Q1 2026 Natuzzi SpA Earnings Call

August 6, 2026

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Speaker #2: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Natuzzi S.p.A. Q1 2026 financial results. Interested people can also join this conference call live by telephone by dialing the following number: 1-201-493-6703.

Moderator: Good day, ladies and gentlemen, thank you for standing by. Welcome to the Natuzzi S.p.A. Q1 2026 financial results. Interested people can also join this conference call live by telephone by dialing the following number, one two zero one four nine three six seven zero three. Enter the passcode three nine two five two one zero three pound, in addition to the link already provided to join via video. Again, as a reminder, you can also join this conference call live by telephone by dialing the following number, one two zero one four nine three six seven zero three. Enter the passcode three nine two five two one zero three pound, in addition to the link already provided to join via video. At this time, all participants are in a listen-only mode. Following the introduction, we will conduct a question and answer session.

Operator: Good day, ladies and gentlemen, thank you for standing by. Welcome to the Natuzzi S.p.A. Q1 2026 financial results. Interested people can also join this conference call live by telephone by dialing the following number, one two zero one four nine three six seven zero three. Enter the passcode three nine two five two one zero three pound, in addition to the link already provided to join via video. Again, as a reminder, you can also join this conference call live by telephone by dialing the following number, one two zero one four nine three six seven zero three. Enter the passcode three nine two five two one zero three pound, in addition to the link already provided to join via video. At this time, all participants are in a listen-only mode. Following the introduction, we will conduct a question and answer session.

Speaker #2: Then enter the passcode 39252103#. In addition to the link already provided to join via video, again, as a reminder, you can also join this conference call live by telephone by dialing the following number: 1-201-493-6703.

Speaker #2: Then enter the passcode 39252103#. In addition to the link already provided to join via video, all participants are currently in listen-only mode.

Speaker #2: Following the introduction, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. Joining us on today's call are, as usual, Pasquale Natuzzi, Executive Chairman and Chief Executive Officer; and Pasquale Jr.

Moderator: Instructions will be provided at that time for you to queue up for questions. Joining us on today's call are, as usual, Pasquale Natuzzi, Executive Chairman and Chief Executive Officer, Pasquale Jr. Natuzzi, Chief Commercial Officer and Chief Product Division Officer, Carlo Silvestri, Chief Financial Officer, Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Operator: Instructions will be provided at that time for you to queue up for questions. Joining us on today's call are, as usual, Pasquale Natuzzi, Executive Chairman and Chief Executive Officer, Pasquale Junior Natuzzi, Chief Commercial Officer and Chief Product Division Officer, Carlo Silvestri, Chief Financial Officer, Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Speaker #2: Natuzzi, Chief Commercial Officer and Chief Product Division Officer; Carlos Avestri, Chief Financial Officer; and Piero D'Arenzo, Investor Relations. As a reminder, today's call is being recorded.

Speaker #2: I would now like to turn the conference over to Piero. Please go ahead.

Speaker #3: Thank you, Darryl, and good day to everyone. Thank you for joining the Natuzzi S.p.A. conference call for the Q1 2026 financial results. After a brief introduction, we will give room for the Q&A session.

Piero Direnzo: Thank you, Daryl. Good day to everyone. Thank you for joining the Natuzzi's conference call for the 2026 Q1 financial results. After a brief introduction, we will give room for the Q&A session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under the United States securities laws. Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition. Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. I would like to turn the call over to the company's chief executive officer. Please, Mr. Natuzzi.

Speaker #3: Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward-looking statements under United States securities laws.

Speaker #3: Obviously, actual results might differ materially from those in the forward-looking statements because of risks and uncertainties that can affect our results of operations and financial condition.

Speaker #3: Please refer to our most recent annual report on Form 20-F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call.

Speaker #3: And now, I would like to turn the call over to the company's Chief Executive Officer. Please, Mr. Natuzzi.

Speaker #4: Thank you, Piero. Good morning, everyone, and thank you for joining us today. The results for this Q2 are clearly disappointing. They reflect a combination of external and internal factors that had significant impact on the Group's performance.

