Good morning everyone, thank you for joining the Esprinet Q1 2024 Results Conference call. Please note this webinar is being recorded, and after the call, the podcast will be posted on the Esprinet website in the investor section together with the presentation. For the duration of the call, your lines will be on listen only mode. However, you will have an opportunity to ask questions at the end of the call. Please note again that this presentation contains forward-looking statements, so I would like to draw your attention to the regulation note on page two regarding the information contained within this document. I'm Giulia Perfetti, Investor Relations & Sustainability Manager of Esprinet, and with me is Alessandro Cattani, CEO of Esprinet. I will now turn the call over to Alessandro to present and comment with you the Q1 2024 results. Alessandro, over to you. Thank you, Giulia. Hi everybody, and welcome to this Q1 2024 investor call. Hope you're all well. Here we kick off 2024, where we believe the year should turn as a market, hopefully in a much better way than the really tough 2023 that we left behind. If we look at the highlights of our results, we are on our path to recovery after a challenging year. We have witnessed a growth in our market share in Italy after having lost some of it last year. We have stabilized our market share in Spain. We have as well improved furthermore our gross profit margins. Even more importantly, we have improved our working capital in line with the plan that we drew last year. If we look at the profitability indicators, what happened in terms of P&L, what we would like to highlight is the fact that the end result of the quarter has been affected by a particularly bad performance of the Spanish market. The Italian market was bad as well, not as much, and we won market share. Spain was down 12%. Most of last year, we had a particularly good performance in Spain, and then at the end of the year, Spain began to slow down, and this reduction in the performance moved into the first quarter. If we had not witnessed such a tough market in Spain, the numbers would have been really good compared to last year. What is really important is that we have normalized our market share. Last year, we have walked away from a number of businesses, which held a structurally inadequate return on capital employed, and that impacted the last year's revenue performance. We are getting back some of those businesses, which meanwhile we think could be turned into structurally adequate return on capital employed. We are on a good path we think here. The positive results of this strategy is witnessed by the progressive growth in our gross profit margin. We stood at 5.74% against the 5.34% of Q1 last year, 20 basis points up sequentially against the Q4 2023. 40 basis points year-over-year and 20 basis points sequentially. This is now a winning streak of multiple quarters. The shift progressively to higher margin businesses keeps on happening, notwithstanding a significant impact of the higher interest rates on our gross profit margins. I recall to everybody that within our gross profit margin lies the cost of the factoring, at least the financial cost of factoring, that grew significantly because of the higher interest rates, tens of basis points. Notwithstanding this situation, we were able to grow our gross profit margin, hopefully paving the way the moment market will grow up to a significant acceleration of our profitability. If we look at the financial structure, we keep on stabilizing and reducing our net debt, acting on our cash conversion cycle. Cash conversion cycle, measured as the moving average of the last four quarters, was down at 24 days, eight days less than Q1 2023, and four days less sequentially. We are on a good path. I recall to everybody that our group, when running at around 18-20 days of cash conversion cycle, is cash neutral, excluding the impact of IFRS 16, and that's a sort of target that we have always declared in these last years. Net financial position is negative EUR 188 million, of which more than roughly 120 represented by the impact of IFRS. A significant improvement compared to Q1 2023, where debt stood at EUR 341 million. Even more remarkably, this has been achieved with a significantly lower utilization of factoring. Let's say the stabilization of our market share on one side, the improvement of gross profit margins on the other side, the improvement of the working capital based on choices made in terms of combinations of products and customers to address is paying off. The moment the market will start to rebound, which we expect together with all the analysts in the second part of the year, numbers should hopefully take off and give a better picture. If we look at our sales evolution, here we can see for the first time we have introduced the concept of gross sales. We report according to the IFRS standards, and as long as we keep on growing our sales of software and cloud, the impact of the IFRS accounting principal agent is getting bigger. More and more of our revenues are stripped off. As long as the market analyst, the Context, the GfK report gross sales, we decided to provide our market share in a homogeneous way. Therefore, the difference between gross sales and net sales as reported is basically the portion of our sales represented by