De Longhi Spa

Good afternoon. This is the Corusco conference operator. Welcome and thank you for joining the de' Longhi first quarter 2026 consolidated results. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Fabio de' Longhi, Chief Executive Officer of de' Longhi. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining the de' Longhi Group conference call for our first quarter 2026 results. With me on the call today are Nicola Serafin, Group General Manager, Stefano Biella, CFO and Samuel Acchioletto, investor relations director and M&A manager. I'm pleased to announce that we have consolidated our recent action results with a solid start to the year, driven by exceptional momentum in the professional division and positive organic growth in the household segment. Despite the market environment characterized by volatility and geopolitical uncertainty, we remain fully confident in the group agility and responsiveness. which have allowed us to navigate recent challenges effectively. The resilience is reflected in our consistent track record marked by significant revenue expansion and a steady improvement in profitability. Moreover, over the years, we've been able to further strengthen our global leadership copy by successfully capitalizing on the structural growth and premiumization of both the home and professional markets while simultaneously seizing strategic opportunities in key categories such as nutrition and irony. Starting with the auto for the professional division, the strategic combination of Lamar Zocca and Eversys continue to generate exceptional value, delivering outstanding performance and increasingly reaffirming the rationale behind the deal. As the market shifts toward premiumization and specialty coffee, Our portfolio is perfectly aligned to capture these structural trends. This positioning has enabled the professional division to maintain its impressive momentum, steadily delivering revenue growth in excess of 40% for three consecutive quarters, all while sustaining superior profitability. During the quarter, Avesis completed the acquisition of its Dutch distributor, a strategic move designed to elevate service standards and provide an integrated experience for our local partners and customers. This initiative aligns with the evolving European coffee landscape, where Eversys and La Marzocco remain key players and where we aim to accelerate regional growth through an expanded direct presence. The household division delivered positive organic growth for the period, with trends improving after the absorption of excess market inventory during the opening weeks of the year. Excluding January, the division would have achieved solid mid-single-digit growth at constant exchange rates, driven by positive performance across coffee and nutrition categories. Over recent quarters, The new social media hub has become a strategic pillar of consumer engagement, ensuring maximum impact for all communication initiatives and supporting all marketing activities through an integrated paid and earned media ecosystem that is driving significant engagement across the entire consumer journey. Our participation in Milan Design Week offered and Excellent Opportunity execute this strategy, expanding our reach and deepening the connection between the coffee industry and the world of design and lifestyle. The smallest coffee shop at home, in original collaboration with miniaturist Simon Weisse, transformed five de' Longhi machines into iconic coffee shops from all around the globe, from Paris to Tokyo. The results of over 1500 hours of meticulous craftsmanship. This activation captured global attention, turning the miniature coffee pop-up into a viral media moment, with a combined reach of over 200 million people. Now, let me focus on the results. The first quarter of 2026, the group growth at constant exchange rates was broad-based across all geographic regions, with a significant contribution from the Americas and Asia-Pacific. In more details, Europe recorded a 1.4% increase in revenue during the period. The professional division achieved a double-digit growth, while the household segment was essentially flat. Within the latter, stronger expansion in markets such as Poland, Benelux, and the Bergen Peninsula offset weakness in some areas, such as Germany, which were impacted by the reabsorption of market excess inventory during the period. The MIA region, Middle East, India, and Africa, achieved 4.2% growth at constant exchange rates, driven by significant expansion in the professional division. Conversely, the household division recorded a decline in revenue. weighted down by the market unfavorable exchange rate effect and microeconomic challenges in the Gulf countries. The Americas region recorded 18.2% growth at constant exchange rates, supported by the robust performance of the professional division and amid single-digit organic growth of the household segment. Regarding the latter, the excellent performance of the coffee machines more than offset the contraction of the blended market. Finally, the Asia-Pacific region achieved an 8.7% increase in revenue, despite a significant negative current impact, plus 17.2% at constant exchange rates. Specifically, the professional division delivered an excellent performance across nearly the entire region, while the household segment maintained a growth trend at constant exchange rates. consolidating the strong results of the previous year. The professional division demonstrates broad-based growth, with a widespread double-digit momentum across our key regiographies and primary product categories, recording €139 million off sales, a 40% increase compared to 2025. The premium positioning of Evesys and Lamarzocco supported by a robust product portfolio enabled the group to capitalize effectively on the espresso premiumization trend, meeting the demands of consumers increasingly focused on premium quality. Reflecting this, the Marzocco consumer segment continues to drive significant expansion. Increased volumes combined with premium positioning allow the division to protect and strengthen profitability for both brands. The household division achieved a turnover of €641 million, representing a slight decline of 2.4% on a reported basis, but an increase of 0.8% at constant exchange rates. Home coffee recorded low single-digit growth at constant exchange rates, driven by manual machines and espresso products, alongside significant expansion in coffee accessories. Nutrition The low single-digit contraction and constant exchange rates is mainly attributable to the stocking activity recorded in January. Net of this effect, the segment showed a positive trend in the subsequent months. Conversely, Cambodian brand kitchen appliances showed a significant acceleration in performance compared to the same period last year. Other categories, the comfort segment, portable heating and air conditioning, recorded mid-to-high single-digit growth year-on-year, while Homecare maintained moderate growth at constant exchange rates. The first quarter of 2026 delivered a further improvement in the group margins, driven by volume growth and a favorable sales mix underpinned by the excellent performance of the professional segment. In details, in the quarter adjusted EBITDA amounted to €126 million, or 16.2% of revenues, an improvement of 80 basis points compared to the previous year. This improvement was mainly supported by strong growth of the professional division, which carries margin above the group average. As for the household division, the price-mix contribution was slightly negative due to selective price repositioning aimed at increasing market support. while investment in media and communication remained stable as a percentage of total group sales. During the quarter, we experienced a slightly negative impact from additional tariffs in the US market, approximately 4 million euros, while not in effect during the previous year. As of March 31, 2026, the group net financial position was 721 million, a significant improvement over the 483 million reported in the prior year period. Regarding cash generation, free cash flow before dividends, share buyback and acquisitions was a negative 44 million for the quarter. This was driven by the typical seasonality in net working capital, specifically the restocking of inventory following sales in quarter four. On a trading to a month basis, free cash flow before dividends Share buybacks and acquisitions reached $464 million, a remarkable achievement that allows us to maintain a flexible and attractive capital allocation strategy. In summary, our first quarter results reinforce our long-term trajectory of growth and margin expansion, overcoming market uncertainty. While the geographical landscape requires us to remain vigilant regarding potential inflationary pressures on costs and consumer behavior, underlying business trends have remained resilient over the recent months, and we remain focused on rigorous cost management to navigate these external factors. Regarding the professional segment, we are leveraging our strong and unique proposition to expand the consumer market and tackle the out-of-home area. achieving above market results. To drive this performance, we are further strengthening our product portfolio, highlighted by the recent launches of Eversys Plus, which has allowed us to target the convenience store and coffee service segments, and the introduction of new colors in the La Marzocco home line, including cream, blue, and brushed steel. We also continue our extensive communication activities and participation in trade shows and lifestyle events, further strengthening engagement with our community and partners. On the House of Proms, we are currently benefiting from recent launches such as Elekta Woolter & Coffee, the large portfolio of Kenwood food preparation, and Brown's Ironing. We are advancing our new product launching designed to align with evolving consumer desires and investing in strategic marketing campaigns to draw global attention to our brands, supported by an integrated social media strategy. Furthermore, we are driving the group towards a technological frontier by intensifying investment in key strategic projects across various fronts as presented in the business plan. These include operational excellence, where AI-enabled Customer Service has moved beyond the first two pilot geographies and is now being prepared for a potential extended rollout. Talent acquisition with a new social officina in London, scaling up our social media capabilities and digital transformation, where we completed the implementation of a global Salesforce e-commerce platform, which is now fully operational across markets. In light of our progressive improvement during the first quarter, confirmed by a favorable start to the second quarter and normalization of exchange rates, we reaffirm our full-year 2026 forecast. We expect revenue growth at the mid-single-digit rate and have adjusted the BDA in the range of 640 to 660 million. We now welcome your questions. Thank you.

Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 under touch-tone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Nicola Storer Kepler-Chevreux.