Welcome to the call of the Natuzzi Second Quarter and First Half 2019 Conference Call. 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 Executive Officer, Mr. Pasquale Natuzzi; the Chief Financial Officer, Mr. Vittorio Notarpietro; Mr. Oscar Severi, Global Strategy and Finance Development Director; then Mr. Nazzario Pozzi, the Chief Commercial Officer; Mr.

Gianni Tucci, Chief Commercial Officer, Key Account Private Label; and Piero Direnzo, Investor Relations.. As a reminder, today's call is being recorded. I would now to turn the conference over to Piero. Please go ahead, sir..

Thank you, Sandy, and good morning to our listeners in the United States, and good afternoon to those of you connected from Europe and Asia. Welcome to the Natuzzi's Second Quarter and First Half 2019 Conference Call. After a brief introduction by the CEO and the CFO, 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 discussion 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..

Mr. Jason Camp, which -- and Mr. Oscar Severi. Jason Camp, most recently a senior executive at Restoration Hardware, will lead our business operation in North America. In Italy, we are all pleased really to have Jason, our manager in America, because his expertise has been in wholesaler and retailer and has been very successful in his career.

We are very pleased and confident that with his ability, our company will perform much, much better in America. While Oscar Severi, he comes from international company, from L'Oréal France big company, and from Murdoch Media, another skilled manager that will help us in a strategic financial project that we are going forward.

Then eventually, if you want to know a specific project, what we are doing, Oscar is available certainly to answer because he's with us today here. The group is developing the management retention plan that will be based on our share price and designed to align the success of our managers with the return generated for our shareholders.

I would now like to introduce Vittorio Notarpietro, our CFO, who will take you through our numbers. Thank you. I'm available for any question after Vittorio will finish his speech. Thank you..

Okay. Thank you, Mr. Natuzzi. Good day to everyone. Let me also welcome Jason and Oscar. Let me start by explaining the change in accounting for our Chinese retail. As already said, in July 2018, we finalized a JV agreement with KUKA Group for the exclusive license to distribute our brands in China Mainland, Hong Kong and Macau.

Consequently, starting from August 1, 2018, we no longer fully consolidate the Chinese business. Obviously, we continue to supply the JV as a manufacturer.

Total adjustment on first half 2018 sales derived from that is €7.3 million, €2 million comes from DOS sell-out and €5 million from sell-in, the production that we sell through third-party retailers.

If we adjust the 2018 revenue base to reflect this change, 2019 first half revenues would have decreased by 7.6%, as said before, instead of 10.6% reported, reflecting a 4.1% decrease in the Natuzzi division and a 15.3% decrease in the unbranded or private label division.

In this regard, we have explained in our press release that the most recent trend is improving for the Natuzzi division while private label division is worsening [thoroughly] [ph]. In terms of seats sold, so excluding furnishings, volume was down by 18%.

Despite such lower volumes, 2019 first half gross margin was 29.1%, slightly up from 29% last year, thanks to a better product mix, positive trend in raw material prices, selective price increases and efficient cost management in our industrial plant.

We accrued €1.4 million of layoff costs within the industrial costs due to -- so in the cost of goods sold, due to the reduction of some blue and white collar significantly. Net of such accrual, gross margin for the period would have been 29.8%.

The percentage of SG&A on sales from 34.3% to 35.5% this year increased mainly because of declining sales in the period, but in absolute value decreased from €76.2 million to €70.3 million, favored by the deconsolidation of the Chinese [vehicle] [ph].

The reported operating loss for the period was €10.8 million, including, as said, €1.4 million for the layoff cost in Italy versus €8.1 million last year. Last year, we consolidated severely the positive operating result of our Chinese operation with a positive EBIT of €1 million.

Today, having deconsolidated the Chinese business, we recorded 49% of around €2 million net profit reached by the Chinese vehicle below the EBIT line and specifically under the share of profit of equity method in this line. It is important to underline that the Chinese vehicle more than doubled its profit in 1 year.