mostly software and a part of cloud, a minor portion of cybersecurity sales, which are stripped off because of the IFRS 15 accounting. There are other minor adjustments, mostly revenue recognition, which is small numbers. As you can see, the gross sales in Italy were up 3% against the market down 3%. Spain was down 12 against the market down 12, so basically we kept our market share. Portugal was flat as a market. We were down 58% because we quit selling smartphones in Portugal, and that accounted for roughly 50% of our sales over there. We are rebuilding the strategy in Portugal, and as a matter of fact, we're pleased to see that we are gaining share in the SME market. Of course, Portugal is still very small and undergoing a major restructuring. It generated tons of cash because having quit selling these highly working capital-absorbing businesses, we released a lot of cash. Morocco is doing great, up 48%. As you can see, lots of the Morocco sales are software and cloud. As a matter of fact, we don't sell hardware in Morocco. We don't have a warehouse. We sell something imported from Spain. Margins are pretty good, so Morocco is a good contributor, although still small. If you look at sales by product category, screens were down 9% against the market down 5%. We recover share on PCs, and we lost share mostly because of the impact in Portugal and Spain of having quit a major Chinese vendor of smartphones. On PCs, we're back on track, and in Italy, we're doing great. Solution and services, that's a really interesting point. We won share big time, up 7% against the market down 6%. We're doing great here, and we're participating to a number of tenders to open new distribution contracts. We don't know if we will win at least some of these tenders, but we are on a good path here. Years of investments are paying off. Then devices were down 7% against the market down 11%. Again, here, mostly affected by the consumer market, which you see in the following chart where we were down 20% on retailers against the market down 11%, while on resellers, we were up 3% against the market down 4%. The devices were mostly impacted in the TVs and wide goods space, again, because of the softness of the consumer market on one side and our decisions to optimize margins and working capital. We kicked off 2024 in terms of market share, in terms of mix of products, as well as the customer type in a good way are working hard to recover share wherever it makes sense, but things are getting better, and we start seeing the light. It will really mostly depend on what will happen in the market. Italy apparently is doing very well recovering. Spain, quite surprisingly, being the GDP of Spain, particularly good, it is really one of the toughest market. As a matter of fact, in Q1, it was by far the toughest market together with Germany. We are in this situation. All right. That's for the sales evolution. If we look at profitability, well, here we have already commanded most of the numbers this year. I want just to highlight the fact that we were able to contain the cost structure so that the impact of lower sales was partly offset by higher gross profit margin, as well as by a very good cost management. On cash conversion cycle and net financial position, I already spoke. Return on capital employed is still low. We are using a moving average here, but if the performance on working capital as well as the recovery that we expect on profitability will happen in the next quarters, return on capital employed should bounce back significantly. If we look at the usual picture on what we call the five pillars, screens, devices, and own brands together are managed under the Esprinet brand, and solution and services are managed under the V-Valley brand. As you can see, here we are talking about net revenues and not gross revenues. We had a slight decrease in the EBITDA margin of the Esprinet area, mostly because of screens. You will see it in the following chart, if you look at the cost absorption, the impact is mostly driven by a lower absorption of fixed cost because of the reduction of the revenues. The gross profit margins were up more or less across the line. If we look at the V-Valley, again, the performance of the services keeps on adding value, with a nifty 52% EBITDA margin. We are down 10 basis points, but again, gross profit margins were really good. Hence, the EBITDA margin is up by four basis points. Our strategy of moving towards higher margin businesses keeps on happening. As you can see, with one third, roughly, of our total sales, we generate two thirds of our EBITDA. The moment market should accelerate, we believe that the volume business should help again absorbing costs and driving profitability up. The P&L in detail, as I said before, is showing up on SG&A in absolute terms. We were able to keep them stable, actually 200K less than previous year. That despite the impact of acquisitions of Sifar Group in Italy and Lidera Network in Spain, both signed August last year. The impact that we have seen before on the EBITDA margins of different lines is driven mostly by the impact of SG&A on sales, which was up close to 40 basis points, even if the costs were flat. It was offset by the significantly higher gross profit margins. If we look at the financial expenses, it's worth noting that the impact is mostly driven by