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

[Operator Instructions] And welcome to Dexelance's Q1 2025 Financial Results 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 afternoon, everyone. Let's go to Page 4 of the presentation, where we can see that in a continuous very complex macroeconomic scenario, we were able to have a stable revenue. Profitability, you see is influenced by different reasons, mainly quarterly shift in Luxury Contract, yes, carry on of personnel and marketing investments and quality and service level issue in a major soft contract project. The combination of the 3 causes led us to have an EBITDA around EUR 5.3 million and a full adjusted net income of EUR 0.3 million. We have the full revenue -- actual revenue are exactly the same, EUR 72 million, in line with previous year. Talking about net bank debt, the level is EUR 13.2 million. If we had the options and also the IFRS 16 principle, we arrived to a level of around EUR 119 million. Still excellent cash conversion, around 80%. But in reality, there is a temporary cash absorption due to the variation of net working capital. So I mean, this is the synthesis of the introduction of the presentation. Now let's go the stage to Giorgio.

Good afternoon, everybody. Let's go through a very intense first 4 months of the year in terms of marketing and commercial initiatives. Actually, we will go a little bit beyond the first quarter because as most of you probably know, in April, we have had our most important annual event, which is the Salone del Mobile in Milan starting from January. In January, it takes place in Paris, the most important addition of Maison&Objet fair mainly dedicated to the house objects and components for the house, not [indiscernible] furniture. But we took the chance as we just opened a couple of months ago a new monobrand flagship store for Saba brand downtown in [indiscernible] at the right store, the right place to be just to kick off and to boost the opening of the store and combining with the historical monobrand store of Meridiani, we organized an event outside the Maison&Objet fair that created a lot of traffic in both the stores and that supported the launch and the introduction in the Paris community of the new Saba store. If we move to Page 6. In February, we also had in China, Shanghai, the complete renewal of a monobrand store of Gamma brand. For Gamma, China is the most important market together with North America. The largest space inside a building that is owned by the most important retailer, luxury retailer in China called [ Tiamantii ]. Actually, Gamma had already a very large space. We took the chance despite the momentum, which is not much favorable in China in terms of consumption and economic expectations. We completely renewed the store in combination with the bulk order made by the dealer who runs the monobrand that supported the Q1 results also of Gamma. Page 7. This is an important brand new opening in Japan. In Tokyo -- [Technical Difficulty]

Can you hear us?

We can hear you now. The voice just cut out for a little bit. Maybe we can start this slide again.

