Dexelance S.p.A. (DEX.MI) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Dexelance Midterm Ambition Investor Presentation. [Operator Instructions] I now have pleasure handing over to Andrea Sasso, Chairman and CEO. Please go ahead, Andrea, the floor to you.

Thank you. Good morning, everyone. You have probably seen that yesterday evening, we announced the approval by the Board of Directors of the Group's midterm ambition, as well as the call for an extraordinary shareholders meeting for a share capital increase. Our goal today is to guide you through the details of such ambition and the reasoning behind this new step for the group. And in order to do that, I will start by reminding us all the background and key features of Dexelance model. So let's go to Page 3, where I would like to underline, once again, that the Dexelance today is a distinctive platform in the high-end design sector, offering the full coverage of home furnishing categories, with a well-diversified and balanced presence across geographies, product categories and distribution channel. We've proven distinctive M&A capabilities. In fact, today, Dexelance represent 16 brands, 13 companies, 5 strategic business areas and around 1,000 people. If we go to Page 4, you can see also our impressive track record, 13 acquisition in 10 years. And today, we are the ideal home for entrepreneurs who wants to accelerate growth. If you go to Page 5, you see also that in this way, we were able to create a portfolio of complementary brands with high end positioning and especially in 2025, we strengthened such a position entering with 2 new excellences, one in the outdoor sector with probably one of the best brands ever means -- meaning RODA. And in the omnichannel with MOHD, which combine a physical distribution and the best electronic platform design serving from the project world. So I want to strengthen what happens in 2025 from an M&A point of view, because really this is our 2 excellences that we are very proud to insert in our portfolio. If we go to Page 6, you see also from my point of view, one of our best competitive advantage that can attract and excite new entrepreneurs is our distribution platform. You can see 4,500 multi-brand retail partners, 47 mono-brand stores, 15 directly operated stores, 16 direct operating showrooms, 3 following subsidiaries. They allow any company to have the possibility of distributing its products in a truly global network from the day 1. And believe me, when we are talking with entrepreneurs, this is a strategic key advantage. So I will leave the word to Marella.

Thank you, Andrea, and good morning, everyone. So if we go to Page 7, we can see that, as already mentioned on multiple occasions, all Dexelance's reference market and of all its brands is what Bain calls the core high-end design furniture market which, before COVID, recorded a pretty stable 20 years growth of roughly 4% to 5%. After the 2020 decline, minus 7%, the market benefit from the after COVID global consumption dynamics, signing double-digit growth, both in 2021 and 2022 and reached a record high of EUR 48 billion size in 2022. It then went through a normalization phase, as already commented, in 2023 and 2024, declined to EUR 46 billion worldwide in 2024, which in any case, is still almost 20% more than the pre-COVID levels. So overall, looking at the last 9 years, the reference market grew with a CAGR of 4% to 5%, which is a growth pace that and Dexelance has consistently outperformed with achieving a CAGR of almost 34% in the same period. So if you look at the graph at the bottom of the slide, you can see Dexelance evolution and the interplay between organic expansion and acquisitions. The growth of the group was driven by a solid organic performance which was, on average, 10% annually, double compared to the market and a targeted M&A strategy. If we want to talk briefly about 2025, expectations, public sources anticipate substantial stability. Federlegno, for example, during the last -- the first 9 months, highlighted our worst trend for general furniture and lighting while a better performance by bathroom and office furniture. Bain, for example, then also talks about general stability, although it has been monitoring lately high-end design and home work together and is specifying the homeware sector recorded growth, contrary to a more cautious consumption in design. But if we talk about our internal market intelligence, we can see that -- we see our worst performance in the retail channel, probably in the high single digits and a better trend for residential, hospitality contract sector. As well known, the personal Luxury goods sector suffered in 2025 from the general macroeconomic conditions. Therefore, contract in retail, retail contract, where we are with our Luxury contract companies was heavily affected. If you go to Page 8, we can see that -- and we want to remind that in the 2024 declining market context that we just described, Dexelance reached EUR 324 million with a positive and full organic growth of 4% with respect to 2023, as well as a strong EBITDA margin around 15% to 16%, well above the industry average. Looking into 2025, and what happened during the first 9 months, which we will deeply comment on going on through the presentation, we can see that organic growth at the end of September was single digit down. But considering the inclusion of the last acquisition that Andrea mentioned before, MOHD, the group is running at almost plus 20% year-on-year. What is important to highlight here is that on the right side of the page, you can see a third-party research summarized that shows how the consistent and rapid growth path of Dexelance in a lifetime of just 10 years, rapidly position the group among the top 10 global high-end design worldwide furniture players. The group is even ranked first if we consider the last 3 years' average annual growth, which is here represented as 31%, which is perfectly in line with the 9 years trend just commented. So this demonstrates the resilience and the effectiveness of our scalable business model that is based, as Andrea was highlighting before, on a complementary brand portfolio, a diversified market presence and a strong design and project capabilities and reinforces, more than ever, the growing international relevance of Dexelance. Please, Giorgio, go ahead with the next one.

