Earnings Call: Q1 2021

May 14, 2021

Good morning. This is the Corusco conference operator. Welcome and thank you for joining the Cinquantieri First Quarter 2021 Results Conference Call. As a reminder, all participants are in a 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. Gallia, General Manager. Please go ahead, sir. Thank you, and good morning to everybody. We are here to present the Q1 results. Josep Pedda, our CFO is with us along with the Investor Relations team. If you go to Page 5 of the presentation, you will find executive summary. I believe there are a couple of important messages. The first one being is that it's a very solid start to the year. We confirm our guidance for year end in terms of revenues and profitability. And the Q1 results are totally consistent with this statement. When you look at the number, you can see that revenues in the Q1 excluding the pass through we commented in the last presentation, revenues as I was saying are up by 9% plus confirming the growth trend that were outlined in previous quarter. EBITDA margin structurally improved to 7% with, I would say, quite solid improvement compared to Q1 of last year, which as you may remember has been affected by a month by the pandemic. Net debt increase, this is due to a very tight delivery schedule, which is concentrated in the 3rd quarter and in 4th quarter, which means that in the first half of the year, there will be very few cash in and there will be to sustain the cost for the constructions or the ships we are about to deliver in the second half. COVID-nineteen related extraordinary items are running a touch less than €15,000,000 When we talk about 2021 guidelines, we are expecting we're still expecting and confirming revenues in the region of 25% to 30% growth and with the EBITDA margin around 7% and importantly a net financial position which will stabilize in the second half of this year to go roughly in line with the level we're being presented to you at the end of 2020. If you flip page and you go to page 6, this is a brief business update. On cruise, we've been carry on with the delivery schedule as expected. Viking Venus, which is the first out of 5 cruise ships, which are about to be delivered in Italian shipyard, was successfully handed over in mid April in our shipyard in Ancona. Defense will be taking part in the Sea Defense project, which is aimed at providing technology, which will be included in the next generation of naval platforms. We also signed a memorandum of understanding between our Naviris joint venture and Navantia for a cooperation to develop European Patrol Corvette, which is a very important PESCO European program. And regarding our VARDA subsidiary, VARDA is to design a cable repair vessel for Orange Marine, one of our clients, and it's been designing and constructing 3 service operation vessels for North Star Renewables. We will be commenting later on that it's important to highlight that Bard is progressively and we'll say successfully shifting its focus from oil and gas whose demand is very low as you all know to towards wind particularly offshore wind. And this is a theme, which will be characterizing the strategy of our group, particularly of ARDA in the years to come. We'll be commenting the final outlook, a few other themes regarding cruise and defense. If you flip to page 7, an update on 3 other important themes. The first one is digital and innovation. We're being signing a very important agreement or collaboration with Amazon Web Services, which is designed to cooperate in the digital sphere, the technology development with a special focus on cloud computing. We're expecting significant improvement in the time to come. Regarding green, we've been working with another important partner, which is Amaviva, an Italian IT and Digital Company, to support enhanced digitization in the transportation and logistics sector. We are active in transportation as far as censorship technology digital is concerned. But you may know, ALMA Divas is the undisputed leader in this field, not just in Italy. We're being also signing an important agreement with ArcelorMittal and Paul Wirt, the former owner of Itarim Pianti to consider drawing reconversion plan for existing integrated cycle in Taranto using Eco Friendly technology. And we're also being working on hydrogen regarding what is probably going to be the 1st zero emission ship to be completed in 2021. And as far as sustainable mobility is concerned, we signed a letter of intent with NOX regarding coal ironing. As you may know, it's about building and running next generation poor infrastructure, electricity versus more producing materials, which means having a lower environmental impact. What I would highlight of all these comments is that Fincantieri has been able to attract collaborations with world leaders in what they do because Fincantieri is world leader itself. And that is very important also when we look at the future of this company. It's clearly focused on what we do. We do ships. But in our ship, there's a lot of technology. Any kind of technology, any kind of new dynamics which are impacting