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FILA Fabbrica Italiana Lapis ed Affini SpA reported a modest increase in revenue for Q1 2025, showing resilience amid softer market conditions, particularly in the U.S. The company’s revenue climbed 3.4% year-over-year to €136.3 million, while adjusted EBITDA rose 7% to €22.6 million. According to InvestingPro analysis, FILA maintains a strong financial health score of 3.03, rated as "GREAT," and appears undervalued based on its Fair Value assessment. Despite these gains, the company’s stock price experienced a slight decline of 1.54% following the earnings announcement, reflecting investor concerns over market uncertainties and strategic shifts.
Key Takeaways
- Revenue increased by 3.4% year-over-year to €136.3 million.
- Adjusted EBITDA grew 7% to €22.6 million, despite market challenges.
- Stock price fell 1.54% post-earnings, indicating cautious investor sentiment.
- The company is restructuring its business portfolio and closing a Chinese subsidiary.
- FILA maintains its 2025 guidance but remains cautious about market conditions.
Company Performance
FILA’s performance in Q1 2025 reflects its ability to maintain growth in a challenging economic environment. Trading at an attractive P/E ratio of 7.19x with a market capitalization of €651.06M, the company managed to increase revenue and adjusted EBITDA, although the U.S. market has softened since March, and tariff uncertainties continue to affect consumer behavior. FILA’s strategic focus on restructuring and maintaining market share appears to be paying off, particularly in the stable European market. InvestingPro subscribers can access 8 additional key insights about FILA’s valuation and growth prospects in the comprehensive Pro Research Report.
Financial Highlights
- Revenue: €136.3 million, up 3.4% year-over-year.
- Adjusted EBITDA: €22.6 million, up 7% year-over-year.
- Adjusted Operating Income: €12.9 million, consistent with the previous year.
- Free Cash Flow to Equity: €55.5 million.
- Net Position: Negative €202.8 million.
Outlook & Guidance
FILA has maintained its guidance for 2025, although executives expressed caution due to ongoing market uncertainties, particularly in the U.S. The company is evaluating potential price increases to manage cost pressures and is exploring refinancing opportunities, with a potential window at the end of 2025 to mid-2026. Notably, FILA offers an attractive dividend yield of 6.85% and is trading near its 52-week high, demonstrating strong momentum despite market challenges.
Executive Commentary
"The US market is a little bit softer since March," noted Luca Pilli, COO, highlighting the challenges faced in one of FILA’s key regions. CFO Christian Nicoletti added, "We confirm our target is the guidance," underscoring the company’s commitment to its financial targets despite the uncertain environment. Pilli also remarked, "Consumers are very attentive in purchasing goods," reflecting a cautious consumer sentiment impacting sales.
Risks and Challenges
- Market Conditions: Slower replenishment in the U.S. and tariff uncertainties could impact sales.
- Supply Chain Restructuring: Closing the Chinese subsidiary and moving production may lead to transitional challenges.
- Cost Pressures: Potential need for further price increases to offset rising costs.
- Debt Position: A negative net position could limit financial flexibility.
- Global Economic Environment: Ongoing macroeconomic pressures could affect consumer spending and business investment.
Q&A
During the earnings call, analysts focused on the U.S. market’s softness and FILA’s response to tariff impacts. Questions also addressed the company’s strategic restructuring efforts in Europe, particularly in France, and FILA’s long-term plans for maintaining its market share amid competitive pressures.
Full transcript - FILA Fabbrica Italiana Lapis ed Affini SpA (FILA) Q1 2025:
Conference Operator: Good afternoon. This is the conference operator. Welcome, and thank you for joining the FINA Group First Quarter twenty twenty five Results Webcast Call. Participants are in listen only mode. And after the presentation, there will be a Q and A session.
Today’s call is hosted by mister Luca Pelosi, COO and Christian Nicoletti, CFO. Mister Nicoletti, please go ahead.
Christian Nicoletti, CFO, Fila Group: Good afternoon, everyone. I am Christian Nicoletti, CFO of FilleBrew. I am together with Luca Pilli to true Fila Group’s results for q one twenty twenty five. We are very pleased with our performance in q one twenty twenty five as its market a positive start to the year in high volatility environment with increasing rates solidly operating profit expansion, a fee loss taken down 26.01%, remaining close to all time up. Regarding DOMS, I am also happy to announce that in April, the DOMS shareholder meeting approved the new shareholder agreement between Fila and India Majority Shareholders.