Thank you, Marella. So after this snapshot on our track record, let's now focus on those that are the key facts in 2025. Some of these factors you know already and will go through them briefly, some other, either you don't know yet or you do need for sure, more details, and we will provide you with them. If we move to Page 9. As Andrea already anticipated by far, the most important key fact for 2025 for us is the completion of these 2 acquisitions that I would call 2 milestones along our path towards excellence because with RODA, we basically introduced into our group, one of the best excellences in the outdoor furniture world globally. And on the other side, the acquisition of MOHD allow us to enter into the omnichannel distribution but even more to have an internal partner that will support the growth of all of our brands in the group in the projects, contracts and multi-brand supply for architects and A&D community. So both these acquisitions, although RODA will become consolidated in 2028 but both of these acquisitions increased dramatically the level of excellence that our group is providing the market with. And on the other side, is further completing the range of products and services that we can offer to the market. If we move to Page 10. Another important key fact in 2025 is that despite the flat market that Marella announced before, we kept on investing for the growth, both of the group as a whole and the growth of the single companies. We basically invest -- made selective and effective investment in 2 major areas. One is people -- skills and people. And basically, we focused on both increasing the level of scales in our operating companies by introducing some new functions, and I will come back to them later on. And on the other side, as you know, we are -- we became master in generational succession. We have to invest also in some key people that will grant continuity to some of our companies in order to succeed to entrepreneurs that will very likely in the midterm, leave the field to the younger generation. On the other side, we invested in some countries, as I said, in increasing some skills, especially in the area that we have neglected so far, which is the operations. Basically, as you know and as you heard in all of our conferences before, we've always mentioned investment in marketing and sales in subsidiaries. But as a matter of fact, and we will come back to that later on. We are now focusing also on cost efficiency and on optimization of the operational processes, that's the reason why, for instance, we're introducing a couple of our companies, the role of Chief Operating Officer in order to have a high level of skills in lean manufacturing, in lean processes and in cost reduction and cost efficiency. That's kind of a new shade of the way we are investing in our companies. Last but not least, we have invested also in marketing and commercial costs, again, in a very effective and selective way because, I mean, there are new markets to address. Some of them are opening right now. There are our subsidiaries to support, and we are receiving some signals from -- for instance, from the North America, from the United States of a kind of reached stability after the high level of uncertainty that highlighted 2025 because of the duties, because of all the level of uncertainty that the government has put into the market. So this new kind of optimism on the U.S.A. side as well as the fact that China seems to have reached the end of the tunnel, like we say, in Italian, and it seems -- we perceive some slight signals of recovery and coming back to growth in our industry. And this is suggesting us to make selective investment in marketing and initiatives in order to catch and seize this kind of opportunity. So in a whole, despite a flat market, we kept on being very carefully investing in work to growth and also in areas where we can have a better cost management inside our companies. I'll leave the floor for the next fact to Alberto.