businesses from digital to green to mobility are already in our businesses. And we're just extending our know how, our knowledge, our competencies, which is represented by years and years of working on very sophisticated international projects with top quality people. When we go to Page 8, events, it's the Q1, which is to say that we signed new orders, 3 service operation vessels with North Star, as said before. And we have been delivering 2 ships, the logistic support ship, Volcano, for Italian Navy and the cruise, cooper, or expedition, which is being manufactured in our Vietnam based shipyard. When we look at Page 9, more very importantly, you can see the visibility we have attached to our backlog. It's still a very important and very profound visibility through the years. We have visibility up to 2027. As far as cruise is concerned, cruise is still our main division. On naval, visibility is even higher. And regarding wind, visibility clearly is lower, but it's important to highlight the transformation path that Avard has begun. So 2 units delivered, 3 new orders and a touch south of 100 ships in backlog. I will hand it over to Giuseppe for commentary regarding economic and financial results. Well, good morning, everybody. So we move to Page 11 with the order intake backlog. For the Q1 of this year, order intake came in at €340,000,000 roughly, of course, slightly up compared to the Q1 of last year. Well, given the current situation, the order intake in the shipbuilding sector is influenced by wait and see attitude by our cruise clients. And we stand in this. Also last year, the latter was in a difficult situation to say the least. But in any case, what matters here is our diversification in other businesses. Last year, I remind you, we had €4,500,000,000 in order intake in the worst year ever for our clients, of course. What really stands out in this Q1 is the order intake in the offshore specialized vessels in the wind segment. Like we said before, the acquisition of the 3 vessels for the Dogger Bank's wind farm is a very important achievement for us as it marks a further entrance into this new and promising sector of the offshore wind farms. The oil intake in equipment systems and services stands at 148 €1,000,000 roughly in line with last year's backlog, €34,400,000,000 Very important to note that it's let me say, we preserved the backlog as of today. Of course, we didn't have any order cancellation in our backlog, and that's a very important message. Moving on to Page 12 on revenues. The growth of revenues is on the right track. We grew quarter over quarter by roughly 9%. Notably in the shipbuilding segment almost 13% with a growth in cruise of 11.6 percent and in novel of 16.2 percent. Let me remind you that last year, we shut down production in the last 2 weeks of March at the beginning of the pandemic and with the loss of revenue, very important loss of revenue that was even higher in the Q2. Overall last year, the revenue shortfall was 1,000,000,000 euros This is to say that we are right on track to bridge this gap that we experienced last year. For instance, to give you a more physical number on how production volumes are progressing, the 1st 3 months of 2021, we did roughly 3,800,000 hours of production in our Italian yards. Only in the month of April, we did cipher 1,500,000 hours of production. So this is a clear indication of the progressive ramping up of production volumes. Revenues in offshore and specialized vessels went down more than 20%. This is mainly due to the disposal of the Brevik shipyard that was still operating in the Q1 of 2020. And of course, we still have to see the effect of the repositioning strategy towards the wind offshore segment. In equipment systems and services, revenues were at €232,000,000 up 13.4% versus last year. On Page 13, EBITDA. As we said before, we stand at 7% right on the spot with respect to the guidance that we gave for 2021. This performance is in line with the Q4 of 2020 and really marks a very good start in 2021 and we are right on track with respect to the guidance. Last year, the shortfall in EBITDA due to the shutdown of production, as a reminder, was approximately 15 €1,000,000 With this result in the Q1, we really bridged this gap and we show that the profitability embedded we are more consistent let me say with the profitability embedded into our backlog. Of course, we mark also a slight uptick in the margin in the EBITDA of the Offshore and Specialized Vessels segment at €2,000,000 1 point 6%. Q1 of last year, we were breakeven, but with a minus 1%. So there is a slight improvement and this is consistent with our strategy. EBITDA margin in Equipment Systems and Services was somehow lower and this is due to the different mix of our products and services within this segment was mainly affected by lower contribution coming from the ship repair and conversion business area. We move on to net working capital and net financial position. Of course, we are on track also here. Our net working capital has increased and this is expected. This was expected. It's in line with our current delivery schedule, which entails