Natuzzi, S.p.A.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Natutis Conference Call for 2023 Fourth Quarter and Full Year Financial Results. As a reminder, interested parties can join this conference call live, also via telephone, by dialing in the following number, plus 1-412-717-9633, then passcode 39259. In addition to the link already provided to join via video. Once again, if you'd like to join via telephone, please press plus 1-412-717-9633, then passcode 39252103-POUND. At this time, all participants are in listen-only mode. Following the introduction, we'll conduct a question and answer session. Instructions will be provided at that time, free to queue up for questions. Joining us on today's call are Mr. Antonio Achille, Natuzzi's Chief Executive Officer, Mr. Pasquale Natuzzi, Founder and Executive Chairman, Mr. Carlos Silvestri, Chief Financial Officer, then Mr. Mario De Jonato, Chief HR Organization and Legal Officer, Mr. Diego Babo, Global Retail Division Officer, and Piero Di Renzo, Investor Relations. As a reminder, today's call is being recorded. I'd now like to turn the conference over to Piero. Please go ahead.

Thank you, Kevin, and a good day to everyone. Thank you for joining the Natruzzi's conference call for the 2023 fourth quarter and full year financial results. After a brief introduction, we will give room for the question and answer 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 last 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. And now I would like to turn the call over to the company's Chief Executive Officer. Please, Antonio.

