Natuzzi SpA (NYSE:NTZ) Q2 2018 Earnings Conference Call - Final Transcript

Sep 24, 2018 • 10:00 am ET

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Natuzzi SpA (NYSE:NTZ) Q2 2018 Earnings Conference Call - Final Transcript

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Operator
Operator

Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Natuzzi Second Quarter and First Half 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the introduction, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.

Joining us on today's call from Italy are Natuzzi's CEO, Mr. Pasquale Natuzzi; then the CFO, Mr. Vittorio Notarpietro; Mr. Ed Teplitz, President of Natuzzi Americas, second largest market in the world for our Group; Mr. Nazzario Pozzi, CO of the Natuzzi Division; Mr. Gianni Tucci, CO of the Softaly Division; and Mr. Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded.

I would now like to turn the call over to Piero. Please go ahead.

Executive
Piero Direnzo

Thank you, Matt. Good morning to our listeners in the United States and good afternoon to those of you connected from Europe. Welcome to Natuzzi's Second Quarter and First Half 2018 Financial Results Conference Call. After a brief introduction, we will give room for a Q&A session. Mr. Pasquale Natuzzi, together with the top management team, will be glad to answer your questions.

(Forward-Looking Cautionary Statements)

And now I would like to turn the call over to the Chief Financial Officer. Please, Vittorio.

Executive
Vittorio Notarpietro

Thank you so much, Piero.

Good morning everybody and I apologize for this delay. We hope that the -- our technical problems have been solved. As announced that we have recently concluded the partnership with KUKA Group for the expansion of the Group retail presence in Greater China, mainly China and Hong Kong. The operations have just started, but let me give you an update of the financial impacts that will be recognized in the third quarter 2018 financial statements deriving from the conclusion of this agreement.

First, a recap of the transactions foreseen by the partnership, the contracts. One, the capital increase of EUR35 million in Natuzzi Trading Shanghai afterwards the Chinese legal entity subscribed and paid by KUKA. Two, the transfer of some Chinese legal entity shares from the Natuzzi SpA to KUKA for a gross amount of EUR30 million. And three, the sale of the Natuzzi brand's distribution license in Greater China by Natuzzi SpA to the Chinese legal entities for the gross amount of EUR15 million.

At the end of the day, the capital increase and the share purchase lets KUKA achieve the majority stake, 51% in the partnership. The above mentioned steps generated for the group at total extraordinary income of about EUR48 million that will be reported in third quarter 2018. As a consequence, the group has already collected a total amount of about EUR40 million already net of any factors.

In fact, during the third quarter 2018, Natuzzi already paid a total amount of taxes equal to almost EUR5 million. In executing the agreement, the parties had contributed to the Chinese partnership vehicle, a total amount of EUR25 million in order to support investments