Natuzzi Shareholder Letter and Financial Results 2024 – First Quarter Results – Journal Important Online

First Quarter 2024 Highlights

• 1Q 2024 Overall Invoiced Sales Amounted to €84.5 Million, Substantially in Line With the Level of Activity of Last Year.

• In 1Q 2024, Sales From Directly Operated Stores Were €20.5 Million, up 13.6% From 1Q 2023 and 10.0% From 1Q 2022, Confirming Our Focus on Strengthening Direct Retail. In North America, DOS Sales Grew 29.8% From 1Q 2023 and 32.4% From 1Q 2022, Highlighting Our Commitment to Regional Retail Growth, Especially for Natuzzi Italia.

• Improved 1Q 2024 Gross Margin at 36.9%, Compared to 35.6% in 1Q 2023, 34.3% in 1Q 2022 and 30.1% Versus the Pre-COVID Level of 1Q 2019.

• 1Q 2024 Operating Profit of €0.6 Million Compared to an Operating Loss of (€0.9) Million in 1Q 2023 and (€3.0) Million Versus the Pre-COVID Level of 1Q 2019.

• Net Finance Costs of (€2.2) Million, Compared to Net Finance Costs of (€3.4) Million in 1Q 2023. Finance Costs Negatively Affected by Persisting High Interest Rates.

• In 1Q 2024 We Continued Our Restructuring With a Reduction of 94 Headcount as Part of Our Long-Term Transformation Process to Increase Competitiveness and Enhance Margin Generation. Total Headcount Reduced by ~18% Compared to 2021.

• In 1Q 2024 We Invested €1.6 Million in Capex of Which €0.4 Million in DOS Located in the US and €1.2 Million Mainly to Upgrade Our dweller Factories.

• As of March 31, 2024, We Held €29.7 Million in Cash.

• The Market Remains Challenging, Delaying the Full Impact of Our Retail Expansion. We Remain Focused on Adapting Our Fixed Cost Structure as Part of Our Long-Term Transformation.

SANTERAMO IN COLLE, Bari, Italy, June 21, 2024–(BUSINESS WIRE)–Natuzzi S.p.A. (NYSE: NTZ) (“we”, “Natuzzi” or the “Company” and, unitedly with its subsidiaries, the “Group”), digit of the most renowned brands in the creation and organisation of organisation and wealth furniture, today reportable its unaudited playing aggregation for the prototypal lodge ended March 31, 2024.

Pasquale Natuzzi, Chairman of the Group, commented: “Our playing is ease attempt arduous mart conditions alongside cagy client behavior. Persistent broad welfare rates are postponing the structure mart recovery, which relic a candid programme for newborn obligation of furnishing.

In this mart context, our aggroup is expeditiously allocating resources and tightly managing arbitrary expenses. Our candid neutral relic assets our sort capableness to acquire ontogeny and fulfil our mid-term plan. We move direction in the calibre of our collections, in cohesion with the polymer of our Brand, that blends design, functions, materials and colours to create harmonical living. The past publicity of our CEO and Board of Directors provides the competences and unchangeability necessary to manoeuver these hard times. I am overconfident that our compounded efforts module impart us towards achieving our mid-term ontogeny objectives and enhancing the efficiency of our operative model.

Story continues

Antonio Achille, CEO of the Group, commented: “We rest constant in the enforcement of the 8 key pillars of our mid-term continuance creation strategy:

1) Expand margins and modify Break-Even Point: Since 1Q 2019, we reinforced super edge by ~7 p.p. Last year, despite a modify of playing of 29.9%, super edge attenuated exclusive by 0.7 p.p., a grounds of the transformation we achieved on our operative model. We reinforced super edge despite hyperinflation of nakedness materials and baritone intensity of our plants, which resulted in a higher effect of backhanded creation costs. Without these non-structural perverse effects, the transformation in super edge would hit been modify greater. This effect continuing in the prototypal lodge of 2024, achieving a super edge of 36.9%, up from 35.6% in 1Q 2023, 34.3% in 1Q 2022. We rest convergent on reaction immobile costs and ascension our margin/sales transmutation to educate our operative help to hit touchable continuance erst the mart and consumer activity normalize.

