Giorgio Iannella: Good morning and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica Q1 Revenue Management Call. The Group CFO, Stefano Grassi, will elaborate about the revenue drivers of the first quarter of the year. After his presentation, there will be a 30-minute Q&A session. [Operator Instructions] With that, I hand it over to Stefano.

Stefano Grassi: Hello everyone and welcome to our Q1 2025 results. We are here today to comment an excellent start of 2025 despite macro environment that is clearly more uncertain than ever seen in recent years. EssilorLuxottica delivered a first quarter with revenue up 7.3% constant currency and 8.1% at current exchange results. Asia-Pacific was up double-digit, while EMEA delivered a 9.9% top line growth at constant currency. Latin America was approximately 9% and our North America region delivered a mid-single-digit quarter with a 4% top line growth. The impact of the two recently acquired Heidelberg Engineer and Supreme accounts for about 2 percentage points in our top line growth profile. So, even excluding those from our revenue growth, you will be looking at an underlying company marching at a mid-single-digit pace, very consistent with the long-term guidance that we shared with you between 2022 and 2026. Moving to FX now. Let me just share that in Q1, currencies created finally, I would say, some tailwinds in our numbers with about 1 percentage point of difference between constant and current exchange. And the main reason for that is the revaluation of the U.S. dollar against euro year-over-year, which was approximately 3% during the course of the first quarter. Unfortunately, those tailwinds will vanish if currencies stay at those levels throughout the second quarter onwards and that is mainly due to the recent devaluation of the U.S. dollar against euro. Now, before starting our journey across the four regions, let me just give you a quick update on Nuance Audio. The breakthrough innovations, which has been recently launched in the United States, in Italy and just a few days ago in France. The product in itself is now available in 4,700 doors between direct-to-consumer and our B2B channel, with very encouraging results. It's a bit premature to talk about numbers now, but let me share that consumer feedback are extremely enthusiastic in both North America as well as in Europe. So, stay tuned for more news in the upcoming quarters. But now let me move through the four different regions. And as usual, let's begin with the largest one, North America. In the region, we had a solid quarter on the direct-to-consumer that delivered high single-digit quarter while the professional solutions side of the business was flat year-over-year. In the B2B, we experienced a strong quarter in our key accounts and I would say that is true for both lenses and frames, while our independent channel were actually negative on the first quarter, in particular, due to some softness on the lens business. From a frame business standpoint, Ray-Ban was up double-digit, very much driven by a strong Ray-Ban Meta and also by a stronger prescription business of Ray-Ban. On the luxury side, we probably put on the spotlight two brands Miu Miu and CHANEL. If we now move to the lens. On the lens side, we had a strong and positive single vision lenses, while the progressive part of our business -- of our lens business was actually flattish year-over-year. And I would say the main reason is on the ECP side. We have seen, in particular with Varilux that ECP were kind of waiting for the launch of the upcoming Varilux Physio extensee that will hit the North American market between the end of the second quarter and the beginning of Q3. On top of that, I would say Nikon was solid positive mid-single-digit growth. Shamir had an excellent quarter with high single-digit growth in Q1. Very last touch on price/mix. Price/mix was positive, was positive in lenses, was positive in frames. And I would say this is something very consistent with what we've seen in the last few quarters for Professional Solutions North America. Now, let's move to direct-to-consumer. We're kicking off 2025 in an excellent manner. We were mid-single-digit comp sales in Sunglass Hut and high single-digit comps in optical retail. Sunglass Hut is a very consistent trajectory of what we've seen in the last few months with stronger comp sales growth and that's obviously very pleasing because we remember that Sunglass Hut came from a trajectory of tough and negative comp sales for quite a while. And now we're very pleasing to see from the last quarter of 2024, and now in Q1, a very strong and consistent pace for our retail banner in North America. On the optical side, LensCrafter was high single-digit comps. We had positive traffic. We had a very strong conversion and the growth was very much driven by positive volume. Target Optical, high single-digit comps, while Pearle Vision was actually on the mid-single-digit delivery from a comp sales standpoint. So, a very compelling picture of our retail proposition, both optical and sun. And the positive