that in that range between 2024 and 2030, there will be positive surprises for incremental growth. Along this path, it is very reassuring to know that there is a secured European institutional demand guaranteed across the planet on which we can build to actually fuel this incremental growth I'm talking about. On top of this, the EMEA recovery plan will start sometime in 2022 and will provide incremental and unforeseen opportunities for accelerating on technological development all across the period 2022, 2026. So if we have to go after these incremental opportunities, we also necessarily need to increase the pace of investments, improve the technology, improve capacity and so on. And these resources from the revolving plant will be instrumental to reach this growth. So a lot of work but a lot of opportunity at the same time. Now last and absolutely not least, at the end of 2022, there will be the next European Space Agency Minister of Gasior that could load new resources for new development contracts in the period let's say 2023 2025. But this will be the occasion to capture further contact and extend the product roadmap beyond 2025 actually. And so it complements to all we have said before regarding also the recovery plan. All this should be the package that I would call it grow to 2,030, which is pretty much the time spent that we should be looking at when considering the size of the opportunity we have ahead of us and the way we should value the investment and the asset. And this is actually the way we look at it as managers and investors at the same time. On this many topics, we are working through a review of our strategic planning exercise, which of course takes stock of what has happened in the course of the last 3 years and how we have now come back after having gone through many difficulties and replanted the excess cash flow towards the end of the decade and partly beyond. So we'll try to be more precise to the same expectations as different degree that we can, but I wanted to provide you some of the key highlights for you to be able to grasp where the opportunity is and how we plan to be supported also financially to make it happen. And with this, I think we're done and we're happy to answer any questions. Excuse me, at this time. The Chorus Call conference operator, we will now begin the question and answer session. The first question is from Martin Odion Brogi with Equita. Please go ahead. Yes. Good evening. The first question is on the order intake. Just to be sure, for the current year, the order intake, roughly €450,000,000 plus, does not include any contribution from the Italian recovery plan? Or something is included? No. In 2021, we don't have anything yet on the recovery plan. And you know that the recovery plan is being implemented as we speak quickly. I do not anticipate that we will be able to get by the end of 2021 to already incorporated in Okay, perfect. The second is more difficult. So I probably know the answer, but you presented €2,400,000,000 as a global plan for the space sector. I imagine it is very difficult and too early to do that. What could be the magnitude that you could take from this bigger cake? This is a bit difficult for us as well. Let's say, it's difficult to explain to you why, because it will be if let's say that the remainder of the recovery plan is maintained as the agency has currently outlined on this initiative. On the Earth observation side, it will be essentially the procurement of launch services to enable the launch of this constellation. And we don't know yet how many launches this will require. What we know is that on the current distribution of funds, significant amount of funds have been in March for the year of cultivation. So there it should be slight, which doesn't change anything in the technology, but provides additional business. So in a way, it's even simpler. On the access to space initiative, we don't know exactly the figure. But if I have to, let's say, to create an ambition, perhaps it could be something maybe less than what we typically get from a ministerial conference, so to speak, but not so much less. So a pretty sizable package. Now this is difficult to estimate because it will be it will require bids and proposals that needs to be submitted and contracting and so on. So it's not guaranteed, we need to pitch for it. But as you know, there is 1 rocket player in Italy. So if we do well, I think we are in good sense. So the amount is sizable. It will grow by a substantial degree the availability of 100s in fact what we typically receive from our international conference. It will grow the number of flights. And as a consequence of that, we think it's a substantial difference. So we're not talking €20,000,000 Yes, very clear. If I remember correctly, the last ministerial can still worth €400,000,000 for us for Peru and Almost €500,000,000 Almost €500,000,000 Almost €500,000,000 to be spread over? 3, 3.5 years. Okay. And when do you expect this resilience recovery plan will sort of fix the upward? And so just to have an idea on whether this will materialize into all of this? Italy expects to award contracts all in 2022. Now, I don't know whether they will succeed, but the money needs to be spent by 2026, I believe by the consequence of European regulation. So, they will be pretty quick. Okay. And this should be spread the same typical ministerial council business or probably longer? I think 2022, 2026. Okay. It's 5 years. Okay, perfect. But we overlapped