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

Good morning, everyone, and welcome to Dexelance's Full Year 2024 Financial Results Presentation. [Operator Instructions] I now have pleasure handing over to Andrea Sasso, Chairman and CEO. Please go ahead.

Thank you. Good morning, everyone. Let's go to Page 4 of the presentation, where you can see that in a very complex macroeconomic scenario, it seems minus 3% both according to Bain and the estimates of Federlegno Arredo with regard to the high-end design furnishing market. At Dexelance, we were able to make another sales record at EUR 324 million. This is very important also because if we enter in the details of the market trend, the retail that is 70%, 80% of this entire high-end design furnishing market in reality is high single-digit decreasing in '24 versus 2023. And then on the opposite side, the world of contract and project is growing even double digit. In that situation, I mean, the marginality at least stays slightly decreased. In that situation. If you are talking about the EBITDA, EUR 51 million, that in comparison of last year was minus 6%. If you are talking about the full adjusted net income, it's EUR 23 million, minus 9% versus last year, respectively, from a marginality point of view, 15.7% and 7.2%. But frankly speaking, I mean, this slight decrease is due also for multiple strategic initiatives generated to sustain a neutral brand's position and visibility, paving the way to longer-term value creation. And then, in particular, Giorgio will explain to you all the activities we have done to neutral our brand. We are very, very satisfied about our activity for a long-term vision. In terms of net financial position, thanks to the excellent cash conversion, the total net financial position is equal to EUR 97.6 million, but the cash exceeded debt to the banks of around EUR 5 million. So I mean, the company, during a very complex 2024 here, from a market point of view, is very solid. I think that the vision we have, the business model we have is very solid. We are continuously gaining market share. So I leave the floor to Giorgio that will explain really the many, many initiatives that we do from a marketing and sales point of view.

