Good afternoon. This is the Chorus Call conference operator. Welcome, thank you for joining the F.I.L.A. first quarter 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. Please go ahead, sir. Good afternoon, welcome everyone to the analysis of the first quarter 2023 results. I think that we are happy of the numbers we have been able to deliver. I think that in the last meeting, we expressed some concern. We were a bit conservative on the first quarter because the opening balance inventory coming from 2022 was extremely inflated by the problems that we faced last year with the raw material and the transportation costs. The fact that we have announced a price increase that has had full impact only starting from mid-February. hat the first quarter, thanks to the very good performance, very solid performance from United States, Mexico, and India mainly, are telling us that the recovery of margin is already, is already in place. I would say that at this point, the year is looking very consistent with our, with our expectations. Only Europe so far has shown some, I would not say weaknesses. I would more define some delay in the normal seasonality of back-to-school, but we are not negative at all. The second quarter will tell us more. It is important to say that the profitability that we have been able to generate in the first quarter could have been even substantially better if we started the year with the same costs that we are having today in raw materials. This is very important because we have almost used all the inventory of the end of 2022. Now the situation will improve both from margins point of view but also from a cash generation point of view. In terms of market, we have a very strong demand of product both in India and in Mexico, while in North America, the market seems anyway very, very positive despite some recession expectations. We are confident that, thanks to the reorganization we have put in place, starting January 2023, United States will deliver a brilliant performance. In Europe, for the reasons that we know, including the unstable situation in Ukraine, still persistent inflation and high interest rate that influence a bit the approach of our customers to the back-to-school, still the trend of the year is not clear. Even if we think that at the end of the year in Europe will not be negative. I would ask Cristian Nicoletti to enter in details of the numbers, and then we will be happy to answer your questions. Thanks. Great. Thanks, Massimo. Good afternoon to everyone. Please go to the presentation page four to analyze the Core Business Sales. Adjusted core business sales were EUR 168.7 million, +7.6% on the same period of the previous year. EUR 166 million in Q1 2022, +7.5% at comparable FX rates. Asia and Central America saw significant organic growth, +29.1% and 29.2% respectively, thanks to the strong performances, particularly in the School & Office segment. India and Mexico, Brazil, with North America up 2.5% and Europe contracting 2.8%. Looking at Asia and Central America, it is important to align India and Mexico growth. In particular, in India, we registered the revenue of around EUR 30.1 million, + 35.5% on the same period of previous year at comparable FX rate. Sales in Mexico were EUR 10.6 million, + 16% on Q1 2022 at comparable FX rate. Please, next page to discuss about EBITDA. Adjusted EBITDA in Q1 2022, excluding IFRS 16 effects, was EUR 24.3 million, + 7.4% on Q1 2022, + 5.4% at like-for-like exchange rates, with 13.6% margin in Q1 2023, substantially in line with the same period of the previous year, thanks to the growth in Asia, Central America, and North America. The increase in product sales, prices at the beginning of 2023, with a better-than-expected benefit and a continued focus in managing general costs, partially offset the cost inflation and increased personal expenses, particularly in the United States, India, and Mexico, protecting the group margin. For all these reasons, we are able to preserve our margin. Net profit. Adjusted net profit was EUR 5 million, excluding IFRS 16 effects. This result was significantly impacted by increased net financial expenses of EUR 8.7 million, more than doubling of the same period the previous year, of which EUR 7.3 million related to interest and the residual part of EUR 1 million to the negative financial expense, financial exchange effects on the strong main currencies. Adjusted group net profit was EUR 3.4 million due to growing contribution of minority to EUR 1.7 million, significantly up Q1 2022, thanks to growth in the India subsidiary. Please go to the Net Bank Debt. The Net Bank Debt over the last 12 months, excluding the negative exchange rate effect of EUR 10 million, increased it in line with expectations by EUR 15.9 million. This difference is mainly related to extra CapEx in India of EUR 10 million to support the growth. The reported figures increased of EUR 25.9 million to EUR 416.5 million on March 2023. Finally, we confirm that the Net Bank Debt in Q1 2023 is in line with our 12/ 2023 expected cash generation. Free cash flow to equity was negative EUR 55.5 million, negative EUR 29.6 million in Q1 2022. The difference of EUR 25.9 million between Q1 2023 and Q1 2022 was mainly due to increased CapEx for EUR 9.7 million, almost in India, to support its growth, as explained, we have explained it before. Increased the net financial expenses for EUR 3.5 million and the temporary negative impact of the net working capital. Thanks so much. We are ready for the Q&A section. 