Ladies and gentlemen, please standby. Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi 2023 First Quarter Financial Results Conference Call. As a reminder, you can join this conference live via telephone by dialing into the following number +1-412-717-9633, then passcode 39252103#. In addition to the link already provided to join via video. At this time, all participants are in a listen-only mode. Following the introduction, we'll conduct a question-and-answer session, instructions will be provided at that time. Joining us on today's call are Mr. Antonio Achille, Natuzzi's Chief Executive Officer; Mr. Carlo Silvestri, Chief Financial Officer of the Natuzzi Group; Mr. Pasquale Natuzzi, Founder and Executive Chairman; then Mr. Jason Camp, President of Natuzzi Americas; and Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I'd now like to turn the conference call over to Piero. Please go ahead.

Thank you, Kevin and good day to everyone. Thank you for joining the Natuzzi's conference call for the first quarter 2023 financial results. After a brief introduction, we will give room for a Q&A session. 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 securities 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. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. And now, I would like to turn the call over to the company's Chief Executive Officer. Please, Antonio.

Thank you, Piero, and good morning, good afternoon to our respective investor and analyst. Before we get started, let me also introduce our Treasury Director, Marilena Scaramuzzo, today join us together with Piero and Carlo to handle potential question on more (ph) the financial side of our analyst presentation. So as we published in our press release, the first quarter sales were clearly below our ambition and below significantly 2022 first quarter. I do remind you that 2022 first quarter was one of the strongest that we ever recorded, but that doesn't, is not enough to describe the situation. The situation is a situation which continue be characterized by a very challenging business environment. Globally real estate, which is one primary source of new demand for our business is very much frozen given the high interest rates. In general, consumer have turned away from durables privileging more instant pleasure, so holiday’s dining out (ph). And it's unfortunately a contest we see per [indiscernible] even though we know the industry is cyclical, so we deeply believe that there will be a return to normality in due course. Beyond what we experiment globally, we clearly have two geography to deserve further reading. If we look at our performances, 75% of the absolute number, negative delta, is driven by two region, North America and China. North America is accounting a delta negative of 11.7 million versus the first quarter of 2022. If we read carefully on North American business, most of the, let's say, decrease come from the wholesale business, especially the unbranded part of the business. The unbranded part of the business, which is still present, even though it's a minority for our business. In 2019, in North America first quarter accounted for 8.3 million in the first quarter of 2022 for…

[Operator Instructions]

Good [indiscernible]

There is an investor, please.

Good morning. Yes. My apologies. Thanks for taking my questions. I was surprised, given the decline in revenue that if I add back the restructuring charge, it look like on an operating basis, you were actually breakeven, which is kind of a testament to the improvements that you've taken in terms of margin and it's encouraging for the future. Now that being said, have you seen any improvement in written orders specifically in North America and China recently -- is this the trough? Is this the bottom in terms of written orders or are things still very challenging and is there a potential for revenues to continue to decline from this level?

So -- and then Jason can spend more on North America specifically. The situation remains challenging. In term of written order, if we compare with that versus last year, the last eight, 10 weeks were clearly much better also because last year had a very strong start in the first part and then softening. So if we look at our delta versus last year, it was more negative in the first weeks that is in the current trading. The situation remain anyhow very challenging in the sense that we have to conquer every single sales is not that we are getting high volume of traffic. And I would say that's true for the industry, unfortunately, because it would be an encouraging sign in a way if it was just for us. I think the industry overall is quite cold in term of traffic. So in terms of trend versus last year's factually, last week are improving, but also because last year, by April, the wind kind of changed, so we're comparing it versus a second part of last year, which was softer. In terms of North America, I might let Jason describing on China, they have favored the new year's, but the result on a tradition they are very, very encouraging, the current trading. Natuzzi Italia, as I mentioned before, require some fine-tuning of our merchandising and fine-tuning of our retail operation before it gets better. But Natuzzi Edition, we had a commercial event tensions (ph) and the world's strongest cycle on our brand and the sales are -- and the order flow are above last year. Please, Jason on North America, you might want to comment.

Good morning, Dave. So listen, I would say that from a written order standpoint, Q1 of '22 was our retail peak. In fact, uniquely, it was almost 10% above any quarter we had ever had in our history from a retail perspective in North America. Of course, what we're most focused on today is, we report revenues to you and in North America those revenues on a retail basis often come four to five months after the orders are written because we import almost all of our sales from Italy or China. I would say, in general, that our start to the year on a written basis has been healthier and stronger than how we finished '22. So the quarters that followed, let's say, the back half of '22, our business year-to-date is healthier and stronger than what we wrote in the back half of '22. And then lastly, I'll say is, if I'm looking at our -- the health of our retail business against, even 2019 kind of pre-pandemic on a like-for-like or comp basis, we're comfortably running almost 30% above 2019. And in totality, that retail business, although still relatively small, will probably be in the range of doubling 2019 at a total level. I hope that helps.

Okay. That's very helpful. And then from my standpoint, critical to the success of the company and value creation for shareholders is the continued expansion of branded -- your branded presence in North America and like markets in Western Europe. Can you talk about -- you said you opened three stores, I believe, in Q1. Is the plan on track for the balance of the year and then also 2024? I mean in the past, we spoke about eight to 10 stores, DOS stores per year or a combination, is that still the case and will you potentially accelerate that or fund it from sales of non-core assets, meaning real estate? Thank you.