Thank you, Andrea. Good morning, everyone. Like every quarter, let's briefly go through the main marketing and sales initiatives that we put in place with our companies in Q4. Let's start at Page 5. So every year, twice a year, in North Carolina, there is a trade fair that is relevant for the North American market, where almost every buyer and every retailer participates and comes to visit the mid- to mid-high-end brands. We are present there with a permanent presence with Gamma, our leather specialist upholstered product. They featured a fantastic display that you can see in the pictures in October. And the good news is that they also gathered quite a good amount of orders that now are converting from orders into invoices. So that's a good news about the North American market dynamics in the most critical part of the market, which is the mid-high-end, where Gamma plays. If we move to Page 6. Another important initiative, you know that Salone del Mobile is by far the most relevant event or exhibition worldwide with regard to design, function and lighting. Just to promote the Salone around the world, they organized in Shanghai, in West Bund, a very nice exhibition of the most relevant brands that are featured in the Salone del Mobile exhibition in Milano. We took part as a supporter and promoter to the Salone del Mobile event with 4 of our brands displaying one product for each brand, one for Meridiani, Davide Groppi, Turri and Saba, just to sustain the fact that Salone del Mobile is by far the most relevant aggregation and visibility moment for the whole Italian design industry. Just like Andreas says every time, I mean Italy as a whole holds almost 25% of the high-end furnishing market. And this is mainly due to the fact that Salone is just representing the whole of our mid-small sized companies. Page 7. This was a brand-new initiative, another event held in Paris every year. It's called EquipHotel, and it's the most relevant exhibition for equipment for the hospitality industry. Gervasoni, as they are very much exposed with supplies of furniture, tables, chairs and sofas to that channel, to the hospitality industry, they decided to participate this year to the exhibition in November with quite a good success. They gathered some margin projects there to the extent that they decided to replicate also next year. So Gervasoni will be present in EquipHotel also in this year, 2025. Moving from trade fairs and events to real business and retail. We just had a chance to open a very important monobrand store for Davide Groppi in Madrid Downtown in a very nice high street of Madrid. And this is quite relevant to the development strategy with Davide Groppi. Davide Groppi monobrand stores can easily become sustainable from an economical and financial viewpoint, because they do need a small space and they generate well for the retailer, who opened the store, quite a good level of revenue since year 1. So that's the strategy that we are implementing with Davide Groppi to open this kind of ambassador around the world for the brand. This is just the first of many others that will come this year. At the same time, in last January, we kicked off another monobrand store for Saba in Paris in one of the most beautiful locations for high-end furniture in Paris in [ Saint-Germain-des-Pres ] at the crossroads with Hugo Boss. It's a kind of a small boutique, just 80 square meters, but it's just positioned in the heart of the design district in Paris. And since the day and the night of the grand opening, we had quite a high level of interest from all the stakeholders, both interior designers, architects, designers, other retailers around France willing to do the same. So it's kind of a project that we believe is going to be successful because of the low cost implied in the small size of the store, but a high potential in terms of sales and returns for the investor. From sales to awards, we move to Page 10. For those who don't know Archiproducts, Archiproducts is probably the most important design portal for architects around the world. They feature almost every brand in the mid-high-end of the market in furniture, carpets, rugs, lighting and whatever referred to design. Every year, they held a sort of a contest where they assign awards to those new products launched during the year that are worthwhile to be mentioned. This year, we were present with almost all of our finished products brands, and we achieved 6, actually, awards with Saba, with Meridiani, with Turri, and with Davide Groppi. Just to mention that for Meridiani and Turri, this was the first award that they got with this, let's say, contest. It's not much about the prestige and the [ renownance ] of the award, but all of the architects around the world basically look at this event. So the visibility that you gain in terms of brand and in terms of new product launched in the architect and designer community worldwide is quite huge. On the other side, Page 11, this ADI Design Index that is actually the Compasso d'Oro is much more prestigious as an award probably. It's by far the most renowned award in design worldwide signed by ADI and the Association of Italian designers. We won Compasso d'Oro with Davide Groppi last year. The award is assigned every 2 years. So in the year in the middle, which is 2024, you have the -- there takes place the nomination to the Compasso d'Oro the year after. And again, with Davide Groppi, we got 5 nominations that are quite a good, let's say, prospect in order to win maybe another 1 or 2 Compasso d'Oro this year in 2025, stating again that Davide Groppi is, let's say, the leading innovative company and brand and lighting designer worldwide, recognized also by this prestigious award. Coming to other kind of initiative through DEX4Arts, there are 2 noticeable things to highlight. The first one is that a lantern, let's say, redesigned by Axolight called Bul-Bo has been selected by the Triennale di Milano for their permanent exhibition. Bul-Bo is a re-edition of a historical lamp designed in the '50s, in 1950, by, at that time, very famous designer for the houses of the Olivetti Managers and never entered into mass production. So we discovered and we take both the rights to redesign and to relaunch this product. We relaunched it a couple of years ago. And finally, it has been selected with this prestigious Triennale di Milano exhibition, permanent exhibition. At the same time, in Milano really Downtown, Piazza del Duomo at the Museo del Novecento, we supported the relaunch and the refurnishing of this important museum of contemporary art by furnishing and lighting the VIP lounge that is basically at the entrance of the museum. So all of the visitors of the museum will have the chance to admire the lights from Davide Groppi and to relax sitting on Saba-made sofa. This is another permanent installation that we are going to leverage and build upon in the coming few years. Last but not least, Arredamenti business or projects, in this case, two important residential projects, both in Australia, one in Brisbane and the other one in Sydney. We completely furnished two very important penthouses, one with Gamma products, the one on the right, and the other one with Meridiani, thanks to cooperation with two separate designer and architect studios with whom we tightened the relationships and with whom we aim to keep on working together and to realize furthermore luxury residential installation like this one. I guess this is everything. And I move the ball to the crude numbers to Alberto.

Thanks, Giorgio. Good morning, everyone. Revenue 2024 is EUR 324 million with an increase of 4.3% compared to the previous year. A significant growth is observed, especially in Luxury Contract as we will see in the coming slide. This is a positive result considering the weakness of their reference market. The level of sale and purchase prices were broadly stable with a limited inflation effect. Total gross margin is higher than 2023. In this slide, percentage reduction is due to the mix for different revenue weight of each company. Each company has a different percentage gross margin. EBITDA adjusted is EUR 50.9 million. We observed an improvement over the 9 months from 13.9% to 15.7%. The difference from 2023 is due to, on one hand, to the strengthening marketing and commercial activities; on the other hand, to the higher personnel cost due to -- especially for new hires to support development. The bank debt cost has decreased for the reduction of the cost of the tax of the interest rate and, on the other hand, the reduction of the gross bad debt. The tax rate remains between 29%, 30%. Marella, for the next slide?

