Good afternoon, this is the Chorus Call conference operator. Welcome, and thank you for joining the LU-VE Group financial year 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Matteo Liberali, President and CEO of LU-VE. Please go ahead, sir.
Good afternoon, everybody, and welcome to this conference call on the financial results, year 2025. One year ago, if you recall, we committed to return to growth and, notwithstanding a slow start in Q1 last year, we have delivered what we promised, as usual, I would say. Financially 2025 was extremely good year because we reached a new record on financial results. The all-time high EBITDA, EUR 88.7 million, with a margin of 14.7%. We have the highest ever Adjusted net income and a reduction in the net financial position to EUR 72, less than EUR 73 million.
This results mainly due to the fact that all the effort in sales and improvement of efficiency proved to work. All the work done proved to be valid, and also notwithstanding some different markets, but being present in different applications once more proved to be a very good distinctive feature of our activity because we have some markets like aftermarket refrigeration. We grew 2%, notwithstanding some fewer projects in logistics centers, especially in France, which is traditionally one of our strongest markets. We grow very much in the Data Center business.
Heat pumps business was recovering faster than expected, which compensated somewhat the less brilliant situation in the air conditioning market in Europe related to big buildings and some delays in new projects in the mobile application. Having said that, once more, we beat market expectation in terms of results, in terms of EBITDA, EBIT and net financial position. We closed the year with a very high order backlog close to the record, and with an order backlog which once more is 70% related to cooling system business units, so mostly related to power gen investments, energy in general, and to Data Center with the first order not only in Europe but also outside Europe in this application.
This year, we completed, as you recall, the plant in U.S., and we had the startup in China. Notwithstanding China didn't have a very brilliant economic year. We started our operation in China, and we finished the project in U.S. perfectly on time, and we are now in the ramp-up phases of the new plant in U.S., with all the difficulties in establishing a new supply chain after all these tariff wars and so on. These two investments are strategic for us in order to be able to be in the position to get opportunities for further growth in the next coming months and years.
Of course, everybody's talking about Data Center, which is an important market for us, but once more, I would like to stress the fact that the incidence today of Data Center on our turnover is around 7%-8%, while in terms of order backlog in this moment is closer to 12%-15%, with some nice projects we already achieved, some projects in the pipeline that is still to be finalized. We are less exposed to Data Center than other peers. On the other hand, we are working to catch all the opportunities available in Europe and outside Europe for sure. 2026 had a good start.
We expect to be in line with our plans and also with the consensus both in terms of volumes and revenues and results and improvement of financial position. As you said, the big drivers still remains in terms of demand and new orders we're getting are power gen. We got recently a big order from General Electric for a special project to be delivered in 2026, 2027 and partially in 2028 for more than EUR 50 million, more around EUR 40 million, and some other big project in the Data Center, as you said, both in Europe and outside Europe.
We feel that we are well in line to achieve the result, the medium-t erm results in terms of growth and in terms of margins also in the midterm. Having said that, I would leave the space to Q&A. I'm ready to listen to your question. Thank you.
Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Marco Vitale, Mediobanca. Please go ahead.
Good afternoon. Thank you. Couple of questions from my side. The first one is on the top line drivers. You just recalled that Power Generation and Data Center will be a key driver for volumes increase in 2026. I was wondering if you could add a few comments on refrigeration, what you expect for this year, and also heat pump that you were referring as one of the key drivers in the press release. The second question is on the U.S. operation. You mentioned that you're now beginning the ramp-up phase.
I was wondering if you could provide us some, say, additional color on the order pipeline and the DC in that market with the specifics of Data Center business. I recall the past interviews where you were referring that you have the potential to achieve EUR 50 million revenues in that market once the ramp-up phase is completed. If you would just comment on this. Thank you.
Well, thank you for your question. Yeah, refrigeration during February there was the big show, the EuroShop show in Düsseldorf, which is a show every three years concerning where all the supermarket business manufacturer are involved. The signs from the results and the feedbacks coming from this exhibition are positive. All the supermarket chain we had the chance to meet, and also all the operators we met during this show were positive in terms of expectation of new opening and also refurbishing. What came out is that there is of course a big push on once more on natural refrigerant.
