EL.En. Aktie

Good afternoon to everyone, and welcome to El.En's. First Quarter 2026 Financial Results Conference Call. Today's call will be recorded, and there will be an opportunity for questions at the end of the call. With us on the call are Andrea Cangioli, El.En's. CEO; and Enrico Romagnoli, El.En's. Chief Financial Officer and Investor Relations Manager.

Before we begin, please note that there are management remarks during the conference call regarding future expectations, trends, prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business conditions in the industry in which we operate. These statements may be affected if our assumptions turn out to be inaccurate.

Consequently, no forward-looking statement can be guaranteed and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the contents or the forward-looking statements to reflect events or circumstances that may arise after the date hereof. -- the virtual and we will have the floor in order of request. But at this time, I want to give the floor to Andrea Cangioli. Please go ahead, Andrea.

Thank you, Nicola. Thank you, Bianca, for your introduction, and good morning -- good afternoon, everyone, and thank you for joining us today to discuss the financial results for the El.En. Group for the first quarter ending March 31, 2026. Enrico Romagnoli will be on the call with me as Nicola anticipated. As we look back at the first 3 months of the year, it is clear that the El.En. Group continues to navigate a complex global landscape with resilience and an unchanged commitment to our core mission, leverage our technological leadership in both the medical and the industrial laser sectors to drive value for our partners worldwide and subsequently for our shareholders.

We were pleased with our financial results, and I want to thank our global team of engineers, clinicians and staff to their dedication to the success of our group. Turning to our consolidated financial performance for Q1 2026. We achieved total revenues of roughly EUR 145 million, up 3.3% compared to Q1 of the previous year. This performance reflected the excellent performance of the medical sector, which was up 9.3% in revenues and in fact, more than 10% on an organic base, neutralizing the effect of the exit of our Japanese subsidiary, Withus, overcoming the slowdown in the industrial sector, which was down in sales by 11.4%, mainly due to the cutting segment, which was down by 15.5% in the quarter. The quarter also displayed an improvement in P&L efficiency based both on marginality on sales and on leverage, leading to EUR 19.8 million in EBIT with an EBIT margin of 13.6%, more than 1 point up on Q1 2025, but also, and this was an excellent achievement due to the weak seasonality of the first quarter, also up sequentially on last quarter of 2024, '25 on the EBIT margin performance.

As leverage is given by volume and margin on sale depends upon the quality of the sales mix, I would like to provide you with some color on the matter. Volume increase came from the Medical business only. And this contributed to the overall margin for mere mathematical reasons as margins are higher in medical than in industrial. It's roughly 48% in Medical versus 38% in Industrial.

Within the respective sectors, margins were stable to a high level in Medical, but they materially improved in Industrial from 34% of Q1 2025 and 28% of Q4 2025, up to 38% in this first quarter. So it is important to point out that under the sales margin profile, we had positive contribution by the industrial sector as well. Margin improvement in the segment is the cornerstone of the path towards a return of the segment to a stronger profitability. Sales have been lagging in this quarter in the industrial sector. But under the margin point of view, we are on the right way, and we expect stronger quarters ahead also on the sales volumes side. Ground to this trend lie in the sales mix under the product and the geography profile for both sectors.

In industrial, geography is a prominent margin driver with Europe, the U.S. and Brazil being the most attractive markets margin-wise. Q4 2025 has recorded the highest weight of sales in Italy and a negligible sales volume in the U.S. and Brazil and subsequently showed a very low gross margin in sales. Q1 2026 witnessed a return to a decent sales volume in Europe and in the U.S. and accordingly, a decrease in the total share of sales in Italy.

The effect on margin was evident. The weak sales performance in Brazil was in this quarter the missing piece that didn't allow us to convert the material margin improvement into a volume effect sufficient to better cover the expenses from operation.

In Industrial, as quarterly sales volume in the cutting segment declined, higher margin bearing sales in the marking and laser sources segment increased the weight, therefore, increasing the segment margin. Medical maintained its gross margin levels, confirming a sales mix, which privileged within aesthetic devices, anti-aging treatments versus hair removal and confirm the material contribution of the surgical business, both for system sales and consumable sales as the volume of sterile optical fibers sold in the quarter exceeded once again the EUR 10 million threshold. On the top is currently the trend is deviced in our product range, a system which successfully captures the requirements of the demand in medical aesthetics, especially focusing on skin tightening and skin firming.

Our CoolWave microwave technology enables minimally invasive and extremely effective procedures with effects that are evident, but are also respectful of the appearance of the patient, mild improvements that do not distort the expression. Patients want to improve their appearance but are not willing anymore to accept that their efforts are too evident. They want their status to be maintained without being noticed too much. By the way, on ONDA PRO, we are expecting an unprecedented number of imitations being introduced on the market, and we are delivering a notable effort, both on the marketing and commercial side and on the legal side to protect the uniqueness of our flagship device.

On the innovation side, our key success factor and main competitive weapon, we continue to dedicate significant resources in terms of management, manpower, investments that enable our R&D teams to maintain their excellent productivity level. Coming up this year, we have new products in aesthetics for pigmented lesions and hair removal and improved capabilities for our skin tightening devices. In surgery, a new laser in the wavelength band of the thulium is due for release within the end of the year, while in urology, a new high-powered thulium BPH system is almost ready to launch -- for its launch. In the industrial sector, laser cutting systems are improved, especially for the large-sized high-power system dedicated to steel construction, but also the offer of laser marking is continuously updated with new wavelength and special emission modes, which allow the system to be more and more innovative and more and more matched to the needs of a diversified set of customers, application segments and industries.

A brief mention of the unprecedented first quarter improvement of the net financial position. We were up EUR 1.5 million in the quarter, the first quarter that historically is a cash absorber. Enrico will give you the details. I can now make a comment that CapEx was lower in Q1 '26 than in Q1 '25 as expected to date on a yearly basis as well. As expected to date and as expected on a yearly basis as well.

We though approved during last week a fairly sizable investment for a new building here within the Calenzano plant that will be mainly dedicated to marketing support areas for overcoming potential customers, both in person and with the most recent technologies for effective remote meetings. The order of magnitude of the investment is around EUR 5 million. It won't change the outlook of our cash flow statement, but it will probably bring 2026 CapEx closer or equal to the order of magnitude we had in 2025.

I would also like to give you an update on certain possible M&A activities I outlined in other meetings and calls. Quanta System new subsidiary in the U.S. for the Medical Surgical business is now operational. And with a seasoned general manager, we are hopeful of being able to rapidly capture the market and the customer base that was previously covered through a distributor. The launch of the company didn't exactly follow the plan and also the transition with the former distributor required an initial investment smaller than budgeted. Quanta's management is following closely the development of the company, and we will update you on the performance of this new sub of Quanta. Also in the physiotherapy segment, we are working to an agreement with our U.S. distributor with the goal of a closer cooperation and subsequently an increase in the performance of this market segment, one of the most fruitful among the businesses of ASA, a company based in Vicenza, which is dedicated to this market segment.

Concerning other M&A activities in the industrial and medical sector involving on one side, the laser cutting business and the distribution of medical laser systems in selected countries on the other one, I have nothing notable to report apart the fact that the group is considering the possibility of evaluating certain options in regard. During the quarter, the group continued and further consolidated its sustainability activities, which are also included among the performance indicator relevant to management incentive systems. Implementation of the 2023-2027 sustainability plan continued with overall progress in line with and in some areas exceeding the defined objectives, particularly for initiatives to transition to renewable energy sources. The plan continues to focus on strategic issues such as climate change, circular economy, promoting a responsible supply chain, developing human capital and supporting local communities, confirming the group's commitment to a sustainable development model, which is fully integrated into business processes.

As we anticipated in the press release we issued to disclose the news, we are sharing today more detail with respect of the resignation that our General Manager, Mr. Paolo Salvadeo, formally submitted for personal reasons on April 30. Dr. Salvadeo served in this capacity since 2017, and his impact on our group has been profound. Under his leadership, we have seen EL.En. solidify its position as a global leader, especially in the medical sector, the focus of his management activity.

I obviously did it already in person, but today, on behalf of the Board of Directors, I want to formally thank Paolo for his exceptional professionalism and the significant contribution he has made to our growth under several profiles, including the strengthening of our management structure over the last 7 years. We wish him nothing but the best in his future endeavors. In addition to saying that we are not aware of any reason, if not strictly personal, that led Paolo to the decision to resign and we -- and that we are on excellent terms with him, I want to emphasize certain key points regarding the transition phase we are facing.

In terms of operational continuity, thanks to the robust management structure Dr. Salvadeo has put in place, we are fortunate to have an incredibly talented and professional management team. Because of the strength of this team, we do not expect any impact on our day-to-day efficiency or operational continuity. Concerning our strategic targets, our commitment to our goals remains unchanged. There are no changes in our targets short and midterm.

We are moving forward with the same momentum and focus that we began the year with. Concerning the next steps, the executive management shared with the Board of Directors its view on the new management structure. We confirm there are currently no plans to appoint a replacement for the general manager position.

In fact, also thanks to the contribution made by the General Manager, Paolo Salvadeo, the existing management expertise and synergies allow the company to waive a direct replacement at this time. The company can effectively rely on selected executive roles already in place across various business areas, which are complementary to one another. Ultimate coordination will remain under the responsibility of the Executive Directors, namely the President and the Managing Director.

At this time, I'm giving the floor to Enrico for the comments -- the detailed comments on the financials.

Thank you, Andrea. Good morning, everybody. I'll briefly comment on the first quarter financial results. In the first quarter, the group recorded a 3.3% increase in revenue, reaching EUR 145.6 million compared to the EUR 140.9 million as last year. And the performance -- the main performance was achieved by the medical sector when the industrial showing a decrease of around 11%.

On a like-for-like basis, the growth in the medical sector revenues would have been even higher, reaching nearly 11% as with us consolidated until the end of February 2025, contributed approximately EUR 1.5 million to the medical service revenue in the prior period. In 2026, the weakness of U.S. dollar in medical, but also in industrial had a cumulative negative impact on the growth of sales of minus 1.6% for an amount of EUR 2.3 million. In terms of gross margin, it was EUR 67.2 million, up approximately 7% compared to the EUR 62.9 million on March 2025 with an increase in margin that went from 44.7% to 46.1% in the first quarter 2026.

Although the medical sector achieved the highest sales margin, the improvement in sales margin in the quarter has been registered also to the industrial sector.

Despite a reduction in turnover, the sales mix in Industrial was more favorable, both geographically with a lower incidence of the highly competitive Italian market in terms of product type, thanks to the reduction in the weight of the laser cutting segment, which has lower margins. Operating expenses increased in value and an impact on sales, mainly in G&A, plus 6%, including travel and IT costs and sales and marketing activities, plus 12%, mainly for trade fair. Staff cost increased to an increase in headcount. On March 2026, the employees were 1,428 when on March 2025, they were 1,383, plus 45 units in Italy and Europe in Medical and in Industrial.

EBITDA was EUR 23.7 million, up 9% on the EUR 21.7 million of last quarter. EBIT recorded a positive result, EUR 19.8 million, up 14% compared to the EUR 17.4 million in the prior year.

This increase reflects both the improvement in gross margin and the lower impact on sales of depreciation, amortization and other provision, mainly due to a reduction in bad debt provision. The main reduction relates to Asclepion and With Us, which were consolidated until February 2025. The impact on With US on EBIT 2025 was negative for EUR 0.65 million. Financial management recorded a gain of EUR 0.8 million compared to a loss of EUR 1.1 million in the previous year.

The exchange rate differences went from a loss of approximately EUR 1.5 million recorded in the first quarter 2025 to a profit of EUR 0.6 million recorded in the first quarter 2026. The contribution of associated companies included in other expenses was negative for EUR 0.7 million due mainly to with Penta Laser Zhejiang, minus EUR 0.2 million each. The 2 companies was -- the 2 companies, the majority stake of these 2 companies was sold during 2025. [indiscernible], on the other hand, recorded a positive contribution of EUR 95,000. An additional impairment was recognized by El.En. through a 50% write-down of its stakes in Epica International for EUR 0.4 million. And finally, the pretax was positive for EUR 20 million, up from the EUR 16.3 million on March 2025.

Moving now to the analysis of the cash flow. The net financial position increased by EUR 1.5 million in the quarter from EUR 172.2 million as of December '25 to EUR 173.7 million on March. And the increase in net working capital absorbed EUR 9 million, while around EUR 5 million was absorbed by changes in other assets and liabilities, including the higher advances paid to supplier, lower advances received from customers and an increase in VAT receivable from the tax authorities.

Cash absorption for working capital was therefore lower than that recorded in the first quarter 2025 and capital expenditure amounted to EUR 4 million, also lower than the investments made in the first quarter 2025. On May 27, a dividend of EUR 0.25 per share will be paid for a total consideration of EUR 20 million. For the breakdown by business, the revenue increased across all medical application segment. The aesthetics segment performed strongly, plus 10%, driven by the anti-aging system despite the weakness in the hair removal.

Surgical application remained strong, while physotherapy system showed a recovery. And medical service revenue includes sales of services and consumables generated after the installation of systems, an increase of 8% and approximately 50% of the medical service revenue related to sterile optical fiber used in surgical application. The deconsolidation of With Us, the Japanese company, resulted in inorganic revenue decline for the Service segment.

Consequently, organic growth in the segment, excluding With Us from the sales of 2025 was approximately an increase of 16% in the quarter. In the industrial sector, the quarterly revenue declined by 11% with the decrease affecting system sales across all application segments, except for the restoration. Post sales and components, on the other hand, performed very positively, increasing both in absolute terms and as a share of total revenue.

For the breakdown by area the European market were the main driver of revenue growth during the quarter across both application segment in both sectors in the Italian market recorded a decline, while in the rest of the world, performance was positive in the medical sector and down in the industrial sector. In Italy, the weaker performance in the Medical segment was mainly driven by professional aesthetics for which a recovery is expected following the launch of the new hair removal system.

In the industrial sector, an unfavorable environment continues to affect the manufacturing industry and machine tools in particularly also due to the ongoing uncertainty surrounding tax incentives for investment. These measures are now being defined on a multiyear basis, which should provide a more stable framework for customers investment decision. The decline in industrial sales in the rest of the world is mainly attributable to the weak performance of Cutlite do Brasil, the company distributing our laser cutting system in Brazil.

