Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi S.p.A Second Quarter 2025 Financial Results. [Operator Instructions] Joining us on today's call, as usual, are Pasquale Natuzzi, Executive Chairman and Chief Executive Officer, Ad Interim; Carlo Silvestri, Chief Financial Officer; Mario De Gennaro, Chief HR Organization and Legal Officer. Furthermore, also joining us on today's call are Ms. Marilena Scaramuzzo, Treasury Vice President; Domenico Ricchiuti, Chief Operations Officer; and then Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I will now turn the conference over to Piero. Please go ahead.

Okay. Thank you, Donna, and good day to everyone. Thank you for joining the Natuzzi's conference call for the 2025 2nd quarter financial results. After a brief introduction, we will give room for the 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, Mr. Natuzzi.

Thank you. Good morning, everyone, and thank you for attending this conference call. While all the information regarding the performance of the first 6 months have been available on the press release, which we sent to all of you. I believe that for all stakeholder information, I would like to add also some additional information, which I believe are very important for everyone. What has caused the result, which everyone is lumpy, okay, starting by me, by the shareholder, by all the stakeholders and by the management has been caused primarily from the Chinese market and the American market. And I like to explain that, which I believe is very important. In China, China is an important market for us. So that's why like [Technical Difficulty] in china regarding the tariff. And that has caused in China a crisis, which has impacted on our business. The volume that were forecasted for China were very much higher, much, much higher than what we are doing today. To give you an idea, just in 2025, we closed 77 stores in China. But -- and we opened 30 new stores. So while we closed 77 stores between Natuzzi Italia and Natuzzi Editions, we opened 30 new Natuzzi store in China. So there is really a situation, let's say, complicated situation. But the fact that we are closing the store and opening a new store, 30 stores with the partners that are investing on our brand, this is something that needs to be told, needs to be understood from everyone. Now in many time, the tariff and the uncertainty between how much it would cost to import the product from China. In China, China has been always an important market for us, not only for distribution, but also for production. So our production for…

[Operator Instructions] Our first question today is coming from David Kanen.

The first one is I see that you've extended personally a credit line to the company of $15 million. What are the terms of that in terms of the interest rate and then also, you've referenced noncore assets that you can dispose of. Could you quantify for us some of those assets, what they're worth, tannery other property that you can potentially dispose of while we're transitioning the company to profitability?

So as anticipated in the press release, the Board of Directors has just approved the guidelines of a multiyear restructuring plan basis and optimizing the cost structure, increasing the flexibility and developing the retailer business. To implement these activities in the plan targeted investments are likely to be required such as marketing, retailer, the managing and redundant workers and et cetera. Therefore, the board will be evaluating measures aimed to strengthen the capital structure to support the restructuring plan. Once the restructuring plan is finalized and approval by the competent corporate body, we will provide further information on the capital strengthening measures required. I have granted credit line to the company because as the majority shareholder, I'm firmly convinced that the effective implementation of the restructuring plan guidelines, particularly those relating to the Italian production hub and the general optimization of fixed cost together with our commercial initiatives can help the group to relaunch its activities and pursue sustainable profitability. This credit line will provide the resources needed to address the short-term needs and ensure the financial stability required to achieve the group strategic objectives set out in the restructuring plan. However, as I previously mentioned, together with the Board of Directors, we are evaluating a measure to strengthen the company's capital structure. In the current year, we -- that's it. So that's the story.

David to further add is a 0 interest loan. And as you know, we are looking always for opportunity to, let's say, monetize some of our noncore assets. In specific for the tannery, we don't have any news so far, but we are actively looking for other opportunities to offset some of our noncore assets. And this would be also one of the point of our strategy for the near future regarding also the rightsizing of our industry operations facilities.

Okay. That's helpful. Carlo, could you quantify for us 2 things. First, on the assets, give us a sense as to the value of some of these noncore assets as well as the tannery. How many millions are these assets worth? And then if you could give us some sense of the restructuring, once we move past it right now, our gross margins are last quarter at these volumes was only 34%. After the restructuring let's assume similar revenues, what type of gross margin do you think we can achieve. And then in terms of operating expenses, what kind of a reduction do you think we can get in operating expenses? And will we be positioned to be profitable as a $320 million company?

Thank you very much for all the questions, David. Let me elaborate a little bit because it's a bit long. I will try to summarize it to be effective. First of all, in terms of assets. Okay. Our total net asset value is around EUR 70 million, okay. To specify which is core and noncore, for the moment, I cannot give you the precise figures because all the investigation and internal analysis and discussion with the Board are ongoing. So this will be, let's say, quantified in a way once the final setup of our operations is done. But as I said before, this is one of our strategic point. If talking about the tannery, the tannery had a value of EUR 5 million specifically, that was the last evaluation we had. But of course, David, we need to be aware that then we need to go on the market. And these are the latest valuation and specifically for tannery is not an easy market to find a buyer in this moment. For the other assets, when I talk about EUR 70 million is composed by the plants and the machinery. So also on this, we need to play careful. It's not a value that we can totally monetize because like for the machinery, it's a different way of evaluating. So this is for the assets. Allow now to discuss a bit about the gross margin. And as far I can give you indication on what we are working because, of course, the work is on process and so I can't disclose any further detailed information, but allow me to give you the sense of what we are doing. With Mr. Natuzzi and all the team, we are working to be sustainable, especially from the financial point of view. So when we talk about increasing marginality, this is one of the main points. The 34% has some factors that need to be specifically addressed. The first one is the impact -- direct impact on the lower retail sales that, as you know, has a higher margin. And this, we are working with Mr. Natuzzi and the commercial team to bring back the sales that will grant us a higher marginality. On the other topics, we are working on both operational efficiencies that they will increase the margin and will decrease as one of the reply to your question, all the industrial costs in a permanent way and working on the price list to adopt the profitability to the changing environment of business. So all of these activities together with other actions that are aimed to be more efficient from the cost point of view, targeting of decreasing and increasing the speed of that activity to the economic environment will improve our marginality. Therefore, we will go back to the trajectory with increasing margin and decreasing the sales to be breakeven. I hope being clear and replied to all your questions, David?