That is into details, the growth details in q one twenty twenty five stood at 136,300,000 plus 3.4% versus q one twenty twenty four and plus 4% on comparable FX. Thanks to the partial recovery of the one off SAP AWM disruption of Vixen UC in q one twenty twenty four and continuous positive trend in Europe. Adjusted EBITDA achieved 22,600,000.0 plus 7% versus q one twenty twenty four, plus 5.2% without IFRS 16 principle, with margin improvement to 16 to 16 in q one twenty twenty four, benefited from the favorable product mix coupled with ongoing efficacy action. Adjusted operating income came in at 12,900,000.0 in line q one twenty twenty four, ’13 million. Financial results stood at negative 9,900,000.0 versus 3.9 in q one twenty two four twenty twenty four.
These results were impacted by negative FX effect for 5,600,000.0, of which 4,400,000.0 of financial assets held by US dollar using an exchange rate of 1.08. This noncash and not current effect lead to a decrease in net €900,000. Free cash flow to equity was equal to five the 55,000,000.5 versus 40 in q one twenty twenty four, in line with the expectation as a result of seasonality of the first quarter with increasing working capital absorption driven by receivable. Net position was equal to negative 202,000,000.8 in q one twenty twenty five with 132,200,000.0 net of reduction versus q one twenty twenty four. Thanks to the strong cash flow generation and domestic disposal for 18,700,000.0.
Net bad debt, hundred $7,076,700,000.0 in q one twenty twenty four 2025, sorry, versus 303,000,000 in q one twenty twenty four. As mentioned early on, shareholders meetings approved the new shareholder agreement. These agreements will regulate the strategic relationship between Fila and Dom’s own governance and upfront a production asset, M and A transaction, and dividend distribution with an Aclair as the lasting firm framework. Finally, as far as the outlook is concerned, the achievement of 2025 guidance changes are then subject to potential adjustments in the year due to the uncertainty arising for tariff and the release effects on the global macroeconomic situation, imparting on consumption in USA.
Luca Pilli, COO, Fila Group: Thank you
Christian Nicoletti, CFO, Fila Group: all for your attention. Now I’d like to open the floor to questions.
Conference Operator: Thank you. We will now begin the question and answer session. To enter the queue for questions, please click on the q and a icon on the left side of your screen. When announced, please click continue on the pop up window. The first question is from Niccolo Stoehr of Kepler Cheuvreux.
Please go ahead.
Niccolo Stoehr, Analyst, Kepler Cheuvreux: Thank you. Thank you for taking my questions. I have a couple. The first one is on on The US market. Basically, you you have not recovered the ground loss last year with your your system disruptions in in March.
So I was wondering what’s been happening there where you see, weakness? Is it more related to finance or school products? And don’t you see the opportunity to benefit, from the current tariff environment to gain market share from competition, in the in the coming months? I mean, if the situation remains as it is today, do you think that the potential negative volume effect is going to be stronger than potential gain in market share because some of your competition, basically, is no longer profitable given the the ties. The second question is a clarification on your corporate governance.
Basically, it seems that the relevant threshold for your partnership with DOMS is 20%. So, basically, is it fair to say that, you might go down to to to that level if if you wish so? And can you remind us if you have, at the moment, a look up after the, the latest placement? Thank you.
Luca Pilli, COO, Fila Group: Thanks, Nicolas. So for you to reply to your first question, it’s true we didn’t fully recover the revenues we lost last year from the WM implementation. But, you should remember twenty twenty three decided to business, to bring this subsidiary with a better profitability and a better EBITDA ratio. And indeed, the results in the numbers, we achieved, something from end of twenty twenty three. And this, happened also in 2024 because not all the lines have been, let’s say, teamed or we of the business.
So what we presented in 2024, and it is also for 2025 as a company with a more solid and sustainable business, mainly in terms of portfolio and the EBITDA ratio. And, in addition, you know, very well, this market is made by a few customers, sir. So any decision from our side or from their side that could impact in one way or in another in one direction, in another the ratings. I can confirm the majority of the changes have been driven by us to, let’s say, get the achievement of the targets that we fix. And another point to consider is the uncertainties of the tariff.