There is still, as an average, two-thirds of the installed stores all over Europe still need to switch in the next coming years to natural refrigerants. There is also now a new trend on smaller sized stores to go to other fluids called A2L, where we presented our solution, which we already developed a couple of years ago, well in advance compared to the rest of the market. All in all, we expect refrigeration to continue to grow this year, both in the supermarket business, also in the HORECA business. Concerning U.S., as I said before, we got the first order for dry coolers. We got orders for Power Gen in U.S..
Part of this order are still to be manufactured in Europe, and some of them are already forecasted just to move the production to U.S. in the next coming months, because the order were achieved when the platform was not available, not ready yet. Due to the effort we made to unify the platform of the product, now we are able to produce exactly the same units in Europe and outside Europe, and also in China. This is very promising, and I confirm the possibility that EUR 50 million is a volume that we can reach in this market in the next coming months and years.
Thank you. Very clear. If I could just add to comment on the heat pump business. Thank you.
Yeah. Heat pump, as you recall last year, we started last year, 2025, with a very prudent approach. Our budget was to slightly grow. During the year, progressively, we saw that the market was restarting. The growth we made from last year, we made almost EUR 37 million of heat pumps compared to 2024, and we made in previous years is not the result of the growth or the market growth all in all. There is more a growth generated by newer customers that we got on new projects that were supposed to start in 2023 and 2024 were postponed due to the crisis of the market. Is not the
the market for heat pumps is increasing. In this estimation, roughly, Europe is around 9%-10%, but we grow faster than that because of the new project we achieved.
Thank you.
You're welcome.
The next question is from Andrea Randone, Intermonte. Please go ahead.
Thank you, good afternoon. I have three questions. The first one is about the current trading. You already commented that is positive. I wonder if you can confirm that the trend is broadly in line with the last quarter you just reported. The second question is on what we are observing in the Middle East. I mean, in the past you proved very resilient to any kind of volatility, inflation, supply chain, other possible implications. I wonder if you can elaborate on what is your view on what we are observing. The last question is on M&A. You reported a very good free cash flow also in the last quarter.
Your leverage now is, I mean, I do not say very low, but for sure, it allows you to look again to new deals. If you can comment to us on what you expect in this kind of activity, if you are already working for a deal in 2026, and in case what you see on the market. Thank you.
You're welcome. Concerning the current trend, I said before, the order income in the first two and a half months of 2026 is very positive. We have in this moment a higher order backlog than we have at year-end. As I said before, it's mostly concentrated, the increase in order intake in the Power Gen and Data Center, but also our traditional markets for heat pumps or refrigeration and are going well. The only one suffering, as I said before, is the mobile application. We are in this moment in line with the, as I said before, with the consensus and with our expectation we have for 2026.
Concerning Middle East, just to make a couple of figures. Last year, it counted in terms of revenues less than 4%, so less than EUR 23 million. We have an order backlog at the end of the year of roughly EUR 7 million, which is less than 3% of our total order backlog. Just to give the size of the potential issue we have, even if it's a market where we were growing in the last few years, especially in Saudi and the Emirates and Turkey. Having said that, the first point for us is to have, you know, that our people are safe, so we make special initiatives to protect them.
They decide to remain there, but it's a decision taken in agreement with the people of our team. Yeah, up to now, we didn't have any order cancellations from anywhere. Of course, the situation could create in the future some tensions on the logistics and on the circulation of some raw materials that we are buying from Asia Pacific. As you mentioned, if you recall, even during COVID, we had to face similar issues. For us it's not a big issue to move volumes from one part of the world to another one. Concerning the energy costs, we are not a very energy...