Thanks, Giorgio, and good morning to everyone. Page 11. We talk about the Luxury contract. Last year, we achieved our best results ever in Luxury contract, EUR 91 million of revenue with an important acceleration in sales and consequent backlog unloading in the fourth quarter. We achieved an EBITDA margin of 22% due to operating leverage and strong margin of the 3 top clients. During the first half of 2025, we recorded an initial slowdown of order intake related to weaker market conditions and some customers started asking to postpone the projects. During the second half of 2025, we had other postponement or cancellation of several projects, but keeping a good relationship with the main historical clients. At the same time, we started to acquire new clients. Expected sales in the current year is roughly EUR 70 million with a partial recovery from activation of new clients. The expected margin of roughly 13% decreased due to operating deleverage and a different client mix. We move to Page 12, and we talk about some projects of [indiscernible] a furniture company of our group, starting 2 important projects for a total value of EUR 35 million acting as a general contractor at the end of 2023. During the previous year, the company began to have several difficulties in the realization of the projects. During the 2025, in order to solve the problems, there have been accommodation interventions with increased cost, which resulted in a high increase in cost with a margin reduction of EUR 5.5 million. These events are to be considered non repeatable due to technical reorganization of the structure and procedures. We move at Page 13, and we talk about the new partnership -- an enforced partnership with Cubo. This month, we have strengthened the partnership with the founders of Cubo Design, one of the best performing companies of our group. The cooperation provides for enhanced long-term development in the kitchen area. For this reason, we sold the put and call option agreement relating to 40% of the share capital of Cubo and guarantee the presence of the founding members for a long period. Cubo is a market leader in the kitchen area and the strengthened cooperation will bring excellent results in terms of sales and profits. The financial effect is the reduction of the financial debt ex IFRS 16 due to the cancellation of the debt for the purchase of minorities of about EUR 30 million. And please, Giorgio?

Yes, Alberto, I'd like to underline that this type of partnership beautifully highlights the long-term relationship and values that Dexelance wants to be with the best entrepreneur families who choose to enter in our common house. And this is a perfect example of that. Please, Giorgio.

Well, let's move to Page 14. As anticipated already, on one hand, we are focusing on investing in developing and partnering our growth. But on the other side, given also the profitability below our expectation that we are facing this year, we have also focused on more intensively, I would say, focus also on cost management and liquidity optimization initiatives. As far as cost management is concerned, I told you before that we have invested in some generational -- in personnel cost in some generational succession. But on the other side, if you look at the midterm, the next 2, 3 years, some of the generational succession will be completed as well as some organizational optimization will be completed as well. And this, in a whole, will end up with a total saving in the area of a couple of million euros. At the same time, we are also looking carefully at our marketing and commercial costs. And on this side, we are also planning some efficiency measures on how we do invest and what are the tools we use to communicate our companies and also on the effectiveness of some of our directly operated stores. We are planning to close 2 of them as a matter of fact, in the next 18 months. And also these activities altogether will end up with a total saving of about EUR 1 million. So the first results of this optimization analysis that we have done will end up in kind of EUR 3 million savings in our fixed cost, without damaging or impacting our expansion growth. On the liquidity side, you remember that at the end of 2024, we announced a CapEx plan of around EUR 40 million that was mainly but not only devoted to capacity expansion in the Luxury contract filled on one side. And on the other side, was devoted to capacity expansion of our jewel kitchen company, Cubo Design. We confirm this level of investment of EUR 40 million, but we started managing it in a more careful way by splitting over 4 years instead of 3 years, the total amount of CapEx. It's worthwhile to remember that this EUR 40 million includes also the maintenance CapEx, which roughly amount to kind of EUR 5 million per year. We started this liquidity management program already during 2025, where we reduced the amount of investment down to EUR 9 million, including ordinary and extraordinary investments. Again, both on the profitability and cost management side and on the liquidity side, we are reassuring you that we are keeping a careful eye on all the initiatives and the expenditure and the investment that we are planning over the next midterm. Andrea?