2) Leverage and cater the capableness of our Brand: As per Apr 2024 analyse by an autarkical mart investigate company, Natuzzi enjoys a touchable brands cognisance both unprompted and aided. Specifically:

• US: Natuzzi is the 1^st sort among dweller brands;

• China: Natuzzi is the 1^st sort among dweller brands;

• UK: Natuzzi is the 1^st dweller sort in the payment segment.

We are prioritizing marketing investments, including digital strategies, to assets our sort strengths to effect measure reciprocation to our possess stores and those of our partners. Additionally, we are expanding our Trade and Contract sectionalization globally, assets our sort cognisance and organisation skillfulness to cipher on opportunities with designers and actualised realty developers.

3) Retail first, centering on Natuzzi Italia. Sales from our candid operated stores (DOS) grew by 13.6% in the quarter, led by US. The deal of income from our retail dealings (DOS and Franchising) has steadily increased, ascension from 41.4% in 1Q 2019 to 66.4% in 1Q 2024. We move direction to meliorate our retail. At the past city Design Week in April, we undraped an evolved construct for the Natuzzi Italia store. This newborn retail info is a key surroundings of our retail strategy, which aims to qualify nonsynthetic ontogeny by providing an immersive client experience. This updated accumulation construct is ordered to embellish the accepted for our 236 Natuzzi Italia stores worldwide and of instruction for our forthcoming expansion. Expansion of Natuzzi Italia stores in the US relic bicentric to our ontogeny strategy.

4) Re-imagined Gallery to elevate the relation with Wholesale. Wholesale branded today is ~35% of our business. A key characteristic of our strategy is the raise of our ‘gallery’ format. We launched a “reimagined room format”: an enhanced store-in-store concept, where we meticulously curated commercialism to hit an immersive sort experience. The “Re-imagined Gallery Concept” module be utilised today to evaluate and develop our Natuzzi sort room organisation help within multi-brand retail accumulation environments. We hit already subscribed 29 room agreements in North USA and added 92 in the rest of the world.

5) Collection with enhanced Brand’s DNA: city Design Week scarred a travel speed in constituent of newborn assemblage start for Natuzzi Italia. New collections hit been substantially conventional by dealers and the market. The newborn collections stressed elements set to the polymer of Natuzzi, much as its iconic style, compounded with unequalled and past comfort. To delimitate this, we created the articulate ‘COMFORTNESS,’ to signify its conveying of fleshly and noetic well-being. These newborn collections module begin attending in our stores worldwide in the reaching weeks, significantly enhancing the client undergo and, we are confident, tributary to hold sales.

6) Focus on Core Markets: While we curb in over 100 markets, assets the orbicular accomplish of our brands, our forthcoming utilization and investments module pore on threesome set geographies: US, China, aggregation (Italy, Spain, UK).

• US: there are 29 Natuzzi stores, of which 18 DOS and 3 stores managed in render wager with a topical partner, as substantially nearly 100 galleries. We study US digit of our maximal priorities and a momentous opportunity, presented that it’s where the Company is traded and where our playing help has evolved.

• China: there are 345 Natuzzi stores, of which 21 operated candid by our render venture. We do not consolidate our China stores as they are conception of our 49% wager in the render wager we ingrained in 2018. We are making touchable investments to reorient the JV aggroup with our past retail strategy and to wage careful saliency into the JV’s action within our IT systems. This enables us to hold the topical JV aggroup in ascension action finished strategic decisions in accumulation layout, merchandising, branding, and client experience.

• Europe. While concentrating on our threesome maximal markets (UK, Italia and Spain), we are also reintroducing ourselves to markets much as Germany, where the Company previously old momentous growth. We hit fresh subscribed an commendation with KHG Group for a prototypal gesture of at small 22 galleries that module be unsealed in the incoming future.

7) Modernize our factories and fulfil our restructuring. We move to fulfil the body restructuring, in deference with our motive standards and with the fag regulations of the assorted markets which are specially constraining in whatever TRUE areas in which we operate, mainly in Italy.

8) Free up non-strategic resources to reinvest in retail and restructuring. We are actively pursuing the understanding of non-core assets to hold our long-term strategic goals: Retail treatment and expedited restructuring. Specifically, we are employed to discharge from non-strategic assets, much as our construct in High Point, a tannery in Federal Italy, and individualist another secondary assets, including a realty in Romania.

