Half Year 2026 Eurogroup Laminations SpA Earnings Call
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Speaker #2: I want to start this presentation with a few statements before entering into the results. So, 2025 has brought a lot of changes in the market in view of all the turbulence that we experienced and we saw.
Speaker #2: And for this, we considered 2026 a year of transition. And I have to say that the first half 2026 results are in line with our expectations.
Speaker #2: But on the other side, we see as well that the general macro trends of electrification go beyond the electrical car. And EGLA's diversified business model is ensuring the possibility to catch all the opportunities that are linked to the energy transition.
Speaker #2: And so, to recognize as well the next wave that can secure the growth for EGLA. Having said that, we enter into the results for this first half.
Speaker #2: And we confirm the improvement on a quarterly basis, driven by the industrial and infrastructure business solutions. At the same time, we see the first signs of recovery in e-mobility.
Speaker #2: If we enter into the detail, we see, of course, that 2026 is impacted especially in the North American market. And for e-mobility, we achieved €224 million in revenues, which is down 13.3% compared to last year, and these lower sales are mainly driven by the North American market.
Speaker #2: But at the same time, we see early signs of recovery in the order book, and as well in the pipeline. The regions where we see this, of course, for the order book, are China and Europe.
Speaker #2: For the pipeline, we see this as well in the European market. So overall, we see early signs of recovery. If we move to the Industrial and Infrastructure Solutions segment, we see as well a sequential growth in this business, mainly driven by the increasing demand for applications that serve the data center market.
Speaker #2: Here, specifically regarding energy generation, it's about the cooling down—the refrigeration—for this data center. So the sales revenue is in line with €173 million.
Speaker #2: Up 9% compared to last year, and the higher volumes are consistently in Europe and in North America, while in Asia we see a stable volume compared to last year.
Speaker #2: Overall, the margins are improving thanks to the execution of our performance improvement programs. If we move to another important part, in May this year, we also finalized a medium-term, long-term financing agreement with a duration of 5 years, for up to €375 million.
Speaker #2: This was an agreement that was made with a pool of leading banks and is helping—allowing us to optimize the financial structure. So the average debt maturity moved from 2 years to 4 years.
Speaker #2: With regards to the performance improvement program, just some as well to highlight on this side. With regards to the organization, in the first half we have reorganized our Mexican manufacturing footprint in line with the volumes that are now foreseen.
Speaker #2: And we have consolidated the Touring facility in Italy. And last but not least, we have also appointed a new COO, Renzo Argentina, in order to strengthen our operational leadership and execution as well.
Speaker #2: With regards to the operational efficiency program, we have advanced our program in Europe, in EMEA, and as well in North America. Thanks to this, we have also achieved improvements in margins and cash flow.
Speaker #2: So, based on all these considerations and the results, we confirm our 2026 guidance. In terms of revenue, a range between €700 million and €750 million.
Speaker #2: In terms of EBIT adjusted EBITDA margin, a level around 11%. And in terms of free cash flow, it will be positive in 2026, including as well CAPEX of approximately €45 million.
Speaker #2: So with this, let's say, statement, I now ask Matteo Perna, our Group CFO, to enter into the details of the financial results.
Speaker #1: Okay, thank you very much, Marco, and good evening. So the total amount of revenues that we generated in the first half of 2026 is equal to €396.5 million.
Speaker #1: This is implying a 7.6% decrease as per last year. This is as well the evolution of the different behavior of the two segments. So you can see that the industrial segment reported a 5% increase compared to last year, whilst the e-mobility solution business decreased in the age of 15.5%, driven by the evolution of the North American market.
Speaker #1: I have to say revenues are above the budget across the different geographies. And I have to say as well that the order intake for the second part of the year is also slightly above our budget.
Speaker #1: Moving to the EBITDA adjusted, you see the total amount is €36.1 million. This implies a 9.1% margin over revenues, which is a 19.4% decrease compared to last year.
