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2022 results in line with guidance growth in backlog and cash provides long term visibility
Rome, March 13th, 2023 – The Board of Directors of Avio S.p.A. today reviewed and approved the company and group consolidated financial statements of Avio S.p.A. as of December 31, 2022.
Avio, a leading aerospace enterprise listed on the STAR segment of the Italian Stock Exchange reports a record Net Order Backlog of 1,014 M€ as of December 31, 2022, exceeding Guidance indications (870-920 M€), with an increase of 16% compared to last year, thanks to a record order intake of circa 500 M€. Order intake includes the contracts for the Vega C production, the Vega E development contract, the P120C production contract and tactical propulsion production and development contracts. Order intake does not yet incorporate the effects of ESA’s November 2022 Ministerial Conference and the new projects from the Next Gen EU and PNRR program, which will now unfold in 2023 order intake.
In 2022 Avio reported net revenues of 357 M€, 15% higher than previous year, and slightly higher than the 2022 Guidance of 330-350 M€. Focus of 2022 has been the Vega C Maiden Flight, the development activities related to the M10 LOX-methane engine and the Space Rider programs, as well as to the activities related to the P120C.
Adjusted EBITDA reached 27.8 M€ excluding non-recurring costs, 26% lower than in 2021, and in line with the 2022 guidance (22-30 M€), significantly affected by the sharp increase in energy costs recorded in the course of 2022 (natural gas prices moved from a 2021 average of 45€/MWh to an average of 125€/MWh in 2022 with a peak to 230€/MWh in mid-2022), and inflation.
Reported EBITDA of 21.4 M€, in line with the 2022 Guidance provided in September 2022 of 17-25 M€ and decreasing 29% (8.6 M€) on the previous year. EBITDA Reported is also affected by non-recurring costs (6.4 M€), mainly driven by the extra costs incurred in the Maiden Flight of Vega C and including a 3.2 M€ one-off positive contribution resulting from the balance of other revenues from settlement of Law 808/85 payables with extraordinary provisions for risks for Vega C return to flight activities and for the execution of future programs.
Net income of 1.3 M€, in line with the 2022 Guidance (-2/+3 M€) and decreasing -7.8M€ on the previous year, primarily due to the factors mentioned above.
Net Cash Position substantially improved at 74.4 M€ (+30% with respect to the 57.2 €M as of December 31, 2021), thanks to the contribution of cash from the operating performance and cash advances from new orders despite the cash out incurred for dividend distribution, completion of the share buy-back program, TEMIS acquisition and industrial Capex for various programs.
During 2022 Avio performed the successful Maiden Flight of the new Vega C launcher. However, the second flight of Vega C, that took place in December 2022, suffered an unexpected flight anomaly leading to the loss of the mission. An Independent Enquiry Commission, chaired by ESA and Arianespace with also the support of Avio, has been set up immediately after the failure and on the 3rd of March 2023 has presented its conclusions, identifying the cause of failure in the over-erosion of the Z40 nozzle throat insert due to an unidentified material weakness. The Commission issued a series of recommendations to be implemented in order to ensure a prompt and safe return to flight, as well as to ensure the launch vehicles reliability in the long term. For this purpose, ESA has announced a dedicated support program for circa 30M€ (to be drawn from existing budgets already subscribed at ministerial Council of 2022) to cover the necessary costs of return to flight activities.
During 2022 3 successful Ariane 5 missions have been performed. By 2023 Ariane 5 will perform its last 2 missions leading the way to Ariane 6.
In 2022 Avio successfully performed 24 static firing tests for the first prototype of the M10 LOX-methane engine, with a total of more of 1300 seconds of burn time at Avio’s Space Propulsion Test Facility (SPTF) in Sardinia. This is the first European LOX-methane engine to be successfully tested in Europe, paving the way for next generation launchers characterised by more efficiency and lower environmental impact. The lessons learned will be implemented on the second prototype, to be tested on ground in 2023, before being equipped on the new generation launcher Vega E, whose Maiden Flight is expected by 2026.
In 2022 Arianespace signed several new contracts, with, among other, 6 missions for the European Commission’s Copernicus Program for Vega C, for which Avio is prime contractor, and 18 launches for Amazon’s Kuiper constellation for Ariane 6, for which Avio supplies the P120C engines.
In November 2022 the ESA Ministerial Council held in Paris voted for a 17% overall European space budget increase over the previous three-year period to €16.9 bn, the largest in ESA's history. Italy has further strengthened its leading role in the sector, with a budget of € 3.1 Bn (+35% compared to the outcome of the 2019 Ministerial Council), accounting for 18% of the total funds subscribed by ESA member states (vs 16% at the 2019 Ministerial Council).
Programs dedicated to access to Space, such as Vega, Ariane, and Space Rider, in which Avio plays a leading role, have been fully confirmed and received a total budget allocation at European level of € 2.8 Bn, in line with the previous three-year period, confirming the strategic relevance of the European capacity for autonomous access to Space. Based on what the ESA Member States have agreed, Avio expects to be awarded contracts for research, development and support for operational conditions for more than € 700 Mln starting in 2023, up sharply from the nearly € 500 Mln allocated in the 2019 ESA Ministerial Council.
During 2022, the Italian Government has approved several projects in the space sector for the National Recovery and Resilience Plan (PNRR), the Italian implementation of Next Gen EU, some of which specifically aiming at the evolution of propulsion technologies and launcher products. In this context, two contracts have been signed today by Avio in presence of the Italian Minister of Enterprises and Made in Italy, to start two key development programs: the first one, funded with € 181.6 Mln at completion, devoted to the development by 2026 of an in-flight demonstrator of new technologies and architectures for a two-stage-to-orbit liquid propulsion small launcher powered by green LOX-methane engines. The second one, funded with € 103.7 Mln at completion, devoted to the development of a new LOX-methane green engine with High Thrust to be tested on ground by 2026 for qualification.
Around the end of 2021 the tensions between Russia and Ukraine have become more and more intense, with an open conflict starting on the 24th of February 2022. These events brought to a sharp increase in energy costs in 2022. At present, Vega operations are not impacted in the medium term. In this context, ESA has recently decided to dedicate financial resources to initiate technical and industrial actions aimed at mitigating the supply risk in the long term through the development of complementary technological solutions.
The Board of Directors also approved the Guidance for the FY 2023 results, quantifying it as follows:
Net order backlog: 1,150-1,250 M€
Revenues: 330-350 M€
Reported EBITDA: 19-25 M€
Net income: 3-6 M€
On the basis of the FY 2022 results, the Board of Director has proposed to the Shareholders’ Meeting not to distribute a dividend.
Following the purchases made so far, as of the 13th of March 2023, Avio holds 1,091,207 own shares, equal to 4.14% of the total number of shares.
"2022 marked the successful Maiden Flight of Vega C and the first set of static firing tests of our new M10 LOX-methane engine. It was also a record year in terms of order intake and growth in cash position" commented Giulio Ranzo, CEO of Avio. “From the operational point of view, we suffered from a surge in energy costs and from the unfortunate loss of the second Vega C mission.
In this context - Ranzo added - Avio has nevertheless met the targets defined in the guidance and increased the order backlog to the record level of over 1 billion euros, thus guaranteeing improved visibility on operational activities in the coming years. In addition, just today Avio signed two important development contracts for next generation launchers powered by liquid oxygen and methane. More Vega C orders are also expected to come in 2023”.
The strong and further growing order backlog and cash position provide full visibility for the next few years, allowing Avio to look at the future with confidence" concludes Giulio Ranzo.
 Law of financial support for the development of projects in the aerospace and defense sector