Good afternoon. This is the conference operator. Welcome, and thank you for joining the FILA First Half 2026 Results Web Call. All participants are in listen only mode, and after the presentation, there will be a Q&A section. Today's speakers are Massimo Candela, Group CEO, Luca Pelosin, Group COO, Cristian Nicoletti, Group CFO, Steven Boyea, CEO U.S.A., Dixon Ticonderoga. At this time, I would like to turn the conference over to Cristian Nicoletti, CFO of FILA Group. Please go ahead, sir. Good afternoon, ladies and gentlemen. I am Cristian Nicoletti, CFO of FILA Group. Let's start with a brief overview of our financial performance for the first half of 2026. First, I would like to highlight that first half 2026 confirms the indication provided during the Q1 results. Specifically, a sustained growth in operational performance, particularly in Q2, following the consolidation of Seven Group and the progressive shift of the business seasonality toward the center quarter of the year. On organic basis, excluding negative FX impact, group EBITDA increased, delivering very satisfactory profitability levels. It is worth noting that the net impact of tariff was only EUR 2.7 million at the EBITDA level in the first half of the year. While considering that 2025-2026 period, the economic and financial impact of the tariff will be zero, completely neutral. Moreover, FILA Group also increased its financial flexibility following the successful completion of the debit refinancing and the ABB for its 7% stake in DOMS, without compromising the company governance structure. We are also pleased with our Free Cash Flow to Equity performance. Excluding the cash absorption for the Seven Group of around negative EUR 70 million, Free Cash Flow to Equity stood at negative EUR 43 million, showing an improvement of EUR 27 million compared to H1 2025. Regarding the net bank debit, the decrease at the end of June reflects the strong cash flow generation and the disposal for the stake in DOMS for EUR 73.8 million. This more than offset the acquisition Seven Group, its bank debt, dividends, and buyback. Finally, today, the board of FILA agreed the distribution of an extraordinary dividend of EUR 0.46 per share, which will be approved in September and paid in October. On top of that, our share buyback program continues with around 468,000 treasury shares purchased today out of the total 1.3 million shares authorized by shareholders meeting. Moving on to slide eight, where we look at core business sales. In H1 2026, core business sales reached EUR 343 million, up 12% on a constant FX basis, and including EUR 44.3 million of Seven Group contribution. The organic growth was positive in Q2 for 2.1% on a comparable FX, reflecting the shift of the order towards the Q2 in North America and Europe, the latter as a result of the new commercial strategy. Meanwhile, Central and South America were down 11.9% at the constant FX, still suffering from the weak economic environment in Mexico, further impacted by competition from illegally imported school products. Let's now turn to group profitability on slide nine. Adjusted EBITDA coming at EUR 75.9 million, up 20.4%, which includes an EUR 8.6 million positive contribution from Seven Group, recovering from the negative EUR 3.4 recorded in Q1 2025, driven by its Q2 seasonality. Importantly, excluding Seven Group, H1 2026 Adjusted EBITDA grew by +2.9% on constant FX basis. EBITDA margin reached 22.1%, expanding from H1 2025, thanks to ongoing operational efficiency and the net tariff impact, EUR 2.7 million, which is the result of the tariff refund for EUR 8.2 million and the reversal of inventory sold for EUR 5.5 million. Please do turn to slide 11 for adjusted net profit. Similarly, adjusted net profit, including Seven Group, rose to EUR 37.9 million, improving from EUR 22.5 million in H1 2025, driven by better operating performance and lower net financial expenses. Many thanks to the positive FX impacts, EUR 13.5 million between H1 2026, H1 2025. Reported net group profit increased to EUR 59.3 million versus EUR 9 million H1 2025, including the capital gain or disposal of 7% stake in DOMS. On slide 12, we detail our Free Cash Flow generation. Free Cash Flow to Equity stood at -EUR 60.3 million, consistent with the standard first half seasonality and improving versus the negative EUR 70 million H1 2025. It is worth noting that excluded the nearly EUR 17 million negative contribution for Seven Group. Free Cash Flow to Equity improved year-on-year by around EUR 27 million, reaffirming the strong cash generation profile of FILA core operations. Let's move to slide 13. As of June 2026, the net debt stood at EUR 209 million, a decrease of EUR 35 million compared to June 2025. This change was primarily driven by the positive cash flow generation of the period and the disposal of the stake in DOMS. In