Esprinet S.p.A. (PRT) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Esprinet's First Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Giulia Perfetti, IR Manager and Sustainability Manager. Please go ahead, madam.

Thank you, Madam. Good morning, everyone, from me too, and thank you for joining us for the Esprinet Group Q1 2026 Results Presentation. I'm Giulia Perfetti, Investor Relations and Sustainability Manager of Esprinet. And here with me is Giovanni Testa, CEO of the group, who today will comment on the results. Before we start, please note that this presentation contains forward-looking statements. And so I would like to draw your attention to the regulation note on Page 2 regarding the information contained within this document. Today's call is being recorded, and the podcast will be posted on the Esprinet website in the Investors section, together with the presentation. I will now turn the call over to Giovanni to begin presenting and commenting with you on the Q1 2026 results. Giovanni, over to you.

Thank you, Giulia. Welcome to this investor call. We can start. For sure, the first quarter of 2026 began with a very solid growth, even if the environment remains very complex. The most significant result we think that is the group performance was driven not only by market conditions, but also by a capacity to increase our market share in Italy, Spain and Portugal as well. We will see some details in the next slide. This confirms the group ability to identify key structural trends in demand and translate them into concrete results. Speaking about sales dynamics, gross sales reached EUR 1.1 billion, representing an 11% year-on-year increase. As in the last quarters, the Peninsula Iberica continues to perform very well with an excellent result despite a very challenging comparison with Q1 2026. Also Italy is showing some signal of growth, but for sure, in a market that is a weak market. The topic of the market in this moment remains the PC refresh. We have the long tail of the refresh Windows 10 that is closing probably that will be closed probably in the H1 2026. There is a moment of restocking by our customers in anticipation of some potential supply constraint in the second half of 2026. And the main drivers are related to AI demand and overall cybersecurity overall because by rising about cyber threats. Greece also and a good ongoing development of the green tech market. Speaking about the profitability indicators and the financial structure on the quarter shows a very clear improvement of the profitability of the group. Adjusted EBITDA stands at EUR 15.7 million. Compared to March 2025, we have an increase of 44%. The margin as a percentage of sales rose to 1.47% and is compared to 1.13% in the same period of the previous year. And -- we can say that the result is driven by 2 key factors: a gross margin that is stand at 5.60%. The capability, and we will see also that in the next slide to keep cost under strict control. The cash conversion cycle is closed at 26 days is stable with the figure that we had in the full year 2025 and is down compared to Q1 '26 -- '25, sorry. The net financial position is negative by EUR 350 million and is essentially in line with the same period of last year. The difference between last year is connected to the price paid by the acquisition of Vamat that the group closed in October '25. We are speaking about a deal -- an M&A deal related to space. is stand at EUR 6.1 million against EUR 6.4 million of Q1 of the last year. Passing to the sales evolution -- what we can say starting with this slide is that the group beat the market for -- in all region in which we are present by all the product categories for all the cluster that we show in the slide. And this is a very good result because underperforming all the markets means that we are doing a good job, not only in one country for a favorable market, for example, Spain, but we are doing good job in all the countries we are present. There is also a good performance of Morocco, even if we are not able to show the market, but we are increased -- we have increased 34% the sales value of Morocco. We see a good performance of the screens and is connected to the good performance overall of notebook for the price increase of the unit selling price in -- for notebook also for smartphone. And for us, there is a good performance of the devices because we are in line -- we are flat with -- for the net sales compared to the 25 Q1 result despite the market decrease of 5%. And we are happy to again to show a very good increase of the turnover for Solutions & Services and Green Tech, overall Green Tech 40% that is a good demonstration of the strategy of the group that is focused on the green transition, the green market. Speaking about e-tailers and the retailers and the reseller customer, -- we decreased 1% on the retail space better -- doing better of the market. And we increased over 16% of the resellers' space, beating the market that increased about 9%. So I think that overall, we can show you a consistent performance of the group, the market -- we beat the market by country, by product category, by customer segment. And -- as we said before, we see an increase of our market share also in Spain, not only, but also the market share and is a good result because the comparison between '25 and Q1 and '26 to Q1 was not so easy to beat. In the next slide, we see the profit and loss Q1 and '26 by the 3 dimensions, our spaces Esprinet, V-Valley and Zeliatech. As we can see, we increased our turnover of 11%, but we did better for the EBITDA margin figure because we increased 44%. It means that the cost related to each space and are under control. And we see in the next slide has slightly rose because we checked and we put under control the possible, and we are trying to introduce better processes also to keep the same profitability or increase the profitability, maintaining the same staff needed despite increasing 11% the turnover. Speaking about the percentage of EBITDA margin, you can see that for all of that, we increased a lot. We would like to underline the performance of the devices because last year, in Q1 '25, we lost EUR 0.4 million. And in this quarter, we gained EUR 1.2 million. The good performance is connected for sure, a good performance of the gross margin and gross profit, but also for a reduce of the cost off cost related to advertising program for our own brand that in last year was done in the first quarter. We see also a good performance on solutions. We see a very good performance because we more than 3x increased the EBITDA of Green Tech. Just to anticipate maybe some questions about services. The performance of services and the decrease of sales and EBITDA is fully connected to one short deal in [Spain we] did in Q1 '25 and not repeated in Q1 '26. You know perfectly that we launched