The growth in the industrial market in the medical sector remained solid, also in non-European countries, driven in particular by the Far East. Andrea, if you want, you can go ahead with the guidance.

Thank you, Enrico. So looking ahead to the remainder of 2026, we remain cautiously optimistic. While we are mindful of macroeconomic headwinds and supply chain complexities,[Foreign Language] sorry, I mean, while we are mindful of macroeconomic headwinds and supply chain complexities, our order book remains healthy and our pipeline is robust. Q1 2026 has provided a solid foundation for the year, and we can, therefore, confirm the guidance we released a couple of months ago that we target a consolidated revenue growth of about 5% and that as we did in Q1 '26, we count on improving our EBIT margin on a yearly basis as well. Thank you for listening to our prepared comments. I believe that we are ready for your questions now.

We can now open the Q&A session [Operator Instructions]

Andrea, maybe we can ask Andrea to speak first. He's the first of the list here. Andrea Bonfa.

Okay. Andrea, go on because we do not have any. Andrea?

Now so I have been accessed to the audio. Andrea. Very quickly, my curiosity is on these numbers, the first quarter number. What's the impact on the procurement of RAM? And what's the visibility on that particular aspect or point?

There's no impact. We are paying our RAM memories a little bit more, but the effect of the RAM single component is not material. At this point, we see a longer lead time, but we do not see a shortage hitting us. So -- and the increase of the cost of memories will increase for sure, the cost of our products, but also given the amount -- the volumes we are planning to manufacture in this moment, such increases in costs are offset by improved efficiencies under other point of view. And so they have no impact on our gross margin, no material impact at least.

And now we have Carlo Maritano. Go on Carlo.

I have 3 questions. The first one is on the guidance. So if I remember well, on the previous call, you indicated an expected growth of 5%, and that was broadly based on similar contribution from both divisions. So I was wondering how the first quarter is changing this picture. So the 5% now is, I imagine, more skewed towards the medical, but correct me if I'm wrong.

The second question is on the Industrial segment. So I was wondering whether the weakness in the segment is also driven by any accounting reasons or maybe orders that were not accounted by the end of first quarter and that could be delayed in the second quarter as happened in the past.

And the final question is on Middle East. I was wondering if you could give an update on how the business in the region is progressing, if there are cancellation of orders or postponement or if the stabilization of the situation is causing no particular problems compared to the past?

Okay. So to the first question, the answer is we confirm the guidance, and we confirm a contribution from both sectors. The first quarter is a very short valuation period for a business like industrial, even though answer and I am answering to your second question, there are no material cutoff changes in this quarter.

There are certain slowdowns in deliveries and in concretization of orders, for instance, in Brazil that we expect and we count on being recovered throughout the year. So even if we didn't -- we can confirm that we expect growth from both segments at the end of the year. Concerning the Middle East situation, there's not much of an effect in this quarter.

Ironically, the sales we are missing in Middle East are mostly hitting the hair removal segment, which is the lowest margin bearing sale segment. And so when we are putting up with sales in other areas and other disciplines, we replace the lower margin bearing sales with higher margin bearing, which is accretive to the results.

For the moment, there are certain countries in the area which continue to buy well like Egypt, other countries where we are registering a very strong slowdown like the Saudi Arabia and Iraq in particular. Overall, so we are seeing a slowdown. But overall, in these months, we have always seen that sales traction in other areas of the world is offsetting the slowdown we are seeing in the Middle East area.

Carlo, do you have another question? It's enough for you?

Yes, yes, it's enough.

We have no more question. Do you have -- I want to ask to the investors if they have any other question for the management. No. We have no more questions at this moment, but I would like to ask once again if there is some other question. No.

Okay.

No problem. No question. Sorry? Ladies and gentlemen, the conference is now over. Before closing concluding this call, I would like to extend one final invitation to the Reverse show in Samarate, which will take place on May 28 next week and for which many of you have already registered to attend. We currently have 25 -- 22 investors registered for the event. Tomorrow, we will send out the final invitation and anyone wishing to participate will be able to register directly through our platform or sending me an e-mail requesting registration.

If you have any inquiries in the future, please do not hesitate to contact Enrico Romagnoli, who will be happy to assist you. Thank you for attending this conference, and we hope to have you all again next time. Goodbye, everybody. Thank you.

Bye-bye.

Bye.

Okay. Good afternoon to everyone, and welcome to El.En.'s Fiscal Year 2025 Financial Results Conference Call. Today's call will be recorded [Operator Instructions]. With us are on the call, Andrea Cangioli, he's El.En.'s CEO; and Enrico Romagnoli, El.En.'s Chief Financial Officer and Investor Relations Manager.

Before we begin, please note that there are management remarks during the conference call regarding future expectations, plans, prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business conditions in the industry in which we operate. These statements will be affected if our assumptions turn out to be inaccurate.

Consequently, no forward-looking statements can be guaranteed, and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the contents or the forward-looking statements to reflect events or circumstances that may arise after the date hereof. [Operator Instructions]

But at this time, I want to give the floor to Andrea Cangioli. Please go ahead, Andrea.

Thank you, Nicola. Thank you, Bianca, and thank you, everybody, for joining this call of comment on the 2025 financials. Enrico Romagnoli will be with me and will dig into the details of our financial performance after my brief introduction.

As we released our financial results after market on Friday, looking at the news on the web over the weekend morning -- over the weekend, the main line captured by the press is that our net profit declined in 2025 compared to 2024. I don't believe this line appropriately captures our achievements of 2025, and I would like to describe them under 2 essential profiles, market positioning of the group on our main outlet markets and overall financial performance for current operations.

Market positioning. Sales volume was up in excess of 4% in both medical and industrial sectors. In the medical sector, net of the onetime events, which I would call inorganic, I mean the sale of the majority of With Us, our Japanese subsidiary active in the Professional Beauty segment, and the almost complete loss of our historic customer, Cynosure, to its new Korean partners. Revenue growth was, in fact, in the neighborhood of 10%, which I believe is an outstanding achievement for year 2025. DEKA, Quanta, Asclepion, ASA, all the business units and brands marked our sales and profits increased in 2025.

The incumbent obstacles that have been hindering our performance generate internal and uncertainty in the political and financial global arena are surprisingly absorbed and metabolized by the economic environment, and to a great extent, by our organization as well. There's no dark shadow cast on our financial results by the ongoing war in Ukraine, by the war in Palestine, by the new tariffs hitting trade with the U.S. and by the U.S. dollar weakening over the year. We stood strong in all our main markets, including the U.S., where in the medical sector, we consolidated our market position retained through our valuable distribution partners.

Our brands are well recognized and significantly improved their visibility in the market. We have provided adequate marketing support to elevate them to prominence that they serve, both on social media and in the physical world. Moreover, with the exit of our Chinese operation out of the consolidation perimeter, the group is making a move towards the prevalence of the medical sector. We continue to be fully commitment and engaged in exploiting the capabilities and opportunities of the industrial sector within the group. But our overall balance is now more oriented towards the medical sectors, which is proving to be more rewarding.

2025, markedly its second half has been the first period in which we actually operated in the new configuration of the group with a lighter weight of the industrial sector. In 2024, we reported our financials with the same perimeter, excluding China, according to IFRS 5, but we were actually in charge for the Chinese business as well. So what concerns the financial performance, it displayed a very solid result. At EBITDA level, we beat 2024. Due to higher than usual accruals for risk of various kinds, EBIT stood right below the level of 2024. Under this profile, the profit guidance provided at the beginning of the year that we would beat 2020 -- in [ 2025, 2024's ] EBIT wasn't fully met.

On this theme, I would like to spend a few more words. EBIT lagged behind 2024's level throughout the year. And entering Q4, we needed an effect, we counted on an extraordinary performance to close the yearly profit gap in the quarter. The performance in Q4 was actually very solid. Revenue was EUR 169 million, and EBIT margin was 13.5%, both meeting the metrics of Q4 2024. Only a revenue mix that in the laser cutting segment was heavily weighted on the lower margin spare sales on the Italian territory, leading to a poor performance of the tech sector under EBIT generation profile inhibited Q4 2025 financial performance to fully close the gap to 2024.

Drilling down into the performance of the various market segments, revenue mix continued to be favorable in the medical sector and was very unfavorable in the Industrial segment, leading to a wide divergence in the profitability of the 2 segments. In medical, the demand trend confirmed what we had experienced throughout the year. Competition is driving down volumes and prices in the hair removal segment. The volume missing in the hair segment are replaced with expansion in the anti-aging rejuvenation application space, where the margins we can achieve are higher, an effect of the excellent branding and positioning of the technologies and procedures that we offer in the segment.

It is meaningful to mention that both CoolPeel, which is the brand name of the procedure that is performed with our CO2 lasers to effectively, rapidly and painlessly rejuvenate the skin of the face. And ONDA, our unique microwave technology for body shaping and skin tightening, are witnessing an important increase of imitations which are more or less blatantly setting forth claims of equivalence with our systems and procedures, which are recognized as the market leaders and reference. We are taking care of this with our legal department. But this circumstance testifies the strength and enviable market positioning we reached in this space.

In the medical area, we did very well once again in surgery and specifically in neurology where sales volume increased for laser system and even more for the consumable tied to the performance of the surgical procedures, the single or multiple-use sterile optical fibers. Optical fiber's revenue exceeded EUR 40 million in 2025, a notable achievement, which is not materially affecting the gross margin yield, but as the expense involved in the sale of the product is marginal compared to systems, has an important effect on EBIT.

Finally, in medical, I'd like to mention the excellent performance, both in the last quarter and in the full year 2025, of the business unit dedicated to physiotherapy systems, ASAlaser based in Vicenza, Italy, which contributed to the group's performance with an increase both in revenue and in profits. Wrapping up all these elements in the consolidated financial performance, we ended up with yearly revenues EUR 428 million, EUR 114 million in the quarter and with EBIT margin sailing above 17%. I'm talking of the medical sector, of course.

The last quarter performance was not as favorable in the industrial sector, markedly for the cutting sector. The results in terms of sales was remarkable, but the mix, in this case, the geographical mix, was not favorable. Sales were concentrated mainly on the Italian territory, which for the cutting market, is currently very competitive and bears very low margin compared to the U.S. market and the other European markets, which normally provide a stronger contribution to sales and margins but that were extremely weak in the quarter.

As the cutting systems segment is by far most relevant in terms of revenue in the industrial sector, it accounts for EUR 121 million out of the total EUR 162 million for the sector. Its weak quarterly performance impacted on the sector profitability, driving EBIT down to roughly 1% only in the quarter and roughly 2% only for the year.

Among the other segments within the industrial sector, I would like to highlight the excellent performance of Lasit and its subsidiaries. As you know, Lasit is engaged in the laser marking business for identification and small surfaces. Revenues were just slightly up on 2024, but the quality of revenues and margins improved a lot to a remarkable 46% increase in EBIT and to an EBIT margin in excess of 13%, which makes this segment more similar to the medical sector segments profitability-wise.

While our EBIT targets were substantially met under a cash generation profile, 2025 was an outstanding year. Our net financial position is up to EUR 172 million at the end of the year, and we have EUR 11 million more of cash invested in so-called long-term financial assets. The [ 62 and change millions ] increase were due to onetime events, meaning the sale of the majority of Penta Laser Zhejiang for about EUR 20 million -- EUR 24 million, excuse me. While roughly EUR 30 or EUR 38 million were generated by operations, net of about EUR 80 million paid out in dividends and about EUR 80 millions more of capital expenditure.

Net working capital decreased on a yearly basis, contributing to cash generation and inverting the increased trend that had initiated with the post-COVID supply chain crunch. Capital expenditure was higher than forecast, and was mainly allocated to facility expansion and capability improvements.

Quanta System is building its new sterile optical fibers manufacturing facility with improved capacity and automation of certain processes, an investment that will exceed EUR 5 million over the 2024-2026 time spend. El.En. rebuilt part of the building on the other side of the street here in Calenzano, as a new home for the medical service department, which moved there last week, which now has a dedicated facility with appropriate offices, services and logistics, and freed up the manufacturing floor space in the main building.

Lasit in Torre Annunziata increased its investment level in this year, also taking benefit of the significant aid that investment in fixed assets are receiving in Southern Italy.

The determinants that from a comparable starting point in profits from operations, make the 2025 net profit results diverge so much from 2024 results, can be summarized in the opposite impact for both foreign exchange variances and the extraordinary management entries related to the sales of the Chinese subsidiary.

I leave the floor to Enrico that will provide you with all the relevant details on this specific matter and on the 2025 financial performance.

Thank you, Andrea. Good morning, everybody. And as usual, I will briefly comment on the full year 2025 financial results released last Friday.

As already mentioned by Andrea, we apply -- as we already applied for the interim account, the full year 2025 consolidated income statement has been prepared in accordance with IFRS accounting standards. Excluding the consolidation line by line of Chinese activities, both in 2025 and 2024, due to the negotiation for the sale of the Chinese division in accordance with IFRS 5. The majority stake of the division was sold on July 15, and the residual stake is about 20%. So the contribution of Penta Laser Zhejiang for the first 6 months has been accounted in the line of the discontinued operation when the contribution for the second part of the year is accounted in the line of other expenses below EBIT, which included the contribution of associated company consolidated using the equity method.

For the full year 2025, El.En. recorded revenues for EUR 591 million, up 4.4%, versus EUR 566 million in 2024. The medical sector grew by 4.4%, in line with previous quarters, while the industrial sector reported a similar annual increase, plus 4.3%, supported by a significant recovery in the fourth quarter. The gross margin reached EUR 259.8 million, up 5.7% on the year, with margin improving from 43.9% -- from 43.4%, excuse me, to 44%, mainly driven by a favorable product mix in the medical sector. Industrial sector showed a slight lower margin profile due to a higher rate of Italian sales, but the overall effect remained positive. In 2025, the weakness of U.S. dollar in medical and industrial and real in the industrial sector only had a cumulative negative impact on the growth of sales of minus 0.9%, minus 0.8% in Medical, and minus 1.1% in the Industrial.