Okay. Let's go to Page 15 when we are talking about our midterm ambition. We want to highlight on this page the return to organic growth with a strategy in line with our historical performances. In particular, in 2026, we expect, for example, in the Luxury contract field, a stabilization of projects from historical clients. You understand that some clients this year, I mean, they are not even opening some new stores. So they canceled some stores, but they didn't change our trust in us, in our companies. In fact, we didn't lose any single customer and any single market share. Simply, they don't open new stores. Then in 2026, I repeat, we are waiting from a project stabilization, but also a contribution from new clients and increased client base diversification. And then it's a process that is already starting 2 years ago. And then in 2026, we see some nice effect. And then this, for sure, will produce some recovery in strategic business, as mentioned, especially in one company that this year was afflicted from cancellation of projects. In the residential area, we expect a return to growth. You know that this year in residential area, we were able to keep and to maintain our sales more or less much better than, I mean, the market that was in the retail sector, frankly speaking, high single-digit negative despite a stabilization in general, thanks to the contract business. I mean, we had a different situation in our companies and business. But also for 2026, we see that there are some initial signs of improvement in market conditions, especially U.S. that for us is a very important market. You remember the uncertainty generated in the U.S. from tariffs, I think is already [indiscernible], finger crossed. And then we see that the business in January is giving some positive signals. By the way, our subsidiary was performing well even in 2025 in this uncertainty, I mean, situation and market. But in 2026, we are positive on that. And then APAC and Middle East are keeping positive momentum. And I can see you also that because I and Giorgio, we have been in China quite often this year. And I think that also the bottom of the market was touched, I mean, between July and September and then some nice customers show really an interest, a real interest in our subsidiary, in our brands. And then we are opening new stores in Shanghai that is something that is vital, I mean, to do business in this country. And then I don't want to talk about Turri, Alberto was explaining very well. But for sure, we will see a recovery. So I mean, it's over, the problems with Turri, and we are coming back to the old situation. So talking about the midterm ambition in a wider period, I mean, we think that we can achieve interesting results. And we are -- first of all, I want to underline the key assumption. So the numbers that I will tell to you is based on organic perimeter. You will see the consolidation of RODA in 2028 because this is not -- we are not considering as a new acquisition is, I mean, part of our contract and partnership that we have with our new shareholders, revised phasing of CapEx plan and normalized working capital dynamics as our colleagues are talking to you. So we expect, in the midterm, revenue around EUR 500 million sales and adjusted EBITDA margin stabilization around 15% and adjusted net income margin stabilization around 7% and operating cash flow stabilization around 50% of the EBITDA. So this is really an ambition in which we, not only the management team of Dexelance, but also each of our entrepreneurs deeply believe. Please, Marella.

Thank you, Andrea. And of course, going to the next page. On top of the organic ambition that Andrea just commented, we remind that M&A is a key strategy value driver -- strategic value driver of Dexelance. It's the real upside of the group since inception. As commented, we have an impressive track record; in 10 years, Dexelance completed 13 acquisitions, building a truly diversified and -- synergy platform. And just looking into the last 5 years, thanks to that, revenues have tripled and EBITDA more than doubled. So this is really showing the value of being able to identify and successfully integrate Dexelance companies. And we still firmly believe that M&A is and can be a fundamental asset in Dexelance's future strategy because the sector remains highly fragmented and will necessarily go through a consolidation process, now more than ever, to be honest, as we are living an increasingly complex and competitive scenario in terms of market trends and dynamics. So this is creating many opportunities for future acquisitions. Moreover, the group has consistently delivered the strategic support and the promises made to the acquired companies. And this has, frankly speaking, developed during the years, a positive and strong reputation in the market, making Dexelance more and more the natural home for the entrepreneurial companies that are seeking structure and international expansion. We have a clear pipeline of identified targets for future acquisition, which are -- which is including both synergic companies, which can make industrial sense in terms of integration of the group's brands and products and channel and geography mix as well as more transformational opportunities because M&A is and will continue to be a core strategic growth pillar on top of the organic path alongside the development of our midterm ambition. To conclude, going to Page 17, you have read on the press release that the Board of Directors yesterday approved a capital increase up to EUR 50 million with preemptive rights. The purpose of the capital increase is to strengthen the financial structure of Dexelance to support the growth strategy and the funds will support the organic growth. So the increase in production capacity, the commercial development, the brand reinforcements that we are going through and that we will keep, and of course, on top of the external growth. So the readiness to capture new M&A opportunities that the market will offer. And this underscores Dexelance's unique positioning to be a reference player and a stronger capital base will enable Dexelance to continue acting as a market consolidator in the industry and to accelerate future expansion. There's now time for question and answer. Thank you.

[Operator Instructions] The first question today comes from Roberto Condulmari. His question was written down. So I will say it out loud. Looking at the Turri issue, which cost you minus EUR 5.5 million cost in 2025. Does this not lead you to rethink about the quality of this business you bought, given the risk implied in cost overruns on contracts?