Thank you Piero and good morning everyone and good afternoon for people which are connecting from Europe. Let me start to briefly discuss the figures of the last quarter of 2023 and the full year of 2023. Then I will provide, together with my colleague, an understanding of what we are doing and our long-term objective. So starting from the last quarter of the year, we reported a decline in sales. It is important to consider this decline in perspective versus 2022, where throughout the year, and especially in the last quarter of 2022, we had a strong backlog. If we net the performance of 2023 last quarter from that effect, the decrease is still significant but is in line from what we observe in the industry in general, given a very tough market for the durable and furniture in 2023. This is, let's say, clearly tough market condition. In 2023, last quarter, we work to accelerate our transition to becoming a brand retail company. In particular, in the last quarter, we have reported sales from branded goods in excess of 92%, which means that basically our entire sales is composed by branded sales, either Natuzzi Italia or Natuzzi Edition. The percentage was 85% at the beginning of 2021, so a step acceleration. Equally for retail, that if you wish, is the natural consequence of becoming a brand company, retail on total sales has been nearly 10%. Diego, can you put on silence, please, from 52%, which was reported in 2021. I will discuss later, but I believe this is a very important element because Natuzzi has completed a transformation as investor or other people interested in our story. Now we should really in full look at Natuzzi as a company which has been investing for more than 20 years to establish itself as a globally recognized brand and especially with Natuzzi Italia in the high segment of the market. This also implied that we had to invest, and we will comment later also with the help of Diego, to evolve our tools and organization really to control this retail and branded business in a manner that before was not required by the company. The other area which became evident in 2023 last quarter and more in general in the full year is that we are executing and accelerating on our restructuring plan and effort. In 2023, last quarter, in fact, we accrued 5.9 million of one-off restructuring costs for interventions that will become, from a cash perspective and from a benefits perspective, fully visible in the following year. In the last quarter, our gross margin net of this one-off restructuring activity has been of 36.2%, which compared with 38.8 in the last quarter of 2022, and it compared with 34.6 in the last quarter of 2019. So we are still in trajectory of improving margin. Clearly, the fact of having a sub-utilization in factory as a parcel is impact on the margins. These key figures on last quarter of 2023. Looking at the full year, I would say the key underlying elements that apply to 2023 are pretty similar in the sense that for us, as for the majority of the people, we compete with the public, the result. 2023 has been a year where after two years of very strong demand, given the implication of real estate and low confidence of consumer, we witnessed a lot of postponement in purchasing. And again, this caused a decrease that if you compare it with 2022, net of backlog is significant, but in line with what we observed from competitors. We discussed about restructuring. Let me give you a few numbers to give you the size of what we're talking about. In 2023 only, we reduced our team, especially from factory, by 514 units, which brings the total of reduction from the beginning of 2021 to 759 units. equivalent to 17.5% of the total workforce, which I believe is a significant achievement because in most of the jobs where we operate, starting from Italy, there is a very rigid labor law. So every step needs to be accurately planned and accurately executed. And we did so avoiding any kind of, let's say, turmoil in our environment. This restructuring will produce on a yearly base a benefit of 22.5 million running benefit and labour cost compared to 2021. In 2023, we also kept investing some 12 million, of which 4.6 in retail. We opened nine new doors. And 7.2, again, in the area of factory enhancement. So this is the key highlight on numbers and figures, on which then our C4 will provide some other details. In opening the Q&A, I would like to give you more holistic and strategic perspectives. So it's clear and evident that the results reported in 2023 are an effect of an adverse market for furniture. It's clear that those figures are well below our mid-term target and our potential. Having said that, there are three key messages I would like to share and elaborate on. The first one is now that we really have completed the transformation to become a brand company. As I mentioned, nearly 93% is branded, which is a huge, huge achievement considering that the company has been investing 20 years to arrive to this point. And its regions were very different because in the region, Natuzzi, it was an incredible growth story, but very much focused on the value segment. So it was selling at the lean price in the US in the range of $395. Currently in US, average ticket for Natus Italia is in the range of $9,000 and the best sold configuration product is in the range of $14,000. So you can imagine how much it takes to legitimate a brand to do this kind of stretch. So first element, we are a branded company. Second element, we really invested to excel in distribution. Distribution for us is both retail, where we mean the US direct to pre-store and franchising, but also, which is very important for us, wholesale of branded product that we distribute through a format which is called gallery, which again is a control format where we express the right merchandising and the right brand experience. And the last element, as I mentioned, Transformation, which we've been working on very hardly to prepare it in the last few months and year, now is getting to a pace that is what is going to be continuing and accelerating in the following year. So, to get some more detail, talking about the retail front, we now have 680 stores. with the banner Natuzzi, being them Natuzzi Italia, Natuzzi Edition, being them DOS or Franchising Operator. But for a customer perspective, those are store. And then we have some 600 galleries which are store in store. For us, both deserve equal attention. For the first area, the stores, we worked very much to really learn how to do retail and to really control the sales at sell-out level. Doing so required quite a significant program of investment in AT because historically the store were just, you know, an account number. We didn't really have an understanding of what's happening in the store. Now we have a very timely and punctual understanding of what's happening in the store in terms of people getting in, people buying, what they buy. And this, for our transformation to become a consumer-centered company, is really invaluable. To support that this knowledge gets progressively spread across our market, we created not only systems, but an organization. In particular, some 12 months ago, we created an organization that we called explicitly Global Retail Excellence Division, which really has the purpose of absorbing best practices, codifying them, and making them available. to our directly operated stores, but progressively also to our dealer, because we want the experience and the productivity also at the dealer level. Let me invite Diego Babbo for a brief illustration of some examples of what we do under this chapter of Global Retail Division.