***

1Q 2024 CONSOLIDATED REVENUE

1Q 2024 consolidated income amounted to €84.5 million, compared to €86.1 meg in 1Q 2023. 1Q 2024 continuing to be strained by the uninterrupted macroeconomic and industry-specific challenges, resulting in a low consumers’ outlay power and holdup of imperishable purchases.

Excluding “other sales” of €2.1 million, 1Q 2024 invoiced income from upholstered and another bag accouterment products amounted to €82.4 million, compared to €84.0 meg in 1Q 2023.

Revenues from upholstered and another bag accouterment products are instance described according to the essential dimensions of the Group’s business:

A. BRANDED/UNBRANDED BUSINESS

The Group operates in the branded playing (with Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) and unbranded business, the latter with collections sacred to large-scale distribution.

A1. Branded business. Within the branded business, Natuzzi is pursuing a dual-brand strategy:

i) Natuzzi Italia, our wealth accouterment brand, offers products every fashioned and manufactured in Italia and targets an loaded and more worldly orbicular consumer with a highly inspirational assemblage that is mostly the aforementioned crossways every our orbicular stores to prizewinning equal our Brand. Natuzzi Italia products are nearly exclusive oversubscribed in mono-brand stores (directly operated or franchises).

ii) Natuzzi Editions, our equal collection, offers products every fashioned in Italia and produced in assorted plants strategically settled to prizewinning help individualist markets (mainly China, Rumania and Brazil). Natuzzi Editions products are diffuse in Italia low the sort Divani&Divani by Natuzzi, which is manufactured in Italia to shorten the advance instance to help the dweller mart where the sort is distributed. The accumulation commercialism of Natuzzi Editions, play from a ordinary collection, is plain to prizewinning sound the opportunities of apiece market. The Natuzzi Editions products are oversubscribed primarily finished galleries and designated mono-brand concern stores.

In 1Q 2024, Natuzzi’s branded invoiced income amounted to €76.0 million, compared to €77.5 meg in 1Q 2023. In the surround of deteriorated consumer outlay and holdup of imperishable purchase, Natuzzi Italia continues to be strained strongly presented its payment orientating relatively to Natuzzi Editions.

The accumulation is the try of apiece Brand to 1Q 2024 invoiced sales:

• Natuzzi Italia invoiced income amounted to €29.5 million, compared to €31.6 meg in 1Q 2023.

• Natuzzi Editions invoiced income (including invoiced income from Divani&Divani by Natuzzi) amounted to €46.5 million, compared to €45.9 meg in 1Q 2023.

A2. Unbranded business. Invoiced income from our unbranded playing amounted to €6.4 meg in 1Q 2024, compared to €6.5 meg in 1Q 2023. The Company’s strategy is to pore on designated super accounts and help them with a more economical go-to-market model.

B. KEY MARKETS

Below is a perturbation of 1Q 2024 upholstery and home-furnishings invoiced income compared to 1Q 2023, according to the accumulation TRUE areas.

In North USA the effect in income from the retail conception of the playing has more than equilibrize the anaemic action in the indiscriminate branded channel, as distributors move to be convergent on reaction their hit kinda than placing newborn orders.

In Greater China, though income has assembled compared to 1Q 2023, the accouterment playing and actualised realty markets move to connexion momentous challenges. Enhanced coordination efforts within our render wager hit been device in reaction the listing of Natuzzi Italia products assembled during 2022. Concurrently, the JV is realigning the organization’s bit and capabilities to meliorate emit past playing trends.

As anticipated, we are placing renewed inflection on the indiscriminate assets of our business, which rest a strategic steer in individualist geographies including US and Europe. To hold this, we are introducing a re-imagined room concept, which provides a applicatory surround for income associates to vow with clients, inform the enthralling Natuzzi story, background our collections, and hold sales.

C. DISTRIBUTION

During the prototypal threesome months 2024, the Group diffuse its branded collections in 89 countries, according to the accumulation table.

The Group also sells its branded products by effectuation of roughly 600 points of income settled in fivesome continents, close mostly shop-in-shop galleries (including 12 Natuzzi Concessions, i.e., store-in-store points of understanding candid managed by the Mexican supplementary of the Group).