Pasquale Natuzzi: Thank you, Piero. Good morning, everyone. Thank you for joining us today. The results for this Q1 2026 are clearly disappointing and reflect a combination of external and internal factors that had significant impact on the group performance. On the external side, we continue to operate in a complex market environment, marked by geopolitical instability, tariffs on sales in the United States, and housing market at historically low levels and persistently weak consumer sentiment. In addition, the transfer of Natuzzi Editions production for the United States market from China to Italy negatively affected the margin profile of this production line. This result confirmed the need to take decisive action on certain structural elements of the group. In particular, our industrial footprint in Italy is currently oversized compared with the present sales volume and carriage cost level that are no longer sustainable.

Speaker #4: On the external side, we continue to operate in a complex market environment, marked by geopolitical instability, tariffs on sales in the United States, a housing market at historically low levels, and persistently weak consumer sentiment.

Speaker #4: In addition, the transfer of NATUZZI edition production from the United States market for the United States market from China to Italy negatively affected the margin profile of this production line.

Speaker #4: Therefore, this result confirms the need to take decisive action on certain structural elements of the group. In particular, our industrial footprint in Italy is accordingly oversized compared with the present sales volume and carriage cost level, which are no longer sustainable.

Speaker #4: For this reason, since the beginning of July, we have started executing a restructuring plan aimed at significantly reducing our fixed costs and improving overall efficiency.

Pasquale Natuzzi: Since the beginning of July, we have started executing a restructuring plan aimed at significantly reducing our fixed costs and improving overall efficiency. The plan is based on a number of very concrete operational levers. First, we have initiated the transfer of Natuzzi Editions production for the United States market from Italy to Romania. This initiative is designed to improve the industrial margin of this product line and consequently reduce the losses associated with this production. Second, we have rationalized our industrial operation in Italy, reducing the number of operating plants from five to two plants. This is a necessary step to eliminate the fixed costs that are no longer aligned with the current size of the business and to create the condition for economies of scale.

Speaker #4: The plan is based on a number of very concrete operational levers. First, we have initiated the transfer of Natuzzi Edition production for the United States market from Italy to Romania.

Speaker #4: This initiative is designed to improve the industrial margin of this product line and, consequently, reduce the losses associated with this production. Second, we have rationalized our industrial operation in Italy, reducing the number of operating plants from five to two plants.

Speaker #4: This is a necessary step to eliminate fixed costs that are no longer aligned with the current size of the business and to create the conditions for economies of scale.

Speaker #4: Finally, we have already received expressions of interest from 120 Natuzzi employees to participate in a voluntary exit program. We are fully aware of the complexity of this phase and of the impact that the decisions currently underway may have on our organization.

Pasquale Natuzzi: Finally, we have already received expression of interest from 120 Natuzzi employees to participate in a voluntary exit program. We are fully aware of the complexity of this phase and of the impact that the decision currently underway may have on our organization. At the same time, we believe that acting now with discipline and urgency is essential to strengthen the Group economic sustainability, protect the competitiveness of the Natuzzi brand, and lay the foundation for the progressing recovery in margin. That's the real situation as of today. If there are any questions, I would be very pleased to answer to any kind of question. Thank you very much for listening to me. Thanks.

Speaker #4: At the same time, we believe that acting now with discipline and urgency is essential to strengthen the Group's economic sustainability, protect the competitiveness of the Natuzzi brand, and lay the foundation for the progressive recovery in margin.

Speaker #4: That's the real situation as of today. If there are any questions, I would be very pleased to answer any kind of question.

Speaker #4: Thank you very much for listening to me. Thank you.

Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please click on the 'raise hand' icon to ask your question verbally, and I will unmute your line at that time.