The incidence of energy costs on our P&L is very low, but anyhow, we have already fixed. We've been lucky or good, I don't know how to say, to fix the energy price for the whole 2026 for the whole group. For the time being, we are protected. We are in a safe position. Concerning M&A, as usual, we have firepower enough to do acquisition, and we are always actively looking for opportunities, especially outside Europe. We are fully aware that we have all the capabilities, and we prove also our track record that we've been good in doing acquisition and find the right target and integrating them quite rapidly.
We still very actively working in this field, but it's a matter of opportunities.
Thank you. Thank you, Mr. Liberali.
You're welcome.
The next question is from Alessandro Cecchini, Equita. Please go ahead.
Hello, everybody, and thank you for taking my questions. The first one is, I make one by one. The first one is on mobile. Basically I remember that last time you stated that for some customers, key customers, that these customers were waiting for new models, et cetera, so you had a delay. Just to understand if you are seeing these new models arrive in the market or it's a question more during the year. Just to give us an update on this.
On this part, in this moment, this application, which accounts for around about 6% of our revenues, is still suffering. The new release has not been delivered for internal issues of our main customers. We expect for H2 to have a recovery in this situation. The beginning of the year confirms the weakness that we saw in the last part of the year.
Okay. My second question is, given the increase in raw material, aluminum, copper, et cetera, which is just a very rough indication, which kind of price hikes you expect this year? This year, 2025, price hikes were 0.8%, so very, very small. I presume that this year could be much higher, but just to give you your feeling on this.
For sure. This year, the situation is different compared to last year. Of course, we proved also in the past when we had important increase in raw material cost to be able to transfer this cost, the increasing cost, to our customers. With the pass-through mechanism in the coils or in the heat exchanger market for OEM on a quarterly basis. This mechanism is still in place, and it still has been improved, as we explained several times. The formula has been. In the formula, we added new factors to be taken into consideration, and this mechanism proved to work. On the cooling system, we already made two price increase.
We announced one price increase in beginning of the year of 4%, and we made a second one already, starting from the end of this month, another additional 3.2% on the price list. Now we have to take into consideration that more and more our business is more project related than selling product by the price list.
We are now taking every project we quote, make the reference to raw material cost we are applying with a short-term validity and a discussion with the customer based on the most recent values of the raw material with the possibility both in agreement with the customer or by our decision to fix the raw material price based on the cost that we estimate at the moment we quote the order. We expect to be able once more to cope with this situation and the effect of the pricing effect on the balance sheet. We expect to be higher than last year, of course.
Okay. Many thanks. Then on to two projects. The first one, if you can, you said during the call, so we can start talking a little bit. It's the project Power Gen EUR 40 million, if I am not mistaken, EUR 40 million with General Electric, 2026 to 2027, 20 28. Just confirm this.
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EUR 14 million. Okay. Okay. It was too much, EUR 40 million. Okay. Anyway, so that it's fresh new in the order intake of 2026. This is my question. The second one, just if you can elaborate a little bit more on your negotiation or discussion with the hyperscalers in the U.S. for your offering in the Data Center.
Yeah. Concerning Power Generation, it's EUR 14 million. Sorry, maybe it was my mistaken pronunciation. It's a project we got last week. It's something we've been working on for a while. It's a project we split. It will be a small part in 2026. The biggest part will be in 2027, 2028. This is where we apply the fixing rules in accordance with the customer, and we already put all the protections on this project. But not on the same size. We got in the beginning of the year similar projects.
Most of them are going to U.S., even if we are talking with European operator, both for cooler, so oil cooler for the transformer and for our traditional product for cooling the engine producing energy of big size. Our most important customer in this business, Wärtsilä, is focusing most of his efforts on the U.S. market, but still for us is invoicing from Europe to Finland and to ship to U.S. Concerning the hyperscaler negotiation in U.S., we are proceeding. We are very confident that we will get some interesting results in the next week.
Okay. Lastly, sorry, it's technical, sorry for this, but we saw D&A that were at EUR 30.6 million, so below the last year. This year, 2026, we have the new, I would say the new plant, but I remember that you said that some phasing out of old investments. Just if you can elaborate a little bit more on D&A for 2026.
