Ferrari N.V. (RACE) Q3 2020 Earnings Call Transcript

Ferrari N.V.  (NYSE: RACE) Q3 2020 earnings call dated Nov. 03, 2020

Corporate Participants:

Nicoletta Russo — Head of Investor Relations

Louis C. Camilleri — Chief Executive Officer

Antonio Picca Piccon — Chief Financial Officer

Analysts:

John Murphy — Bank of America Merrill Lynch — Analyst

Adam Jonas — Morgan Stanley — Analyst

Susy Tibaldi — UBS — Analyst

Giulio Pescatore — Exane — Analyst

Monica Bosio — Intesa SanPaolo-IMI — Analyst

George Galliers — Goldman Sachs — Analyst

Michael Binetti — Credit Suisse — Analyst

Thomas Besson — Kepler Cheuvreux — Analyst

Stephen Reitman — Societe Generale — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Ferrari Third Quarter 2020 Results Conference Call. [Operator Instructions]. After the presentation there will be a question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today Tuesday, 3rd of November, 2020.

And now I would like to hand the conference over to your speaker today, Nicoletta Russo. Please go ahead.

Nicoletta Russo — Head of Investor Relations

Thank you, Martin, and welcome to everyone who is joining us. Today’s call will be hosted by the Group CEO, Louis Camilleri; and Group CFO, Antonio Picca Piccon. All relevant materials are available in the Investors section of the Ferrari corporate website, and at the end of the presentation we will be available to answer your questions.

Before we begin, let me remind you that any forward-looking statements we might make during today’s call are subject to risks and uncertainties mentioned in the Safe Harbor statement, included on Page 2 of today’s presentation and the call will be governed by this language.

With that said, I’d like to turn the call over to Louis.

Louis C. Camilleri — Chief Executive Officer

Thank you, Nicoletta, and welcome everyone. We are pleased that you’ve joined us.

All in all, I would characterize our third quarter results as robust, particularly in terms of our income performance. As Antonio will describe shortly, our volume and top line performance was affected by the simultaneous impact of the end of the life cycle of certain models and the ramp up of the new ones, particularly the SF90 Stradale and the Ferrari Roma on our production planning.

Hence, deliveries were affected by supply and certainly not demand. Absent any potential dislocation caused by the resurgence of the COVID-19 pandemic, we are now confident that we will meet the top end of our previously released guidance for the full year across all measures. This implies a very strong fourth quarter, reaching record quarterly levels in terms of absolute volumes, revenues and EBITDA. Solid proof that we are now running on all cylinders and have overcome the embryonic issues that we and our suppliers faced with the industrialization phase of the SF90 Stradale.

The key dynamics of our business model remain exceedingly strong and the momentum I referred to back in August remains in place with a record order book, robust residuals and the low level of cancellations. Indeed, orders received this October exceeded the average pre-COVID first quarter monthly intake by some 30% and were essentially in line with the average that we received in the fourth quarter of last year, which witnessed several new models.

This is testament to the success of the digital activities that were implemented, and much more recently the very significant number of individual test drives that garnered record request and attendance levels. Clearly, a key watch out is the effect of any further lockdowns. For example today, in the United Kingdom, all showrooms have been closed and therefore some 81% of our dealers in Europe have now closed their showrooms and that reflects 74% on a weighted basis.

We also are somewhat concerned that the test drives and dynamic activities that we had planned may be somewhat curtailed or even aborted. The quarter witnessed the launch of the latest addition to our family of models, the Portofino M, M standing for Modificata, with a redesigned powertrain, a brand-new eight-speed gearbox and numerous other design and technical upgrades.

In keeping with the times, it is the first ever Ferrari to be previewed exclusively through vivid digital activities that have triggered very positive feedbacks to date. We are pleased with the reception that the Ferrari Roma continues to generate across the world. Of particularly note today is the very strong orders emanating from China, Japan and Korea. The fact that it is attracting a higher percentage of new to Ferrari customers, than the Ferrari Portofino and the younger cohort augurs well for the future.

China in particular is exciting. Orders are currently running at 50% above the Portofino in the equivalent time span since their respective launch. We are also encouraged by the demographics of the SF90 Stradale as in terms of its current order book, the new to Ferrari customers are the youngest across all the models that we offer.

Whether or not this is related to the fact that it is our first range hybrid model remains to be determined, but it is certainly an exciting prospect. This latter point, hybridization, allows me to segue to a matter that I know is of considerable interest to everyone on this call, namely carbon neutrality. As I have alluded to in recent calls and answer to direct questions on the matter, we have undertaken a significant Company-wide exercise to determine our total carbon footprint.

While many focus on carbon emissions alone, we firmly believe that this is only part of the equation, especially with regard to our products that on average only clock up very low annual mileage. We have studied the entire carbon footprint from cradle to grave or more accurately from the mine to the effective end of use, across our entire activities including Formula 1.