the delivery of 3 vessels, 3 large sized cruise vessels actually in the Q3 of 2021. And we're going to have one more in the Q4 of 2021. And as you see, the net financial position exactly mirrors the increase in net working capital. And let me be clear here. We do expect in the second half of the year a substantial deleveraging here. We are working at full speed to complete the delivery program. As I said before, the ships are big ships, large ships, so they do require substantial amount of funds to be supported when it comes especially to the last stage of production, which is the stage in which we do rely more on external supplies. But of course, this trend will deeply reverse in the 2nd part of the year. On the outlook, I leave the word back to Fabio, please. Right. Thanks. Page 16, you have the final page of this presentation. Maybe a few words regarding cruise. Cruise is our major business lines, the historical one. And I would like to highlight very clear statement. We believe the worst is over. The sector and the companies have been adapting to the pandemic last year, restructuring their balance sheet, cutting costs, working on health and safety measures. And we believe that it's important to see 2021 as a transition year and 2022 and even more importantly, 2023 as a growth year. And this is not our prediction. It's simply what we hear from our clients and what you can read when looking at the statements of the different companies, most of them are listed. And you can see that indication regarding 2022 are strong. Strong in terms of bookings is very encouraging in term of pricing. Some of them highlighted the fact that 2022 will be even better than 2019. So 2020 has been a horrible year for them. 2021, they will still be losing money, but the CDC is also being weighing a lift regarding the restrictions and there could be some also positive surprise, probably not material, but in terms of booking and destination even during the summer. But everybody is expecting a full swing recovery starting next year. As we said, we're not expecting new orders in 2021 and in 2022, But we believe that orders will get back because this sector is getting back. Naval, the company is now fully entering in a new phase, which characterize companies shifting from basically one client, our entire Navy, a very sophisticated one, to a more a broader and more diversified client base abroad and particularly in U. S. And as I probably said before, we already said before in the past, being the prime contractor for U. S. Navy is what best you can imagine when you have to market new products and and your services around the globe. And the expense for defense is encouraging. It's not homogeneous around the globe, but you have the Eastern part, which is expected to grow more than Europe, which is expected to grow more than U. S. But the growth is nice. And it's very important to highlight that we're leader in frigates. And frigates for a number of reasons is probably the most important ship to have in our product range because it's expected to grow more significantly more than the market overall. Regarding tech, we've been discussing the Amazon collaboration agreement, which we believe is transformational for us and can materialize also new player in an area which is strategic even considering what is being highlighted in the recovery plan, our Italian one, the effort which is being asked to everybody to become more digital or modern, simpler. And as you may know that everything which has to do with artificial intelligence, data, connections and for connections it means Internet of Things We'll go through cloud and we've been partnering with the world undisputed world leader. And also the other businesses from infrastructure to accommodation to the other naval business we have are characterized by leadership positions and technology leadership. And so we will continue to be focused, disciplined, working more and more to introduce in our yards, in all our manufacturing facilities more and more technology. That is going to impact manufacturing as well. To wrap it up, as we already said a couple of times before, we confirm the target for 2021 and we can say that the start of the year is encouraging in a still uncertain word, but we have visibility and we have a leadership position that we want to leverage in order to have sustainable solid and profitable growth. I will stop here and leave the floor to the question first question is from Alessandro Pozzi with Mediobanca. Please go ahead. Good morning and thank you for taking my questions. I have a few, but let's start with the first one on naval. You mentioned the division is entering a new phase with a broader number of clients. And when I look at the revenues, I think naval is now just a little bit below 30% of the shipbuilding. I think in the past, it's been higher as well. But I was wondering how do you think that's going to change the mix close versus naval? And also, if you can give us a little bit more color on the progress of the FTG program in the U. S. I think it is now in the design phase, but can you tell us when you believe it's going to