Moderator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please click on the raise hand icon to ask your question verbally, and I will unmute your line at that time. Once again, you can click on the raise hand icon, and I can give you permission to unmute. As a reminder, if you'd like to ask a question, please click on the raise hand icon.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please click on the raise hand icon to ask your question verbally, and I will unmute your line at that time. Once again, you can click on the raise hand icon, and I can give you permission to unmute. As a reminder, if you'd like to ask a question, please click on the raise hand icon.

Speaker #2: Once again, you can click on the Raise Hand icon and I can give you permission to unmute. And as a reminder, if you'd like to ask a question, please click on the Raise Hand icon.

Carlo Silvestri: Daryl, if you don't mind, I can give some more color about the action that we are taking, to have more clarity on that. While waiting for questions, then we can give you a bit of more color in what we are doing as a management to recover from the situation. Maybe this can help in understanding better how we are facing all the issues. As Mr. Natuzzi has rightly underlined, we are taking several actions on this, I would like to also to give you also what are the expectations on the action that we are taking.

Speaker #5: So, Darryl, if you don't mind, I can give some more color about the action that we are taking, just to have more clarity on that. So, while waiting for questions, we can give you a bit more color.

Speaker #5: In what we are doing as management to recover from the situation. So maybe this can help in understanding better how we are facing all the issues.

Speaker #5: As Mr. Natuzzi has rightly underlined, we are taking several actions on this, but I would also like to give you what our expectations are and the actions that we are taking.

Speaker #5: For example, when we talk about, you know, the relocation of the production from Italy to Romania of the Natuzzi edition for the US market—if the question comes up, please anticipate it.

Carlo Silvestri: For example, when we talk about the relocation of the production from Italy to Romania of the Natuzzi Editions for the US market, if the question will come out, to anticipate it, the total volume of business is in the ballpark between 30 and 40 million. That will give, according to our preliminary analysis, that of course, will differ because it will be impacted by the actual product mix, will give us a 25% of that profitability of that portion of business. This, of course, is an action that we are taking into action and will impact, of course, the results in H2, and the figures that I did mention before refer to the full year impact.

Speaker #5: The total volume of business is in the ballpark between $30 and $40 million, and that will give, according to our preliminary analysis—which, of course, will differ, because, I mean, it will be impacted by the actual product mix—will give us a 25% percentage of better quality of that portion of business.

Speaker #5: So this, of course, is action that we are taking in two phases, and will impact, of course, the results in the second part of the year. The figures that I mentioned before refer to the full-year impact.

Speaker #5: When we were discussing the reduction of the 120 employees that have voluntarily, for the moment, signed an intention to participate in this voluntary plan that, of course, still has to go through and be confirmed, we know that the 120 employees will not be in our roster as of January 1, 2027, and all the cash flow of these exit costs will be in 2027.

Carlo Silvestri: When we were discussing about the reduction of the 120 employees that have voluntary, for the moment, signed an intention to participate, that of course, has to be screened and has to be confirmed, meaning that the 120 employees will be, let's say, not in our roster from 1 January 2027, and all the cash flow of these exit costs will be in 2027. In terms of cost advantages, a portion of our workforce cost today is already offset through social safety net measures and wage support program. The results of the saving achieved will depend on the level of plant utilization and on the extent of the social support mechanism for next year. This is important.

Speaker #5: And in terms of cost advantages, a portion of our workforce cost today is already offset through social safety net measures and wage support programs.

Speaker #5: So the results of the savings achieved will depend on the level of monetization and on the extent of the social support mechanism for next year.

Speaker #5: So, this is important. But the main point of this initiative is that it is our first step toward a more structurally efficient cost base and will give not only immediate financial impact, but will improve operational flexibility and productivity, and better align our workforce with current and future needs.

Carlo Silvestri: The main point of this initiative is that it is our first step to a more structurally efficient cost base, and will give not only immediate financial impact, but will improve operational flexibility, enhance productivity, and better align our workforce with the current future needs. On the same side, we perceive as a plan that is going through several years of dismissal of idle assets and offer for another plant that has also a potential rehiring of 40 people because the objective remains the disposal of non-core and assets, but the process has also been designed with a strong focus on protecting employment. This is also something that the company is reevaluating. On the cost base, what I would like also to remind, we start the downsizing of the top managerial structure.