To summarize, despite much lower seats sold , the consolidated operating loss would have been in line with last year, minus €7.9 million EBIT, considering the €1.4 million for layoff cost, the €0.5 million negative impact of U.S. tariff net of price increases and the €1 million of net profit from the Chinese vehicle.

I'm not changing the sense of the numbers, but these details are important to better understand the mechanics - some mechanics in our profit and loss. The manufacturing played a significant role in reducing the impact of lower volumes by increasing efficiency and lowering operating costs, even fixed the cost in some cases like China.

Supply chain improved its efficiency in the last quarter. SG&A costs are under control, but volumes are lower for reasons explained by Mr. Natuzzi, I'm sure we will further discuss later. As said, we are revising the international manufacturing footprint of the group.

Oscar will give more flavor, but we are in an advanced stage of talks in Vietnam, which would both avoid tariff, 25% today and 30% expected in a few weeks, and save at least 10% versus our manufacturing -- today, manufacturing cost in China. We are actively trying to get the production in Vietnam to start at least from Q1 2020.

In the meantime, we are moving to downsize our Chinese operations. Our current plant in China is under lease agreement expiring in third quarter 2020. We have planned a smaller plant to be leased. This facility will be devoted exclusively to meet the Chinese and the rest of APAC demand. In addition to the tannery and foam operations that Mr.

Natuzzi said, we are divesting -- we have identified other assets that we intend to sell. I'm referring to real estate properties we have in the United States of America and Italy. Total net book value of all assets to be sold is €25 million.

On the basis of today's information and the current stage of negotiation, we expect the partnership [ph] to achieve about €35 million from the sale of such asset.

Thanks to the outsourcing and sale of asset, we will lower the group working capital by €6 million, and we will adapt with a more flexible group structure by lowering operating costs in the region of €6 million, €7 million.

For the first 6 months of 2019, in spite of declining sales, cash flow from operating activities was positive by €2.7 million, also thanks to a more efficient working capital management. In addition, we used €18.1 million to repay short and long-term borrowing.

Consequently, cash net of bank overdraft repayable on demand as of June 30, 2019, was positive by €37.4 million. The company expects third quarter 2019 sales almost in line with the same quarter of the previous year. Thank you..

[Operator Instructions] We take the first question from Timothy Stabosz [ph]. Please go ahead, sir..

Good morning. I own about 230,000 shares or about 2% or 2.5% of the company. Pasquale, it's been a very painful situation for your shareholders. Your stock is down 80% in the last year or so. Your stock is selling for 1/8 of book value, which means the marketplace is saying that the company, this wonderful company that you have built, is worth nothing.

And the company has lost money now for 10 year straight. We've lost money for 10 continuous years. So you have been a destroyer of value and yet you own roughly 2/3 of the company. So you believe in the company, which is good. But shareholders have been suffering and the marketplace is valuing the company as if it's going bankrupt in the next 6 months.

And yet you just announced today that you're going to sell assets that can raise $35 million, so you're absolutely not going bankrupt in the next 6 months.

How do you feel about the fact that the investment community thinks that your company is garbage and that you'll never turn it to profitability? And when will you turn it to profitability, Pasquale? When? When?.

Okay. Timothy, first of all, it's a mistake to say that we lost money in the last 10 years. We have been investing the money. We have been investing in long-term projects of the company.

Please remember that we were a manufacturing company based primarily in Italy, okay? Italy is not -- you can manufacture the product in Italy but only if you make very high-end product, only if you sell your product through retailer to offer the experience to the consumer. Now in order to do that, it's a huge investment.

It's a long journey for the company at all levels, corporate, regional, country, everywhere. It's just a matter of change management investment.

I understand that the book value of the company -- I mean it's everyone knows, I know very well, I follow the stock price every day at least, sometimes 2, 3 times per day, okay? Obviously; the financial markets are evaluating the company based on financial performance.

