Good afternoon, this is the Chorus Call Conference operator. Welcome, and thank you for joining the F.I.L.A. first half 2023 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Massimo Candela, CEO of F.I.L.A. Please go ahead, sir. Good afternoon, everyone, and welcome to our conference call. The first semester of 2023 is looking extremely solid. We are, of course, very happy by the results we have delivered. We have seen a very good market in North, Central, South America, as in Asia. We have seen a quite weak market throughout Europe. Of course, the group is enjoying its global, its global footprint. All the key performance indicator are extremely positive from core business sale that are substantially growing at almost 8% with a comparable exchange rate. EBITDA is enjoying an operational leverage, growing more, growing double digit at 11.5%. Of course, EBITDA is enjoying the price increase, the implemented price increase in the second half of 2022 and in the first quarter of 2023. As you recall, several times we said that inflation in 2022 was too steep and too high to be recovered only in one single year, especially considering that we have seasonality. We have always announced that 2023, we would have gone back to our normal profitability. I am happy to see that things are happening as expected. We have done a pretty good job in North America, recovering our standard efficiency. Generally speaking, we see a good trend in terms of costs. As explained already during the first quarter, now in the first, with the first semester, we have completely sold the inventory that we had in the beginning of the year at higher costs, so now we can fully enjoy the new, lower replenishment cost. We do expect that the trend of recovered margin will continue in the second, in the second half of the year. In Europe, we have experienced an unusual conservative approach from our customers, justified by very low traffic in the shops. This is valid almost throughout Europe, so it's a little bit of a bit of a negative approach by the consumer, that are definitely struggling with inflation, with energy costs, and I would say with the probably an expected recession in the coming in the coming months. We have seen a very conservative approach from our customers. This does not mean that we do expect a weak back to school, the opposite. I do expect a normal back to school because I would like to remember that the business is very much related to the number of kids that go to school. Of course, this year, there are not big changes compared to back to school 2022. Cristian Nicoletti to present the numbers in detail, I would like to highlight extremely good numbers coming from working capital that is improving significantly as expected, after we regain stability in the supply chain and the cash generation. Despite strong growth in top line, we see already a good net bank debt substantially improving in the last 12 months. Considering that we are in the full seasonality, this number is helping me to say that we do expect the best cash generation we have announced for 2020 through 2023, the best I mean, in between the ratio EUR 40 million-EUR 50 million Now we are positioned towards the highest range of the, of the, of the EUR 40 million-50 million. For the moment, I, I finish my presentation. Cristian, please, can you introduce the number in detail, and then I will wait for your Q&A session. Thanks a lot. Thanks so much, Massimo. Good afternoon to everyone, should have received the presentation, please go to page 4. Adjusted for business sales were EUR 460.6 million, +6.4% on H1 2022, +7.9% at comparable FX rates. Asia, mainly in India, and Central South America, mainly in Mexico and Brazil, saw significant organic growth, +34.2% and 20.6% respectively, thanks to the strong performances, particularly in the School & Office segments. I'd like to highlight in particular, the progress in North America, up 6%. As you already know, since the beginning of January, F.I.L.A. group management focus was moved to North America with the aim to bring back the subsidiary to a historical level of profitability and to consistent growth. Please go to page 5. Adjusted EBITDA in H1 2023, excluding the IFRS 16 assets, was EUR 72.3 million, +11.5% on H1 2022, +10% like-for-like exchange rate, highlighting a more than proportional growth that is up the revenue, thanks to positive performance in North America, Asia, and Central South America. Adjusted EBITDA margin was 17.4%, with a significant increase of 18 BPS on the same period the previous year, and better than foreseen, mainly thanks to the positive assets generated by price increases, expected to continue in 4 quarters, and cost efficiency, despite the service cost increase to support the growth. We highlight a significant margin improvement in North America, mainly for the increased price, improving delivery service level, the customer simplification, the brand and product rationalization, and simplification on the offer. Please to go page 6, net profit. The adjusted net profit, excluding the IFRS 16 impact, was EUR 28.6 million, in line with the same period of the previous year, thanks to the strong operating performance. Despite higher net financial expenses at EUR 17.4 million, compare the amounts of the