Yes, sure. We just dropped the line. I was saying that we had a very important opening of a monobrand store Meridiani in Tokyo. It is the first monobrand store of Meridiani in Japan in Tokyo in Aoyama District, in Minato nearby Aoyama where the whole design community have stores or showrooms. We just opened it 1.5 months ago, so just started. We don't have results yet, but the store looks great. And the partner, the dealer who runs the store is a longtime partner of [ Gazoni ] brand that decided to extend this cooperation with us with Dexelance Group also to Meridiani by opening this monobrand store. We don't have yet sales results, of course, maybe the next video conference, I will have more update on that. If you go to Page 8, in March, as you -- some of you probably know, a couple of years ago, we bought an important piece of art called Rotante Massimo, III by Arnaldo Pomodoro that was initially displayed in the flagship store of Meridiani in Milano in Via Manzoni, then we moved it to the flagship store in New York and then it came back to Milano. And this piece of art has been selected by a community of Milan [indiscernible] as being part of the diffused Milanese Museum of Art. So we had the chance during March to be part of an event where a lot of traffic of high-end wealthy people had the chance to pass by to see this sculpture, but also to visit the Meridiani showroom, which is quite important to us from a commercial viewpoint because the flagship store Via Manzoni by Meridiani is mainly devoted to foreign customers. So it's not yet well known inside the Milanese consumer community. So we have this chance and has been a very prestigious opportunity for us. If we go to Page 9, we entered the most important chapter of this first 4 months, which is the Salone del Mobile. 2025 edition has been a fair as an event very much successful, both inside the fair where we -- as a whole, we had more than 300,000 registered visitors, the same result of 2 years ago when the lighting exhibition was there. You know that Lighting is displayed every 2 years. And in the other 2 years, that's the kitchen event. So we just compare pears with pears and apple with apple. And so we combine the number of visitors of '25 with 2023 when Euroluce took place on lighting event. Basically, we have the same level of visitors and a higher level of presence downtown in the city for the Salone. So all in all, 2/3 of the people visiting were coming from outside Italy, from everywhere in the world. So all in all, the exhibition itself has been very much successful, both inside the fair and downtown in Milano. From our side, we had just 8 companies displayed in the fair event, all the 5 companies in furniture and the 3 of lighting. Adding up together all the booths of each of the 8 brands, we had a kind of 3,000 square meters covered divided into 8 booths, let's say. And also the investment has been pretty much relevant because for 3,000 square meters, the total investment in marketing has been in the area of EUR 3 million, roughly speaking. As a matter of fact, we also announced immediately before the Salone event, the new strategic partnership with the outdoor company RODA that was displayed as well in the Salone in the fair. So to be precise, we had 3,500 square meters covered with an investment of something less than EUR 3.5 million. Outside the Salone events or the event inside the fair, if you go to Page 10, we had some other, say, 40 Salone events, the first of which has been the celebration of the anniversary of the 20th anniversary of the Davide Groppi bestseller lamp called Moon. This is a very iconic product from the Davide Groppi collection. Was launched exactly 20 years ago and its sales are still growing 20 years later. Almost 10% of Davide Groppi sales are linked to this model in the different version and sizes that are proposed to the market. To the extent that we dedicated a special factory to the manufacturing of this lamp, just for those of you who don't know, this lamp is totally handmade, is covered with a Japanese special paper that is applied by very skilled workers that are specializing with this job. So it does not exist a Moon lamp similar or equal to another. They are all, let's say, handmade. Another important event at Page 11, we took the chance to celebrate for Turri company, the 100th anniversary. So Turri is exactly 100 year old, a century old. We celebrated this through the opening of the new redefined, restyled, refurbished flagship store in the Quadrilatero della Moda [indiscernible] in between Montenapoleone, della Spiga, just to be more precise. We completely refurbished the store just to reflect what Turri is 100 years after its birth. And the same style has been applied also to the stand in the Salone exhibition event, let's say. To celebrate the 100th anniversary, we also had a very important party with a lot of important stakeholders and key opinion leaders in one of the nights of the Salone fair. If we go to Page 12. Another important event that we took place with 2 of our brands actually, with Davide Groppi and Saba has been furnishing and lighting an apartment in Brera was organized by the organizer of the Brera Design District that has been very much successful. They had almost 70,000 people registered visiting this apartment during the week of the Salone and the apartment is still open and still visit by many people also in this recent weeks. Saba on the other side, had also 2 other events downtown besides this Brera apartment that I'm not explaining. But let's say, Saba has been the most active of our brands also outside the Salone, that was Salone events. Page 13. This is something we are all in Dexelance very proud of. We have preannounced before the Salone and launched and presented during the Salone in the Meridiani stand a new project based on the AI technologies, on the artificial intelligence. Actually, we were expecting many companies, many architects and studios and design companies presenting something new with AI in the Salone. But as a matter of fact, we have been the only one presenting a real project, a real series project that support helped us in having a very good media coverage, both in the, let's say, sector media and also in the technology media. To make a long story short, in the last 4, 5 months, we have almost completely trained a bot to learn how to furnish and generate 3D renderings according to the style that Meridiani -- or the different styles that Meridiani can generate and provide its consumers with. The training has been achieved through submitting to AI to the bot thousands and thousands of photos and pictures of Meridiani ambience. We are today at almost 80% of the training completed. And we do believe that this way of supporting consumers and architects in generating photographic renderings is something that in the next few years will completely reshape the way consumers and architects will approach and will go through the purchase process in our industry. So we do believe that this is a sort of evolution that we will see happening in the next 3, 4, 5 years, more or less. Last but not least, as I anticipated before, at Page 14, immediately before -- in the couple of days before the start of the Salone, we also announced a new strategic partnership that we signed with one of the 2, 3 highest brands in outdoor furnishing, RODA. Actually, RODA is the brand of the company that many years ago started treating the outdoor ambience like with the same level of quality styling design like if they were the indoor part of the house. And they just opened a market where later on, everybody else entered every brand outdoor and indoor entered. But they were one founding this new trend in outdoor, at least in Europe, founding this new trend in outdoor. We signed this partnership that will evolve in other things in the near future and we were very proud of that. We took the chance already during the Salone to start discussing introducing RODA management to our management in our actual 11 companies. So we started planning synergies and planning the future. I will stop here and I leave the floor to Alberto Bortolin.