Speaker #1: So, a few considerations. The total amount of adjustment, which is part of our results, is approximately €7 million. And I have to say that out of the €7 million, €3 million are the structuring costs.
Speaker #1: And as we said, we completed the reshaping of the tooling activities in Italy in 2026. As well, we had approximately slightly more than €500,000 restructuring cost in Mexico.
Speaker #1: So, the total amount of restructuring cost for the reorganization efficiency was in the range of €3 million. Having said that, you see that in terms of segment report, good performance is coming from the industrial.
Speaker #1: And infrastructure solution segment: €19.1 million, an increase of €18.5 million compared to 2025. Meanwhile, the e-mobility business is reporting €17 million in terms of adjusted EBITDA.
Speaker #1: And I have to say that, on a quarterly basis, this is implying approximately €8.5 million in terms of the EBITDA generated in the second quarter for the e-mobility segment.
Speaker #1: So, the increase on a quarterly basis is mainly driven by the evolution of the industrial segment, due to the strong operations that we had both in North America as well as in Europe.
Speaker #1: The total amount of DNA that we accounted for in the period is €27.8 million, basically in line with what we reported in '25, which was equal to €27.6 million.
Speaker #1: And it's important as well to mention that, out of the total financial expenses that were accounted for in the second quarter, we have €1.8 million of one-off costs related to the evolution of our financial structure and the refinancing agreement that we signed with the banks.
Speaker #1: So you had the effect of, you know, the previous contracts which were closed, and as well the related derivatives, plus the effect of the new agreement with the banks.
Speaker #1: Moving on to the CAPEX side, we accounted for approximately €20.8 million of CAPEX, of which 53% is the part related to auto, whilst the remaining 47% is to support the growth of the industrial segment.
Speaker #1: And if we can move to the next slide, please. So in terms of if you break down over the revenues. So you see that now e-mobility segment, it's representing approximately 56% over the total amount of revenues whilst the industrial 44.
Speaker #1: And Europe is still represented among the vast majority of the business, accounting for more than 56% of the total amount. So, in the period, we sold approximately more than 2 million motor sets to support the automotive business.
Speaker #1: And we had four new SOPs in the quarter. And, you know, the total amount of SOPs that we had—so, the new projects we started to support the traction business for automotive—is equal to seven, of which three were what we accounted in the first quarter and four in the second quarter.
Speaker #1: I have to say that we were originally expecting five new projects to get started, but one has been shifted to Q3. So, we do confirm the total amount of new SOP for this year, which is going to be equal to 14 new SOPs.
Speaker #1: If we move to the next slide—so, we said the total adjusted EBITDA margin is 9.1%. And you see the Q2 2026 adjusted EBITDA margin is 9.1%.
Speaker #1: And this has to be compared with the 10.2% that we reported in Q2 2025. So it's important to emphasize that, in light of the execution of our performance improvement program, we achieved approximately €2.5 million of improvement in EBITDA, which is the result of the execution of such a program.
Speaker #1: We already commented on the DNA. If we can move to the next slide. In terms of net trade working capital evolution, we had a €10 million decrease compared to the figure that we reported at the end of March.
Speaker #1: And we're €10 million above compared to what we reported at the end of June 2025. So it's important to consider that, in terms of trade receivables, the total amount is equal to €163 million.
Speaker #1: And this is implying a DSO in the range of 75 days, compared to 69 days in terms of DSO that we had at the end of June 2025.
Speaker #1: On the inventory side, our DOI stands in the range of 159 days, compared to 152 days that we reported at the end of June. Whilst on the payable side, we're running with DPO in the range of 149, compared to 147.
Speaker #1: I have to say that one of the major impacts that we have now embedded in our net trade working capital is the evolution of our business on a geographical basis. Given the decrease of our activities in North America, it's having a negative impact in terms of our net trade working capital, both in terms of DSO, given that cash collection in North America is very effective.