In terms of operating expenses and costs, we had an increase in value and an impact on sales, mainly in G&A, plus 7%, mainly due to R&D and IT costs, and sales and marketing activities, plus 11%. Staff costs increased due to an increase in head count and in salaries. On December 2025, the group had 1,412 employees compared with last year when there were 1,353, excluding China and Japan, with an increase of 59 employees, plus 4%.

EBITDA was positive for EUR 92.8 million, up from the EUR 91.8 million over last year, notwithstanding a slight reduction in margin, 16.2% in 2024, 15.7% in 2025. EBIT recorded a positive balance, EUR 77.8 million, slightly down from the EUR 78.3 million last year due to more significant provision for risk and charges compared to the previous year, with an EBIT margin decreasing from 13.8% to 13.2%.

In depreciation and amortization provision in 2024, there was the reversal of a provision for risk and charges for EUR 1.6 million due to some legal dispute that were resolved more favorably than expected. And moreover, in 2025, the amount of depreciation and amortization increased of EUR 0.4 million due to the investment did in the year and the past periods.

Financial management recorded a loss of EUR 0.8 million compared to a profit of EUR 0.8 million in the previous year. Financial income generated from the investment of liquidity amounted to EUR 3.9 million, EUR 2.8 million last year, while interest expenses on debt amounted to EUR 1.6 million this year, EUR 2.2 million last year.

Foreign exchange rate, the differences showed a significant overall negative balance of EUR 3.1 million, primarily due to the exchange rate of the U.S. dollar. There is also a onetime exchange rate loss recorded in Q1 for EUR 908,000, following the release of the currency conversion result -- resulting from the sale of the majority in With Us. This release reflects the amount of exchange rate differences accumulated over the years in a specific equity reserve, and this is particularly negative due to the performance of the Japanese yen.

The contribution of associated companies included in other expenses is negative for EUR 2.7 million due to With Us, minus EUR 0.4 million, and Penta Laser Zhejiang, minus EUR 2.5 million. When Elesta was positive for EUR 260,000. In other income last year was accounted the onetime income of EUR 5 million due to the write-off of our financial liabilities related to the earn-out to pay to former minority Chinese shareholders in case of IPO of Penta Laser Zhejiang. The pre-tax income was positive for EUR 74.3 million, down from the EUR 84.1 million.

And below this result, there is the net -- the result of the discontinued operation, negative for EUR 6.6 million, and is composed of 4 main items. The contribution to the consolidated income statement by Penta Laser Zhejiang first 6-month result equal to a loss of EUR 3.9 million. The consolidated capital gain on the sales of the stake equal to EUR 3 million, net of adjustment for costs incurred and expected as of today for the conclusion of the contracted. The financial components related to the release of the currency translation reserve, which resulted in a cost of EUR 1.9 million and a charge of EUR 3.8 million following the definition of fiscal litigation relating to Penta Laser Zhejiang raised in 2025 by the Italian revenue agency, the cost of which were borne by Ot-Las in accordance with the contractual agreement underlying the sale. The Group closed the 2025 financial year with a net profit of EUR 43.4 million, down from the EUR 51.6 million last year.

The tax rate, the effective tax rate in 2025 was 32% versus 25%. In 2024, there were 2 positive onetime effects, the nontaxability of the EUR 5 million in other income as write-off of the financial liabilities related to the earnout previously mentioned in case of IPO of Penta Laser Zhejiang and the cumulative accounting of the so-called patent box in El.En. for the year -- 2024 for a tax advantage of approximately EUR 3 million.

Moving now to the balance sheet. In 2025, we had an increase in fixed assets, with CapEx around EUR 19 million. The main investment referring to plants, lands and buildings. In the year, we reduced a decrease in net working capital for minus 7.6%, with also a reduction in the ratio of sales from 35% to 31%. On December, the net financial position is positive for EUR 172.2 million, up from the EUR 110.6 million at the end of 2024.

The Board of Directors, held on Friday, we proposed to the shareholders' meeting a dividend for -- to be paid on May 2026 of EUR 0.25 per share compared to the point EUR 0.22 per share for a total distribution of EUR 20 million to be paid at the end of May.

For what concerns the revenue breakdown by business, the medical sector reached EUR 429 million of revenues, up 4.4%, driven by the strong performance in surgical, plus 7%; aesthetic, plus 4%; and laser therapy, plus 5%. Despite the exit of the -- With Us, our subsidiaries -- our Japanese subsidiaries, and a challenging environment in U.S. market. The sales of consumable and after sales services remain very satisfactory, driven by sales of optical power in neurological surgery, more than 50% of the sales of the segment, which kept service revenue growth of 2% despite the loss of the service contract revenue from With Us. The exit from the consolidation perimeter of With Us company entails an inorganic revenue loss for the service sector of more than 8% service revenue. Organic growth in the segment was, therefore, approximately 10%.

The industrial sector recorded revenue of EUR 162 million, up 4.3%, supported by cutting and after sales service, with particularly strong growth in Italy when marking and lasers sources recorded a decline in revenue.

The revenue breakdown by area. For medical, Italy led growth, supported by solid performance across Europe, plus 7%, and on the global markets, high international exposure, around 90% of revenue, and successful product in Asia, offsetting With Us exit and U.S. headwinds and confirm the strong competitiveness of the group.

Industrial, in Italy, Italy showed a significant recovery in the second half of the year, supported by renewed confidence in the manufacturing sector and fiscal incentives from -- for investment like [ ZES ] for the south of Italy and Industry 5.0. However, international exposure remains lower than in the medical sector, with foreign sales below 50% of revenue despite structurally higher margin abroad.

In Europe, performance has yet to fully stabilize. Lasit's subsidiaries are now reaching maturity, while Cutlite Penta European branches underperforming expectations. In the U.S., order intake was negatively affected early in the year by uncertainty linked to potential Chinese acquisition, also a recovery in order emerged towards year-end.

Please, Andrea, go ahead with the guidance.

Thank you. Thank you very much. So before going to the guidance, I wanted to mention another point, I believe, also anticipating your request. The point about any planned M&A activity, also in light of the considerable amount of cash retained by the group today. We are today considering opportunities of expansion, especially related to the U.S. territory, on which from the days of Cynosure, we don't have a stronghold anymore.

Opportunities, it's stayed plural, since we operate in several market segments, and each of them would need a specific organization. Quanta System is interested in creating an organization for its surgical business, ASAlaser for its physiotherapy business, DEKA for its aesthetic business. There is nothing more than this, which is worth mentioning to date.

The guidance we disclosed in the press release outlines a 5% growth in revenues and a stronger growth in EBIT. Order intake has been very busy in the last months of the year and also in January and February. Our backlog mix reflects the latest mix of revenues in medical, more weighted in anti-aging devices, Onda Pro at first place. And it is much more balanced on international sales, including the higher margin bearing sales to the U.S. market for the industrial sector, including and specifically in the laser cutting segment. The level of confidence that our operating units display is high.

Had we delivered guidance on February 15, the message we would have broadcasted would have been more optimistic and a shared expected growth more aggressive. But the bombing of Iran could have an impact on our business, though quite unpredictable. Short term, we are seeing the reaction quite understandably from the Gulf area, which is particularly relevant for the medical aesthetic sector. The [indiscernible] immediate impact is the increase of gas prices for cars and prices increase that are hitting in whatever is related to energy and transportation.

Hoping in a quick solution of the conflict, we'll have to see how this will impact on the overall economy trend and propensity to invest. It's a great deal of uncertainty tied to the outcome and effects of this new contract. And as I often have said, uncertainty is one of the worst enemies for capital equipment manufacturers that sell their equipment to customers based on their solid expectation to receive solid results.

But in closing these remarks, and before we answer your questions, I would like to confirm that in any circumstance, we feel our organization is today's strong, stable and well positioned, and we are confident in our abilities and capabilities to pursue our expansion goals. Thank you.

And now we can open the Q&A session. [Operator Instructions] We have the first one from Carlo Maritano.

[Foreign Language] Just have 3 questions from my side, just to begin this session. The first one is on the Middle East. So you just mentioned that it's a relevant market for you. Can you remind us how much of your revenues come from these area and which are the application in the state that are most affected more from the current situation?

The second one is on CapEx. So this year, you invested more than expected to the capacity. I was wondering if next year, given that you expect still some growth, some important growth, if you expect the current level of 2025 will be basically the same in 2026? So it will be more, we can say, normal around 15% -- EUR 15 million per year.

And the final one is on the marking business. So in the fourth quarter, there was quite decline. I was just wondering if you can provide us some more color on the performance of this division?

Middle East. Thank you, Carlo, for the question. Middle East, it's worth roughly 15% of our medical aesthetics sales, where it's way less significant in any other segment. So this is the amount of risk, let's say, of the area. Then the Middle East is quite a broad concept because Egypt is part of Middle East, and Egypt, today is not affected at all, at least by the current situation. While the areas in which we sell that are more affected are the Emirates, Iraq and Saudi Arabia. Those are the 3 areas where we have very good sales volume in medical. The situation is uncertain. Dubai Derma, which is an exhibition which was due to take place at the end of March, has been, for the moment, suspended. Obviously, we'll see. I mean, of course, we would need to somehow put up with this situation. We hope that it won't last too long.

Second question was CapEx. I wouldn't expect 2026 to replicate by any means the volumes of investment in of 2025. We bought a building for Cutlite Penta, which was worth EUR 3.5 million, which we don't expect at all to replicate in this year. We had several infrastructure investments in Lasit which are not going to be replicated in 2026. We built a new building in the other side of the road, here, which will not replicated. Actually, we could have some, again, investment in expansion of capabilities or in refurbishing of certain parts of our manufacturing plants. But as you said, I expect the CapEx in 2025 to remain well below the EUR 15 million mark.

The third point was marking. And yes, marking has seen overall decline. We have 3 companies engaged in various means in the marking arena. The first one is Lasit, which is engaged in the small surface identification market, and then a small increase in revenue were basically even.

The second company engages Ot-Las, which is engaged in the decoration wider surface market. They didn't have a good year. Part of their business is also related to the fashion market and to -- and this year, was a varied idea for all the manufacturers related to the fashion market. So there was no stimulus incentive for our customers to invest.

And the third area of marking is a special system of El.En. El.En., our major -- our parent company, has an industrial division which specializes in 2 specialties, mid-power laser sources and marking systems, which sometimes are sold together, sometimes are sold separately.

In this case, I'd like to mention one of the bad -- one of the worst events of 2025, where we had to stand the bankruptcy of an important customer of ours in Israel, which was a very interesting customer for our marking systems that were used in digital converting. And unfortunately, even though the company was a listed company, they went bankrupt, and it's one of the reasons why we had so large accruals with respect to 2024 in 2025.

Looking forward, since you brought me into the marking segment, we believe that 2026 can be a year of recovery. Lasit has an expensive budget with an expansion both in service related to existing system and in the sale of new systems. Ot-Las has seen a very interesting recovery in their own application fields. And also with El.En. between -- I mean, I wouldn't say for laser markets and laser sources, but with both, we are in this moment, envisaging a good return in growth in sales.

One thing I have to mention, that our -- sometimes our sales volume is important, but the mix of products within the sales volumes is very important as well. Lasit and its subsidiary did not materially increase the sales in 2025, but we shifted their mix to special system, which means systems that are not standard and on which there is less competition because they are customized versions for customers' needs. And by this means, with the same revenue, they increased materially gross margin and materially EBIT margin, which is good news, which makes Lasit a kind of company which operates with the level of margins, both on gross margin and EBIT margin, which are comparable to the medical sector.

Are there questions from investors? Yes. We have Giovanni Selvetti from Berenberg.

The first one's probably is to stay on the point that Andrea was making now on the mix. I was wondering what changed compared to the third quarter because I would assume that if most of the order intake for the industrial division was Italy, unless you were assuming a different profitability in Italy, should have been already clear then that the guidance would have not been met. So because it seems to me that you were saying before that these assistance runs at lower profitability compared to other countries in Italy because the market is more competitive. But at the same time, you should have had the visibility on where these orders were coming. So I was wondering if maybe the profitability realized was lower than you actually expected?

The second one is on M&A. During the last call, you were mentioning that, if I'm not mistaken, you were close or not too far from closing some bolt-on deals, while now it seems more that there's nothing on the table. Is something happened there?

And the third one is mostly very short on the tax rate for maybe Enrico, is it -- if it's fair to assume that it's going to be around 32% structurally going forward?

Andrea, if you want, I can answer to the tax rate. Okay. So the last year, as I mentioned before, there are 2 nonrecurring benefits on the tax rate. So for the future, I think that if you assume a tax rate around 30%, could be a reasonable tax rate, from 30%, 31% around.

No, we are sure it also. So concerning profitability, concerning profitability in the fourth quarter, you are somehow right. Basically, guidance was a mess for 700 -- I mean, for a very, very small amount which, within all the determinants of a quarterly results are, I mean, a minor issue.

We thought we were going to deliver certain units to the U.S. We thought that we were going to deliver more units in Brazil. The performance of Brazil in the fourth quarter was very, very poor. Sales revenue in Brazil was 0. And so these 2 elements by itself change the guidance. Excuse me, not change guidance, caused enough margin reduction not to meet the guidance. The good news here is that the orders that we could not deliver in 2025 are due to delivery now, and so we expect a better mix in the industrial business, in the cutting sector, especially now starting in the first quarter of 2026.

Concerning M&A, you are right. But actually, what I described in my comments is that we are considering -- we are considering those bolt-on transactions for these segments. But that today, I have nothing to add because there is nothing disclosable more than a vague description of an intention to move in that direction.

Andrea -- Andrea Bonfa, yes. We have another question from Andrea Bonfa from Banca Akros.

Now very quickly, is it possible for you to elaborate how is the U.S. market doing in the light of the, let's say, nominal duties and now the potential that the duties will not be applied anymore?

We -- in this moment, our forecast for the U.S. market duties or not is strong, is very strong. Of course, if duties would be actually be released, which, I don't know if I have to believe in full, the situation will be better. All our forecast is based on purchase volumes, which for our customers, bear 50% duties. Should the duties be applied from a certain date on, of course, we would have an advantage. We would probably also have a compression of sales because if a window will open, everybody will try to purchase in that window. But I mean, we don't have a model for that today.