with that of the main share conference. Yes, clear. Okay. The second is on the EBITDA guidance current year. How much is the fiscal benefit of R and D incentives assumed in your guidance? It's between the main stage. What we expect and I mean and what is now early in April, I would say. Okay. And it should go gradually in the next few years? Yes, it is important since we are now stabilized, we have more like 5 years in this year and gradually up to 26. Okay. And the last question on the EBITDA. You are factoring in €5,000,000 of non recurring costs, which is more or less double than in the first half. If I look at it of your first half and no recurring cost, it was mainly referring to the VIGA return to flight and just a minor port for COVID emergency. So how you double this cost when I don't want to be too optimistic, but it seems to be better than it was in the first half when you had Colleferro in the red zone for 2 months? COVID costs continue to run because when we move people all around, we have more substantial costs. We need to keep for example when we send people to the loan side we need to keep them in different houses 1 by 1 to rent cars 1 by 1 to we still have some extra office space used at the production site to make sure that we expect distancing. So these costs continue to run And we will see what happens in Italy at the end of the so called emergency period by year end and according to the current vaccination plan, if requirements will be taken down for distancing and so on, so we can save some costs, but this we don't know yet. The next question is from Ben Heelan with Bank of America. I had 2. 1, obviously, the backlog is improving. You've won this contract and this outlook from Europe seems very good. Can you talk a little bit about the pipeline for international government and international institutions and how you feel that, that is shaping up? I know you talked a little bit about the strong outlook, but just if there's anything a bit more specific around the kind of international side of things. And then secondly, how are you thinking about the kind of risks around the Vega C flight and how some of the failures are kind of informing the way you're going about preparing for Vega C to make sure there are no issues there? Thank you. Thank you very much for your questions. So on the commercial pipeline, we'd like to talk about it a bit qualitatively for the sensitivity on the commercial side that you may understand. But just to give you a sense, I mean we see a wealth of opportunities. You mentioned what are you doing with foreign governments and so on. There's a wealth of demand coming from governments from the Middle East and from the Far East, all of which we are monitoring closely. There are some competitive bids, of course. And so some of them are harsh. But on some of them, we think we have a pretty good opportunity in combination with some of the European satellite manufacturers who are also pitching for their satellites to be manufactured. So there's more than a handful, let's say, of concrete opportunities that are currently in the pipeline. The value of the pipeline is substantial. The degree of maturation of this pipeline, let's say at least for half of it is very close to finalization. So we hope to be able within the next 6 months to make some announcements. So far, we've been unable to announce new customer contract signatures because out of the difficult periods we have gone through, some customers have waited before signing new contracts. Now that we are reestablishing a credible track record of performance, I think the situation is relaxing also because of course insurance premiums are more affordable that there is a more comfortable condition I would say. Now on your second question on the risk of legacy, now very interesting. When we were given a set of recommendations by the European Space Agency to implement in order to improve freight working at San Vega, They requested that these provisions be applied also to legacy. So we have to spend extra time on Vega C. We had more time to do it, but we have to spend engineering efforts to implement new more rigorous inspection processes on the manufacturing of Vega C as well. And as a matter of fact, Product compliance was split in 2 tranches to make sure that we would carefully review with not only the European Space Agency, but also with the panel of independent experts that each and every subsystem on regulatory is flight worthy, is checked and x-ray to make sure that minimize rates at least off. So this process is ongoing, should complete before year end. The ship to actually send the flight hardware is ready to go on, I believe on the 4th or 5th November. So everything is already planned. And I think the feedback I have from the team is that we are exactly on track. On these things, you can never eliminate surprises, of course. Many things need to go right. We have a substantial change in the product. It's 70% more performing. It has a completely new control system in different locations. Software is completely upgraded. So it's a lot of change. But I think we are going to prepare for the buildings for the teams to stay there are being ready as we speak. There will be quite a team there between let's say December March. So preparation is a good team and we are quite excited. There is a follow-up question from Martin Odion Brogi with Equita. Please go ahead. Yes. On the P120, I don't know if you could provide us an update on the expected run