We - I invite whoever is online today to understand that we are the most well-known brand in the world, okay? We are a global brand and we are the most well-known brand in the world. We are still a manufacturer, but we are the most well-known brand in the world. Now if you consider also that China, which has been the world factory until a year ago.

And then a year ago, Mr. Trump decided to raise the tariff, 10% first then another 15% to 25%, and I -- probably in one or two weeks from now would be at 30%. And consequently, all the manufacturers are moving from China to Vietnam and probably to Cambodia. I mean that's the manufacturer situation.

Thank God that we took decision to define a strategy to invest the money and make our -- and create a lifestyle brand. That's what we have been creating, which has a tremendous value, but we still are at the 45% at the retailer business. Another 55% is still wholesale, and consequently, we are still strong manufacture company.

And that's why we -- it's not easy to move manufacture from China to Vietnam, from Italy to Romania and from Romania to Belarussia and from -- I mean that's what we have done as a manager. I’m driving this company in the best way I can in the all shareholder and stakeholder interest, dear friend, okay, dear Timothy.

So that's my -- what I can tell you. But if you have other question, please ask me specific question, and I will be very pleased to answer you..

Thank you.

Can you reassure the shareholders -- with the stock price crashing, can you reassure us that with the - the program to divest assets, that you will have plenty of liquidity that you currently anticipate, no guarantees, but you anticipate having plenty of liquidity from the moneys raised from these asset sales to operate the company for at least the next 12 months? Yes?.

So let's go step by step. First, let's clarify why we are divesting, okay? We are not divesting because we need money, okay? Certainly, I mean we need money, no question about that. I mean the numbers are there.

But we are divesting, for example, the tannery, okay? We purchased our whole tannery 25 years ago when we were only manufacturer and we were making democratic-level upholstery product.

Everybody knows, [indiscernible] in New York street, Fifth Avenue, wherever you go in the world, everybody knows that we were leather upholstery manufacturer making affordable leather upholstery. That was the company nature in those days. And we were making tons, we were very close to €1 billion.

In 2002, I wanted to remind you that we were a company with €805 million revenue, almost close to €1 billion. But we were just a manufacturer company. And then the Euro become, and you know -- and consequently, Italy was losing competitiveness to export around the world. I mean the world has changed and changed so fast.

So today, we don't need the tannery anymore because first of all, people are purchasing all the way more less and less leather and they want fabric. The volume we do today with leather, it's 30% compared with what used to be in 2002, 2003, in those years when we were still making just leather upholstery. Today, we make lifestyle.

We have living, we have dining, we have bedding. We are a lifestyle high-end brand. It's a different company. We don't need anymore the tannery. To keep the tannery function going, we need the working capital. We don't need it. That's been just analyzed by the strategic point of view, not because we are selling something because we need money.

Otherwise, we would find some other solution, I mean be sure about that. The same I can tell you about the foam company. We don't need the foam company. We need just the working capital to keep those factory just to supply Natuzzi. They were okay 18 years ago, 16 years ago, not anymore today.

That's what we are doing, okay? Then regarding your last question, I don't know, we need to ask Mr. Trump. Impeach him, I don't know what will happen, I mean, today or tomorrow. I mean I don't know. Because if somebody tomorrow -- I mean we are moving now in Vietnam, but if in 10 days from now, Mr.

Trump decides that even Vietnam, even Italy where we manufacture our brand - don't ask me that I should assure. I can assure you my full commitment and my management full commitment. That's why we can assure that we are honest. We are certainly disappointed for the result we are getting. We're sorry.

We apologize for shareholder, for stakeholder, for everyone, but we are working very, very hard. We are very strong -- committed to make this company successful. That's what I can assure you..

Thank you. I have one other very simple question, very brief question, and then I'll let others ask questions. It's actually a request. It will be nice to see the insiders, the officers and directors of the company buying stock after this earnings releases is out in 72 hours or whatever passes, to see you buying stock in the open market.

I hope we can count on management, directors of the company to make a statement that they think that this company is incredibly undervalued and to see you and others buying stock in the open market and affirming your faith that you have plenty of time and a strategy to turn the company around and create value for shareholders.

I hope we can count on you to do that. Thank you, Pasquale..

You’re very welcome. I mean Vittorio would like to answer to your question. I mean okay, so -- but I'm here involved. We are here to satisfy any of your request -- requirement..

As a manager of this company, I know that tomorrow, the blackout period will stop. I will buy on the open market personally. And I think that some other managers will do the same..

That's all I have. Thank you. Best wishes..

You're welcome Thank you very much. Appreciate that..

[Operator Instructions] We take our next question from David Kanen with Kanen Wealth Management..

Hello, gentlemen. Thanks for taking my questions. With the restructuring activities that you've already taken, what is the, on a pro forma basis, the savings in operating expenses annualized? I thought that you mentioned it, but I may have missed it. I joined the call a little bit late..

Let's say about China, okay, David? China is the next step. We need to do that for the reasons already explained, Vietnam and so on. The investment we will do in China will be devoted to the rightsizing of the plant. Negotiations with the existing landlord are still going on. We don't have the final plan.

We could divide the existing plant in two or we could find another plant smaller, in any case, from the previous one. So we will have some layoff cost depending on the final solution.

But the range for the restructuring of Chinese operations ranges from €2.5 million, €3.5 million, of which €2.5 million should be monetary cost and the rest non-monetary cost. As far as the additional transaction is concerned, as said by Mr. Natuzzi, we are pursuing outsourcing production in low-cost and tariff-free countries.

We have mentioned Vietnam, why not Cambodia tomorrow. We have already mentioned Belarus and maybe in the future some other places..

Okay. David, this is Pasquale, okay? I would like also to just update you what we are doing. So first of all, the market that has been impacted by the tariff has been United States of America, I mean. So that's primarily. And that's because the tariff, 10%, then plus 15%, now probably plus another 5%.

So America has been impacted by the production made in China. So what we have done, I mean, not Italy, thank God. So we took all the business we do in America, divided by cluster, okay, by cluster. So we have a retailer which is Natuzzi Italia. We manufacture in Italy. And then we have wholesaler.

But we have branded wholesaler which means, while you live in Florida, for example, if you go and visit Baer's. Baer's is our dealer or Matter Brother [ph]. We have a customer there in Florida but everywhere in America that they have a gallery. It's a shop in the shop.

So Baer's, for example, has 2,000 square feet and just Natuzzi Editions branded display. That business is a profitable business for us. We can make still in China and making good margin.

But if the tariff will be still there, then we are already considering to manufacture the product first in Romania because we have all the numbers impact the calculation that if we make the production for Baer's, Matter Brother and many, many other customer that we call customer Cluster A, we manufacture the product in Romania, we will improve the margins very, very, very well, okay, because we avoid to pay tariff.

But we need to create space in our Romania factory, production space. It's 1 million square-foot factory, but it's full. It's working at full production capacity. We are moving production. We still make Natuzzi Editions for the European market in Italy. But Italy is too expensive.

We are moving the production, Natuzzi Editions, from Italy to Romania, where we can improve the margin.

But in order to give space, then we take out from the Romania factory production that we make for big distributor where the margin are unbranded, the margin are lower, and we will make this production in Belorussia, but over there we will not invest to open a factory.

We are already at a good stage to make the product in Belorussia and make improved volume and margin. Then we'll take production out from China and move to Vietnam.

But for customer like, whoever, the big, big customer, the one who has 100 store, that for them it's important the product and we make good product because at least we learn in 60 years experience how to make product, how to make innovative product. But you know, manufacturing the product in Vietnam will avoid the tax and we will improve the margin.

And we are at good stage in Vietnam. I expect that starting from January we will start to manufacture product in Vietnam in outsourcing. And that again will make the company flexible and we reduce working capital. I mean, we are putting on the table with our management the best solution to face this situation regarding the tariff in America.