turn into a contract? And also, I was interested in knowing about the option of when the U. S. Government will potentially exercise the option company. As you may know, Finca Tierra has been historically working with a major client, which is our Italian name. And over the years, a strategic effort by the company has been to diversify its client base. I would like to highlight diversification for a moment also referring to our cruise division. Not only we have the largest market share in among international operators, but we also can boast the most diversified one. That is very, very important because it's not depending on 1 or 2 major operators. We've been through that phase before. It is also more difficult to extract value from your company. So being diversified is a value that we've been constructing, thanks to the great work done by the company and the colleagues. And clearly, we are entering and we've been entering different phases because you know from Egypt to Qatar, we've been able to get new orders, significant ones and beyond Italian territory. So clearly, being naval, a very attractive business in the long run, we continue to invest and we want to be able to export our products in a very promising market. With that respect, having been awarded the U. S. Navy contract for this year represents a very, very important business card because it clearly is the most sophisticated and most important buyer in the world. And we are now so I come to your question, we're now working on the FFG program and we are progressing in line and we are clearly also investing. When you look at our net financial position, you have to know that we're coming from a couple of very, very intensive year in terms of investments. We've been, I would say, strengthening the competitive position and productivity of our shipyards in Montalcone and Marghera, which are among the 2 largest in the world. And we've been investing a lot, we're still through this investment cycle. And this year, our investment numbers will be clearly impacted by what we're going to do in U. S. So the program is clearly in line with the plan, the original plan. And clearly, we have options, as you know, and we hope that there will be good news in the months to come. Okay. In terms of when you're planning to enter the construction phase for the FFG program? Pardon? Sorry, I didn't hear. I believe the first ship for the FFG program, it will be delivered in 2026, but probably you are going to book revenues well ahead of that. I was wondering when are we going to see that into the top line? I mean, Josep, if you want, but we clearly keep on we stick to our clearly accounting principle and nothing is going to change versus what we ordinarily do. Please, Josep. Well, yes, Alessandra. As well said, 2026 is the delivery year. Of course, it's a long time from now, but we are already in the engineering phase of the first vessel. We do expect the options to be exercised this year. We expect the exercise of the option for 1 vessel and out of the 9 remaining. And we expect the program to progress as expected. Of course, contribution in terms of revenues in the year 202120 22 considering also that we have 1 ship in the backlog right now will not be substantial. What mainly still contributes to revenues as far as our U. S. Operation goes are, of course, the LCS program and the program, the MMSC program for the Saudi Arabian Navy at this point in time. Okay? Okay. Thank you. My second question is on the longer term view and the business plan. I think that the last time that we've seen the management view for the long term target was maybe about 3 years ago. And you have a lot of things going on. You have the naval clearly, intermediate phase, but also VAR that changing the business basically moving toward wind, but also you have a lot of investment in digital. Do you think we're going to see a new business plan? Okay. But it sure is right, Alessandro. I mean, the company has been transformed. But I would like that ships is still our stronghold. It will continue to be our core business, continue to be a leader in cruise because it's a promising market and enable. It's growing, it's diversifying revenue base, it's characterized by different booking capital cycles. You may know it's important to keep on growing and having a more balanced exposure between these two decisions. On the other companies we have in our group, we believe that there will be big promising expectations for the digital, electronic, cyber and security businesses, which I would like to say, they are very, very close to what we do because on a ship, on the kind of ships we build. That's a lot to think about. We're not just building ships for containers, tankers, roll on, roll off or other. We bring people. We bring CMS Combat Management System. So the technology, which go through, I would say, every square meter of what we build, it's impressive. And we realized over the last few years that this technology can have also in the market outside of our products. So this technology, the know how that this company has been building, thanks to his very robust competitive position