conclusion, turning to our full-year outlook, we confirm our full-year guidance. FILA expects double-digit growth in both revenue and Adjusted EBITDA, alongside positive organic growth. Free Cash Flow to Equity is projected between EUR 40 million and EUR 50 million, with a targeted dividend payout ratio 20%-40% under normal business conditions. Thank you for your time and attention. We are now happy to take your questions. We will now begin the question and answer section. To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, please click Continue on pop-up window. If you are connected on audio only, please press star one on your telephone. The first question is from Isacco Brambilla of Mediobanca. Please go ahead. Hi, good afternoon, everybody. Two questions from my side. The first one is on current trading. The Q2 showed positive organic growth both in North America and in Europe. Just wondering if you can share any data on the first part of the Q3, whether these supportive underlying trends are continuing as we approach the back-to-school campaign. Second question is on Seven. Just a clarification. You mentioned, Cristian, the EUR 17 million negative impact from Seven. Is it free cash flow or net working capital absorption? Final question is on full-year outlook for free cash flow. Just wondering which are the underlying assumptions on CapEx and net working capital backing your guidance on free cash flow. Thank you, Isacco. Massimo Candela. Concerning the first question, we have in this call, we are happy to have the presence of the CEO of North America, I will answer for Europe and rest of the world. He will answer for North America for the Q3. Concerning the two remaining questions, Cristian can answer to you. Steve, would you like to start talking about North America, please? Certainly. Again, this is Steven Boyea, the CEO of Dixon Ticonderoga. We had a very good shipping month in July comparing to prior year, both U.S. and Canada shipped double-digit increases in gross sales. The sell-through that we are seeing, basically we see customer sell-through through the third week of July, which is still not the peak of back-to-school shipping. The last week of July and the first three weeks of August are the key weeks. Overall, the industry is starting off a little slow on sell-through, but our performance is better than the industry. For example, one of our largest retail customers, the sell-through of our product through the first three weeks of July are up 5%, and they are very happy with that. A real good start to the Q3. Massimo? Thank you. Yes. Thank you. Concerning Europe, Europe is a little bit behind United States as our back-to-school start generally the end of August, a little bit premature. I think that the improvement trend that we have seen in the Q2 should be confirmed. Of course, we were a bit concerned due to the situation in Hormuz, but the Q2 is showing very good resilience, very good cost control that we have been able to apply. I do expect a Q3 in line with expectation, thus positive Cristian, can you answer the other two questions, please? Yes, of course. Thanks, Isacco, for your questions. Related the absorption of the Seven Group, the EUR 70 million is related to Free Cash Flow to Equity. Consequently, you call the EUR 60 million that is an absorption H1 2026, will have an improvement of these amounts. Related the guidance, we confirm our guidance of Free Cash Flow to EBITDA at the end of the year, between EUR 40 million and EUR 50 million. Of course, at the moment, we are reasonable to be in upper guidance at the moment, for the information at the moment available. Related the CapEx, we confirm the initial evaluation of EUR 20 million for the full year 2026, and the change in networking capital, a general assumption for EUR 10 million as discussed in the previous call. Fantastic, my friends, everybody, for the answers. The next question is from Alessandro Cecchini of Equita. Please go ahead. Hello, everybody, thank you for taking my questions. The first one actually is on capital allocation. You had an extra dividend for about EUR 23 million. I would say you had a very positive cash in coming from DOMS at EUR 74 million. Just to understand, what is your view about the delta in term of capital allocation priority? This is my first, then I make the others. I will start with this. [Non-English content], Ale. Thanks. In terms of capital allocation, we are living in a very unstable moment. It will be interesting to see what will happen at the macroeconomic situation. As of now, we want to deleverage FILA Group as much as possible, because we have the perception that in two, three years, some transformational project can become reality. In short term, we have two main priorities, to reduce as much as possible debt in the United State. Apart that the CEO is doing an