Apologies for the technical issue. We will start again. We are pleased to present another strong set of results which further demonstrate Fincantieri's ability to capitalize on favorable macro trends while maintaining financial discipline and ensuring consistent execution of its backlog. This strong momentum builds upon a remarkable 2025 and provides a solid foundation to support the group's growth strategy. We achieved a solid revenue performance despite the unfavorable comparison with a particularly strong Q1 2025, which benefited from the order for two PPA units for the Indonesian Navy. Revenues visibility for the rest of the year and beyond is very clear, supported by the group's significant long-term backlog. We delivered a further material improvement in EBITDA margin of approximately one percentage point year-on-year, reaching 7.4% in Q1 2026.
Reflecting a remarkable increase in profitability across all segments and a strong commitment on operational efficiency, cost discipline, and execution excellence. On the commercial front, we achieved a new record high total backlog at over EUR 74 billion, with the new contracts further extending the visibility on deliveries up to 2039. The value of the contract signed in the first four months of the year already exceeded the 2026 annual target of approximately EUR 11 billion envisaged in 2026-2030 business plan. Our deleveraging path continues with net debt adjusted EBITDA last 12 months ratio increasing to 1.1 x, significantly improving compared to the full year 2025, supported by cash generation over the period and by the EUR 15 million capital increase completed in February 2026.
On top of this robust set of results, fully confident on the group's growth trajectory, we are raising our 2026 guidance. Let's turn now to page four. Going deeper into our commercial performance, we achieved another strong set of results in the first quarter 2026, with a book-to-bill at 1.6 x and an all-time high total backlog of EUR 74.2 billion, increasing by 17.4% compared to the end of 2025 and guaranteeing approximately 8.1 years of work. The backlog in Q1 2026 reached EUR 42.7 billion. The new significant orders announced in the first quarter of the year, which I mentioned before, are included in the soft backlog and will feed into the order intake and backlog as they become effective in the coming months.
Let's now move to page five to have a look at our order book and deliveries. In the first three months of 2026, we delivered five units: two cruise, three offshore vessels from five different shipyards. This is an impressive result also considering that this year we expect to deliver a record of eight cruise vessels. In April, we also delivered the first multipurpose support vessel, Tritone, to the Italian Navy following an extensive upgrade program on the original Vard offshore ship. The vessel is designed to ensure maximum operational versatility with specific reference to the underwater domain. As we speak, we have a full slate of deliveries scheduled for the medium long term, offering a clear and profound visibility up to 2036, with 94 units in order book.
Considering the new order for three cruise ships for Princess Cruises signed in April 2026, we have extended the visibility up to 2039. Let's now move to page six for an overview of our commercial performance. In the first months of 2026, we signed important contracts exceeding the target set for the full year, confirming the group's impressive commercial momentum. As mentioned, these are still subject to financial and other typical conditions, therefore not yet reflected in the order book, but with a clear visibility in their conversion into hard backlog. We confirm our leadership in the construction of increasingly advanced and sustainable cruise ships. We new order signed for three new LNG powered Voyager class vessels for Princess Cruises. In addition to the contract signed in the first quarter of 2026 with Viking for NCLH for five cruise ships.
We continue to strengthen our position in the U.S. with an important contract covering materials and engineering for the first four units under the 35-ship Medium Landing Ship program. This step precedes a future award of construction contracts and represents an important step in the evolution of our longstanding partnership with U.S. Navy. Last and not least, in the underwater business, in February, we signed the largest order ever for WASS, for the supply of lightweight torpedoes for the Royal Saudi Naval Force, not yet included in the backlog. In addition, we signed two key strategic agreements for the production of a new class of high-speed multi-mission unmanned surface vessel developed by Saildrone, marking a concrete step forward in Fincantieri's industrial strategy to integrate unmanned solution into its defense portfolio.
A strategic agreement with KAYO to establish a joint venture in the construction and maintenance of naval assets in Albania. Also pursuing commercial opportunity for smaller naval vessels in international markets, in which Fincantieri will act as prime contractor, opening up new geographical markets, new product lines, and expanding our production. The strong commercial momentum supports our balanced strategy, which maximizes the value growth opportunities intrinsic in all of our business segments. In Cruise, we continue to benefit from a profound backlog, which gives us very long-term visibility and enables us to tie in our supply chain for the long haul. This impressive backlog is also significantly de-risked, thanks to a very high proportion of sister ships and only seven prototypes in our order book. The full saturation of our shipyard capacity optimizes our fixed cost and increases our margins.