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 one on the telephone. To remove yourself from the question queue, please press star two. Please pick up the receiver when asking questions. Anyone who has a question may press star one at this time. The first question is from Alessandro Cecchini of EQUITA. Please go ahead. Hello, everybody, and thank you for taking my questions. The first one is about the performance in North America and Europe, in particular, organic. Could you better explain us what how much was the impact of pricing in the first quarter organic growth in North America and Europe? My second question is instead about your process, your reorganization of the North American business. It's, I mean, last time that we had a call, so passed some weeks, months. I would like to have a recap or if you could provide additional flavor of your performance or what you are making in the country. Finally, actually it's, if you could elaborate a bit more on the cost evolution over the next couple of quarters, that of course are very, very important for your seasonality. You, you stated about, decreasing costs with, I mean, pricing that is holding well. I would like to better understand what do you expect about the cost evolution. Thank you. Thanks, Ale. Let me start from the last one. I prefer to start with an example. If in the first quarter we would have had the opening balance sheet with the same cost as of today, we would have had EUR 2.5 million better EBITDA, so a substantial better performance versus 2022. In order to give another measure to better understand the magnitude, on the entire world of F.I.L.A., we have a cost reduction average between 5% and 7%. Of course, this include freight in, raw material, means plastic, pulp, so wood, cardboard boxes. In the other direction, we have the cost of salaries that are growing almost throughout the world, but the impact of the raw material cost reduction is much more significant. Again, if you want to translate this into numbers, the first quarter, we would have had EUR 2.5 million better EBITDA. What do we expect? From the next one to two quarters, we don't expect any relevant change. In this moment, the costs are, worst case scenario, stabilized. We could have some farther positive news, but the big savings are already, I would say, established. Don't forget that the majority of our purchases are happening now. I think that we will see a second and third quarter in which we will have the full impact, positive impact of prices that we have increased in the beginning of 2023, and the positive impact of costs as soon as we will completely use the inventory. Concerning the prices impact, the question number one. As always, we have announced the price increase last September, October. As you can imagine, there are, especially when you deal, I'm talking of North America in this moment, but also in Europe, when you deal with big customers, they always try to push back and lose sometimes before receiving the impact of the price increase. To translate this into fact, we have an average between 5% and 6% in North America, and an average of almost 3%, 4% in Europe, starting the beginning of 2023. The full impact in the market has happened at not later than mid-February. In the first quarter, you had the negative impact of the expensive inventory and partially the implementation of the price increase. We don't have any customer left on implementing the price increase. From mid-February now, the impact is completed. Let me remember you that we are compensating the cost that we faced starting July 2022. We are compensating the problem that we have not been able to solve in the second semester of 2022. Now we have completely reached our, let's say, stability in terms of gross margin and profitability. You will appreciate this in the second and third quarter. Concerning the reorganization, the impact is extremely positive and extremely important. Again, for the reorganization, you will see the full impact in the second and third quarter for a mathematical reason. We jumped on the company at the end of January. We have prepared almost 70 lines of changes in the company that we have implemented. The reorganization started the first week of March. Clearly, you cannot appreciate the job we have done, if not for one single month out of three in the first quarter. Starting from March, the company has reached a good level of efficiency. We have reorganized the different divisions as per F.I.L.A. strategy model, we have implemented the price increase. We have changed the percentage of inventory that we have used to work. We have changed the policy for private label. We have changed the priority for marketing investment. I think there is a long list of decision that we have taken. United States, as per the back-to-school orders we are seeing, I think will be a very pleasant surprise during 2023. Thank you, Massimo. About, if I may, about pricing and so, looking at other companies and so on in the world now, it's a question also to holding up the price hikes because of course customers are looking at costs that are going down, and in some industries are asking for reductions. Just if you can elaborate a bit more. I remember that you clearly state that you would like to maintain this kind of pricing in order to protect profitability. If you can elaborate this little bit more current situation, current dialogue with the clients. Thank you. The answer is very simple, and there will be no price reduction. I would like to explain to you better because it is not so simple. As you perfectly know, in 2022, the group has suffered a lot for the amount of inflation, for the timing that this has happened. In short time, a huge amount of inflation. For us, it was literally impossible to recuperate the cost increase during back-to-school. What we have done in 2023 is not a price increase based on the cost that we were facing during the second semester. We have elaborated an estimation of the cost that we are going to have in 2023, of course, average cost, and we have positioned ourselves in a sustainable level of prices. There is always a delay in our business from the moment in which you suffer the cost increase and the moment you apply the price increase. There is more or less four months. When we have asked for the new prices for the early 2023, we have not taken the punctual amount of cost, but we have asked for a price increase that considered the average cost that we are incurring during 2023. I think it was not that difficult, at least compared to 2022, to make a fair analysis and a fair price increase. This is the reason why you are right. Many customers have asked us to reduce prices. We are not going to reduce prices, in any case during 2023, because our policy is absolutely