in March '25 Innovexia that is the new division that will serve the Esprinet Group across country, across company. localized to deliver and to sell services for all the Esprinet Group. We have -- we are very focused on services, but we know perfectly that services space is in a market in which we have to work not in a run rate business,but in a project business. And so sometimes it could happen that a deal can pass from a quarter to another. In the next slide, we will see the Q1 profit and loss summary. We have already commented that the increase of sales and of gross profit. About SG&A, we have a high decrease of the percentage of sales of the SG&A that is passed from 4.53% to 4.12%. We can see that the only cost that rose that increased by -- is the personnel cost that increased by 5%. The increase of the cost is related to 2 events. The collective bargaining agreement both in Italy and Spain that started in the Q2 and Q3 '25 that is not represented in Q1 '25. And the inclusion of the perimeter of the personnel cost of Vamat that I remember, we acquired in October '25. All the other operating costs decreased with a reduction of more or less 6% compared to the peak of Q1 '25, in which I would like to remind you that we insert also some consultant costs related to the M&A of Vamat that the process started in the early '25 and closed and finished in October '25. About EBIT, we have more than double the result of Q1 '25. Speaking about the financial expenses, we have 2 different situation. We decreased of 7% over 6% the other financial expenses, but we have an increase of the foreign exchange losses that in Q1 '25 was a gain of EUR 0.7 million and in Q1 '26, it represent a loss of EUR 1.1 million. Say that net income is more than 5x the net income of Q1 '25. So we can say only that we are happy for the result. Speaking about the balance sheet slide is representing our balance sheet, and we want to have your attention on 2 metrics, the net financial debt and the operating net working capital. The net working capital follow the usual interim pattern because every Q1 show us a greater cash absorption that is different from the other quarter of the year. Speaking about the net financial debt, we have an increase of EUR 14 million compared to Q1 '25 to Q1 '26 and is fully connected to the price that we paid for the acquisition of in October '25. We are speaking about EUR 15 million. The other financial debt is stable despite an increase of 11% of the turnover. Passing to operating -- sorry, passing to operating -- previous slide, please Passing to the operating net working capital, we have -- we are in line with the value of Q1 '25. We have a slight increase of the inventory and is connected to some purchase that we have done to anticipate some issues about shortage of products. I remind you that we are speaking about overall notebook, smartphone and server. -- trade payables and trade receivables are in line with the same momentum of the Q1 '25. And what we are trying to do is to remain focused on reducing inventory on one hand. And on the other hand is we are trying to obtain a longer DPO from the vendors. We are not working in this moment on DSO because we think that in this moment, for geopolitical scenario for the financial situation overall in Italy, but also in Spain, it's not useful, and we can say also very difficult, but overall, not useful to ask to our customers to reduce the time of payment because we think that the role of distributors is also to sustain the channel to sustain our customer sometimes in these moments that the geopolitical scenario put some doubts on some aspects, for example, the capacity to deliver the product by the vendor from the next month. About this aspect, we want to transmit to you that we are checking continuously with the vendors, the capacity to respect the delivery time and to deliver the products not only in the right time, but also in the right quantity. And at the moment, we don't see any issue of shortage till more or less August or September. After that, we have no clear visibility of what can happen. But there is, from our point of view, a positive situation better than expected when we started to speak about the shortage of RAMs in Q4 '25 and also in Q1 '26 Turning to the next slide, this is a slide in which we show you the working capital metrics quarter average. The result of Q1 is fully in line with the final full year '25 result of 26 days and increased only 1 day by Q1 '25. Speaking about the quarter end, we reduced 3 days the quarter end working capital main cash cycle from 37% to 34%. And the increase from the Q4 and Q1 is exactly the same of every year, as you can see in the graphic because it is a normal run of our market during the year.The ROCE is 6.1 exactly the same of the full year result -- '25 result. All in all, what we expect. The geopolitical scenario is a factor that we have to consider because not only the Ukraine war, but also the issue and the ongoing conflicts can put some problems on the table, we can say. We will have some supply chains because there is a longer period of delivery of the product. We see pricing cost pressure because our suppliers are shaping the operation with higher cost than in the past. And -- but we -- after having seen that, we think that we have to remain positive because the distribution is the way in which the IT market pass the most part of the business. We remember that every year, we have seen an increase of the percentage of the business that is passing through distributor. AI remain the main growth engine very, very close to the cybersecurity opportunities because cybersecurity spending is rising every quarter due to also a lot of attacks that are doing to some companies. The infrastructure investments are very high is supporting demand and is one of the reason why we have a little shortage of server because of the RAMs that we need to prepare a server to have a tier of capacity that is the capacity that we need to run AI infrastructure is consuming a lot of products. Customers, we have seen in Q1 are anticipating the potential shortage as we have done, accelerating purchases and this effect is supporting the short-term growth. I would like to repeat the distribution channel have a strategic role in this moment. More than in the past, all is connected to the geopolitical scenario and the shortage -- possible shortage of the products. So we want to announce the group 2026 guidance in which we announced the EBITDA adjusted guidance of between EUR 71 million to EUR 77 with also a target of improving working capital for sure. And we are assuming no further external shocks will be in the next month. And we hope also that the crisis in the Middle East can have a stabilization and helping us to reach a positive result. So I have finished my presentation, and I pass open the Q&A session to you.

