Natuzzi S.p.A. (NTZ) 31 May 222022 Q1 Earnings call transcript

Good day ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi First Quarter 2022 Financial Results Conference Call.

As a reminder, if you like to join via telephone you may do so by dialing in the following number: (+1) 412-717-9633, then passcode 39252103#. Once again, that’s (+1) 412-717-9633, then passcode 39252103# in addition to the link provided to join via video. participants a all mode. time, this are listen-only in At

question-and-answer will will Following we a session, time. the introduction, that conduct instructions at be given

Antonio Camp, President from Executive Natuzzi Americas; Mr. today is Direnzo, of Natuzzi; Achille; Investor Piero Mr. Relations. Pasquale Jason us Chairman, the Mr. Joining then and Executive Natuzzi Officer, Chief

the call Piero. Please to today's reminder, I a over being recorded. would ahead. conference now As is like to turn go

XXXX Q&A the financial good and to Thank Natuzzi's day a first joining introduction, room quarter conference Thank will you, Kevin brief results you everyone. After session. call. give for we for a

Before a differ proceeding, statements our our that to financial from forward-looking the materially Obviously, United of our certain discussion statements and condition. forward-looking Please listeners laws. under the those and affect the in discussed Executive obligation we that like can would because the of or the most call. assumes turn Form no any for uncertainties to like that on constitute our States results statements recent I contain now, may Chief And today to risks. risks operations this results could of company call to those Officer. matters forward-looking securities advise actual SEC company's report Please, to revise Antonio. refer over annual The filed complete during update XX-F would with review

European investors this in time one. good the for from morning joining you, for the Good Thank Piero. U.S. and afternoon

view where of ended point first quick a XXXX. term Just we in of quarter

our continue strategy. executing We

you we the outgrowing market. As know, are

and first versus by versus XX% XXXX. XX% grew revenue XXXX the Our quarter

branded towards We the product. continue mix improving also

percentage XXXX above which order of and is the roughly respective In X, terms order flow, of flow come of from XXXX. period brands points X XX%

which digit. China America Europe key geographies. and also are XX% Southwest double strategy, growing XX%. our focusing geography continue have is North XX% We revenue, been growing center in X All to on

store XX U.S. are know significant. all in which data in mass in We you our critical believe and we to XX a are stores, XXX of added I continue in both We Italy. X we in also franchising, already retail. freestanding particularly are the where of are X focus on China, quarter,

we [ph] So quarter. door freestanding in the added XX

North I XXXX. XX% above believe is data is significant. In which America, like-for-like Another versus

our again, strong working. formula start a So sign that retail

As a directly result, operated and XX% in XX% retail, 'XX. to revenue the on grew store weight total of compared franchising quarter to

our to be and is The we technology results investing continue are based solid for delivering modernize We running the our will factory. on the factory. very investment in base pilot future X.X

partnership. joined investment an of with and governance which We We listed Singapore team. create just a Asia of And signed committed a our company. we Pacific million. €X.X the partnership continue our accelerating also strengthening our growth lastly, development XX% to a share venture TTF for continue rest more We trying of is with with

option joined you one As the which Bonan release, Roche Gilles effective the next which independent of which in approved few our Bobois, is CEO the -- including of stock as executive should as will you Board senior plan several press positions, have cover our also from the and a Board months. read become

continuing COVID. than everyone in So raw clearly terms a this We but would despite we and wish some This usual phenomenon headwinds clearly, to is in a to want in cost. line in experimenting go. COVID are beyond inflation significant inflation I with be of transport where quarter this stayed we say as which the that very material the in higher industry

achieved. than our cost further We are monitoring and this expand but in margin what ability the this pricing quarter our to adjusting limited we the

is our also factory. China, local authority affecting Shanghai restriction factory by imposed we are an in with have mentioned area we seen which the total you are that in As in important the dealing the transparency,

the So the X the affected speed first of in of the in months quarter to operate nothing you first of read -- partial so quarter ability Shanghai the full X our been quarter. generation factory. will But by has the first second months second that terms revenue

is a synthesis, reading So of extreme this quarter. the

element was which this the restriction and challenge the plan. clearly, always continued it's dealing inflation, direction we with that other the the in had think the to for to shareholders. We're good face you see COVID in want is euro I in we we going direction when it driving biggest company create and value your China now also COVID our zone. the you're war wish direction the go the in and Clearly, additional to

answer. be stop brief me leave than possible to to more as Let here. and usual question I as to even space tried

Our [Operator today Management. Kanen from from Wealth coming question Kanen Dave Instructions] first is

first during price effect take The press list increases you're the In that the that QX. they'll regarding taking. one said you release, start to is

lockdowns I'm So to But looking temporary half of kind the year beyond. QX so an and and vis-à-vis of period the in a China extraordinary the past as event looking forth. second or

year and expenditures in increases from Given margins, alluded factory increases level? of then that increases improve of the combination some technology increases efficiency. as inflation to as investments level at of the to factory at passing gross higher you've we the the price no and you're in assuming investments expect the price modernization that Should back well me, further given the in half price -- the also, excuse or capital

Okay.

