Thank you. We're going to give you a short presentation with the half-of-the-year results.

Francesco, if you want to do that, and then we're of course here for your questions and...

Good afternoon to everyone. Thanks for for your timing.

Going to the index and the most significant information, here is a a very quick resume of our recent past experience in B&C Speakers.

Okay.

Key fact of the of the of the year, we are still we're still in a very pretty good level of EBITDA margin, still very close to 20% at group at group level, even considering the the the timing reduction on on demand and even with still some non-recurring costs that we're facing for for some legal action that we have in place since the two two semesters ago. The net result of the of the of the of the semester is significantly bigger than than the previous semester of last year, mainly because we have been able to differently and more consistently manage financial aspect of our activities.

In other words, we have limited of incurring in exchange rate cost, which was the most important aspect of last of last year's semester. The the result is that at the end of at the end of the day, if the net result is better is better than last year.

We're still we're still a company not only resilient in terms of efficiency and cost management, but also, as you can see, in cash flow generation. Clearly during the the the semester, we have paid in May the €7.6 dividend payment, being coherent with our political policy of paying back to investors, but even in having considered this, we have been able to produce cash free cash flow almost able to to equalize the amount of dividend paid.

The group remain pretty strong all over all around the world thanks to our very broad geographical presence. For example, we have we have we have seen a pretty good result in Italy and and apart from some specific situations, Europe remain not only not only the most important initial market for us, but but also we have seen some more players growing growing around, as well as the distribution market, which is which is doing pretty well, especially in Europe.

At the end of the day, being present in the in the different area of the of the world gives us the possibility to differentiate clearly our offer and even to try sort of compensating when some portion of the market are are suffering, with other area that are performing better. The key financial highlights, they represent what we have sort of introduced.

Total revenues end of semester amounted amount at 47, some some something around -7% with respect to last year, which means that the second quarter, as expected, we have still seen from the major most important OEM how to say, a delay on on their forecast program, which means that nothing has been canceled, but mainly they have asked to postpone most part of of summer orders summer forecast to September and and later over there. The EBITDA has has reached more than €9 million.

The effect of our still non-recurring cost is it's around €300,000. If you if we consider if we consider the normal the normal cost structure, we would have been able to almost almost arrived at at 20% of EBITDA margin.

The net profit, as as introduced before, seems to us pretty pretty pretty significant considering that it's bigger and and higher than last year. The good results, as I said before, is it has been to limited risk on exchange rate currencies, which is not so easy in a very turbulent market like this one.

The net financial position is clearly impacted by the dividend paid in May, while on the other side we're still solidly producing a cash flow from recurring operation. Pretty quickly, the the graph representing the the the, I say, the profit and loss most important index.

From our point of view, it's very much important the gross margin, which is almost stable in respect to the first half of last year, even with even without a portion a portion of of of sales. This means that while we are we are waiting for the market to restart, which will which will happen by the end of the summer and the beginning of of the autumn, of the second the last part of the year, we have been able to react promptly and efficiently.

The consequence is that if we are losing some some volume, the the real the real percentage of the of the gross margin is there, which represents, from our our point of view, an important target that has been achieved. Clearly, in terms of EBITDA, which is how to say it?

In terms of EBITDA, the the amount of fixed costs is making, how to say, is making the the big difference between one one semester to the other one. In terms of geographical background, it's it's clearly still a very much prominent predominant Europe the European market thanks to our big European OEM customers, which are doing again good again, well again starting from September, where they have confirmed confirmed order at the the level of beginning of 2026 at least.

In this meanwhile, minor or less important OEM players European ones have performed pretty well, as well as the Italian market, which is becoming which is becoming more important. South America, especially Brazil and and and the north northern part of Central America are doing are doing pretty much pretty much well.

North America, that we we have done we have done a more than satisfying first half of the year. The summer is is never is never so good even if was never was never that good this year in especially on the retail market.

We are still optimist optimistic that they will they will restart, they will re-jump sooner than later. Here we have here we have the EBITDA while I was trying to introduce it before.

Clearly in terms of EBITDA margin, the effect of the reduced volume is more visible than at the at the gross margin level. As I said before, net of non-recurring costs, they would have been closer to to 20% than to than to 19%.

Net result is clearly is clearly growing with respect to last year for the reason that we have just we have already we have already explained. What we are saying here, stating here, profitability level preserved by tight cost control activities is something that is clearly in place not not only not only in in period like this one with reducing volume, but in this time is is becoming more and more important.

We're still we're confident that most of those efficiencies are still to come. Net working capital, more before the net financial position, it's important to to say to say to underline that thanks to our resiliency, thanks to our capability to try to react on market trend, one of the one of our decision has been was to increase our net working capital mainly inventory, taking advantage of still a pretty stable if not lower cost of components in order to be ready for for the time when the demand will restart, not only to be able to react almost just-in-time, but also, how to say, benefiting from how to say, good cost on in terms of cost of components.

Okay? The net financial position clearly is impacted by the the dividend paid.

It will be There are no reasons to to to imagine that this financial position will become zero. We will be able we will be again in a positive in almost a positive position by the end of the year.

This is clearly the this represents the way that how we have produced cash. This 5.1 million is is the represent the free cash flow produced by the recurring the recurring normal activity before before financing and investment.

Then, in terms of in terms of the visibility for for the second part of of of 2026, as said as said before, we're we're still dealing with a very short visibility, but it is it is it is to be confirmed that the biggest player on the market, they have clearly and and firmly restarted, which means that they have they have confirmed order for the months of September and October at levels that were recurring and normal at the end of last year, if not at the beginning of this year, which means that with them in particular, we are on on the way to recover part of what has been lost during the summer time because of this market how to say, turbulence and uncertainty. Okay?

We continue to work on on flexibility in order to, control more than more than we are used to do, control and cost efficiency in order to make any of our decision less impacting possible in terms of profitability. No no particular reason and and here Lorenzo could confirm that that from the market is arriving could arrive a message different from lasting but temporary indication about this demand the demand this demand not not not growing as expected.

This is more or less what we will be working on the on on the second part of the year in order to, how to say, re-establish re-establish how result and performance in line with our year beginning-of-the-year expectations. On the appendix, we can find that the the the the the profit and loss and the balance sheet statement that we have, how to say, communicated to market a couple of hours ago, where it's clear where the numbers are coming from.

This is This This is simply the detail of what we have of what I've tried to explain to you before. This is for the profit and loss, and this is the balance sheet at the end of the year.

Here it's important to underline the effect on the working capital, as I said before, is mainly inventory for the strategic reason that that I have introduced to you before. Cash is still very much strong and and and relevant within the group.

In terms of trade receivable, we have no significant In reality, we have no matter in terms of overdueing or credit at risk. This is the highlights of the cash flow for the for the semester.

Almost that's it. The safe harbor statement, I don't think it's anything interesting for you.

From our from my point of view, from our point of view, this is the, how to say, the way to go through the most important topics. Now, it will be any question, or or or unless you have anything...

No, no,

no. I'm waiting for the...

...questions

are welcome.

Thank you. Ciao Lorenzo, ciao Francesco.

Thanks for the presentation. I would like to start with the outlook you provided.

Maybe just a clarification on the bigger clients that you are seeing improving orders. Just want to be sure if you're referring to the OEM clients in Europe.

Should we expect a better, let's say, European sales in the second half of the year? Or it was referring in general, bigger clients, not only OEM?

No, actually, we were specifically referring to our two largest customers, which as you all know at this point are the French L-Acoustics and the German d&b audiotechnik. The fact is that in a normal year, they would represent, like last year, for example, they would represent together 30% of our global sales, consolidated number.

They have given us a forecast last year, which was already indicating that they were expecting a slowdown, but in reality, one of the two had a much bigger slowdown than expected. Okay?

Which was surprising for us, but even for them was definitely something that they couldn't take in account. Of course, it's possibly the main reason of our sales' minus signs.

Okay? One of the biggest reasons.

I have to say that this is something that has kept on during the first two months of the current quarter. Okay?

The good news is that starting from September, they have given us a strong sign of recover. Both companies are telling us that their order intake is improving, and they are already of course talking about next year, if you understand that.

They think that they can recover at the level of 2025. Okay?

What is important for everybody to understand that I'm just stepping back a second. The main concern that we have when we see things going down in such a way is of course we never had a minus signs in our history other than when there were very strong economical crises.

Of course the COVID times was still bad, but it was an external tragic reason that we all remember. The previous one was the economical crisis of 2008, 2009.

This year is an awkward year because there are no sign that the overall industry, meaning the event industry, is anytime slower. Okay?

There has not been major flexion of the final demand for a concert and therefore systems and whatever is around the concert. Definitely our major customers They're both suffering from China, which is for our industry definitely very slow and there are no big signs of a price, but I can talk more extensively about that, and the US.

What is important for B&C to understand when we have with this evolution, this negative evolution, is the market that is slowing down or are we actually losing market share, which is two different things? For these two customers, which are of course key for our numbers, both sales and marginality, we are 100% sure that there is no loss in favor of some of our competitors.

Okay? This is I want to stress this very very strongly.