This allows us to focus on the critical elements that compose our footprint, which in all honesty have led to some surprising findings, not least with the regard to the impact of specialty metals and battery components on our overall footprint. It is my sincere hope that prior to the end of next year, we will be in a position to publish a third-party certified Ferrari carbon footprint, and a clear path — plan, to meet our ambitions to ultimately become carbon-neutral through actions taken directly and indirectly.

Although it represents a very small part of our footprint, this plan will also include Formula 1 as we work with all the interested parties on the power unit of the future currently slated to come into vigor in 2026. Before I hand over the call to Antonio, I need to correct the statement I made just in case, 81% of our dealers are open, not shut, sorry about that.

So now, I’ll hand it over to Antonio, who will review our quarterly results and guidance for the full year.

Antonio Picca Piccon — Chief Financial Officer

Thank you, Louis, and good morning or afternoon to everyone who is joining us today. Starting on Page 4, the third quarter of 2020 witnessed the resilience of our core business, leading to a very solid set of results across all metrics, which compares well with peers in the luxury domain.

The core business excluding Formula 1 brand-related activities and engines for Maserati performed in line with our plans and our margins were enhanced by the full deployment of the cost containment measures adopted since last March. We also benefited from the improved forecast of F1 revenues received from the commercial right holder which nevertheless remains significantly down compared to last year.

Our shipments in the third quarter were 2,313 units, 6.5% less than in Q3 ’19. Group net revenues were EUR888 million, down 3% compared to prior year outstripping our shipment volumes, thanks to the deliveries of the Ferrari Monzas, SP1 and SP2 which enriched our mix. EBITDA, and please note during this quarter, all adjusted metrics coincide with the reported ones since there were no unusual items, came in at EUR330 million, up 6.4% with a robust margin of 37.2%. EBIT was EUR222 million essentially in line with prior year embedding higher D&A.

Net profit was EUR171 million, slightly increased versus Q3 ’19 and resulting in a diluted EPS of EUR0.92 compared to EUR0.90 of prior year. Industrial free cash flow for the quarter was back into positive territory totaling EUR77 million. Moving to Page 5, you can see the details of the third quarter 2020 shipments, which decreased 6.5% driven by the cadence of the Company’s full-year production plan with some models gradually phase out and the new ones ramping up.

I remind you that our full-year production plan projects a recovery of 500 units out of the 2,000 lost following the seven-week production suspension due to the COVID-19 pandemic. This obviously assumes that our manufacturing plans will remain unaffected by measures that may be taken to combat the pandemic. Going back to the deliveries of the quarter, the V8 models were down 12.8% and on the other hand, the V12 were up 15.4%. The F8 Spider and the 812 GTS are in the ramp up phase reaching mainly EMEA, gradually offsetting the 488 Pista family and the Ferrari Portofino that arrived at the end of their life cycle.

The Ferrari Monzas continue to be delivered as originally scheduled. As a consequence, quarterly shipments were affected by the deliberate geographic allocations driven by the phase-in pace of individual models resulting in EMEA increase by 12.7%, Americas decline by 34.7%, Mainland China, Hong Kong and Taiwan posted a decrease of 25.2%, also considering the third quarter of 2019 was still somewhat flattered by the anticipation of our Phase before the introduction of the new emission regulations, while deliveries to rest of APAC were in line with prior year. I remind you that the SF90 Stradale and the Ferrari Roma will start the deliveries in Q4 2020, actually they started deliveries in Q4. Finally, within the end of the year, we will unveil an additional new model, the eight out of the 15 planned of our planned period 2018-2022.

Turning to Page 6, you can see here displayed the walk of our Group net revenues for the third quarter of 2020. Revenues from cars and spare parts were up 2.4% at constant currency. Such growth in spite of the volume decline reflects the positive mix price mainly thanks to the Ferrari Monza SP1 and SP2.

This was partially offset by the phase-out of the 488 Pista family, which in turn implies a lower contribution from personalizations from a volume perspective. Also the personalization rate on cars and spare parts revenues was slightly lower than last year. Engines revenues were substantially in line with prior year. Revenues from sponsorship commercial and brand were down EUR43 million significantly impacted by the COVID-19 pandemic resulting in a lower number of Formula 1 races and corresponding lower revenue accrual as well as reduced in-store traffic and museum visitors.

For the sake of clarity, our revenue accrual for F1 sponsorship and commercial was based on full-year estimates updated in the third quarter and improved compared to the first half of 2020. Currency, including translation and transaction impacts as well as foreign currency hedges had a minor positive contribution of EUR2 million, mainly the U.S. Dollar.

Moving to Page 7, let me review the change in our EBIT, which was EUR222 million essentially in line with prior year, minus 2.1% or minus 4.1% at constant currency, with EBIT margin at 25%. The negative variance at constant currency remains mostly in the COVID-19 impact on Formula 1, partially offset by the strength of the core business.

More precisely, volume drove a negative variance of EUR19 million due to reduced deliveries. Mix/price variance was positive EUR46 million, thanks to the Ferrari Monza SP1 and SP2 partially offset by the lower contribution from personalization programs due to the decrease of shipments and the gradual phase-out of the 488 Pista family.

