Natuzzi SpA (NYSE:NTZ) Q1 2019 Earnings Conference Call - Final Transcript

May 28, 2019 • 10:00 am ET


Natuzzi SpA (NYSE:NTZ) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Natuzzi Conference Call for the First Quarter 2019 Financial Results. 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 are Natuzzi's Chief Officer, Mr. Pasquale Natuzzi; the Chief Financial Officer, Mr. Vittorio Notarpietro; Mr. Nazzario Pozzi, Chief Officer of the Natuzzi Division; Mr. Gianni Tucci, Chief Officer of the Softaly Division; and Piero Direnzo, Investor Relations. As a reminder, today's call is being recorded.

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

Piero Direnzo

Good morning to our listeners in the United States, and good afternoon to those of you connected from Europe and Asia. Welcome to Natuzzi's first quarter 2019 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.

Before proceeding, we would like to advise our listeners that our discussions 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 most recent 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 Chief Executive Officer. Please, Mr. Natuzzi.

Pasquale Natuzzi

Thank you. Good morning, and thank you for joining us today. I would like to talk about two important areas this morning: first, where we are; and second, where we are going and the specific steps we are taking to get there. I will describe the first quarter 2019 as perfect storm. Sales of upholstery furniture through traditional channels continued to decline, and the imposition of US tariffs on Chinese goods added significant pressure on price. Natuzzi Group suffered an almost 9% decline in total revenues and showed an operating loss of EUR3 million. But within this result are some very strong sign of the impact of our efforts on a turnaround.

Our gross margin improved from 28.2% to 30.1%, despite the decline in sales of EUR10.4 million. This is the result of great efficiency in production and the logistic coming from our new management team and the continued improvement in both our mix of business and in our DOS network.

Our branded sales grew to 76.7% of total, up from 75.1% in the same quarter 2018. We will continue to follow such direction. While these are not the results we have in mind, I'm encouraged by the very strong sign that we are taking the right strategy and that our efforts are finally bearing fruit.

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