Ermenegildo Zegna N.V. Ordinary Shares

Hello everyone and welcome to the MRL Gildo Zegna Group 4 Year 2021 Revenues Conference Call. My name is Victoria and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. If you wish to withdraw your question, please press star 2. When preparing to ask your question, please ensure that your line is unmuted locally. I will now pass over to your host, Francesca Di Pasquantonio to begin. Please go ahead.

Thank you, Victoria, and welcome to everyone joining us today for our first conference call to discuss the financial results of Zania since we listed on the New York Stock Exchange in December. As you all know, we listed on the New York Stock Exchange on December 20th of last year. That monumental day was the culmination of more than a century of Zania history and the start of Zania's next. grace chapter today we're going to discuss our preliminary 2021 revenue we will be using presentation materials posted on our website earlier today you can find the materials along with the related press release under the investor page of the daniel group website Today, I'm joined by Senior Group Chairman and CEO, Jill Boszlenia, as well as our CFO, Gianluca Tagliabue, and Rodrigo Balzano, CEO of Tom Brown. Jill will begin today, walking you through our results at a high level and discussing the groups ongoing with Trusted Gen Guidance. Gianluca will then spend some time going into the numbers in new detail and at the end of today's call, everyone will be ready to answer your question. Before we begin, I also need to point out that we may make certain formal state statements in today's code. Our actual results may be materially different from those expressed or implied by these overlooking statements. All such statements are subject to a number of risks and uncertainties, including those discussed in our S&P findings. I refer you to the statewide statement, which is included in page 2 of today's presentation, and, of course, this call with the government will be governed by that language. Again, we thank you for joining us today. And with that, I will turn the call over to Jesus.