Thank you, Alberto, and good morning, everyone. So talking about the revenue breakdown by the different SBA. We are looking into the Q4 numbers. We can confirm that also in 2024, the seasonality of the group sales is more skewed towards the second half of the year and, in particular, in Q4. So in absolute terms, Furniture and Lighting registered a strong Q4, the strongest for the year for both business areas and with an overall performance in line with Q4 2023, which already was in the previous year the strongest quarter. Kitchen & Systems keeps growing high single digit, plus 7.5%, and in line with the overall growth trend recorded during 2024. So overall, Residential business areas closed the quarter in line with 2023, slowing down with respect to the growth base recorded at the end of Q3, which was roughly 5.5% as a result of tougher comparison, mostly driven by Turri. Because as I recall that in 2023, Turri recorded almost 40% of its full year sales just in Q4. Luxury Contract experienced another spectacular quarter, signing record sales at around EUR 29 million and compared to EUR 26.5 million last year, which, as reminded during last call, already was a record sale, because at the time included the delivery of 2 important projects in Milan. So this year result is both the result of the recovery of some last shippings related to the projects that were delayed throughout the year back in Q2, if you remember, and acceleration of client requests of some projects, mainly in the U.S., originally set up for end of 2024, early 2025. So looking at full year number, all business areas recorded growth in the 12 months. Residential businesses are up plus 3%, despite being the business areas more exposed to the normalization phase or going in the market. And this is sustained basically by higher exposure with respect to the market average to the Soft Contract channel, as we will see in a minute, gradual improvement of the performance, in particular, in the Lighting business throughout the different quarters, and the excellent performance of Kitchen & System, plus 7.5%, which coincides with only one company that is Cubo Design. Luxury Contract ended the year with a plus 7%, confirming the exit pace from the 9 months 2024, and signing an all-time record sales at over EUR 90 million. And I remember that back in the pre-COVID era, those 2 companies, Cenacchi, Modar, were worth around EUR 75 million, which already was their record. So they went back to another record back in 2023, EUR 85 million, and now more than EUR 90 million in 2024. So this is despite some uncertainties that have been discussed many times also related to their main end market, which is the luxury market, which is flagship stores and brand stores for luxury brands. So we will see also later that the order intake for this business area remains strong looking into 2025, and we're also planning some investments in order to expand their production capacity and prepare for future growth. Looking at the channels, one comment for the Hard Contract because both in Q4 and 12 months, this channel perfectly coincides with the Luxury Contract business area. I'm sorry, I forgot to remember that all the year growth we are commenting here, they are all organic. So they are all referring to the same perimeter, either for the quarter or the 12 months, because Turri and Axolight were already there also in Q4 2023. So looking at the channels at Q4, again, retail went back to negative performance after the recovery signing in Q3, and that's mostly concentrated to furniture companies in spite of the positive trend recorded in Kitchen & System. Soft Contract plus 21% with increased project contribution throughout all the different business areas. So that's more or less spread in all of them. Talking about the 12 months, we see that overall retail holding up despite the complex macroeconomic scenario and the consumption scenario that, of course, is a channel that is more exposed to consumption trends, closing in line with 2023, and having a fluctuating trend throughout the different quarters of the year. While Soft Contract remains the driving force behind Dexelance growth in Residential business, so that ended up with the plus 3% that I commented before. And that's not only thanks to the Turri contribution, which, of course, has been a strategic acquisition in the channel, because this company is generating more than 50% sales in the Soft Contract channel, but also thanks to contribution in Lighting or in Kitchen & System with Cubo Design increasing its presence in the channel. Overall, the world of projects, so summing up Soft Contract and Hard Contract, amounts for more or less 47% of sales for the group. Talking about breakdown by geography. As always said, quarterly results by area are not that significant for us, because they are heavily influenced by swings in the award of contract, both Hard and Soft, but mainly in the Hard Contract. So for example, if you look at the Q4 numbers, Italy records minus 20%, as in Q4 2023, as I mentioned, there were 2 important projects in Luxury Contract that were concluded here in Milan. So this EUR 26 million, you can see from 2023 were kind of a spike. Or on the other hand, North America, plus 46% that's mainly related to the fact, on the opposite side, yes, that we had some deliveries in 2024 of Luxury Contract projects in North America. So commenting on the full year numbers and trying to, let's say, grasp a couple of trends, let's say that domestic market increased by 2% with a coherent positive performance in all the different business areas. Rest of Europe is the only area with a slow minus despite -- because there are some key markets like France and Germany that, in fact, recorded, talking about Dexelance, but also at market level, heavy slowdowns in the order of minus 10%, minus 15%. But the performance of the group is thanks to a better performance in the U.K. that, for example, was one of the markets that sustainable project had been growing or Southern Europe in general like Spain and Greece. North America, plus 16%, with a growth and overall market size that is mainly related to the world of projects, as mentioned, in the U.S. But there's also a good track in Canada and Mexico, and we can see that there are some positive signs of growth coming from the other residential companies that are involved in the project of the new subsidiary established there, making us understand that, as a reminder, we opened 3 directly operated stores in New York and the local sales team, that is despite the complexity, let's say, that the market is going through and, of course, has always been a difficult market as a whole. We can see that there are some new partnerships and new connections that have been facilitated in order to create a more capillary distribution with residential areas. Rest of the world, plus 3%, with China and generally Far East still in negative territory and but it's worth mentioning the strong performance of the Middle East area that recorded that their record sales is back in 2024 with strong double-digit growth. So we keep on working on conquering market share, as Andrea said at the beginning, in more mature markets like Italy and rest of Europe, trying to also taking advantage of the cold moment that the market is going through and continue investing on this. And we are also working at North America and rest of Europe in order to increase the penetration in what can be called for us more emerging markets. And now I will hand it back to Alberto. Thank you.