The margin growth in cruise is clearly visible in the overall results of the first quarter 2026. We are also seeing a positive evolution on prices, with revenue per gross ton increasing by more than 20% between 2026 and 2030, as well as an improvement in payment condition on recent contracts. In Defense, market backdrop remains extremely supportive. As we have mentioned recently, we expect approximately EUR 5 billion new orders in the coming months, also supported by the progressive allocation of the SAFE funding facility. More broadly, we continue to see structural growth in naval defense, also in the medium long term, with a macro trend which is decoupled from the news flow on ongoing conflicts.
The current tension on energy supply and prices has sparked a demand for energy security, in particular in Europe, which provides significant opportunities in offshore, both for wind and oil and gas. It also promotes the strategic importance of developing regional value chains. Additional growth opportunity for Vard are emerging in defense, including the evolution of the VARD-like mothership concept, as I mentioned, and the Nordic defense programs, as well as in commercial segments such as cable layers and next-generation icebreakers. Finally, in underwater, rising geopolitical tensions and the growing need to protect critical energy and communication infrastructure are accelerating demand for advanced subsea solutions, threat mitigation technologies, and unconventional capabilities in high value-added premium margin market. There are also significant opportunities in commercial applications in underwater telecommunications, deep sea mining, energy at sea, and aquaculture, which we intend to capture.
This positive outlook, coupled with the solid performance delivered in Q1, gives us full confidence on our trajectory and enables us to raise our 2026 guidance. We expect revenue in range of EUR 9.3 billion-EUR 9.4 billion, EBITDA in the range of EUR 700 million-EUR 710 million, with an EBITDA margin confirmed at approximately 7.5%. Net profit in the range of EUR 140 million-EUR 180 million. Finally, net debt adjusted EBITDA ratio at approximately 2x, which equals to 1.3x, including the capital increase completed in February 2026. Turning to page nine for more color on non-organic growth plans.
As we communicated, the EUR 500 million capital increase that we successfully completed last February is intended to support our selective inorganic growth strategy through M&A opportunities, in particular in relation to unconventional underwater solutions, where we see significant space to expand our position and in technologies that will enable us to accelerate our product and process innovation. The underlying funding strategy is consistent with the one we applied for the acquisition of WASS, where the capital raised was used to fund the acquisition of the division. Such track record in M&A in recent deals like Remazel and WASS is strong in light of the growth profile of these companies that have been highly accretive to the group's performance. We are currently looking at number of potential targets and of course, we will update you in the coming months.
Now, I will hand the call over to Giuseppe, who will discuss our financial results for the first quarter of 2026 in more detail. Please, Giuseppe.
Thank you, Pierroberto. I'm on page 11 right now. Good afternoon, everybody. The first three months of 2026, order intake stands at a solid EUR 3.4 billion, not fully comparable to the extraordinary record level we had in the first quarter 2025. That level included the four NCL jumbo cruise ships, significantly higher than the average Q1 order intake of the last five years. As Pierroberto mentioned before, we also signed several major contracts in the first months of 2026, i.e., up to now, for a value of over EUR 12 billion. These are reflected in the soft backlog as still subject to financing and other typical terms and conditions of the sector.
Of course, they will feed into the order book and backlog in the coming months. At the end of the first quarter, the book-to-bill ratio stands at 1.6 x, reflecting the sustained growth in Fincantieri's commercial pipeline, supported by strong demand across all core business segments. Shipbuilding order intake landed at EUR 3.2 billion, with two AIDA cruise ships contracts becoming effective. Underwater and equipment systems and infrastructure order intake increased by 24% and 62% respectively compared to the first quarter of 2025. On page 12, our total backlog reaches yet another all-time high at EUR 74.2 billion, increasing 17.4% compared to year-end 2025, and this is driven by strong growth in the soft backlog, thanks to the new contract signed and solid order intake.
In detail, backlog grew to EUR 42.7 billion from EUR 41.1 billion in the first quarter of 2025. Soft backlog increased to EUR 31.5 billion compared to EUR 22.1 billion as of the end of the first quarter of last year. We deliver five units from five different shipyards, two for cruise and three for offshore. On financials on page 13. Revenues reached EUR 2.1 billion in the first quarter of 2026, and this is compared to EUR 2.376 billion in the prior year period. Of course, the year-on-year comparison is skewed as Q1 2025 was particularly strong, benefiting from the order of the two PPAs for the Indonesian Navy that Pierroberto mentioned before.