thing that I can tell you right now is that April is very much continuing on the same pace. Now, let's move to another important region, Europe, EMEA, that is 9.9% up at constant currency. This is the 16th consecutive quarter of revenue growth in the EMEA region. Couple of -- here. Professional Solutions delivered a high single-digit quarter, while our direct-to-consumer channel was up double-digit. All the countries in the region were solid positive in Q1, with Germany that was double-digit with U.K., that was double-digit with Scandinavia, Eastern Europe, and Middle East that were double-digit. Italy delivered high single-digit quarter. So, you can see a widespread positive and strong trend across all the countries in the region. On Professional Solutions side, a few comments on the different channels. Independents were solid positive in Q1, with the key accounts, they were up double-digit and with e-commerce partners that were up on a high single-digit territory. Our premium lens portfolio delivered another outstanding quarter, and that is very much confirming the fact that the appreciation of our -- of the market for our brands, whether it's Nikon, Varilux, Eyezen, or Transition, it's all there. And the positive thing is that the growth was very much driven by volume. Now, let's switch channel. Let's move to direct-to-consumer. Happy to report another remarkable quarter for both optical and sun. Both the channel, sun and optical deliver high single-digit comp sales. On the optical banners, I would put on the spotlight two banners, Salmoiraghi & Viganò and Apollo, they both delivered double-digit comps. That was very much driven by a strong retail execution and an excellent service level for both of them. On the sun part, I would highlight U.K. that despite a negative traffic did really well on conversion and mix management. Now, the third region on the pipeline is Asia-Pacific. Double-digit growth, 10.4% at constant currency, a great start to the year for the Asia-Pacific region, second consecutive quarter at double-digit pace. Japan and Korea were double-digit while Greater China, India, and Southeast Asia delivered a mid-single-digit speed in Q1. If we look at for a second, a bit closely China, I would say that consumer spending in China was still under pressure in Q1. So, not really a material change from what we commented during the second half of 2024. But the positive thing is here is that the Vision Care part of our business is clearly showing strong resilience throughout the quarter. And in this environment, I would say, we are very happy with the Myopia solutions that deliver a growth at about 30% in Q1 and now represent 26% of the revenue base in Greater China. The key driver of this performance, as usual, is Stellest, and we've seen that happening consistently in the last few years, but also the other alternative technology, the DOT 1 that has been developed in partnership with CooperVision and is now distributed through the brand of Nikon and Kodak. Outside the myopia solution, well, Bolon was slightly weak due to a soft sell-out on the B2B side, while Oakley and the overall luxury portfolio were very strong, delivering a double-digit quarter. If we move now to direct-to-consumer. The almost 1,600 stores that we have in the region did well in Q1 with mid-single-digit optical comps, very much driven by a strong OPSM and the Mainland China optical banners that deliver a strong comp sales in Q1. Two brands like Oakley and Ray-Ban were actually very strong in Japan and the retail banners underneath those brands actually delivered an outstanding quarter at a double-digit pace in Japan. Now, moving to Latin America. 9.2% growth at constant currency, 17 consecutive quarter of positive growth in the LatAm region at constant currency. Two things I would highlight here. First one, Brazil. You remember Q4 last year was a tough quarter for Brazil. But during our last call on Feb 12th, I wanted to reassure you that we were entering in 2025 with a different trajectory in Brazil. And here we are. Brazil delivered a double-digit quarter driven by Sunglass Hut and Oakley retail that were both up double-digit with Óticas Carol and [indiscernible] that delivered mid-single-digit growth with our B2B frame business that was up double-digit, and the lens part of our business, B2B was up mid-single digit. And let me say that in this respect, the introduction of transition Gen S in the market in Brazil during the end of last year, early this year was definitely instrumental to get the proper strong trajectory in the region. Let's touch on the retail banners. The delivery for the rest of the region, outside Brazil, I would say, was remarkable in Q1. GMO and the GrandVision banner delivered high single-digit comps while Sun shined on our Sunglass Hut Mexican banners with mid-single-digit comp sales, very much driven by strong airport location, and I would probably mention today the Cancun 1 that show all our Sunglass Hut location up on the double-digit pace. With that, let me hand it over to the operator for the Q&A session.