And I mean, the story is really long, but we can update you, shareholder, any time..

Okay, so now....

Did I answer your question, David?.

I’m still a little bit unclear so let me ask a couple of follow-ups so I can get a clear picture.

So the production that pertains specifically to the KUKA joint venture, I'm sure that production will continue in China, right?.

Absolutely. Absolutely..

Okay. And then so for the -- let's say, the other wholesale and Natuzzi Editions business where you manufacture in China, you're going to move that potentially to Vietnam, Romania, where you can gain capacity, and there'll be savings there.

You'll be able to recapture some margin is what you're summarizing, correct?.

Exactly. But to ship the product from Romania, the transportation cost is also a little bit -- not a little bit, it's higher than shipping from America. And we are already working for the final solution within, let's say, 12 months from now, again, expectation. I mean, we are not sleeping certainly here.

As you know, to manufacture the Natuzzi Editions in Mexico for the American market. So that's the final solution. So Vietnam for unbranded because we still need those volume and capitalize the product know-how, production know-how. We have a customer. We have a business there. We want to keep and improve the business, but we need to deliver the margin.

And Belorussia is the answer for Europe. And Vietnam is the answer for America. And Mexico will be the answer for Natuzzi Editions for America. And Romania is already the answer for Natuzzi Editions where we are opening the store and performing very, very well. As you know in China, we are already almost 160 or 170 or 175.

We open store almost every week in China with the Natuzzi Editions. The same in Latin America. And now we are growing very well with the Natuzzi Editions store franchising in EMEA, in England primarily. But the production made in Romania makes our product designed in Italy, quality-certified in Italy.

The experience in the store is an Italian experience lifestyle. The price are still attractive and the margin are good for retailer and for the manufacturer. I mean, the investment we have done on the brand and on product know-how and production process know-how, knowing the market, change management investment, digitalization will give result.

We strongly believe in what we are doing..

Okay. So two years from now it looks like you're starting to accelerate the growth of the KUKA joint venture. You're saying you're up to 179 China stores.

So 2 years from now how many stores do you think the joint venture will have? What's the potential size of that? And then also your higher-margin direct operated stores in the U.S., Europe, et cetera, how many do we have now 2 years from now? Or let's say over the next 12 months, how many additional DOS stores do you think we will have?.

Our goal, I mean, we have today, I believe, 69 stores in total between Natuzzi Italia stores in America, between United States, primarily Florida, then we have Chicago, we have Los Angeles, we have New Jersey, King of Prussia, New York, Madison Avenue, whatsoever, and in Mexico.

We have in total 16 to 17 store, 54 was - exact - I'm sorry, thank you very much. So the store are 54, okay, in total, between Natuzzi Italia and Divani&Divani in Italy.

Then I would like also to talk a little bit about Divani&Divani Italy, okay, just to inform you dear shareholder what we are doing here, okay? Can you take note, Vittorio, about Divani&Divani? I want to update the shareholder regarding Divani&Divani..

54..

So the store are 54 between Natuzzi Italia and Divani&Divani.

I believe Divani&Divani are 18 stores, Vittorio, can you help me please?.

Sure..

18 stores, 17 stores?.

14, 14..

14 stores. Okay. We have 14 stores Divani&Divani and we have 40 stores Natuzzi Italia distributed from between United States, England, Spain, Switzerland, Mexico and even in France. We have a new store in Paris. And then we have also a concession in Palacio de Hierro is a department store in Mexico. We have 12 concession.

Now obviously, the volume we do in the concession are much lower than the volume we do in Divani&Divani, for example, or the store we have in Spain are 15 years old store, so 10 years old store, while the new one because we are making progress in terms of retailer, how to improve the retailer operation, how to identify better the consumer, the location, everything, and how to improve the business also in our retailer operation by selling a project.

For example, Florida, we have done turnaround in Florida because we took back the store from our dealer that he passed away. And so we took the store that was a disaster. But because the brand has huge value for us, we said, no, no, let's stay the company there and make it a turnaround. We have made a turnaround.

And we have a great manager there, Michele Griner. She comes also from Restoration Hardware. And she's changing people in the store because our product proposition, our brand proposition is to sell project, obviously, even object. If you come into our store and you wanted to buy a sofa or coffee table or lamp, whatever, we can sell it to you.

But we need also to design entire homes. But in order to do that, you should have the appropriate people in the store. They know how to work with architect, with interior decorator and to make a project. And whenever we made those change, already our businesses is up between 35% and 40%, great job.

And Jason Camp, our Natuzzi President in Natuzzi America, he comes from that experience. He has energy. He has determination. Really, he loves the company because you need to love this company in order to really make this company successful again.

Now back to the retailer operation, how many store we should open? We want to focus for next year to make all our store successful. We want to capitalize the investment we have made. We want to make our model perfect with our management. And then we will plan again the growth. But we'll....

Yes. So my question was, over the next year, how many additional DOS stores do you expect? And you're saying right now you don't have a plan, you're focusing on growing the existing ones and their profitability.

Is that correct?.

Okay. Let me -- do you mind if I pass you, Nazzario Pozzi. As you know, Nazzario Pozzi is the Chief Brand Officer and Retail Manager. I mean, at worldwide level, he would like to answer to you. But then you or me, Nazzario, we need to give also explanation about what we have done. Okay. I will talk about Divani&Divani.

You answer to these today, okay?.

Nazzario Pozzi speaking. We are planning next year to open 5 or 6 DOS in United Kingdom and United States. This is mostly Natuzzi Editions because as Pasquale Natuzzi mentioned, so far, we have built a strong foundation for our Natuzzi Italia DOS.

In our press release, we have explained the result of our Natuzzi Italia DOS over the course of the last 6 months and you might remember against also the previous year, both in terms of like for like growth and in terms of profitability.

And of course, now we want to leverage on these Natuzzi Italia retail format and best practices to take benefit of all these also on our license stores which we have extensively in the rest of the world.

As for Natuzzi Editions, we have been pursuing aggressive growth in China and Latin America so far and the time has come to open Natuzzi Editions stores also in Europe and the United States. And we want to do this first through our direct-operated stores and then we will continue such retail expansion also through license partner stores.

That's why the next step based on the preliminary results we have achieved with the pilot stores of Natuzzi Editions in the U.K. that are great, both in terms of sales to square feet and profitability, we are now planning additional 6 stores for next year.

And besides this, Pasquale Natuzzi has also mentioned the business of Divani&Divani in Italy which is Natuzzi Editions under the Divani&Divani retail brand in Italy. And I'll let Pasquale Natuzzi further comment on that..

Thank you. So I mean, Divani&Divani deserves some really explanation. Divani&Divani is a chain of store in Italy that today we have in total 62, 63 stores, something like that. And 14 are DOS and the rest are in franchising.

And the chain has 28 years history, okay? I mean, it's the highest brand awareness in Italy in terms of upholstery is Divani&Divani by Natuzzi. I mean, Italy, it's a country with 65 million people. I mean, it's a nice place. It's a nice place to live.

But because we have been focusing on developing Natuzzi Italia, Natuzzi lifestyle brand, we have been focusing, I mean, we really took less care Divani&Divani. But 3 years ago we decided that to have a brand in Italy with 95% brand awareness, I mean, if you ask anywhere in Italy, if you should buy Divani, where you go to look so far? Divani&Divani.

I mean, everybody knows that. So we decided to focus on Divani&Divani on redesigning the store. It's been a huge investment and huge focus redesign up because today the consumer they need really to make experience when they go in the store. They need to make experience. So we're redesigned the store. We reviewed the merchandising, the product.

We reviewed the advertising, everything. We opened a few stores, new generation stores, the business went up by 60%, 70%. And we have a plan now to roll out. Our DOS Divani&Divani are performing well and we are, obviously, we are opening the new store in franchising.

