Dexelance S.p.A. ($DEX)

Good afternoon, and welcome to Dexelance Full Year's 2025 Financial Results Presentation. [Operator Instructions] I now have pleasure handing over to Andrea Sasso, Chairman and CEO. Please go ahead, Andrea.

Thank you. Good afternoon, everyone, and thank you for being here with us. Let's go on Page 2, where I would like to highlight how 2025 has been a truly strategic year for us on the acquisition front, EUR 62 million invested to drive the next growth phase starting from Flexalighting on execution of our put and call agreements to reach 100% of our ownership. To Cubo Design, where we have done the resolution of the put and call agreements to reinforce the partnership with the founding family to align our interest practically forever. To -- from Roda, purchasing 25% of the shares to increase to 60% in 2028 in a leading specialist to address a potential market segment. With a very strong product expertise combined with excellent top design and collaboration. And finally, to Mohd, a unique global platform for interior design and distribution of design furniture and accessories, creating a new SBA enabling more integrated access to end customers. So in this page, I mean, really, we want to underline a strategic milestone with EUR 62 million invested to advance the excellence aggregation strategy to drive the next growth phase. If we go on Page 3, we see the summary of our result in 2025, starting from a growth of 15% of our revenue, M&A driven, while organically, we had a slowdown, mainly linked to luxury contract and achieving EUR 372.7 million of full revenue, so plus 15% versus last year. In particular, I would like to underline the growth, which is not at all trivial in the Lighting and Kitchen segment with plus 8% and also in the omnichannel go-to-market too. The achieving of EUR 372 million sales places Dexelance firmly among the top 10 groups in the world in the high and medium high design sector. EBITDA was EUR 34.4 million full adjusted with a margin of 9.2%. The organic margin reduction is due to multiple factors, as we already explained in -- during the first 6 months and 9 months, including one-off increase in operating cost and luxury contract slowdown. We also dilution impact from recent strategic acquisition of Mohd. Mohd has an EBITDA of about 9% and has a dilutive impact on the margin we had in 2024 but strategically is a fundamental acquisition for the reason we discussed earlier. In terms of full adjusted net income, we achieved EUR 6.2 million, 1.7% of marginality. On the other hand, speaking about debt, we had close to EUR 53 million net bank debt, that is growing to EUR 93 million, including put and call and earnouts, and EUR 130 million if we consider also the international principal accounts. In short, a complicated year from the point of view of margins but which made us stronger and more determined in achieving our medium-term objectives together with new extraordinary partners. Please, Giorgio.