compared to everybody else, allow us to invest and grow in different divisions, but with a clear focus on doing what we know how to do it. So there's no, I would say, competence risk. And while once we go a little bit outside of our usual track, we do it with the best partner in the world. Thank you. Thank you very much for the color. The next question is from Monica Bosio with Intesa Sanpaolo. Please go ahead, madam. Good morning, everyone. I have three questions. The first one is on a general is a general question. Most of the industrial sector are experiencing shortage in supply chain and strong cost inflation. Maybe it would be helpful some comments from you about how the company is dealing with raw material pressures, potential supply chain shortage or if you have done some provisions in relation to this issue? And the second question is on the Naveen business. Within the consolidation of the European defense business, according to the press, press rumors reported the potential interest of Fincantieri and Thyssenkrupp with the participation of Rheinmetall. Maybe it's not the case to ask, but I'll try. If you can comment on this. And the very last question is on INSO. When should we see some initial contribution from INSO on Cinquantieri figures? Thank you very much. Thank you, Monica, for your questions. The first one, raw material, is a very appropriate one. You all know that we are in a phase in which raw material commodity prices have been spiking. And as far as steel is concerned, you may know that there has been quite an imbalance around work. Chinese steelmakers are no longer exporting. Actually, they're using to finance their explosive growth. U. S. Is growing and you've seen Joe Biden plans for infrastructure. And by the way, big portion of recovery planning will also be put infrastructures, which will require steel as well. Before, yes, this is an area of concern for us. As for everybody else, it's important to know that we're being buying long term contract, I think, criteria as we usually do, But and that clearly we have to see and understand where steel price will stabilize. But what is important is that we will continue to work on efficiency by definition and we do it in different way. As I said before, investing in yards will make us more competitive and will allow us to really to improve the cost of the constructions. We do because more and more can be done onshore rather than offshore. It's a very technical things, but we are happy one day to bring you to shipyards and to see what is going to happen there. Plus more and more technology from robotics to other innovations that we will have we are implanting, implementing and we will keep on implementing in the next few quarters, in the next few years. Fora is a steel price, something we cannot control. We're not concerned for this year, but clearly we have to see where it stabilizes. But the only answers we can have since it's not hedgeable, can be hedged, you can just protect yourself with long term contract is to wait for stabilization and hopefully for lower price. In the meantime, we have to be more and more efficient in the way we do things. On naval consolidation, you've been hearing about consolidation in European defense for quite a long time now, and we'll see. So no comments on that. Inso. Inso is a very interesting extension of competence know how. As you may know, we're being building our infrastructural business out of knowledge because as you know, any ship is made of different bridges. So we know what bridge is about. We've been having a very, I would say, wide echo after our accomplishment at the Genoa Bridge. And but to be very, very also conservative, we also have been buying cordially from bankruptcy procedures And we'll be also buying other lateral set of skills from very similar bankruptcy procedures or extraordinary commissioners. And that is also true for Inso, which is about hospital and is about technology. We can put a hospital and it's also about concession. We do have we believe that it will take a while. The order book is significant, but I would highlight the most important things, the skills, the know how we have there. And so it's very important that we don't want to be a generalist player in the infrastructure world. We want to stick to what we know how to do. And there are obvious opportunities around the world very close to our main area of skills. Working steel, we are working our ships are made of steel. We know how to craft it. We know how to shape it. We know how to construct it. And if we have to turn that set of skills in something which is not on the ocean, but is more solid, we can do that. We can do that. And the client base, we will comment maybe in the one of the next few quarters, it's quite impressive, not just in Italian level. And regarding hospital, we also believe that there will be a lot of investments in this area, not just for recovery plan, but more and more after what happened. And therefore, the set of skills and knowledge we're being taking on board with the Inso acquisition will definitely make a mark in our accounts progressively. Yes, I