Okay. About financial impacts. And we see, in the left of this slide, net working capital. Due to high payment from customers in the last quarter, net working capital is around 0, as in previous period. Inventory and trade receivables are roughly the same of the sum of trade payables and advance payment. The result is a neutral net working capital. CapEx, EUR 7.9 million, less than 3% of revenue, is in line with the previous period. And as we said also in the previous meeting, in the coming years, we'll invest more to increase our production capacity. About debt. Net bank debt is EUR 5.2 million, is a credit position with the banks. Minorities and the earn-out are EUR 62 million, EUR 5 million other financial debt. About minorities and earn-out, we'll pay this year EUR 14 million. The remaining part, it will be paid in 2027. About IFRS 16, EUR 35.9 million. If we consider the leverage without IFRS 16, the leverage is 1.2. If we consider also IFRS 16, it becomes 1.9. About operating cash generation in the Page 19. We'll see the operating cash generation in 2024 is roughly EUR 30 million, more than 50% of EBITDA with a neutral effect of net working capital. So the bridge for the balance of bank last year, in the beginning of 2024, EUR 40 million. So a positive effect from operating activities of roughly EUR 30 million, then EUR 10 million for especially payment minorities and interests. So the result is a credit position of EUR 5.2 million.

Thank you. So at Page 20, you see our trend of the order intake. It's a positive trend, and the year's exit pace is in line with the overall revenue growth. And interesting to notice that also in the first half of 2025, the trend is continuing. So this 4%, still we have until February year to date. So I mean, talking about 2025 and talking about the high-end furnishing market, we see that this market will be flat or stable with retail continuing to slightly decrease, and seeing a growing world of projects. With this market estimation, we think we will be able to grow due to the solidity of our business model and the many initiatives we have implemented and we will implement also in the future during 2025, because, for example, we are the only group that we participate to the Salone del Mobile with 8 companies, 5 of the furniture world and 3 of the lighting sector. This is the evolution this time. And also we will do, I mean, meetings and continuous chat with all our stakeholders in the showrooms we have in Milan. I say these kind of things because, I mean, when we see in a world that people and companies are cutting cost, we want to invest because that's the time to continue to invest against a flattish or negative market, because we are continuously conquesting (sic) [ conquering ] market share and then we get the trust of stakeholders and also dealers that this is really a treasury in our business, the solidity of the business model and the trust we have of our 4,500 retail partners. So thank you for your attention. I think it's the time of questions and answers.

[Operator Instructions] The first question today comes from Carmen Novel.

I hope you can hear me. I have a quick one on current trading. If you can comment the performance of Luxury Contract and Residential in these first 2 months of 2025. And I was also wondering if you can give us some color on the impact of potential tariffs imposed by the U.S. and the impact that the States can have on your business?