Thank you, Andrea. Good afternoon, everybody. We move to Page 4. I have to underline that Q4 is not the moment of the year. We have the highest peak in marketing initiatives but now we have together a collection of those initiatives that highlighted in Q4, the continuity and the consistency of the actions that we put in place during 2025 on each and every one of our brands. The first one that I'm highlighting is with Turri, you know that in Turri, the retail part of Turri is under an important repositioning from a classical traditional design into modern and contemporary one. Step by step, we are progressing in this turnaround from a style viewpoint of the company. The last brick that we put was in Greece in Athens when in December, we took part together with a local partner to an architect show called hotel and house, HoHo, which basically supported us in both promoting the brand and collecting some potential projects to undertake. If we move to Page 5, again, a long continuity, Saba. Saba is our brand that has undertaken a path to increase and improve their market positioning, reaching higher end of the market by boosting the image of the brand. We have the chance to furnish a fantastic villa on the Como Lake in occasion of the Italian archive film festival. Of course, the exhibition by itself does not have a great value, but the fact that we had access to this magnificent building allowed us to shoot a huge number of contents that [ arriving ] in these weeks are on all of our digital medias. If we move to Page 6. That's another important -- it was an important actually event that we participate to -- in Dubai during the month of December. There is the traditional Downtown Design in Dubai. Meridiani has a historical distributor there that we work with since probably more than 15 years, probably 20. We participated to this event. The event was pretty much successful in December. We -- sadly to say, we gather many orders and many leads and opportunities for projects that after what happened in, let's say, in the Persian Gulf, now are almost all frozen. But none of them has been canceled so far. Page 7. Another important business event. You know that Gervasoni, a company with the Gervasoni brand and the Very Wood brand has quite a huge role in furnishing and supplying cruise ships with any kind of seats, chairs, armchairs, sofas and so on and so forth. Especially Very Wood is a specialistic brand in B2B seats. We participated with both brands at the Hamburg Messe, and the Hamburg Cruise Ship Interior event. And again, also in this case, the event was quite successful to both of our brands because in reality, the demand for cruise ships is one of the portion of hard luxury contract that is still stably growing. And with Gervasoni, we are trying to catch as much as possible of this, by the way, profitable portion of the market. Move to Page 8. This is a real business. After the recent -- in 2025 enrichment of the organization of Davide Groppi, finally, we are in a position where we can really enjoy and let's say, use the power of the brand by implementing multiple number of activities. Among them, the 2 most significant occurred in China when in November, we kicked off and we opened a mono-brand store in Beijing managed by one of our local partner, Jasming Lighting. And in Shanghai on the right, we opened a, let's call it, a B brand store because actually a Japanese furniture brand called Luxeon accepted to share this beautiful showroom with Davide Groppi. Basically, all the furniture is from this Japanese brand but all of the lighting in this permanent position is Davide Groppi branded in a quite visible way, I would say. Page 9, still with Davide Groppi. After Davide won 3 Compasso d'Oro in the past years, we had another good surprise. One of the lamps presented in 2024 called RIBBON, is a table lamp, has been selected for the ADI Design Index 2025, which means that this lamp will become a candidate for the Compasso d'Oro 2026. Interesting, the fact that this lamp has not been designed by Davide Groppi. Actually, it has been designed by a Spanish lighting designer called Maurici Gines. And Davide Groppi took care of the engineering and industrialization of the lamp. So basically, it's the result of a four-hands work done by these 2 geniuses together. Page 10. This is -- I don't know how many of you knows Archiproducts. Archiproducts is a portal dedicated to architects, probably one of the best worldwide. Every year, they organize the Archiproducts Design Awards. And normally, this award is recognized to many brands and many products. But we have been pretty much happy to see that most of our brands got at least one of this award. This is not as much important as Compasso d'Oro, of course, but it is quite important to gain a piece of share of brain of the most prominent architects and interior designers around the world. So from a commercial viewpoint, it's quite a powerful tool. I leave now the floor to Marella on Page 11.