agree. Thank you. So should we start to see some contribution not in 2021, but maybe something from 2022 and then progressively increasing. Is it correct? Yes. We are expecting a progressive growth numbers, but I mean, we're a large company, as you may know. So it's important that these infrastructural division is gently and solidly and prudently moving ahead. Okay. Thank you very much. The next question is from Matteo Bonizoni with Kepler. Please go ahead. Yes, good morning. I have three questions. The first one is as regards the growth of VARTA in the renewable area, including cable and vessel and support vessels for offshore wind operation. So as a matter of fact, VARTA is now around breakeven on the EBITDA, slightly above breakeven. My question is to understand on one side, what is the size of the commercial opportunities which you see here? And then also what are your expectation as regards margin evolution for the VAR, Doxor and Specialized Investors division? The second question is as regards the potential outlook for also 2022, 'twenty three in this sense. So you have a big backlog, but for a couple of years, probably you are going to have a book to bill quite low or below 1 due to the fact that cruise order will resume in 2023. So my question is, as regards your top line, should we expect another leg up in 2022 due to the execution of, let's say, the old the existing backlog? Or maybe 2022 and also 2023 could be roughly stable here? So what is the outlook on your top line? And then as regards the guidance which you have confirmed for an improvement of the net financial position, notably in the second half of the year. So you have said that at the end of the year, your net debt should return in line with M 2020. My question is, is this also true for the amount of the construction loans? And also, you have lost deliveries, I think, in July or in any case in Q3. Can you quantify a little bit the cash in which you are going to have in the Q3? Thanks. Thanks, Matteo. Giuseppe, you want to take those questions? Yes. On your first char Matteo. On your first question on VARD, Bard is, let me say, right on track with respect to what we started, let me say, on the back of 2019 results. The deep restructuring process ended with the shutdown of 2 yards in Norway. And of course, given the development of the markets, Varda has once again had to reposition in its business. But what really I mean, what we really see here is the flexibility and the ability of VARDA to cater different needs and to adapt, let me say, its business to new demand. Years ago, it was carbon fuels, gas and oil. Right now, that segment has literally collapsed. And I kept saying for years that it was really foolish to forecast a return to previous levels on this sector. And what we see now, the new story here is offshore wind. Offshore wind capacity is expected to grow 4 times the current capacity in the next 10 years. The order that we acquired in the Q1 is for 3 service operation vessels for the Dogger Bank's wind farm, which is expected to become the large to become operational in 2 years from now, I guess. And it's, at the moment, the largest wind farm in Europe. We see further order intake in this segment. These wind farms need support vessels to be operated and maintained. This order is very well welcome. And when it comes to the flow into revenues and profitability, of course, those 3 ships are for delivery 2023. So we're going to see contribution kicking in end of this year and the following year mainly. We had as I said before, we had an uptick in Bart's EBITDA. We expect further growth. Of course, this requires very good execution. We believe that VARTA has improved a lot in execution. In many instances, it has been brought up to Fincantieri standards. And we still keep a very, very close eye on the footprint of our in terms of its yards, its capacity. And of course, we the big buzzword here is wind offshore, but we can't forget that VARD with its Romanian operations has played a very important part in the growth of the top line also for Fincantieri SPA for the cruise business out of Italy because of the contribution that the Romanian yards are giving to the construction of entire sections of the cruise vessels that are then towed to Italy and assembled together. And in that matter, we can say that Romania, operationally wise, is getting closer and closer to the standards that we have here in Italy. So it's of course, we maintain a cautious stand here, but we can say that we are so far right on track. On the outlook on Giuseppe, just one comment additional comment regarding wind because he was asking the size. We don't comment about our target. But in terms of what we stand now, as far as offshore wind is concerned, globally, we have roughly now installed 20 gigawatts. And any kind of analysis from you choose which kind of consultancy companies is going to grow at least to 80, 90 before 2025 and well north of 200 gigawatts in 2,030. That means from 30 to 230 that tells you about the growth, which is being expected in a very consistent way by any observers commenting watching. U. S. Is lagging