Okay. So if I understood correctly, for the time being, more or less, you are dividing -- you're sharing the royalties or the duties 50% with your client, is that right?

Not exactly. Basically, in the medical sector, most of our customers in the United States are bearing in full, the cost of the tariffs. In certain cases, we provided a contribution, which is though way lower than 7.5%. I believe that as of today, as manufacturers, we have borne in full the effect of the foreign exchange, which was worth close to -- I mean dependence when we look for 7%, 8%, let's say, today, but we didn't bear any material cost in taking charge of the duties. We are not beyond 2% or 3% in the [ sell-down ] circumstances in which we agreed to contribute.

Okay. And if I may, a follow-up question. On your guidance, the 5% top line sales growth, is that expected to be about the same for the 2 divisions? Or do you see a faster growth in medical versus industrial, or if you can comment on that?

As of today, both sectors are expected to grow at the same speed.

Is there any other question for the company. No, it looks like there are no more -- yes, Andrea Bonfa again. Okay.

Sorry, I exploit the fact that there are no questions for the time being. No, the -- so Andrea, I will ask you. I mean, you mentioned that if it wasn't for the war, your guidance in February would have been, let's say, more important. But is that -- is the current guidance already reflecting a slowdown or is it still hypothetical for the time being?

I could talk -- we could talk long on this issue. We had a guidance which provided for certain growth rates in several countries, including the Middle East, and provided on a certain, let's say, global situation. We decided to be more conservative following the bombing of Iran by Israel and the United States. And so we are factoring in a certain degree of prudence, which takes into account 2 major effects. One, the fact that the Middle East countries would probably not be a market as large as we were expecting for the medical aesthetics sector. And so we applied a reduction on that specific market. And second, also a more cautious approach worldwide which, I mean, overall, led us to disclose the guidance that we have disclosed.

Unfortunately, you can understand, 10 days after the beginning of a war, we have no means to understand how this will actually impact our business. Maybe the impact could be negligible. I mean, if the war ends and we have no impact, especially on the supply chains, we are worried about the supply chains. We were already worried by the supply chains for events, which are unrelated to the war, because we are encountering an increase of pricing in certain electronic memories in -- especially in memories, which, of course, are related to the increase of demand for AI. So we already have some concern on certain of our supply chain, let's say, channels. Should other supply chain channels become hurt by this situation, we would need to face further problems.

For the moment, we just -- we are at the beginning of the year, we just decided to apply some prudence to what we -- we thought we could actually perform. And so for the moment, we believe that 5% growth is something we should be able to achieve. And while achieving 5% growth, we should, especially by recovering in terms of profitability in the industrial sector, which has been so poor as also Giovanni Selvetti was somehow -- as we commented with Giovanni Selvetti before, this kind of achievement is something we feel quite comfortable to reach.

Okay. And sorry for the level of detail, but -- so if I understood correctly, in your guidance, the areas -- the countries affected by the geopolitical event are now seeing with the sales decline in your guidance. Is that correct? Or is lower...

Listen, I -- probably yes. I don't know. I can tell you that if we had x million of sales in the Gulf, we applied a reduction of sales to the Gulf. And I don't know if after the reduction we applied on the budget, this is increases or not, but I believe, yes, it's probably -- since we did fairly well last year, not very well. Last year, we did extremely worse in the Far Eastern market, we did not do so well in the Middle East markets because there were already some structural problems related to the unease of the area. So I will not -- I'm not able to tell you if there will be a decrease in Middle East, for sure, we decreased the forecast.

We have one more question from Giovanni Selvetti.

Yes. Two quick one on my side. The first one is related to, again, M&A. Before you seem to -- seems to suggest that probably the -- also Quanta would like to expand in the U.S. In this respect, I saw that you already opened a commercial presence recently with Quanta. So I was wondering if you are deciding to go on with your own, just say, a commercial sales force or if you still would like to find a distributor?

And the second one, maybe again, is on guidance. Is it -- because it's almost done already, that Q1, is it fair to assume that Q1 is going to have an increase of revenues that is more than 5%, considering what you just said then, what's going to happen in the rest of the year, it depends on many things, and I'm aware of that. But is it fair to assume that Q1 is going to be stronger than plus 5%?

First question, you're right. We opened a company called Quanta U.S. We incorporated a company. This is not setting any direction. It's just giving us a, let's say, a logistical in terms of financial logistic base to develop the business. But again, it's too early to disclose the way we will develop the business. So you're right, we have this subsidiary, but we will tell how this will develop in an activity later on as soon as we have everything in place.

For what concerns 2020 -- the first quarter, we are quite hockey sticked always, and so March is the most important month. The last week of March is the most important week. We are subjected to cut off which is technical. So we might have delivered products, but we wouldn't -- it's not -- we are not necessarily able to book it for revenue. So I would say that I would expect a good growth in Q1 2026. But yes, I would say I would expect it well above 5%, but it's not granted. It's not granted because we have to see how things evolve with deliveries in these weeks also in -- also in the United States, also in the Middle East.

If we were -- if we didn't have this issue of the bombing, I would be more confident. But being a very, very short period and being affected by cutoff, I mean, just to -- we had the end of periods with EUR 15 million of cut-off. So EUR 15 million of cutoff is worth 10% of our revenue on a quarterly basis. So it's sometimes very difficult to evaluate until the very last moment. So let's say that I hope and I'm confident that we could improve our revenue below -- over 5%, but I'm not granting it, and I have no certain visibility on it.

[Operator Instructions] No more question, Andrea. Ladies and gentlemen, the conference is now over. If you have any inquiry in the future, please do not hesitate to contact Enrico Romagnoli, who will be happy to assist you. Thank you for attending this conference, and we hope to have you all again next time. Goodbye, everybody. Bye.

Bye-bye. Thank you.

Thank you.

Okay. Good afternoon or good morning to everyone, and welcome to El.En.'s Third Q 2025 Financial Results Conference Call. Today's call will be recorded, and there will be an opportunity for questions at the end of the call. With me on the call, Andrea Cangioli, El.En.'s CEO; and Enrico Romagnoli, El.En.'s Chief Financial Officer and Investor Relations Manager.

Before we begin, please note that there are management remarks during the conference call regarding future expectations, plans, prospects and forward-looking statements. Certain statements in this call, including those addressing to the company beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business condition in the industry in assumptions of -- in which we operate.

These statements may be affected if our assumptions turn out to be inaccurate. Consequently, no forward-looking statements can be guaranteed and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the content or the forward-looking statements to reflect events or circumstances that may arise after the date hereof.

At the end of the presentation, if you need to ask a question, please book your question on the chat of Bianca Fersini Mastelloni raise your virtual hand you will have the floor in order of request.

But at this time, I want to give the floor to Andrea Cangioli. Please go, Andrea.

Thank you very much, Bianca, for your introduction and for hosting us. And thank you to everybody for being with us in this call following the release of our financial report as of September 30, 2025. Enrico Romagnoli will be on this call with me, and I thank him for taking care of the details of our financial reporting that he will be sharing with you in a very short time.

Our third quarter came out really strong, especially under the profitability profile, confirming the trend of this 2025, a brilliant performance in the medical sector and a softer one in the industrial business. The reported numbers say on the 9 months revenues were up 4.6% in medical and just shy of 2% in Industrial. And that consolidated EBIT was down 3.2% on the 9 months, but up 3.8% in the quarter, marking the EBIT recovery that hints and supports our guidance for this year-end.

If we look a little deeper inside these numbers, we have grounds to be extremely pleased with the performance in the medical sector, also on the revenue line. In fact, this 2025 -- in this 2025, we're facing the inorganic effect of the exit of consolidation from March 1 of the Japanese subsidiary with us. Net of such effect, growth in medical would have been equal to 7.1% on the 9 months. Moreover, we're also facing the moving away of the historic and very significant customer Cynosure as our OEM contract for the supply of high-power alexandrite laser systems for hair removal is only formally in place after Cynosure merged with a South Korean company, Lutronic, that is now providing and that is going to provide to Cynosure such technology for their distribution net.

By removing the negative effect of this circumstance and cumulatively with the removal of the without effect, sales growth would have exceeded 10% on the 9 months. This on the revenue side. The other pleasing news of this period is that the revenue increase is achieved with the increase of revenues in higher margins bearing sales segments and products with an overall beneficial effect to consolidated gross margins and overall profitability.

Growth in system sales was mainly generated by systems for anti-aging treatments in which the innovative content of both the technology and the application is bearing higher margin on sales for us compared to the main and slowly declining revenue stream of the hair removal devices. I'm talking at first place of the Onda product. The revisiting of our flagship body contouring device, Onda based on the microwaves technology, a revisiting that expanded the intended use of the device to anti-aging face treatments.

Based on this, Onda Pro is experiencing a second use with respect to the original launch of Onda with amazing acceptance also in the most advanced markets for innovation in the aesthetic application, namely the Far East markets like the Korean market, which are extremely developed and sophisticated in selecting the most innovative and effective devices. But as our group does not rely on the peak performance of single product devices, Onda Pro was not alone in driving revenues toward the anti-aging demand. I'll give you just a couple more examples of other successful products and related procedures.

Nano and picosecond devices like the Discovery Pico by Quanta System and the TORO by DEKA are innovation leaders in the pigmented lesion, skin toning area that is traditionally prominent for treating the signs of aging facial skins. CO2 microablative procedure cool peel performed by DEKA's Tetra PRO is now the golden standard for facial rejuvenation and is encountering increasing worldwide success starting from the U.S. market.

Another significant contribution to the performance was provided by the surgical business, especially in the urological application, which are the treatment of stones.

[Foreign Language]

so another significant contribution to the performance was provided by the surgical business, especially in the urological application, which are the treatment of stones and BPH, the benign hyperplasia of the prostate, a business that within the group is mainly pursued by the market leader, Quanta System, but also by Elexxion Surgical, the brand managed by our German sub, Asclepion.

Revenue for laser systems in urology was up roughly 7.5% in the 9 months. The side business of consumable sterile optical fiber was also growing smoothly along with the increasing installed base and it now accounts for more than half of our post-sales revenues of the medical business. which means roughly EUR 10 million per quarter or 10% of the overall revenues of our medical business. Moreover, this piece of revenues is bearing gross margins that are in the upper segment of our products margin mix. And since operation expense in terms of sales and marketing and labor is less intensive than for system sales, the accretive impact on EBIT and EBIT margins is also significant as testified by the profitability of Quanta System that is the main factor in this business for us.

In terms of expenses involved in this business, there is CapEx going on and coming up in Quanta System as Quanta System is starting the construction of a new larger semi-robotized clean room at Samarate facility dedicated to the production of sterile optical fibers to increase its production capacity for its medical devices. EBIT margin for the industrial division, I am providing you an -- excuse me, for the medical division, I'm providing you an unaudited figure is improving in 2024, 2025 on 2024 and was roughly 16.9% on the 9 months and around 19% in the third quarter.

We were not able to achieve similar results for our industrial business. The only activity bearing margin similar to the medical business is the identification marking activity led by Lasit, which continues to perform well both in revenues and in profitability. The other businesses within our industrial world have not performed according to expectation, the expectation we had in our yearly planning, missing the revenue targets and therefore, lacking also in terms of profit generation.

The most dimensionally significant business is the cutting business, which despite expectation and decent order bookings has been slowing down both in revenues and in profits in each quarter this year. Since order bookings came quite late in the year and delivery lead times for our sophisticated and often custom design systems are not easily compressible, as of September 30, we incurred in a major sales cutoff, meaning the inability to recognize revenues for several systems that had been physically delivered to customers but had not cleared the final testing procedure within the end of the month.

To give you an idea of this adjustment, which, to a certain extent, physiologically always takes place at the end of each quarter, we're talking at the end of September of almost EUR 8 million versus less than EUR 1 million at the end of June. EUR 7 million worth 22% on the quarterly business revenue and 7% on the year-to-date revenues as of September. I am not stating that without this adjustment, everything would have been okay in this business segment as the market is very competitive, and we need a great effort to maintain our competitive position and win our sales.

But of course, it would have looked different under several profiles. In fact, we are continuing to invest in what we feel is strategically meaningful for the market positioning of Cutlite in the sheet metal laser business, which can be summarized in 3 CapEx -- in 3 points that lead to CapEx or profit and loss outflows in 2025. The purchase of a plant to expand the versatile production capacity of Cutlite Penta that we closed in the first quarter of 2025. The P&L expenses involved in the launch of the European sales subsidiaries in order to get closer to the customers in the countries of Spain, Germany and Poland.

The profit and loss expenses involved in the managing of Nexam, the company dedicated to automation system complementary to our laser cutting system, an addition to the product range that is highly strategical for the product offering, but that for the time being, is far from being EBIT accretive, though improving its EBIT result in the third quarter.

For what concerns the other smaller businesses in the industrial world, the laser marking system for special application and for large surfaces provided by Ot-Las and also by the industrial division of El.En. very often in combined supplies with the mid-power CO2 laser sources in these businesses, the performance continued to be weak. We are identifying new application niches to recover in a year that has been hit by the negative cycle of the fashion world customers and also hit by the down trimming of the expectation in the motors for electrical vehicle segment.

Cash generation has been outstanding in the quarter as we benefited from the onetime cash inflow stemming from the sale of the majority stake in Penta Laser Zhejiang, which on the net financial position was worth already factoring in the possible future price adjustments, roughly EUR 26.4 million. As I mentioned before, had we closed before, I mean, in previous conference calls we held, had we closed the deal 3 months earlier, the foreign exchange level with the Chinese yuan would have been much more favorable as it quickly deteriorated by 10% around and after the Liberation Day.

Cash flows from operations amounted to roughly EUR 20 million, contributing to the EUR 47 million quarterly increase of the net financial position. Under this profile, it is worth to mention that the quarter highlighted a slight decrease in the overall net working capital and accounted for roughly EUR 3 million in capital expenditure that were offset in the effect on the net financial position by the release of EUR 3 million of long-term cash investment that cannot show up in the net financial position. By the way, the balance of such investments that are not accounted for within the net financial position since they are long-term assets was around EUR 11 million at the end of the third quarter of 2025.