Sorry, I'm not sure I got your question. You're talking about depreciation?
Yes, D&A that in 2025 were below 2024. Now we have a new plant, but some projects, some plants are phasing. Just if you can elaborate a little bit more, which kind of D&A we need to expect this year.
Well, reality is the decrease is a little bit lower than EUR 1 million compared to last year in terms of depreciation. Of course, this is the result of the fact we rationalize and we redefine our CapEx program, more investing less in capacity, but just in automation and efficiency on the products. This is just the result of the fact that the investments were reduced compared to the past, and also the fact that if you consider some of the investment for China were paid by the local authorities. We have a small amount of investment in China compared to a normal plant in the rest of the world.
Of course, in 2025, the biggest part of the investment were related to the new plant in Texas, which has been finalized, and we completed below the budget cost. We had some saving also on this part. Now we are already working on getting it up and running at full speed. It was something missing in one line, but in the investment we made in the new building, we already had some preparation for potential further addition to the building in case of opportunity.
Okay. Thank you.
You're welcome.
The next question is from Michele Mombelli at TP ICAP Paris. Please go ahead.
Good afternoon, Mr. Liberali, and thanks for taking my questions. Since my colleagues already asked some brilliant question, I will have three marginal ones. The first is, since production for Data Center products in the U.S. and China is going to increase, what margin should we expect for this new product, new lines? Will it be above or below this 14.7% Adjusted EBITDA margin that you reached in 2025? The second question is, I saw inventory increased by about EUR 10 million and trade receivable by EUR 9 million. Is this linked to an acceleration of orders for Q1 2026, maybe? I saw other Italian players reporting stronger recovery in heat pumps also in 2026 after the rebound in 2025. I was thinking something maybe driving your increase in inventory also for the same reason. Thanks.
Thank you for your question. Concerning the Data Center product, of course, in principle, as you may recall, we always stated that in U.S., in general, margins are higher compared to Europe in bigger units, both in industrial refrigeration and bigger condenser cooler for air conditioning for Data Center. Of course, now the costs in U.S. are difficult to estimate on a daily basis because everything is changing continuously. In principle, with the ramp-up of the plant, we expect to have at least the same margin, if not higher, even in the Data Center application, and especially in U.S. In China, we expect to have similar margin compared to those in Europe, but the market is different compared to U.S., as you can imagine.
Concerning trade receivables increases, just the fact that we had a strong Q4, it's practically the result of the fact that the strong increase we are in 10.6 or 10.9% in Q4 is also affecting the value of the trade receivable at year-end. Nothing special and nothing critical to mention. Concerning the inventories, same thing. We have a very high order backlog. We have some compared to the past, we have slightly a higher amount in terms of finished product due to some postponement of delivery, but we're talking about EUR 2 million, EUR 3 million, EUR 5 million, so no more than that. It's strictly under control.
On the other hand, we improved very much the payable situation, thanks to new negotiation we made with all of our suppliers, both in Europe and outside Europe. We think it's temporary. Concerning heat pumps, I'm not sure if I got your question correctly, but what I was saying before is the fact that the growth we had, which is more than 50%, is not the market growth. It's a growth related to the fact that all the seeds we put in place in 2023 and 2024 concerning new products finally flourished with a bigger delay compared to the initial expectation.
Some of the good sign is that the market demand is good, the order backlog is good, and some of the customers are starting to split the order between Europe and India. We have already two accounts that are ordering now from India also the heat exchanger for heat pumps, which is something we proposed already many months ago, and now it's starting to work, and it's a win-win situation for both sides because we have higher margins and they can get some savings compared to what they're getting in Europe.
Thank you. Maybe the last one from my side. The Refrigeration segment grew by 4%, excluding glass doors, if I'm not mistaken.
Yeah.
Is this driven by some CapEx cycle? What is supporting this CapEx cycle from your clients? Maybe, I would expect that is that, and maybe a little bit of guidance in terms of, you know, which region in the world, are more representative for you in this, in this segment, which is still very, very important for you. Thanks.