Excluding this effect, revenue in the first quarter of 2026 recorded an increase of 6% year-on-year. In particular, cruise revenues grew by almost 17%, driven by backlog execution and the progress of construction programs already acquired. The year-on-year decrease in defense is mainly due to the positive contribution from the sale of the two PPA that I mentioned before. This is in the first quarter of 2025. It also reflects the impact on 2026 revenues of the redefinition of the Constellation Program for the U.S. Navy announced in November 2025, which leads to a shift forward in revenues expected in the United States. Of course, those revenues are linked to the new contracts expected to be finalized during the year, including the order for four units under the Medium Landing Ship program.
You already saw first order being acquired by Fincantieri in the U.S. in the recent months. Offshore revenues reached EUR 360 million, up by little over 12% compared to the same period of 2025. The underwater segment posted a very strong increase in revenues, up 43.3% year-over-year, driven by the consolidation of our submarine systems and of course its solid performance and the accelerated advancement progress of the U212 NFS submarine program for the Italian Navy. Last but not least, equipment systems and infrastructure segment also recorded continued growth, with revenues up almost 9% to EUR 309 million, mainly driven by the mechatronics segment and the infrastructure segment, respectively 24.6% and 7.1%.
On page 14, EBITDA, remarkable margin increase to 7.4% from 6.5% reported in the same period of the year before. This, of course, more than compensates the effect of the Indonesian Navy order on the first quarter of 2025. In detail, shipbuilding EBITDA margin increased significantly to 7.5% versus 6.8% in the first quarter of 2025, mainly supported by the cruise segment. This is due to better pricing dynamics and, you know, efficiency initiatives and maximization of the operating leverage. Offshore and underwater EBITDA both increased, reaching margins of 5% and 17.1% respectively, showcasing the growth trajectory of both the businesses.
The equipment systems and infrastructure segment delivered a strong contribution to the group's profitability, with EBITDA rising by 40.2% and EBITDA margin reaching 6.4%, 1.5 percentage point higher than the 4.9% in the first quarter of 2025. Main drivers are a significant contribution from the electronics and digital products, +1 55%, the infrastructure segment + 27%, and a double-digit profitability in the mechatronics segment at 10.7%. Deleveraging accelerating thanks to cash generation on page 15. As at March 31st, 2026, as we said before, adjusted net debt strongly improved compared to the end of 2025, reaching EUR 771 million versus EUR 1.3 billion at the end of fiscal year 2025.
This value includes non-current financial receivables as well as the effect of the capital increase of February 2026. Excluding the effect of the capital increase, adjusted net debt improved to EUR 1.3 billion almost, supported by cash generation over the period. Leverage ratio improved to 1.1 x compared to 1.9 x recorded as of year-end. Of course, the 1.1x is 1.8x, excluding the effect of the capital increase. Net working capital is negative at EUR 705 million, slightly decreasing compared to the end of last year, where it was negative at EUR 634 million. With a decrease in construction contracts and client advances, EUR 206 million, partially compensated by an increase in trade receivables and a decrease in trade payables. With that, I will now hand the call back to Pierroberto for his concluding remarks.
Thank you, Giuseppe. Let me now summarize our key takeaways on page 17. We reported solid financial performance in the first quarter of 2026, with a strong margin improvement driven by the positive contribution from all our business segments. Commercial performance marks a new milestone with a new record total backlog and new contract signed, providing profound visibility beyond the next 10 years, thus securing a clear and structural operating leverage for the years to come. Our strategic defense business best positions us to capitalize on an acceleration in demand driven by the current geopolitical scenario, with a near-term opportunity pipeline of approximately EUR 5 billion expected in the coming months. The strong set of results achieved allowed us to raise our full-year guidance, reinforcing our commitment to the growth trajectory envisaged in the new 2026 to 2030 business plan.
The successful completion of the capital increase in February 2026 demonstrates strong market confidence while providing additional firepower to pursue our strategy of selective M&A. With that, we are now open to take your questions.
Thank you. This is the chorus call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. We will pause for a moment as participants are joining the queue. First question is from Antonio Gianfrancesco, Intermonte.
Good afternoon, thank you for considering my questions. I have two. The first one, looking at broader picture, the group today benefits from a very large total backlogs, stronger execution in cruise, with margins providing particularly accretive, even in a phase where the defense contribution is temporarily lower. My point is exactly this, just coming back for a moment on the defense order pipeline, at the Capital Markets Day, you indicated around EUR 5 billion of potential order over six months, now you are reiterating this target on upcoming months. My impression is that visibility on some of these opportunities remain very high, especially on domestic programs and U.S. I think the main variable is more related to timing than to the existence of the demand.