Speaker #5: On the same side, we perceive as a plan that is going through several years of dismissal of idle assets and offer for another plant that has also a potential rehiring of 40 people, because the objective remains the disposal of non-core assets, but the process has also been designed with a strong focus on protecting employment.

Speaker #5: So this is also something that the company is really evaluating. On the cost base, what I would also like to remind you is that we have started the downsizing of the top managerial structure.

Speaker #5: So for the moment, we have had the exit in US and Italy or some executives that will bring saving in our cost structure base and on the side note, I would like to underline that the company is actively working for the of our actually discussing with that may support us in the thank you.

Carlo Silvestri: For the moment, we have had the exit in US and Italy of some executives that will bring saving in our cost structure base. On a side note, I would like to underline that the company is actively working for the strengthening of our and we're actually discussing with a play that may support us in the future. Thank you. I would like maybe Pasquale Junior to add some on the commercial side, to give the full picture of what's happening, leave the floor to the questions. Thank you.

Pasquale Natuzzi: Thank you.

Carlo Silvestri: I would like maybe Pasquale Junior to add some on the commercial side, to give the full picture of what's happening, leave the floor to the questions. Thank you.

Speaker #5: May I—I would like maybe Pasquale Junior to add some comments on the commercial side to give a full picture of what's happening, and then leave the floor to questions.

Speaker #5: Thank you.

[Company Representative] (Natuzzi): I have had some issues hearing you sometimes. I hope you can hear me loud and clear. Do you hear me right?

Pasquale Junior Natuzzi: I have had some issues hearing you sometimes. I hope you can hear me loud and clear. Do you hear me right?

Speaker #3: I have had some issues hearing you sometimes. I hope you can hear me loud and clear. Do you hear me right?

Speaker #5: Totally. Totally. Perfect.

Carlo Silvestri: Totally. Perfect.

Speaker #3: Good morning. Good morning, gentlemen and ladies. Thank you for attending this call and giving me the chance to introduce myself. I would like to take a few minutes to update you on our commercial transformation, I would say, since we've launched it over the past few months, and the initiatives that are shaping Natuzzi's future growth.

[Company Representative] (Natuzzi): Good morning, gentlemen and ladies. Thank you for attending this call and giving me the chance to introduce myself. I'd like to take a few minutes to update you on our commercial transformation, I would say, that we've launched over the past few months and the initiatives that are shaping Natuzzi's future growth. I have joined as a Chief Commercial Officer shortly before Milan Design Week in 2026, in April, where we already there back then introduced one of our most important strategic initiatives, which is the Natuzzi Studio. Natuzzi Studio is a new retail concept designed to capture the growing opportunities within the trade, projects, and specification business. It's clearly more than a traditional store. It was conceived, and it is conceived as an urban design hub where architects, interior designers, developers, and clients can collaborate with our teams on residential and commercial projects.

Pasquale Junior Natuzzi: Good morning, gentlemen and ladies. Thank you for attending this call and giving me the chance to introduce myself. I'd like to take a few minutes to update you on our commercial transformation, I would say, that we've launched over the past few months and the initiatives that are shaping Natuzzi's future growth. I have joined as a Chief Commercial Officer shortly before Milan Design Week in 2026, in April, where we already there back then introduced one of our most important strategic initiatives, which is the Natuzzi Studio. Natuzzi Studio is a new retail concept designed to capture the growing opportunities within the trade, projects, and specification business. It's clearly more than a traditional store. It was conceived, and it is conceived as an urban design hub where architects, interior designers, developers, and clients can collaborate with our teams on residential and commercial projects.

Speaker #3: I have joined as a chief commercial officer shortly before Milan Design Week in 2026 in April, where we already there back then introduced one of our most important strategic initiatives, which is the NATUZZI studio.