[Operator Instructions] First question is from Niccolò Storer, Kepler.

Can you hear me? -- the first one is about your guidance, in particular, on EBITDA first. I was wondering under which scenario you would end, let's say, towards the lower bound of your range, EUR 71 million, if I'm not wrong. And secondly, on working capital, you said you plan to improve it. You talked about DPOs and inventories, but do you have a specific target set on working capital? Second question is about weakness that we have seen in Q1 in retail. Do you have any explanation because of this weakness retail versus strength in the other channel? And third question and last question is about Zeliatech, very strong performance. I was curious understanding which product category drove the 40% increase in Green Tech.

Thank you to you. So speaking about the guidance, the calculation, we can say that we have done is that we have seen an increase of the EBITDA adjusted in Q1 compared to the Q1 '25. And we think that we have the possibility in a pessimistic scenario to repeat the results of Q2, Q3 and Q4 of last year, and we have added simply the increase of EBITDA margin in Q1 compared to Q1 '25. We want also to say that we haven't a guidance, but for sure, we are working very strong to have at the end of the year, a result that could show to the market a target -- a result very close to our higher target of EUR 77 million. About working capital, we prefer not to say a specific target. For sure, we are working about reducing inventory. Reducing inventory is in this moment, meaning not only reducing the value, but also the quantity because maintaining the same quantity for some product categories s notebook and smartphone, we have seen an increase of 20%, 30%, 40%. So to maintain the same quantities available for our customers in the warehouses, the inventory means an increase of the value of the overall inventory of the total turnover of the total inventory. The second question was Sorry, the third question was related to Zeliatech, it's easy to answer is all connected to photovoltaic products overall battery and inverters. We have done a very strong work about. And we -- from Italy, we are starting -- are continuing to increase the sales abroad, and we are starting to work also in other countries that in Q1 was not present, for example, Holland Benelux, Holland, Belgium and Ireland. So a part of the result is also connected to have included in the perimeter of the sales, the result of the acquisition of -- about the -- your second question that was related to retailers customers and maybe also the consumer market. The decrease that we have shown is fully connected to the Italian market because in the Spanish one, that type customers are growing. And on the contrary, in Italy, there is -- there are some issues for some retailers and probably also the demand of the end user is decreasing due to some situation also geopolitical that is not so clear.