Operator: Ladies and gentlemen, we will now start the Q&A session. Our first question comes from Oriana Cardani, Intesa Sanpaolo. Please go ahead, Oriana.

Oriana Cardani: Yes, good evening. Thank you for taking my two questions. The first one is about the impact of U.S. tariffs. Could you say a little more about how you plan to offset the impact? Have you already decided on a potential price increase in North America or in other regions? And my second question is about the evolution of these Smart glasses this year. You have just announced the expansion of Ray-Ban Meta in Mexico, India and Emirates. When will the launch take place? And will the Meta collection in these three markets also be available in the wholesale distribution network? Thank you.

Stefano Grassi: Good evening, Oriana. Let me answer the two questions you have. The first one on the impact on the tariffs and the actions that the company has undertaken. So, first of all, as you might appreciate, the framework on U.S. tariffs, it's obviously not stable. There are still several moving parts. I think every other day, we hear news and an update on the situation. So, we are operating in a framework that from a U.S. tariff is extremely volatile and unstable at this stage. But what I think is important is what the company is doing in this respect. And on really three main areas that I believe are important to mention today. First of all, is the focus on the strategic execution on the MedTech space. That is obviously an important priority for us to EssilorLuxottica. That strategic execution is happening in two ways. On one side, through a strong pipeline of product innovation. One example, for example, is the progressive rollout of Nuance across the different countries. The further development of the assortment and the product offering of myopia solutions in China, the entering into a new market like the U.S. one as soon as we get the FDA approval, the development of the wearable in the partnership with Meta. So, -- not to mention the diagnostic business, which obviously, it's framed underneath the recently acquired Heidelberg Engineering, but will be taken then through the next level through some acquisitions that have been announced, like, for example, Cellview and a pipeline of stronger M&A activity that we are currently working on. So, those two important things are very strategic for us and help us to evolve and grow in the MedTech space. Second important area for us is represented by the diversification of our supply chain. This is nothing new, Oriana. We've been talking about it for quite a while. It's a journey that we undertook a few years back. You might remember the investment that we made in Thailand to create a state-of-the-art facility for manufacturing and distribution in that country. You might recall the investment that we made in Mexico for lens manufacturing capacity for laboratories, the investment that we made in France. So, overall, our footprint today of diversification give us very much different optionalities that we have in our hands with one clear goal, manufacture and distribute our product in those locations where it makes more advantage from an economic standpoint without any compromise to quality and service level. The third important pillar is represented by pricing. We are moving towards the price adjustment in the single-digit territory in the U.S. across the different product line and across our distribution channel. Clearly, we evaluate the impact of all those actions that we are undertaking. And obviously, in a few months from now, we'll reconvene. I think July 28 is the time to reconvene for comment in the first half of the year of results. And if we need to go deeper, we certainly have the ability and the agility to do so in the upcoming months. So, the second question was related to smart glasses. You read the press that just came out on Meta. That press encompass a product launch, some new colors for the Skyler Meta and obviously, a launch in three different countries. I will stick to what is written on the press. But clearly, Ray-Ban Meta has a strong pipeline of innovation, which will come through the Ray-Ban brand, and that can give you a preview. You will encompass also another brand that will be marketed throughout 2025. So, there is a lot of exciting news related to the partnership with Meta.

Operator: Our next question comes from Louise Singlehurst, Goldman Sachs. Please go ahead.

Louise Singlehurst: Hi, good evening Stefano and Giorgio. Thanks for taking my questions. Just following up on the tariff question. I just wondered if you could clarify, as it stands today, the tariff codes provided, which are giving products that you're exempt currently. Does that -- can I just confirm that includes the Ray-Ban Meta product? And also any implications that may have on shipping just so we can think about that wholesale dynamic for the U.S.? And then just my second question on the underlying trends in the U.S. I think you mentioned, Stefano, in your commentary that April had a similar pace versus Q1. Has there been any change? And if we think about the ASP traffic conversion, most other consumer companies are talking about not much change, but definitely a sense of greater volatility. I wonder if you can just provide us with additional color there? Thank you.

Stefano Grassi: Louise, good afternoon. Let me answer both of your questions. The first one with respect to Ray-Ban Meta. Ray-Ban Meta is part of our optimization of our supply chain. And without getting into a lot of details, we obviously want to make sure that we manufacture Meta in the most economically convenient location, and we are working in that direction. The second question with respect to the underlying trend. Q2 started pretty well, I would say, and it started pretty well across all the regions. I would say a general consistent pace with what we've seen in the first quarter. In the U.S., in particular, I would say we are happy with the way things started in the weeks of April, very consistent trend, in particular on the direct-to-consumer side. We do see strong performance on both optical and sun business. So, nothing to really report different from what we are commenting here for the first quarter.

Operator: The next question comes from Hugo Solvet, BNP Paribas Exane. Please go ahead.