I was wondering how we should think about the risk that most of this order intake slips beyond of the original six months window and whether a delay in the award of contracts could represent a risk for the achievement of the 2028 plan targets. The second question is on the offshore segment. We have seen a softer performance in 1first quarter in terms of order intake. Can you help us better understand how you see the outlook evolving from there? In particular, which geographies and end markets are you currently monitoring more closely for new opportunities? What could drive a re-acceleration of the ongoing business going forward? Thank you.
On your first question, you know, I am sure that when we say six months, you understand that we are saying in the very short term. You have to finalize contract. There are a number of fulfillments. I would be very, I would say, uncomfortable with someone that is counting the seconds, the days. On your first question, I believe it is a no-brainer. If we are saying that there are EUR 5 billion of discussions that are close to the finalization, it means that there are name and surnames that we have disclosed as far as the Italian Navy is concerned. We made explicit reference to the DDX, the Destroyer, to the LSS, which are the logistic ships. We made disclosure on Clara.
Are all offers that are, you know, on the table and in the process of being, I would say, finalized. Again, only these three, if you know the metrics and if you are knowledgeable about the short-term and long-term Ministry of Defense expenditure, you will know that it's not, there's no risk there. It's a matter of finalizing paperwork. Again, Ben, I don't want to cut a long story too short. Obviously, you know, the relevant financing has to be there in order for the public administration to, you know, execute. You know, it's written in the public document, Here and there. The rest has to do with negotiations with foreign navies with respect to which, you know, for obvious reason, we are being as confidential as possible.
Again, these kind of discussions are equally triggered by the availability and accessibility of SAFE, which is this big financial measure made available by the European Union. Again, also in that respect, everything is going and we don't have any special information to share, which means to deviate from the expectation of EUR 5 billion in the very short term. Having said that, we believe that revenues, full year revenues for 2026 are solid. In fact, we have not only reiterated the guidance on revenues, but we have also a little bit fine-tuned upward.
Again, the comparison with last year, first quarter last year is driven not only by Indonesia, but by a peculiar contract, being the sale of a ship with a specific accounting treatment, being a sale of the ship. It's, I would say comparing two quarters that are not comparable in term of the way revenues are recognized in a sale of an existing ship vis-a-vis revenues recognition according to the work in progress accounting mechanism. On the order side, we feel confident. On the revenue side, we feel confident. A little bit of color on offshore, which was your second question. The offshore market is a market in which there are multiple kind of ships that can subsidize each other. That is the world of the energy, which is divided into two legs, the wind farms and the oil and gas.
What we experience regularly is that if by chance the wind is slowing a little bit down, the oil and gas will compensate a little bit up. You know, it's very clear that the world needs energy and, you know, either you produce electrons or you know, produce energy from hydrocarbons. No way to stay where you are. It is impellent to grow. Sometimes one leg is working more, the other time the other leg is working more. Yes, today, investment decisions in energy matters is inevitably hindered or I would say affected or influenced by the war, the conflict, the energy, I would say sense of urgency. It is very important to say that there are other kind of specialized vessels in which Vard is very versatile.
On top of addressing as usual wind and oil and gas at sea, wind and oil and gas infrastructure at sea, they are addressing also, cable layers. Lot of special vessels for underwater research, which is something that is remarkably interesting more and more on top of icebreakers and on top of positioning Vard on the specific demand of Norwegian Navy, which is, you know, opening a new cycle made of relevant investment plan for defense. On top of the large combatant ships, there are many, I would say, medium and smaller naval ships. Also in that respect, Vard is exposed to a very large and very interesting opportunity.
The general comment on our offshore business is that the combination of these multiple specialized vessels, including, for example, ships for fisheries, which is another kind of ship in which Vard is very active in these days. The portfolio of product and the overall demand for this kind of critical ships is there and Vard is very strong, very well-referenced and very well-positioned all in all.
Very clear. Very clear. Thank you.
Next question is from Marco Vitale, Mediobanca.
Good afternoon. Thank you for taking my question. Couple from my side. The first one is on still on the defense business pipeline. Looking at the, say, medium term, we noted that when you elaborated your financial targets for 2030, still there was the belief that your domestic market, that Italy, was supposed to increase defense spending to, say, 2.8% of GDP by 2028 and, sorry, 2.5% by 2028, while now we are witnessing still unclear messages from current government on whether this will happen or not.
