Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi First Quarter 2014 Financial Results Conference Call. [Operator Instructions] Joining us on today's call from Italy are Natuzzi's Chief Executive Officer, Pasquale Natuzzi; Vittorio Notarpietro, Chief Financial Officer; Umberto Bedini, Chief Operations Officer; Marco Saltalamacchiai, Chief Commercial Officer; Simone Ferrari, Chief Marketing Officer; and Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Good morning to our listeners in the United States, and good afternoon to those of you connected from Europe. Welcome to Natuzzi's first quarter 2014 conference call. After a brief introduction, we will give room for a Q&A session. Mr. Pasquale Natuzzi, together with the management team, will be glad to answer your questions. By now, you should have received an e-mailed copy of Natuzzi's earnings results. If not, you can find this information within our website at www.natuzzi.com or please call our Investor Relations department at 00390808820812 to receive the results by e-mail. You can also e-mail information requests or questions to our e-mail address, investor_relations@natuzzi.com. We will respond to you as soon as possible. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States security laws. Obviously, actual results might differ materially from those in the forward-looking statements, because of risks and uncertainties that can affect our results of operations and financial condition. We have discussed such risks and uncertainties, which have in the past affected and may continue to affect our results of operations and financial condition in our annual report on Form 20-F for the fiscal year ended December 31, 2013. These reports are available within our website, www.natuzzi.com, or from us upon request. You may also obtain a copy of our Form 20-F filing from the United States Securities and Exchange Commission. And now, I would like to turn the call over to the Chief Executive Officer, Mr. Pasquale Natuzzi. Please, Mr. Natuzzi, go ahead.

Thank you. Good morning to everybody, and good afternoon for the European listeners. During the last conference call, I started with the presentation of the new management team. For those of you who do not remember, I said that we were still looking at the new Human Resource Manager to manage the human resource during this restructuring plan. We have just found a very skilled manager. He's [indiscernible], with international experience that will join us in the second part of June. And I'm sure he will give us a great contribution in this very critical stage. As you should already know from previous presentation, the 2014, 2016 business plan is the result of one tough work year -- 1 year very tough work carried out by our management team. You may also recall that the first part of the business plan was mainly about the restructuring of the group overall operations through product and industrial process innovation, with particular focus on Italian industrial platform and headquarters. All these actions, which are the core of 2014 measures included in the 3 years business plan are intended to let the group recover efficiency and competitiveness and to allow the company to return to grow in 2014, '15 and '16. First quarter 2014 result represented a first and important stage in testing. Whether the action already undertaken and included in our 3 years' business plan to recover efficiency and competitiveness are giving us the experiences and the results, even if we did not expect an immediate and concrete results in terms of overall savings. In fact, for the entire 2014, we have many goals to achieve and included in the business plan. The start of the implementation of the restructuring measure foreseen in the first part of the plan, the implementation of the marketing and distribution strategy, the launch of the newly introduced product such as Re-vive, bed, new fabric, new furnishings product, and we are here today to verify how such action will be able to generate the expected result in the next quarter. So based on that, I would like Marco Saltalamacchiai, our Chief Commercial Officer, to describe the sales of the first quarter. Thank you. Marco, your turn.

Good afternoon, yes. Good afternoon to everybody. Thank you, Pasquale. I would like to comment the results for the first quarter. In the first quarter, total revenues for the period were down by 11.2% as compared to 2013. This reduction in sales was partially expected by the plan, due to internal activities much related to restructuring in the operation in both all our Italian and Chinese and Romanian plants. There have been external factors, and namely, some of our largest customers located especially in the Northern America, especially in the United States and Canada, suffered because of the adverse weather conditions that hit the Atlantic coast during the first months of the year. In addition to that, we had a few accounts concerned in Far East and China. All those accounts, they've been anyway providing us still a positive outlook for the rest of the year. Secondly, and most importantly, most of our activities in terms of presentations of the new products, especially for Natuzzi Italia, has happened during the end of March through the different international fairs that we attended, and namely, Wanju [ph] in China end of March, High Point in beginning of April, and last but not least, the Salone del Mobile in Milan at mid-April. As a matter of fact, we expect and, actually, we have evidence showing that the order flows by our customers is starting to grow starting from April, and I may confirm that over the last few weeks, we've been seeing very encouraging patterns in our order intake, especially in the Natuzzi Editions and Softaly model line. In addition to that, I might also add that we have completed the reorganization, or we are about to complete the reorganization of the commercial team in North America. Now, all the team is on board. And we are about to complete the process in Western Europe and in Asia. We've been working not only on the revenues, but we've been working, as you might remember, also on the cost side by closing noneffective, not profitable doors. Out of the 13 stores foreseen by the plan, we have closed already 8 stores. And in the meanwhile, we reported a 19%, 1 9%, increase in sales on the same-store sales basis against last year. As a consequence of the above-mentioned actions, we expect to see -- to be on track with the plan already in the second quarter, and we keep a positive outlook for the rest of the year.

So now, it's Marco. Marco, our --

Simone.

Simone. Simone, our Marketing Director.