It was something in discussion since the new president was in charge, but the disruption to the to the market arrived in late February. And, all of these disruption, which are manageable from our side, we already told many but, there is a market effect because all customers we are dealing with are now waiting to understand what strategies they will put in place to face this different environment. And what we see in this moment, despite we have a good order portfolio for the for yes. For the replenishment for the daily replenishment, and are buying just what we they need. Or more than this, they are also reducing the stock and controlling better the their working capital.
So we already told The US market is a little bit softer since March. And this situation stand until a few days ago when, finally, it seems for the time being, the tariff structure is not final, but at least is fixed for for a period of time. It’s true. We can have benefit from this tariff implementation if it could be final, but it is something we can discover only late in the year or better next year because the majority of our customers have a long supply chain, and they plan purchases well in advance compared to the BTS. So at the moment, the fulfillment for the BTS requirement mainly for private label, but not just for private label, has been already defined before this, let’s say, tariff disruption.
So at the moment, what we see in the market, Our customer lost and waiting to understand what to do also because more than customers also from our view, US consumers are also very attentive in purchasing goods because also they don’t know what will happen in terms of cost increase. And whenever in the market, there is something uncertain, the natural reaction is to wait. For the second question, I leave three for the first time for the next Thanks for the question. Related to minimal threshold,
Christian Nicoletti, CFO, Fila Group: we see the during the the STAR conference, we confirm at the moment to maintain this 26.01% of partnership. We confirm that is the threshold, the 20%. At the moment, we are not in the future program to to reduce our stake in terms of the moment. Because as the agreement confirm, we see the relation with as a very important point for commercial m and a and strategic operation in the future. Basically, to look up, we have defined the team ABB that the look up is after three months of ABB.
And at the moment, it expired if we resolve the other part of this mistake.
Niccolo Stoehr, Analyst, Kepler Cheuvreux: Thank you.
Conference Operator: Next question is from Alessandro Cecchini of Equita.
Alessandro Cecchini, Analyst, Equita: Hello, everybody, and thank you for taking my questions. This one, actually, it’s on, I mean, Central And South America. So basically, it was minus 2% What is your, I mean, expectation for the rest of the year now that the situation in Mexico has been, I mean, confirmed versus U. S? Is this offering to you, I mean, a sort of pickup?
You see some improvement in the business. My second question is instead about still North America. From my understanding, basically, your order book is expected if so you consider it positive. So do you expect a positive performance in The U. S.
In the second quarter? And then you are, I mean, waiting for more visibility for the rest of the year given sellout, etcetera? So just to understand if this is the right way to analyze the North America performance. And then my last question. So you confirm, I mean, the outlook, but with some, I would say, wait and see mode in term of we will see about probably second half how it’s going.
Current consensus is already below your guidance in terms of EBITDA. Do you think that this more prudent approach by consensus is the right one at the moment, considering your your expectation or your current backlog, etcetera. Thank you.
Luca Pilli, COO, Fila Group: Thanks, Alessandro, for your reply to your first question. Central and South America is slightly below last year, but we need to analyze better the composition of this number. Of course, we have Mexico exactly in line with our expectation. So Mexico for us is a company that after COVID was managed much better, we don’t see any issue for this market. On the contrary, we have other subsidiaries of America, like Brazil, which is not performing like like last year.
The moment, what we can say is that probably a switch of sales compared one other to to to another one one year to one one one quarter to another quarter. For US, we confirm the order book for the BTS is in line with our expectation. It’s difficult to say what will happen in the second quarter because what will drive US is mainly consumption from the end consumer. And as I said at the moment, what we see is consumer very attentive in in buying stuff and customers a little bit lost and also them waiting to understand what will happen to the market. So to predict what will be the second quarter at the moment is it’s pretty impossible.
We will see in the next month. We will start shipping from late late May and June the first BTS orders, and we will see. I confirm replenishment softer than in steer, and talking to customer, it’s something they are driving is their decision to have their working capital really under control. So none of our customer at the moment are building stock as usually. So the key point will be the end consumer consumption for the q two and the and the in the forward.
For the outlook, I need to understand.
Christian Nicoletti, CFO, Fila Group: Just just another point related to Mexico, Ale. As a look, I see that we confirm that this is live, but take care also that is a for our for our point of view in positive result considering the impact of the communication of the tariff. No? Because when Trump announced the tariff, the main impact of the tariff was in Canada and Mexico. As happened at the in in in Mexico also also in in The USA, sorry, also in Mexico as a as a an an effect of the consumption.