The question is, looking at the, say, domestic business, is there something that there could be some potential risk conceived for your mid-term pipeline coming from a lower or slower ramp-up in defense expenditure from the Italian government? That was the first question. Second one is on the, say, cruise business. We noted a strong acceleration in profitability. The key question is whether this phase of margin expansion is something that you see sustainable to also going forward, specifically for the cruise business, or whether this was somewhat aided by finding some, say, favorable timing for specific mix change or other one-off effects. Thank you.
Thank you very much. Let me start from the second question and get back to the first. The answer is that the improvement in margins in the cruise is the, you know, result of a series of actions and interventions, organizational measures that we have constantly and consistently pursued over the last three, four years. It is not, you know, a case, it is not a one-off, it is there to stay, because it's the result of a process of reinforcement, which is on multiple domains and which is remarkably, I would say, quote, unquote, "invasive." I don't see any reason why this is not projected and projectable for the way forward.
In particular, if you consider that this dynamic is on the, on the cost side, so on the operations. There is also the dynamic on the revenue side, meaning on the momentum we are experiencing with respect to the prices, to the set of prices. The combination of the two effects, so optimization on cost and enhancement on price revenues, the combination of the two effects make us very positive for the, for the future of cruise. We want to get out of that image whereby, you know, cruise is not satisfactory and it needs the support of defense in order to become satisfactory. We don't like the image of that, this kind of image for the profitability of Fincantieri. Having said that, we want to overweight defense revenues in our blend.
This is the core of the strategy, so we are very happy that the engine of cruise is working very well, and this is from the very beginning our primary target. The big piece of news is to see defense revenues gaining traction and gaining pace. This is what we are working for. This is the big job we have been doing to position the company everywhere in the world, and this is what we are eager to show up and demonstrate, first of all, to financial stakeholders. Your question on Italian budget for defense, it's understandable. Let me say that investment programs of the armed forces are not something that can go zigzag.
When you launch a program, you launch a program, it's very difficult to imagine an armed force that is, you know, preparing everything and then not finalized and pursue. It's a matter of fact. I believe that the contingent situation is not expected to affect the ability to transform this long time prepared, engineered new ships for the Navy into real orders. That's my point of view. Again, I think that more in general, Navy expenditure in Italy is the one that is converting more into local value chain, supply chain, and local GDP. When we build the ship, the, I would say 80% at least of this order is translated into supply chain benefits and value chain benefits for our nation.
That's why I strongly believe that this feature of the Navy make the comparison with similar expenditure very, very, very advantageous for us. We will continue to address those opportunities, and we're looking forward to sharing with you the achieved target.
Clear. Thank you. Next question is from Emanuele Gallazzi, Equita.
Good afternoon, everybody. I have three questions. The first one, clearly you provide a lot of details, useful details on the naval business. Just looking at the underwater segment, can you give us a sense of the current commercial pipeline for this division? The second one is on the cost side. If you can just touch on what you are experiencing on the cost side in the current environment. I'm clearly referring to the steel and logistics. The third one, you mentioned the opportunity related to the Spectre project in the U.S. I was wondering if you see other, let's say, let's call them, partnerships for advanced unmanned vessels. Thank you.
Thank you for your question. Commercial pipeline on underwater. The underwater business is made of, I would say, three different legs. One leg is the traditional underwater submarines, so traditional underwater vessels. The demand for this is very evident, is everywhere. We are again pursuing those opportunities in multiple geographies. I think this in itself is a very good market to be addressed and very good, I would say, engine for the division. There is a second engine, which is the one related to innovative vessels, such as smaller submarines and/or drones of 9 m and 3 m, which is something we are very active. We have validated, as you may know, underwater drones with an integrated solution, including acoustic barriers and command and control systems.
I would say containerized command and control systems. We continue to work with the, with the navy and with international navies for those non-conventional solutions, so large AUV and smaller submarines. Submarines in the region of 800 tons vis-a-vis the traditional one of 1,600. We experience a lot of interest for this lighter kind of vessels, and we are very focused on that. There is a third leg, which is the leg of the commercial world. In the commercial world, we see a lot of opportunity in the civilian commercial space.