Industrial costs/research and development costs decreased EUR5 million due to the spending cadence particularly in the Formula 1 racing activities for the current season, partially compensated by higher depreciation and amortization as the production lines for the new models started being operated. SG&A decreased EUR18 million reflecting fewer marketing initiatives, as well as cost containment measures.

Other was down EUR60 million due to the already mentioned COVID-19 impact on the F1 racing calendar as well as lower traffic for brand-related activities. The total net positive impact of currency was EUR5 million year-on-year.

Turning to Page 8, industrial free cash flow for the quarter was EUR77 million positive. Improvement in the quarter was essentially driven by the EBITDA growth, partially offset by the continuous investment to fuel our long-term product development with capital expenditures of EUR158 million and the adverse working capital impact due primarily to higher raw material and component inventories as well as the reversal of the Ferrari Monza SP1 and SP2 advances already collected in 2019.

Net industrial debt as of the end of September was EUR715 million compared to EUR776 million as of June end. At the end of the third quarter 2020, total available liquidity including undrawn committed credit lines for EUR700 million was EUR1,879 million, which compares with approximately EUR1,250 million as of the last end of December.

Moving to Page 9, on the back of the third quarter results, we are revising our guidance to the top end of the range communicated in August, assuming trading conditions remained unaffected by further restrictions or impact from the COVID-19 pandemic that may halt the pace of production and deliveries.

Net revenues greater than EUR3.4 billion to reflect a drop in deliveries of nearly 9% compared to 2019. The positively revised assumption on the F1 Championship, the pace of restart of our brand activities and demand for engines from Maserati. Adjusted EBITDA at approximately EUR1,125 million with percentage margin of 32.5%.

Adjusted EBIT close to EUR700 million targeting an EBIT margin of 20%, which reflects the higher D&A following the capex increase of most recent years. Adjusted diluted EPS of circa EUR2.8 per share assuming a 20% tax rate substantially in line with 2019. Industrial free cash flow in the region of EUR150 million with capital expenditures of around EUR750 million. It goes without saying that we are not immune to what happens around us, and you may be assured that our top priority remains to protect our people.

However, barring any restrictions that would inhibit our ability to keep operating diligently as we are currently doing, we believe we are well positioned to reach the target that I’ve just outlined; targets that we consider remarkable in such a disruptive year. With that said, I turn the call over to Nicoletta.

Nicoletta Russo — Head of Investor Relations

Thank you, Antonio. Martin, we are now ready for the Q&A session. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. And your first question today comes from the line of John Murphy of Bank of America. Please go ahead. Your line is now open.

John Murphy — Bank of America Merrill Lynch — Analyst

Hi. Good afternoon, everybody. I just wanted to — I just want to ask a first question on product cadence, because it doesn’t seem like there’s been any beat skipped here whatsoever on product launches. So I’m just curious if you can confirm that, and if you can just remind us how the order book builds around new product launches, because it seems like that’s very, very important in the book building or the wait list building.

Louis C. Camilleri — Chief Executive Officer

Sorry, John. I’m not sure I understood your question. Product cadence relative to new models?

John Murphy — Bank of America Merrill Lynch — Analyst

Yes. Given the disruption around COVID, has anything changed or been delayed on your product cadence or your product launch cadence?

Louis C. Camilleri — Chief Executive Officer

In terms of actual launches, i.e., presentations, it hasn’t really changed. As we said back in August and the COVID did disrupt our supply chain and the industrialization phase, particularly the — of the SF90. So that’s been somewhat delayed relative to our beginning of the year plans. As you know for COVID, we’ve also said on at least two occasions that we’ve been prudent in terms of our investments and certain models going forward have been delayed by three months and others by nine months.

So nothing really very material. There have been delays, John. I don’t know if that answers your question.

John Murphy — Bank of America Merrill Lynch — Analyst

That does. And the correlation with those launches and the wait list appears to be relatively high. So I’m just curious, it sounds like you’re getting record orders for the wait list, but I’m just curious, has that changed anything with the wait list where it’s either strong or may be growing as people are willing to wait longer.

Louis C. Camilleri — Chief Executive Officer

Well, the wait list has obviously increased and that’s something that we will need to address, particularly on the models where we have rather ambitious plans in terms of attracting new to Ferrari customers. And I think those are somewhat vulnerable to very long waiting lists, as opposed to normal customers who are — who are acclimatized to a longer waiting list.

But essentially, I think we enter ’21 with a very strong order book. And as Antonio just mentioned, barring any dislocations because of the pandemic, we should have a pretty good year obviously of a weak base, but nevertheless a pretty strong year.

John Murphy — Bank of America Merrill Lynch — Analyst

Okay, that’s helpful. And then a second question just around the EBITDA margins. It’s hard not to get excited when we see 37.2%, I think that’s one of the highest, if not the highest that you guys have ever printed at least in [Indecipherable] you know, public data. I’m just curious if you think about the puts and takes in the quarter and as we go forward, what would actually potentially not be repeatable either on cost containment or mix or is this something we can think about as a potential for the future on EBITDA margins?