Hugo Solvet: Hi, thank you for taking my questions. On the CapEx project, would it be fair to assume that you would -- prioritize some projects as in like some of the diversification of supply chain will be prioritized over store remodeling, for example, given the economic uncertainty? And second, on Stellest, just a quick clarification. Can you update us on the latest interaction with the FDA as part of the regulatory review process and confirm the timeline for launch in the U.S.? thank you.

Stefano Grassi: Good evening Hugo. Good afternoon. First question on CapEx. I think that we have a clear plan for capital expenditures. I go back to the curve. If you remember, we showed during the Capital Market Day back in 2022. So, this year, in a way we were expecting a lower percentage of capital expenditures as a percentage of revenues. We have a clear list of priorities that we need to undertake. Remember, the diversification of our supply chain is not kind of an emergency call that we are doing today. It is a journey that we already undertook in the last two, two and a half years. So, it's very much business as usual. We're clearly taking that to the next level, making sure that wherever we can optimize furthermore our supply chain and manufacturing infrastructure, and we do so. But there's nothing different that we are executing now from what we originally planned. Stellest, the interaction with the FDA is continues. And obviously, we are confirming what we shared in the previous call that we expect an FDA approval between the end of this year, early next year.

Operator: Our next question comes from Susy Tibaldi, UBS. Please go ahead.

Susy Tibaldi: Hi, thanks for taking my questions. Just to go back to the tariff situation. Obviously, it's all very fluid, but can you help us and give us a picture of your current sourcing footprint into the U.S. market? It will be very helpful if you will let us know how much of the U.S. is considered domestic, how much comes from China, Mexico, Europe? Anything you can provide there? And secondly, you commented about the start of April in the U.S. market. We are hearing from various MedTech companies that have expressed concerns about the outlook for the U.S. market as people may use insurance benefits as well as their jobs, do you see this as a risk at all? And can you remind us what percentage of your U.S. sales are funded by insurance? Thank you.

Stefano Grassi: Good evening, Susan -- Susy. Let me answer the first question, the footprint. The footprint in U.S. has some important manufacturing capacity. We have the Foothill Ranch facility for frame manufacturing. We have about 100 laboratory -- prescription laboratories that are operating in the United States, many of them ensure that proximity with our customers and are very important in that respect. Without getting into many details here. What I can tell you is that clearly, we are not immune to tariff headwinds. Clearly, we make about 43% of our revenue base in the U.S. But I would say that the major headwinds with respect to tariffs, as I stand today, is represented by frames manufactured in China and imported in the United States. So that is really the major thing. Concern or comments with respect to insurance. The insurance business, actually, the funded sales where we internally called funded sales. So, sales generated through Managed Vision Care are actually doing really well. They are an important driver of our growth in our optical retail banners, LensCrafters, Target Optical, Pearle Vision, and they do represent about 50% of the revenue that we generate across those banners.

Operator: Our next question comes from Cedric Lecasble, Stifel. Please go ahead.

Cedric Lecasble: Yes, good evening, Stefano and Giorgio. I have a question related to the evolution of the currencies. You mentioned Stefano that it went in the right direction in Q1, but will be a headwind in this quarter and maybe for the rest of the year. Could you maybe help us a little bit not thinking of tariffs, but just of the parity between the euro kind of sensitivity analysis of -- if the dollar loses $0.10 versus the euro, what is roughly the implications on margin or on EBIT, just to help us, and we'll add tariffs on top of that later when we have more visibility, but that would be great if you could help us with the math.

Stefano Grassi: Hi Cedric, just to give you a ballpark idea, an update here with a plus/minus 10% on U.S. dollar, we expect plus/minus 6% on the earnings per share on an adjusted basis impact.

Operator: The next question comes from Domenico Ghilotti, Equita. Please go ahead.

Domenico Ghilotti: A couple of questions. The first is on the prices that you were mentioning. I wonder if you are just looking at some price increases in the U.S. or if you are also considering some price increases in the rest of the world to, let's say, cross-subsidize also the tariff impact. And if you think that -- this is -- so if our planning price increases in order to fully offset the profitability impact from the tariffs? And then the second question is on Europe that actually is really very, very strong. So, I understand that the focus is in U.S., but I wonder if you can also share some views on the early days in Europe where your performance has been very, very strong?

