Esprinet S.p.A.

Good morning, everyone, and thank you for joining us for the EspritNet Group Q3 2025 result presentation. I'm Giulia Perfetti, investor relations and sustainability manager of EspritNet, and here with me, as always, is Alessandro Cattani, CEO of the group, who today, together with Giovanni Testa, our chief operating officer that I have the pleasure of introducing to you, will comment on the results. Today's call is being recorded and the podcast will be posted on the ESPERET website in the investor section together with the presentation. Your lines have been placed on mute, but after the speaker's remarks there will be a Q&A session. Please note again that this presentation contains forward-looking statements, so I would like to draw your attention to the regulation note on page 2 regarding the information contained within this document. I will now pass the call over to Alessandro to begin presenting and commenting with you on their Q3 2025 results. Alessandro, over to you.

Thank you. Thank you, Giulia, and welcome, everybody. As Giulia said, today, Giovanni Testa, our chief operating officer, who's been with the company for the last 23, 24 years, is joining me to comment on more technical aspects related to the P&L and balance sheet. So I will start with the highlights of our first nine months and Q3 more specifically. We have delivered another quarter of solid growth. We have sort of hit on all cylinders in terms of profitability and financial metrics. We have grown our revenues, we have improved our market share, improved our gross margins. We managed our cost structure. We grew EBITDA, reduced the financial charges, and grew EBIT and pre-tax. And we have reduced our net debt by close to 60 million against the September of 2024. So we're pleased of what's happening. Just digging into the results, the sector has again recorded excellent performance, especially in the Iberian Peninsula, where the sector is benefiting, among other things, of a really favorable economic situation. Whilst in Italy, we have seen a basic flat situation since the beginning of the year. Italy has been particularly well-performing last year, and this year is having a more flattish performance. As I said, our gross sales grew by 7%, and we had really excellent performance on our solution and services segment, as well as on the Zellia Tech division. So the green technology and energy efficiency segment, which we established last year. And since Q4, we will also benefit in this area from the recent acquisition of Varmat, a company that we expect to expand. helped the group to grow furthermore in this really interesting new segment, which is adding close to 16 billion of addressable market for the group. Gross profit was up 5%. Giovanni will comment more on it. And the gross profit margin was up as well. EBITDA adjusted, which is equal to EBITDA is up 3% in quarter. sorry, 3% in the past nine years, nine months of the year and 4% in the quarter. We had very strict control of our cost structure after Q1 where we had a spike in costs. We have been able to effectively manage our cost structure in the following two quarters and we plan to do so moving forward. Cash cycle is standing at 28 days, one day less sequentially, and we have improved our net financial position against September last year of close to 60 million euros. So, based on this, we reiterate our position regarding our focus for the full year. We have a range of a bid objective for the end of the year between 63 and 71 million euros, and we expect to be on the upper portion of this range. So, now, digging more specifically on sales, As I mentioned before, Italy was, since the beginning of the year, flat as a market, and we grew 1% in terms of gross sales in Italy. The market was down 2% in Q3, and we were flat in Q3. We matched the growth of the market in Q3 and we are behind the growth of the market, which is quite remarkable, by the way, mostly because of decisions taken in the, especially in the area of smartphones and some other consumer electronic products where we walked away in order to improve our net financial position, our working capital. Portugal. It's growing as a market, but we are way ahead outgrowing the market after two years ago we took bold decisions in terms of restructuring of our go-to market, getting rid of the vast majority of cash-divorcing businesses, and hence we're now seeing a strong rebound, mostly in the SME market, and to a lesser extent in the retail segment. If we look, Morocco is growing again. We don't have figures around the Morocco market. It's a small business for us, but extremely profitable and very interesting. If we look at the product categories, what I would draw your attention to is the growth in the market of the screen segment. This is a blend of PCs and smartphones. The smartphone market is not performing so brilliantly, but the PC market is growing high double digit, and we are growing in line and above the market, especially in PCs. We have sort of made our choices on specific areas of the smartphone business in order to improve our working capital. devices is an area overall that is, as a market, since the beginning of the year, is underperforming. We have witnessed a special pressure on TVs and video gaming, and we have suffered a little bit more than the market. But again, here, more so, we are making our choices, taking our decisions in terms of what is happening and what will happen with our product portfolio because of return on capital and implied optimizations decisions, especially in terms of working capital. Solution and services. Well, in solutions, we are way outgrowing the market, which has been rather flattish in Q3, but is expected to be still vibrant in this quarter. The green tech is down compared to last year, mostly because, well, effectively only because of a major shortage of products we had. In October, we booked high double-digit growth in this segment, recovering at that were due to happen in September and which were not possible because of lack of products. So we're again positive here. I remember everybody that we had an acquisition which will be hitting our numbers effective October 1st. So we'll see them in this current quarter, no effect whatsoever. in Q3 and, well, in the first nine months, varying the fact that during Q1, mostly, we bear the cost of our due diligence on VAMAT. And that was part of the spike of cost that we had during Q1. We fully expanded the cost and we didn't put anything in our balance sheet. Last but not least, if we look at the performance by customer type, we grew in line with the market with retailers and retailers during the course of Q3. During the first nine months, we underperformed again because of choices made, especially on product segment. And on the other side, we outperformed the market in the IT reseller segment. Again, a clear message of focus on higher margin businesses, especially in solution and services. So now, if we look at the P&L of the three dimensions, so the three businesses we run, Esprunet as a whole with PC, smartphones, and printers and consumer electronics, Vivali, which is focused on solutions and services, so value-add IT distribution, and Greentech solutions that run under the brand Azalea Tech and also in the next months. we see that we had, in terms of revenues in the quarter, an aspirant that grew, especially because of very good performance in screens, namely on PCs. We were in line with the previous year in Vivaldi, and we were down on Zeliatek. In terms of a beat-up, and EBITDA margin, you see that we had a little bit less of EBITDA margin in the quarter on V-Valley, mostly driven by lower absorption of fixed costs, whilst we had higher performance in Esprit, exactly for the same reason. Like-for-like performance in terms of gross profit was mostly positive on all product lines where we outgrew the market. And even in those areas where we had a little bit of sales decline, gross profit margins were up. But Giovanni will comment overall in a second. And on green tech, even though we had a decline in revenues, but the profitability was up. So all in all, we're fine on the performance. And if we go to the following slide, we can dig into the P&L and balance sheet, and I leave the stage to Giovanni. Please, go ahead.