Louis C. Camilleri — Chief Executive Officer

Well, it’s driven by a very strong performance in the core business, the car business, where the EBITDA margin, I’m looking at Antonio, but I believe it was above [Phonetic] 45% in terms of the core business. So that’s driven a lot by mix and particularly by the Monza. As you know, in the fourth quarter, we will face a comparison where we had Monza’s last year. So that huge uplift won’t be there. But it was still nevertheless be pretty strong because of the advent of the SF90, the full ramp-up of the 812 GTS that is performing strongly.

So we feel very good about the margin. I think from the Maserati perspective, as that becomes lower, that obviously has a favorable impact on our margin, because you can imagine that the margins on the Maserati engines are quite low. Brand margins are high, they are having a very difficult year for obvious circumstances. And hopefully next year, we’ll be able to really start implementing the plan that we had announced, I guess this time last year.

John Murphy — Bank of America Merrill Lynch — Analyst

Okay, that’s very helpful. And then just lastly, when you talk about mix, you keep highlighting the positive mix from the Monzas which I certainly appreciate. But when you look at the V12 versus the V8 mix with V12s up 15.4%, V8s down 12.8% on unit shipments. Isn’t that a significant driver of positive mix as well? And I’m just curious why you haven’t sort of stated that as part of the positive mix.

Louis C. Camilleri — Chief Executive Officer

Well because, for simple reason the Portofino and the Pista are ending their lifecycles and they’re being replaced by the Roma and the Portofino M. So those will be coming up and being part of our volumes. So that’s why I didn’t mention it.

John Murphy — Bank of America Merrill Lynch — Analyst

Okay. But in the quarter itself, I mean that was — it was [Speech Overlap] definitely hit… [Speech Overlap]

Louis C. Camilleri — Chief Executive Officer

Oh, yes, in the quarter absolutely, but I thought you were looking more in terms of the future.

John Murphy — Bank of America Merrill Lynch — Analyst

Yeah — No, I’m just trying to understand, because it seems like that simple — not simple, but I mean that straightforward comparison of V12s versus V8 in the quarter was very, very strong and obviously includes the margins to some degree, but it wasn’t highlighted as part of the significant driver of positive mix in the quarter as explicitly as the Monzas. So I was just trying to understand if I was missing something there.

Louis C. Camilleri — Chief Executive Officer

Well, because the margin on the Pista and Pista Spider in particular is pretty attractive. I think that’s what you’re missing in your equation.

John Murphy — Bank of America Merrill Lynch — Analyst

Got you. Okay, all right, great, thank you very much, I appreciate it.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. Your next question today comes from the line of Adam Jonas of Morgan Stanley. Please go ahead, your line is now open.

Adam Jonas — Morgan Stanley — Analyst

Hey, Louis, I got a bit of a longer-dated strategic question for you on EVs. So if I look at your COGS, Cost Of Goods Sold on a per unit basis for Ferrari we get close to EUR150,000 per unit and I’m thinking — I’m thinking, roughly half of that, it could be related to the power unit, the engine transmissions, fuel delivery exhaust and all the supporting mechatronics and electronics.

Now, I’m thinking if this is transitioned hypothetically to 100% BEV power unit, including the battery, e-motors, charger inverters etc, that this would be substantially less complex, less exquisite and lower variable cost per unit compared to today’s ICE powertrain. Could this create a very large cost efficiency opportunity for Ferrari while still providing your customers with the highest performance experience that they would expect from a Ferrari?

Please tell me Louis where I’m — where I maybe wrong with this logic.

Louis C. Camilleri — Chief Executive Officer

I understand where you’re going, I don’t necessarily agree with you. I think that the way you said it less complex and less exquisite is where you potentially derail, because in fact, to achieve the objectives, you just mentioned, which is to retain the Ferrari DNA, the EV will actually be significantly more complex than you are assuming. And that’s clearly something that we’re working on.

But just to have a standard EV and put the Cavallino on it is about what we’re all about. So the day we come out with an EV, or what we call a BEV, it will be a pretty complex machine. And furthermore, there are a number of elements that we will have to put in, which are very costly. If I look at the SF90 Stradale and the cost aspects of the electric aspects of the hybridization and the electric axles on the front-axle, those are pretty expensive considerations.

Having said that, over the longer term and that’s what we’re talking about, you would hope that there would be cost savings. I’m not sure they would be as an extravagant as you imply, but there should be cost savings longer term as battery technologies improve as well. However, my own sense is that to sort of say 100% electric, that’s pushing things. I really don’t see Ferrari ever being at 100% EV. And certainly, not in my lifetime will it reach even 50%.

Adam Jonas — Morgan Stanley — Analyst

That’s great color. Thanks for that. And just as a follow-up, I don’t know, if Michael Leiters is on the call today.

Louis C. Camilleri — Chief Executive Officer

No, he isn’t. But ask away.

Adam Jonas — Morgan Stanley — Analyst

You can do your best of Michael Leiters’ imitation. How is your German accent?

Louis C. Camilleri — Chief Executive Officer

Yes, I can. [Foreign Speech].