same period of previous year, of which EUR 15.2 million, mainly relate to the increase in variable interest rate and the residual parts were around EUR 1.2 million, related to negative financial exchange assets on the main current. Adjusted group net profit was EUR 24.6 million to the growing contribution of the minority, a EUR 4 million on EUR 2.4 million in H1 2022. Please go to page 7. The net bank debt of EUR 408.3 million over the last 12 months, including positive assets of the exchange of proxy, EUR 2.1 million, decreased EUR 90.9 million. Thanks mainly to the reduced absorption of working capital, despite the increase in capital, higher financial expenses. F.I.L.A. S.p.A. continues to improve the management of bilateral credit lines in favor of the centralization to benefit, in particular, from the favorable condition obtained from the new loan. In particular, we have improved credit line in North America and in Mexico. We successfully also finalized the cash pooling project in Europe level, including company in Italy, Spain, France, Belgium, and Germany. Finally, by the low credit line rationalization, we have streamlined cost of banking services. Please go to page 8. The free cash flow to equity was EUR net, minus 48.2 million, and improved by EUR 1.8 million on H1 2022, thanks to growing operating cash generation and the reduced absorption of working capital for EUR 14.2 million, following the release of inventory in line with our expectation, mainly in North America. Partially offset by the increased capex for EUR 10.7 million, almost entirely in Asia to support the growth. Higher net financial expenses of EUR 6.6 million, due mainly to rising interest rates. Now, we are ready for the Q&A session. Thanks. Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Alessandro Cecchini with Equita. Please go ahead. Hello, everybody, thank you for taking my questions. The first one is about your very good performance in North America in the second quarter that you achieved in term of organic growth, roughly 7% positive trend. I would like to better understand how much is volume and how much is pricing, if you can. Still, you already stated about your great performance in term of EBITDA margin in North in North America. I would like just to know if this kind of bold improvement is expected to continue in this current quarter, what is your view about the back to school in particular in North America? This is my first question. My second question is instead about Europe. You already stated some, some, some messages. In term of normal back to school, you are probably assuming a sort of flattish volumes or including pricing. Just to better understand what kind of market you are looking at in this kind of back to school in Europe. Thank you. Massimo, are you there? Sorry. Thanks, Alessandro, and good afternoon. First of all, the market in North America is more dynamic. We start already seeing some statistic coming from our customers back to school. Back to school in United States starts two, three weeks earlier than Europe, so we have a little bit more visibility. For United States, I can give you already some preliminary information. Back to school is doing okay. We see some positive numbers, and, and this is important, while in Europe, we can only guess. In North America, as you know, we have increased prices in 2023 on average by 6%, the, the largest part of the growth is related to prices. Still, there is some volume expansion. Yes, we do expect in North America to continue the good performance, if possible, to slightly improve for the reason I explained several times. So in the first semester, we have an average cost of the inventory that is higher than the inventory that we are replacing. In North America, the company is now extremely efficient. We have reorganized the company. We have cut costs. We have improved the quality of the sales with our customers. The product mix is better. Of course, the sell-out in the back to school will be extremely important for to reach the numbers at the end of the year, but the first signs are positive, so I don't see any reason why 2023 should not continue with the same path. For Europe, the situation is different. There is these first seven months some weakness, not only in the purchases of our customer that has clearly admitted to us they are under stocked for for the back to school. We do expect a normal back to school, so theoretically, we could see some slight improvement in the third quarter from Europe. We don't see any reason why the back to school should not be should not be normal. Also in Europe, we start to enjoy some cost reduction. From margin point of view, working capital point of view, we see a good year also ahead of us. In terms of top line for Europe is a little bit premature. For Mexico and India, we still see very solid business with very strong margin and cash generation. As you know, India is heavily investing in the future, so the cash generation is completely reinvested in the asset. From India, we will not -- we do not expect extra cash coming from the operation, while we are very positive in Mexico, where back to school is giving us very positive signs. Okay, thank you. My last, if I may, on minorities, the first half, you had roughly EUR 4 million of