We are pursuing with Prysmian, with the alliance with Prysmian that led to the joint acquisition of a very, I would say, strong and well-referenced company for the underwater telecom equipment, as well as partnership with Sparkle and partnership with other key player in the space of the underwater. I think also this third leg is expected to gain pace. We see a lot of interest in the market. Basically, we are collaborating with everyone. We would like to, you know, show some very good achievement and ordering take also in this space soon. This is the update on the commercial pipeline in the underwater. Again, ranging from submarines to, I would say, innovative and to non-military solutions. Your question was on the cost side?
Yes, exactly.
Yes. On the cost side, we are not experiencing negative consequences on us, simply because we have, first of all, in place very, I would say, successful hedging policies and hedging contracts. For example, for steel, for gasoline, which is something we consume when we go for tests, sea trials. Basically also on the interest rates, we can be, I would say, fully shield from the outside pressure.
Let me say in the short term, we don't experience issues, neither logistic bottlenecks. On the logistics side, please consider that the vast majority of our procurement is in a regional value chain, so it's in the short distance from our shipyard and inside Italy, apart from, you know, big components such engines that are produced elsewhere, but for sure not in Middle East or not in region where we need the Middle East. Let me say, as far as the short term is concerned, we don't see big issues for Fincantieri due to costs inflation and/or logistic bottlenecks. On Spectre, so on our activity on surface drones, let me say that we have a lot of activity going on, obviously.
Surface drones are the primary instruments for increasing the projection and the deployment of naval power and in particular also in integration with existing ships, existing platforms. We are very active at any level in term of partnership in the surface drones. Obviously, Europe and U.S. are very different in the sense that in Europe, what we call surface drones are basically smaller. The doctrine by this side of the Atlantic is to have them for patrolling, for intelligence. The trend of today is to make them, you know, quote-unquote, offensive, so properly armed. By the other side of the ocean, by the other side of the Atlantic, there is even a more aggressive doctrine according to which they believe in very large drones. They are thinking of drones that can be missile launchers.
U.S. vision for the future is to have many, many, many, you know, platforms, as unmanned as possible, able to be equipped with VLS, which are the launchers, and to represent a kind of big deterrent, in case of, you know, deploying such a fleet, basically many, many, many drones of, you know, even, even very long sides. They are thinking of drones of 100 m and 120 m, let's say 2,000, 3,000 displacing tons. Something that in Europe we are not yet accustomed to elaborate. Fincantieri enjoys the possibility to play in those two different theaters, to get accustomed with those different theories and doctrines. That's why we are so focused because we are also more than happy to cross-fertilize the two shores of the Atlantic in order to make available the best.
Very clear. Thank you.
Next question is from Gabriele Gambarova, Intesa Sanpaolo.
Yes, good afternoon, Pierroberto and Giuseppe. Thanks for taking my questions. I've got three. The first one is on the fiscal year 2026 guidance for net profit, EUR 140 million-EUR 180 million. I was wondering if this target refers to the reported, let's say, net profit, so after exceptionals or is adjusted, so it's before? If I may, I mean, the range is pretty wide, so I was wondering what can make the difference between the EUR 140 million- EUR 180 million, if there is any particular moving part. The second question is on naval. I saw that the first quarter was pretty weak in terms of top line.
I estimated a -29% year-over-year considering, let's say, the one-off in Q1 2095. I was wondering if it is possible to understand when there will be, let's say, a recovery thanks to the new programs you got? I mean, should we see a further slowdown in the coming quarters, or is it possible that maybe from Q2, Q3 or Q4 there will be a flattening and then a recovery? The third one is on underwater. In this case, the performance was exceptionally strong, +43% in terms of top line. I was wondering, I mean, you said that specifically submarines recovered very strongly.
Even here, I was wondering what could happen in the coming quarters, because it seems to me that, let's say the guidance for 2036 in terms of submarines, was pretty, let's say, was a high single-digit growth. Instead, I was wondering if you, if we could see something more than this. Thank you.
Let me answer on the below EBITDA dynamics, I will leave the floor to Giuseppe. On your, on the revenues on 2026, the fact that we have reiterated the guidance should be the answer to your question. Otherwise would have been, I would say at least awkward, if not macabre, to increase, to confirm and increase the guidance. Again, the beauty of when you work in our business, the beauty when you work with projects is that projects are driven by the production schedule, so revenues are not what you sell, but revenues are what you produce. Typically, you know, there could be issues, there could be, obviously some issues along the way.
Typically, when you are in the current year, you tend to know what is your production curve, and so what is your revenue recognition mechanism for the months to come. If your answer is that if we will increase revenues on yearly basis or, you know, go beyond the current phasing experienced in the first quarter, the answer is absolutely yes. This is the reason why we have reiterated the guidance and even a little bit uplift. On the below EBITDA mechanism and dynamics, I will leave the floor to Giuseppe and get back.