Thank you, Giorgio, and good evening, everyone. So commenting on the next 3 slides with the different breakdowns. Please note that the 2025 numbers are all presented on a pro forma basis. So they are including, respectively, 3 months and 12 months of Mohd, while commenting on the 2024 numbers, they refer to the previous Dexelance period -- perimeter, sorry, so without Mohd. In particular, in this slide, commenting on the breakdown by SBA, the Mohd effect can be easily read, thanks to the company's inclusion in a new business area, which is omnichannel go-to-market. So in the fourth quarter, we reached revenue of almost EUR 100 million, supported by 3 main factors. First of all, the strong contribution from Mohd, omnichannel go-to-market, as I mentioned, which reached almost more than EUR 20 million revenues, thanks to a very strong Black Friday period in November. And this result was higher compared to the average quarterly level of sales that the company reached throughout the year of approximately EUR 17 million, EUR 18 million. Second, there was, let's say, a better-than-expected performance by luxury contract, which despite being down almost 40% compared to the record quarter registered in Q4 2024. The business generated around EUR 17 million, bringing full year revenues to just above EUR 76 million, which is minus 16% year-on-year. We commented this trend already, and we can say that this is the reflection of a more cautious approach adopted by some key luxury clients, in particular, starting from the second half of the year and with regard to new store openings. But nevertheless, the final result came at the upper end of the range that we previously indicated, which we remind was between EUR 7 million to EUR 75 million revenue. And lastly, the fourth quarter was strong, also thanks to lighting, which delivered a solid performance, reaching revenues of around EUR 10 million, recovering from the softer performance that these areas recorded in Q3. Looking at the full year numbers, revenues reached almost EUR 373 million, up 15% year-on-year, as Andrea already commented, mainly supported by the consolidation of Mohd, which by itself delivered around 5% organic growth. On an organic basis, so looking at the 2024, the Dexelance perimeter, however, revenues declined by roughly 8%. This was mainly the reflection of the slowdown in luxury contract that I just commented and the weaker performance in the Furniture segment, which was down around 12%, as you can see, largely due to the challenging year experienced by the company. This trend in residential was actually partially offset by the strong and fully organic growth delivered by Lighting and Kitchen & Systems, which were supported by solid brand positioning and ongoing expansion in international markets. In particular, Kitchen & Systems, which includes one company only, which is Cubo Design, recorded healthy high single-digit growth consistently across all the different quarters of the year. Going to Page 12, so moving to the breakdown by channel. You can see that the impact of Mohd consolidation is visible also here, particularly in retail and soft contract, which increased on a 12-month basis by 22% and 41%, respectively. This reflects the Mohd's omnichannel business model, which in 2025 was almost evenly split between the 2 channels in terms of revenues. Looking at the organic trend, retail showed a gradual improvement in the fourth quarter because after a negative Q3, the channel returned to growth in the last 3 months of the year, allowing the channel to close slightly positive on a 12-month basis at around plus 2%. This recovery was mainly driven by the acceleration in Lighting and in Kitchen Systems but also by some few encouraging signs coming from furniture companies. On the other hand, commenting on the soft contract, soft contract continued to decline also in the fourth quarter, in line with Q3. This is mainly reflecting a weaker demand, longer lead time in projects, something that we had already seen during the other quarters of the year, both in luxury cruising and in the residential markets. Finally, we want to comment regarding hard contract, which is essentially corresponds to luxury contract companies that we just saw in the breakdown by SBA and a decline around 16%. Finally, looking at the geographical breakdown at Page 13 and focusing directly on full year results. Revenue growth across all regions was largely supported by Mohd contribution because the company more or less in terms of breakdown by region, let's say, as a profile, which is more or less in line with the group profile. Starting from Italy, revenue reached around EUR 92 million, up around 18% -- sorry, 11% year-on-year. This was thanks to Mohd contribution but also thanks to contribution of the residential businesses, in particular, Lighting and Kitchen & Systems, which continue to consolidate specifically in the domestic market, their positioning against competitors. Moving to Europe, excluding Italy, of course. This was the region showing the strongest growth, which was except for Mohd contribution, also driven by luxury contract performance, which reflects some clients' store openings decisions during the year, which moved in the 12 months more towards Europe with respect to other areas of the world but also thanks to the residential segment, which remained broadly stable. In particular, regarding the residential segment, it's important to reiterate that we have different shapes in different countries with southern countries like France and Spain that performed positively with some others in the DACH regions, namely Germany and Switzerland that actually are still facing challenging market conditions, so we're actually negative. Looking at the rest of the world, revenue increased around 10% overall. Although organically, this area would have been slightly negative, so without considering Mohd effect. And this is mainly reflecting the slowdown in soft contract projects. Giving you some colors on the main areas included in this region, we can say that China, for example, remains a challenging market in 2025, although there was -- there were some encouraging signs from other Far East countries like Japan and South Korea, where, for example, we recorded growth. Middle East, which, of course, is the topic of the moment, accounted for around 5% of group revenues in 2025. And the region was intended to be one of the areas with the highest long-term growth potential for the group. And however, as Giorgio was commenting before, given due to current geopolitical environment over there, we are closely monitoring the situation and starting to see some early sign of slowdown and freezing of projects and of course, a more general cautious approach from clients in the region. But we will be in a better position to assess the potential overall impact on the group as the situation evolves over the coming weeks. And I will leave now the speech to Alberto for Slide 14.

