Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FILA-Fabbrica Italiana Lapis ed Affini SpA (STU:3S0, Financial) reported strong cash flow generation, prioritizing this since acquiring Pacon in 2019.
- The company's Indian asset, DOMS, continues to perform spectacularly, with its share value tripling since its IPO.
- EBITDA margin improved significantly, growing from 19.1% last year to 21.3% this year.
- Net debt decreased by almost EUR100 million compared to a year ago, largely due to the cash-in from the IPO of DOMS.
- The company confirmed its guidance for 2024, expecting single-digit growth for EBITDA and free cash flow generation between EUR40 million and EUR50 million.
Negative Points
- The first quarter was negatively impacted by the introduction of SAP EWM in North America, causing delivery delays.
- Central and South America faced challenges due to the devaluation of the Argentinian peso.
- Despite improvements, the second quarter still experienced slight negative impacts from delivery delays at Dixon warehouses.
- The company's revenue in North America showed a contraction of 10.3% in sales for the first half of 2024.
- The devaluation of the Turkish lira negatively impacted the company's financial results.
Q & A Highlights
Q: Can you comment on the current trading trends in the third quarter, particularly in North America?
A: Massimo Candela, CEO, stated that the second semester is driven by back-to-school sales, and it's too early to predict sell-out trends. However, they are confident in their full-year guidance.
Q: What is the outlook for Central and Latin America in the second half of the year?
A: Candela noted that they focus on generating sales with good margins rather than boosting sales artificially. The second quarter trends are considered normal and expected to continue.
Q: Can you provide more details on the net working capital absorption in North America?
A: Cristian Nicoletti, Non-Executive Director, explained that the absorption is mainly due to temporary effects in Dixon USA, estimating around EUR6 million. They expect stable net working capital by year-end.
Q: Could you elaborate on the expected revenue and EBITDA growth for the full year?
A: Candela confirmed the guidance of mid-single-digit growth in adjusted EBITDA and free cash flow between EUR40 million and EUR50 million, with revenue expected to remain stable year-on-year.
Q: Are there any plans for extraordinary operations with DOMS, given its strong performance?
A: Candela confirmed that DOMS is strategic for FILA Group, and there are no plans for extraordinary operations with the company.
Q: What are the drivers behind the improving trend in Europe?
A: Candela stated that the improvement is broad-based across all countries where FILA operates, with no specific country driving the trend.
Q: Is there additional work needed on the EWM module in other centers of FILA Group?
A: Candela mentioned that EWM implementation is ongoing in other plants without expected disruptions, with North America being an exception.
Q: Can you provide more color on the logistics hub operations in the U.S.?
A: Candela explained that the SAP EWM tool was implemented in both distribution centers and production, with disruptions mainly in one distribution center. Improvements have been made, and key performance indicators are showing better efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