Thank you, Giorgio. About our figures, profit and loss, revenue in the first quarter 2025 are EUR 72.1 million, roughly the same of the previous period. We'll see the breakdown in the coming pages. Many new projects in Luxury Contract started in this period. Consequently, we see a consistent part of the margins in the coming quarter when we deliver the goods while this quarter, we recorded the production start-up cost of the orders. The sales price level is stable as well as the purchase prices of materials with a limited inflation effect. The company continues to invest in marketing and personnel. The lower added value depends on the temporary timing of Luxury Contract project implementation for more than EUR 2 million, a project reworking residential area due to some realization issues of roughly EUR 1 million, the increase in personnel cost for recruitment to strengthen the organization for roughly EUR 1 million. About depreciation and amortization, they are the same of the previous period because our program will last 3 years. So we'll see the CapEx in the coming pages. Marella?

Thank you, Alberto. So let's go to Page 16, and good afternoon, everyone. So talking about the breakdown of the different business area, we can see that in the first quarter, both Lighting and Kitchen & Systems recorded robust growth with Kitchen & Systems at around plus 15%, accelerating from Q4 and from the full year 2024 exit pace and the Lighting businesses recording plus 9%. Furniture out of minus 1% in Q4 2024 signs almost minus 4%. And we know that also during 2024, this has been the weakest, let's say, business segment for the group. And weaker performance is recorded also in this quarter by almost all companies and is also impacted by some delays in confirmed orders in some soft contract channel, in particular in the luxury cruises space, which were expected to be reabsorbed in the upcoming quarters. But overall, the residential business closed the quarter in positive territory, plus 2.7%, more or less in line with the exit pace from the Q4 2024 and compounded on almost plus 12% that the residential businesses recorded in Q1 2024 with respect to the previous quarter back in 2023. As anticipated during the March call and as recalled also by the colleagues, Alberto and Andrea, Luxury Contract is experiencing a normalization phase after the all-time record that the business area signed in Q4 2024, where sales reached almost EUR 29 million, thanks to the acceleration at clients' request of some projects that were originally set up for early 2025, signing in 2024 the all-time record sales for the year at over EUR 91 million. So the area for this quarter closed at minus 9.4%. And overall, the group revenue is in line -- in the Q1 2025 is in line with Q1 2024 at around EUR 72 million. Talking about the breakdown by channel at Page 17. We won comment hard contract minus 9.4% because it perfectly coincides with the Luxury Contract, as just commented. And we can see that retail, despite the overall macroeconomic conditions and the consumption sentiment that, as mentioned by Andrea in the beginning, remains challenging and quite difficult to interpret, signs almost plus 3%. Thanks to the contribution of Cubo Design that is the kitchen company that was signing plus 15% as a business area and that keeps conquering market share also in 2025 and the lighting companies that are generating growth more or less homogeneously in retail and -- both in retail and in soft contract. Soft contract channel, plus 3%, remains positive and with growth in line with the 2024 exit pace. And that's thanks to Lighting business, as just commented, but also thanks to Turri that has a strong positioning in the high-end residential and hospitality projects that are somehow able to counterbalance the delays experienced by the other furniture companies in the channel and in the luxury cruising space, as just commented before. Going to Page 18, talking about the breakdown by geography. Again, it's -- you know that quarterly results by area are not that significant for Dexelance because they are strongly impacted by some swings that you have in related to contract, both soft and hard. And that's even more true when talking about the first quarter. But that's the reason why we see minus 28% in North America that is driven by a strong Q1 2024 that was signed in Luxury Contract at the time and as well as the effect of some big projects that were expected to be delivered in the area and were anticipated in Q4 2024 or that's also the reason why you see plus 35% in rest of the world that is thanks to the above-mentioned projects delivered by Turri in high-end hospitality and residential as well as some openings like the ones that Giorgio commented before for Meridiani in Tokyo or for the restyling of the Tiamantii showroom by Gamma. But what is important to notice is that the minus 28% that you see in North America is not a result influenced by the recently introduced tariffs, which were, in fact, announced in early April and at the moment, not seems to be -- to deeply affect per se the business in the area because they are limited to 10% and are resulting for our business in a net retail impact of about plus 3%, 4%, which you can understand that in the high-end segment of the market is not a nightmare. In fact, the residential business generated in North America, also thanks to the support of the Dexelance local subsidiary that we opened there and is starting to produce results keeps providing positive signs. Of course, the level of uncertainty connected to the economic impact of such tariffs as well as of the dollar ongoing depreciation provides for lights and shadows in the area and we keep a high level of attention for the development of the situation in the upcoming months. Overall, talking about Europe, you see some continuous resiliency by the domestic market, plus 13.4%. This is thanks to the contribution of Cubo, but it's more or less spread all around the companies. And on the opposite of the rest of Europe, minus 8%, where multiple key markets are still in negative territory and keep struggling because of the macroeconomic conditions. And I will leave it back to Alberto for [indiscernible].