European further much reporting literally is yes. today your May of answer If is if your month I thank sense the question, the highest for of Dave, keep inflation I of reported for Union inflation any XXXX. you that short if not question. are we in the X.X% answer which since the Union, very the assume take is yes, creation European So we the -- an pressure, strong to just Reality, inflation.

a So let how bit on expand work we on pricing. me maybe

raw the act the week typically third of cost we plus at price different year, then beginning of for expect the reflect at now year, we of material we should what So decision look transportation. between we and year beginning the form the at of into this take we increasing. every -- end January. And fourth the the and dynamics And and at

the that that target with allowing started a dynamic year certain should So in be pricing costing. given the margin us we new scheme the

an we certain dealing we should been this taken in year a full a which be normally year. higher the we, where should in a months marginality than So year, the decision what once for been situation has X year. report your and protecting What we we've in of normally reported inflation be is

of a when metal other to instance, overnight comes for energy, war complete given fuel and cost. cost of reported, surge also like the energetic it in We Ukraine,

the day. we reviewing time maybe be keep want. every you cannot cannot during we pricing condition and of every course, year sure we because one This, marginality So client, to the just the not day dealing partner change list, but that the done can protect with multiple make

So we in to tried maybe a times and doing be couple discrete of a year.

You between is model, the whatever also today, and X effective our be revenue to we the will revenue recognize X need order the X, of in decision that order months months. recognition given terms the it fulfillment timing taking recognition, Because take afterward.

the pricing. dynamics enough has to the game we more Reality, months. over want should We're reasonable, inflation this We our particularly So these material. of stable, stay last where to the protect marginality. And in it's than dynamics been delicate carefully always if margin. should crazy look at few a protect be

And assuming then going -- you're yes, to I'm touch sorry, I'm on...

there Yes, get too. we'll

are and discussion I to we good element second these full the my of operating attention came think on it's our use transparency to use discounts. is acting which to provide A model. on

industry invest So given the a in typically, selling list, certain price discounts.

privileged your marginality historically and basically to another industry discount significant very final on for this. discount retail Natuzzi customer. This way recognize acting specific is which sell for you you condition to the your wholesale at the has is course, to do So level the partner of and protect which been out significant is

of and are only discounts to discount we types which is way management the controlling commercial those condition. reviewing also So better but a Not And protect are are marginality. a we protect also allowed. privileged the price those listing because the getting of of

you your were question. Dave, Sorry, further articulating

Yes.

second cost of of the the start was the When we benefits? would So in you're for modernization making some efficiencies. factory those purpose that of and it realize the part benefits to getting investments your

pricing more in pilot decision, while imagine, also immediate factories the team in basically of capturing investment is, X.X, way. XXXX. call X -- started elements, as doing to this way an We you and a our can at our X different the So a different workers in benefit training December require work of

well. like we is months, assortment. So is based of X It's X progressing the One are extremely simplification concepts: on

are one automotive the new expectation. industry pilot the way through industry. them well, flow. delivering is Second becoming are new expected Starting of Italian be technology continuous our specific results supplier which maybe are of processes working which are this which they process, This third integration progressing to our industry is for And is is standard so Lean above kind managing while internal of the to The doing of factory. cost new investment part develop the higher. and from be on we'll labor we the quite of acting are modernize start of is this for new where factory where to second and blueprint, the new factory for the the our standard a the this are higher existing will to is the benefit the year,

and clients way reduce to better to importantly, to of a the be to this production. quite expect for our contribute cost quality We

assuming Can give ROI -- relates some I'm and you'll what Okay. us be be improvements you of what as will it purchasing? to is as equipment on to margin some those that the this capital its sense

Yes.

potentially in at improvement looking single-digit of we're of So cost high margin production. terms

industry say, margins for let's an say, industrial not, would of significant, infinite. I our course, So are like

improvement. can So a be it significant

between the be of bulk year, of plants. timing investment investment of terms Italian this of next In the the in part and will second year

attractive In terms to look want capital use the I compared we we of say is do. to that ROI, at of would

say, the So on current, it's than average capital. return let's higher

to should invest it way a company. the So good resources of be the

is of is of approximately that of In higher-margin about was that plan? -- per pivot we As to that be north one operated year. the opening would much story stores for why could Okay. direct reasons an just the a give the up Jason. there product because investor, your American XX expansion North like talked then XX%. this a branded past, you've an us the footprint, Is question of And update goal with you maybe the still

was to all. it that heard Haven't speak thesis. our critical you about at So investment

open -- then we to are year in If that future foreseeable touch touch And in well. and Europe a you if on could if opportunity America? also on Jason, your there's an track if can probably XX Western North stores elsewhere, as upon the that for

Great.