Thanks, Marella. Full year revenue in 2025, including the impact of the Mohd acquisition from 1st January 2025 amounts to EUR 372.7 million, representing a 15% increase compared with the previous year. On a like-for-like basis, considering the 2024 perimeter, we observed a decrease of 7.7%. In the last quarter of 2025, adjusted EBITDA returned to double-digit levels in percentage terms. Full year adjusted EBITDA amounted to EUR 34.4 million, equal to 9.2% of revenue compared with 8.4% in the first 9 months of the year. The difference in EBITDA margin between 2025 and 2024 can be explained by 5 main factors: the first shift and mix in some luxury contracts projects, 1.7 percentage points; number two, one-off costs related to tourist projects, 1.5. number three, dilutive impact from the Mohd acquisition, 1.3; number four, increase in strategic commercial and marketing expenses and strengthening of the personnel structure, 1 basis point; and the last one, other operating effects, 1 point. The increase in D&A is mainly attributable to the Mohd acquisition. The increase in financial expenses is mainly due to the higher bank debt related to the acquisitions and negative exchange rate differences. Adjusted net income amounts to EUR 6.2 million, equal to 1.7% of revenue. Moving on to Page 15. During the last quarter, working capital decreased more significantly compared with the end September level than in recent years, mainly due to significant customer payments and tighter inventory control. This contributed to a reduction in bank debt of about EUR 24 million since September 2025 from EUR 76 million to EUR 53 million. Looking at the full year, the increase in bank debt is mainly related to the acquisition of shares in Roda and Mohd and the completion of the Flexalighting acquisition for a total cash out of approximately EUR 62 million with a neutral net working capital impact. Overall, minorities decreased. There was an increase related to model options. On the other hand, a decrease related to the final payment for Flexalighting and the cancellation of Cubo's debt following the resolution of put and call agreements, allowing minority stakeholders to remain in the Kitchen business. CapEx amounted to EUR 10.8 million, mainly related to improvements in industrial building and machinery. This investment are part of the company's CapEx plan, which will be implemented with flexibility over time. The average cost of bank debt is just over 4.5%. So Andrea?

Okay. Let's go to the next page, where we are talking about the full year '25 order intake, and we registered a double-digit orders growth driven by Mohd consolidation. In this page, I want to be precise about order intake. Otherwise, there could be some misunderstandings. In fact, despite order intake is positive, not only in luxury contract but also in the Q4 in residential. So the exit is positive to organically naturally talking because if you consider Mohd is always positive. For both in Luxury Contract and in the residential organic, there is a time lag. As a result, in the first quarter organic without Mohd, residential revenues will show a negative comparison versus the Q4 of the previous year with recovery starting in terms of turnover from the second quarter. We are positive on that because you know that we have a visibility of 2, 3 months but there is the time lag that I explained to you. And then if we go to the next page, again, we have here a recap of our midterm ambition announced on December 2025, where the synthesis is that we want to achieve on the midterm ambition a revenue of EUR 500 million with an EBITDA margin and the net income margin respect of 15% and 7% stabilization with a cash flow that is equal to the 50% of the EBITDA. We try to synthesize also what already we presented in December with key priorities in terms of revenue margins and cash generation. In terms of revenue, I start from the luxury contract because we are focused on client diversification, margin catch-up. And frankly speaking here, we have a visibility of 12 to 15 months. And then I mean, it's good in terms both of client diversification and the order intake. In terms of revenue, in terms of residential, when we are talking about stronger partnership with distribution network and actually, I mean, we are targeting some special coverage in terms of quantitative with some special sectors like kitchens, for example, not only. Talking about margin, as announced in the ambition midterm, we started to do some efficiency action in operating personnel costs and commercial investment. And also, we want to do some rationalization of the presence abroad. In terms of cash generation, we already confirmed Alberto, in particular last time, the phasing of the CapEx plan as announced in December, and then we will enter later on in the details. So all initiatives that will be implemented over the course of the midterm ambition but we have already started executing them and the first effect will begin to be visible from the second quarter of 2026. So let's see now Marella, the timing and expected timing of the capital increase.