Thank you, Antonio. Good day to everyone. Just briefly, let me introduce myself while I'm attending this call for the first time. On top of my previous experience in the retail downstream within the old company sector, I've been working for more than 20 years now in this company. embracing many roles within our retail environment, from purchasing to construction and development. And I can witness the effort that Natuzzi put in place in order to sustain the transition from manufacturer to retailer and a lifestyle brand, which had to do with cultural and mindset evolution for the majority of us, supported through the adoption of new tools and routines. And this is exactly, as Antonio was saying, what Retail Division established last year is about. Our goal is to set up appropriate retail processes and guidelines in order to generate consistency within the brand experience and ultimately increase stores' profitability. Our willingness is to partner with each regional manager and assisting him or her in achieving their retail network's expected performances. But let me give you examples of some recent achievements. We have recently launched a state-of-the-art 3D room configurator, which is allowing a more efficient interaction at store level within the local trade community. We have also revised the compensation scheme for the store manager and design assistant, which, together with the launch for the first time here of a sales contest for the global DOS network, is intended to boost performance and sense of belonging for our employees. We are also cherishing our store staff by addressing their training needs through a brand new online platform, boosted with the artificial intelligence driven multi-language live translator, which will allow for the first time ever to reach all our networks, on top of the classroom sessions with more than 300 attendees already set up. Leveraging our store staff has already proven to achieve very good results in some of our more representative stores, with double-digit growth, for instance, in our ambassador store in New York and Madrid. Back to you, Antonio.

Thank you, Diego. Just in synthesis, I mean, to make a long story short, the Global Retail Division has the objective to improve organic performance because you have to think that with 600 stores, and then we'll discuss the role of those stores in China, it's quite terrific the upside potential that we have by simply working on organic growth. Then I mentioned branded wholesale. So as I anticipated, 40% is still distributed within wholesale branded product. That for us is still a very important strategic part of the business. So for that, we developed what we call Natuzzi Commercial Excellence Programme. what is about basically two things one is merchandising the format so we define a new brand gallery format so basically it's a kind of business card of the natuzzi in a multi-brand environment i know most of you a lot of you come from us so you need to think about the large furniture retailer where you find different provider maybe on the same floor Given the confidence we have in our brand, we want to have a special role and positioning on the floor, which means that the shopping environment and the brand presentation need to fully express the potential of the brand, like it happened in our store. So in the wholesale, we really invested on these topics, again, with organizational people appointed. Secondly, the commercial excellent program aims at daily improving the performance of our commercial team. We have 304 people, a different role in the organization, some direct employees, some other agents, which are dealing with clients, with dealers. So we are standardizing the methodology, they should approach this dealer, but also we are setting very clear productivity target. and budget by dealer that can be managed centrally. Again, because Natuzzi is a very spread organization and we realized that we needed to really reinforce the control of the center. On the retail front, I believe it's very important to show a concrete sign of our commitment to debt to remember that in 2023, which is a year where a lot of company cut investment we actually open nine stores all which sticks in north america a store is a name you know but store can be very different the store that you see open 30 years ago they are very different on what we open now what we open now especially market north america we really strive to have signature location signature retail infrastructure environment An example is Manasset. Manasset, as you might know, is a long island. It's called the Miracle Mile because it's really connecting Manhattan to the anthems. And it's one of the areas with highest productivity. There we opened an absolute flagship. which is really a very iconic new store. And this is an example of what we are now doing when we talk about new stores from Atos Italia. So they're really major, major investment in the appropriate location to fully express the potential of the brand, commercially and from a brand perspective. Shifting here to the restructuring. Maybe before that, let me do a couple of comments on individual market. Now, as you know, as we discussed, we operate in other markets. But let me provide some insight in the three most important markets, which are U.S., China, and Europe. On U.S., our focus remains very high. We believe it is one of the highest priority and opportunity we have. is where the company is listed, is where the company, in a sense, found its own way of doing business. We open six directly operated stores and one franchising, an additional seven galleries, and there is quite an interesting pipeline of new galleries as we speak. We also stabilized the organization with Lumosotti taking on the baton from Jason Kemp as announced in the press release of March. Lumosotti is a person who has more than 20 years experience in North America and was with us for more than two years, really coming from the same team of Jason Kemp. And then we have Scott Kruger, who is developing the brand that was his business. To accelerate on this letter, we also have now 24 independent agents, which basically are covering, I would say, the state, not second priority, but the one where we didn't have yet a direct agent, a direct rep. So this, under the belief and certainty that the U.S. is a large opportunity, is a continent, is made of significant states where currently Natuzzi is no longer distributed. but where being distributed and very successful for more than 30, 40 years, there is a clear business case for coming back. The other market where I would like to provide some background is China. In fact, out of the 680 stores, more than half, 346 are in China. First, I want to provide some insight on how to read the number of stores. the productivity of stores, because in fact, the store belonging to the JV where we don't have the majority are not consolidated. So that is important because otherwise, when you assess the productivity of the retail, you might think that, you know, in some store, we just, you know, entertain clients, but we don't sell. So when we look at the productivity, in a sense, the store need to be carve out because for the store that belong to Natus Italia, which are 96, we report in our P&L the sell-in. For the store and the sedition, which are the majority, we report in our P&L only the cost of production plus a mark-up, because this is the way in which they deal with the JVSV structure. Of course, then, as a financial shareholder, we take fully benefit of the growth of the JVSV. In the journey of becoming a global retail company, we recognized that the JV needed to be more integrated in our way of working. So this happened through our presence directly. For instance, myself, but also with Pasquale, we've been several times, personally six times since it was possible to travel back. And now the team is really working with the same approach when it comes to retail, merchandising and visual. We are very excited to welcome Sun24, the top dealer of Natuzzi Italia, to the upcoming Milano Design Week, which is a special opportunity not only to develop business, but also for brand positioning. And this year, it will be an extraordinary event because Natuzzi celebrates 65 years of heritage. And not many companies in our environment can arrive and celebrate that milestone. So China is now integrating our IT system. We can see the performance at the level. We can see the performance at the US level. And this for us is a major achievement and is the base on which we will build to increase the performance of China operation through our GV team that sits in Shanghai. That's on the two largest markets. I was anticipating on the restructuring. Restructuring for us is very important. It comes from, as a consequence of the journey we are doing, you have to imagine the Natuzzi, it was historically a huge production platform. It produced also for third party, just to name one, which was a client since a few years ago. So you can imagine, you know, what it means in terms of size of production, but also in terms of capabilities to move from producing that kind of product to produce something which is really top of the market and allow us now to develop, for instance, the contour business. We are developing business with global leading resort and hotel, five-star hotel in the world. It's been a huge stretch. from a brand perspective, but also from a production perspective. And one of the consequences is that we don't need that much capacity anymore. Executing a restructuring is never easy. Executing a restructuring in Italy is almost impossible. But we are achieving it step by step. Now it's becoming visible in terms of numbers. As I mentioned, we let go 759 people out of VIX 260 are in Italy. south of italy i can assure you that normally when you touch this kind of topic before you get strike and then you get the result we've been achieving this without any strike we're looking at the net saving of 22.5 million and i would like mario which has been really a leading force in driving us to this restructuring to provide some more insight on what we achieved so far but most notably on the way forward on what we want to achieve with the full restructuring of our operation.