Okay. Page 19, something about net working capital and CapEx and net financial position.

Page 19, please. [Foreign Language] Can you hear us?

Yes, we can hear you. Can you see the page? We're currently at Page 19. Can you hear us?

Yes, we can. I'm sorry, we might have some connection problems in the afternoon because -- yes.

It's not a problem. We can hear you well. Can you see Page 19 of the presentation?

Yes.

Exactly.

Perfect.

Perfect. Thank you. In this page, we see -- on the left, we see a significant increase in net working capital due to the start-up of the new projects in Luxury Contract, as we said before, which in some cases have been partially paid at the end of last year. For this reason, there is both a reduction in advances and an increase in inventory. This increase in our opinion, will partially absorb in coming quarters, similarly to what we have seen in the previous increase years. The CapEx investment are in line with the past period because as I said before, we want to increase our capacity production, but the program will last 3 years. About the net bank debt, we see an increase and it's due to the effect of net working capital. About minorities, we don't have any change from the last of the year. The bank debt cost halved to EUR 0.9 million this quarter and the average cost of the bank debt is something more 5%, so we had another reduction compared to the last 5 years. Good. Let's go to Page 20, where you can see, I mean, our 3 months order intake that are single digit growth and positive. But talking about 2025, the high-end design furnishing market is not stable in the first 3, 4 months, less retail as last year and more project, which, however, don't compensate the decline in retail. From the list of store openings that we have in Luxury Contract today and talking about us now and no more about the market, we will have fewer openings than last years with the current hypothesis of sales around EUR 80 million. And believe us, we are not losing market share on our customer, but it's actually the opposite. In the residential business, we think we can continue to grow as we have done in the first 3 months. But for sure, it will also depend on the market trend in the remaining part of the year. Thanks for listening. Now it's time for question and answers.

[Operator Instructions] The first question today comes from [ Vincenzo Casorina ]. His question was written in the chat, so I will read it myself. He says, could you please be so kind to give us more details about the Luxury Contract segment by country, by main partners or significant contract already signed in 2025?

Okay. With regard to Luxury Contract, as I told you, I mean, we have -- as you know, we have orders in the -- we have a vision about the next 15 months, sometimes even 18. And the list of order is positive, frankly speaking. But the list of the openings that we have till now are fewer and lower than last year. It's practically generally, a little bit generally. It's not a single customer and client that are doing this. I mean, generally, the majority of them, they have less store openings during 2025 because they postponed some openings in the last quarter and the last 4 months. Situation can change. But till now, I think it could be -- that these kind of openings will permit us to have Luxury Contract forecast, as I told you, around EUR 80 million. And also from a geographical point of view, I mean, you know that 50% of our business is U.S. in the Luxury Contract. And in the first quarter, I mean, we have seen that we have a strong minus in North America, as Marella said, is for the Luxury Contract new openings that were postponed then in the opposite in the residential business that we are growing, we are growing very well also in North America, thanks to the good activity of our new subsidiary and so on. So I mean, it's something that is general. I don't think that we can locate to special areas or customers. Then naturally, you read also, I mean, the situation of the majority of the luxury brand that are also mainly our customers. I mean, there are some of them that are suffering a little bit more. But in terms of new store openings, this is a general effect.