Right. Of course, this is mainly for us. It's a market where we are present in Europe. We're present also in China. Up to now, it's 90%. They represent 90% of what we are doing in China up to now, and in U.S. as well. The good news is we've been specified by two supermarket chains in U.S. already, and we're starting to deliver the first project for both Walmart and Costco. It's a very first step to enter this market. The big focus in refrigeration remains Europe, where today, as you know, the Epta is the biggest player in Europe now. They just made an acquisition of Hauser. So now Epta became our customer number one with this acquisition, putting together the volumes with Hauser.
Both Epta and Arneg, our two main accounts for supermarket application, they are strongly related to us, and they transferred us the information during the meeting we had the beginning of the year that they expect a good year because there is a need to renovate a lot of stores and also some supermarket chain we started. Apart from the French ones mainly, now in Italy there is a big emphasis on new opening from some supermarket chain like Lidl, Aldi, Eurospin in Italy, not to mention, but also they expect both to increase more the position in the DACH and Deutschland, Austria, and Switzerland due to the fact that both made investment with this in this market.
With an acquisition of Epta, we expect being traditionally Hauser more German-oriented in terms of supplier. We expect to have also a new possibility to grow in this market where they are aware there is still a lot of space. Our market share is lower compared to the rest of Europe, I would say. Also in Spain, we are doing quite well in the supermarkets. In Spain, there is a big need of renovation because Spain together with Greece is still the region in Europe where the transition to natural refrigerant has been slower up to now and continue to postpone due to climate reasons, due to lack of knowledge and skill from local installers.
Thank you. Thank you.
You're welcome.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is a follow-up from Michele Mombelli, TP I Cap Paris. Please go ahead.
Sorry. Maybe just because you mentioned Spain, I saw news from some hours ago regarding one of your offering using CO2 in order to cool down some Data Center in Valencia, Spain. I would like to know just, you know, if it's one of the particular offering that LU-VE is offering compared to other players and maybe competitors, and if maybe this could be an advantage also for other types of projects in Europe for LU-VE. If you have some guidance around that, just from a technological point of view, not just strictly financially. Thanks. That's the last one.
I would like to say that this project for Data Center with CO2 made in Spain will be copied from a lot of players. I doubt about it because in my opinion is that in terms of technical solution for Data Center is still too expensive. On the other hand, I recall that the same reasoning was made some years ago concerning CO2 in supermarkets. For the time being, this project we made, it was a very special one where this investor wanted to make this attempt, which is working, is up and running, and the results seems to be interesting. I think that in reality this could have some.
It could be applicable in on smaller sites for Data Center, not in the huge one. Still the beginning is the CapEx for a Data Center where everything is redundant due to the fact in Data Center technology every compared to refrigeration, every has to have much higher redundancy in order to achieve the goals of being compliant with Tier 4 and Tier 3. I'm not convinced it would be the best choice. There could be a market, a niche market for some application for sure, and many more for Scandinavia than for Spain, that's for sure, because CO2 is always working better with lower ambient temperature than Spain.
The idea to make it in Spain is, let's say, a crash test, and the fact that it works, it is good. You know, and for us it is very satisfactory because we prove that we can provide capacity, the capacity even in very hard working condition. In terms of future opportunity, I think that the direct to chip water cooling technology is up to now the best one for most of the solution all over the world.
This, in my opinion, will remain the focus for the next coming years, even if the cooling technology for Data Center has shown an acceleration so strong in the last couple of years that maybe in my opinion could be wrong in two years time.
Okay, thank you so much.
You're welcome.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Gentlemen, Mr. Liberali, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.
Thank you. Once more, I would like to thank all the participants for joining this call concerning the results of 2025. I confirm we are very satisfied about the results we achieved, and we are very much committed to further improve the results and to meet the targets we now had and we have in our hearts and we have also in the consensus. Notwithstanding all the turbulence around us, we still are confident that the results will be in line with our expectations. Thank you very much again, and have a nice day.
Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.