fair and consistent with our history. Okay. Many thanks. The next question is from Niccolo Storer of Kepler. Please go ahead. Ciao, Massimo. Good afternoon. I have two questions. The first one is a little bit qualitative on the composition of your performance, in particular in Europe. If you can comment on trends between Fine Art and School products. The second one is on your guidance. In the press release, you say that your confidence in confirming your cash generation expectation, is this the EUR 40 million, EUR 50 million you were mentioning? Is this number right? Thank you. Thanks, Niccolo. Let me start from the second one because it's easier. The first quarter, based on our budget, has done significantly better than expected, both in profitability and also in cash generation. Cash generation was closer to our budgeted estimation. EBITDA was substantially better. I think that as of now we can confirm our guidance at least. The reason is quite simple. It's not a problem of being optimistic or not optimistic. It's because the performance has been driven by United States, India and Mexico. In these countries we have visibility at least until August, September, and all the numbers are consistent with our guidance. We really, we really see the guidance to be respected. The question of EUR 40 million, EUR 50 million, yes, we do confirm that, as of now, we are in line with our EUR 40 million, EUR 50 million cash generation, of course, before any extraordinary events, positive or negative, whatever it is. The ordinary course of business will generate between EUR 40 million and EUR 50 million free cash flow. For Europe trends, the situation, the numbers in Europe in the first quarter looks weak. This is not what we see in the market in terms of sell-out. The sell-out of our products is in line with our expectation. In this moment, what the weakness is related to the sell-in. Our customers have a tendency to postpone to last minute the back-to-school, also for a reason of cost of money, which has grown a lot, both in the United States and in Europe. They try to speculate, minimize the level of stock. Still, when we see back-to-school orders that are late than usual, late by at least one month, if not more, the level of orders is in line with our expectations. We think that the weakness shown by Europe so far is temporary. This regards only school that is late. For what Fine Art is concerned, Fine Art is doing pretty well. Fine Art is in an organic growth in the area of 2%-3% as a normal year after the strong decrease in 2022. Thank you. Perfect. Thank you. As a reminder, if you wish to register for a question, please press star one on your telephone. The next question is from Isacco Brambilla of Mediobanca. Yes, thanks. Good afternoon, everybody. A couple of questions from my side. The first one is on gross margin. We saw in the first quarter cost for materials not far from the one of last year. If I understand correctly, you are seeing a sharp improvement. Is it fair to assume gross margin full- year 2023 to be higher than the one recorded last year? This is the first question. The second one is a quick one on financial charges. Could you help us figure out the source of a target for overall financial charges this year, so in the 12 months of 2023? Thanks. Thank you for your questions. Yes, we do confirm that gross margin will be stronger in 2023. I think I already anticipated this during the view of 2023 because if you recall, last year, we started having big problems from cost side starting now. We had the shutdown of the all the Chinese plant due to COVID. Probably sometimes people do not remember this, but in March and April, we had the shutdown of our plants forced by the government, and we had to face a lot of air shipments, which cost us a lot of money. In this year, the trend is exactly the opposite. From one side, we have the price increase. Let me remember one point that is not negligible at all. We do have the price increase of beginning of 2023. Don't forget, we have also a price increase that we implemented in July 2022 that did not give us a full positive effect because the for us, the second half was quite weak in terms of sales. Usually, the first half is more important. We're going to have the full effect of the price increase of 2023 and the full effect of the price increase made in July. Don't forget that what we increased in July, as all the pending orders received before the 30 of June did not change the price in the invoice. Really, the impact on 2022 numbers, we can say was not more than 1/4 of the entire year. I think we will enjoy a substantial improvement in the gross margin in the coming months. This probably is part of the positive surprise we had in this first quarter. For the financial charges, I ask Cristian to help me. Yes, sir. Absolutely. Okay. Related to financial expenses, as we can see in cash flow statement, this year we are more or less EUR 3.5 million higher than the last year. Mainly in the UC and F.I.L.A. S.p. A., which are, we are the main part of the senior facility agreement, because 35% of the financing is related to variable interest rates. You know perfectly that at the moment, beginning of the year, also in the last months, 2022, the interests are increasing and consequently, I mean, 35% of our financing is linked to them will be higher amount. The other part, we have sustained the growth in particular in India and Mexico, the headquarter, in particular, F.I.L.A. S.p.A, is working very hard to maintain under control this part of interest. As Massimo said a few minutes ago, this amount at the moment is in line our expectation. We are working all line available in F.I.L.A. S.p.A to reduce this part due to mainly of the interest rate variable on our senior facilities agreement. Mr. Candela, there are no more questions registered at this time. Okay. If there are no more question, I thank everyone for the attendance. I take the opportunity to remember everyone that we welcome you the next 30th and 31st of May in Florence to visit the plant and discuss about potential development, news and strategy for the following years. Thanks, everyone.