Yes. On the first part of your question, it refers to net result after extraordinary non-recurring items first. Of course, the range is linked to the, let me say, realization of some upsides that we expect throughout the year. Let me put it this way. You also asked about naval revenues recovery, I guess. Pierroberto, if you
Huh?
Yes, it was on the phasing of the results when we could see.
Also in the underwater, again, you know, revenues are, you know, consequent to the production curves. No way to zigzag. It's the trajectory of our ongoing projects. We don't see issues why the current trajectory is not expectable for the future to come.
Okay. Thank you. Thank you very much.
Next question is from Lorenzo Di Patrizi, Bank of America.
Hi, good afternoon. Thank you for taking my question. First on the guidance raise, can you give just more details on what prompted this? Is there a division or program in particular to call out? Then on your leverage ratio, it has improved significantly from the full year. What drove this improvement, and what does this mean for the trajectory for the full year and to 2030? Am I correct that the one time target in 2030 is still excluding the capital increase?
Yes. Let's start with the second question. Yes, you are correct. The guidance we gave on leverage ratios as of 2030 excludes capital increase. The proceeds of the capital increase as we gave those targets before the ABB, and of course, without factoring the ABB in the targets. It goes the same for this year. I mean, we stand in the fact that we report, of course, net debt levels, including the proceeds, net of the proceeds of the capital increase. We are still guiding towards two without the proceeds of the capital increase. That is the, let me say, communication approach that we have chosen. Okay. On your first question on any detail on what prompted the guidance. Well, let me put it this way.
From what we definitely upgraded the guidance with respect to revenues, and of course, we qualified quantitatively the guidance on net debt, increasing it. As you remember, we gave qualitative guidance on net result levels. We simply said that net result of 2026 was going to be higher than 2025. Of course, now we are saying what range, in what range this result will fall, and it will definitely higher than what we expected. This is the sense of what we said.
Okay, fair. Thank you.
Next question is from Sriram Krishnan, Deutsche Bank.
Hi. Can you hear me well? Yes, we can hear you. All right. Perfect. I have two or three quick questions, if I may, please. The first one is on the U.S. With regards to the LSM contract, I believe that the manager for that particular program is still not appointed. Just trying to understand, post the appointment of that manager, is that purely from an operational management point of view, or is the manager has the ability to appoint more shipyards for manufacturing these 35 ships? That's the first question. The second one is on Norway. It's a pretty simple one. I believe, I think in the last month or so, there was the ship design contract was awarded by Norway.
Just trying to understand from the timeline perspective, when do we expect the ship design to be frozen and when the actual construction contract to come to fruition? Is it 2027 and 2028? Finally on the M&A in underwater. It's clear that you are focusing on underwater. Just trying to understand, are you focusing more from a technical capability which boosts you the technical capability or more from an expansion of market access point of view? Thank you.
On your first question, the LSM, the U.S., I would say that the good news is that the U.S. Navy, the procurement office decided to move forward on assigning Marinette Fincantieri USA with a new class of ship. They have indicated which is the overall number of ships they would like to build, which is more than 35, and that they have indicated two shipyards as the two shipyards to be specialized on these kind of ships. They have clarified that the first four were assigned to Fincantieri USA and that on these four, you know, order, on this order for four, they wanted to jump-start with the award of an initial contract for ordering the long lead items. Those procurement items which need a long time to be fabricated and produced.
This is, this is the news flow, and this is very good for Marinette because this is the living evidence that the agreement achieved in end of November 2025 was strong and, you know, solid. Your question is either they want to use more shipyards on top of Bollinger and Fincantieri. I have no specific information to add to what was public. I'm not aware of something like this. I believe that we will be very happy, as a beginning to build the first, the first four. We believe that, you know, good performance is calling for good business and additional orders. Let me, let me say, I don't have any specific extra information or official information received in said respect.
What I believe is that let's start well, because if we start well, the rest will be natural. On your second question, if I understand correctly, you would like to have some color about Norway, the defense program in Norway. Basically, the status is the following. There is a large budget to be managed, and this large budget is expected to be managed in a way that can compensate also local shipbuilding for not having been, you know, extensively involved in the frigate program. At the end of the day, the frigate program was assigned, was awarded to U.K., along with an agreement, a G- to- G, a government to government agreement to provide military support to Norway in case of Russian invasion.