Just to be more precise, not canceling new openings or store renewals, they are just diluting them instead of a normal program of new openings or renewals during one single year, they are diluting this program over 18 months, 15, 18, 20 months. So basically, just to be clear, we are not losing any one of these projects that we received and that we have already quoted and we are not replaced by anybody else in this project. It's just a matter of the -- those fashion houses or jewelry houses are having poor results and therefore, they are postponing their cash [indiscernible].

Good job. It's even the opposite. There is a customer -- a good customer of us that they told us, okay, last year, we gave you 10 openings. This year, we gave you 4 openings. And then we are even contesting market share because we choose you, I mean, and we are giving you also some other openings that generally we gave to some other supplier. But at the end of the sight is the same, less openings during 2025, full stop.

Our next question now comes from Vandita Sood.

I've got 3, if that's all right. So firstly, I just wanted to understand a bit more about your strategic partnership with RODA. So is that just a one-off project? Or is that like a joint venture? How should we think about that in the model, if you could help with that? And then also like -- sorry, just to add on to that, this arrangement that you have with RODA, could we see that in other segments with other players in the industry? Or is it still -- are you still looking to do like bolt-on M&A? And then my second question was on tariffs. So I think you said that at the moment, with the 10% tariff, it makes a 3% to 4% inflationary impact on prices, which, of course, at the luxury end of the market are not a deal-breaker. But does your view change if, for example, the tariff becomes 25% or wherever it ends up being? Or do you still think that people are sort of price insensitive to a certain extent? And then my last question was just if you could talk about the FX impact. What does -- how does the balance of strong euro and weak dollar mean for you as a business on the profit line?

So let's talk about your third question about the impact of custom duties or tariff, as you call. I mean, frankly speaking, the number that you see are not impacting at all about the custom duties and tariffs. And even the future is not a big problem. I mean, an impact or real impact of 3%, 4% in our business. But if we do the sum of these costs plus also the 10% of lower dollar versus euros, of course, in the case of uncertainty that I mean, in the American market could have an impact. Frankly, we don't see in this moment because talking with customers, we are doing this kind of things often. I mean, the business in retail and also what we call signature is still good in North America. It was good also even in April. The only impact that we have is for different reason in the Luxury Contract. Please Alberto, if you want to add something?

Yes. About this effect of the value, the change between dollar and euro. We have to remember that our goods are sold in dollars are less than 10% of our total revenue and a change of 10% of the exchange, the total effect on the profit and loss is less than 1%. So in this moment, the impact is not very high because our total -- our sales in dollars are less than 10% of the total revenue.

And regarding your first question about RODA, it's -- you need to think about that as a proper acquisition opportunity. So we talked about the strategic partnership just because we just signed for the moment a letter of intent, but there will be a share acquisition. But the precise terms of the bolt-on acquisition will be released as soon as possible, as soon as we have a binding agreement with the sellers. We mentioned in the previous press release that there will probably be a 2-step acquisition, so starting from a minority stake and then coming to a majority stake at a certain time. But again, no binding agreement has been signed yet, just a letter of intent for the moment. And that's the reason why we still have limited, let's say, information to give, but we will be providing soon and as soon as possible more details regarding the transaction. But it will be an acquisition.

Our next question today comes from Andrea Bonfa.

Very quickly, Andrea, I didn't catch very well what you said at the end of your presentation. You mentioned some EUR 80 million. I don't know if you can remind me what was that referring to. And the second one is if it's possible to have an update on your, let's say, intake amount or backlog amount in order to understand what's the state of the art there? And the third point maybe is, are you still kind of discussing any transformational deal? Or I mean or is that possibility too far away at the moment? And the fourth one, if I may, is, I mean, looking at the consensus, are you happy right now with these kind of numbers? Or shall we take a slightly more conservative view looking at the start of the year? I mean, these are my first 4 question points.