Thank you very much, Francesca. And once again, I want to ask what a pleasure it is to be speaking with you all on the NSFIRS Turning Call as a public company. When my grandfather started his wood mill in Triviero, Italy, 112 years ago, his goal was to produce the finest textile the more than ever seen, while also being a company that cares for all the surrounding environment that is equal to our communities. All these years later, we have grown into a global luxury group present around the world, but our business is in so many ways based upon his vision. 2021 was a beautiful year for Xenia. Not only we deceased our company in New York, a publicly traded company, but we also launched a major brand of our legacy brand, now Xenia. A major moment that demonstrates the world ambitions we have as a brand and a company. In the middle of this milestone, we also performed extremely well, and I think our success was the result of effectively executing with regard to three core pillars of our statistics. First, we were actually focused on our namesake brand tenure Ahead of our listing, we pursued a campaign for the second brand, which has allowed us to increase our focus on beating the brand's equity. And because of this constant focus, in 2021, the day I started the program, at 847 million units in, it's 33% growth from 2020, and making up 66% of the growth total revenue. Second point, since applying for the brand in 2018, we have concentrated on growing presence, in a way that stays true to who it is and its unique place in the luxury market. This business has been very rewarding to watch grow over the last couple of years. In 2021, Brown had a 265 million euro in sales, 47% growth from 2020, and making up 20% of the group revenue. Finally, we continue to grow over an extra-large platform. with one-of-a-kind platform of Italian markets and companies, producing the world's finest textiles, both for our product and for our luxury customer bloggers. In 2021, the textile platform gathered €102 million in sales, a 17% growth from 2020 and making up 8% of the growth total in sales. Please go to slide number five. where I want to put you through some highlights regarding our revenues figure for the year. And over the past year, we have seen a strong rebound in the majority of our markets as the COVID crisis eases. For study data, the year for 2021 was just short of 1.3 billion euros, up 27% from 2020. and are now once again approaching pre-pandemic levels, as our momentum has been gaining speed over the quarters. This increase is reflected for both Steyer from Brown, whose revenue grew 23% in 47 respective years of the year. The growth we saw was driven in large part by very strong performance in the USA and register. We already can see strongly outperforming previous years' performances and growing at a faster pace than also. I am very pleased to say the least, that we are ahead of the business plan that we shared in July at the time of the business combination with Investing Master and in light of the success that we had and based upon how we think 2022. We play, we will play. We are advancing our guidance upwards. On top of that, the national position for 2021 is expected to be slightly positive, thanks to health care generation ahead of plan. So, we have raised our chance of getting margin for 2021 to around 10% up from 9% estimated. which is given in July 2021. And for 2022, we expect sales to rock in the low teens, with further steps ahead in adjusting interest rates. Well, we will elaborate more on the guidance at our next conference call early in the spring. When we expect to reach our full-year 2021, all this will be confirmed. Now, it's time enough to go to slide number six. And before I need to call over to Gianluca to give you more details about our organization, I want to share a bit about our strategy and the role for our group. As always, our main focus will be to stay close to our customer. We are led by our customer. And to continue to evolve alongside them. We will continue to focus on the growing casualization of Hensworth, including expanding what we offer and growing our clients in terms of luxury leisure wear. The consolidation of our previous three brands, Ergo Energico Zegia, Zeta Zegia and Couture, under the Zegia brand name, and the signifier introduced with this rebranding, also means that we will be more focused on our recording process. And our features in Snickers, which have grown to be widely popular, are a perfect example of this. Our main convention offering, the service we provide with a valuable whole of our products, remains a competitive advantage factor. It is one of the main avenues we pursue to maintain a close connection to our long-term customer and try further to provide it in Houston. From Brown, of course, we continue to be a major driver of growth for us, with unique brands and expansion to both women and men's wear, a strong brand awareness, and to growing customer base. Since I have already shared, the Luxury Tax Laboratory platform is crucial as part of our strategy, offering one of Italian craftsmanship and high-quality fabrics in excellent design from Brown and a number of major global luxury players. In terms of geography, we are increasing our focus on high-performing markets, And as we speak later in this presentation, the U.S. and greater China have been two of our best-performing markets, and we will continue to invest in them moving forward. While our focus is on organic growth, we are concerned that we have developed a strong platform to be further leveraged should interesting opportunities arise both on the national and on the brand side. Finally, the underlying focus on sustainability, embedded by my grandfather in Christianity, continues to underpin everything we do. You will be hearing from us more on this topic. Again, thank you for joining us today, and I look forward to taking your questions later. Now, the panel goes to Gianluca. Thank you, Gildo. Good morning, good afternoon, everybody. Today, I will discuss our revenue breakdown by different angles, by segment, by product line, by geography, and by channel. And I will start calling your attention to page eight, where we have the breakdown by segment. We have two main segments. In 2021, the biggest segment, which includes in-brand, textile, digital alliances, rebounded by 23% from 2020. to exceed the €1 billion mark, representing 80% of the group's overall revenues. Dombrano saw even more significant growth, growing 47% from 2020 levels to €264 million, with a two-year stack of plus 64%. Moving to page 10, we see the performance by the product line. So the revenues for the Xenia branded products grew 33% from last year, with particular strengths coming from sales of luxury leisure wear and shoes. Tom Brown revenues have seen robust growth across the board by channel, geography, men's and women's. And Rodrigo might talk about this more in the Q&A session. Textile revenues grew 17% for the year, offset by a 9% decline in strategic alliances. That is our B2B business when we produce on behalf of other brands not belonging to the group. This came as a result of higher inventory levels in some B2B clients post-COVID. the business of strategic alliances in the first half of 2022 is expected back to normal. Moving to page 12, we see the breakdown by geography. As Jim has already shared, we have seen significant growth in U.S., where revenues were up 53% from 2020, pushed by a strong rebound in the Zania-branded products, especially in the Zania retail channels. Greater China region continues to be a particular hair strength for us, growing 28% compared to 2019, and 34% compared to 2020. EMEA exhibits a similar strength, with 20% growth year over year, especially driven by Italy, which has been exceeding pre-COVID levels, and a very strong retail performance in the Emirates, especially Dubai. Meanwhile, Japan and the other Asian countries continue to be negatively impacted by COVID-related restrictions. Moving to page 14, we provide this breakdown by channel. DTC direct consumer outperformed in 2021, growing 39% year-on-year and 6% compared to pre-COVID levels, and all sales drove growth was in the region of 14% versus 2020. This reflects our prioritization of retail and our strategic decision to be more selective about our wholesale editing. In 2021, BTC represented 66% of group sales compared to 60-61% in the two prior years. BTC for Zegna grew 35% year-on-year, with particular strength in EMEA, Americas, while the DPC for Tom Brown growth was more than double compared to 2019, performing over and above the growth of the retail footprint. We remember that Tom Brown had 28 stores in 2019 and now has 52 stores at the end of 2021, but the growth was higher than the expansion of the retail footprint. Wholesale sales also grew for both Zing and Tom Brown at 24% and 32% respectively from the 2020 levels. While Zing-branded products saw wholesale growth in Asia and North America, Tom Brown wholesale growth was driven by Europe and Asia-Pacific. Don Brown wholesale in the second half of this year, 2021, was impacted by a different timing of deliveries, which in 2020 shifted from Q2 to Q3 due to the COVID implications. For Q1 of 2022, we have scheduled strong shipment to wholesale accounts for Don Brown. Finally, page 16, let me reiterate the guidance that was anticipated by Jimbo for 2021 and 2022. As Jill anticipated, we are raising our EBIT guidance based on the 2021 strong performance, and we are ahead of the business plan that we shared during the workshop July and the analyst day of November 21. Our adjusted EBIT margin guidance for 2021 is now around 10% up from the 9% estimate of July of 2021. In terms of net financial independence at the end of this year, we see preliminary levels before the impact of the business combination that are positive, thanks to healthy generation of cash well ahead of the previously disclosed plan. As for 2022, we see low sales growth compared to 2021. And we also expect further improvement in the EBIT margin for 2022. Thank you, Dean, for joining. And with that, I'll hand it back to Francesca.