the foreign exchange gains losses, all generated, actually almost entirely generated in January. We had almost flattish performance in February and March. We have a few percentage points of our sales in U.S. dollars, and we book the purchases with exchange rate of the day of the purchase, and whenever we pay, we record the difference between the exchange rate the day of the purchase and the exchange rate of the day of settlement. In general, we had a major impact because of the devaluation of the euro against the U.S. dollar. If you look at the other financial income expenses, although we are significantly down in terms of cash, well, average debt utilization, but we do have a significant impact from the interest rates. Beginning of last year, we still had a good level of interest rates, which grew during the course of the year. We forecast these numbers theoretically to decrease in the second half of the year, mostly because we expect net debt, average net debt to keep on decreasing. We also expect a reduction in the interest rates applied by the banks. On tax rates, that's essentially unchanged. If we look at the balance sheet, well, as always, the key figures are all around our operating net working capital. Net working capital was down from EUR 500 million of Q1 2023 to EUR 317 million of Q1 2024. That's the end period, end quarter periods. In the next graph, we will have the comparison also on the moving average. As I said, we are having a very good performance in terms of cash. Notwithstanding the fact that our factoring programs for retailers mostly, were down, close to EUR 60 million, EUR 50 million plus. Because we had EUR 341 million of factoring as of March 2023, and we were down to roughly EUR 290 million as of March 2024. Notwithstanding an impact of roughly EUR 50 million on the receivables, if we had applied the same level of factoring, we would have had roughly EUR 560 million of trade receivables, so roughly EUR 100 million less than last year. Notwithstanding this, the performance has been pretty good. Trade payables are up, not so much because of further improvement in the payment terms, but simply because, as some of you might recall, I mentioned a technical aspect, during most of second half of 2022 and 2023, we decreased aggressively our level of inventory. By doing so, we reduced the level of purchases. Even if the nominal payment terms were high, but we had lower amounts of purchases and hence lower amounts of debt in absolute terms. As we have sort of stabilized the level of inventory, we are on a more standard course of purchases, and that reflects, given standard payment terms on higher levels of trade payables. That's it for the balance sheet comments. The graph speaks by itself. We went through, this is the moving average of the previous four quarters. We went through a tough series of quarters, ending up with Q1 last year, topping 32 days of cash cycle. The last four quarters have been devoted, as you have heard me say more than one, to improvement in our level of inventory and working capital, generally speaking, and we're down to 24 days. If we look at the end quarter figures, you see that even in the best years, we ended up having 15 and 16 days. Average year such as 2019, 25 days. In 2018, as well as in 2023, we were at 39 and 41 days. They were bad numbers, very bad numbers. We are getting back to more reasonable ones. Vendors keep on contributing to the sustainability of our business. This is something that happened in light of the growth of the financial cost, the interest rates. Some of them contributed with margins, some with payment terms. Here we are with this much, much better situation. For the return on capital employed, this is the picture. This is an average of five quarters. We do believe that pending an improvement that we expect in profitability and the continuous reduction of the working capital, the cash cycle days that we have witnessed in these last quarters, the numbers should start turning up in the next quarters. Okay, that's for the numbers. What's happening looking forward? Well, the market as always, is full of challenges, but opportunities as well. The outlook for our industry is, broadly speaking, positive. What is really still hanging on the performance of the market and hence of the players of the markets, including ourselves, is the geopolitical and the macro scenarios, which represent the greatest headwind for the ICT market in this moment. All industry analysts agree that the return to growth is nearing. As a matter of fact, there's expectations for growth for the Italian market this quarter. We'll see what will happen. Spain is still expected to be down, even though not so much as it happened in Q1. Definitely in the second half of the year, there should be an average low single-digit growth rate across the board. Of course, there's this looming tension all around macroeconomics, geopolitical tension, and in Europe, the upcoming European elections. If we look more specifically at what's happening in the different customer categories, indeed large corporate IT budgets have been slightly muted in terms of performance. What really happened was that the share of wallet of competition from other industries for consumers has been very strong. We face consumers spending more on the mortgages on one side, and still travel and