extremely good job. Interest rates are pretty high, and even more in Mexico, the cost of debt is extremely high. They have a very high peak season. We want to reduce as much as possible the cost of debt that we have in that area. Okay. Very clear. My second question is instead about Seven. Of course, for us it's new, the seasonality of the business, we need to better understand the trends, in particular in term of EBITDA. Looking at the Q2, for the year, for instance, I was just wondering, in the past was around EUR 40 million, EUR 1.4 million of EBITDA for the year. Looking at this Q2, we are ahead of these targets, or we are in line given the seasonality of the company? Thanks, Ale. First of all, I think we made a mistake not being very clear, starting from the Q1, because the seasonality of Seven is definitely different because they go directly to retailers. I remember you that this will be something that characterize also FILA in the future, both in Italy and in Mexico. Our seasonality is going to go more towards the Q2. The performance of Seven as of now is slightly better than June 2025. It's very much important to see the sell-through. I explained five minutes ago, our back-to-school is starting the last week of August. As of now, yes, we have some very first positive signs from customers that are telling us they are reordering because they have a nice sell-through. Frankly speaking, this cannot be considered an average. It's just a first sign. We are positive to say that Seven, despite the difficult market in Italy, is going to have a pretty good year in 2026 comparable to 2025. Okay. Very helpful. Back to the previous questions about the trend in Q3. Probably missed your view about Mexico, the Central and South America, because Q2 was very tough, minus EUR 19 million with a very relevant loss in term of EBITDA, in term of year-on-year. Second half is easier comparison because the crisis started, if I am not wrong, in the second half of last year. Just to understand which is the current dynamics that you are seeing in the market. Finally, just to recap on the U.S., it is possible to see U.S. to be mid-high single digit in the Q3, or I understood wrongly the messages? Thank you. Steve, can you please answer the question about U.S.A.? Yes. The Q3, I think July will be stronger than our August. I think that is going to normalize between those two months. I would say mid-single digit increase in revenue over last year is definitely attainable. Okay. Thank you. For Mexico, the answer is a little bit more elaborate. I would like to remember you that last year, this period, we have shut down Chinese operation for the reason that we have shared many times. As every extraordinary project, especially when you touch production, there are some unforeseeable problem, and we have absolutely fallen in this situation. There has been a strong delay in implementing all the equipment, all the machines in our plant in Mexico for different reasons. This has generated, number one, extra cost. Number two, important delays in production that has affected also domestic sales, because Mexico should have been forced by us to respect deliveries to Europe, which, by the way, anyway, have been delayed by four, six weeks. Mexico is going to make up some difference in domestic market because now they have the production in place and they can supply orders they couldn't supply by the Q2. We have had also big problems of learning curve. This was more predictable because in the past when we moved to China, we had exactly the same experience, so very high level of waste, quality problems. The learning curve is going to become flat in the near future, I would say for next back-to-school. This year we have paid consequences. If you put together delay in deliveries in domestic market, delay in shipping to Europe, very high level of defective product, learning curve still very steep. Difficult market due to illegal import. Of course, we really hope that Trump will be able to put all the pressure to Mexican government to stop illegal import because they feed this illegal import clearly for economic reason. Mexico is still a difficult country in which we operate, but definitely the worst is behind because the production now is showing important improvement. Thank you. The last, if I understood correctly, basically the net tariff of the current 2026, if I understood correctly, excluding, of course, reimbursement or previous is close to zero or zero. I understood correctly? Yeah. When we say zero, it means that if you start from the tariff when they have been applied last year, I would say around April 25. If you consider the reimbursement we have been able to get, the impact will be close to zero. This year, 2026, the positive impact of the reimbursement is around, Cristian, EUR 2.5 million, correct? EUR 2.7 million. EUR 2.7. This