Safilo Group S.p.A.

Good evening and welcome to the Safilo Group first quarter 2025 trading update. This call may contain forward-looking statements relating to future events and operating economic and financial results for the Safilo Group. Such forecasts, due to their nature, imply a component of risk and uncertainty due to the fact that they depend on the occurrence of certain future events and developments. The actual results may therefore vary depending even significantly to those announced in relation to a multitude of factors. Today's participants are Angelo Trocchia, Chief Executive Officer, Michele Melotti, Chief Financial Officer, Barbara Ferrante, Director of Investor Relations. I will now pass the call over to Mr. Angelo Trocchia, Chief Executive Officer. Mr. Trocchia, you may begin.

Thanks. Good evening, good evening everyone, and thank you for joining us today to discuss Safilo's Q1 2025 trading updates. The start of the year has confirmed our group's ability to perform with resilience and focus, despite a market environment that remains uncertain and complex. We will see over the next few slides how our brands and regions contribute to an increase in sales growth and to a solid financial performance built on a combination of disciplined commercial execution and the ability to adapt to the rest, to the environment. We entered 2025 with encouraging momentum. January in particular started on a solid note. with North America showing signs of renewed traction after a promising end of last year, as we discussed back in March. This momentum, however, was gradually tested as the quarter progressed. Geopolitical tensions and, above all, the escalating trading dynamics started to weigh on client sentiment. We operate in an environment that remains highly uncertain, but even with this complexity, I believe our first quarter performance speaks to the resilience of our portfolio and the strength of the relationships we continue to build with our clients across our key markets. Let me now give you the highlights of how we perform, providing some of the key drivers. we closed the first quarter with net sales of 285.8 million euros, representing a 2.2% increase at constant exchange rates, plus 3.1% at current exchange rates compared to quarter one, 2024. Europe once again proved to be our most balanced and resilient growth engine. the region where our innovation and customer focus align most effectively, helping us to drive broad-based growth across markets and brands. In North America, while the picture remained uneven, we recorded a recovery supported by the strong performance of the winter sport categories across all channels and by the reliable growth of our wholesale prescription frames business. Growth was driven in particular by the progress posted by Smith, which further strengthened his leadership in North America market for ski goggles helmet with positive results also on the eyewear. And, but not only that, also by Carrera and David Beckham, which consolidate the strong momentum already seen throughout 2024. In the quarter, we have also seen a positive contribution from Polaroid, building on the recovery record in the fourth quarter of last year. And by our key license, most notably Tommy Figer, Carolina Herrera, both Hugo and Matt Jacobs. Behind top line growth, we also delivered a nice improvement in both growth and operating margins. And most importantly, we generated stronger free cash flow and a further reduction in the net debt. These results prove and reinforce our ability to navigate short-term pressures while continuing to invest in the long-term development of our brand. With that, I will hand it over to Michele.

Thank you, Angelo, and good evening to all of you. As usual, I will take you through our regional performance, starting with sales in Europe, where we posted an increase of 2.8% at constant exchange rates. Growth was broad-based across all our brands and key licenses. Carrera delivered yet another standout performance, while David Beckham sustained impressive double-digit growth trend recorded in recent years. Fueled by both expanded distribution and rising productivity per door, as the brand continued to attract a broad and growing consumer base with its stylish offering and unmatched value for money. Among our licensed brands, Thomil, Fieger, Marc Jacobs and BOTS stood out, all posting double-digit growth. Trading remained particularly dynamic in France and Eastern Europe, where we continued to expand our customer base and increase productivity with existing accounts. When we looked at the different channels, independent opticians kept leading the way, and we saw that clearly in areas like Italy, Spain and Germany. In North America, sales were up 1% at cost exchange rates. Forex was a positive contributor in the quarter as the dollar strengthened, so at current exchange rate, the region was up 3.8%. Smiths kicked off the quarter strong, building on the solid momentum from Q4. Thanks to a great snow season, we saw double-digit growth both in sports store and it is direct to consumer channel with solid results across all product categories. During the PDO, we gained more ground in GALBOR, reinforced its leadership position, and also made some nice progress in our leveraging its ChromaPop Glacier Photochromic Lens stack, the launch of the 80s Archive ultralight model, and the first way of Pulse Virtual Brand Campaign going live. In the rest of the business, results were a bit more mixed. As we already referred to during our latest conversation in March, blenders had a difficult quarter, still impacted by a more promotional and competitive market environment in the entry price level. On a brighter note, our wholesale channel was positive, thanks to the steady demand for prescription frames. When it comes to brands, Tom Hilfiger, Carrera, David Beckham, Caroline Herrera, and Marc Jacobs continue to stand out as key growth drivers in North America. Asia-Pacific maintains solid momentum, slightly accelerating the exit pace of 2024. Sale will up 18.5% at cost and exchange rates, thanks to two specific drivers. On one side, growth was led by career in Australia, supported by successful co-branding initiatives like the one with Pat Cummings, the Australian international cricketer, and the rollout of his woman collection. On the other hand, the quarter... In Asia, it was also supported by a favorable phasing effect on a number of orders of key accounts and distributors. Finally, sales in the rest of the world declined low single-digit at constant exchange rates, down 2.9%, mainly due to the continued weakness in India and the soft trading also in Mexico. On the other hand, positive sales momentum remained both in the Middle Eastern markets and in Brazil. From an economic perspective, we deliver a strong and balanced performance at both the gross profit and EBITDA levels. Gross profit increased by 4.1% year-on-year, with gross margin improving by 50 basis points to 60.5%, up from 60% in the same period last year. This was largely driven by a favorable price-mix effect, supported by the absence of dilutive phase-out sales, unlike Q1 of last year when we were still phasing out Jimmy Choo. Our pricing strategy remained effective and helped offset a slightly negative channel mix, which reflected a higher proportion of sport products in the sales mix. Thanks to the improved operating leverage which helped us to sustain the increase in market investment to support our brand development, we were able to carry the gross margin gains directly through to adjusted BDAs which rose to 12% from 11.5% in the prior year. To wrap up with our free cash flow and net debt, we are very pleased to see a strong acceleration in cash generation, reaching 14.4 million euros, compared to 1.7 million euros in Q1 2024. This improvement was largely driven by our solid operating performance and disciplined work in capital management, particularly through inventory normalization. As a result, net debt declined to 68.4 million euros at the end of March, down from 82.7 million euros at the end of December. On a pre-FRS 16 base, net debt improved from 40.3 to 27.1 million euros. With that, I lend back it to Angelo for his final remarks.