I give the floor to Enrico, and I will be back with more general remarks after his section.

Thank you, Andrea. Good morning, everybody. As usual, I'm going to comment the financials we released last week. As for the year-end and for the half yearly report, the quarterly report has been prepared in accordance with IFRS accounting standards, excluding the consolidation line-by-line of Chinese activities, both in 2025 and in 2024 due to the negotiation for the sale of the division in accordance with IFRS 5. The majority stake of the Chinese companies was sold on July 15. So since July 2025, Penta Laser Zhejiang is consolidated with the equity method for the residual stake of 19.3%.

In the first 9 months 2025, the group recorded consolidated revenue for EUR 422 million, up 3.9% compared to the EUR 406 million and the medical sector up over 4.6% when the industrial up 1.9%. The gross margin was EUR 188.3 million, up 6.5% compared to the EUR 177 million of September 2024, with an impact on revenue of 44.6% improving the profitability of 1% compared with last year. It should be noted that in 2024, the group recorded proceeds for insurance and government reimbursement relating to the damages of the flood of November 2023 for an amount of EUR 1.9 million, 0.5% of the revenue.

In 2025, Asclepion accounted EUR 1.3 million of R&D grants, 0.3 percentage point on the revenue. So excluding both of this nonrecurring income, the impact of gross margin on sales would have improved more than 1% in 2025, attributable to an improvement in the sales mix. Operating expenses increased in value and an impact on sales, mainly in G&A, R&D and IT costs and sales and marketing activities. Staff costs increased due to an increase in headcounts and in salaries. EBITDA positive at EUR 65.6 million. The result is in line with last year, even though the EBITDA margin in 2025 slightly decreased from 16.2% to 15.6%.

Depreciation, amortization and provision amounted to EUR 10.6 million in 2025 compared to EUR 9 million in 2024. The main reason of the increase was the reversal of the provision for risk and charges in 2024 for EUR 1.6 million due to some legal disputes that were resolved more favorably than expected. Net of this amount, the overall cost aggregate is in line with the previous year. EBIT for the first 9 months was EUR 55 million compared to the EUR 56.9 million for the first 9 months of 2024.

The margin on revenue was 13%, down from the 14% with a decrease over last year of 3.3%, having the delay registered on June. Financial Management recorded a loss of EUR 1.8 million. In the first 9 months, the interest income generated by liquidity was EUR 2.8 million, while the interest expenses on debt was EUR 1.3 million. Exchange rate difference has a strongly negative balance equal to EUR 2.4 million. But in addition, we have a onetime exchange rate loss recorded -- already recorded in Q1 for EUR 908,000 following the release of the currency conversion reserve resulting from the sale of the majority of with us.

The contribution of associated company is negative for EUR 1 million, mainly due with us, minus EUR 0.5 million and Penta Laser Zhejiang, minus EUR 0.6 million. In other income last year was accounted the onetime income of EUR 5 million due to the write-off of liabilities related to the earn-out to pay to former minority Chinese shareholders in case of IPO of Penta Laser Zhejiang. So at the end, income before taxes showed a positive balance of EUR 52.2 million, lower than EUR 61.2 million at the end of September 2024.

In the third quarter, as already mentioned by Andrea, the group had a strong performance and recording growth in both revenue and above all, operating profit, plus 3.8% versus Q3 2024 with a strong recovery compared to June when the delay in terms of EBIT compared to the first 6 months of 2024 was 7%. In the third quarter, the main segment that performed better than last year were aesthetic in medical sector and marking in the industrial sector.

Looking into the cash flow, the group net financial position on September 2025 was positive for EUR 137 million, an increase by EUR 47.4 million in the third quarter from the EUR 90 million at the end of June 2025. In the 9 months, the increase was EUR 26.8 million, thanks to the cash flow generated by current activities and the proceeds received for the sale of the majority stake in Penta Laser Zhejiang for a net amount of EUR 26.4 million. The main reduction incurred in the period are dividend paid for EUR 19 million in Q2, CapEx for the 9 months of EUR 13 million, increase in net working capital of EUR 20 million.

Furthermore, the group invested the liquidity in insurance policy, mid- long-term investment accounted in noncurrent assets. So we have additional liquidity of EUR 10.7 million on September 30. What concerns the revenue breakdown by business in the medical sector, system sales showed strong growth in all major segments. In the aesthetics segment, plus 4%, the very favorable trend for anti-aging and body contour application continued. Among surgical applications, plus 8%, urology, ENT and gynecology system continued to record significant growth in sales. Asa's performance in physiotherapy, plus 5% was also very satisfactory, thanks to the significant innovation in the range of products offered, a more effective coverage of international market, together with the relaunch of sales in Italy.

Sales of consumable and aftersales service remained very satisfactory, driven by the sales of optical fiber for surgical application, more than 50% of the sale of the segment, which kept service revenue growth to 4% despite the loss for service contract revenue from the Japanese company with us, whose majority stake was sold in February 2025. In the industrial sector, the cutting segment, which no longer includes Chinese companies, maintained growth of 2%, thanks to the excellent sales result of the Brazilian subsidiaries, plus EUR 4 million of revenue in the first 9 months.

Lasit also performed well in the market segment with the increased weight of its subsidiaries. In the Q3, we had a significant recovery in sales in the segment of large footwear marking application where Ot-Las operates. In the Laser sources segment, the slowdown was more evident and was primarily due to decline in revenues from system integrators for fashion application and electric motor windings. Sales for Industrial Service returned to show an increase of 6% as expected due to the progressive increase in the installed base.

Geographically, the most positive note came from the Italian market with an extraordinary growth of 27% in medical. In the industrial sector, Italian turnover also recovered in the quarter, up 6% in the 9 months, thanks to the increased confidence among manufacturing market operators, supported by the return of tax policies to support investment. The performance in European market was very satisfactory, particularly in the German medical and professional aesthetics beauty sector and in the industrial sector, thanks to the progressive consolidation of the sales subsidiaries activities, particularly by Lasit.

The negative sign appearing on sales in the rest of the world has different determinants depending on the sector. What concerns the medical, Andrea already mentioned the inorganic operation that affected the sector. The result is a good result because it was achieved net of the exit of Withus in February and the loss of the supplies to Cynosure due to the M&A that brought it closer to Lutronic. Net of this departure, turnover, therefore, increased significantly. The situation is completely different in the industrial sector, where our order intake in the American market, the most significant in the rest of the world was negatively impacted in the first month of the year by the image projected on the market by the potential acquisition by a Chinese entity.

Andrea, please go ahead for what concern the guidance.

Okay. In closing my prepared remarks, I would like to touch 3 more topics. The role of the industrial division, especially of the cutting division within the group, the use of our cash and finally, the 2025 guidance. As the performance of the industrial division markedly of the cutting division is weaker than the one of the rest of the group, I would like to share with you the strategy short term and midterm of the group with respect of this business area.

We are very proud of the results and the dimensions achieved by our cutting business unit, but we are also aware -- but we are also aware that its business, especially after the CO2 laser sources have been ruled out of cutting by the fiber laser sources technology is not fully consistent anymore with the other businesses of the group. There is no market correlation and the technological correlation is very limited as well. Therefore, we are convinced that the Cutlite's Penta organization, people and business would benefit of strategically cooperating with organizations that are more consistent to Cutlite's business.

Along this path, we moved towards a transaction that would have placed Cutlite within a larger organization, developing a specific growth strategy for Cutlite. I'm talking of the sale -- potential sales to the Chinese end. But when we were faced by the material risk under the new organization, that one of the most promising businesses of Cutlite, the U.S. business, was bearing the risk of being completely jeopardized, we decided that for protecting the organization itself, we would have not sold Cynosure -- Cutlite anymore. So the short-term strategy now that Cutlite is still within our consolidation perimeter is to manage the potential of Cutlite and to continue to invest in what we feel is needed for Cutlite to flourish.

The longer-term strategy is to resume and pursue the design of finding a strategic partnership for Cutlite a partnership that would enhance its peculiarities, capabilities and potential, giving the best opportunity to Cutlite's organization to continue to flourish or better to improve its opportunities and chances to flourish on its market that are quite competitive. What is evident from our reporting is the amount of investment involved in supporting Cutlite's strategy. What we can additionally tell you about the larger picture isn't much at all for the moment, but we will update you as soon as we will have something meaningful to report.

For what concerns the businesses of Lasit, Ot-Las and industrial division of the mother company, El.En., we are planning to continue to pursue such businesses within the group. Now the quite wide cash position we are holding today, which is beyond the ordinary operational needs of our companies, also considering potential expensive investment activities like the one I mentioned for the fiber optical -- sterile optical fibres manufacturing plant. As usual, capital expenditure and operational needs for our operations are first in the list for us as we believe that interesting growth rates can be achieved by further improving the operational performance of our own business units.

In order to enhance our growth rate, especially in terms of profits, we are investigating a set of small M&A opportunities that could be accretive to the development of the business units involved, especially in the medical sector but also in the industrial sector, as we mentioned before. We could be closing soon one or more small deals across -- along this path. More complex deals that could fall under the label of transformational are now being more closely considered, though there is nothing for the time being to report about.

The Board of Directors has not yet resolved about any onetime cash distribution to the shareholders in any form. Therefore, I'm not in the position to elaborate any comment about. Finally, the guidance. I can keep it simple here. We are targeting and planning to beat 2024, both in the revenues and in EBIT. As you know, we are on schedule for the revenue target. We are just a little bit behind for what concerns the EBIT target, but we are recovering and confident to be able to hit the EUR 23 million figure in EBIT in the fourth quarter of 2025.

Thank you for your patience, and I believe we are ready for your questions.

Andrea, the first question in our list comes from Giovanni Selvetti of Berenberg.

Can you hear me well?

Yes.

Well, I had two, but then let's just say that the final remarks added a few extra questions, but maybe I'll jump in the queue and ask more after. These are two regarding the medical division. The first one is on Asclepion that based on the press release seems to be doing much better in Q3. And as far as I remember, Asclepion was also mainly involved in hair removal, which was the area that was struggling the most. So I was wondering what's changed exactly also because if I can remember, in the first half, the cost of personnel was going up also in relation to Asclepion.

The second one is about Quanta. If I look at your press release, you're saying that now optical fibers account for more than 50% of medical services. So if we assume, let's just say, a figure around 35%, that is, let's just say, more than 50%. If we had to double this capacity, do you see already demand to fill it? Or how much should we think before the excess capacity gets filled?

And maybe the last one is on the Lasit, let's just say, part of the business that, again, based on what you're saying, we are talking about margins based on what the press release say strongly above last year. So I was wondering what kind of margins Lasit is now running at?

Okay. So starting from Asclepion. Yes, there was a recovery. Yes, the recovery was also tied to a better performance in the hair removal in the third quarter. So I mean, this is a good line considering the hair removal segment. And yes, the impact of the cost of staff in Asclepion is quite significant. It was increasing a lot in the second -- in the first half. Since the result for the third half was extremely good in terms of revenues. Now the difference of the impact of staff cost between Asclepion and the rest of the group is smaller.

Most important and what actually made turnaround in the quarter, the business of Asclepion is the increase in revenue, which is due to aesthetics, but also to its surgical line, which is performing very, very well. Quanta System and Fibers, we -- as of today, we do not feel we are limited or materially limited in the deliveries of fibers by our production capacity. But we feel that given the rhythm of new installation and of the absorption by the market of our optical fibers, we needed to expand the capacity in order not to incur in a sales limitation due to capacity in the future.

So we are progressively increasing the volumes, and we are placing this very large investment in order to improve the production capacity, but we don't have an impellent need. It's, I mean, a strategic programming that will allow us to continue to increase the stream of revenue over the time smoothly.

Finally, your third question was about Lasit. Lasit actually is improving. It's not improving its sales volume over the 9 months, especially due to a slow behavior of the Italian market, while we are doing very well, especially in Europe, where the subsidiary that Lasit set up on the territory are now starting to be really accretive to the business. I recall we have subsidiaries in Poland, the oldest one, in Spain, Germany, U.K. and France, the last one. So we have 5 subsidiaries. And quarter after quarter, they are becoming accretive to revenues and especially to profitability.

In terms of profitability, we had an EBIT margin just shy of 8% after the first 9 months of 2024. After the first 9 months of 2025, we are exceeding 11% as EBIT margins. Those are unaudited financial results referring to the consolidated financial results of Lasit and its subsidiaries.

I'll jump in the queue and then I have some questions.

The second question comes from Andrea Bonfa of Banca Akros.

I hope you can hear me. Very quickly, I mean, connecting to your last statement on M&A, potential M&A. So if I understood correctly, transformational deal are -- might be considered but unlikely for the time being, but some bolt-on acquisitions are definitely more possible. Is that possible for you to comment on which sector niches, technologies are you looking for?

No.

Or in which geographies eventually?

I'm sorry, I said all I can say.

Okay. Okay.

It's nothing -- the answer wouldn't change. I mean we are -- we have several things on our pipeline related, as I said, both to medical and to industrial and they are both on the European territory and in the rest of the world. But I mean, in answering by this means, I don't -- I cannot give you any more detail. It wouldn't be fair. I can only tell you that we are examining several situations.

Okay. And if I may, as far as the industrial business is concerned, I mean, within now, let's say, the recent input that you just mentioned, is the U.S. still a potential important market or now with the duties and your, let's say, smaller size is less so. And the third one is on the U.S. duties. How is the trading environment in U.S. now with this new duties environment, if it's possible? Also in relative terms because, I mean, maybe there are other countries now less competitive than Europe.

First of all, the U.S. market for our industrial cutting systems is still very interesting and still the main market -- international market for our systems. We have suffered, as Enrico said explicitly and as I confirm, the image that was projected during the negotiation with the YOFC for the sale of the company. And we spent quite a lot of time in convincing our U.S. customers that we were not becoming Chinese. And also after the deal that was going to have Cutlite Penta fall under Chinese control was canceled.

Still, we have our hard time in discussing with our U.S. partners and I mean, partners because we have distribution partners and making them fully comfortable that we will be able to provide them on the midterm, a sound and price attractive and technologically attractive Italian-made product. This is -- by the way, they are visiting us on Wednesday in order to clarify again this situation because based on this, we have had some sort of fluctuation in order bookings from the United States, notwithstanding our efforts, which include a massive deployment of technical service people in order to serve at top quality with top quality our systems installed in the United States and also a strong investment in terms of fares.