So another, I mean, but Divani&Divani is another important opportunity for us where we have made just investment, investing money and time and focusing, now we should get return. That's what we expect..

Okay. So I just wanted to know in the next year how many additional DOS stores we'll have.

Is the answer 5 to 6? Is that correct?.

That's correct, UK and USA..

Okay.

And then as far as gross margin going forward, as wholesale sort of becomes -- not sort of, becomes a lower percentage of the overall revenue and DOS, which is vertically integrated, becomes a higher percentage, where do we see in 2020 gross margins being? Can they get back close to the low to mid-30s? And then what is the OpEx run rate going forward with the restructuring? I'm trying to figure out basically on an EBITDA basis when you can be profitable..

David, our goal for next year as a group, considering the starting of Vietnam, the possible starting of Belarus, considering everything, is to let the company be EBITDA positive with a smaller increase in volumes focused on the existing franchise store organic growth and of course, the switch of the production footprint at the very beginning of its stage..

Okay. And then what's the rate at which the KUKA joint venture is opening stores currently? I believe you said they have about 179 stores in the partnership.

What's the rate on an annual basis of growth there?.

Our plan for this year in China is to open slightly in excess of 35 stores by the end of the year. And our plan for next year is even more aggressive..

The next question comes from Timothy Stabosz [ph]..

I just have one follow-up here.

Pasquale, I don't want to quibble with you, but it's important for trust to hear you affirm that you understand that the company has lost money for the lion's share for the vast majority of the last 10 years, 90% of the last 10 years, that if you add, if you look at each and every quarter or each year, that 9 out of the last 10 years or maybe even 10 out the last 10 years, the company has lost money.

You were defensive around that and it's important that I know as a shareholder and I think that all shareholders know that you fully well know that there's been little or no value generated and a huge destruction of value for the last 10 years.

And I wasn't trying to attack you, but it's important that shareholders know that you know that these losses go back pretty much 10 years now, give or take. And I didn't want to have you quibble with me about that. I hope you understand the question. That you acknowledge that....

To be honest, okay, just wait one second, please. I'll only take only a second. Timothy, I'm a shareholder. I have 5 children. My wife, my children, they torture me every day. Not torture, I mean, to be honest, I mean, they love me and they understand what I'm doing to relaunch this diamond company, I mean. So that's reality.

Again, we have been investing, investing, investing. Our main goal was to convert this company from a manufacturing company to lifestyle brand. Please pay attention, try to look on social, try to visit our store, try to understand there are intangible value that we create.

Otherwise, why in your opinion just for China, KUKA would invest €65 million for 51% only for China. Why? Okay. And by the way....

Very impressive, impressive..

Pardon me..

Very impressive. It's very impressive. I agree with you..

And so that's why. And we mentioned at the opening of this conference call, Oscar Severi, the strategic financial manager, is pursuing -- the goal of the company is to find other solution like KUKA one in Vietnam, like in India, like in Mexico, in Russia.

Those are huge market but you need to be there to install manufacturing, manufacture the product locally and distribute locally through direct to store or franchising a store. We have a turnkey program, product, selection process, factory, networks, retailer, Natuzzi Italia, Natuzzi Editions, huge investment.

That's what we have done in the last 10 years. Now we look just to get a return on investment. We don't have more time, period. We don't have more time. We know that. And I must tell you that the management is fully aware of and very much motivated. And that really makes me feel 30 years younger, believe it or not..

Okay. Thank you very much. That’s all I have..

You’re welcome..

[Operator Instructions] It appears there are no further questions at this time. I would like to turn the conference back to Piero for any additional or closing remarks..

Thank you, Sandy. So it seems that there are no further questions at the moment. Therefore, this concludes the conference call today. Of course, please feel free to contact us as you need further information. Thank you and have a great day ahead. Good-bye..

This concludes today’s call. Thank you for your participation. You may now disconnect..