Thank you, Antonio. Good day to everybody. Just a few words before introducing myself because it's the first time I'm joining this event. I have more than 30 years of experience in different core tests. like big corporations such as Unilever or other Western companies, and I am quite used to managing particular situations in which is needed a deep experience in heavy industrialization contexts, like in Italy, but not only in Italy. In all my experience, I have always managed restructuring, change management, and transformation projects. Antonio has already highlighted the most important figure of our transformation journey, so I don't want to repeat them. What is important for me is to underline that this is not just a reduction plan, because honestly we are managing in the meantime a fair approach for the redundancy but also an important transformation for the rest of the our colleagues in particular we are managing an important training program for all our people upskilling and reskilling for the digital challenges that we will have in the next future. And just for giving you an example, in Italy, during 2023, we have done more than 100,000 hours of training for our colleague for realign their competencies, not only in the commercial side, but also in the factories, because we have invested a lot of money for creating a future way of managing our production in terms of 4.0 transformation program. The other important point is, as already said by Antonio, that we have to deal with different legislation. In some cases it is simpler, it is easier to manage the reduction of people. In some other cases it is a bit more complex. And obviously we have to approach everything with the usual ethical, cultural approach that Tutsi has. uh indeed this is also the reason for which you can see an acceleration in 2023 for the number of people that we let me say supported in their exit this is the due to the fact that we spent several months to find a good agreement with the italian government with the local government in the other countries and with the union for having a very very let me say, agreed way of managing this redundancy without any claim, without any strike. And this is also the reason for which we will continue to do that in the next couple of years. In Italy, in particular, we are using a specific measure that could be considered a sort of early retirement, and this is also the reason for which, as Carlo will better explain in the following slides, minutes, you see that we have accrued the entire cost of redundancy of those people, but the cash out will be in the next five years. Thank you, Antonio. I think that you can... Antonio, you are muted.