Speaker #3: NATUZZI Studio is a new retail concept designed to capture the growing opportunities within the trade projects and specification business. It's clearly more than a traditional store.

Speaker #3: It was conceived, and it is conceived, as an urban design hub where architects, interior designers, developers, and clients can collaborate with our teams on residential and commercial projects.

Speaker #3: Clearly, the dimensions of these stores will allow us to be more capillary and be closer to these designers' destinations. So definitely more city-centric.

[Company Representative] (Natuzzi): Clearly, the dimensions of these stores will allow us to be more capillary and be closer to these designers' destinations, definitely more city-centric. This evolution is fully aligned with our premium luxury and clearly design-oriented positioning. From the very beginning, the organization experienced a renewed sense of energy and urgency since I started. The response of the Natuzzi Studio during Design Week exceeded our expectation, and several dealers already expressed interest in opening this new format. Speaking of retail expansion and retail formats, the expansion continues at a very healthy pace, I would say. During H1 2026, we opened already 26 new stores following the 49 opened during 2025. These investments confirm our commitment to strengthening our global retail network, as well as the recognition from investors and dealers who see a great value in the Natuzzi brand.

Pasquale Junior Natuzzi: Clearly, the dimensions of these stores will allow us to be more capillary and be closer to these designers' destinations, definitely more city-centric. This evolution is fully aligned with our premium luxury and clearly design-oriented positioning. From the very beginning, the organization experienced a renewed sense of energy and urgency since I started. The response of the Natuzzi Studio during Design Week exceeded our expectation, and several dealers already expressed interest in opening this new format. Speaking of retail expansion and retail formats, the expansion continues at a very healthy pace, I would say. During H1 2026, we opened already 26 new stores following the 49 opened during 2025. These investments confirm our commitment to strengthening our global retail network, as well as the recognition from investors and dealers who see a great value in the Natuzzi brand.

Speaker #3: This evolution is fully aligned with our premium, luxury, and clearly design-oriented positioning. So, from the very beginning, the organization experienced a renewed sense of energy and urgency since I started.

Speaker #3: The response to the NATUZZI studio during Design Week exceeded our expectations, and several dealers have already expressed interest in opening this new format. Speaking of retail expansion and retail formats, the expansion continues at a very healthy pace, I would say.

Speaker #3: During the first half of 2026, we already opened 26 new stores, following the 49 opened during 2025. These investments confirm our commitment to strengthening our global retail network, as well as the recognition from investors and dealers who see great value in the NATUZZI brand.

Speaker #3: And in addition to that, with more modern and better-positioned formats, we continue to optimize the distribution footprint by closing or relocating locations that no longer reflect the premium luxury positioning of the Natuzzi brands.

[Company Representative] (Natuzzi): In addition to that, with more modern and better-positioned formats, we continue to optimize the distribution footprint by closing or relocating locations that no longer reflect the premium luxury positioning of the Natuzzi brands. At the same time, retail itself is changing. Across most markets, store traffic continues to decline at a double-digit rate, making it increasingly clear that relying solely on walk-in customers is no longer enough. For this reason, we are transforming our retail model from a traffic-driven business into a clienteling, outreach-driven organization. Our store manager and sales consultant are becoming design consultant and business people, business developers, capable of generating opportunities not only inside the four walls of a store, but throughout their local markets by building relationship with architects, designers, developers, and of course, end consumers.

Pasquale Junior Natuzzi: In addition to that, with more modern and better-positioned formats, we continue to optimize the distribution footprint by closing or relocating locations that no longer reflect the premium luxury positioning of the Natuzzi brands. At the same time, retail itself is changing. Across most markets, store traffic continues to decline at a double-digit rate, making it increasingly clear that relying solely on walk-in customers is no longer enough. For this reason, we are transforming our retail model from a traffic-driven business into a clienteling, outreach-driven organization. Our store manager and sales consultant are becoming design consultant and business people, business developers, capable of generating opportunities not only inside the four walls of a store, but throughout their local markets by building relationship with architects, designers, developers, and of course, end consumers.