We participated to the FABTECH, which is one of the most expensive fairs that you can approach on the industrial systems market. And so after this long speech, I would say that, yes, the U.S. market, it's still an opportunity. It's still an important opportunity. And it's not an issue of duties. Duties are impacting us in the industrial sector, but it's not duties that today caused a slowdown in sales to the United States in the industrial business.

For what concerns the duty question on the medical system, of course, duties are there. They are quite impacted. But we have seen increasing interest in the last months from our U.S. customers in our products. This speaks about the fact that even though each and every of our customers in the United States will try to negotiate a deal in order to have us participate to the "undue extra cost driven by duties. " They are still looking for us because we are able to provide them the innovative content of products that allows them to make margin, notwithstanding the extra cost.

And so basically, in this moment, we are -- I mean, at least for the first 10 months of the year, we are very pleased with what we have done in terms of revenues and what we have done also in terms of order bookings. Then, of course, -- we will have to see how the hot seasons on the U.S. market, which is the month of December, will roll out for our distributors to have a final judgment on the total effect of duties on our U.S. business. But so far, we have -- we can notice an overall positive reaction of the U.S. market on the duty situation.

Next question comes from Carlo Maritano of Intermonte.

Can you hear me?

Yes.

I just have a couple of questions. The first one is on the European performance in the industrial cutting business in the third quarter. I see that there is a decline compared to last year. I was wondering if it is related to the EUR 9 million of revenue that shifted from the third quarter to the fourth quarter. And the second one is again on the industrial business, in this case, on Italy. So recently, the government changed again the incentives related to [indiscernible]. So I was wondering if you expect any kind of impact on your clients from this change or if the order book remains healthy and that you do not expect any kind of disruption.

Thank you for these two questions. About the first one, the decline in the European revenues in industrial, you see it in the third quarter. It's something which is, let's say, local. It's not related to the cutoff, which is mainly an Italian issue. It's mainly an Italian issue because we don't -- it's tied to the means of delivery we have in Italy. And what we could say, it has been driven by a softer activity in Europe and by the slower activity of the subsidiaries, we should be able to overcome the situation over the rest of the year.

For what concern the Italian laws, the Italian, I mean, funding situation, I didn't want to go in this detail. But of course, we are examining the effects of the cutoff that the Italian government put on Industry 5.0, and this might have some effect. I'm not able to quantify. It shouldn't be determinant, but it could be material. The good news is that it looks like that the new law for 2026 could be interesting for the investors. And so we might suffer a marginal correction. I mean, we have an order book, a book of orders, but some of them may not convert in sales due to the change in the approach by the Italian government as the monies for Industry 5.0 is finished, but we should be supported, hopefully, without the hesitation that took place in 2025, also in 2026 for a certain level of investments.

Andrea, we have one more question from Emmanuel De Figueiredo. I will read for him for problem of connection. The question is, why was medical so strong in Italy versus other markets?

Of course, this stands out. It stands out. And because we did extremely well and because I believe we performed exceptionally well in the distribution of DEKA Renaissance in Italy, which is going to hit a record target, a record amount. We also had some sales in the professional beauty that increased its volume smoothly, and we are still experiencing very, very strong demand.

Why is this happening? I believe the team that we have in Italy now provides to our end customers an unparalleled level of services. We have, I believe, 8 product managers, which are traveling all the time around Italy if they are not stable in a region because, of course, the main regions have product specialists, which are always providing support to our customers. So we not only, as we mentioned before, limit our activity in providing the laser box to our customers, but we are providing continuous training. We are providing very, very -- I wouldn't say cheap, but affordable service in order for them to take the maximum benefit of the lasers that we have sold them. And so since they are happy, since they make money with our lasers, they come back and buy. This 2025 is going to be a record year for Italy. And this is the only explanation I have on this point.

Thank you, Andrea. We have one more question from Andrea Bonfa of Banca Akros.

Andrea, very quickly, in the numbers that you provided at the beginning of the conference call, the like-for-like figure, 7.9% without Cynosure and more than 10% without -- sorry, 7.9% without the Japanese subsidiary and over 10% without Cynosure is related to the medical division only or to the group.

Medical division. What I was saying is that we are hitting in stable situation, the 10% revenue increase target after 9 months. This was the message I wanted to -- for the medical business. This is the message I wanted to give with these comments.

And we have no more questions registered in this moment. I would like...

Giovanni Selvetti has said he wanted to ask more questions. Maybe we answered already, but I don't know. He said he wanted to.

yes, Giovanni. Go on.

Part of it was already answered, yes. I mean let's just put it this way. I don't want to ask too much information on M&A, right, also because you cannot give much. But it was more about whether the companies are more, let's just say, technological company that will add technology or company with actual sales, right? It's more about whether you're investing in technology or in market share. But I'm not sure if you can answer that. So...

It's -- we have everything in our basket. So in our potential basket, there's something of any flavor. So you've got both. I don't know what and if we will close. Again, don't have too wide expectation on this. We're talking of small transaction, but we have both technological and sales solutions and sales opportunities.

Then at this time, we have no more questions. I would like to ask once again, if there are any further questions from investors still connected.

No more questions. Then ladies and gentlemen, the conference is now over. If you have any inquiries in the future, please do not hesitate to contact Enrico Romagnoli, who will be happy to assist you. Thank you for attending this conference, for your participation, and we hope to have you all again next time. Goodbye, everybody.

Bye-bye. Thank you, Bianca. Thank you everyone.

Good afternoon to everyone and welcome to EL.En.'s Half Year 2025 Financial Results Conference Call. Today's call will be recorded and there will be an opportunity for questions at the end of the call. With me on the call are Andrea Cangioli, EL.En.'s CEO; and Enrico Romagnoli, EL.En.'s Chief Financial Officer and Investor Relations Manager.

Before we begin, please note that there are management remarks during the conference call regarding future expectations, plans, prospects and forward-looking statements. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectations of possible future results or events are forward-looking statements. Forward-looking statements involve known or unknown risks, including general economic and business conditions in the industry in which we operate. These statements will be affected if our assumptions turn out to be inaccurate. Consequently, no forward-looking statement can be guaranteed and actual future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the contents or the forward-looking statements to reflect events or circumstances that may arise after the date hereof. [Operator Instructions] But at this time, I want to give the floor to Andrea Cangioli. Please go ahead, Andrea.

Good morning. Thank you, Nicola and thank you, Bianca, for introducing this call. And thank you, everybody, who's attending, for being with us in this call following the release of our financial report as of June 30, 2025. Enrico Romagnoli will be on this call with me and I thank him for taking care of the details of our financial reporting that he will be sharing with you in a very short time.

The numbers are out since last night. So you have seen that our performance in the 6 months was good in revenue generation. Revenues exceeded on a consolidated basis to EUR 285 million, up more than 5% compared to the same period in 2024, meeting our guidance and confirming the positive trend of the first quarter. The goal of overcoming 2024's result wasn't met at EBIT level. EBIT result was, in fact, quite strong, reaching EUR 34.6 million, meaning 12.1% EBIT margin but was lower than the EUR 37.2 million of the corresponding semester in 2024. While by slightly exceeding the initial expectation given the overall condition of the economic environment, the medical sector delivered an excellent performance. Revenue growth in the industrial sector was weaker than expected and its lower contribution to consolidated EBIT constitutes in full the delay of 2024-'25 consolidated EBIT versus last year.

When I mention the overall economic conditions, I am referring to an overall climate of uncertainty in international relations stemming primarily from the failure of international diplomacy to bring to an end the wars in Ukraine and Palestine and from the trade war initiated by the U.S. administration that is reshaping the trade relation and also the political relation between the most powerful countries in the world, including Europe. While the wars are now in place from so long that notwithstanding the risk of further escalation, the markets are acting like they are accustomed to this status.

The trade war for the time being is impacting on our business, making it more expensive to sell our products in the U.S., making it less profitable due to a weaker U.S. dollar and also inhibiting the reduction of interest rates in the U.S. due to the expected tariff-driven inflation. We disclosed before how interest rate and expectations about the change of interest rates impact on our capital goods market, where our customers predominantly fund their investments with debt and therefore, are helped in their investment decisions by lower interest rates.

Of course, the conditions in our specific markets are affected by this general situation and are confirmed by the business trend of the financial results that are available concerning certain competitors of us. Below the EBIT line, all the entries -- I'm talking again of the consolidated financial results of the EL.En. Group and below the EBIT line, all the entries contributed to widening the gap between the results of 2024 and the result of 2025. Foreign exchange rate differences hit financial income for roughly EUR 3.5 million. The contribution of the Chinese activities on the verge of being divested and sold was a EUR 4 million loss in 2025, worse than the EUR 3.2 million loss contribution booked as of June 2024. And we finally had in 2024, a EUR 5 million extraordinary income booked as a remeasurement of our financial debt no longer due at the time, an entry which, of course, could not be replicated in 2025. So what the very bottom line is showing, a wide gap between the EUR 27.3 million income of 2024 and the EUR 17.9 million income of 2025 is not adequately depicting and reflecting our current performance.

But rather than on this gap, which is mainly generated by uncontrollable events or by area of business, which are not part of the group anymore at the Chinese facilities, I want now to concentrate on the remarkable achievements that we met this year. First of all, revenue and EBIT increase in the medical sector. Both were up by more than 5% and this is the envelope results of a set of more specific achievement and successes. With the release of the Magneto urology laser system in late 2024, the leadership of Quanta System in the laser devices for urology application was confirmed and strengthened. Almost 900 urology system, including TFL lasers as well, I mean TFL or the fiber laser source-based systems, those not only including solid-state lasers like the Magneto, were delivered in the first 6 months of 2025, exceeding EUR 35 million in revenues.

And as the installed base increases and also the manufacturing capabilities of our plant in Samarate are progressively moving upward, the revenue for the sale of sterile optical fibers, the consumable needed for each and every surgical procedure materially increased, exceeding EUR 20 million in the 6 months with close to 180,000 delivered fibers. As demand in our main aesthetic application segment, hair removal, is experiencing progressive softening throughout the last years, we concentrated our efforts on one side in improving the performance and effectiveness of our laser hair removal systems in order to fight the market slowdown. And on the other side, we concentrated in improving the performance and effectiveness of our systems and technology dedicated to anti-aging procedures and in providing them an adequate marketing support.

I'm talking of technologies which improve the appearance of the skin, removing smaller wrinkles which stimulate collagen regeneration, providing shine and elasticity to the skin, which are tightening the skin, providing remedies to laxity, which are removing redness from the face and from the [indiscernible]. I am talking of RedTouch PRO and Onda PRO by DEKA, of Discovery Pico by Quanta and TORO by DEKA and of the CO2 laser product range, including Tetra PRO by DEKA and [indiscernible] laser by Quanta System. As I said -- as said, revenues stemming from these application domains sharply increased in 2025, offsetting the softer demand in other disciplines. Even if the overall performance in the industrial sector wasn't successful nor satisfying, especially due to a soft demand in the manufacturing markets in Italy, we can count several activities that in these 6 months set the foundations for a marked improvement of the ability to compete of our companies.

The Chinese business, which was not contributing anymore to the performance of the group, has been sold and is not constituting a burden for management and financial resources anymore. The European subsidiaries network started up by LASIT in the market domain in the last 2 years is stabilizing and becoming an increasingly reliable source of revenue, also contributing to profit at least for the older subsidiaries.

A similar pattern is now pursued by Cutlite Penta, which in rapid succession incorporated 3 subsidiaries in Poland, Germany and Spain, which for the moment are obviously weighing on expenses and on EBIT but we count on them being soon accretive in profit generation. Cutlite gained control of [ Nexam ], a small company based here around Florence, specializing in the manufacturing of automation systems that are strictly complementary to Cutlite's high-power laser sheet metal cutting systems. When jointly installed with the laser system, automation system by [ Nexam ] improve the overall performance and productivity of the laser system, providing to Cutlite a means of differentiation on its very competitive market through increased performance of the system and more extensive customization ability.

Cutlite is pursuing competitive advantage on one side through the expansion of the offer, integrating it with automation systems and on the other side, through an increased level of service and of proximity to the end user through the organization of local sales and service facilities. Another point I would like to mention, if you look at our financial performance, one of the worst performance in terms of financial results in the 6 months was the industrial division of EL.En., the mother company of the group.

But the development work performed both on the mid-power range CO2 laser sources for special manufacturing application and also in the performance of the scanning units based on our proprietary galvanometers are promising to be the grounds for a future rebound in revenues. Under this profile, I'd like to mention that the performance of our 1.5 kilowatt RF excited CO2 laser source are currently reaching such a level of stability that we are working and counting on the release of a 2-kilowatt laser source within a reasonable time span. Such achievement will extend the maximum power of our product range, meeting a threshold that could open up several interesting application markets.

Another item I would like to touch on in my remarks is cash generation. The balance of the net financial position decreased by EUR 20 million in the period. I don't see in this contingent trend any particular problem as seasonality of the net working capital balance is always unfavorable for the group in the first 6 months. And as we paid out dividends for EUR 80 million and change and booked investment for EUR 50 million, out of which 6, I would describe as midterm liquidity investments. For sure, the net financial position is one of the historical strengths of the group. It's one of the components of the wealth of the group. The other components are much more intangible and sit in the capabilities of this organization to continually evolve and innovate its high-quality product range, confirming its recognized position among the world's leading players also through several solid commercial relationships built over the years. Thanks to the uniqueness and differentiation of its offering, the group is able to maintain a high customer perception of its value, which can be defined as an excellent market positioning.

Despite the macroeconomic uncertainties of recent months, the offerings of our business units remained attractive to customers, thanks to effective product development, marketing support, training and the excellent technical assistance that accompanies aftersales service in all markets. One last thing before I hand the microphone to Enrico, a comment on the U.S. tariffs. The 50% tariff, which our products are called to pay when entering the U.S. constitutes today a cost increase in the chain that delivers our product to our end users in the U.S. The tariff-induced cost increase could either be absorbed in full by our distributors that could accept the minor reduction on margins that the cost increase would represent given the high resale margin that they often apply or could, if reverted to end users, be considered marginal price increase and do not affect demand maintaining the price in a range where demand is, let's say, inelastic to price or such cost reversal to end user could push prices in a range where demand could decrease due to elasticity to price. Those are all the theoretical possibilities.