I said, thank you, Mario. I'm sure there might be questions later on. I suggest, Carlo, that you briefly double-click on some of the figures we mentioned, and then we open up for the questions that I'm sure our audience has.

Good morning everyone, thank you Antonio, Mario and Devio for your notes. I will go very quickly through some of the numbers. As Mario was mentioning, talking about the standard for median of restructuring cost, it has to be noted that the application of related accounting principle was asked to accrue such labor interest structure as soon as the corresponding liability arises towards our employees. And the majority of such liabilities arose in the fourth quarter. So, in short, it was planned but we cannot prove in the previous quarter. From the financial perspective, we have paid almost half of it and the other half will be paid in the next five years. This, of course, impacted the way we need to look at our gross margin. I'm going to provide a homogeneous comparison deducting all the impact of this restructuring cost in the previous year for the last quarter. I will provide it for the full year. If we then neutralize this effect, 2023 close with a gross margin of 36.3 versus 2022 at 35.6, 2021 at 36.2 and 2019 at 31%. So, confirming the improvement and cost improvement that we have been having in the gross margin in the previous year. How we did achieve that? Not only because we were able to align the level of purchase and consumption to the new sales volume, but because we did achieve a better inventory management, a continuous renegotiation of the condition of the supplier. And this goes also for all the industrial costs that will manage a better cost controlling activity. Briefly talking about operating expenses and in details about the selling expenses, administer expenses, we can see in our numbers that from the selling expenses We can network and hire to improve the quality of our personnel. We were able almost to compensate the lower volumes and the impact of the overall selling expenses passed from 26.7 in 2022 to 27.8. Also, in this case, to every negotiation, especially of the transportation costs. While for the administrative expenses, we did have an increase overall of 2.1 million, and this brought us, in terms of impact, from a 7.7 in 2022 to 11.4. This, of course, is where we need to work, we are constantly working, and is a One of the focus of the manager also for 2024, but it can be partially justified because we did invest in 2023 specifically 400,000, 0.4 million to further digitalize our company and 0.8 million always for accrual for the reduction of our workforce. workforce and then on top of that in 2022 we did achieve a half a million euro contribution from the government on this perspective. The last word of our net finance costs that did account for 9.3 million in 2023, while 8.5 million in 2022, we did lower our average outstanding bank debt of 7%, but we were impacted negatively of the average increase of interest from 4.4 in 2032 to 6.2 in 2023. I will leave now the floor for questions.

Thank you. We're now conducting a question and answer session. If you'd like to ask a question and you're over the web, you may raise your hand by using the ask the question feature. If you're dialed in by phone, you may press star one on your telephone keypad to be placed in the queue. Once again, please use the ask the question feature to raise your hand, or please press star one on your telephone keypad. Our first question today is coming from David Kanin from Kanin Wealth Management. Your line is now live, sir.

Hi, good morning. Thanks for taking my questions. The first one is in regards to China. I know the government has been working on different stimulus measures, including lowering interest rates. Have you started to see an inflection there where things have bottomed and they're starting to turn up?