Okay. Good afternoon and good morning to everybody. According with the delay in introducing some new products in the market, the marketing spending of the first quarter has been reduced by 45.2% versus budget, because we were expecting, of course, to have stronger activities in terms of consumers that was postponed. But in any case, it's still -- it was ever the same level of 2013, the first quarter investment. Nevertheless, all the loan support tools, such as trade events and PR activities, has been developed as planned. We did 8 press participation, 5 PR international events, and 1 worldwide retail congress. All expected new product developments were implemented. We are talking about 59 new sofas, 37 furnishings and the 6 new beds. At the same time, a deep analysis of the product development process has started, and we expect it to be out by the end of the second quarter, the beginning of July, to review product complexity in order to create a more cost efficient and a more effective process. So we are basically in line what we were expecting in terms of development of the marketing activities. So this is for marketing update.

Okay. Let's talk a little bit about the operations. And so Umberto, it's your turn, please.

Okay, good morning, good afternoon to everybody. We have had a low [Audio Gap] this means that we had workers that were partially engaged with respect to their standard shift that caused the lowering more than expected of the overall productivity. We put in place some actions and beginning of May 2014, we entered the staffing of our Italian plants with workers on rotations. In other words, we will have only workers 100% engaged at the industrial lines, and so people that will be brought, they're quite fully-trained and fully-motivated very soon. Therefore, we expect a gradual improvement in productivity and in main operational KPIs. Chinese plant. In China, we experienced a higher-than-expected turnover in connection with the Chinese New Year holiday period. As you can easily understand, those newly hired people, about 140, had to be properly trained, and so the productivity level there was affected more than planned. While facing the above-mentioned issue, we continue to focus on product innovation. Additional 35 models were already re-engineered during the first 3 months of the year. And further 84 -- 85 models are expected to be re-engineered by the end of this year. This implies that 90% of our overall production will be made on a modular basis, with all the advantages associated to it such as the utilization of the common component, the reduction in operational complexity, and a better forecasting on raw material management. Any new model to be designed must treat one of existing platform end. As soon as all models will be re-industrialized, we will start this action, reducing the total number of available platforms. In any case, we continue our industrial process innovation. We implemented, during the quarter, just past additional 15 new moving lines in order to get the final growth of 50 moving lines across the group's plants by the end of this year. Therefore, in the [indiscernible] month, with the product innovation and industrial process innovation projects, both to work their complete achievements, we will benefit from advantages in terms of cost savings. As you may recall, we have already tested on specific samples, the advantages deriving from industrial process and product innovation of the cost. These measures in the product and industrial cost innovation are in line with what's foreseen by the plan.

Okay. Vittorio, can you explain a little bit the financial, please?

Okay. Good morning to everybody. After sales, marketing and operations, let's talk about overhead structure. It's not a secret for anybody, we have an overhead structure both in the headquarter in Italy and in local markets, principally in Europe, that is not sustainable anymore and needs to be reduced. What we are doing, we have already started to implement the project for a centralized shared services structure as foreseen by the plan designed to reduce back-office cost at central and also local level by also leveraging on the SAP system. But let's come back to the top line. The 11.2% decrease versus last year in upholstery net sales can be explained through the following: Minus 9.9% decrease in units sold; minus 3.2% from currencies effect; and plus 1.9%, which shows the combined result of a negative product mix in sales and the positive contribution from price list adjustments, effected last year and that are starting giving the full benefit. Notwithstanding the reduction, 11.2% in net sales, worsened our sales mix and the inefficiencies experienced, as Umberto was explaining before, in the plants during the first quarter this year, we have almost maintained the same gross margin as last year, 28.5% versus 29% reported 1 year ago. SG&A expenses went down from Q1 2013 in absolute terms, but due to lower sales, they went up as a percentage of net sales, resulting in a negative EBIT of EUR 9.4 million that was worse compared to Q1 2013, but almost in line with Q1 2014 budget, benefiting also from recovery of EUR 0.9 million achieved in the directly operated stores' management. And finally, cash flow. The analysis of the cash flow displays that the company spent EUR 3.1 million in operating activities versus EUR 12 million used during the first 3 months…

Thank you. So in our 2014 and 2016 3-years plan, throughout 2014 was devoted to the restructuring of the company. This was, and still remains, the first goal this year in order to put the company in the position to come back to the growth in the following years. Even if with some delays in the first months this year, all our activities on cost have been put in place and are running in the foreseen direction, although we perceive the first signal of the trend [indiscernible] following the positive feedback we have received on our new collection that we were currently recently introducing. Sales in the second quarter should be a bit below last year's second quarter, thus we underline that the implementation of the action on cost will continue in order to get at the end of the planned fixed cost structure adequate to today volumes. The job we have to do is not issuance, but this is a 3-years plan on which a new and full committed management is 100% committed and confident. So that's the situation. If there are, I hope, questions, we would be very pleased to answer you.

[Operator Instructions] It appears we have no questions at this time. Would our speakers like to make final remarks before we conclude the program?

How come? There are no questions?

No, sir. There are no questions at this time.

Okay. Then what can -- I mean, if there are questions that you can e-mail to us eventually, we would be pleased to answer for all of you in real time. I mean, we have a very clear idea in what we are doing and we apologize if you are concerned or if you are disappointed. We are very much confident in what we are doing. No question about it. And we would like to invite you to be confident, too. Okay? All right. Thank you very much to everyone for attending this silent conference call. Thank you.

This does conclude the conference. We thank you for your participation.