rate and when do you see the full run rate for the P120? Okay. So full run rate of P120, I would expect that we reach between 20232034. Now this depends very much on how the progression of new order could actually unfold in the next few years. We still stay ready for accelerating along this path if we can. There might be a possibility of that, but if not, probably 2024 is going to be a good assumption with a potential upside to go back. Okay. And referring to Slide number 17, when you present the estimate of total asset launch per year doubling in 10 years, could you try to translate it in number of launches? Because meanwhile, the multiple launches is becoming a habit. So probably it's less than proportional the number of launchers required. At a global level, I guess, this is almost impossible to do because now we have we will have by then a different mix of launches between very large, small, micro. We honestly cannot tell. And the reason why we use this measure of mass is because it's a good way to normalize that against the number of flight events. From our point of view, this should sustain for example on Arian, the flight from 8 to 9 to a year something like that. For Vega, maybe by 2,030, from 5 to 6, possibly slightly beyond. So if we succeed that growing at the same pace of the market, there is where we should be. And as a matter of fact, capacity upgrade is one of the things we are now studying very carefully with the agencies to make sure that if this scenario unfolds as we expect, we need to be ready with the right capacity upgrade. And just very last on the Italian relaunch plan. Could it be possible to see the plan financing the mini launchers or is not taken into consideration for the next investments? So far, what we have heard from Italian state agency does not contain a plan for a mini launch. It contains a plan for propulsion technologies, but not for our mini launches. Okay. So is it abandoned as a program or you are still have it in your pipeline? It's still there, but we should really see whether this in the scenario of such a growth in the maps is truly instrumental to reach our objectives or it's an opportunistic move that we could do if any of the customers have a very explicit requirement for it. Because what is happening is clearly showing that no one is intending to do micro launches for Tevanovic. The only reason why micro launches are being developed is because it's an intermediate task to develop a larger one and this is taken. If you look at what Rocket Lab is currently doing, they have successfully launched Electron with roughly 150 gigagrams. And as soon as they got listed, they announced of course the preparation of a much larger rocket. The next question is from Sandro de Raesto, Private Investor. Please go ahead. Hello. Good to hear from you. Could you hear me, please? Yes, very well. Okay. Just three quick questions. Okay. Regarding PNNR, do you expect just an order flow or capital contribution for free? Sorry, I didn't quite understand. You asked about the order flow and? No, no. Regarding the PMR, okay. Do you expect just a new order flow, an increase in the backlog or any contribution contribution from Doctor. Buto, I don't know that. Okay, okay. Well, this we will need to see because as you know, on the Italian recovery plan, there is not yet a manual how to execute it. It's something really in the making. The reality is that the overall European recovery plan assumes that the vast majority of funds are as you say in fund over 2, so no cash back. And part of this could be done on loan. But I would say the overwhelming majority will be without any expectation for a cash back. And it's the only sense of the plan to provide these resources to companies to restore their growth path. So that's what we expect to. Okay. Thank you. The second question is regarding okay, around the world, the U. S, for sure, company like Avio are crazy have crazy evaluation, not crazy compared to Avio. So how could you justify just the stock market is just a different stock market or and if this is the answer. Have you ever evaluated the chance to list in U. S. Or UK to have a double listing for your shares? So first of all, why do they have these valuations? This is a very difficult question. First of all, I have 2 explanations. The first one is that, of course, the U. S. Capital market is a much, much larger one than the one we are in Italy for sure, but in general in Europe. Number 2, U. S. Investors are looking at space with a much more long term perspective than European investors are. All of these companies are presenting their expectation for EBITDA by 2028 and they are valued on that. Whether this expectation is favorable or not, I don't know. But no one evaluates these companies on what they do in 2022 or 2023. The third reason why in the U. S. There is such a big valuation is because the government is spending a lot of money for contracts for these companies. And so they have a huge government demand that is way larger than in Europe. So I believe we consider leasing in the U. S. Why not possibly? This is not very much something we can decide on our own as a management. It's a question that should be reverted back to the shareholders if they want to be listed on a U. S. Stock market. For sure, the U. S. Stock markets have much larger liquidity. So provide more opportunity for selling if you want to sell, for buying if you want to buy. And there's a much, much larger number of investors. Keep in mind