So let me comment on China because I feel equipped. I spent, I believe, three months out of six in China. And some of those actually were really visiting stores. So I visited 70 stores. A fair share of those are in what we call a furniture mall. So you have to imagine what in the US can be a department store, but floor by floor, it contains all the different categories of furniture. The traffic is still very low. So China is still a market that needs to find its way to full recovery. I believe you are very deep in a global, let's say, insight. You have witnessed what happened to Evergrande. You're witnessing what's happening to other firms much larger than us. Kering reported a 30% loss of Gucci in China. So for durable, you can imagine it's even more sensitive, the loss in spending versus fashion. So long story to say what. For Natuzzi Edition, which is more our affordable brand, we see a kind of initial symptom of rebounds. For Natuzzi Italia, not yet. And we are working really to use the best of this Milano-Dezenvicos as a way to re-engage with our key dealer. So as we are confident that the strength of Natus in China will definitely pay off because we are by far the largest distributed company. Our competitors have few dozen of stores. We have 350 stores. So we are highly confident China will be a strong upside. The exact timing when this will become strongly visible in our P&L is still uncertain in terms of weeks and months because of the macroeconomic and consumer environment in China. Okay.

And then, excuse me, in the rest of the world, especially North America, have you started to see stabilization or with written orders a little bit of an improvement in to start 2024?

So on North America, we do see definitely sign of improvement when it comes to, you know, performing area of the business. They are performing stronger in 2024. We are still dealing with a tail of overstocking of the channel. But I say compared to China, I think it's legitimate to expect a faster rebound of business in the U.S. and in China. We also, as we speak, Mario is in the U.S. Again, we are really having a close eye on what we can do to better support our team, basically starting from today. But with a peak in the rest of the week, the high point market for the wholesale branded business, where, again, we believe we have a very strong and compelling offer that we're bringing to the market. On the retail, we're working one by one to bring quickly. at the regime, the new opening, on the historical stores, performance has definitely improved. For instance, I didn't mention it, but if we take the first three stores in terms of productivity, but the same can be to the first 10 stores in terms of productivity in North America, And you compare it to 2019, the like-for-like improvement in the range of 50% if we take the top 10 stores, and 70% if we take the top three stores. So it means that in three, four years, we've done a huge step in terms of being able to manage stores in the U.S. The first three stores, now they are basing at $4 million and above per year. So definitely there is, if you look across cycle, a very, very strong trend of improvement within North America.

Okay. Yeah, I'm a big believer in you guys expanding your North American footprint and becoming vertically integrated. So to that point, I know that you have some non-core real estate up for sale, right? in specifically in High Point and in Italy, assuming that those assets are liquidated or that capital comes back to you, will you be redeploying that capital into expanding your North American footprint? Because it seems like you get the most bang for the buck there.

The answer is absolutely yes. so i think it's important to share with the broader audience we discuss the sales and non-strategic assets which include high point which include the tannery in north of italy and some other minor assets that the company has in the board for approval and in the board has been agreed that in coherency with our long-term strategy the priority uh for potential this investment will be reinvesting in north america retail the other priority will be supporting our long-term transformation so in our mind the way to create value for our shareholders is very clear the board is absolutely aligned with us and we are not deviating for one bad year for from that journey The way in which to create value is retail, especially in North America, and to reduce the cost base of our factory in Italy. So, David, if we have additional funding, those are the only way we're going to be redeploying those funding.

Okay. Thank you for that clarification. And then in regards to the 514 projects, person headcount reduction and the $22.5 million savings, does that number primarily show up in cost of goods sold going forward or is some of it in selling expense?

It's a combination, but I'll let Mario and Carlo comment more precisely. In particular, workers getting the cost of goods sold where account goes in service. But I will let Mario and Carlo, I believe each of you can be precise in answering.

As you said, Antonio, obviously we are improving our services. first contribution margin being more efficient in the factory, obviously we are also reducing our central staff and that will have a positive impact also in our G&A in the next few years.