America. with off North kick I'll So,

approximately open XX see we that this are year's expect stores can we did be X XX year. to year track target we by You stores and And committed America open a approximately in quarter still first that to stores to end. growth the of on North in

you about increase Great. footprint to And Antonio, there an opportunity Western can Europe. there? Is then your talk DOS

a stores So, quite brand have team the and a U.K. are good also already significant I a And an increase we we have there's brand which back. to we in now DOS say France. store and here, exploring good of a established There yesterday in in We and awareness. definitely an opportunity in opportunity of which used we're to Spain, terms by are renovating. terms market I is with where be And X store and is FOS base awareness. was we clearly come way, have way here, XX in distribution. to where also would operational we

So distributing is company in market. as know, you the under

are especially be definitely, talent, that, to a be view beyond marketing. beyond very my have opportunity we the retail, company Spain back to scattered have and to and to difficult the locally lead on need -- but of Because to you and when to there then them, here to not will So strong because be U.S., to globally. to kind suggest be I one company focused. the it store don't one it attract it's pay store strong manage to to be comes is What very U.K. there need do

opened geography Vienna to a look open to fantastic Europe just individual with real a XX in in willing We So at is area. new center we partner opportunity Vienna, is a are FOS where the also of we in XX, which do franchising that. Differently in that is store have for we capturing.

is model our franchising So of very attractive.

a franchising America look at is we quite our And emerging and a beyond the to they pops become is with is to a substitute North U.S., mom a to very store. in is mom significant perfect I supply there And and and pops and amount So manage the Asia, business believe brand predictable our with modernizing, retail return family difficult Because their that for accelerate a on transformation. both of promising. can this and which retail plug-and-play industry chain our inflation Europe predictable see from with franchising front, markets the still way different traditional and and part are investment. for of as

can believe be be and a quite quite It substantial in opportunity markets. our franchising So can I emerging substantial. Europe

makes That to Okay. in investments so I that markets sense. can make and have certain understand you wanting density scale those them.

yet China almost our estimating -- the as I'm initiatives on specifically for and the business has the but credit question us you it. over to share stock want I to don't me about unlock In JV? estate it Vietnam and for per or have that China. past, the to Singapore for an underway it plus the to value efforts smaller, is hidden then much JV I'm on or not to you call. give like worth my just to where value. is So talk China that looked $XX everyone your turn in X we is real getting Can probably asset." core it or Now to going update next "a that totally the any don't more they're anyone at queue. shareholders we've has The on apologies trading

Yes.

create we're kind more option is for in individual Board having listed on investor, KUKA And Board. this the of So Board JV. the to Shanghai increasingly the is amount value which is four and discussion of Natuzzi by with

agreed terms for the that of some investment terms cannot for also is full, I value some action of in to The recognition be those And the amount in let's doing that of the upon initial potential terms this but central. Natuzzi we So of been can and already an direction. the is I to it's more specific but partner partially China distribution but us? in becoming those in have do cash say, no. reduction be of specific JV. already step of R&D form agreed individual further answer is and of Is

As a the at initial discussion operation. very I alternative include partner. there's mentioned, IPO of there Natuzzi, inside premature. the China we with the shareholder But on with it's the which But is a potentially Chairman that been that, Pasquale moment, discussed with

it's that happen But So something next not table. the the in will months. few also option is on

turn there [Operator to to Instructions] are over the further back management are questions. If time I'd no There this closing further comments. floor no questions, at or any further like for

We've our direction step, around news our press release. we a locked around our at I that in our quarter focused is have is retail, Okay. and we June, total press back the modernizing which right, XX% this geography the in mean, the is confirmed No. is affecting is -- can you is growing I operational and which factory. Good down and mean workforce are around looking beginning is good our a quite authority in release, China believe is factory which in of of we plan been accomplishing factories. go explicitly of positive. in that mentioning just the fact that brand, having

prudent can we line in maintain can wholesale in more you we where, in also see for sure of situation market expectation retail terms and see, retail, keep our mentioned, investing make consumer. the general that I as to As top a a

our a bit to summary. you. keep hope is We make I I more would release press with say, self-explanatory. investing So -- stay this to

by one a by growth with the growth. and geography split relative of -- revenue also We session added

you pose welcome remarks I additional want if don't final off-line if question to Piero Chairman have you the will or any. I to to We beyond know did? just Pasquale any what do

You covered everything.

fantastic. are You

Thank you, Chairman. Mr.

You're welcome.

any on Piero, or Jason side? remark final your

Not side. my on

and Thank webcast. you. today's teleconference conclude that In that does note,

this thank time at your today. your for participation have day. disconnect wonderful may a You line you and We

Thank you.

Thank Thank you, everyone. you.