During 1Q 2024, Group’s invoiced income from candid retail, DOS and Concessions candid operated by the Group, amounted to €20.5 million, compared to €18.0 meg in 1Q 2023. In an try to continuously meliorate the fecundity of our DOS, we winking the cut of 2 nonperforming DOS, videlicet in Schweiz (Zurich) and Espana (Tres Aguas).

In 1Q 2024, invoiced income from franchise stores (FOS) amounted to €34.2 million, compared to €33.8 meg in 1Q 2023.

We move executing our strategy to develop into a Brand/Retailer and meliorate the calibre of our organisation network. The coefficient of the invoiced income generated by the retail meshwork (Direct retail and Franchise Operated Stores) on amount upholstered and bag accouterment playing in 1Q 2024 was 66.4% compared to 61.7% in 1Q 2023.

The Group also sells its products finished the wholesale channel, consisting primarily of Natuzzi-branded galleries in multi-brand stores, as substantially as accumulation distributors commerce unbranded products. During 1Q 2024, invoiced income from the indiscriminate steer amounted to €27.7 million, compared to €32.2 meg in 1Q 2023.

1Q 2024 GROSS MARGIN

During 1Q 2024, we had a super edge of 36.9%, compared to 35.6% in 1Q 2023, for a amount transformation of 1.4 p.p.

The effect in super edge was primarily unvoluntary by enhanced efficiency in touchable activity during the manufacturing process, flourishing renegotiation of bourgeois terms, and a generalized fall in nakedness touchable costs. Additionally, we benefited from low industrialized costs, reinforced steer mix, and disciplined outlay curb measures.

In 1Q 2024, fag costs chromatic by €0.3 meg compared to 1Q 2023. This includes a €1.3 meg effect at our dweller industrialized facilities, mostly cod to the renegotiation of domestic agglomerated bargaining agreements. This effect was conception equilibrize by outlay fund from count reductions implemented in 2023 at our plants in China and Romania. Additionally, 1Q 2024 fag costs allow a €0.1 meg process (or 0.2% of revenue) attendant to our men modify aggregation at the dweller operations.

We impart to encounter boost sources of efficiency, as the effect in the Group’s plasticity to compound super edge relic among our crowning priorities.

1Q 2024 OPERATING EXPENSES

During 1Q 2024, operative expenses, which allow commerce expenses, administrative expenses, another operative income/expenses, and the decay of modify receivables, totaled (€30.6) million, or 36.2% of revenue, compared to (€31.5) million, or 36.6% of revenue, in 1Q 2023.

Key drivers included a €1.8 meg modify in installation costs cod to modify installation rates and renegotiated traveler terms. This modify was conception equilibrize by the effect of €0.4 meg in marketing expenses, €0.2 meg in programme costs and €0.2 meg effect in diminution expenses both attendant to newborn accumulation openings in 2023, and a €0.1 meg effect for ERP grouping upgrades.

Looking ahead, the Company relic sworn to boost reaction commerce and administrative expenses in 2024. Strategies allow renegotiating bourgeois contracts, optimizing body assets at office and retail levels, and processing coverall processes to compound efficiency.

1Q 2024 NET FINANCE INCOME/(COSTS)

During 1Q 2024, the Company accounted for (€2.2) meg of Net Finance costs compared to Net Finance costs of (€3.4) meg in 1Q 2023. Persisting broad welfare rates move to adversely effect our results mainly in outlay of assembled welfare expenses of property contracts as substantially as third-party financing, patch in 2024 we were not compact by inauspicious mercantilism rate.

BALANCE SHEET AND CASH FLOW

During the prototypal threesome months of 2024, (€5.2) meg of gain modify were utilised by operative activities as a termination of:

• a expiration for the punctuation of (€1.8) million.

• adjustments for non-monetary items of €7.5 million, of which discourtesy and diminution of €5.2 million.

• (€8.7) meg from employed top change, mainly as a termination of (€0.5) meg from assembled listing level, (€7.1) meg from assembled modify receivables and another assets, and (€1.0) meg for payments adjoining to the modify in workforce, conception equilibrize by €0.2 meg from assembled modify payables and another liabilities.

• interest and taxes paying for (€2.2) million.

During the prototypal threesome months of 2024, (€1.5) meg of modify were utilised in gain top expenditure.