Speaker #1: And as well, in terms of DPO, due to the fact that we have to import 100% of the raw material that we need and that we consume in North America, the DPO decreased accordingly.
Speaker #1: Moving to the next slide. This is a result of the evolution of the performance on an economic basis, as well as on the CAPEX and the net trade working capital absorption.
Speaker #1: You see that, in terms of net leverage—considering the last three months' adjusted EBITDA—we're now in the range of 3.5 times, implying a net debt in the range of €280 million.
Speaker #1: So, approximately an €8 million decrease compared to the figure that we reported at the end of March. And you see that, out of the €280 million, €40 million refer to financial lease liabilities as per IFRS 16.
Speaker #1: In the period, we bought we bought BTP expiring which would expire above 12 months and now it's part of the financial assets. And as well we distributed certain dividends with our certain of our control companies which are not entirely controlled by Eurogroup Lamination.
Speaker #1: And the total amount of the BTP purchases and dividends, it's in the range of €3 million. Moving to the next slide. So, given that we are now in line as per our expectation, we do confirm as well the performance that we discussed, as well as timing, it's backloading in the second part of the year.
Speaker #1: And in light, as well, of the ability that we have with the order intake for the next month, and again, in light of the expected execution of the efficiency program and the related effects to be released in the second part of the year, we do confirm our guidance for the 2026 year, which includes total revenues to be between €700 million and €750 million.
Speaker #1: And EBITDA adjusted margin in the range of 11%, CAPEX in the range of €45 million, and a positive operating free cash flow.
Speaker #2: Thank you, Matteo. And so we can now pass the floor for the Q&A session.
Speaker #3: Thank you to the speakers today. We now have an opportunity for a question. As a reminder, if you would like to ask a question, please use the raise hand function on your screen, or for those dialing in, press star and then the number one on your keypad.
Speaker #3: Once your name is announced, please unmute your line and state your company name before asking your question. Thank you. We will wait just a few moments to give everyone the opportunity to ask a question.
Speaker #3: The first question today comes from Alberto Jegra. Please, Alberto, the floor is yours.
Speaker #1: Hi, good afternoon everybody. Hope you can hear me well.
Speaker #3: Yes.
Speaker #1: My first question is a clarification on the guidance, just to better frame the second half, because as you also said in the first half, we look ahead on sales. But even the high end of your guidance would imply a lower half on your sales in 2026.
Speaker #1: So, just to understand, which kind of quarterly development should you assume in the third and in the fourth quarter? And, at the same time, margins confirming roughly 11% will require a significant step up in the second half.
Speaker #1: So, also, if you can provide us a bit more color on the moving parts that you expect would bring benefits on margin, it would be helpful.
Speaker #1: And I have a second one. If you can comment, how are your main customers in the automotive segment doing this year in the first half?
Speaker #1: What are your expectations for the full year?
Speaker #2: Okay, so let's get started with the first question. So, Alberto, we do expect total revenues to be slightly above what we reported in the first half of 2026.
Speaker #2: And you have to consider, as well, the seasonality that we will have in August and December. So that's why we do confirm our range between €700 and €750 million.
Speaker #2: As of today, to the best of my knowledge, we are, let's say, closer to the upper part of our guidance in terms of revenues.
Speaker #2: But we don't expect to be above the guidance as of today. In terms of margin, you're right. So, we have to consider that we do expect an improvement in terms of margin due to the, let's say, full execution of our performance improvement program.
Speaker #2: I have to say that as of today, in the first half, we have accounted for approximately 40% of the total amount expected to be achieved this year in terms of improvement of the performance.
Speaker #2: And I have to say that, as part of our guidance in the second part of the year, there is also a potential income deriving from the discussions that we're having in the supply chain.
Speaker #2: Of course, we don't want to disclose this amount, but it's embedded in our estimate. Second, the second question—so, you know that we cannot comment.
Speaker #2: We don't want to comment on our customers. I have to say that, you know, we are progressing a very, very important discussion with them. We have been involved in 100% of the projects that they are launching.
Speaker #2: And this is not only a reference to the automotive segment. I have to say that we are able to serve them across all the different geographies.
Speaker #2: But as of today, we are progressing very well, as per our expectation.
Speaker #3: Thank you, Alberto.
Speaker #1: Thank you, Matteo.
Speaker #3: Thank you. Currently, we don't have any questions queued, so we will wait just a few moments to give everyone the opportunity to ask a question.
Speaker #3: As a reminder, if you would like to ask a question, please use the raise hand function on your screen, or for those dialing in, press star and then one on your keypad.
Speaker #3: Once your name is announced, please unmute your line. State your company name before asking your question. We will wait just a few moments to give everyone the opportunity to ask a question.
Speaker #3: We now have a follow-up question from Alberto. Please, Alberto, the floor is yours.
Speaker #1: So a few follow-up from my side. The first on data center business, if you can better quantify the percentage of sales on on the first half and maybe also the grow rate and also the kind of complexity that these application requires to to understand the the the competitive advantage in these in these segment.
Speaker #1: Then you can if you can provide an idea at least directionally of what is the expected trend for the CAPEX in in 2027. And very last on Indian market, if you can comment on how is Kumar going, how is the transformer business is going and maybe how close you are to finalize the additional partnership in India for the automotive segment.
Speaker #2: Okay, on data center, so it's interesting because we do expect to generate approximately slightly more than €50 million of total revenues in 2026 deriving from data center applications.
Speaker #2: To let you know, let's say, on an apple-with-apple basis, the total amount of revenues that we generate in '25, in 2025, was in the range of €30 million.
Speaker #2: So, this is implying an increase year over year in the range of 87%. So, this is very meaningful. As you can imagine, now we're able to catch this, let's say, opportunity mostly in North America, especially through our Mexican, but as well through our USA plant.
Speaker #2: And as well in Europe. While it's still not meaningful, the amount of revenues expected to be generated this year from such a trend in Asia.
Speaker #2: Then, with respect to our segment, this is having an impact both in HVAC, as Marco was saying, as well as in what we call energy, due to the need for new electric generators to support the energy consumption required by the data center.
Speaker #2: And as well, as you were saying, deriving from the transformer business. CAPEX—we didn't declare any, we didn't provide the market with any guidance to support guidance for 2027.
Speaker #2: But I have to say that, to the best of our knowledge, we don't expect guidance to be above what we reported, or what we will report, this year.
Speaker #2: So, we do expect CAPEX for 2027, as of today, to be above €45 million. Kumar, the first half, I have to say, is in line with our expectations.
Speaker #2: So, this is implying approximately a 10% year-over-year increase, without a forex effect, which is having, as of today, a negative effect. So, I mean, we are progressing consistently with expectations, with Kumar.
Speaker #1: Thank you.
Speaker #2: Well, on the JV, yes. So, I mean, as you know, we are at an advanced stage of discussion with a potential local partner to support our entrance into the Indian market in the e-mobility segment.
Speaker #2: I have to say again, we are at an advanced stage of discussions. So, I mean, we do expect to complete such discussions within the year end.
Speaker #1: Maybe just to add two points related to the data center. So, as you can imagine, all the specifications that are connected to this application are very sensitive to the efficiency.
Speaker #1: So, efficiency in the consumption of energy and efficiency in the generation of energy. So it's important to secure the best technologies in order to have, let's say, the right capabilities that are required by the customer operating in this field.
Speaker #1: With regards to the rate of growth, I think you can, of course, consider as well what the market is expressing. So the numbers are really incredible.
Speaker #1: So I don't want to throw numbers out there, but if you consider the declarations that all the big companies are making in North America and in Europe, the rate of growth is double-digit for sure.
Speaker #3: Thank you. Thank you, Alberto.