minorities, largely, I think India plus, something else. For the full year, it's correct to assume roughly EUR 6 million-EUR 7 million of minorities at this stage? Thank you. Cristian, can you please answer? Of course, Ale, considering the trend, after the trend, we can consider reasonable this, this range. Okay. Many thanks. The next question is from Isacco Brambilla with Mediobanca. Please go ahead. Hi, good afternoon, everybody. Two quick questions from my side. The first one is on net working capital and free cash flow generation. Second quarter, the sharp improvement in net working capital control despite the usual investments you made on this item in this quarter, seasonally speaking. May you help us understand your outlook targeting the high end of the EUR 40-50 free cash flow for this year, which is the assumption embedded on net working capital in absolute terms or as a percentage of sales, if you prefer? Second question is on net financial expenses. If you can help us understand, which is a reasonable assumption to make for this year, following roughly EUR 20 million booked in the first semester. Cristian, can you please, give the, the details, and then, I will add some comments, please. Yes, absolutely. This we confirm as our outlook, the free cash flow to equity, between the EUR 40 million and EUR 60 million at the end of 2023. Of course, at the moment, we are on the higher range in this, in this amount. Relating to changing working capital, we confirm the continuous improvement of the group, in particular, in the second semester of 2023. As you said correctly, the ratio between said working capital and sales, is improving each quarter by quarter. We are hoping to maintain this improvement also in the closing of September, as to confirm the year end closing 2023. In particular, about the investment, the trend of investment will be the same at the end of 2023, because we confirm the continuing investment in the, for the, Asia, in particular India, and the continuing investment for HG, in particular, the end of 2023. Relating to net financial expenses, of course, in this case, we are, I, I think so, the other company in the worldwide, we are actor at the moment, no? We are each quarter, more or less, the increase of the spread, and we have the double respect 2022, the interest paid, and we attend at the end of 2023, in a range between EUR 27-29 interest paid. Of course, the group is still working at the headquarter level to minimize the interest to pay the not under Senior Facility Agreement, managed at group level, in particular in Central South America, that at the moment, the interest rate is 17%. We are work on it. We are work on it to achieve our free cash flow to equity between the range of EUR 40 and EUR 50. The only comment I can add to the numbers that Cristian has highlighted is more from a commercial point of view. The cost reduction when we replenish the stock, of course, is helping our effort to improve working capital. From commercial point of view, we started a very aggressive strategy of reducing sales in items that are below certain level of margins. After the storm of the inflation last year, a lot of products do not satisfy anymore our criteria, and we have decided to cut some of them, and this has already a positive impact in working capital because we are not replenishing the stock. upply chain now is working under, under normal circumstances, so there are no particular emergency around the world after COVID and after the inflation period. So of course, we are reducing the level of the safety stock in different in different area of the world. The fact that we are doing a good job is demonstrated by the turnover. So despite we are reducing the working capital, the turnover is growing almost 8% with at comparable FX rate, which means that we are servicing the customer in a in a very efficient and expected expected way. I would say that we continue, as promised, to improve efficiency, generate cash, and, of course, now to generate cash is becoming absolutely a priority, considering that we have been able to generate the same net profit of 2022, but with double net financial expenses. We have the same net result with almost EUR 7 million of higher, higher interest rates. Clearly, to reduce interest rate now is become a priority. Okay. Many thanks, Massimo and Cristian. Thank you. The next question is from Sébastien Lemonnier with INOCAP. Please go ahead. Yeah, hi, good afternoon, and, and congratulations. Just two quick question. As you talk about working capital, can you please help us to get where you think you will be in terms of net debt by the end of the year? That the first one. Second one, in relation to the progress in the US, and if I understand well, it's gonna be more by H2. Do you think in the midterm, US margin should be in line with the average margin of the group? If so, when? The last one is in relation to the share buyback. What, what's the rationale? Because it's, it's a quite small one. Is it just for stock option? I understand the first tranche, so it means that could be some other tranches. Can you just elaborate on this? Thank you. Thank you, Sebastian. Please, Cristian, correct me if I am wrong, but I do think North America is already in line in terms of profitability