year, the positive impact has been EUR 2.7 million. Okay. Just to understand, because of the EUR 5.5, if I am correct, is due to tariff applied to inventories linked to 2025, and the reimbursement is due to 2025. If I exclude this, the message, you are basically not paying tariff now, so in your current business or very, very limited. Yeah. We are paying an average of 10% or slightly above. Yeah. Okay. You already confirmed what you said about the value of the tariff in inventory. Okay. Thank you. Once again, if you wish to ask a question, please click on the Q&A icon on the left side of your screen or press star one on your telephone. The next question is from Arturo Lopez, CL&AR Value Advisors. Please go ahead. Good evening. I hope you hear me well. I have a couple questions. The first one is actually on the free cash flow. It's my understanding that EUR 50 million from the transaction of DOMS is going to go against debt, plus the organic free cash flow generation, which is, as you mentioned, on the higher part. That would be approximately EUR 100 million less of the leverage on a back of the envelope very quickly. That should be correct? That was the first question. The second question, if I may, should we adjust the EBITDA margin for the reimbursement of the U.S. tariff? What will be the adjusted margin? In other words, the gross margin of first half 2026 to be compared with first half of 2025, please. Just to understand also the impact of these inefficiencies that you just, Massimo, mentioned that we should expect to recover. Thank you very much. That was the second question. Cristian, I think you have all the elements. Related to the Free Cash Flow to Equity, if we go back page 12, the proceed from sales of DOMS are excluded our Free Cash Flow to Equity. EUR 60 negative is without sales DOMS as this maintain the same approach also the liability related to Seven Group is pure core business. Okay? Okay. Relating to impact of the tariff, as did in 2025, we are considered ordinary business, the tariff. In our EBITDA, we have the impact negative in 2025 for the amount that we are reversed in inventory, in the sales. Yep. In 2026, we have only this EUR 20.7 million in EBITDA, but are considered ordinary business. As Massimo said, starting 1st July 2027, we are zero impact for other reimbursement, roughly of course material. Okay. Basically, it's accounted above the EBITDA level for both years, correct? Yes. Thanks, Cristian. The next question is from Niccolò Storer of Kepler Chevreux. Please go ahead. Yeah. Good afternoon, thanks for taking my question. Actually, just a clarification on the accounting of the sale of the 7% stake in DOMS. I was wondering which was, at the end of the day, let's say, net impact post-tax, the net cash in post-tax of the disposal. I guess that the EUR 70 plus million you mentioned in the cash flow statement is gross of tax. Also, which is the capital gain linked to the transaction which we should see on the P&L. Thank you. Niccolò, for your question, the net proceeds are EUR 73.8 million net proceeds. Okay. The capital gain related investments due to the sales value of DOMS, respect the initial booking is EUR 46 million. Okay? Okay. The impact of the net income is roughly EUR 33 million, considering that we have EUR 46 million of gain, EUR 13 million of tax between Indian tax, Italian tax, the net is the difference. Okay. Thank you. Welcome. For any further questions, please click on the Q&A icon on the left side of your screen, star one on your telephone. The next question is a follow-up of Alessandro Cecchini. Please go ahead. Hello, everybody. Just a quick on financial expenses, because basically all in, excluding, of course, Forex this year, we can run around EUR 13 million-EUR 14 million, if I am not wrong. Given the sort of restructuring or renegotiation of the debt package, which is a reasonable assumption for savings for 2027 in terms of financial expenses? Thank you. Ale, thanks for your question. 2027 or 2026? This year probably will be double the first half. Just to understand the net savings in year-on-year in 2027. Okay. Roughly, let me say that is the normal decalage that we have considered in the beginning of the valuation, because we have confirmed the actual margin and the value of the structured interest, let me say, to me, more or less. It's important to understand where the Euribor will arrive at the end of the year, of course. The condition of the interest is absolutely better off the previous one, let me say, EUR 1 million, EUR 2 million, related a like-for-like bank condition. Okay. Thank you. Management, there are no more questions registered at this time. Thanks, everyone. Thanks for attending this call, and we're going to meet soon at the first opportunity. Enjoy holidays. Thanks a lot. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices.