The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Hi, guys. Thanks for taking my questions. The first one is regarding the price list increases that you're taking. In the press release you said that they'll
start to take effect during Q2. So I'm kind of looking past Q2 as an extraordinary event or temporary period vis-a-vis the lockdowns in China and
so forth.
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MAY 31, 2022 / 2:00PM, NTZ.N - Q1 2022 Natuzzi SpA Earnings Call
But looking to the second half of the year and beyond, given the price increases that you're passing, and then also, you've alluded to modernization
investments or capital expenditures at the factory level to improve efficiency, should we expect better gross margins assuming no further increases
in inflation in the back half of the year from that combination of price increases, as well as some of the investments in technology at the factory
level?
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Okay, and then -- I'm sorry, I'm assuming you're going to touch on --
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Yes. So the second part of it was the investments that you're making in the modernization of your factory for the purpose of getting some cost
benefits and efficiencies, when would we start to realize those benefits?
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Okay. Can you give us some sense as to what those improvements will be as it relates to margin and what the ROI is on some of this? I'm assuming
it's capital equipment that you'll be purchasing.
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Okay. And then, could you just give us an update -- maybe this is a question for Jason. In the past, you've talked about the expansion of your North
American footprint, direct-operated stores, with a goal of opening up approximately 10 per year. Is that still the plan? As an investor, that was one
of the reasons why we liked the story is because there would be that pivot to much higher margin-branded product north of 70%.
So it was critical to our investment thesis. Haven't heard you speak about that at all. If you or Jason could touch upon that, if we are on track to
open approximately 10 stores a year for the foreseeable future in North America. And then also, if there's an opportunity in Western Europe and
elsewhere, if you can touch on that as well.
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MAY 31, 2022 / 2:00PM, NTZ.N - Q1 2022 Natuzzi SpA Earnings Call
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Great, thank you. And then, Antonio, can you talk about Western Europe? Is there an opportunity to increase your DOS footprint there?
Question: Dave Kanen - Kanen Wealth Management LLC - Analyst
: Okay. That makes sense. I understand wanting to have density in certain markets so that you can make those investments and scale them.
So the next question, and then I'm going to turn it over to anyone that is in queue. I don't want to totally monopolize, my apologies to everyone
on the call.
In the past, we've looked at the China JV as, quote, a hidden asset. I'm estimating it has probably worth almost $10 per share or more, that plus the
real estate. And yet, our stock is not getting credit for it. The core business, to me, is trading for zero value.
Can you give us an update on your efforts or any initiatives underway to unlock that value for shareholders on the China JV? You don't have to talk
about Vietnam or Singapore where they're much smaller; we like it, but just specifically China.
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