with the rest of the group, but I ask Cristian, I ask Cristian to confirm. Before, before waiting the answer of Cristian, yeah, in terms of net financial position, clearly, 2023 will be, will be a key year because no doubt that this is, this is a, a priority for F.I.L.A. also in light of future external growth, to, and we need to reduce substantially the level of debt. From now until the end of the year, we have 2 important, let's say, measure that we'll we will have to share before December. Number one, is the cash generation from the operation that now we do expect more in the high end of the interval, so we do expect we will be able to generate EUR 50 million, and I underline, despite the growing interest rate. Number two, the cash-in from India, if the IPO will happen in the period that we do expect, so between November and December. This, as we communicated in a press release just a few days ago, should generate a cash-in for F.I.L.A. around EUR 90 million, of course, plus, minus, depending on the exchange rate with the Indian rupee. We really do expect a dramatic change, a positive dramatic change in the financial situation of the company, because we are talking of EUR 130 million-EUR 140 million cash improvement, which means for 2024, a huge change in the cost in the cost of financing. For your last question, if it was your last question, the the the share buyback, it's it's very simple. I think this first semester is extremely good, but is in line with what we said for the last 3-4 quarters, so we are not surprised. I think we were absolutely aware that we were doing a good job. The share for the moment does not reflect completely the value of the company. We want to give some positive messages to our investors. Cristian, can you please support me on the profitability of United States standalone, please? Yes, absolutely. Okay, we can confirm that the marginality of North America is higher than of the group results. ... if possible, I want to show, analyze the EBITDA results of North America. If we consider the portion of sales on the group of North America, highlighted in page 3, in 5, you can see that the core business sales in the first semester of 2022 is 44%, and in this same period, 2023, is more or less the same, 44. If we analyze the EBITDA portion and the weight on the group in 2022, we are 14% of the C weight, North America weight, and in 2023, we are 45%. Higher increase to confirm the good and positive performance about the margin. Relating to NFP, expected for the end of 2023. If we consider, we consider the NFP excluded year for IFRS 16, and the mark-to-market hedging at the end December 2022, that is an amount roughly EUR 350 million, considering an cash generation, free for cash flow between EUR 40 million and EUR 60 million, we have 10, more or less, slight higher, of EUR 310 million, more or less, on the end of 2023, considering the actual trend and our outlook 2023. Of course, not considering the cash in from India, in this case, we would be positioned at, at EUR 210 million. Get it. Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is a follow-up from Alessandro Cecchini with Equita. Please, go ahead. Hello, just a very quick follow-up, because I probably missed your answer about the process in India, the time, time frame, the expected time frame, if you can elaborate a little bit more on this? You stated about the, that after the EUR 50, EUR 45, EUR 50 million free cash flow and the potential IPO in India, you could have better financial terms. Just to know, it's already something that it's on paper with your banks, your financial sponsors, or something that I would say, you are going to them and say, "Okay, we are much better, we need to adjust our financial costs," just to, on this. Thank you. Alessandro, I ask Cristian to give you the details, but I know that our contract with the banks already contain an improvement, so an incentive to reduce debt. This is already in paper. Cristian, can you please give the detail to Alessandro? Okay. Thanks, Massimo. Thanks, Alessandro, for the question. Our syndicated facility agreemen t define that for the decrease of the repayment, potential repayment of the liability with the bank, we are already in agreement on a decrease of 0.5 of basis points for each level of leverage. Because it depend on the range between EBITDA and, and consequently, decreasing the NFP for each potential repayment or increase of NFP, we'll have a reduction already signed, already in agreement with the bank for this. Okay. Alessandro, you can calculate this positive impact on the interest rate. Concerning the, concerning the Indian potential IPO, but first of all, I think you are more expert than me in IPO, but the timing is that these days we are depositing the filing to the Indian council, that is called SEBI. In normal times, the positive answer arrive in a couple of months. Of course, it's a quite elaborated process. There could be some modification to our filing. What our best expectation today is that the share we started to be traded at around the mid of November. Mid of November is the period in which we could expect the cash-in from our decision to sell more or less 17%-18% of the shares of the company, keeping the relative majority and the strategy and to drive