Okay, let's talk about the EUR 80 million. I was talking about the Luxury Contract business division that we have. So frankly speaking, with the precise list of the opening stores that we have from our mainly 2 companies, not an [ active ] model, I think that our forecast could be at the end of this year more around EUR 80 million. If you remember well, when we presented the 2024 data results, we said that we could be in a range between EUR 80 million and EUR 90 million. Last year, it was EUR 91 million, if you remember. So in this moment, I mean, after that we talk with the majority of our big customers, I mean, I can tell you that we are more around EUR 80 million than EUR 90 million, okay? This is the first question with regard to also about the recession that we have outside, no? Then with regard to also your question if in this moment, the data consensus that you put and also the general assumption that we have, for sure, I mean, having EUR 10 million less in the Luxury Contract. I mean, we are working hardly -- very actively in order to, I mean, recover this EUR 10 million in the residential area that is going well, even April was going well. But this is a big question mark because it depends, frankly speaking, from what will happen in the market trend. The market trend in the first 3, 4 months, you remember that we have an idea that the market could be stable in 2025 about the high-end furnishing market. Frankly speaking, in the first 4 months, it wasn't true this kind of forecast because retail is heavily down in the majority of countries. Yes, the world of project, yes, but not able to recover at the market situation, I mean, the situation. So if in the second part of the year, the market trend will continue to be the same, I mean, the consensus could be a little bit high. So it's a question mark, frankly speaking. And you know also that decreasing, I mean, also the level of Luxury Contract in our business. I mean, also you are talking about the area with the best profitability. So if the mix of the business will not be the same of 2024, this could have an impact on the profitability. You remember that we discussed that if the market will be stable and if I mean, the mix between our business area will be stable, we can keep the profitability of the consensus for sure. But in this moment, there is a [indiscernible] that in the first 3, 4 months wasn't in that area. With regard to the transformational deal, we are working very actively, frankly speaking, in a second possible acquisition. I said possible because, as you know, it doesn't depend from us. But we are working very actively to have a second acquisition within the end of the year and could be a transformational deal. I mean, something could be very, very interesting, I mean, in a different area with also a good level of volumes and revenues and so on, not only. I mean, we are proud about, I mean, the level of contacts that we have because despite in 2024, as you know, we haven't done any acquisition, but the level of contact was it is very good and this year could be the year of 2 acquisitions despite, as you know, will be in a minority in the first instance.

We now have a question from Paola Carboni.

I have a very quick question first on tariffs and the price increase you have mentioned, just to understand whether you have already implemented that? Or do you expect those to start from a certain moment in time? Or are you waiting for greater visibility and clarity on the context? So just to understand on that. The second question is about your EBITDA bridge that you have mentioned quickly at the beginning, if you can come back on this on the few drivers you have mentioned for the EBITDA bridge we have seen in Q1. And specifically, if you can comment on gross margin, this is a KPI you sometimes provide I was interested in. And last but not least, we are seeing personnel costs still on the rise. Clearly, we appreciate that this is linked to the many initiatives underway and the strengthening of the organization. I just wanted to have a sense of maybe the pipeline here? And when do you expect this cost line to stabilize a little bit? We are still seeing some high-single digit sequential growth quarter-on-quarter. So I was wondering whether you expect at some point in the year to see a stabilization here?

So let's start. Thank you, Paola. As far as price increases due to tariffs, as Andrea said before, basically in luxury goods, the impact of the tariffs is on the price at which we do import or we or our customer dealers are importing the product. So the impact on the final consumer on the consumer price list is roughly 1/3 of the amount of the tariff. As Andrea said, a 10% tariff like we have today has an impact on the final consumer price list of around 3%. The question before, if tariffs would grow up to 25%, once again, the impact will be 7%, 8% on the consumer price list which is more or less the amount of price increase that we applied during the inflation because of Ukraine war a couple of years ago and nothing happened with this price increase in our segments in terms of demand. The way in which we have applied the price increase to the tariffs is twofold. On one side, we decided to play very seriously. And so any time that we do have a dealer that ask us to import the products and deliver them at their warehouse, we apply bottom-on invoice exactly the amount in dollars that we do pay as an additional tariff compared to the tariffs before. This implies that the consumer price list will be roughly increased even as a suggested market price to our dealers by 3% to 4%. This is on average. There is a second flow of business, which is the export sales that we do in U.S. In this case, we are suggesting our dealer to apply the tariff price increase exactly in the same way, but we cannot be sure of what they do. Roughly speaking, we do expect them to play like we are doing. But we are seeing that some of our -- some players of our industry are speculating a little bit on the tariff side in order to apply price increases that are higher than the real additional cost that they are sustaining. So again, back to the way we play, when we import and sell in dollars to our dealer, we just apply the price increase that we pay in absolute amount as a tariff to import.