As Jason, you comment, can I answer, yes for 2023, but I'll let Jason comment on a more elaborated way and then I -- if you agree, Jason, I will briefly comment with Carlo on the sales on strategic asset. Jason, do you want to comment on the pace for 2023 and [Multiple Speakers] color on where we're opening next?

Our opening count is on plan for 2023 for the year. And I think, in general, we're spending time aligning on 2024. So I think simply said, we're on target to achieve that for 2023 and we're spending time getting aligned for 2024.

And Dave (ph) and other investor and analysts, in terms of direction of our plan, which, by the way, was approved by our Board, so it's a kind of formal, let's say, commitment everyone is taking towards the Board. Nothing has changed. So brand retail and core market is a priority in the U.S. is in that frame, the largest priority. So there's not been a redirection of the plan. In terms of sales of non-strategic assets, equally, that is a priority. We are continuing a dialogue especially for our largest asset [indiscernible] where we are in dialogue with a potential buyer. And hopefully, we will be able to report back more precise outcome. Also on the sales side, as you can imagine, with this interest rate, the loan-to-value for potential buyer is reduced. So we will not accept, let's say, very sub-optimal offer. But if there is a change of fair valuation of the asset, we are very much with the Chairman -- inside the shareholder, we are very much aligned that it is a good moment for pursuing those opportunities.

Okay. Well, again, just to recap, although, revenues were disappointing, what was encouraging is the fact that we were more or less breakeven on an operating basis. And when we do return back to EUR100 million plus in revenue, it seems as though we're positioned to generate meaningful operating profit. So I commend you on that and continue the good work of improving margins holding the line on expenses and expanding our North American footprint. Thank you.

Thank you, Dave. And I think, of course, is a better satisfaction, if you want. But if you were simulating, we're doing this even today, what will have been the EBIT running at EUR100 million, which is nothing particularly exciting to write home about because our plan clearly at higher target for this year, but will be a significant margin and EBIT with the current EBIT conversion that we're operating. Okay. If there are no further questions, I suggest maybe Carlo drive or a comment from our colleagues or the Chairman, I suggest that Carlo drives through the more, let's say, detailed and technical aspect of this press release.

Good day, ladies and gentlemen. I will go through the data that we did report for the first quarter 2023. And then, I will have some information regarding what Antonio mentioned about the quality of our sales and other P&L assets. So at the first quarter 2023, the Natuzzi Group reported revenues for EUR86.1 million with a gross profit of EUR30.6 million and an operating loss of EUR900,000 with financial costs of EUR3.4 million in the share of profit of our investments in the JV channel, EUR1.8 million (ph), we closed with a loss before tax of EUR3.2 million and after tax of EUR3.3 million. So in short, we had revenues for EUR86.1 million and a loss of EUR2.3 million. So in order, as Antonio did correctly mention, to give not as a justification of our performances, but to give you a better perspective of our performances, we will refer to not only the first quarter 2022, (ph) but also to the first quarter 2029 (ph), given the fact that the 2022 was under the spotlight as the last quarter of 18 months expansionary phase starting immediately after the COVID. So if we analyze the data, starting from overall perspective, our sales, excluding the other revenues, so focusing on our core business, we did land at EUR84 million that represents a decrease of 26.2 versus 2022 and 16.9 versus 2029 (ph). 2029 (ph) was at EUR100.1 million and 2022 as EUR113.8 million. If we focus again on our branded delivery sales that includes Natuzzi Italia and Natuzzi Edition, we were flat at EUR77.5 million versus 2019, while we were decreasing of 21.6% versus 2022. Between the two brands, we did see the sales of Natuzzi Edition surging and compensated by the decrease of Natuzzi Italia. So based on our EUR84…

Thank you. [Operator Instructions] I may turn it for any final remarks from Antonio and Carlo.

Thank you, Kevin for moderating as usually very effective our conversation. And I thank your supported people who've been attending for the last 45 minutes of our conversation. We've been -- and we will continue being extremely transparent on our business. We do remain confident of the potential of this group. When we go around talking with our dealers, our partner, even our final customer, we really believe that what we set ourselves as a midterm goal is absolutely achievable and this company deserve it. At the same time, our, let's say, midterm plan, we need to recognize that we encounter a strong headwind and this will be causing to be 18 months plus shift in terms of execution over time of our plan. But in term of direction and goal, we have not changed of one each (ph) our conviction on the potential of this company. Thank you very much. And unless Chairman or the colleagues want to have additional comments, I thank you for the time you dedicated to us today.

My comment is very simple. Business environment is complicated and no question about, I mean, the -- I mean, there are a tension between China and America, tension between Russia, China against Europe, then certainly, all those tensions, they impact negatively, obviously, on the consumer confidence. We are a company with a very strong and clear direction. Today, the team is more united and strong and professionally prepared to face this kind of a situation and then totally confident about the future of the company despite the environment, again. Thank you very much for everyone, for attending this call and we hope to give you a better news in the next one. Thank you very much again.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Thank you.

Thank you. Bye-bye.