Essilor Luxottica

Good morning and good afternoon, everybody. This is Giorgio Ionella from the IR team. Thank you for joining SRO Luxottica full year 2024 results management call. The group's chairman and CEO, Francesco Milleri, the deputy CEO, Paul Dusayan, and the CFO, Stefano Grassi, will walk you through the business and financial highlights of last year. After their presentations, there will be a 30-minute Q&A session. If you want to make a question, please press star followed by five. We kindly ask you to limit your questions to a maximum of two. With that, I hand it over to Francesco.

Welcome, everybody. I'm happy to reconnect with you to present the sound financial performance of 2024 and give you an update on our strategic initiatives in smart glasses and hearing aids. Essilor Luxottica's revenue broadly maintained the sound pace of the past years, with the four-quarter at 9% and the full year at 6%. This came on the back of the sound organic growth of our business, supported by the solid trajectory of the eye care, eyewear activities, and boosted by the new category of wearables. M&A gave a little extra contribution in the fourth quarter. I'd like to say a few words on Supreme, which continued to successfully execute its strategy after the consolidation in the Silo Luxottica perimeter, delivering sale growth in line with the group pace. We are at work now on the next steps, expanding the brand footprint both through e-commerce and new stores as well as improving the eyewear category. We are also happy with the Heidelberg edition as it is opening new opportunities in medical applications that are becoming a strategic priority for us. Diagnostic and eye treatment as a part of broader strategic focus on eye care is the natural evolution in MedTech space for our group. Talking about revenue, I'd also like to highlight the amazing performance of Stellest, growing 60% in the full year in China and gain traction in Europe. This once again proves how urgent it is to address the myopia issue in China, Asia and worldwide, including the U.S. market that we look forward to start serving between this year and the beginning of the next. Looking at the group profitability, in 2024 we substantially expanded our margins, with adjusted operating margin advancing by 50 basis points, offsetting the labor-driven inflectionary pressure on our cost base. We also achieved double-digit net margin and sound free cash flow generation. resulting in the dividend distribution proposed in line with the last year at 3.95 euro per share, also confirming the script dividend option. I'd rather like to focus now on the two disruptive technological innovations that Essilor Luxottica has been promoting in the market. to make it evolve towards a future where a pair of eyeglasses will be the main digital computing platform addressing our daily needs related to medical service as well as information and social entertainment. Let's start with the Ray-Ban Metaglasses. a new category of products that we introduced in cooperation with Meta more than three years ago and is now proving to be a great success for its digital future that ramp up sales and utilization rates. Since its launch in September 2023, Essilor Luxottica has sold more than 2 million units of Ray-Ban Meta. The rate of activation and the time of utilization have been constantly increasing since the first launch, showing that this product is becoming part of our daily life. The category of wearable is at an early stage, but we have great confidence in its potential and we are planning for the long term with Meta. We are thinking about new releases with new future and new brands, all supported by AI, key application in smart glasses and wearable. We expect important progress soon, as the most advanced multimodal AI, which is currently available in the US, Canada and Australia, will expand across other markets worldwide. Consistently with our open model, we look at this product like a share platform. ready to embark on third-party brands and new functions also in the form of subscription services. In the light of such evolution and in line with our ambitious plan, we are currently expanding our production capacity for Ray-Ban Meta, set to reach 10 million annual units by the end of next year. Passing to hearing aid glasses, we have launched Nuance Audio both in the US market and in main European countries. In the US, we have just got the full clearance from FDA and we are selling Nuance glasses in the OTC segment. In terms of the trade channel strategy, we confirm we'll go through wholesale, physical retail and e-commerce, including both our and third-party banners and E-ring A specialists. Selling and training tools are ready. The whole powerful platform of Selor Luxottica is ready to push. We are also currently speaking with insurance groups to include the hearing aid part of the product in the new managed hearing care schemes, like we do in Vision Correction. In Europe, we have obtained the CE label as well as the ISO quality certification and we are getting ready to start selling once in Italy, in France, Germany and the UK. In line with the U.S. market, the trade channel mix will encompass both wholesale and retail, including hearing aid retailers and our own optical banners in each country. We strongly believe in our product and its ability to address a currently unserved need for more than 1 billion people worldwide affected by mild to moderate uncorrected hearing impairment. The disruptive comfort of a pair of good-looking and well-fitting glasses, equipped with a groundbreaking open-air hearing solution, available at an affordable price, will overcome the adoption barriers of stigma, discomfort and high ticket that have so far prevented the category from rising in penetration. The journey is just the beginning. as we are already at work on the next product releases to offer to our customers higher quality and new functionality already later this year. Thanks to our audio team for their strong effort so far. Let's make it work now all together. With that, I hand over to Paul.