Speaker #1: Thank you. If I may, a very quick follow-up on tariffs on steel because of the new European regulations. So, if you can remind us, what percentage of the steel that you use in Europe is imported, and if you are having any impact from the new regulation that lowers the allowable amount of steel without paying tariffs.
Speaker #2: Well, we import approximately 65% of the total amount of electrical steel that we consume in Europe. And finally, the quotas were published a few weeks ago.
Speaker #2: Well, of course, it's a matter now of being able—now that we know the rules—it's a matter of reorganizing ourselves to be able as well to face such a change.
Speaker #2: And as well, as well, to remember that it's not only a matter of different quotas, but as well, the duty has been increased from 25% to 50%.
Speaker #2: And on top of that, there is as well the so-called CBAM having as well an impact on our import import price. So I mean, you know, for us, it's important to be able to pass through the expected evolution of the electrical steel purchasing cost in our in our price list.
Speaker #2: But I have to say that, you know, as well our competitors are facing such a situation. So of course, we do expect overall the price to increase in Europe compared to what we have experienced over the last over the last months.
Speaker #2: Yeah. That's to me it's the the major points which I want to be to be to be discussed.
Speaker #1: Perfect. Yes. Thank you.
Speaker #3: Thank you, Alberto. We now have a question coming via chat from Federico Feminella. The question is: you mentioned improving trends in the e-mobility order book.
Speaker #3: Could you please provide more detail on your visibility for the next 12 and 18 months? Specifically, what do you expect the recorded order intake to start translating into revenue growth and EBITDA margin improvement?
Speaker #2: Okay. So, as we said, the order book compared to the figure that we reported at the end of April—despite the fact that in the meantime we have generated sales increase by approximately €100 million.
Speaker #2: And this is mostly driven by, as Marco said, the evolution of the business in China, but as well the evolution of the business in EMEA. And I have to say, as well, through the significant business development activity that we have been able to carry out in North America.
Speaker #2: The pipeline increased and now, somehow surprisingly, the region which is leading the most growth in pipeline is Europe. And it's Europe as well, including potential new projects which have been requested to be quoted from Chinese OEMs, which are now considering potentially establishing and setting up their operations in Europe.
Speaker #2: And on top of that, I have to say that, as per this year, given that, you know, we do expect 14 new projects to get started, the total amount of revenues deriving from the new projects is expected to be in the range of €40 million, compared to what we have in our guidance.
Speaker #1: Maybe just to add as well one point that is of course so as you know, robotaxi is a trend in North America that is growing and for which of course there are new forecast that are let's say as well increasing the pipeline and as well the order book.
Speaker #1: So it's important to underline this trend, for it is not perceivable here in Europe, but it is perceivable when you travel to America and you visit certain cities.
Speaker #1: So this is also one of, let's say, the causes of this increase in order book and pipeline.
Speaker #3: Thank you very much. Currently, we don't have any questions queued. We will just wait a few moments to give everyone the opportunity to ask a question.
Speaker #3: As a reminder, if you would like to ask a question, please use the "raise hand" function on your screen. Or, for those dialing in, it's *star 9* on your keypad.
Speaker #3: Once your name is announced, please unmute your line and state your company name before asking your question. Thank you. We will now wait just a few seconds to give everyone the opportunity to ask a question.
Speaker #3: I currently see no questions queued. We will wait just a few moments before handing back to the speakers. As there are no further questions queued, I will now hand back to the speakers for any final comments before bringing this presentation to a close.
Speaker #1: So, thanks again for attending this conference. We want to just underline again that 2026 is a year of transition, and the first half results are in line with our expectations.
Speaker #1: And that the macro trends of electrification go beyond electrical cars, and that our diversified business model can secure that any possibility and opportunity that there is in the market, EGLA is capable to catch it.
Speaker #1: So, any opportunity connected to the energy transition is, of course, an opportunity for EGLA. So we remain positive, and we thank you again for your attention to EGLA.
Speaker #3: Thank you. This presentation will now come to a close. Thank you.