On the contrary, as I have told you already, in their recent announced flagship system, B&C is 100% of the transducers suppliers, and so we expect next year to be again brilliant with both of them, which in fact, they also had some delays in the transition from the old systems to the new ones. I would say that we feel very positive about our relationship with these guys, and we went down with them because they went down.

Okay? When they will recover, they will recover with them in a very direct proportion.

I think and other large OEMs in fact, these are by far our largest. We have other OEMs which have performed okay.

A couple of Italians, which have actually overperformed. As I said, all Chinese have been actually badly performing, and our main concern is of course the European and the Americans OEMs, companies which are selling to China are now not selling to China any longer, and they are saying that this is because the government is pushing for the Chinese events to be supported by Chinese brands.

Okay? In that case, I was expecting that we would be in a good position because we sell a lot of transducers to Chinese manufacturer.

That is what we're trying to understand. I have to be frank with you.

Even visiting China recently, a month ago, just right before August, we really went there with the objective to understand whether we were still the first option or not. China is really in this moment is the big question mark.

Also the United States, to an extent, but that is a different situation. For example, one of the other strong reason of our not excellent performance in this first semester is because of our subsidiary in the United States.

B&C North America, I don't mean Eminence, which is a different animal. B&C North America is underperforming because we have completely lost, and of course we don't know whether this will come back and how soon, that very important market for us of the do-it-yourself.

I think in past meetings, we discussed this already. Most of this market is driven by Latino communities, and all of these guys are, as you all know, very much prudent to run parties on the street.

Is a if you want, is a very immature and poorly structured market, and that is really disappeared. For us, it was accounting something like $3 to $4 million at the end of the year.

This is the very problematic area. We are of course trying to understand it better.

Lots of decisions have been placed on hold because of course there are, you know very well that there are this very important election at the beginning of November that may eventually change something in terms of domestic policy. It's so very complicated and again, we don't think that we are losing market share there as well.

It's really that these people are not buying stuff because they don't need audio system for their entertainment, if you want. Okay?

Again, the other OEMs, the Americans are doing okay. The Italians are overperforming.

More or less, we don't have indication that we are losing market share in favor of someone else in our let's say, Western OEMs. China is something that we're still investigating.

Okay. Lorenzo, do you see the same, let's say, market responsiveness from the aftermarket car audio?

Because there is kind of retail market, what is the response there? Exactly.

Yeah.

It's a very good question. In fact, we do see the same.

We had very good expectation for the year for the car audio. We have been participating to a lot of shows and activities that is slightly different market, but still is private, and we are addressing the end users.

It looks like simply the end users in that category, we're talking about people that are not rich people, are hobbyists, if you want, okay? It's very much depend on their economy.

We all know that the US economy is actually better than other, but I don't really see that is reflecting the situation of those markets. It looks like the power of purchase of the end users in that is very very limited today that was in the past.

Now, I think and I don't know whether this is going to change or not soon. It's clearly something affecting the US.

For example, there were big guys, which are of course always on the front line when it comes large events and so. For example, in the United States, they had the World Championship.

I was personally expecting that could have been a drive, a strong drive for lots of sales because lots of events. On the contrary, I was told that things were decided last year already for this large events, and for the smaller rental companies were in fact very difficult to work because all the venues were occupied and booked for the championship.

We're receiving lots of contradictory information if you want. I'm afraid that this is something I may sound contradictory in what I say because, as always, we're always very active in running our intelligence, if you want, to understand and prevent and re-address.

This time is very confusing. Don't forget also that we don't sell to the Middle East directly or we sell very little amount of stuff traditionally because you don't have manufacturers there and you don't have do-it-yourself.

If you have, that is very small. Our customers are clearly suffering that as well.

Is it that 5% 10%? There was a moment in June, if I'm not wrong, don't remember exactly the time, then people were starting to say, "Okay, now these countries will be massively reinvest because they need to relaunch, they need to recover all the ground lost, they need to show the world that there is a place," and I'm specifically talking about Dubai and the Emirates.

Looking at what is happening in the last two weeks, things are still far from being

back to normal,

and I think that the overall market is still suffering from that. My priority list is definitely China is number one question mark.

The situation is not clear, and we are told that no matter how important and let's say, A-class production they're running in China, they can still be using lots of copied products. This is something that we hear more and more.

From L-Acoustics, from d&b, but also from RCF, for example, which is a little different animal from the previous two. They have a less expensive product and more affordable, but they're finding China difficult as well because it looks like there is an easy and a copies like we were not seeing in a long time before.

Apparently, the government is not making a big question whether the product is original or not. We're also running some legal action against copycats, but honestly, it looks like trying to fish with your hand.