Okay. Thank you. I mean with regard to -- I mean, what we see in the first 2 months from an order point of view, we keep the momentum also in the Residential area that for us is the 3 areas of Kitchens, Lighting and also Furniture. So I mean, we continue to have a slight regrowth from this area. And this is very, very important because you know that in a flattish market or slightly decreasing, the retail that is impacted in these 3 areas, and the market is in an opposite trend, so very positive. And also, we are receiving a good level of order from, I mean, the Luxury Contract point of view. And you know that also the visibility is different in the 2 businesses. I mean, while we have visibility from an order point of view from the Luxury Contract of 12, 15 months, I mean, on the other sector, the visibility is limited to 2, maximum 3 months. This is from an order intake point of view. Then with regard to the sales and turnover, I mean, the situation is slightly different, because in the Luxury Contract, probably the Q1 in terms of sales will be a little bit, I mean, freeze because they have done a tremendous effort in the Q4, and then some new openings has slightly moved in the Q2. I mean, which is important for us is the trend growth. With regard to the second question, I missed a little bit.

Duties, North America.

Yes, the import in the U.S.

No, no. U.S.? Okay. Despite, I mean, the taxes and the word of the Trump President that we expect naturally, but we don't see, I mean, an effect. In the first 2 months, the order intake growth is in line with our expectation in U.S. We closed an excellent year in 2024. And not only that, personally, I have done a meeting with the most important customers in U.S. in November, December last year, visiting customers in New York, but also both from Washington, D.C. and Chicago. And Trump was already elected and it was his promise to increase the tariffs, I mean, during the electoral campaign. Frankly speaking, with the market we have, they were not afraid, okay? And so this is the first impression we got and the order trend is confirming this. Naturally, could be better if, I mean, he is changing idea, but we are not so in front with the President of the United States.

We now have a question in the chat from [ David Elanco ]. His question is, how do you assess the impact of the weakness in the Chinese real estate market for luxury furniture demand? And what does it mean for Dexelance?

Yes, sure. Well, basically, China is, this year, for the second year in a row, in a quite strange situation, strange especially for the Chinese consumers, because for the first time in the history after the communist era, the Chinese consumers and people are facing something that they never saw before, uncertainty. So they're not sure about the future. So as a matter of fact, as we play in the high-end of the market, as much as Andreas said, in the U.S., duties are not impacting our business directly, so basically, our products are already expensive. If you apply duties, they seem a little bit more expensive, but they are for rich people. Uncertainty is the real danger. And the real danger is both in North America, but even more true in China, because Chinese, as I said, they were never used to that. In this respect, we are lucky in a way because our sales initiative in China is basically a sort of a start-up just started a few years ago. We just established a sales subsidiary there. We are investing this year in enlarging and enriching our presence there by moving our location, the offices and the showroom from Suzhou to Downtown Shanghai. So basically, we are taking the chance of this, let's say, strange transition moment in the Chinese economy in order to strengthen and reinforce our presence there. As we are moving there in an uncertain world, we try to establish some certainty for our stakeholders, both retailers, consumers, architects, designers, and so on and so forth. So in a nutshell, the current real estate situation in China is not even impacting us because of the small size of the business, but we are using it as an opportunity in order to enlarge our foundations there and be ready for when the market will restart, and we are sure it will.

I'd like to add also that, for example, in 2024, we were able to keep the business in China stable that is a level of 4% of our sales, okay? If we had also what happened in other markets that are similar to China in terms of variability of the business during the year, for example, I mean, [indiscernible] countries, we have 5% of our sales. In the Saudi Arabia, we have 3% of our sales. I mean this is a strong point of strength that we have in our business model. We have not a region -- an instable region that we do 30%, 40% of our business, even 20%. We do, I mean, 26% of our business in Italy. We do 23% of our business in the U.S. So these are solid markets that will not change incredibly during the year. So we were not affecting about the China situation of the market. It's even the opposite. In 2025, we see some lights, frankly speaking, from a market point of view. And we also strongly enforce our team there in the subsidiary in order to get more opportunities. It's a disaster for people that has 20%, 30%, 40% of their business there, and it happens in the fashion system, but not only also in the design system.

We now have a follow-up question from [ David Elanco ]. His question is, are there any plans to expand to the Middle East?

I mean, sure. I mean, frankly speaking, this year and also last year, we have done the result that I just tell you. So we don't see the necessity to establish a subsidiary until now. For the reason why I told you, I mean, we have the right contact with specifiers. We are growing and we lead and we do furnishings also for many important projects in that area, thanks to the strong relationship of our specificator, I mean architect, but also interior designer. We participate in the main project, the most important project in the area. So I mean, if we continue growth in this way, in a solid way, avoiding any risk to implement subsidiary in that area, we don't see the necessity to do at least in 2025, and that's in the future.