outdoor spending. Everybody agrees on the fact that the ICT spending in Europe is projected to grow in the coming years, and as a matter of fact, in the coming quarters, especially in Q3 and Q4, with first signs of improvement in Q2. I can only add that April has been a good month for the market and in terms of sales for us as well. It's not yet significant because Easter last year was in April, and this year was in March, so we had different working days. We'll see if May will confirm the resilience and expansion that we have seen, the expansion we have seen in Italy and the resilience of the Spanish market, even if the analysts are more cautious, especially about Spain. In terms of product categories, software services, and to a slightly lesser extent, cybersecurity solutions will keep on being the star performance in terms of growth. Slower growth for the infrastructure hardware segment, server storage, and networking, even if still it represents an essential component for the digital transformation. The devices market is supposed to regain momentum. We are already seeing PCs rebounding. Smartphones, TVs, and consumer electronics in general is still softer, but it should bounce back during this year and especially in the next years. Key drivers keep on being an aging portfolio of devices out there. We are now into the fourth year since the pandemic, and the growth that we witnessed in terms of sales during that period. The other point is the growing integration of AI capabilities into processes and therefore into devices. This will happen especially into PCs with the new AI PCs. Probably second half of the year, especially initially for enterprises, and later on consumers will come. Definitely in the next years, this should be an interesting driver. One last comment around the government spending. In Spain, government spending first quarter last year was particularly strong. There has been quite a slowdown, especially in education this year, and so probably it impacted the performance in that area. Italy is doing fine, but the government spending slowed down a bit and it's supposed to bounce back hopefully in the next quarters. That's for the market performance as a whole, and I wrap up with our group priorities and our guidance. Well, no real big news here. We expected to consolidate our market share in the countries in which we are recovering share, and we do expect that we might recover furthermore. Anyhow, looking only for areas of business that can provide structurally good levels of return on capital employed. We are focused, as always, on our gross profit margin. We will keep on investing and expanding our business in advanced technologies, advanced solutions, and we are trying as much as possible to push on digital transformation, removing the complexities in the market for our customers and our suppliers. Services are an interesting area. They keep on growing, and we are investing a lot in that area. We will keep as a priority the optimization of the levels of invested capital. Again, our return on capital employed strategy will move forward with the solutions as a contributor to the profitability and the growth in the volume business with low working capital absorption, contributing to the fixed cost absorption on one side, and the optimization of average invested capital levels on the other side. We will keep a keen eye on our cost structure. We are investing on the growth of strategic business areas. We keep investigating possibilities of M&A in the usual areas. Nothing happened during Q1. I don't think, given the status of the discussions that we have with the potential targets, that a lot could happen in Q2, but you never know. Again, we are looking at niche players such as the Lidera, Sifar, Bludis, Dacom of the last two, three years. We keep on looking at expansion in other regions, but again, and over there it would be more of a transformational business, bigger companies, but we have not yet found anything really worth the move. As to the group estimates for our EBIT adjusted during 2024, we estimate a range between EUR 66 million and EUR 71 million against the EUR 64.1 million of last year. So far, we don't estimate adjustments. The big one last year was the tax settlement that we closed. The big question mark here is mostly the macroeconomic backdrop. If the macro environment will stay in terms of performance as it is forecasted so far, with a slight decrease of interest rates in the second half of the year, stable or decreasing inflation, we do expect it to be on the upper part of the range. If the market turns nastier, we might be on the lower part of the estimate, but we see a better year moving forward. That's for the presentation, and I thank everybody for joining us, and I turn it over to Giulia. Thank you, Alessandro. We can start with the Q&A session. Let me remind that to ask questions, you should kindly book your speech and then unmute your microphone. Okay. We have the first question. Yes. From Federico Belluati. Federico, please go ahead. Good morning. Thank you for taking my question. My question is on the Spanish market. If you can give us more color on the trends behind this decrease. Is it only related to the government or there's also something else? That's it for me. Okay, if I look at the Context figures for the Spanish market, the Spanish