Speaker #3: At the same time, retail itself is changing. Across most markets, store traffic continues to decline at a double-digit rate, making it increasingly clear that relying solely on walk-in customers is no longer enough.

Speaker #3: For this reason, we are transforming our retail model from a traffic-driven business into a clienteling outreach-driven organization. Our store managers and sales consultants are becoming design consultants and businesspeople, business developers, capable of generating opportunities not only inside the four walls of a store, but throughout their local markets by building relationships with architects, designers, developers, and of course, end consumers.

Speaker #3: This transformation also extends to our headquarters, where we are evolving our commercial operation from a model primarily focused on organic order intake into one supported by targeted commercial initiatives and demand generation programs.

[Company Representative] (Natuzzi): This transformation also extends to our headquarters, where we are evolving our commercial operation from a model primarily focused on organic order intake into one supported by targeted commercial initiatives and demand generation programs. Over the past weeks, we have introduced daily cross-functional meetings focused on commercial priorities, cash generation, and operational execution. Commercial operation and finance are now working as one integrated team with shared objectives on orders, revenue, deliveries, and cash flow. This new way of working has significantly increased alignment, speed of execution, and accountability across the organization. We have also launched several initiatives to reduce raw material and finished goods inventories throughout targeted commercial programs with selected key accounts. The feedback has been encouraging, with customers recognizing not only the commercial initiative, but also the improved coordination, responsiveness, and service level that are delivering.

Pasquale Junior Natuzzi: This transformation also extends to our headquarters, where we are evolving our commercial operation from a model primarily focused on organic order intake into one supported by targeted commercial initiatives and demand generation programs. Over the past weeks, we have introduced daily cross-functional meetings focused on commercial priorities, cash generation, and operational execution. Commercial operation and finance are now working as one integrated team with shared objectives on orders, revenue, deliveries, and cash flow. This new way of working has significantly increased alignment, speed of execution, and accountability across the organization. We have also launched several initiatives to reduce raw material and finished goods inventories throughout targeted commercial programs with selected key accounts. The feedback has been encouraging, with customers recognizing not only the commercial initiative, but also the improved coordination, responsiveness, and service level that are delivering.

Speaker #3: Over the past weeks, we have introduced daily cross-functional meetings focused on commercial priorities, cash generation, and operational execution. Commercial, operations, and finance are now working as one integrated team with shared objectives on orders, revenue, deliveries, and cash flow.

Speaker #3: This new way of working has significantly increased alignment, speed of execution, and accountability across the organization. We have also launched several initiatives to reduce raw material and finished goods inventories throughout targeted commercial programs with selected key accounts.

Speaker #3: The feedback has been encouraging, with customers recognizing not only the commercial initiative but also the improved coordination, responsiveness, and service level that we are delivering.

Speaker #3: In the United States, our retail organization is placing strong emphasis on commercial urgency while accelerating clienteling initiatives to generate B2B and B2C opportunities beyond traditional store traffic.

[Company Representative] (Natuzzi): In the US, our retail organization is placing strong emphasis on commercial urgency while accelerating clienteling initiatives to generate B2B and B2C opportunities beyond traditional store traffic. In China, we recently completed another successful road show alongside the opening of our flagship store in Beijing, where Mr. and Maestro Lang Lang came as an ambassador and supporter of this opening, as well as the ambassador of Italy in China. It was followed by a series of events with the local design community, the growing recognition, and the confirmation that Natuzzi among architects and high-end consumers of China is becoming more and more a point of reference and an icon of the industry.

Pasquale Junior Natuzzi: In the US, our retail organization is placing strong emphasis on commercial urgency while accelerating clienteling initiatives to generate B2B and B2C opportunities beyond traditional store traffic. In China, we recently completed another successful road show alongside the opening of our flagship store in Beijing, where Mr. and Maestro Lang Lang came as an ambassador and supporter of this opening, as well as the ambassador of Italy in China. It was followed by a series of events with the local design community, the growing recognition, and the confirmation that Natuzzi among architects and high-end consumers of China is becoming more and more a point of reference and an icon of the industry.