But just to tell you, the investment the company did over the last 20 years and this restructuring really changed the ability of doing a bit and cash conversion. We just did a comparison versus different tier that have the same top line that we reported in 2021 and 2022. And the company lowered its breakeven of about 150 to 100 million, really because there's a better mix, because it's selling branded instead of unbranded. but also because of all this tough work of reducing the cost base and the accounts. So now we need really to focus on sales. If we reach the sale we aspire or half of the sale we aspire, there will be huge, huge upside from an economic standpoint, a return standpoint from the investment.

Antonio, just to be more precise, we have only 1.1 million that we are impacting on administrative expenses, aesthetic expenses, all the rest in the cost of goods sold. Thank you.

Thank you, Carlo.

Okay, one more question before I go back into the queue. Carlo, if I could ask, let's say over the next two years, we add 15 or 20 new direct operated stores here in North America. In theory, that would give us about 15 to $20 million incrementally per quarter of revenue. That would give us about roughly 65 to $80 million a year at 4 million average unit volume at 90 to a hundred million in revenue with the headcount reduction, some of the investments in automation at the factories, at $90 million, $100 million a quarter in revenue, would we achieve a 40% gross margin or better?

May I, Antonio?

Yeah, the question was with you, but David addressed it. to you and your capacity of C4. Then I'm very happy to comment.

Let's say that we are going in this direction in terms of, you know, improvement of margin, of course, adding more to absorb better the fixed cost. So, of course, 40 is where we are going towards. If we add those sales and even more...

And again, Dave, we don't provide guidance, but at this point, I think it's fair to do some, you know, high-level modeling. On our integrated sales from the Italian, we have a contribution margin. Integrated contribution margin, which means the producer plus the retailer of 65, 68 with the current sales productivity. So if you, of course, build 100 million with that productivity and that marginality, by definition it would be north of 40 because we are already targeting 40, let's say, in a sense, let me say organically, which means with the same structure of business. Okay.

So it sounds like we're well positioned during the next upturn. Hopefully the Federal Reserve here in the U.S. cuts interest rates and, We're starting to see somewhat of a bounce in housing. There's more inventory. So we'll keep our fingers crossed that this spring things start to improve. Thank you for your time. I'll go back in queue. Thank you, Dave.

Thank you. As a reminder, if you'd like to be placed into question queue over the web, please raise your hand by using the ask a question feature. Or over the phone, please press star 1 on your telephone keypad to verbally ask a question. Once again, you may press star one to verbally ask a question or over the web, please type your question into the ask a question feature using the raise your hand function. Thank you very much. One moment please while we poll for questions. Once again, that's star one to verbally ask a question or type your question into the raise your hand feature on your screen. One moment please while we poll for questions. And if there are no further questions at this time, let's turn the floor back over for any further closing comments.

I do my closing comment, and then, of course, I invite Pasquale, who is the person who created the company, who is the person who is going to be celebrating 65 years with it for potential final remark. Listen, guys, for me, the story is very clear. Tough year, but we know what we are doing. We're very committed and very confident on the upside. This company is very different. You're investing in a brand retail company. The awareness of this company is really strong and terrific. I don't do any valuation on our, let's say, market evaluation, but I believe there is significant upside in it. And thank you for being with us as investor. Thank you for being with us today as a participant in this call. I'd like Mr. Pasquale, our chairman, to do any final remarks, if you wish.

Okay, Antonio, thank you very much for the way we've been explaining, you know, what we are facing. The same Diego Babbo and also Carlo, our CFO and our human resource manager. I feel very much confident about the management today and even in this difficult, you know, business environment, war in Ukraine, war in the Middle East. consumer confidence is very low. I mean, we believe very much in what we are doing, and we are very much confident, obviously, about the future. I thank you very much, everyone, for attending this conference call, and we hope we will, obviously, we are very much committed to all of you, dear shareholders, a better result, certainly. Thank you again. Thank you.

Thank you, Pastor. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Thank you. Thank you.