To make it short, we don't see a kind of window of opportunity that could be closed in short term. And at the moment being, they are just in Saudi Arabia, mainly because in Emirates and the rest of the Arab Peninsula, we are already, as Andrea said, very well present with distributors, with local business developers and organization. Saudi Arabia is just a promise. So far, they are investing a lot, public investment in infrastructure. It's not yet the moment for supplying furniture. So in a way, we want to avoid to increase our fixed cost and putting them at risk as we want to see how the whole situation there will develop. So there will be time if the situation will consolidate and we will progress to establish there a more structured presence.

And by the way, without I mean, a subsidiary in the Saudi Arabia in the last 2 years, we were able to move to 1% to 3% of our sales. So it's not a better sales practice. We are already there basically.

We now have a question in the chat from Stefano Lustig. His question is, added value decreased by 130 basis points based on Slide 14, if I'm not wrong. Can you elaborate on it? Was it a reflection of inflation on costs not transferred to clients? Was it a question of mixed products or regions, others? And what are reasonable expectations set for the mid-term?

So about the gross margin, the total amount, we had an increase. But the percentage is something -- is a lower amount for the effect of the different mix of our companies, because in retail companies, the gross margin in percentage is higher than the Luxury Contract companies. At the same time, the fixed cost of our Luxury Contract companies is lower than retail companies. For this change of the mix, we observed the percentage of gross margin is lower than the previous year. This is the effect of the mix of our companies. The added value, the reason we can see in the same page, the added value, again, the total amount is higher, but the percentage is lower than the previous year. The main reason is the mix.

The flip side of the coin is that we passed entirely to the market, with all of our companies, price increase, sales price increase perfectly proportional to the cost increase that we had till 2 years ago. So we make discount and we did not undervalue our selling prices when compared to the purchase prices. The only effect that impacted on the percentage of gross margin was, as Alberto said, the channel mix. Lower gross margin in Luxury Contract because of lower fixed cost, commercial and fixed cost, higher margin on the retail part of our business with higher fixed cost to the extent that the EBITDA is more or less similar across the 2 channels. The mix effect with Luxury Contract growing more than retail companies made the percentage of gross margin lower.

Yes. Because our price list last year, we didn't change, because also in purchase price list were roughly the same, it was stable. And the big effect of inflation -- we saw the big effect in 2023, but in 2024, the inflation effect wasn't very high.

And I would just add that looking into the midterm, except for this channel mix effect that we, of course, cannot fully control, but looking at the different business areas and the different channels, we don't foresee any significant change in the contribution margin or in the gross margin according to the level of fixed cost and variable costs that are inside -- say, related to the business.

We now have a question from Paola Carboni.

So my first one is a bit of a follow-up on the previous questions about profitability and, say, starting with gross margin. I appreciate you are guiding for a broadly stable gross margin going forward. You said except for the channel mix. So I was wondering if you can share with us what are you seeing at least in these first few months of the year in terms of channel mix. Should we expect a bit of recovery in this respect in terms of gross margin or more stabilization going forward? And also in terms of the cost base, you have referred several times during the speech about your commitment to keep supporting growth of your firms. So I was wondering if you can share with us a bit of color on what you expect for 2025 in terms of cost base, so marketing, personnel and so on, and provide some indication on profitability for 2025. And still following up from this, I would also be curious about, I mean, some color in terms of the initiatives you have in pipeline. You've mentioned some new openings ongoing in the pipeline, for example, so maybe new showrooms. If you can just share with us the initiatives you have for 2025? I can imagine, for example, you are always very proactive in supporting Davide Groppi. You have a new setup for the other lighting companies. So if you can share more color on that? And then another question is about CapEx. You have referred to the need to expand your production capacity in Luxury Contract. This is not totally new, but if you can maybe quantify a bit what you are expecting for CapEx in 2025?