Without increasing the price list.

Actually the final price list is increasing.

Yes. But the price list is not increasing, it's like on top of the price list.

We increase only the final subject.

Exactly.

We are putting on evidence on the invoice.

Exactly.

Exactly. Bottom of the invoice.

Very transparent -- [Technical Difficulty]

I've lost you, sorry. Hello?

Yes, Paola, I think we're just having some little problems connection at the moment. So we will wait for the management team to be back.

Can you hear us now?

Yes, we can hear you now. Can you hear us well?

Yes, perfect.

Yes.

So sorry for this. I don't know what's happening.

It's okay. We just lost you. So if you can maybe repeat the last 3 or 4 sentences, that would be great.

I was just summarizing that dividing the 2 cases, when we sell exports and when we import and sell locally in U.S. dollars, when it is us through the subsidiary importing and reselling locally in U.S. dollars, we just apply to our dealer at the bottom of the invoice and price increase exactly equal to the amount that we pay at the customs as tariffs. The dealer receives a suggested retail price to consumer, which is increased on average between 3% and 4%. And we suggest him to apply this price increase only in U.S. because it counterbalance perfectly his margin in terms of the additional tariffs. Different situation is when we sell [indiscernible], we sell in Italy, in Europe to the dealer and the dealer takes care of importing goods and paying the tariffs. In this case, we just suggest to the dealer to apply the same 3% to 4% price increase, but we are not in a position where we can really pretend him to do it. But on average, we expect no impact on demand on sales. We just got back the whole amount that we pay additionally to the customer, we get it back in sell price. And when it is up to the dealer to import, it's up to them to counterbalance the cost increase. And this only in U.S., of course, we are not applying any price increase for this reason anywhere in the world.

About the EBITDA, we are losing, this moment we have a temporary effect in our project in Luxury Contract because we are starting with new activities. So we record the costs, but the margin will record it in the coming months. For this reason, we consider to recover this amount of over EUR 2 million. On the other hand, the issue on one project of EUR 1 million, obviously, it remains in our profit and loss. And about the personnel cost, we are completing the strengthening of our organization. We completed in the second quarter. So we'll see the definitive value of the personnel and the organization in the second half of this year.

There were 2 questions in the chat that have been answered already. Currently, there are no questions. So we wait just a few moments to give everyone the opportunity to ask a question. As there are no further questions -- I can see that Paola Carboni actually has a follow-up question. So I will give the word back to her for a question.

Yes. On the EUR 1 million issue for one project that you have mentioned, I just wanted to understand whether the issue is solved now, what was it about? Is there any risk still of a tail for Q2 or not? And secondly, on gross margin, again, sorry, I was asking if you can give us the figure for gross margin or a sense of how gross margin performed in Q1?

Yes, Paola, I go ahead with the project that Alberto mentioned. Basically, this has been, I would call it an extremely unlucky situation that is not going to repeat, of course, and I will explain you why in a while. The effect of this unfortunate project are not yet completely over, but we are we are almost done. We just missed a few additional costs. Basically, I mean, in the area of EUR 100,000. This is the overall amount. Basically, what happened is that last year, we took a very important project of above EUR 7 million project and we decided to tackle it in a new way, counting on the fact that there was a longtime manager in contract in this company that was very skilled and able to manage that project in a different way. The different way was due to the fact that we were willing to see whether we could be more competitive by unpacking, let's say, the manufacturing of the components of this project and at ourselves as a general contractor. We knew that we could have done it because we had this man at the head of the project that was 40 years experienced and seasoned man in contract.

And was consultant as well.