Roberto, I don't think so. I mean I think that it's really a good company, a good brand. I mean, I want to talk again about the reason why we bought such a company. At this moment, when we buy the company, we need a company with the higher position that we had, having a good sales outside Europe, okay, in main countries where we want to strengthen our position. And also at the time, we need also a company that was an excellent mix between contract business, so [indiscernible] of projects and also, I mean, retail. And in the last 2 years, what we have done, presented the new product range in the Salone del Mobile, I think we completed also, I mean, the retail price positioning also the product range that we have, positioning in the high end of the modern contemporary products. So we were waiting for this in the next years above all after the new Salone del Mobile in 2026, where we complete this project, a retail contribution after rebranding. I want to underline that also in 2025, was [indiscernible] reinstalled Turri. We completely rebranded the product. We have done a new refresh in the stores in Milan, also new stores in New York. So we expected some new retail contribution. In terms of project in contract, I mean the contract of Dexelance was suffering in general because our contract, as you understand, and also Turri is the same of MOHD and [indiscernible]. So we are especially doing shops for the brand of Luxury and fashion that it is the only contract that was suffering a lot this year. But I think in the next future, these kind of things could improve a little bit. We have also the forecast from Atacama that are talking about a new wave in the future, not probably in 2026, but probably starting from 2027 of the new stores that I mean, some important brands will do. And then we hope that the production capability that we have also in this company that is Dexelance from a capability and quality point of view, we could help us in the future. Certainly, in 2025, we had some problems, but I think it's really over.

Thank you. Currently, we do not have any questions, so we will wait just a few moments to give everyone the opportunity to ask a question. We have a question from Andrea Bonfa.

Can you hear me?

Yes. Hi.

Andrea, you were mentioning in the presentation that you see a stabilization of the market in the, let's say, end of this year, early in '26. Can you elaborate a little bit on that? Does that entail that you see some potential for earnings for organic growth in '26. So how do you see it?

Okay, let's talk about 2025. So official sources like Bain, for example, they're telling that the high-end design furnishing market is stabilizing around EUR 46 million throughout the world. And I want to underline you have seen in our presentation that in 2022, there was the maximum level of the market, EUR 48 billion. So practically in 3 years of normalization, '23, '24, '25, this market lost EUR 2 billion, okay, having a stabilization this year. And I want to remind again that in reality, Dexelance till 2024 was absolutely on the other way because we achieved our best result ever in terms of sales and also a good margin in 2024, so 2025, we discussed. I think that we see as a market intelligence talking again about the market in this stabilization to opposite trend. I'm talking about the market. So retail was negative and not only us, but also, I mean, the best brand are telling that retail is going down in different countries, high single digit between 6% and 8% in different countries. Then there was a very positive moment of the projects, especially in residential area and hospitality area, not in the Luxury field, as you understand, for the reason why we told before. So this was the situation. And if we are coming back to the business of Dexelance in the residential area, it means our sales out, I mean, the Luxury contract would really stabilize this business. I mean, probably at the end of the year, it will be the same sales or minus 1%, 2%. So we performed better than the market. And this could be a good momentum, I mean, to continue this best performance against the market even in 2026, where all these nice sources are indicating a recovering -- a single-digit recovering, I mean, in the market, okay? This is the situation. So to answer to your question, 2026, we see and we are expecting and also our forecasting internally is showing that we want to grow in the residential area for 2026, keeping in reality with the contract, the same level of sales we do this year. You know that we will land at the end of the year in Luxury contract around EUR 70 million, EUR 75 million that, by the way, we have done again in 2024, the record maximum in our life with more than EUR 90 million. With this EUR 70 million, EUR 75 million, we are coming back to the nice sales that we have done in 2019. So I mean, stabilization in 2026. Why? Because we are enlarging the number of customers. We are investing in CapEx in order to keep this new customer, waiting also that the old good customers that went down this year, we didn't lose any customer, then repeat to grow in '27, '28. In fact, in our mid ambition plan is exactly this. We want to recover, I mean, in the 3, 5 years project, I mean even the Luxury contract. But if we are talking about 2026, stabilization of the business of Dexelance in Luxury contract growing single digit in -- mid-single digit in residential.

We now have a question from Paola Carboni.