Adam Jonas — Morgan Stanley — Analyst

Good. [Foreign Speech]. Okay, remind us — remind us, and I know you’ve addressed it before, but I imagine that this is evolving, particularly as other more internal combustion engine manufacturers move to EVs, not 100%, but maybe 50%, remind us how Ferrari is thinking about the sound of a Ferrari without an exhaust system.

And I didn’t know if you had — if you could maybe address how you addressed it on that — on the SF90 Stradale, I might have missed it when it’s in e-mode. Just to give us some things to think about, because I think in your own materials you mentioned sound is the essence, the sexuality, the passion, the whole spirit of the brand. It starts with the sound, and that’s — that’s got a lot of investors attention. Thanks.

Louis C. Camilleri — Chief Executive Officer

Yes. And that’s one element that we are working on. Obviously for competitive reasons, I’m not going to give you the details. But that’s something that we are quite comfortable that we can achieve. And it’s really the depth of the sound and the gradation of the sound that’s key. But you’re right, sound is, in terms of all the consumer research we have is one of the key elements. And clearly it is a big priority. We’ve done a lot of work on that and we feel comfortable that that is certainly one of the aspects that we can address.

Adam Jonas — Morgan Stanley — Analyst

Thanks, Louis.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. Your next question today comes from the line of Susy Tibaldi of UBS. Please ask your question.

Susy Tibaldi — UBS — Analyst

Hi, there. Thank you so much for taking my questions. And so I have a few. And so one — just one clarification, because you are still planning to make up for this 500 units this year, so does it mean that you are still targeting a minus 9% volume decrease for the full year, like you mentioned in the previous call?

Louis C. Camilleri — Chief Executive Officer

That’s correct.

Susy Tibaldi — UBS — Analyst

Okay. So basically it implies that in Q4, we are going to see quite strong double-digit growth in terms of volumes, which…

Louis C. Camilleri — Chief Executive Officer

Correct.

Susy Tibaldi — UBS — Analyst

I guess that’s what implied. Okay. And we when it comes to the EBITDA margin also that is implied in your guidance, and as you mentioned, clearly Q3 was a little bit of an exceptionally strong level because of the Monza. And — but I was also wondering by any chance there were any one-off maybe within opex that drove such strong margin expansion? And then, and what exactly is happening there in Q4 because the guidance is implying a margin contraction of 200 bps, 300 bps versus last year.

Louis C. Camilleri — Chief Executive Officer

Yeah. I think it was really driven by mix. As we said in the first question, the mix was very, very strong in Q3 and will continue to be pretty strong in Q4. So that’s what’s driving it. I don’t think there’s much I can add. There is no other one-timers in there that’s distorting the picture in one way or another.

Susy Tibaldi — UBS — Analyst

Okay. And when it comes to these lockdowns in Europe which obviously we have very low visibility. If these lock downs are just limited to a few markets and you say there is 80% of dealerships are open, are you able to sort of shuffle volumes within other countries in Europe, because I suppose when it comes to Q4, and you will have the initial shipments of the Stradale and the Roma, typically they will be directed to Europe.

So if a large portion of Europe is closed, how would you react to that? Because I guess deliveries to U.S. or Asia, they usually come with at least six month lag. And so how do you think that you can manage the situation, in terms of lockdowns in Europe?

Louis C. Camilleri — Chief Executive Officer

Yeah. Well, it very much depends on the actual regulations. So in the U.K., the showrooms are closed, but deliveries continue. So in terms of deliveries per se as rules stand today, they can continue. The showrooms however, have an impact on the ability to drive orders, obviously. But I think as long as rules stay the way they are, and the U.K. probably has the most stringent at the moment, deliveries are possible.

Furthermore, as you noticed in Q3, Europe’s volumes were actually pretty strong potentially in anticipation of issues in Europe, and I would say that in the fourth quarter, we’ll have stronger performances in other geographic areas. So we do have some flexibility in terms of logistics and end markets which I think was the genesis of your question.

Susy Tibaldi — UBS — Analyst

Yeah, that’s very clear. Thank you so much.

Louis C. Camilleri — Chief Executive Officer

Thank you very much.

Operator

Thank you. Your next question today comes from the line of Giulio Pescatore of Exane. Please ask your question.

Giulio Pescatore — Exane — Analyst

Hi everyone, thank you for taking my question. Just the first one, I mean, it has changed — a lot of changed since we were all dining together in your Maranello factory in 2018. So I’m just wondering if you are willing to reconfirm the 2022 targets or if there are any changes that you might have to make to those, I mean targets on a headline basis, I guess more than on a margin basis.

Louis C. Camilleri — Chief Executive Officer

Well, Giulio, as you said, a lot of things have changed since 2018, not least of which has been this very sad and destructive COVID, and we’re now seeing a resurgence as you know. I think that it’s a bit early to talk about 2022 other than to say that what I said earlier, in terms of our plans, we have delayed a number of models by three months and some by nine months. So obviously that has a longer term impact going forward.

But we still very much remained focused on the plan that was given, but some models will slip. Others will be delayed by a quarter or two. But I mean next year we should have a strong year and I think that will form the base going forward and we’ll give you obviously more details relative to 2021 at our next call, which will be in February, at which point we will have a much better sense of where the world stands in terms of this COVID which regretfully does create a lot of uncertainty.

Giulio Pescatore — Exane — Analyst

Okay. Thank you. Very clear. Then the second question on your hybrid targets still above 2022, where you had a 60% hybrid mix target by 2022 and I think your plan — your planning was to have a full hybrid range of mid-engine like forecast by 2021. Are those targets still valid and what does it mean for that [Indecipherable]?

Louis C. Camilleri — Chief Executive Officer

Well, again, we are pushing for hybrid SF90 Stradale is obviously the first one, there will be others. Some may be slightly delayed, but we’re talking — we’re talking six months to 12 months, we’re not talking two or three years Giulio, but clearly we want to address hybridization because we think it has huge benefits. But I think also that when you see the carbon footprints, people tend to just look at emissions. We look at the entire carbon footprint and a hybrid relative to an internal combustion engine, it’s not necessarily that much more favorable.

So it’s something we’re working on very carefully.

Giulio Pescatore — Exane — Analyst

Yeah. And I totally agree with you that people should be looking more at carbon footprint. But it doesn’t seem to be the case, at least when we look at regulatory decisions at a local level. For example, if you look at the French Malus scheme that has basically been penalizing you with EUR20,000 fine this year, going up to EUR30,000 EUR40,000, EUR50,000 in 2022. I mean how are these penalties affecting you, your sales into this market and are you afraid of more countries kind of adopting a similar type of scheme, because of course all of your cars except for the SF90, emit more than 200 grams of CO2.

Louis C. Camilleri — Chief Executive Officer

Yeah, you’re right. They’re adding, I guess, sort of excise taxes. I think the whole car industry needs to really educate the regulators because to look at emissions and even then to look at just static emissions, I think is wrong from a scientific perspective and the car industry needs to do a much better job at explaining the entire carbon footprint. And I think they will do that going forward. We Ferrari, have a role in that and we obviously have to do our job and I think as I said in my opening remarks to come out with a detailed carbon footprint will form the basis to really start explaining the various aspects.

Because if you take a V12 Ferrari that only runs 3,000 kilometers a year, probably has less emissions than a very small car that runs every day.

Giulio Pescatore — Exane — Analyst

Yeah, I totally agree. Yeah. Thank you very much.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. Your next question today comes from the line of Monica Bosio of Intesa Sanpaolo. Please ask your question.

Monica Bosio — Intesa SanPaolo-IMI — Analyst

Hey, yes, good afternoon. It’s Monica Bosio from Intesa Sanpaolo, and thanks for taking my questions. The first one is on the personalization. Antonio told that you were a little bit lower on the quarter, could you please quantify the level and the reasonable projection for the full year and the next one?

And the second is on the capex. Do you still confirm a EUR750 million of capex by year-end? And the second question is more in general. Could we please come back to the statement regarding the enlargement of the customer base and the fact that there is a high penetration of younger people. Would like to have more color on these maybe also a view in a three years time if it’s possible?

Thank you very much.

Louis C. Camilleri — Chief Executive Officer

Maybe I’ll start first, Monica. On personalization, we were just a touch lower in term — in percentage terms compared to last year, which was, if I remember correctly, above 20%. And in terms of capital expenditure, I said EUR750 million more or less approximately at this stage. What’s your question in that respect, I’m sorry?

Monica Bosio — Intesa SanPaolo-IMI — Analyst

The question — the second question was on the enlargement of the customer base? I heard in the initial statement that the penetration of… [Speech Overlap]

Louis C. Camilleri — Chief Executive Officer

Yeah. I got your question, Monica.

Monica Bosio — Intesa SanPaolo-IMI — Analyst

Thank you.

Louis C. Camilleri — Chief Executive Officer

Clearly one of our important strategies going forward is to attract new customers and ideally younger customers and also to expand our gender balance, so to attract women as well, which today is still a very low proportion of our sales. I think we’ve made progress as I mentioned in the opening remarks and it is something we’re very much focused on. So far the numbers are moving in the right direction and I think the various activities that are in place, predominantly in terms of digital activities but also all the test drives and generally the whole positioning of some of the models will attract new customers and hopefully younger customers.

Roma is one example, the SF90 has attracted young customers as well. As I said, that may be linked to hybridization, we will see. But it’s something we’re very focused on and there has been progress and I am confident that we will continue to progress. And I think if you look at our market shares worldwide in the segments in which we participate, we are gaining solid share points across most geographies. So that in itself, I think is a good sign.

Does that answer your question?

Monica Bosio — Intesa SanPaolo-IMI — Analyst

Yes. Perfect. Thank you very much. Thank you.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. Your next question today comes from the line of George Galliers of Goldman Sachs. Please ask your question.

George Galliers — Goldman Sachs — Analyst

Thank you for taking my questions. First question I had was just with respect to the dealers being closed and you mentioned in the U.K. that you can actually still deliver cars. Based on the last lockdown, do you find that your customers are happy to take delivery or indeed want to take delivery without having the full showroom experience, or in general, is the showroom experience part of the excitement and the thrill of collecting your brand new Ferrari?

The second question I had was just on the catch-up of the 2,000 units lost this year. Obviously, you’ve referenced the 500, but in theory — and this is really hypothetical, not asking if you will do, but in theory if you wanted to catch-up the remaining 1,500 all in 2021, are there any capacity issues that would prevent you from doing so, or is that something you could manage with incremental shift or change in shift patterns?

Thank you.

Louis C. Camilleri — Chief Executive Officer

Thank you, George. I think our customers would rather have a delivery than to wait. I think the whole showroom experience certainly part of it is the delivery. But I think the real excitement is the order and all the elements of personalization, choosing the colors and all the various elements. I think the showrooms from that perspective are really a part of the whole thrill of purchasing a Ferrari.

I think that most people wants the cars in the dealer, they want to see it and they want to enjoy it and drive it. So, certainly, nobody is complaining about the fact that they’re getting a delivery without seeing it in the showroom. The showroom is more to get the thrill of the order and to trigger the orders. So the concern there is relative to orders going forward rather than deliveries.

I don’t know if that addresses one of your questions. It’s always difficult to talk about hypotheticals, because we are — there are capacity constraints and we will focus our volume very much based on the waiting lists, the mix of products on that waiting list, mix in terms of both models and geography.

So I don’t think I could really answer in terms of total capacity. I think in terms of total capacity utilization, if there was a constraint, it’s people and the time it takes to train them, especially with regard to new models, especially with things that are very complex like the SF90, which has 2,000 new components. So putting those on the production line takes a bit of time to ramp it up to full capacity. That’s just one example.

George Galliers — Goldman Sachs — Analyst

Great. Thank you. And if I may just slip in a one quick final one. Obviously, Sebastian is leaving you at the end of this season and I just wanted to ask, as the four times world champion, presumably he was being very well remunerated. Will that be a saving that will flow through your P&L next year, assuming that he was remunerated largely by Ferrari rather than by sponsors?

Louis C. Camilleri — Chief Executive Officer

I think that’s a fair assumption. And I think going back to the earlier question in terms of attracting youth to have two drivers like Charles and Carlos, I think, that’s gives us added equity in terms of attracting young people. Having said that, Seb has done a phenomenal job for Ferrari in the past and he will always be part of the family.

George Galliers — Goldman Sachs — Analyst

Great. Thank you very much.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. Your next question today comes from the line of Michael Binetti of Credit Suisse. Please ask your question.

Michael Binetti — Credit Suisse — Analyst

Hey, everybody. Good afternoon, thanks for taking our questions. Just a quick near-term one for the models and I had a follow-up. But on Slide 9, the D&A component in the third quarter, I guess, the EBITDA margin was up a lot over 300 basis points, EBIT was only up 20%. When we started the year, I think, you noted a pretty meaningful step up in D&A as a hold back to the margin guidance for the year as you started to develop — sorry, started to amortize a lot of the development in Stradale.

I think earlier in the year, you thought that Stradale would start to ship in third quarter. I just — I want to look ahead to fourth quarter as you’ve now started to ship Stradale, do we see — is that when you see a significant step up in the D&A impact to the margins in fourth quarter? And I guess another way to ask that is, last year the mix was a significant positive, Louis, you pointed that out in fourth quarter.

Stradale, is that — could you just tell us is that accretive to the gross margins and EBITDA margins in fourth quarter to the Company?

Antonio Picca Piccon — Chief Financial Officer

Michael, hi, it’s Antonio speaking.

Michael Binetti — Credit Suisse — Analyst

Hey, Antonio.

Antonio Picca Piccon — Chief Financial Officer

Answering on D&A, you should not see that as a — as correlated to the numbers of cars that we sell, but more the time since the car is introduced. It goes to the P&L linearly from then on.

Michael Binetti — Credit Suisse — Analyst

Okay. Stradale accretive to.. [Speech Overlap]?

Louis C. Camilleri — Chief Executive Officer

And so I wouldn’t just — I wouldn’t also just ascribe the investment to the SF90. There is a whole slew of other things related to future technology, innovation that will eventually find itself or themselves in models going forward. So it felt specific to one model per se.

Michael Binetti — Credit Suisse — Analyst

Got you.

Louis C. Camilleri — Chief Executive Officer

Your second question was?

Michael Binetti — Credit Suisse — Analyst

It just — as you look at — I know you had a big mix tailwind on the EBIT bridge in the fourth quarter last year, as Stradale comes on, that seems like the biggest year-over-year change in the fleet in fourth quarter, is that accretive to gross and EBITDA margin in the fourth quarter?

Louis C. Camilleri — Chief Executive Officer

Stradale is accretive to the average? Yes.