Thank you, Alex. Good morning to everybody. The P&L summary, we can start from sales. Alex already gave you a lot of details of what we did in Q3 and in the first nine months. I would like to underline that the group that we can see in sales in Q3 and also in the nine months are related for the most part for Q3 for the performance of the devices and the screens, the overall screens and notebook that we managed through the Apple Sprint brand. and for both the nine-month and Q3 for the high performance of services and solutions. And we are very happy of what we are doing in this segment because it's a clear demonstration of what our strategy declared some months ago is bringing some very good results and a good performance. The gross profit percentage, is higher both for Q3, respect to the previous year, and also for the nine month. And we can see that also the growth or the gross profit at absolute value is more than the growth of the sales. So it's another demonstration that we can't go through some vendors in which we can have a very good performance connecting what we can call vendor contribution to a vendor financing that we will see later in the balance sheet summary. About different sales SG&A and we can divide this type of cost figures of the loss balance sheet into parts. The variable costs are higher than the, both in the Q3 and also in the nine-month, are higher than of the previous year for some few basis points. On the contrary, the total SG&A are growing in Q3 less of the nine-month accumulated. This is because, if you remember well, and also Alex said a few minutes ago, we had the spike in Q1 related to the cost of M&A deal of OAMAT that we closed. We have the closing in October the 1st and the signing in September 15th. And also for other two aspects, that we have to underline. The first one is that we anticipated some advertising costs related overall for their own brands in Q1. And the other aspect was the increase of the collective bargains that we had in March. And the second tranche we will have in November. So we'll see in the next quarter. About the fixed cost, for sure, we see that the percentage of incidents on sales, even the quarter to quarter, And also in this quarter is less of the cumulative one. And we hope to have the same performance also in Q4, seeing that the very strict control of the fiscal cost is bringing some results. For the other fixed costs that we can mention now, we had some technology costs increased with respect to the previous year, connected to AI and cybersecurity projects, and some a cost related to ESG new regulation of this year that obliged us to stay in line with the new rules. At the end of the day, the EBITDA margin is still flat for the Q3 with respect to the previous year. and is in line for the near-to-date September. The percentage, sorry, the growth of absolute value in Q4 was higher than the percentage of growth in nine months. Between EBITDA and EBIT, passing to the EBIT figure, more or less are the mainly due to the deposition of the right of use of the warehouse of Tortona, the new logistic hub of the group that we opened, if you remember, in August 2024. And in fact, the impact, passing to the next line of the profit and loss, we can see that the impact of EFRS 16 that is growing in a month, 3.5 million euro against 2.7 million euro. In Q3, the fact that we opened in August, and so we have the impact also in the previous year on the three months of the quarter is flat. About other financial expenses, We are flat in the community in that month, but we can see a very important decrease of 29% of the financial cost in Q3, mainly due to a lower average debt that we had in Q3, for a small part also for the interest tax that is lower than respect to the previous year. All these figures bring to the PBT that is growing, from our point of view, a lot in the accumulated nine months of 16%, but also the performance of Q3 of 5% of growth is, at our eyes, very important. About the net income, we see a decrease of the net income that is fully connected to a different income taxes that is applied in Q3, but we think that the estimated tax burden that we have applied will bring at the end of the year to have the same tax rate of last year. If we pass to the balance sheet summary, we'd like to focalize your attention on two aspects. The first of all, that also Alex mentioned before, is the decrease of net financial debts of around 16 million euro. that are the result of a better way to manage our working capital. Our working capital is strictly connected to a commercial working capital because for us, everything is connected to inventory, trade receivable and trade payable. If we see the figures and the progression of the figures, since from the September 2024 to September 2025, we can see that compared overall the two quarters, we can see that we decrease, we were able to decrease of more than 20 million euro the inventory. We were able to decrease the trade receivable of other 20 million euro roughly. And we are with a very small reduction of trade payables that are connected fully to a product mix different from the quarter of 2024, the third quarter of 2024. We are fully focalized to the reduction of the working capital And overall, to have from our vendors, as I said before, not only a vendor contribution that is reflected in the increase of the gross profit, but also a better vendor financing that, in our view, is to manage better, to reduce the inventory days, and at the same time, to have a TNC for the time of payment of vendors, the DPO, better and larger than the past. So what we are doing is trying to move to vendors that structurally require AI of the working capital and moving to a better working capital vendors just to have, at the end of the day, better working capital and also a net financial debt in decreasing respect of what we did in the past. This is reflected also in the ROSE. We have in these next few slides some graphics that reflected the performance that we have in the quarters. Overall, I would like to show you the next one. That is the working capital matrix of quarter-end. that can show you in a graphic way two different aspects. The first is that the test cycle of the last four years, the Q3 of the last four years, is decreasing every 44 days, 36, 35, 32. And also for this year, with the different seasonality respect to the previous year, 2024, we can see a continuing decrease of the cash cycle. In our matrix, our target is 19, 20 days, because we have calculated, we think to be cash neutral at 20 days. So our target for the future is to arrive to 2020. Alex?