I have a few questions. First of all, a follow-up from your indications just on the previous answer for revenue prospects in 2026. If you can share with us, to what extent your, say, expectation of market improvement and your own revenue improvement is so far supported by order intake? And in respect to this, what kind of, let's say, phasing during the year are you envisaging for this recovery, both in residential and in contribution of new clients in contract? And looking in particular to residential, I was wondering if you can recall us the exposure of your residential revenues to the markets that you have mentioned as already providing some positive signal. So you mentioned the U.S., APAC and Middle East out of your total residential revenues and also whether these signals are more coming from the retail part of the business or the soft contract part of the business? Then another point would be on your cash generation ambitions and in particular, how you should -- we should read your normalized working capital dynamics target. If you can share with us what do you think could be a sustainable working capital profile for the group? And just as a reference, if you have maybe any comment on how Q4 and so the end of this year will look like before trending towards more normalized dynamic? Another question, sorry, if you can come back on your efficiency actions. You have mentioned during the presentation. In particular, you had already anticipated something about marketing, commercial focus in the recent conference call. Just I noticed you referred here on top also to your presence abroad. So as if you are thinking about some rationalization in this respect as well, can you give us some more color in this respect? And last one, if I may, on your extraordinary CapEx plan. In particular, if you can give us a bit more color on CapEx addressing the Luxury contracts segment. Just to better understand what kind of investments do you need? What do you mean with the strengthening production capacity here, especially, I mean, for us, more difficult to get probably because we are -- I mean we are quite far from your peak of EUR 91 million. And so just to understand to what extent, I mean, this CapEx are going to support the future recovery of the business?

Okay. Thank you, Paola. I will take the floor as far as revenues and markets are concerned. Yes, as Andrea said before, we are receiving some, let's say, weak signals so far from some markets, not from all the markets, on one hand. On the other side, we are seeing some positive effect out of the many actions that we put in place this year. Of course, the situation is not that easy to describe. When we started drafting this midterm ambition plan, we basically made it top down. But in the meanwhile, we gather all the indication and the work that our current operating companies did. And surprisingly, but not too much, we ended up more or less with the same results. So basically, this plan is backed by all of our 13 companies, to make it short. As I said, the situation is quite complex to describe because there are very different situations geographically, especially around the world. As I said before, U.S.A. seems stabilizing. So after uncertainty, we basically feel much more confident about what is happening in the very last part of '25 and what is going to happen in 2026 provided that there will be no other discontinuity given by government or the President sudden decision. At the same time, as we said before, China seems to have reached the bottom. We start seeing retail partners that were pretty much careful until a few months ago. We see them now prepared and available to sit down and plan investments from their side in order to generate future growth. But again, we are in the world of the weak signals, honestly. There are some areas of the world that are important to us that are still very weak, specifically Central and Northern Europe. You know that France is our -- Italy is the first market for export and Germany is among the top 3. And with part of our market, we are not sure that we'll see any real recovery also during 2026. On the other side of the coin, Middle East is boosting. Everybody knows that. We are investing in people and focusing that area, both in the Emirates and also in Saudi Arabia. We have participated to some fair. We are opening positions with some local partners. So there are a huge number -- there is a huge number of initiatives that we are putting in place in that area. That's why coming from how I started answering you, we basically feel a little bit more confident on the market side and far more confident on the effect and impact of our multiple actions that we put in place this year. Some mix signals are already visible in the order intake of our companies. We basically monitor on a daily basis, the order intake of our companies. We have the average daily intake. Just to mention a couple of them, the average daily order intake grew up by 30%, 40% in -- from second half of November and first half of December when compared to September and October. So all this together makes us feeling a little bit more comfortable about the short-term outlook, both of the market and even more of our sales. As far as -- I forgot to mention, as far as contracting is concerned, the situation doesn't seem market-wise to change that much next year. So as we said before, contract overall will still be positive and growing. The section of contract related to Luxury retail where we are most exposed will keep on remaining pretty much weak. The good news from our side, as we anticipated before, is that basically the decline of some -- one in particular, but say some of our historical customers has ended. So we have reached the bottom there. And we are planning in our ambition plan basically to stabilize them. But at the same time, during this year, we have started cooperation with some new Luxury brands where in 2025, we already produced and installed project #1 and in a couple of cases also project #2. And we do expect these new partners, new customers in 2026 to almost overcome or to overcome a portion of what we lost with the historical client with projects that we have already in our hands and in our portfolio. So also on the contract side, despite the weakness of the segment where we play to make it simple, we do plan to come back to our second best year in the history, so the EUR 71 million, EUR 72 million that Andrea mentioned before. As far as cash generation, I'll leave the floor to Alberto.