Speaker #3: In China, we recently completed another successful road show alongside the opening of our flagship store in Beijing, where both Mr. and Maestro Lang Lang attended as ambassadors and supporters of this opening, as well as the ambassadors of Italy and China.

Speaker #3: It was followed by a series of events with the local design community, the growing recognition, and the confirmation that Natuzzi among architects and high-end consumers of China is becoming more and more a point of reference and an icon of the industry.

Speaker #3: In the UK, we're about to launch a major store refresh program across both Natuzzi Italia and Natuzzi Editions, which will upgrade not only visual merchandising and store displays, but also strengthen commercial momentum and store traffic conversion.

[Company Representative] (Natuzzi): In the UK, we're about to launch a major store refresh program across both Natuzzi Italia and Natuzzi Editions, which will upgrade not only visual merchandising and store display, but also will strengthen commercial momentum and store traffic conversion. Our contract business continues to build a strong international pipeline through relationship with developers, hospitality operators, architects, and specifiers. While geopolitical tension in the Middle East and India, two markets where we invested significantly over the last years, have delayed the closing and revenue recognition of some projects. By the way, these opportunities remain largely intact. At the same time, other regions are generating new opportunities that I honestly feel will help diversify and strengthen our global pipeline.

Pasquale Junior Natuzzi: In the UK, we're about to launch a major store refresh program across both Natuzzi Italia and Natuzzi Editions, which will upgrade not only visual merchandising and store display, but also will strengthen commercial momentum and store traffic conversion. Our contract business continues to build a strong international pipeline through relationship with developers, hospitality operators, architects, and specifiers. While geopolitical tension in the Middle East and India, two markets where we invested significantly over the last years, have delayed the closing and revenue recognition of some projects. By the way, these opportunities remain largely intact. At the same time, other regions are generating new opportunities that I honestly feel will help diversify and strengthen our global pipeline.

Speaker #3: Our contract business continues to build a strong internal international pipeline through relationships with developers, hospitality operators, architects, and specifiers. While geopolitical tension in the Middle East and India—two markets where we invested significantly over the last years—have delayed the closing and revenue recognition of some projects, by the way, these opportunities remain largely intact.

Speaker #3: At the same time, other regions are generating new opportunities that I honestly feel will help diversify and strengthen our global pipeline. So, although the market environment remains challenging, the first months of transformation have confirmed that a stronger commercial discipline, closer cross-functional integration, and a sharper market focus are creating the foundation for sustainable and profitable growth.

[Company Representative] (Natuzzi): Although the market environment remains challenging, the first months of transformation have confirmed that a stronger commercial discipline, closer cross-functional integration, and a sharper market focus are creating the foundation of a sustainable and profitable growth. We remain confident that this initiative will strengthen Natuzzi's competitive positioning and support long-term value creation for our shareholders. Thank you, and I'm available for your questions if you have some.

Pasquale Junior Natuzzi: Although the market environment remains challenging, the first months of transformation have confirmed that a stronger commercial discipline, closer cross-functional integration, and a sharper market focus are creating the foundation of a sustainable and profitable growth. We remain confident that this initiative will strengthen Natuzzi's competitive positioning and support long-term value creation for our shareholders. Thank you, and I'm available for your questions if you have some. Thank you very much.

Speaker #3: We remain confident that these initiatives will strengthen NATUZZI's competitive positioning and support long-term value creation for our shareholders. Thank you, and I am available for your questions if you have any.

Speaker #1: Thank you very much.

Pasquale Natuzzi: Thank you very much, Cesare.

Speaker #2: Again, if anyone does have any questions, please click on the raise hand icon, and I will give you permission to unmute your line and ask your question verbally.

Moderator: Again, if anyone does have any questions, please click on the raise hand icon, and I will give you permission to unmute your line and ask your question verbally.

