This is Ferrari (NYSE:RACE) The Automotive Aristocrat
The iconic Italian Supercar maker Ferrari (NYSE: RACE) on 1 February said that its adjusted earnings before interest, tax, depreciation, and amortization aka adjusted EBITDA, rose 18% in Y 2017, to EUR 1.04-B, on stronger sales of its most profitable vehicles, the V12’s, and Limited Editions.
That result was in line with our expectations.
It is worth noting that Ferrari reached the EUR 1-B adjusted EBITDA mark fully 2 years earlier than it had forecast at the time of its IPO (initial public offering) in October 2015.
That amazing success the Maranello outfit to announce ambitious profit and cash flow goals for the next 5 years on the analysts call early this month
For Q-4 of Y 2017, Ferrari’s adjusted EBITDA was EUR 258-M, or + 7% from the same frame in Y 2016
Demand for big 12-cylinder Ferraris, particularly the new 812 Superfast, helped boost Ferrari’s margins in Y 2017.
The Key numbers
All financial figures are in euros. As of 1 February 2018, 1 Euro = about US$1.25.
|Metric||Q4 2017||Change vs. Q4 2016||Full Year 2017||Change vs. 2016|
|Revenue||840 million||1%||3.417 billion||10%|
|Adjusted EBITDA||258 million||3%||1.036 billion||18%|
|Adjusted EBIT (earnings before interest and tax)||194 million||7%||775 million||23%|
|Adjusted EBIT margin||23.1%||1.2 ppts||22.7%||2.3 ppts|
|Net income||136 million||24%||537 million||34%|
|Industrial free cash flow||13 million||Improved by 84 million||328 million||17%|
Data source: Ferrari N.V. “Adjusted” figures exclude special items, specifically costs related to the Takata airbag recall that were incurred by Ferrari in Y 2016. Ferrari had no special items in Y 2017.
“Industrial free cash flow” is cash flow related to Ferrari’s core auto-making business. “Ppts” = percentage points.
Ferrari’s “net industrial debt,” or debt in excess of its cash balance and receivables, totaled EUR 473-M, as of the end of Y 2017, down from EUR 653-M at the end of Y 2016.
Ferrari has several different models, but for financial purposes, they are best seen in 2 groups:
- Those with 8-cylinder engines, and
- Those with 12 cylinders engines
The 12-cylinder Ferraris are higher-priced and more profitable than 8-cylinder models.
The story in Y 2017 is this
Sales of 12-cylinder Ferraris rose 25%, thanks largely to strong demand for the new 812 Superfast, and the Limited Edition LaFerrari Aperta, while sales of 8-cylinder models were roughly flat Y-Y.
Further, Ferrari was able to increase its prices in Y 2017, as it released updated versions of some other models.
The improvement in mix explaines how a 4.8% increase in vehicles sold translated to larger gains in revenue, adjusted EBIT, and margin.
Ferrari also saw margin improvement by expanding “personalization” program, which allows customers to order their vehicles with unique, upgraded trims and options, aka Bespoke editions.
Ferrari is the world’s #1 automotive performer, it is The Aristocrat of the Automotive sector.
|NYSE:RACE||123.01||12 February 2018||2.77||119.59||123.16||119.59||372,884|
|HeffX-LTN Analysis for RACE:||Overall||Short||Intermediate||Long|
|Bullish (0.33)||Bullish (0.26)||Bullish (0.25)||Bullish (0.47)|
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