Thanks, Giorgio. About net working capital, at the end of September, we observed a change in net working capital without tax effect of EUR 24 million due to especially the reduction of the advanced payment from our customers in Luxury contract. Our expectation at the end of the year is a reduction of this change. So we can land with a lower change in net working capital that compared what we observed at the end of September. Next year, our expectation is an impact -- a neutral impact of the net working capital as the previous years. Only 2025 is extraordinary year because the total amount of advance payment is a change for what we said about the behavior in Luxury contract. So an improvement of net working capital by the end of this year and a neutral impact on 2026. About...

Back on the efficiency actions, I mean, that's split in 2 parts as you asked. I will talk about the marketing initiatives, and then I will leave back the floor to Alberto for the CapEx and Luxury contract part. As far as marketing cost efficiency action, yes, I went a little bit too fast on the foreign subsidiaries efficiency actions that we are willing to put in place. Being a little bit more precise, there are basically 2 things where we are working upon. One is related to the U.S. subsidiary where we basically finished the start-up phase, let's call it that way, in which we have been obliged to some extent to oversize the dimension of the organization in order to put in place the right processes, the ERP, the management of the office, the business development outside our offices and so on and so forth. So we are planning a downsizing of the organization because now we are on a, how to call it, neutral pace, on a running pace moment and we feel confident that with a smaller organization, we can achieve the growth target that we have put in place. The other important action is related to the smallest of our subsidiaries, the one based in U.K. in London, where we are -- it's under discussion the role of basically 2 stores -- one store and one showroom that we have there that are not proving to be profitable enough. And therefore, we are figuring how to make this presence more efficient by maybe reducing from 2 showrooms to one single one but a larger office. So it's a kind of initiative that simply means how to address that market, which is a specification market. We are not working there for the British market, but we're working there to provide support to A&D community that are specifying projects in London that are then sold and executed everywhere around the world. So we are simply planning to make our presence there more efficient in terms of fixed cost base to make it short. A different story about CapEx for Luxury contract.

Yes, because our project in CapEx, we need to consider that we want to increase our production capacity in Luxury contract because we have to remember that one of our company, Luxury contract reached the full capacity this year, especially with 2 or 3 clients. If we want work with other customers, we need to increase the capacity before to receive new order. Otherwise, we will have some issues on delivery on time. It's -- we don't want to consider these issues because our companies are always give the goods on time. So the most important investment in CapEx in 2026 is an increase of capacity -- production capacity in one of our company in Luxury contract. The second is amount of investment is in Cubo Design. As we said, Cubo Design is the best performer, one of the best performer in our group. Every month, they increase order, they increase sales and they have already reached the full capacity. For this reason, they have to increase the capacity immediately. Otherwise, they can lose some interesting opportunities in retail and also in contract projects. So this is the 2 main investment in 2026.

Just a quick follow-up. Sorry, if I may, on the working capital. Just to check if I got it right, you said in 2026, we will have a neutral impact or a recovery versus 2025 and the neutral impact will be as normal cruise speed going forward.

Basically what Alberto said is that after this up and downs given to the effect of payment in advance that we had in '24 from Luxury contract we did not have in '25, basically in '26, net working capital will get back to the neutrality that we were used to basically in every year of our history with the exception of 2025.

Yes. 2025 is an extraordinary year because we receive a higher amount of the advanced payment will return in ordinary system of payment where obviously, our customers pay each advance of the project, but it's different compared to what happened in 2024. 2024 is a non-repeatable year.

Our next question now comes from Carmen Novel.

I hope you can hear me. I only have a quick one actually on your midterm revenues target. I don't know if you have in mind, a particular mix in terms of residential and Luxury contract in your expected growth? And is it reasonable to imagine a mix in line with the previous year?