Maybe as a follow-up of this last answer, have you seen throughout the quarter, an improvement in the retail picture, meaning weak January and maybe some recovery in February or March or the performance has remained, let's say, weak and constant throughout the 3 months?

More or less remain the same. We have seen just a little improvement in March compared to January and February is very low. We cannot say a big difference between January, February and March.

[Operator Instructions] Next question is from Gabriele Berti, Intesa Sanpaolo.

First question, do you expect the PC refresh demand related to Windows 11 and the pull-forward effect linked to memory shortages to remain supportive also in the second quarter or in the second half. Then looking at the supply chain, you already said something regarding product availability. I was wondering if you can also provide an update on how the prices are evolving? And last question, I remember that in a previous meeting, you mentioned a standstill situation in the public administration market, mainly related to negotiations, price negotiations. Could you provide an update on how the situation is evolving?

Okay. Let me start from the last question that is the public administration. I have spent some days in Rome last week, had a lot of meetings with some public administration starting from Consip. For sure, there are a lot of projects that are on hold at this moment because after a lot of years in which we have worked in a deflation market, now we are working in inflation market and all the actors of our market are not available in this moment available in the market to change their position. And so in this moment, the issue is to change the set of the contractual agreements between all the channel vendors, distributors and system integrator with the public administration. And I think that after having spoken with them in a very short period, the situation will be solved because it's not possible for the public administration to freeze to the project. And so all the projects that in this moment are on hold, we think that we will start in a few months, maybe for some product categories in a few weeks because, for example, for the cybersecurity tender, they have the need to start immediately in order to protect the system of the public administration. About the shortage of the product and the price increase, as I have already said, we have a vision of the next month, more or less after the summer, we think that -- sorry, for the moment in which we will arrive the summer, the situation will be the same of today. We are seeing an increase of the unit selling price overall notebook. And -- but in the same time, in this moment, we have -- we see an availability of the products that will continue till August, September. In the last quarter of this year, we have asked a lot to the other times to the vendors, but they are not available to share with us their plans, their forecast. There are some vendors that are more prepared to this shortage of product. Other have some difficulties. But all in all, we see and we think that the market will be sustained by the increase of the PC notebook layer, and we will continue to see a growth of the market for that product category. About the refresh of Windows 10 to Windows 11, probably in the end of -- with the end of Q2, we finish.

Next question is from Pietro Nargi, Intermonte SIM.

The first one is on the recent acquisition. So on Vamat. -- could you please provide us an indication about the contribution of Vamat on the top line and also on the EBITDA, if possible? The second question is on the OpEx level. We have seen a good result year-on-year, also thanks to, let's say, an easy comp since in Q1 '25, there was some consultancy costs related to the acquisition. I would like to understand if this level is something sustainable also over the next quarters? And finally, the last question is on the, let's say, current update on the first weeks of Q2. So just to understand what are the trends you are facing? And if might we expect, again, a solid trend in terms of growth?

Thank you. Okay. About Vamat is as we have presented when we announced the deal, is a small company with a turnover about around EUR 50 million. So the contribution in Q1 of the Vamat to the turnover is in the order of some million. About EBITDA, we have seen that Vamat contribution is in line to the contribution of for the other countries. So we are in line with the expectation that we had when we bought Vamat. And probably we hope to see a better result of Vamat in specific -- in the next month in a specific region of Ireland because in Holland and Belgium, we are seeing the increase of the market that is present in more or less in all the countries in Europe, in Western Europe. But Ireland is a country that is starting now to introducing photovoltaic products. And so is the region in which we have more to obtain a good result. About cost, fixed or variable cost, I think there is no difference in our vision. We have already said that we maintain a strong control, a very high control on the fixed cost. Maybe in the next quarters, we will invest in some projects also in the AI space that will insert some cost. But we think that the percentage of incidents on the turnover will remain more or less the same. We have no idea at this moment of an increase of the incidence of the fixed variable cost. And about Q2, what we can say is that the strong increase of our turnover in Q1 is also represented in the first month of Q2. I hope to have answered your question.

[Operator Instructions] There are no more questions registered at this time.

Okay. Thanks, Madam. So we can end -- I think we can end the call. Thank you for participating. And of course, we remain at your disposal. So thanks again, and see you next time.

Thank you.