Bonjour, Paola. Good morning. So I will talk about the effect of marginality, what we are thinking that it will happen in 2025, not easy to forecast. But what we can see in the first 2 months, I mean, from a gross margin point of view, I think already Alberto, Marella and Giorgio were explaining to you, I mean, what we have in mind. From an EBITDA level point of view, what we think that if the mix between the strategic area will be the same, because the mix is changing and we cannot control, I mean, this kind of effect, that is moving, also having an impact on EBITDA, it happens in 2024. If the mix will keep the same between the strategic area, as it was in 2024, I mean, what we are thinking is that the EBITDA margin in terms of percentage will be at the same level of 2024. I mean, we will grow in total value at the same level we are growing in the revenue point of view. Why this? Because, I mean, from one side, we have a personnel cost drag effect from 2024 to 2025, because as we already said, we continue to invest in 2025. We want to keep market share in a solid way, because that's the time to invest. Another big expense that we have, for example, is Salone del Mobile, okay? For sure, we are participating in. That's a choice. We are the only group with all the companies participating there. I'm repeating 20 times because I believe this is a strong point of growth for the made-in-Italy system and not only for us. So for example, in 2024, due to the fact that there was Salone del Mobile plus Euroluce. We participated, for example, with 5 companies in the furniture and 1 in the kitchens. This time, there is Euroluce. So we will participate with 8 companies. So 5 companies in the furniture, but 3 companies in the lighting for sure, I mean, investment cost, it will be more, not only for the participation in Salone del Mobile, but also what we will do, I mean, in the showroom outside Milan. So from this kind of mix effect, I think that marginality in terms of percentage from an EBITDA point of view will be the same. But on the other side, we continue to grow because, I mean, thanks to the solidity of our business model, thanks also to the continuous investment in our 4,500 retail partners, we will keep the momentum. Giorgio?

Well, as far as in terms of channel mix, we do foresee right now quite a stable channel mix in '25 when compared with '24. So at the moment being, it's quite too early, but we are not seeing any meaningful change in the channel mix. They are basically growing with the same speed. Coming to your third question on new openings, well, we plan to have many new openings, but not DOS, not directly operated stores. So with all of our retail brands, we have a negotiation in place and some negotiation already closed for the opening of monobrand stores, let's say, around the world, but most of them shop-in-shops around the world. But all of them will be carried and managed by third party, our retail partners around the world. Probably, we will make a tactical move with the Saba store in Paris. We would like to see whether it is convenient to us to turn it from a third-party operated store into a directly operated store for many commercial reasons. That's kind of case change that will not dramatically change the picture because of the very low fixed cost of the store. So basically, Paola, we are not planning new openings which will imply increase of our fixed cost base. We are activating retail partners around the world in order to create around the world many more ambassadors for our brands, monobrand stores and things like that. That's part of our commercial development strategy with all of our retail brands. Last, CapEx. Alberto?

About CapEx, our expectation is to invest EUR 40 million in 3 years. So the impact on the revenue in 3 years is 4%, less than 5%. This important investment in CapEx is due to our idea to expand, to increase the production capacity, especially for our Luxury Contract companies and our Kitchen company because we have opportunities to find new customers and increase the activities for our current customers. At the moment, we are working in Luxury Contract at the maximum level. So we want to increase our capacity.

Basically, this project for the 3 companies will come across '25 and '26...

Yes.

So for the most part, in '26. So in terms of -- we are getting ready to support the continuous growth of these 3 companies, say, starting now from here plus 1 and plus 2, mainly plus 2. So it's a midterm kind of investment plan.

Yes. We started the investment just this year and then we...

We complete our projects in 2027. So in 3 years, we complete all our activities to improve our production capacity. We are talking not only about Luxury Contract strategic business area, but also Kitchens also despite the negative momentum of the Kitchens throughout Europe. I mean, our Binova company is really an excellent company. We are very satisfied about the investment. I mean, we have a deep knowledge there from a product point of view and sales commercial point of view. We are doubling also, I mean, the showroom here in Via Durini, Milan, in terms of space. And really, the trend also in the first 2 months of 2025 is really very positive from an order point of view, also sales point of view. So I mean, we confirm the solidity of our business model. And in this, we want to be protagonist. We are already protagonist now, and we want to be also solid protagonist in the future. And also, Paola, Via Durini store for Binova will be doubled, but it is managed by a third party again.

It's a further example of what do we mean by having people, a retail partner, investing on our brand.