I mean -- let's talk about Luxury contract and then you can understand what happened in residential. I mean in the next 3, 5 years plan, that's, I mean, the longevity of the ambition plan, you see that 2026 will be in line of 2025, so around EUR 70 million, EUR 75 million. And then we want to come back to the EUR 90 million, even above the EUR 90 million there. So we want to recover the best maximum performance, thanks to the reason why also within the CapEx because we have to diversify customer in the Luxury contract. It means that in terms of residential area, we are expecting, I mean, a mid-single-digit growth as it was, frankly speaking, I mean, in a market that is coming back to a stabilization because we are imagining that the market will stabilize as it was before the 2019. In 2020, there was the minus and then a peak of double-digit growth and the normalization. This is what we are imagining also talking and with sources, friends and competitors, suppliers and the broad customers. So that's what we imagine and we forecast in our ambition target and plan.

So now we have a question from Roberto Condulmari. His question is, can you talk a bit about 2025, given that we are 2 weeks away from the end of the year?

Yes. Okay. Roberto, yes. I mean, I think in terms of sales, we are in the area of the equity research that we have. I mean, in terms of sales, we are around EUR 365 million sales, could be even EUR 370 million, frankly speaking. It depends how we will be able to deliver it within the end of the year. But I mean, we are in that area. And also in terms of EBITDA marginality, we are in the area of the equity research again, so around 10%, decimal plus decimal minus. A good news that we have also a good order intake, which will translate, we hope, finger crossed into a good first 2026, I mean, quarter. And this is the signal positive that we were talking to you about what happened in different geographies, U.S., first of all, but also, I mean, some recovery also in some areas in the retail business. So that's the indication that I can feel to tell you now.

Currently, we do not have any questions queued. So we'll wait just a few moments to give everyone the opportunity to ask a question. I see that we have a follow-up question from Paola Carboni.

Yes. Thank you for taking another question from my side. I just wanted to comment from you about let's say, the ambition of continuing in your aggregator role in your M&A strategy, which is the backbone clearly of your business model going forward, also thanks to the capital increase, you're going to launch. The question is, I mean, if you have mind kind of timing, let's say, for -- I mean, to look for new M&A because I mean my understanding from some of your past calls was that you were going to take a breath, let's say, to some extent and focus more on the efficiencies action, for example, that you have shared with us today. So it seems that for a while you could have posed your M&A strategy. So I'm wondering whether with the proceeds of the capital increase, the timing could be instead closer than we could have understood so far.

Paola, thank you for your question. Well, you know that, as you mentioned correctly, M&A is a backbone of Dexelance. So we are always looking at working on this activity and talking with companies, talking with entrepreneurs, setting up the pipeline and having an open dialogue with these companies and potential targets to see how things are evolving. So this is something that we always do, of course, and we have always been doing also after the IPO and during 2023, 2024, 2025. Of course, 2025 was an intense year in terms of M&A with these 2 acquisitions, RODA and MOHD. And being also MOHD, in particular, a strange animal, let's call it that way, for us, it will -- it is already requiring us a big effort in terms of integration and in terms of work on potential synergies and connections that we can create with the other companies of the group. So we have to digest. That's a true fact, and that's something that we want to highlight and to underline. But of course, we cannot afford to not be in the market. So we always need to look outside. We always need to keep a continuous and an open dialogue with the opportunities because M&A opportunities, as we have always said, it's a marriage. You need to be in tune. And you also need to be ready to capture the opportunity when the right moment is there. And the right moment can be the family, the founding family that at a certain point change its mind, decides to go on. It can be like it was with MOHD, a financial investor that decides to sell. It can be a specific moment of a transition -- generational change where you need to be there and to be the right actor, the right house in order to proper manage the transition. Otherwise, if you don't do that now, you can lose the moment and the business cycle of the company. So we need to be conscious of this, and we need to be ready to capture the opportunity when the opportunity is there. And this also speaks, let's say, with the timing of the capital increase because what we want to be and we want to have is to be ready when the right opportunity is there. And we know what are the right opportunities for us. That's [indiscernible].

So we currently do not have any questions queued, but we will still wait just a few moments. As there are no further questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.

Simply, thanks, everyone, attending our conference. Thank you a lot, really. And we hope actually to have the possibility to talk with each of you in the next day or whenever you want. Thank you.

This presentation will now come to a close. Thank you.