behind. Europe has been moving fast, so the U. S. Clearly and Asia is booming. And we are a global market, leader. One of the global market leader. For it, it would be not appropriate just focus on what is going to happen immediately. We have no offshore wind installed as of yet, but we believe there will be some project. We are familiar with some of these projects, but when we watch at our competitive landscape, we're clearly watching at the world. On your second question, Matteo, yes, order intake for cruise, we don't have signs of all expectations there. But let me say, even aside the pandemic, 2019 was a record year for cruise order intake. I remind you that we had we acquired 11 ships in the 1st 6 months of 2020. So we would have expected in any case we didn't cite COVID-nineteen in any case, we would have expected a slowdown in order intake. But I would not consider the when you look at the book to bill expectations, I would not consider only, only, opportunities may opportunities may come in the novel business. Our positioning there, as Mr. Gaglia said before, is stronger and stronger year after year. And the acquisition of the Fisher Freegate program in the U. S. Is a huge, very important, very visible business card as we said before. So as with order intake, we maintain, of course, we're confident that new commercial leads will bring new orders in the next years. This is to say also that for 2022 and 2023, we'll still expect without pretending to make a guidance on this, but we do still expect a growth in revenues. Of course, 2021, we are guiding for 25%, 30% revenue growth, but this is also considering that the base is lower. Last year, we lost $1,000,000,000 in revenues. We expect this 1,000,000,000 dollars to be gained again, thanks to the cruise programs and to the naval business that to the construction that we are performing right now. But on top of this, we do expect some growth, okay? If you look back at our previous business plan, the 2018, 2022 business plan, if you look at 2022, it's I can say that we are consistent with that. And we said also the same we gave the same message without giving you, let me say, quantitative measures, already last year on the occasion of the first half year results. If we come out of the pandemic with our order backlog intact, we expect to resume to go back in our growth path that was outlined and indeed that is embedded in our backlog. This is the message we gave you in July last year and we are in a position to reiterate the message as of now. And of course, for 2021, 7% EBITDA, 25%, 30% revenue growth and the Q1 demonstrates that we are on the right track. On your third question, 2021 NFP, yes, we keep this guidance. We expect NFP to slightly grow in the Q2 of this year. We have 3 deliveries in the Q3 and we have one more in the Q4. The cash in all these deliveries will be in excess of EUR 1,500,000,000 for the Q3. And we're going to add another let me for the all year, we are in the range of EUR 2,000,000,000 of cash in for thanks to the deliveries. And no, we do not expect to, of course, to deleverage on the net financial position by increasing construction loans. Overall, debt levels for the end of 2021 will be broadly in line with debt levels at the end of 2020. And again, we always enter into these type of conversations. We expect the first delivery of 2022 is for January 30, 2022, so just a month after the closing of the books. When we will present end of year results, the net financial position as of the end of the year will be already, let me say, an old number. And this will happen also in July as well. The next question is from Gabriela Gambarova with Bank of Yes. Thank you and good morning. The first question is about Varda, I mean the cruise component because in your remarks, in your press release, you say that the top line went down because the number of deliveries is expected to be lower vis a vis 2020. So I was wondering if the former VARDA, let's say, crew is yards pose an issue in terms of backlog. The second one the second question regards naval. I understand you have this strong positioning in the Freight segment. I was wondering if you believe that even the submarine segment is, let's say, a segment in which you have, let's say, the technology, the expertise. I mean, do you see an interesting potentially interesting market there and a market where you can play a significant role? This was my second question. And the third one regards again offshore wind and the perspective in the U. S. We saw that the Biden administration give the green light to the 1st big offshore wind farm, Vineyard Wind. And I was wondering if you believe there is room for you to play a role in that area considering that there is the Jones Act and that they have to build their own ships for offshore wind. So I was wondering if you see any kind of opportunity there. Thanks for the question. I will start in reverse order. Regarding U. S. Wind, I mean, you've been looking at what has been outlined by the U. S. President and Administration, and we believe that offshore wind will be one of the pillar of growth for the strategy. We