Michael Binetti — Credit Suisse — Analyst

Okay. I guess then, Louis, longer term, so we have a pandemic that’s obviously disrupted your path to the original 2022 plan. You talked about that a little earlier. You also have a new Concorde Agreement signed that gives you visibility on part of the business there through 2025. As you look at this, is it time for another Capital Markets Day? How are you thinking about keeping updated targets for the long term?

Louis C. Camilleri — Chief Executive Officer

Well, it’s something we’ve discussed internally as to when we will have our next Capital Markets Day. The time will come for us to have one. Obviously, we can’t have one now, because we would like to have one which is face to face. So it used to come, but I guess we will have one in the not too distant future.

Michael Binetti — Credit Suisse — Analyst

Okay. And then if I could ask you just one last one. I know you talked a little bit about electrification, but there has been some interviews from people at FIA that have noted the Formula One shift towards synthetic fuels and biofuels as an answer to some of the environmental concerns coming up and there’s — even been some that have mentioned that they expect Ferrari will be co-investing in those initiatives. I know you have one eye on electrification, but is — where do you see biofuels, synthetic fuels as part of the answer for the ESG initiatives that you talked about earlier as you look over the longer term?

Louis C. Camilleri — Chief Executive Officer

I think they potentially have a big role to play, particularly in terms of biofuels as opposed to synthetic fuels, but clearly they have a role to play big time. It will probably start with Formula One. It provides now as of 2023 it has to have a 10% — sorry, 2022, it has to have a 10% biofuel percentage, which is the start of — the FIA obviously wants to increase that. As I mentioned, there is a new power unit that has to come into vigor as of 2026. So defining that power unit is going to have to be done in the very near future. And once that’s defined, we will be able to figure out what the components will be and particularly with regard to the fuels.

Michael Binetti — Credit Suisse — Analyst

Thanks a lot, guys. Congrats on the nice quarter.

Louis C. Camilleri — Chief Executive Officer

Thank you very much, Michael.

Operator

Thank you. Your next question today comes from the line of Thomas Besson of Kepler Cheuvreux. Please ask your question.

Thomas Besson — Kepler Cheuvreux — Analyst

Thank you very much. I have two very quick ones, please. First on the mix, would you mind giving us the year, number of Monza deliveries in Q3 and tell us if it was the biggest quarter yet or if you had done better before? And second, on your small engine business, it was unusually strong compared with what we’ve seen in Q1 and Q2. Could you explain why and what we should expect in 2021, specifically for the Maserati parties, are still going to be any business left and/or whether is it linked with Formula One that has seen eventually a pick up here? Thank you.

Louis C. Camilleri — Chief Executive Officer

In terms of Monzas, it was approximately 50 units in the third quarter, year-to-date 120. And in terms of Maserati, it’s really a reflection of the orders we receive. We anticipate that next year the volumes will decline.

Thomas Besson — Kepler Cheuvreux — Analyst

Very clear. Thank you very much.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. And your next question today comes from the line of Stephen Reitman of Societe Generale. Please ask your question.

Stephen Reitman — Societe Generale — Analyst

Good afternoon, Louis and Antonio. I have two questions, please. First of all, I was intrigued by your comment about the high — the increase in orders you’ve seen on the Roma compared to the Portofino in China, because clearly China has not been the market for the two-seaters, but do you think that you’re seeing potentially a way to crack that market even before you launch the Purosangue?

And my second question is about the SF90 Stradale, the Assetto Fiorano option, are you limited and what percentage of sales would you able to supply with that option, and what is the demand being for that, because obviously it’s a significant upgrade in terms of cost than I suppose was profitability? Thank you.

Louis C. Camilleri — Chief Executive Officer

Yeah. We’re very encouraged by the Roma up to now in China. We’re very encouraged by the level of orders we’re receiving and the demographics, so that’s a good sign. And, yes, potentially it could start the process of really penetrating the Chinese market in a more material manner than we’ve been able to. Obviously, the two plus two is an attractive combination. So, that’s one.

The Assetto Fiorano, yes, generates a higher margin than the SF90. We’ve actually been very encouraged by the level of orders on the Assetto, significantly higher than we had expected and is running around 40% of total orders. We do not really have capacity constraints in terms of the Assetto Fiorano.

It takes time for our suppliers to gear up, but over time we don’t have capacity constraints on that one. It really is not an issue, I don’t think.

Stephen Reitman — Societe Generale — Analyst

Does that count as personalization as well?

Louis C. Camilleri — Chief Executive Officer

Correct.

Stephen Reitman — Societe Generale — Analyst

Thank you very much.

Louis C. Camilleri — Chief Executive Officer

Thank you.

Operator

Thank you. There are no further questions at this time. Nicoletta, please go ahead.

Nicoletta Russo — Head of Investor Relations

Thank you, everyone, for joining us today. The IR team will be soon available to answer all your follow-up questions. Thank you, bye-bye.

Louis C. Camilleri — Chief Executive Officer

Bye. Bye, everyone. Thank you. Bye-bye.

Antonio Picca Piccon — Chief Financial Officer

Bye-bye.

Operator

[Operator Closing Remarks].