Yes. For example, talking about us -- that's a good point, Giorgio. For example, in the last 2 weeks, we have done another DOS from Turri in New York, in the same place, Lexington Avenue, where we have already Meridiani, Davide Groppi and Gervasoni. But we do this in New York for these reasons: First, Turri will be the first, I mean, Contract custom-made products for the American markets. No other competitors are doing these kind of things. It could be nice. Also, we will have a possibility to see the light of Flexalighting and Axolight in addition of Davide Groppi that already was there. So once specificator is coming there, dealers are coming there, they can see -- more than to sell to the final consumers, they can see the impact of our product offer first. Second, that is very important, in U.S., there are kind of investors/dealers that when they see that you have the courage to invest in their country doing the DOS, then they will repeat this format in different countries. Again, I repeat when I was there in November, December last year, I mean, I already visited new openings of monobrands, managers, as Giorgio is telling, from the retail partners, similar and copying format that we have done in New York, in Washington, D.C., that is already open; in Boston, that is already open; and the next one will be in Chicago in the next weeks. So that's very important to show that you invest first in America and then they invest following you. For this, we believe in the American markets. We believe the DOS, the direct operating stores, to be strategic, because otherwise, when in this sector we do a DOS, to get to the breakeven is quite difficult, but this is an advertising campaign to show to the others, to the real dealers that they can open with their effort and then having gradually not only breakeven but business with profitability. As we've already done, for example, Meridiani in Milan showroom operated by Bredaquaranta is working very well.

We now have a question from Andrea Bonfa.

Very quickly, a very easy question for you, Andrea. Is it possible to have any update on your M&A approaches?

Andrea, good morning. Yes, this is in our DNA. I mean, in our business model, we want to grow not only from an organic point of view, but also via acquisition, M&A. Despite we have 11 companies and 14 brands, we can now, I mean, satisfy all our customers and also our specificator, but we want to continue to have the companies, not only in new areas like, for example, I already talked about bathroom or outdoor or something else. But also, I mean, in the other we already covered, you know that, for example, in the Kitchens, we have just one company and why not to complete also the offer in Lighting and in Furniture. So to tell you that we continue to talk to people. Our business model and entrepreneur, they really appreciate. We are talking, in this moment, with many companies that appreciate a lot our business model, and we are trying to find the way to add important brands, excellent brands and important people above all, I mean, to join our network. I think, frankly speaking, that 2025 will be the right year to have one or more partners. But the marriages don't depend only from us. What I can ensure to you and to the financial community that we really are talking with important brands and that we'd like to add. And I hope then in 2025 will be the year to see some new important family and brands heading our nice industrial platform.

We are now going to take a question from [ David Landry ], who wrote his question in the chat. His question is, could you comment on the variation of operating margins among the Dexelance businesses? How many of them are above or below the standards you expect?

Well, maybe I can start with this. Overall, let's say, the 4 different business areas have always been with Luxury Contract and Lighting being with a marginality that is higher with respect to the group average, and that was also confirmed in 2024. While Kitchen & System is perfectly in line with the group average despite having had, in 2024, the important cost of the trade fair, Salone del Mobile, which, as I recall, is not every year, so it's biannual. While Furniture is the only business area that is a little lower with respect to the group average in terms of margins and in particular this year because it was also the one in top line terms that was a little bit weaker. So overall, that's the mix and the difference that we have in the margins of the different business area, and that's also the trend that we confirmed in 2024, more or less.

Yes. I'd like to add also that, that is true that, for example, I mean, when we are talking the strategic business area, Furniture is slightly lower than our average, but this is the market situation. I mean, frankly speaking, when you see to the market, the high-end furnishing market, generally in average, the Lighting sector is the best from, I mean, an average marginality point of view, okay? Kitchens, for example, is much lower. But our Binova is really a fantastic company that is able to have a marginality much better than the average of the market situation. Then when we are talking about Luxury Contract also; luxury Contract, I mean, the marginality that we have is not the common marginality of the sector. Generally, I mean, companies that are operating in the sector have a marginality that is much less -- I mean, lower than what we have. So this is thanks to the excellence of our 2 companies. So I want to give you also benchmarking with the market average, because it's vital. It's not because, I mean, coming back to the weaker marginality that we have in the furnishing areas. It means that we are lower than the marginality. No, it's the market that is like that.

So thank you, everyone, for your questions. I will now give the word back to the speakers for any final comments before bringing this presentation to a close.

So just thank you for your attention, for the nice questions you made us. And then let's see, next time we want some one-to-one meeting or with the Q1 presentation. Thank you so much.

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