Sure. Thank you, Andrea. So going to Page 18. You might recall that in December, along with the midterm ambition, we also announced the launch of a capital increase up to EUR 70 million and in particular, up to EUR 50 million for the issuance of new ordinary shares and up to EUR 20 million for the issuance of warrants allotted for free along with the new ordinary shares and granting the right to subscribe new shares in the future. So following the announcement on January 10, the extraordinary shareholders meeting approved the delegation to the Board of Directors to execute such transaction. The execution of the capital increase remains confirmed and as previously communicated, is expected to take place in the first half -- by the first half of 2026, subject, of course, to market conditions. The process, as you can see from the time line, will follow the ordinary shareholders' meeting scheduled for April 27, which will be called to approve the 2025 financial statements that we just commented and also to appoint the new Board of Directors. The presentation is now over, so there's time for all the Q&A you might have. Thank you.

Thank you to the speakers. [Operator Instructions] The first question today comes from Carmen Novel.

I have a quick one to start. If you can give us more color on what are you observing in terms of current trading for the residential divisions? And if you are seeing any changes in the market sentiment with respect to the last quarters in Europe and in the U.S.

Thank you, Carmen. I mean, geographically in terms of the residential we don't see, I mean, something different on the last quarter, both in U.S. and in Europe. The change start especially in these current days in the Middle East area because, as you know, we are under another war that it was totally unexpected. And then frankly speaking, in that area, there are some projects that in this moment is quite -- is a little bit frozen, let me say in this way. Actually, I can tell you, we have around EUR 5 million projects frozen, understanding what will happen. This area, it accounts for us no more than 5% of our sales. But I mean, in the future, in the projects that we have in our mid-ambition term, it's clear that we want to grow there. And definitely, we want to continue to grow. But at this moment, there is some uncertainty that I don't see in Europe or in the U.S. as it was at the end of last year.

Currently, we don't have any questions in queue. The next question comes from Paola Carboni.

Yes, I have a few questions. The first one -- sorry, I have a bit of echo. I don't know if it's my fault.

Yes, we can hear...

We listen to you quite well, don't worry.

Okay. My first question is a similar one to the one of Carmen but it's about the contract segment, in particular, considering that you managed to have a bit better results than expected at the end of 2025. I'm wondering if you can confirm a flat trend for 2026 so far? And if the EUR 5 million you have referred to in the Middle East are related to luxury contract or rather soft contract, just to understand where to place this risk, let's say. And also still on that, sorry, in particular, I was wondering about the onboarding of new clients that you had targeted, let's say, as a mitigant of still a possible deceleration of your existing historical business. So I was wondering what kind of feedback you have on that? Then I have more questions I will ask later.

Okay. Paola, thank you. No, the EUR 5 million that I was talking was more regarding residential and soft contract, not luxury contract in this moment in that area. And then in terms of onboarding new customers, especially for Mohd, we are exactly in the right process, yes. Having a visibility of 12, 15 months, frankly speaking, the order intake in this area is good that we could confirm, I mean, the stability of this year amply qualitative, I can tell you that we are in the range of EUR 70 million, EUR 80 million, but with some positivity from this point of view. But having -- receiving a nice lesson nice between buckets of last year, I mean, I want to have a better visibility in the next months. But frankly speaking, I mean, the activity of onboarding new customers, I mean, Cenacchi continuously is going on the right way. And frankly speaking, also, I mean, you know that we had a key customer in 2025 that I mean, was canceling or even postponing some important project. I mean the team -- the management team of Mohd especially and not only was very good to work on 2025 in order to find some new customers that are starting in a positive way even in during 2026. Again, we will see this activity more in the second, third and fourth quarter, not in the Q1 because also in the Q1, especially for Mohd, we had a strong comparison versus the Q1 of last year where key customers that then starting from the second quarter canceled or postponed some projects. In reality, the Q1 was the strongest and then it changed, I mean, the plan despite the fact that we remain a solid supplier of this key customer that we hope will start in a proper way from 2027. So I confirm the stabilization of the market here in luxury.