Both in our industrial and medical distribution, a key element for selling in the U.S. has always been the innovative content and quality perception of the product that allow us to sell it at premium prices and margins, which means keeping the market positioning of the product in an area in which the tariff costs do not materially affect margins and volumes for our distributors. And again, this directly ties our chances to effectively sell on the U.S. market to our innovation capabilities. It is difficult today to predict the midterm market adjustments that the new tariffs will cause.

As of today, the reaction of our American customer has been positive and demand fluctuation has been limited and more related to specific acceptance of single products than to the extra tariff cost. Under this profile, we have to note that the implicit tariff that the weakening of the U.S. dollar is anyway levying on our sales to the U.S. will be more effective in the second half of 2025 when average foreign exchange rate will be steadily in excess of $1.50 for EUR 1 and the presence of the extra tariff cost on our distributors will make it difficult to neutralize as we have done in other circumstances, the ForEx penalization on our margins.

Please, Enrico, go ahead with your comments on the financial report.

Thank you, Andrea and good morning to everybody. As for the year-end, the half yearly report has been prepared in accordance with IFRS accounting standards, excluding the consolidation line by line of Chinese activities, both in 2025 and in 2024 due to the ongoing negotiation for the sale of the division in accordance with IFRS 5. The majority stake of the Chinese companies was sold on July 15. In the first half of 2025, the EL.En. Group recorded consolidated revenues for EUR 285 million, up 5.1% compared to the EUR 271 million on June 2024. The medical sector up over 5%, while the industrial sector up over 3%. Gross margin was EUR 106 million (sic) [ EUR 126 million ], up 5% compared to the EUR 120 million on June 2024, with an impact on revenue of 44%, in line with the last year.

It should be noted that in 2024, the group recorded proceeds for insurance and government reimbursement relating to the damages of the flood on November 2023 for an amount of EUR 1.9 million, 0.7% of the revenues. While in 2025, Asclepion accounted EUR 1.3 million as R&D grants, 0.4% on the revenue. Excluding both of these nonrecurring income and the impact on gross margin on sales, the gross margin would have improved by 0.4% in 2025, attributable to the improved sales mix. Operating expenses increased in value and in impact on sales, mainly in G&A, R&D and IT cost and sales and marketing activities.

Staff cost increased -- the increase in staff cost is due to an increase in headcounts and in salaries. EBITDA was positive at EUR 42.2 million, down 2.7% compared to the EUR 43.3 million on June 2024. And EBITDA margin in 2025 was equal to 14.8% compared to the 16% of 2024. Depreciation, amortization and provision amounted to EUR 7 million (sic) [ EUR 7.5 million ] in 2025 compared to the EUR 6.1 million in 2024. The main reason of the increase was the reversal of the provision for risk and charges in 2024 for EUR 1.6 million due to some legal disputes that were resolved more favorably than expected.

Net of this amount, the overall cost aggregate is in line with the previous year. EBIT for the 6 months was EUR 34.7 million, down 7% from the EUR 37.3 million in 2024. The margin on revenue was 12.1%, down compared to the 13.7% of last year. As already mentioned by Andrea, financial management recorded a loss of EUR 2.6 million. In details, the first 6 months, the interest income generated by liquidity was EUR 1.7 million, while the interest expenses on debt was EUR 0.9 million. Exchange rate differences had a strongly negative balance equal to EUR 2.5 million. But in addition, there is a onetime exchange rate loss recorded in Q1 for around EUR 1 million, following the release of the currency conversion reserve resulting from the sale of the majority in -- with us.

In other income, last year was accounted the onetime income of EUR 5 million due to the remeasurement of the liabilities related to the earn-out to pay to former minority Chinese shareholders in case of IPO of Penta Laser Zhejiang. Income before taxes showed a positive balance of EUR 31.7 million, lower than the EUR 42.3 million on June 2024. In discontinued operation is summarized the net contribution to consolidated result of Chinese activities under disposal. The negative impact was EUR 4 million compared to EUR 3 million of last year. The main reason of the negative impact in 2025 is due to the devaluation of KBF equity investment in the first 6 months of 2025. The effective tax rate in 2025 increased to 32% from 27% of last year. And the main reason for this increase is due to the nontaxability of the EUR 5 million accounted in other income last year.

Moving on the analysis of the balance sheet amounts, we can see an increase in total noncurrent assets and net working capital, while the net financial position decreased. The value of ratio net working capital on sales is close with the value of last year. In detail, cash flow for the period showed a reduction of approximately EUR 20.6 million in the group net financial position from EUR 110.6 million at the end of 2024 to EUR 90 million at the end of June 2025. This reduction was also due to dividends paid by the group, EUR 18.6 million, capital expenditure for EUR 10 million in fixed assets, EUR 6 million in mid-, long-term liquidity investment, EUR 2 million has been invested in own shares. And the seasonality [ expensive ] trend of the net working capital components resulted in a cash absorption of approximately EUR 20 million in the 6 months.

Regarding sales analysis, in the medical sector, system sales showed strong growth in all major segments. In the aesthetics segment, plus 3%, the very favorable trend for anti-aging application continued. Among surgical application, plus 14%, urology system continued to record significant growth in sales as performance in physiotherapy, plus 7% was also very satisfactory, thanks to the significant incremental innovation in the range of products offered, a more widespread and effective coverage of international markets, together with relaunch of sales in Italy. Sales of consumable and aftersales services remained very satisfactory, driven by the sales of optical fiber for surgical application, which kept service revenue growth to 6% despite the low of service contract revenue from Japanese companies with us whose majority stake was sold in February 2025.

In the industrial sector, the cutting segment, which no longer includes Chinese companies, maintained growth of over 6%, thanks to the excellent sales result of the Brazilian subsidiaries, plus EUR 6 million of revenue in the first 6 months and the inorganic contribution of [ Nexam ], EUR 1 million, a company dedicated to the manufacture of automation system for Cutlite Penta laser system, a majority stake of which was acquired in early 2025. LASIT also performed well in the market segment with the increased weight of its subsidiaries, while performance was more -- while performance was more challenging for all of us and the industrial area of EL.En., highlighted by the reduction in revenue from sources for industrial application, after sales service revenue remained stable.

For what concerns the breakdown by area, revenue growth in Italy was entirely driven by the medical sector, while in the industrial sector, despite strong order intake, which bodes well for the rest of the year, overall revenue failed to match the already poor results seen in the first half of 2024. In European markets, growth benefited industrial company, which are gradually building the direct distribution network. LASIT has branches, some of which are almost fully operational in Poland, U.K., Germany, Spain and France from 2025. Also Cutlite has just launched branches in Spain, Germany and Poland. In the European market, the sales in medical sector increase of 13%. Revenue in the rest of the world declined slightly in both sector, penalizing the industrial sector by lower demand from American markets and in the medical sector by the challenging performance of the Middle Eastern market.

Andrea, please go ahead on 2025 guidance. And you'll hear from Andrea.

Here I am. Excuse me, I was talking with the microphone off. So I will close this section of prepared remarks with a few comments on the guidance. I would like to add just a small shade of color to the very clear statements we made in the press release, the goal of beating 2024's EBIT is harder to meet given the delay that we have after 6 months and considering certain unfavorable circumstances I described earlier in the call. But we can rely on the relevant backlog of orders and as usual, on our capabilities. Therefore, within the frame I outlined during my comments, we confirm the annual revenue growth target compared to 2024. And in the absence of external factors that could hinder further order intake in the coming months, which is needed in order to reach the yearly targets, in the 2025 financial year, EL.En. aims to improve its EBIT as well.

With this, we are done with the prepared part of this presentation and ready for your questions.

Okay. We now open the Q&A session and we have 2 analysts in our list. I give the floor to Giovanni Selvetti from Berenberg.

The first one is on the medical division, which is growing nicely. If I look just at the sequential trends in the Q2, I can see a sharp increase in the surgical applications but a reduction year-over-year in aesthetics. And I was wondering what's driving that. And also, if I look at your comment on the press release of Asclepion, it seems like that this is the only company within the group that is not performing. And as far as I remember, this has been like problematic for the past 2, 3 years in terms of, firstly, sourcing materials, secondly, now sales. So I was wondering what's the story there.

Then on the last comment you were saying on the guidance that given the order backlog that you see, you seem confident in reaching the guidance. Is this mostly medical or it's like an improvement in the industrial that you see that apparently is based on what you were saying at the beginning, the major reason for the difference in H1. It's a mix of both. So if you can give a bit of more color on the order backlog. And the third one is probably on staff cost. I could see that the incidence of the cost of personnel is going up quite significantly year-over-year. Here, the question is more -- so what's driving this? And Enrico said it's a mix of higher salaries and more staff. Is this more, let's say, related to the hiring of salespeople for new subsidiaries that, of course, are fixed cost now with 0 revenues attached? Or it's like any different dynamics that we should be aware of?

Okay. Let me answer your question one by one. Yes, you are right. I mean it's on paper. The revenue for laser system dedicated to aesthetic application marked a small decline in the first 6 months. And as I highlighted also in my remarks, this is mainly due to the softening of demand in our main application segment, which is and still -- which was and still is hair removal. So if we look at the single performance of hair removal, hair removal is declining. We though offset for most of the decline in hair removal with the increase in these other applications. And we are pleased by this situation also because we can hope that there will be or there could be rebounds in the hair removal. We are working for that as well. But we are also acquiring a stronger -- a progressively stronger position in those other application other than hair removal where the market is growing and is expected to grow. So this is the general picture.

For what concerned Asclepion, there are 2 circumstances, I believe that in this moment are impacting Asclepion's ability to effectively compete -- not compete, to effectively perform while competing on the medical aesthetic markets. The first is that we went through reorganization of our R&D capabilities, which is not easy in this moment in Germany because even though -- because we are in a fully -- full employment city like Vienna, where, I mean, we do not have the possibility to easily access to a certain level of employees or we do have the possibility of doing it by increasing the cost. And this also answered partially your question on the staff cost. If you look at the increase of staff cost in medical, this -- part of it is coming from Asclepion, where we had a sensible cost increase due to the need in order not to have people go -- we need to increase the average salary or the overall salary cost.

And the second reason why Asclepion is struggling a little bit because within the companies of the group, it is the most -- the company that mostly relies on hair removal. It has products also for anti-aging and other application historically. But its main product, the [indiscernible] star, it's hair removal as a system. So it is strictly tied to the hair removal market. Of course, we are investing to differentiate. We have a new product for hair treatment, hair, not hair removal for hair treatment, the hair that stays on the head, which is very promising in the cosmetic field. But in the moment, we are a little bit struggling, fighting this not very positive moment in hair removal.

Again -- and now I jump to question #3, which is the staff cost because you give me the -- I had the opportunity to jump on it when talking about Asclepion. Asclepion is one of the staff cost increase drivers. But I need to say that the staff cost increase, especially when compared to revenues was most evident in industrial, where we're hiring all those people with the subsidiaries, where we're hiring people also for R&D and where, as I said, revenue increased but we were expecting a sharp revenue increase. And therefore, we have a higher impact of the cost of staff on revenue. Of course, when you mention the reasons for the increased cost of staff, there are several causes. One is, let's say, the response to inflation that comes with contractual agreements to increase the salaries. Another comes on the need to keep attracting people by giving salaries higher than the average and so by giving benefits, bonuses and salary increases.

And the third is actually the number of employees is growing in certain activities. Of course, we get a little bit more rigid to revenue fluctuation. But if we don't hire those people and if we don't increase the number of employees for a set of activities, which not necessarily are sitting in production capabilities but more also in support capability lies in the regulatory, the R&D, we won't be able to see revenues growing. So this is the answer for the question -- to the question for staff cost.

Finally, back to your question #2, Giovanni, the backlog. Yes, we are pleased with the overall backlog, both in medical and in industrial. The backlog is stronger than in other phases, recent phases we experienced recently, both in the medical and then the industrial. Then you must know, we already -- we always told you that typically, only a very small part of our backlog of our order books is secured. Therefore, we have orders to deliver but -- and the customer need to confirm at the moment that we deliver their willingness to pay the delivery. And so the order books is a very good key indicator for the health of our market.

But as I mentioned on the press release, as I mentioned also in my remarks, of course, we need this tension in demand. I mean, this positive tension in demand to be maintained over the period in order to have the confirmation that all the order backlog is converted into sales and is converted into sales within the end of the year in order to contribute to the revenues that would make the yearly revenues increase and by leverage effect would improve the EBIT with respect to the first 6 months and also with respect of the previous year.

Okay. May I have a follow-up on the hair removal and then I'll get back in the queue and then if there's enough time, ask a few questions after. On hair removal, is -- well, you said that partly it's Asclepion that is not performing, which is tilted to hair removal. Is it also due to Cynosure partly, because the sales going maybe to Cynosure are declining on the back of the new, I'd just say...

Yes, I didn't want to mention it because it was like trying to find excuses and not finding excuses and saying what happens. You're right, Giovanni. Part of the decline in hair removal is due to the fact that Cynosure new property, new management is basically discontinuing the product line, Elite iQ because they will source similar product from their Korean partner, Lutronic. And you're right, part of the decline in hair removal is due to the missing Cynosure relation. But as this is relevant because it represents probably more than half of the decline in the 6 months of the revenues in hair removal and it doesn't cover in full the decline and therefore, the general trend is there anyway.

Next -- the next -- we have another question comes from Carlo Maritano.

Three questions from my side. The first one is again on the industrial sector. If I look at the geographical breakdown, I see that the main reason is Italy, as you previously mentioned. I was wondering if you -- what's the reason given that last year was already weak, is still Industry 5.0 that is struggling or if there is any other reason that you think are the reason of this weakness? The second one is on the medical business. If I look at the geographical breakdown, I see rest of the world in the second quarter it is a little bit weak. I was wondering if it is related to the consolidation of -- with us or if there are any geographical area that is struggling. And the third one, I know that laser sources are quite a small business for you, but I see that in this period, they are struggling. So I was wondering what's happening in this division and if you think that will improve going on.