Thank you, Francesco. And to all of you for being here today. As you have just heard, our company is in great shape. In the past years, we have never stood still. Instead, we have optimized each and every ingredient of our powerful organization, delivering a high pace of innovation, strengthening our supply chain, adding high-profile brands to our portfolio. thanks to the engagement and commitment of our 200,000 colleagues who stand at the core of our strong execution. All this while accelerating the building of new categories. Let me give you an update on some key product and strategic initiatives. First, let's talk about children. Our myopia management initiative is evolving fast. Our first-generation stepless lens has experienced rapid growth and we have equipped almost 3 million kids around the globe in 2024. Based on clinical evidence, we have recently amplified its medical scope targeting pre-myopic children with the aim to delay the onset or possibly even prevent myopia altogether. The Stellest Plano version started to be prescribed at the end of last year. Building on its success, we are now looking at the Stellest brand more broadly, creating a full suite of products and solutions. Two upcoming launches. The Steles glasses, which feature a frame specifically designed to take into account the facial parameters of children for the best fit and maximized treatment. And the Steles Lortoke contact lenses, which represent the debut of the brand in the US. In the meantime, in China, the Nikon and Kodak Dot lenses with the sight-glass vision technology have also had a stellar year, successfully supporting our myopia management portfolio strategy. A word on transitions. A success story. In recent years, the brand managed to effectively rejuvenate its image and is now chosen by millions of consumers of all age groups as a cool feature to colorfully express their individuality while also protecting their eyes. The growing trend was recently also fueled by the launch of Gen S, which is completing its worldwide rollout with Brazil and across Asia. Now, take Reban Meta that Francesco talked earlier about. Already, 40% of the pairs sold in our direct-to-consumer channel are equipped with Transition. It is the enabler to all-day use of the product. And we are taking the brand a step further with new applications. In 2024, we launched the first-of-a-kind Reban Change, featuring the transition technology directly on the frame. The result is a fully dynamic pair of glasses with changing colors on the lens and the frame. Our brands, a strategic asset. They are critical in conveying our innovation and product benefits to the consumer. Lately, we have enriched our portfolio with new licenses. The newest addition are Montclair, which presented its first stunning lunette collection at the spectacular event in Grand Montana mid-January. These are whose bold, daring style are destined to create buzz among Gen Z trendsetters. While the Prada license has just been renewed for the next 10 years, A lot more is to come this year also for our proprietary brands, Ray-Ban, and in particular, Oakley, which will be celebrating its 50th anniversary this summer. Stay tuned. As you have heard from Francesco, the medtech dimension is a strategic priority for us. On that front, we have recently made decisive moves. Our aim is to serve our customers and patients from a more holistic standpoint, covering all aspects of eye care, including eye disease diagnostics, surgical guidance, and management of chronic conditions. In a world with a growing and aging population, the number of people affected by eye pathologies is increasing significantly. At the same time, healthcare systems across the globe are under pressure and the shortage of doctors is growing. To unburden the system, eye care practices can play an enhanced role in screening and monitoring eye health under the shared care approach. Leveraging our relations with all actors of the industry, we are well positioned to contribute to this challenge. With the highly advanced OCT devices from Heidelberg Engineering and the retinal imaging solution of Cellview, we have added powerful capabilities in the posterior and anterior eye segment for addressing diseases such as macular degeneration, glaucoma, cataract and retinal detachment. while non-invasive devices of espansione powered by light therapy will be a game-changer in the effective treatment of chronic conditions such as dry eye. Before concluding, I always like to share with you the remarkable progress we make with our inclusive one-site Essilor Luxottica Foundation and its programs. Since 2013, we have provided access to vision care for almost 1 billion people and equipped close to 90 million individuals with eyeglasses they urgently needed. Regarding our sustainability journey, we are happy to share the validation of our targets for scope 1, 2, 3. by the SBTI, and the inclusion of Essilon Luxottica in the Dow Jones Best-in-Class Europe Index. And now, let me hand it over to Stefano, who will run you through how our rich offering has been effectively delivered to our customers through our global multi-channel go-to-market organization.