Currently, we didn't have question queue. So we will wait just a few moments to give everyone opportunity to ask a question.

I'm sorry, Paola still on the line since she said that she has some follow-up questions but I can't see her anymore. Okay. Now I see her.

Yes. Okay. Yes, I just wanted a clarification, first of all, on instead of visibility you have for the residential segment because in this case, your order backlog should be providing visibility on a much shorter time span. So maybe can you clarify again if in this case, it's reasonable to expect a bit of re-acceleration, some positive trend in Q1, clearly regardless of the war? And then another question, if I may, is about working capital, which I think in the end was, let's say, better than expected at the end of last year. So I'm wondering what was the reason for that? It seems that you enjoyed a pickup in payables, for example. So I'm wondering whether is this sustainable or not? And so in general, what's your outlook for working capital going forward?

Thank you, Paola. With regard to residential sector, I mean, I explained that in the Q1, again, the comparison versus last year will be strong because of the time lag. But frankly speaking, I'm expecting for the full year 2026, again, we expect a low middle single-digit growth organically naturally because if you're including Mohd will be naturally positive for the acquisition of this nice company. But still, despite a Q1 with, I mean, some time lag in the full year, we are positive. We see that the light that we have seen at the end of 2025 still continue. So we expect this low middle single-digit growth even if -- I mean, in residential, naturally, the Middle East situation is impacted -- and then is frozen this EUR 5 million, let's see what it will happen in the next weeks, next I hope weeks and not months because otherwise, it seems that it will be a long last, I mean, timing of war that we will prefer to avoid not only for human impact but because this is not the Russian-Ukraine in terms of impact on the business. That's an area that could be a little bit more dangerous if the war is continuing. But we are positive in this moment. Please, Alberto, regard to the working capital.

Yes. About net working capital, we don't change the condition of payment of our customer, of our suppliers. The rules are the same. But we observe every year that during the year, net working capital increases. And at the end of the year, inventory goes down because we complete many projects, many customers complete the payment for this reason, the last quarter -- in the last quarter, net working capital goes well. And on the other hand, the result -- we see the result in the opposite in a good level of bank debt. In our opinion, the impact of net working capital is neutral. We -- last year, we observed a slight increase due to the acquisition of Mohd. Otherwise, the impact were neutral. And the same for 2026, our expectation is roughly the same during the year, maybe we will see an increase in working capital in the first, in the second and the third quarter. And at the end of the year our expectation is, again, a neutral effect or a slight increase of net working capital.

Following probably the usual seasonality of our business, especially in luxury contract. What surprised in a positive way in 2025 in the luxury contract with tension of some key customers that -- I mean, the payment was probably under tension in reality, they try to respect all the debt they have in a very precise way.

Also the Mohd impact at the end of the year for the Black Friday where Mohd receive advanced payment from the customers then at the beginning of the year, Mohd delivers the goods to their customers. But the bank effect is at the end of the year they received the payment.

Paola, if you have any follow-up question, please unmute your line?

Yes. It's okay for me.

We'll wait just a few moments give everyone the opportunity to ask a question. As there are no questions in queue, I will now hand back to the speakers for any final comments before bringing this presentation to a close. Please go ahead.

Any final comment from our side. Again, thank you for being here with us. And we will have -- we'll see each other, we will be in touch in the next appointment, I mean, of our investor life one-to-one or even altogether again. Thanks. Thanks a lot.

Thank you, everyone, for joining today. This presentation will now come to a close.