What I mean?

At least the process requires time and effort and we go against the most important ones based on our information, but not only the sole one. It could be a never-ending fighting.

Again, the outlook is conservative for the current year and is pretty optimistic that we will recover our position in terms of sales in the next year, especially thanks to the big OEMs. Distribution and China is something that we need to understand better.

We are now finally,

after

forever, promoting Eminence Pro, which is a B&C design, made in China. There are a lot of good feedbacks.

It will take time. Within China, which is important, and also there are many different information, many different news.

Some are very good and promising. Some are still a little bit confusing.

It looks like there's definitely signs that the market is slowly but surely looking better next three months than it was six months ago. This is a market.

Okay. Thank you, Lorenzo.

Maybe if we can jump on the cost side. I've seen that margins held up very well despite lower volumes.

The last time we spoke, you were saying that you were planning a price adjustment on the product, an increase in price in list from June. I was wondering if also, I don't know, the third quarter we can expect an improvement in gross margin or we can...

Gross margin, as Francesco anticipated before, will mostly come from the fact that we have when there was the when there was the big post-COVID I hysteria, whatever you say, we had hired we had to hire a lot of people, temporary jobs mainly, but so we sort of inflated too much our organization. What we have done in the past six months was to bring it back to a more reasonable number.

Our aim now, which is which comes together with the aim we have to reinvest to invest in a new assembly line for our main main factory in Italy, we have initiated a very a very strong how to say, efficiency efficiency program that goes from, I don't know, the new line which we're studying, the adoption of we have we have reached an agreement with a with an Italian company which is expert in AI solutions for for mid-sized company, manufacturing company. We're trying to look for efficiency there.

Of course, all of this efficiency, while at the same time we are increasing the number of we are investing in new people for the R&D and the and the sales team, okay? I am under the impression that no, it's not in fact that we have initiated a process that we'll see we'll see in 2023, 2024, we were too too many people in in production and and maybe too little people in in R&D and sales.

We're sort of rebalancing this. Of course, it's a it's a we have many different tools.

It's not an easy It's not a how to say, journey, because of course you have at the end of the day to to to have some people to lose some people on the way. Back to gross margin, I think that what you will see during the next months, you'll see that the I would say, the percentage cost the cost impact of direct labor is going back to to a more reasonable number, okay, which is a good thing.

In terms of in terms of materials, raw materials, the situation is pretty stable. We haven't seen any any major any major jumps or or in one direction or the other.

It's pretty it's pretty pretty stable and flat, I would say.

We tried to take advantage of our financial position, as said before, in order to invest on the most recurrent inventory components in order to not only saving money, but avoiding potential future increase on their cost and being ready for any additional single additional piece to be asked on the following weeks. Giving some more visibility to you, Andrea, yes, we made a price adjustment between spring and in many cases effective June 1st.

We have no expectation to do anything at any other correction, including US. We made a first step ahead to recover for duties.

As said we will be working on gross margins, trying to make direct labor and especially cost of components as more efficient as possible.

Okay. Thank you.

Welcome. Does anyone else have a question?

Let me just a follow-up, Francesco. Sorry again.

Just to confirm. In the next quarters, is your priority to invest in inventory?

What's your priority in use of cash, that you generate a lot of cash, also this quarter was very good. I calculate €4 million of free cash flow generation if we exclude the dividend, it's impressive.

I just want to understand what's your priority in terms of capital allocation for the business?

Keep investing all in inventory will require to rent double space of what we still have on our end. The level of the inventory is already more than enough for any future short-term restart of the demand.

We are working hard on the after many years, we are almost ready to invest significantly on a new production line with higher level of automatization, more consistency on quality control. Potential M&A apart, or potential investment to create a different offer to the customer, the short-term major investment will be upgrading the production line, which is another of the important priorities we work on.

Okay. Helpful.

Thank you.

One thing that I would like to to which I think is a very good news, as you may remember, we have changed in in in June, there has been a very important change in the company. We have changed our global sales manager.

Of course, the one that retired was 20 almost 20 years with with us. He was a very well-known professional in the marketplace, and he was really a pillar of the company.

The guy that we have selected after this short time, because it's three months, past August which was not very very how to say, full of activity for the group or at least for for Florence. The guy, we're super happy with him, and he's proved to So, we know that we we know already that we have done a very good choice, and he's really bringing lots of new ideas how to address an always evolving market, you know.

That is a very good news. That is a very good for for a small organization like ours to have such an important element to go away, this absolutely was not it was We shouldn't have given it for granted that the substitution was good, while in fact it's extremely good.

Okay. Thanks.