Yes, that's very helpful. I appreciate the clarity and the detail. So are you saying at these levels, these depressed levels we're running at after the restructuring, your objective is to be breakeven. Did I hear that correctly?

Yes, the trajectory of the plan is to be profitable. Yes, the trajectory of the plan is to be profitable, David, absolutely.

Okay. Okay. And then in the past, I guess this would be a question for Pasquale Jr. I don't know if he's on the call, but if you can speak to the commercial initiatives, Mr. Natuzzi highlighted some of these large projects in Jerusalem and Dubai, et cetera. For next year, could you give us a sense as to your internal goal for annual run rate in commercial revenue? Is it $10 million a year, is it $20 million, $40 million? What is a realistic internal goal in terms of run rate? Because this is incremental, and I know there are companies that are doing hundreds of millions of dollars in this business. It seems like there's enormous upside to it. So if you can give us a sense as to the magnitude that would be really helpful.

Okay. I can answer, David. Certainly, you're right. But to be honest, I mean, we want to communicate the real contract that we have in our hand. So we started with one contract in Dubai. Then we -- because it's been successful, now we have the second contract. And because it has been successful we have also contract in Israel. There are already 3 towers that we should develop. I mean, and we have other very important, very exciting project in the pipeline. But I mean, we are not ready now to tell you how much volume we are going to develop with the Trade and Contract business. Certainly, the fact that we've been attending two events in Mumbai and then in Dubai, in Riyadh, then even in New York, where we invest money and we need the architect, where a developer just -- I mean, we are promoting the business. And certainly, we are expecting to get good return, to be honest, okay?

Yes. May I add also on this Mr. Natuzzi, David, to give you a magnitude, it is a start-up. So the number will be low in the beginning, but then there will be a multiply effect. The more projects we do, the more they know, the more we have. And specifically, when we talk about revenues on a yearly basis, there are 2 sides of the contract. The first one is design fees that we will get in the first phase of the contract. The second one is when we realize the project and we deliver all the merchandise that has a time line that we don't know and we cannot predict. So as a total ballpark, we are in a start-up phase and then on top of that, it's difficult for us as of today to understand the phasing of the delivery of the product.

Okay. That's very helpful. And then is there a way that perhaps I can extrapolate if you can give me a sense maybe per unit, let's say there's a building that has 150 units in it, okay? What do you think the spend is, on average, what is the normal spend per unit? Is it, 4,000, 7,000? If you can give me some sense...

It really depends on the project, David. It really depends on the kind of project.

No. I mean if I understood well the question, David, I mean, we promote the Natuzzi Harmony Residences, and we promote apartment of different size. Then we give the liberty to the consumer to choose the Natuzzi product. So it depends. We can -- I mean so the amount of cost to furnishing each apartment could be very much different. It depends. Because as you know, each project we make is available in leather or is made in fabric. Could be -- the configuration could be a big one or a small one. It depends from the customer needs, the consumer needs. So I mean the price could be different. We believe that next year, while after we furnishing, we decorate several apartments. We should make -- we must be in the position to average them, and we can give you this information.

Okay. And then let me move on to my last question, and then I'll go back into queue if there's anyone else that would like to pose questions is, could you give us an update on the permanent CEO search. Do you have candidates that you feel you're close to deciding on? And is that something that you expect perhaps by early next year will be finished?

We engaged a head hunter company and started to propose some candidates. I already made one, I tell you one and I spent 2 hours time. Certainly, we need to find a CEO that should understand how to develop and manage high-end brand. One, we need to -- the same CEO needs to have experience also in managing a retailer. And the last and not the least, should also experience in operation because we are a company which we design a product, we manufacture product, we sell the product through the retailer. We are a global company so I mean it's not easy, but certainly, we will continue to do the search. There are certainly some people capable to manage our company. But that's -- we are going forward, be sure about that because I like to be the president of the company. I cannot be everything. I'm here to add to the company, obviously, because I feel responsibility for that.

I'm going to try and squeeze one more question in there. My apologies. So the last quarter you reported was second, the June quarter. Clearly, the third quarter is over, are we basically maintaining the levels that we saw in Q2? Or have things gotten worse? Or are they slightly better in terms of the written orders?

I mean I already declared on the press release, David, okay? I mean it's -- I mean, I hope I have been clear. I'm sure that I have been clear because I wrote, I read, I re-read again the press release. So do the same please, all right, and you will then understand the company direction.

[Operator Instructions] We're showing no additional questions at this time. I'd like to turn the floor back over to management for closing comments.

So no further questions.

That is correct.

Okay. So thank you very much to everyone, to every listener. And I really appreciate your attendance. Thank you. Thank you very much.

Bye-bye.