are clearly making some thinking about that, having yards there. You know that there is also the Jones Act there and being a producer in U. S. Is something which is a plus, clearly not a minus, but we also are very focused on our naval programs. Therefore, we believe there's opportunity to be captured and we are just making some reasoning about how to capture these opportunities. Regarding submarine, submarine, we don't produce nuclear ones, more the traditional or new generations. There is also innovation going through this segment of the naval business. Clearly, we are interested with being awarded 2 orders last year. And as you may know, clearly, it's part of our business. We want to capture the opportunities. We were just saying that naval business where our, I would say, more competitive position is on frigates, which incidentally are also expected to be probably the most sought after product, the more required product. And when talking about naval, there are also other services and businesses attached to this kind of operations from logistics support to other services we can provide. For Enable for us, it's important at 360 degrees and it's not just submarine. Regarding VARDA, and maybe Giuseppe can comment about that. We just closed YARDA. We're going through rationalization of our manufacturing footprint. And VARDA is slightly positive EBITDA level in the Q1. We are expecting that the worst is over behind our shoulders now and we are clearly concentrated and becoming more efficient, more innovative. Be ready for moment in which oil and gas demand will resume, which is not probably going to happen this year, but sometimes it will go back because we will still need oil and gas for the next 10 years for Easter. Therefore, that is not dead forever according to our opinion. But clearly, what is something which we read about every day, there are lots of project in renewables and our area of expertise and our natural area of extension of knowledge is in the ocean. And so we'll stick to that. If I may add something here on Kuzvard. What I said when we discussed the EBITDA for the NOK Investiture. Abhijo, can you put on mute, please? As I said before, performance economic performance is very good also in the cruise part of the VAR business. The backlog of VAR has been untouched by the COVID-nineteen emergency. VAR has built a reputation in the niche segment of the exploration luxury exploration cruise vessels. We have 4 ships under construction with deliveries in 2021, 2022 and 2023. Of course, other acquisition has been affected by the prices. But at the moment, it's good. Backlog preservation is the key theme, and we are so far right on track with this. Consider that the Luxury Niche Exploration Cruise Vessels segment has been a segment in which we experienced very important growth in the years before the crisis. And it's a segment in which Fincantieri Group with its production footprint has been has played a leading role in terms of market share. So the premises are all there if and when other acquisition will restart again, okay? Okay, very clear. Thank you, Fabiano and Giuseppe. The next question is a follow-up from Monica Bosio with Intesa Sanpaolo. Yes, sorry. Yes, good morning. Sorry. Just a follow-up on the equipment and system and services. The Q1 was impacted by no work contribution from ships repair. Can you give us a rough indication for the full year? No, Monica. Should we expect a recover because the EBITDA was a bit lower than what's expected? Yes, it was definitely a bit lower. As you know, we'd rather guide for the overall EBITDA margin. Of course, the equipment systems and services is a bundle of several things. With the core of the segment still, let me say, very much focused on the marine interiors business. So the let me say, the OEM business in the construction of cabins and accommodation for cruise vessels, and that segment is performing very well and on track. What we where we really are suffering, and of course, this is, let me say, driven by the pandemic crisis because with this pandemic, of course, the cruise operators have canceled CapEx, renovation CapEx on the current fleet. Some of them have heavily reduced the number of ships in their fleet. Look at what Carnival did, almost 20%, the fleet was scrapped or sold. So these were and of course, the lead time in this business is very short. So what we are really where we're really suffering is there. So very low contribution coming from there, very low margins coming in from there. In general, it's early to say how the segment will perform throughout the year. In any case, expectations the overall expectations of the for the group is intact, is consistent. Current margin levels and what we see coming in for the remaining part of the year are consistent with the 7% EBITDA margin, including a possible improvement in the margin of the equipment systems and services segment. Let me put it this way, okay? Okay, got it. Very clear. Thank you. Mr. Mr. Dado, there are no more questions registered at this time. So thank you all for attending the presentation and have a great day. Bye bye. Thank you. Bye.