Q2 2026 Carel Industries SpA Earnings Call Transcript
Key Points
- Record Q2 2026 with revenues near EUR200 million and 23% organic growth in H1, with all business verticals and regions growing double-digits.
- EBITDA margin improved to 22.5% in H1 2026, up 350 basis points year-over-year, driven by strong operating leverage.
- Net profit surged to EUR45.7 million in H1 2026, up from EUR25.5 million in the prior year, with a strong net cash position of EUR7.1 million.
- Acquisition of Coats adds complementary dehumidification technology, expanding humidity control offering and providing access to offshore wind, marine, and defense markets.
- Strong growth in North American refrigeration, driven by rollout of advanced solutions like variable speed compressors and CO2 technology, with a robust project pipeline.
- Data center vertical growing strongly, with European data center investments accelerating, contributing to overall growth.
- Kiona digital services performing well with double-digit growth and 30% EBITDA margin, with plans for US deployment and integration into broader software strategy.
- Management expects another strong Q3 2026 with revenues close to EUR190 million, representing ~20% growth year-over-year.
- Proactive supply chain management, including strategic stockpiling of components like memories and relays, mitigates potential bottlenecks.
- M&A pipeline remains active, focusing on complementary technologies and channel strengthening, with selective and value-creating opportunities.
- External environment remains challenging with geopolitical tensions and macro volatility, limiting visibility in the business model.
- Working capital absorbed EUR32.2 million in H1 2026 due to seasonal trends, strong growth, and increased safety stock, with trade working capital expected to remain around 21% of sales for the year.
- Raw material cost headwinds, particularly for memories and relays, are increasing, requiring cost discipline and selective price adjustments.
- Commercial business in EMEA is softer, growing only in the low single-digit range, though not decelerating.
- Q3 2026 growth is expected to be slightly lower than Q2 due to seasonal effects from August closures in Europe.
- The Coats acquisition carries integration risks and is expected to close only in Q3 after regulatory approvals, with no contribution to Q3 revenues.
- Pricing power is limited, with price increases expected to be in the low single-digit range in H2, reflecting a reactive approach to cost increases.
- The company faces potential margin pressure from raw material costs, though management aims to manage gross margin without material penalization.
- US tariffs on imports have required applications for reimbursement, with amounts collected but not yet reflected in P&L, indicating potential financial uncertainty.
- Refrigeration growth in Europe is driven more by stabilization than acceleration, with only 35% adoption of natural refrigerants, suggesting a long but steady transition.
(audio in progress) Of the very strong growth in data centers, but actually with all the verticals reporting double-digit growth in the six months. At the same time, refrigeration grew in excess of 20%. As I said, we had in EMEA the expected deployment of some projects that were delayed in Q1 and also a consistent acceleration in North America as we gain market share by rolling out our most advanced solutions in the context of technological transition that we expected to be structural and long-lasting.
Let me now please briefly present the Coats acquisition on Page 6.
This transaction follows our direction of growth through bolts-on M&As and complementary technologies. In fact, we have been looking to add this specific technology to our portfolio for some time, and we are very happy to have found an agreement with an outstanding company like Coats. As you know very well, we provide a number of solutions for increasing humidity in industrial as well as in indoor quality applications, and we were basically
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