Operator: Again, if anyone does have any questions, please click on the raise hand icon, and I will give you permission to unmute your line and ask your question verbally.

Speaker #4: Hello, this is Kirby Newberger.

Kirby Newberger: Hello, this is Kirby Newberger.

[Analyst]: Hello, this is Kirby Newberger.

Speaker #1: Hi Kirby.

[Company Representative] (Natuzzi): Hi, Kirby.

Pasquale Junior Natuzzi: Hi, Kirby.

Speaker #4: So, CJ mentioned something about opening new stores. Where does the financing for the new stores come from?

Kirby Newberger: CJ mentioned something about opening new stores. Where does the financing for the new stores come from?

[Analyst]: CJ mentioned something about opening new stores. Where does the financing for the new stores come from?

Speaker #3: I was—I was merely referring to, and I tried to be clear on that, so sorry if I wasn't fully. These are FOS, the so-called franchise stores, which are stores opened by partners that are confirming how the NATUZZI brand, through their investment, is a brand with great value and strategic, I would say, alignment to their investment.

[Company Representative] (Natuzzi): I was merely referring to, and I tried to be clear on that, so sorry if I wasn't fully. These are FOS, the so-called franchise store, which are stores opened by partners that are confirming how the Natuzzi brand, through their investment, is a brand with great value and strategic, I would say, alignment to their investment. These are financed by third parties who are heavily investing on the expansion of our store network.

Pasquale Junior Natuzzi: I was merely referring to, and I tried to be clear on that, so sorry if I wasn't fully. These are FOS, the so-called franchise store, which are stores opened by partners that are confirming how the Natuzzi brand, through their investment, is a brand with great value and strategic, I would say, alignment to their investment. These are financed by third parties who are heavily investing on the expansion of our store network.

Speaker #3: So these are financed by third parties who are heavily investing in the expansion of our store network.

Speaker #4: Great, thank you. That answers my question.

Kirby Newberger: Great. Thank you. That answers my question.

[Analyst]: Great. Thank you. That answers my question.

Speaker #3: Thank you.

[Company Representative] (Natuzzi): Thank you.

Pasquale Junior Natuzzi: Thank you.

Speaker #2: Once again, if you would like to ask a question and you have the ability to unmute yourself, please do so to ask your question.

Moderator: Once again, if you would like to ask a question and you have the ability to unmute yourself, please do unmute yourself to ask your question.

Operator: Once again, if you would like to ask a question and you have the ability to unmute yourself, please do unmute yourself to ask your question.

Speaker #3: Sorry, of course. If there are any other questions on any other day, we will be available to answer any questions that may come up in the next days as well.

[Company Representative] (Natuzzi): Of course, if there is any other question in any other day, we will be available to answer to any questions also coming in the next days. I'm coming up. Did you speak to Liz or no?

Carlo Silvestri: Of course, if there is any other question in any other day, we will be available to answer to any questions also coming in the next days.

Speaker #4: Did you speak to Liz?

Speaker #5: No.

Moderator: No, I didn't speak to Liz.

[Company Representative] (Natuzzi): Okay.

Speaker #4: Okay. Okay.

Speaker #2: Thank you so much. I do appreciate all your time today. This does now conclude today's NATUZZI conference, as Mr. Silvestri said. If you do have any follow-up questions, please feel free to reach out offline, and they will be able to answer any questions that you may have.

Moderator: Thank you so much. I do appreciate all your time today. This does now conclude today's Natuzzi conference. As Mr. Silvestri said, if you do have any follow-up questions, please feel free to reach out offline, and they will be able to answer any questions that you may have. We definitely appreciate your time today, and you now may disconnect.

Operator: Thank you so much. I do appreciate all your time today. This does now conclude today's Natuzzi conference. As Mr. Silvestri said, if you do have any follow-up questions, please feel free to reach out offline, and they will be able to answer any questions that you may have. We definitely appreciate your time today, and you now may disconnect.

Speaker #2: We definitely appreciate your time today, and you may now disconnect.

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