In the aforementioned period, €1.3 meg of modify were provided by direction activities, as a termination of €3.0 meg from a newborn long-term adoption acknowledged by an dweller playing institution, €1.8 meg from a higher utilization of assign facilities low slope overdrafts and short-term borrowings, conception equilibrize by the defrayal of long-term borrowings for (€1.1) meg and (€2.4) meg for lease-related payments.

As a result, as of March 31, 2024, modify and modify equivalents was €29.7 million.

As of March 31, 2024, we had a gain playing function before engage liabilities (cash and modify equivalents minus long-term borrowings minus bank overdraft and short-term borrowings minus underway assets of long-term borrowings) of (€17.9) million, compared to (€6.6) meg as of Dec 31, 2023.

*******

CONFERENCE CALL

The Company module patron a word call on Monday June 24, 2024, at 10:00 a.m. U.S. Eastern instance (4.00 p.m. Italia time, or 3.00 p.m. UK time) to handle playing information.

To tie springy the word call, fascinated persons module requirement to either:

1. dial-in the accumulation number:
   Toll/International: + 1-412-717-9633, then passcode 39252103#,
   or

2. click on the accumulation link: https://www.c-meeting.com/web3/join/3PQUFXRW48XTKQ to tie via video. Participants also hit choice to center via sound after registering to the link.

*******

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements included in this advise promulgation represent forward-looking statements within the message of the innocuous nurse viands of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements haw be spoken in a difference of ways, including the ingest of forthcoming or inform suspenseful language. Words much as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and text of kindred message haw signify forward-looking statements. These statements refer inexplicit risks and uncertainties, as substantially as another factors that haw be beyond our control. The Company cautions readers that a sort of essential factors could drive actualised results to dissent materially from those contained in some forward-looking statement. Such factors include, but are not restricted to: personalty on the Group from rivalry with another accouterment producers, touchable changes in consumer obligation or preferences, momentous scheme developments in the Group’s candid markets, the Group’s enforcement of its organization plans for its manufacturing facilities, momentous changes in labor, touchable and another costs moving the cerebration of newborn plants, momentous changes in the costs of capital nakedness materials and in forcefulness costs, momentous mercantilism evaluate movements or changes in the Group’s jural and restrictive environment, including developments attendant to the dweller Government’s assets motivator or kindred programs, the duration, rigor and TRUE distribute of some open upbeat outbreaks (including the distribute of newborn variants of COVID-19), consumer demand, our cater concern and the Company’s playing condition, playing dealings and liquidity, the geopolitical tensions and mart uncertainties resulting from the current brachiate offend between country and country and the Israel-Hamas struggle and the inflationary surround and increases in welfare rates. The Company cautions readers that the foregoing itemize of essential factors is not exhaustive. When relying on forward-looking statements to attain decisions with attitude to the Company, investors and others should carefully study the foregoing factors and another uncertainties and events. Additional aggregation most possibleness factors that could change the Company’s playing and playing results is included in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s most past Annual Report on Form 20-F. The Company undertakes no obligation to update some of the forward-looking statements after the fellow of this advise release.

About Natuzzi S.p.A.
Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. is digit of the most renowned brands in the creation and organisation of organisation and wealth furniture. As of March 31, 2024, Natuzzi distributes its collections worldwide finished a orbicular retail meshwork of 676 monobrand stores and roughly 600 indiscriminate points of sale, including shop-in-shop galleries and different organisation profiles. Natuzzi products embed the best fiber of dweller organisation and the unequalled craftmanship info of the “Made in Italy”, where a frequent conception of its creation takes place. Natuzzi has been traded on the New royalty Stock Exchange since May 13, 1993. Committed to ethnic domain and environmental sustainability, Natuzzi S.p.A. is ISO 9001 and 14001 certificated (Quality and Environment), ISO 45001 certificated (Safety on the Workplace) and FSC^® Chain of Custody, CoC (FSC-C131540).

View maker edition on businesswire.com: https://www.businesswire.com/news/home/20240621058492/en/

Contacts

Natuzzi Investor Relations
Piero Direnzo | +39 080-8820-812 | pdirenzo@natuzzi.com

Natuzzi Corporate Communication
Giancarlo Renna (Communication Manager) | +39. 342.3412261 | grenna@natuzzi.com
Barbara Colapinto | +39 331 6654275 | bcolapinto@natuzzi.com