market was down 12%. Screens, PCs and smartphones were down 18% in the market. The solutions were down 9.5%, and we were up. We grew 2% in the market. Then there's devices, and mostly consumer-related devices that were down overall 7%. If we look at the performance of the business panel in Spain, it was down 11%, and the consumer segment was down more than 13%. It was more or less across the board. Two factors impacted the situation. One, consumer spending. The Spaniards were the last one to slow down IT spending and turnover to travel and entertainment, and being impacted by higher mortgages as well. We are probably seeing now what we witnessed last year in other markets, Italy included. The second impact was probably, actually not only probably, it was related to the performance of the government. Government is particularly important for the Spanish IT market. Education was particularly tough, and we had as a market, an impact over there. That's basically what happened in this area. Last quarter, in particular, Q1 last year was particularly strong, especially in the government. We have this. Lastly, there's a technical aspect that I mentioned before. January and February were tough, but not so tough. In February, forecasts were still of a market down 4%, 5%. March was horrible, minus 20%, and that was partly linked to the Semana Santa, as they call them, Easter, which fell in April last year and fell in March this year. During Semana Santa, Spaniards do have a much longer period of vacation compared to the Italian market, and that was really hard on the numbers. There's a mix of different things. Analysts forecast low single-digit decrease for Q2 and low single-digit growth in Q3 and Q4 for the Spanish market, which they expect flat-ish Q2 for the Italian market and mid-single digit growth in Q3 and Q4 for Italy. Just to give an idea of where we stand on the analyst projections, which we measured with discussions with vendors as well as with our top customers. Order taking in the market apparently is healthier than the volume of sales, so there's a number of deals brewing, but not yet ready to be delivered in the corporate space. That's the picture. Another question from Mr. Nargi. Mr. Nargi, please go ahead. Good morning. Thanks for taking my question. Just a quick question on the guidance. You just released the EBITDA guidance for 2024, pointing at around 7% year-over-year increase on the midpoint of the guidance. I was wondering what are your main assumptions underlying the guidance in term of market recovery. What could be a reasonable expectation in terms of revenue growth and also in terms of revenue mix? If the improvement in the revenue mix we saw in the first quarter could be a good proxy also for the full year 2024. Thank you. We didn't provide so many details, broadly speaking, when we look at our budget compared to last year, we expect growth in Italy of our top line based on a market which is expected to have some kind of growth, mid-single digit, and then we are winning market share, as you have witnessed in the first quarter, which we expect the Iberian Peninsula, so Spain, Portugal, well, we add Morocco, for what it matters, it's a very small portion of our business, which would probably suffer still a little bit during this year in terms of revenues. In terms of profitability, we forecast an improvement. We have witnessed 40 basis points of gross profit margin growth in Q1. We have factored a good resilience in terms of gross profit margin growth during the course of the year. Of course, we have netted the one-off impact of the transaction we had last year in our budget, and we have added some cost to our projection. Last year, we bought Sifar and Lidera, we have consolidated them just for a portion of the year, just for four months. You have to think of at least close to EUR 3 million of operating costs that will be added on a 12 months basis this year, because last year, seven months were not consolidated. We have factored some inflation on personnel costs as well, especially in Italy, we had a change in the collective bargaining contract, which has a significant impact. Some adjustments on some investments that we're doing to propel growth in the longer period, especially in services. As per the net financial charges, as I said before, we forecast a lower weight of the average indebtedness during the year, but last year, beginning of the year, we still had lower interest rates given the mix of sources that we have. This part of the year, we are therefore bearing a higher cost because of this reason, even if we are using significantly less cash. Second part of the year, we expect the combination of an expected reduction of interest rate from the ECB, as well as continuing and sustaining the reduction of the average net debt to contribute to a reduction of the interest charges. We are forecasting a sort of stabilization of the losses and gains on the exchange rate. We are hedging a good chunk of our purchases, but not all of them. It's too complicated to hedge all of them. Sometimes we take a hit, or we take an extraordinary profit out of these transactions. This year, as I said, close to EUR 1 million was generated, EUR 950,000, something like that, was generated in January alone. It was more or less stable during the rest of the quarter. Those are the key