that as of today, we have something like 10% of our shareholder base in the U. S. We should definitely do our best to grow our investor base in the U. S. Given that the interest. Of course, the pandemic has not maintained simple because it's impossible to travel very difficult to travel to the U. S. At this time. And therefore, we will come back to that as soon as we are in the possibility to do that. But we take your point is a very interesting remark. Okay. Thank you very much. And the last question for me is strategic potential question is regarding Avian. Avian and Avian are the 2 launchers for the official, let's say, EU government, let's say, for them. There is any chance to think to put them together because, okay, Allian is your client and, okay, the business goes well till now and for the future. They could be your current. But the point is, okay, it's not your decision, but it's just, okay, shareholder or political decision. But in your mind, put Allianz and Adioz together makes sense or not? Because apparently, should be a great combination, but I don't know, Pablo, your opinion. First of all, let's say that Arian and Mario are already industrially combined probably more than you think. We have 2 industrial joint ventures. We manufacture engines together. So we already have extracted most of the synergies we can extract. We performed integration of big motors and casting of propellant in fifty-fifty percent joint ventures in French Guiana. And we split the profits in 2. So we have optimized costs and so on on a fifty-fifty basis. So we are already signed integrated. On commercial activity, we have one company, which is Arianespace, of which I am a board member. They already carry out sales activity for Arian and for Vega. So I don't know what other incremental value we could generate if we were to merge the companies quite frankly, more than we already have today. Okay. Thank you very much. You are clear and thank you for explanations. Thank you. The next question is from Bruno Ferre Mousti with Indesa Santoro. Please go ahead. Good evening. A few questions. First one, regarding Ariancic. If you already have a timing for a schedule for the beginning of the launch campaign, so or alternatively, what lacks to schedule the beginning of the launch campaign for the new Aria The second question regards the launch capability, I would like to understand if differences in the launch campaign how much time takes the launch campaign for we take the launch campaign for Vega C or Allianz 6 that's regime and the differences compared to Allianz 5 and Vega. So to understand if there is the possibility to increase the number of launches per year. And the last question is only a detail on the order backlog at 30 June, the €120,000,000 for the Vega E contract was already in or it is something would be recorded in second half? Okay. So let me start from the first question. The Ariane fixed launch campaign, we don't know exactly when it will start. Prior to the launch campaign, Arian will start the so called combined test. So they will start to have the engines on ground to test if everything works. And I believe this could start as early as the beginning of the year or maybe by end of the Q1. Don't take that as appetite as in end, but more or less, okay? Then in terms of the launch capability and frequencies. First of all, on Allianz 6, yes, the launch capacity has been designed to be able to do up to 11 flights every year. So the meantime between 2 launches will be dropped down to I think about a week or 10 days, something like that. How do they reach this improvement? Because they have built next to the launch pad a pre integration building that is very well equipped and automated such that while you are launching 1 rocket, you are already assembling another one. And so these operations will certainly allow for a lot more flexibility in the frequency of launch at the Guillainen Space Center. In addition to that, the control sensor has been redesigned and will allow for reconfiguration at the end of one flight to prepare for the following one within 48 hours. So I think this is also another great software advancement that will enable to increase flight sales. Now regarding Vega, to improve the launch capability, yes, we need to reduce the mean time between 2 launches and therefore the duration of integration campaign. Moving from Vega to Vega C, we already dropped that by 5 to 7 days because we have designed to be largely preassembled, let's say, from Europe. So we spend sub assemblies, which are already well equipped such that when we go at the loan side, we really have to make fewer connections and less amount of work on-site at the loan side. Number 2, we need to work a lot on storage areas at the loan side. For solid rocket motors in particular, we need to increase the amount of storage area. And in this way, we will be able to do something similar to Allianz to prepare for integration activities while one launch is being prepared for flight. And this is what we will work on in the next few years to move from a theoretical capacity of 4 to a theoretical capacity of 6 to 7. It's not a huge and impossible task, but of course we need to do a number of things. Last, your question on the backlog of Agui and Sandro can answer. Yes. Hi, Bruno. Agui was formally signed beginning of July 'twenty one, but Total Free was acquired by the end of 'twenty two. So it was factored within the EUR 855,000,000 of April end of June. Okay. Thank you.