Stefano Grassi: Good afternoon, Domenico. Price increase. We're moving to the direction of U.S.-only at this stage. And then, as I said, we'll evaluate the impact of that. The ability to have a significant upset to the tariff, it doesn't only reside, as I mentioned before, to the price part -- pricing component. There is also the supply chain diversification and the benefit of product innovation and acquisitions. The one that we announced and executed that we believe have a large potential to increase in terms of breadth of geographical expansion and depth through the different channels. So, I wouldn't underestimate that impact in terms of revenue and profitability. And then on top of that, there is the pricing action that we are undertaking. Europe, I'm glad you asked because the trajectory of euro is impressive. And if I look at April, I can only confirm that trajectory -- that impressive trajectory that we've seen in Europe is continuing throughout the month of April. On our B2B side, it's continuing through our direct-to-consumer, both optical and sun. So, very pleased with the performance in Europe in Q1 and also what we see in the early start of Q2.

Operator: Our last question comes from Julien Dormois, Jefferies. Please go ahead.

Julien Dormois: Hi, good morning Stefano, good evening Giorgio. Thanks for taking my two questions. The first one relates to what you mentioned around the contribution from Heidelberg and Supreme, I think you said about 200 basis points of contribution this quarter. That sounds a bit low to me because I think last quarter in Q4, it was more like 350 basis points. So, just wondering whether there is a seasonal element into that contribution. And maybe if you kind enough maybe to just to guide us for Q2 and Q3, what we should expect on this side? And the second question, elaborate on Hugo's questions on myopia management. I'm also curious to hear your thoughts around the DOT technology of the [indiscernible] transition product I think your latest comment was you should get an approval, maybe before Stellest in the U.S. So, just curious how you think about positioning those two products and maybe use China as a blueprint because from I understand you have both -- you have launched both products in China. So, maybe in terms of price positioning or I don't know anything that would help us understand the position of the two brands?

Stefano Grassi: Good afternoon, Julien. So, the first question regarding the contribution of the two recently acquired either Heidelberg Engineering and Supreme. I would say in Q4 last year, you got a bigger contribution due to a seasonality effect. Q4 is traditionally a very strong quarter for Supreme than the later quarters of the year. I would say the -- going forward, it probably should be a more stabilized impact in that respect. The other question you had pertains to myopia management. So, we have as you well know, two technology. They were running through the FDA approval, Stellest on one side and the DOT 1. I think from a pricing positioning today in China, we have a Stellest position a bit higher. Fairly close to Stellest is the DOT with the Nikon technology and a bit lower pricing point is the DOT using the Kodak brand. So, that just to give you a positioning as it stands today, in China. And then obviously, the assessment for what pertains to the U.S. market will be done at the proper time. So, the two technologies are going through the FDA approval probably the DOT is going to get the approval sooner than the Stellest 1, that's just a gut feeling and speculation at this stage.

Operator: We have the last question coming from Piral Dadhania, RBC Capital Markets. Please go ahead.

Piral Dadhania: Thank you for squeezing me in. good evening. Just two quick ones, please. Stefano, you talked very positively about the DTC trend in North America in April. No real comment on the B2B side. And clearly, it looks like Professional Solutions slowed down a little bit in Q1. Could you maybe just give us an update as to what the order book for wholesale looks like for the North American market in the next couple of quarters? Are you seeing a slowdown with some of your wholesale partners based on some of the macro volatility in that market? And secondly, just on the H1 2025 margins, I appreciate this is a revenue call, but just trying to understand whether the strong top line should and can translate into operating leverage in the first half of 2025, notwithstanding any tariff impact, i.e., can we expect margins to be up year-on-year in H1? Thank you.

Stefano Grassi: Hi Piral, let me answer both of your questions. Trend in North America, we talk about direct-to-consumer, B2B. I think it's important that we understand that the core part of our B2B product offering it's doing well, especially on what pertains to the optical channel. So, overall combination of key accounts and the ECP, for example, Vision Source, the ECP that are part of Alliances are doing well. The key accounts are strong, are strong in frames, and are strong in lenses. There is only one key area of softness if we can say in that way and that is very much the lens business on the independent channel. I think that is really the area where we're probably seeing that softening happening. But the rest of the key strategic channel in North America are performing really well. So, when we look at the -- and again, with respect to the second quarter, we don't see a different trend from what we commented. H1 2025, as you know, we have a long-term outlook in place. And obviously, we don't guide for semester or full year. I think that guidance is still in place. And obviously, on July 28, we'll reconvene to comment the first half of the year results.

Stefano Grassi: All right. This was the last question. I want to thank you, everyone, and wishing you all a great rest of the day. Thank you.