assumptions that we were seeing. Depending on the performance of the market, and especially if the market recovers more than expected, things could turn for the better, because on average, we have a contribution to fixed cost equal mix of products of roughly 5%. Any EUR 100 million of additional volumes is roughly EUR 5 million of contribution to the EBITDA. Obviously, it depends. If you add EUR 100 million of smartphones, so you contribute probably a couple of million EUR. If you add EUR 100 million of services, I will no longer participate to this call because I will be super rich. Of course, it will be EUR 50 million of EBITDA. That's basically what's happening. Those are the assumptions. Mr. Riboldi, a question from you. Please go ahead. You remember to open the- The microphone, yes. Okay. Sorry, I had to activate the microphone. Ciao, Alessandro. Thank you for the call. Congratulations for the good results, especially reducing working capital days. Just a quick question about solution and services, which have been growing a lot and now represents about one third of the total sales. Do you expect the contribution of solution and services to grow also in the future, more than 30% of total sales, even if we have a recovery of the hardware components? Do you expect solutions to grow also? No, let's suppose it's very difficult to say what kind of macroeconomic environment we'll have next 12, 18 months, but more similar to now macroeconomic environment, do you expect solution and services anyway to grow? Because we're going to see a lot of PNRR expenditure from the government on the digital transformation and so on. You expect the sector to grow more anyway than the hardware sector in the next 12, 18 months, or not? Yes. Thanks for the question. Well, the overall weight will depend on the acceleration of the recovery in the PC, especially in the devices. If the devices bounce back, they provide immediately big volumes. Not as much in terms of profitability, but definitely in terms of volumes. What is a fact is that we kept on investing a lot on solution and services, and we are seeing us getting more and more momentum in this market. As I mentioned briefly during the call, during the presentation, we are, in this very moment, participating to a number of tenders with a number of, some smaller, but some also significant vendors that are reshaping their distribution network in Southern Europe. Some of them in Italy, some of them in Spain. More and more, we are visible. In the past, we were not perceived as a solution distributor, and more and more, we are perceived as a solution distributor. The strategy of separating V-Valley from Esprinet and pushing on the double brand, and of course, the volumes that we have achieved. We are now with gross sales north of EUR 1.1 billion. We are one of the biggest players in the solution space in Europe, and definitely in Southern Europe. This is paying off. We are more and more attractive for the right kind of skilled people that you need to grow in this area. We are positive here, in terms of our performance, whatever the market will be. As per the market, well, the expectations, as I briefly mentioned before, are that software and cybersecurity, to a lesser extent cloud, but also services will remain the fastest-growing segments. This gen AI hype is driving a lot of investments. There's a bunch of interesting opportunities over there which will turn into opportunities. As you have seen, we had to start introducing the concept of gross sales because the weight of software and cloud is getting so high that it starts to impact so significantly our as-reported figures that we need to make them comparable to the gross sales under which the market analysts report the performance of the market. That is a good sign. It means that we're moving in the right direction. The big question mark here is all around the hardware infrastructure. Lots of investments under the NextGenerationEU funds, PNRR, in Italy. The question is always what will be the speed and capability of the government to turn theoretical tenders into real deals? Of course, how many of those tenders will be won by us in conjunction with our customers? There's Spain, which has slowed down, Italy that apparently is accelerating. There are opportunities. The analysts believe that the infrastructure hardware segment will continue to grow, although with a lower growth rate than in the recent past. All in all, solutions are posed to grow in the market, and hopefully we expected to keep on outgrowing the market because of the momentum that I described before. I think in terms of contribution, in terms of a bigger margin, our solutions should keep on being the star performance within our group. Probably it will be more next year, unless the wave of AI-enabled PC will turn into a tsunami. If that will happen, as lots of analysts expect more in the next years rather than in this 2024, then, of course, screens should grow, but on those PCs, AI-enabled PCs, the margins are higher because they are more complex technologies. We'll see what happens. Great. Thank you, Alessandro. Thanks to you. Ciao. Ciao. Okay, since there are no more questions, we can end the call. Thank you for participating, and of course, we remain at your disposal. Thanks again, and see you next time. Thanks, everybody. Have a nice day. Bye.