And the consultant as well. We hired a dedicated consultant for -- to manage this project that was managing planning in a completely different way than we are used to. The matter of fact is that unfortunately, that's why I said extremely unlucky, unfortunately, the seasoned manager that was managing the project last year died. And a few months later, also the consultant that we hired that was managing the whole planning and logistics of this project did the same, so he died. So we had 2 people that were managing this process who left us. And basically, it was impossible in such a short period in time to hire, find someone that was able to bring together all the written pieces of this project and turn it into something successful. Actually, we went ahead. We are repairing the damages and the missing pieces of this project right now. I think in maximum a couple of months, it will be over. We lost about EUR 1 million. But by recovering in a proper way the, let's say, the company who committed us this important project appreciated the way we reacted to this unlucky situation to the extent that they gave us another couple of projects for the next 18 months. So in a way, we have suffered a huge loss for a very unlucky series of events. But at the same time, we are gaining some additional business for the next 1, 1.5 years.

We now have a follow-up question from Andrea Bonfa.

Maybe we didn't touch much on the order backlog situation or order intake. What's your visibility there?

Andrea, at Page 20, you see the order intake is quite positive.

Sorry, sorry, I missed that. Sorry, sorry.

EUR 92 million versus EUR 86 million. For this, I was explaining in that page that we have a positive plus 7% that is not bad at all, but in reality, then we have on the Luxury Contract the list of openings. So I mean, the postponements we registered. So the level of order are very good, but probably this will not happen within the end of 2025 because they postpone and then it's correct to say to you. By the way, in generally, I mean, I want to give you an impression that we continue to be very positive about the way Dexelance and its companies managing the current business, strengthening also them with high caliber people. So I mean, in this moment of difficulty between brackets of the market situation, we are able to tie the best manager ever, I mean, the market. And then this will permit us to have in the medium term when the market will go back in the normal trend to be very effective and strong. As you know, the operating leverage works positively when, I mean, we are growing from a sales point of view. If we are stable, as it happens till now, I mean, the impact of personnel cost, it seems huge. In reality, these people will permit us in this moment to maintain stable the business when there are a lot of minus if you compare with some other competitors. On the other hand, when the market will keep the normal pace, then we are able to grow always better than the market. The situation of the market is like we said, is not stable at all in this moment and it still continues this kind of trend until 2023. But you remember that 2021 and 2022 was too much extraordinarily positive. And then I mean, there is a kind of normalization. Really, we have still a very, very positive view. And if we are going to have another fantastic partner in our network, I mean, the business from an M&A point of view could grow in the way that you are thinking and everybody, we are waiting.

We will now take the last question for today. So the question is in the chat and it comes from [ Arturo Lopez Payani ]. His question is, so Andrea, I have 2 questions. Dex leverage at the end of the year, room for transformational acquisition or net debt/EBITDA multiple comfortable within this environment?

It has room for a new transformational deal considering the environment and the leverage.

I already said that we are considering to do a transformational acquisition, but it depends what we intend for transformational acquisition. I can tell you that could be the biggest that we have done, that is transformational or not. I think it would be transformational also because it's in a different business area that could be -- could transform also our Dexelance team in the most complete team in terms of business area that we follow, first. Second, in terms of multiple...

Yes, leverage.

Yes. Leverage will be always in line with our possibilities, but please, Alberto.

Yes, we have to consider a transformational acquisition is less than EUR 100 million.

Yes, of course.

Because sometimes we talked more than EUR 100 million. In this case, we are looking for a company with a revenue less than EUR 100 million. About the ratio debt on EBITDA, our idea is to remain under 3x EBITDA. This is our program. So the acquisition will use partially our cash and partially new bank debt.

And then also in this moment, with this acquisition, if we proceed naturally, no capital increase will be required. There are many companies also at this moment that we are talking about, frankly speaking. And then let's see if there will be some other, I mean, nice company and brand to add in our organization. But one step after the time, yes. Now let's see. We are quite positive as you see from an [indiscernible] point of view. We are still positive also from the organic business. Unfortunately, in this first quarter, there was a terrible combination of 3 causes. Then one we can forecast it, but the other 2 not. But okay, it was one shot. And then from Q2, we will have the normal business as usual. By the way, April was a good month I want to tell you. It's not so normal to have an April good month, firstly because there was the Salone del Mobile. Second, because we are listening that the average situation of the market is still not positive, talking with friends and nice competitors also.

So thank you, everyone, for joining today. We have now run out of time and this presentation will come to a close. Thank you.

Thank you, everyone.

Thank you, everyone.

Bye-bye.