It was more a geopolitical deal than an industrial deal. As a result, as a second wave, our understanding is that also in Norway, there is interest to use this naval expenditure in order to revitalize the local shipbuilding and the local value chain at large. In the last months there were the initial steps in terms of identifying the design firm, so it is more on the design phase. Obviously, we are more interested in being the constructor, so we are there for the large award, but not necessarily interested in the small one in terms of design package. Also in order to avoid any possible conflict of interest because, you know, from time to time, if you are the designer, you can be somehow penalized to be the builder.
We have very good experience in design of coast guard ships, for example. We in Norway already built over there. On top of it, we can also contribute some very good expertise from Italy, by the way. Again, the way we are participating to this program is to be there for the large contract rather than for the design one. On your third question is about underwater. If the M&A we are looking at is more characterized by technologies or characterized by market share, I would say both. I would say both.
We believe that we want to create a positioning that is technology driven. Technologies will be for sure a key recipe, a key ingredient in this recipe. We want also to accelerate the adoption of new technologies and the business model. We are looking at a number of transactions and those shares that will be positive in either ways.
Thank you.
Next question is from Michele Baldelli, BNP Paribas.
Hi, good afternoon to everybody. I have a couple of questions. The first one relates to the M&A. Given your leverage has improved materially, if you can remind us what are the targets, what is the likelihood in the short term to see any of those? What kind of, let's say, products, or segments you are targeting that could be interesting for you? The second question relates to the last answer that you gave. If you can remind us about this pipeline of projects in Europe or in the naval part of your business. If any of these, let's say, potential award has gone or if new, let's say, tenders are now visible. If you can, let's say, give us this more color. Thank you.
Thank you very much. On your second question, you know, we are When we mentioned in the, I would say, short-term targets in Europe, we were making reference to opportunities that we've been following and pursuing since quite a long time. In our business, there is no way to be hunter. It's a business for farmers, you need to cultivate. You have to, you know, cultivate a lot in order to have your, you know, with the right level of probability to have your order intake achieved. No way to be, you know, fast track are all opportunity that we've been pursuing. Unfortunately, we prefer not to disclose for a number of reasons.
You know, are there, and I would say also, on the market. On your second question is more color on the M&A opportunities, in the underwater, if I understand correctly, and in general. Again, we try to be as colorful as possible when saying that we are looking at acquisitions of technologies, so on the vertical. Also, acquisition of, you know, key components of the product strategy we have in mind, business development strategy we have in mind. We have MB such that make or buy strategy, which is very clear. Which means that there are certain technological bricks that we want to internalize, i.e., we want to own. There are other bricks that we want to have access to by means of alliances, commercial alliances.
Depending on this make or buy strategy that we have presented in the Underwater Day last year, we are constantly and consistently pursuing number of opportunity in that respect. Again, another possible color is that we are looking at naval, but we are not obsessed by naval. You know our idea of underwater is that it's an underwater economy. Can leverage on defense for the validation, but then has to be opened also to adjacent applications. Civilian clients, such as the energy sector, the telecom sector, the mining sector, and the rest of the adjacencies in the underwater. We don't want to disclose that much because, you know, it would jeopardize the success of these negotiations. We will be more than happy, and I would say, you know, in the short term to get back to you with the right level of disclosure.
Next question is from Andrea Belloli, Banca Akros.
Good afternoon, everyone, thank you for taking my question. Just one follow-up from my side, sorry for coming back from cost inflation. I understood that in the short term, inflation is not an issue for you, but I was wondering how you cover for, how are you covered from potential cost fluctuation in the long term now that you have announced the contract with deliveries up to 2039?
Well, you know, Giuseppe speaking here. As we book revenues and margin with the cost-to-cost accounting principle, if there are long-term, I mean, if there are deteriorations in future costs, we should have to factor them in the, you know, whole life of the products and of the projects. Therefore, on the, you know, quarterly financial statements. When we say that we are not as of now, we are not experiencing deteriorations from costs, especially, you know, in steel and commodities, it means that we are covered beyond the, you know, timeframe that extends to 2026. I'll give you an example.
As Pierroberto mentioned before, we buy gas oil for sea trials for ships, and we buy it and hedge it. I.e., whenever we have a cruise contract signed and effective, we hedge right away the needs that we have for gas oil, even if this gas oil will be purchased four years down the road. Am I clear enough?
Yeah. Thank you.
You're welcome.
Gentlemen, there are no more questions registered at this time.
Thank you. Thank you, everyone.
Thank you. Bye.
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