the company in the future. Mid, mid November. Okay. many thanks. The next question is from Giorgio Martorella with Amber Capital. Please go ahead. Yeah, good afternoon, everybody. I have a question on the Asian business. I was looking at your presentation and the contribution of Asia on, at EBITDA level, which basically moved up from 11.4% of the total EBITDA in 2022 to 20.5%. I did a very rough calculation. I'm expecting an increase like year-on-year by EUR 7 million only from the Asian market or Asian geography. Can you give us some color about the contribution from Chinese market and Indian market? If possible, an outlook for the second half of the year. Are you expecting the Asian market to contribute for the same amount on the second half? There are reasons which have contributed, particularly, in the first half, which will not be replicated in second half, 2023? Thanks, Giorgio. I don't have in front of me the EBITDA of China, but Christian, maybe while I'll answer, you can, you can, take out the numbers. We don't see any particular reason why the situation will change in the second semester. India is a booming economy. I can tell you that India performance is beating our budget. Even ourselves, we are surprised by the numbers of India. The market is asking, is demanding a lot of product. As everybody knows, we have almost 400 million kids in the age that make them our consumers. India is enjoying a very favorable macroeconomic situation, thanks to their neutral position, so they enjoy very good oil cost, very good energy cost. This help our company to keep costs under control while the demand of the market allow us also to enjoy good margin. For what China is concerned, as you know, we have already, in the last two years, substantially reduced our exposure to China. When I say exposure, I mean that we have moved a lot of production from China to India and Mexico. I think that EBITDA from China is less and less relevant. In Asia, we also have a subsidiary in Australia that is improving every year. We have a subsidiary in Indonesia, doing a pretty good job. It's not only China and India. Asia will probably be also, an area of the world in which F.I.L.A. will look very closely for, the future, growth, or for future M&A, in the, in the coming, three, five years. Christian, can you tell us, if you have in front of you, the numbers that Giorgio have asked? Yes, of course. Thanks, Massimo, thanks, Giorgio, for the question. Roughly, the EBITDA at the end of June 2023, sorry, is EUR 1.6 million. Considering that the main company is Fila-Dixon Kunshan, that part of them is intercompany sales, so it's Dickson USA. More or less, it please come out. Okay, thanks. If I may, a follow-up question. Regarding your updated guidance for 2023, you moved to a guidance which is expecting an, an EBITDA, at least, around or above EUR 120 million. With a back of the envelope calculation, if you reach EUR 120 million, it would mean that in second half, you would need to add EUR 4 million-5 million EBITDA versus last second half 2022. With the contribution of the Asian market, which is booming, this would imply that the rest of the business is not recovering from a poor profitability in 2022 second half. What, what's...? How do you build, the, the guidance, and what's, what are the assumptions behind, the, the new indication to the, to the market? We have, What is sure is that, we enjoy, in the rest of the world, we do enjoy a recovery in terms of margins, and this should help us to make, make the guidance. What we are a bit concerned is what, what is happening in terms of expectation of the market, in terms of economy recession. Everybody, is talking of, recession. We have, for example, last year, we had an unusual, very weak year in U.K., and in the first six months, we had also an unusual, very weak year in Europe. As we are, have not yet entered back to school, it's a little bit too premature to say that in the second semester, we can do better than what we have announced. What we have announced is substantially a guidance that says, that thanks to recovery in margins, even in this difficult economic environment, we are going to beat expectations. This is extremely important. Of course, if the macroeconomic situation will improve, and I am referring mainly to Europe, we can do, we can do even better. The situation is unusually weak in Europe, and so I'm not referring only to Italy, in which, by the way, rate of, rate of birth is heavily declining, so unfortunately, our cake is reducing. Is very weak in Spain, in France, in U.K. It will be very important to see, in August, and September, mainly, second half of August, when we start seeing the first signs of back to school, to see if we can go beyond the indication we have given, that I repeat, are reachable because we have increased our average margins. Our forecast says, still a weak market with improved margin and improved cash generation. Whatever will be beyond our expectation will be added to the results. Okay, thanks very much. Mr. Candela, there are no more questions registered at this time. I turn the conference back to you for any closing remarks. Yes, I would like to thank anyone for this dynamic call, and looking forward to meet you after this summer. Thanks. Thanks a lot.