Maintaining the decline trend of the good trend of the 2024, let me say that is an an a positive result. Now we have to to take this point considering the evaluation of the pump’s performance. Related to outlook, as Luca mentioned, we are in a moment that we confirm that our target is the the guidance, let me say. No? But at the moment, it’s a very volatile modality, and and we prefer to to take further information case in the future.
Alessandro Cecchini, Analyst, Equita: Okay. Many thanks.
Conference Operator: The next question is from Isaaco Brambillo, Medio banca.
Isaaco Brambillo, Analyst, Mediobanca: Three quick questions from me. The first one is on the pricing strategy for The U. S. Market. During the last call, you mentioned that you are introducing the pricing piece starting from April.
Just wanted an update on that. Second question is on Europe. If you can elaborate a bit more on the commercial initiatives that are driving growth in the first quarter in the area. And if you have any early indication on current trading or back to school in Europe, you may share with us. Last question is more on the CFO side.
If there is anything on the agenda in terms of, say, refinancing for this year considering that last transaction was, I guess, in 02/2021.
Luca Pilli, COO, Fila Group: Thanks for your questions. So for US, we already implemented the first price increase some weeks ago, and this price increase was fully implemented with the with the customers. And by the way, the new prices will take effect starting from July. And just in these days after we announce from the president, the US president of the new agreement with China. We are defining, the the additional price increase, which will be applied.
It will be different product family by product family. And let’s say, will take a look to our inventory because as we said, bought a lot in in advance to prevent this impact from tariff. And so we are analyzing your best view what is our inventory and when it will be the best time to implement an additional price increase. Clearly, the target is to fully recover the cost increase, say, product by product. In Europe, the market is, I can say, stable, not efficient, but not declining.
So, luckily, it’s a different environment. We implemented a lot of initiative, and, also, we restructure the commercial France. And from this subsidiary at the moment, we see a very nice return of on our projects, and the the subsidiaries is really going in the in the right direction. And then there are other markets, which are stable compared to Sierra. I can say Spain or Germany.
We don’t see any, trend that is different from what we expect. For Italy and UK, there is a little delay in order entry. At the moment, it’s not alarming. So we are trying to understand better when this gap not really important. Clearly, we we will have other initiative also in these markets to better result as we are experiencing in, in France this year for the refinancing.
Okay. Thank you, Zafos, for your question. As you know, the, expiration date for
Christian Nicoletti, CFO, Fila Group: our, actual senior facility agreement will be 2027. At the moment, we are evaluating the opportunity to renegotiate considering also that Phil at the moment has on a 1.3 leverage of leverage ratio. It’s very kinda appreciated at the bank. And, also, the interest at the moment are favorable to the interest in partly about zero rebar. And between the the end of twenty twenty five and the middle of twenty twenty six Yes.
Could be a window for to to to renegotiate our finance. And, also, evaluating the opportunity that, Phila will take in the future in case that we are doing increase or or or not for the amount of the the bonds that we are discussing at the moment.
Luca Pilli, COO, Fila Group: I I would like to add something to your question related to Europe. When we approved the strategic plan, one of our pillar was create value in a different market in a market that is changing very, very, very fast, very quickly, and creating value in the market in a different market, in our view, concern also restructurings that we have in our business plan. And we announced the closing of our one of our Chinese subsidiary, the one which is supplying school item, and this subsidiary is mainly supplying products for Europe. And and the addition of this closing means move production to other plants within the group. And, clearly, we will have a very nice advantage in terms of competitiveness because we reduced the breakeven point, and we have now more opportunities to have also commercial initiative for Europe where the market stable, but not clearly, Brian.
So probably not probably. More will come in the next month.
Isaaco Brambillo, Analyst, Mediobanca: Okay. Yeah. Many thanks.
Conference Operator: Gentlemen, there are no more questions registered at this time. I’ll turn the call back to you for any closing remarks.
Luca Pilli, COO, Fila Group: If there are any more questions, sir, thanks for attending this call. And, we are fully available to reply to the mail or call our investor relate or CFO, and we we will be pleased to give you to to reply to you. Good afternoon, everybody. Thanks to all.
Conference Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.
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