Thank you for this question that gives me the opportunity to treat with a little bit more detail, something which I didn't want to, let's say, be too long in my presentation. Yes, the industrial market, the market for manufacturing in Italy hasn't had a very strong rebound. We are seeing a positive buildup on the order books but we have been quite struggling, both in the cutting and also in the laser marking, in both situations. So we count now on a recovery because you're right, we are comparing to a weak year and being weak again and we really counted on a rebound. And this is -- when I say that we were expecting a stronger rebound, I'm mainly referring to the Italian market in the industrial. Second question is rest of the world in medical. What happened in the second quarter with us? I was trying to peak into the numbers and to see if with us -- of course, with us is part of the decline because we don't have with us revenues anymore. But well, I wouldn't say...

2024 -- in 2024 the -- can you hear me? 2024 revenues by -- with us are EUR 5.6 million, while in 2025 are EUR 1.4 million because we consolidated only until February. So the difference is EUR 4 million, EUR 4.2 million.

So yes, we had this difference, then we had Cynosure that Giovanni Selvetti mentioned. We just to be -- I mean, give you some more information, we had an excellent performance in Far East. I mean, in all the -- we had an excellent performance, weaker in the United States. And of course, Japan is missing with us, while Japan is building up nicely in the other medical applications after a low point in 2024. The third question was -- you had another question, Carlo.

Laser, laser sources.

Laser sources. Yes, yes, yes. We experienced a very difficult transition phase because we have a large part of the lasers, which are dedicated to textile. You know that we sell laser sources for stone -- for the laser stone washing of denim. The whole market of clothing has been struggling, as you know, from the luxury brands to the more standard brands. And we are being hit by this kind of stagnation in the textile and clothing market. We had interesting cooperations in other 2 segments, one which we feel is still very valid, which is digital converting. So it's the packaging, the automation in the packaging industry.

And we had a very important cooperation, which hopefully is down to a low point again with an Israelian company. It's a listed company, which quite unexpectedly filed for bankruptcy in the first quarter. So not only we lost the expected revenues but we also booked a loss, which is booked into accruals, the accruals line, so below EBITDA line for about EUR 450,000, I mean. So this is impacting heavily EL.En.'s division for laser sources. And the other segment in which we were counting to work is the electric motors manufacturing. But again, since our customers are based in Europe, mainly in Europe, also this market for what concerns European demand is quite struggling. And also some of our partners are not in the most -- in the best shape, our final partners because we are manufacturing, we are providing laser sources for manufacturers of hairpin stripping systems and for the manufacturing of electric motors, which provide devices for companies like Magneti Marelli.

And you know that Magneti Marelli for instance, again, at least in the United States, filed for protection from creditors. I wanted to mention this department, this small business unit in my prepared remarks because notwithstanding the poor financial performance and revenue performance in the quarter, we are investing in R&D and we believe that the products could be the base for a rebound in revenues in the next quarters, maybe not in 2025, maybe later on. But I believe that even though certain of our customers are going through an unfavorable phase, we have a very interesting technology and this technology will again be accretive to our revenue and to our profitability.

We have one more question from Andrea Bonfa from Banca Akros.

Very quickly on the duties issue, it wasn't mentioned, the fact that now Brazil is subject to a 50% duty. And for what I remember, Brazil was supposed to be one of the platform to export industrial laser in the U.S. If you can comment on that, if that is really an issue for you or if you can reroute that business from Italy. That's essentially my question for today.

Thank you, Andrea. Our sales to Brazil go to industrial manufacturers in Brazil that mainly manufacture for Brazil. So in the past, for certain markets, the plastic cutting, our Brazilian customers were exporting their product, not the system, their product cut with a laser in the United States. But currently, the Brazilian market is, for us, a market which is, of course, affected by heavy duties but those are the duties for exporting in Brazil. There, we end. We do not use Brazil as a hub for exporting anywhere else. By the way, the performance of Brazil was exceptionally positive in this first 6 months of the year. I mean they had record revenues summing up close to EUR 10 million, which means given the weakness of the real, an absolute record in revenues in Brazilian real. And still, we are [ tonic ] on the market. And so we do not see, as of today, any negative effects driven by the U.S. tariffs on the Brazilian market.

So -- and if I may, now the question is, how is the situation of exporting industrial laser to the U.S. considering that they haven't got any local production there, if I'm correct?

I believe that what I said in relation to the U.S. tariffs in my remarks can be applied to the distribution of industrial laser system as well. By the way, we are in a very important week because this year, the FABTECH is being held in Chicago and is currently being held. So this is the week for the presentation of our products, especially for Cutlite Penta, which has a very large spend this year. And so big investment, Andrea and we're hoping a big return. What I can say is that currently, our offer is so diversified.

I confirm there are no U.S. manufacturers that are able to offer on the U.S. market anything close to what we are offering. In certain specific segment, luckily, there are no competitors worldwide. We can have the kind of offer that we are offering in certain specific and smaller segment. Therefore, on the tariffs, what applies is the following. Since our distributors are applying interesting markups, they are able to handle the cost increase without affecting volumes and with only marginally affecting their margin and without -- not asking us to further reduce our margin given the fact that we are reducing our margin by 10% and more due to the weakening of the U.S. dollar itself.

Anyway, before the FABTECH was starting, our view and our order backlog on the -- for the United States for the sheet metal cutting was positive. And so we could -- we were optimistic about then, I mean, next week, I'm waiting for the people to come back from this very important trade fair and to understand if the perception of our market positioning, which is very positive in the United States, is still confirmed with a high level of differentiation.

Again, what I was saying in my earlier remarks, as long as we can provide a differentiated product and needs to be differentiated with a high perceived value in comparison with U.S. manufacturers or with other worldwide competitors as long as we maintain this perception of value, the 15% tariff which on laser cutting system could be a little bit higher since there is a little bit of steel in, a little bit, there's a lot of steel included in the laser systems. Anyway, the 50% tariffs does not change completely the value chain of the distribution in the United States and we can continue to be optimists in seeing the United States as an interesting market for selling our products.

And finally, if I may, last question. I mean, your working capital level at the end of last year was quite important. I mean you are coming from years where the procurement or raw material was complicated to say the least. Are you planning to structurally lower this working capital or the stock? Or what are your thoughts on this?

We sell in general, products which have relatively high margins and we can never run the risk of not being able to deliver because we don't have available materials to manufacture high-margin products. For these reasons, we have to plan ahead. Typically, the planning cycle has its peak working capital expansion in Q2 -- at the end of Q2 and Q3 because we then close the number for the end of the year, which corresponds also with the highest demand quarter. So we plan to improve our programming capabilities. We are investing in resources, in people, in softwares but basically, it's not easy to reduce the structural impact of working capital. So when I say that overall, the working capital increased by EUR 20 million in this first 6 months and I don't consider this a big issue is because I believe that it will be lowering in the next months and it will maintain more or less the same levels.

Then if we will be able to trim 1 or 2 or 3 percentage points in the impact of net working capital on sales, this we will need to see. We are putting down policies in order to try to reduce but we do not want to run the risk to run out of parts because we try to control inventory because it's really -- it wouldn't be worth. This we know from history. Then I concur the level of net working capital is quite high. But good thing to know is that most of the things we have in stock will not lose value over time because they don't have any intrinsic obsolescence. They have obsolescence also, excuse me, only with innovation and we try to control innovation cycles in order not to leave in inventory older versions as we innovate the versions of our products.

Next question comes from Emmanuel de Figueiredo from LBV Asset Management.

I have just 2 questions. The first one is on the medical, on the tariffs in the U.S. Can you just explain a little bit what your competitors are doing in terms of pricing? Are they absorbing the tariff and hitting their margins? Or are they increasing price? What is your view on that? And what are you doing? And then secondly, again, on the medical, what is your best, let's say, best-performing product this year in the medical? You said that hair removal is weak but what is your best performing product.

Thank you for the question. Good to see you. I don't really know in detail. I haven't seen movements on prices in the U.S. market. So I can assume that everybody is trying to absorb the tariffs somewhere in the chain. I mean, I don't know if it's at the origin. I don't know if it's at distribution level. But we are not seeing, as of today, abrupt price changes, even though the United States is affected by inflation. So year-over-year, there is an inflation in prices. So this gives room to somehow absorb -- not absorb, revert part of the tariffs to the end user without creating a big difference in the approach compared to our other competitors. And about the successful products in the medical, of course, the magneto and the urology lasers are very successful.

In aesthetic, we have 3 very successful products. One is Onda PRO. Onda, you remember very well, I'm sure our technology, which is based on microwaves, Onda in Italian means wave and it was originally a body contouring device. Onda PRO, this evolution launched last year adds a third handpiece, which is used for the face. And therefore, the system becomes also a skin rejuvenation device, having the ability to treat the skin of the face in order to tighten it. So it's a anti-aging device for tightening. The second very successful device is the RedTouch, which is a innovation, which introduces a laser emitting in the red for rejuvenation on the face and on the [indiscernible].

And I leave the third, the most successful of our technologies, I touched this earlier -- in earlier conferences is the CO2 laser. The CO2 laser, which is the first technology, the oldest technology that EL.En. has offered on the market and the technology that we master. And we improved its effectiveness starting from the technology base. Who visited our company knows that our facility has 2 kind of technology for CO2 laser source, the glass technology, DC excited, the metal technologies, RF excited. The RF excited technology has come to such flexibility in the modulation of the beam, which allows extremely dedicated curing on the skin and is the winning technology on the U.S. market, by the way, particularly on the U.S. market for the rejuvenation application. So Onda PRO, RedTouch and Tetra Pro are the game winners in this moment and are the units which -- with increased sales in the U.S. and in Far East are offsetting -- at least partially offsetting the decline in other disciplines.

And now we have Giovanni Selvetti with another question for you, Andrea.

I promise this is the final one. No, it was more of a curiosity on hair removal because I see that there's been quite a decent growth of, let's just say, self-made hair removal devices, laser devices as long -- at least here in the U.K., you see that a lot. So I was wondering if this is partially in a way, eating the market on your side because if people can do this thing alone without going to, like let's just say, a specific place, well, the demand just flows one way to the other, right? So I was wondering if this is something you see or if it's something that you believe it's a real concern going on?

Again, I don't want to be blamed as superficial. But the home, the devices that remove hair or claim to remove hair for household use are not able to remove hair by themself for a simple physical reason that they do not deliver enough energy to effectively remove the hair. They could be used for a maintenance after they use a professional use. And so in these terms, they could limit the number of visits that you make at a professional site. But generally speaking, I don't think they are effective enough to -- for the technologies available today to eat up market shares to our professional market. I see more a competition coming from lower-cost manufacturers, which improved their performance, which is eating up the low-level competition and forcing us to compete in a share of the market, which is still large, which is the high end but which is smaller than the whole market.

We need to continuously differentiate and improve the performances in order to stay on this market effectively. The performances in term of both financial ROI and therefore, effectiveness of laser systems for hair removal improved dramatically in the last years. And our sales, we have in our pipeline further improvements of the technologies aimed of improving the effectiveness and the ROI for our customers. Sincerely, I don't think that the handheld home use devices are affecting our market. But I will study more deeply this situation, Giovanni and maybe be back to you with a more, let's say, acknowledgeable answer when we meet again in some time.

Okay. We have one more question right now from François [indiscernible].

I have seen his question.

Sorry for the time to connect the microphone. One question about your competition, especially in aesthetic sector from South Korea or from Israel. How is the relative competition evolving?

Yes. Israelian and Korean are the front line of our competition in the aesthetic market with a wealth of companies, both companies that are on the market from a long time, both companies that are now offering on the market new products. Of course, when you think about Israel, you think about Lumenis, which is the long term -- the longest -- the oldest company competing on the market as well as Syneron and as well as Sisram/Alma Laser. They are all competitors of us. We don't feel that we lost competitive advantage versus these competitors in the last years. Then there is InMode, which is the leader in terms of market cap, which is actually not directly competing against us because they sell RF technology with a high marketing content, with the use of testimonials, they are doing quite well but we don't feel a direct threat from them anymore.

And then there is a new company, which was just launched by the former founder of both Lumenis and Syneron-Candela, Mr. Shimon Eckhouse. The company is called Softwave. It's quite small. And it's also competing in rejuvenation and skin tightening device. This is for what concern Israel. For what concerns Korea, the longest lived company is Lutronic, which is now merged with Cynosure. And we feel their competition very strongly, first, because we lost the customer, Cynosure due to the merger. And of course, they were purchasing a technology from us.

When they merged with a company that has more or less the same technology, they, of course, are going to source this technology from Lutronic. Lutronic has been very strong on certain European markets. For instance, on the French market, they are the leaders. We are the runner up. And they are extremely -- I mean, they are extremely good in developing technology. So they are high-level competitors. So we cannot treat Lutronic as we can treat several other competitors coming from Far East that still deliver products which are well below par in terms of reliability, technical specification and overall product specification and quality.

There is another pair, which is now flourishing in Korea. It's a company, Classys I. It's a listed company. You can see how with revenue, which is in the order of magnitude of $100 million on a yearly basis today, if I'm not wrong, they have a market cap, which is outstanding, over $2 billion. This is due to the rapid growth they are forecasting and to the very high margin. Basically, Classys is replicating, on a Korean basis, the business model of InMode or at least their ambition is to replicate it. They sell a very low-cost device as high prices and they're very successful in this moment. And again, looking at all this company, we feel more threatened by the competitors from Israel, which compete with the same -- apart from InMode with the same technological infrastructure that we do than from the companies competing from the Far East where the product level is improving but it's still behind what we have in Europe and what the Israeli and the best Korean company are able to deliver today.

Okay. We have no more question registered at this moment in our list. I would like to ask investors still connected if there are any further questions from their side. No more question. Okay.

Then ladies and gentlemen, the conference is over. If you have any questions to investigate in the future, please do not hesitate to contact Enrico Romagnoli, who will be happy to answer your queries. Thank you to all of you for attending this conference and we hope to have all you again next time. Goodbye to everybody. Bye.

Bye. Bye-bye.

Thank you very much. Bye-bye.