Carel Industries S.p.A. ($CRL)

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Carel Industries Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Francesco Nalini, CEO of the group. Please go ahead, sir.

Thanks. Good afternoon, and thank you for joining our call for the presentation of the full year 2025 results. I'm starting right away from Page 3 of the presentation. And I'm very happy to report that Q4 2025 has been the fourth consecutive quarter with an organic double-digit growth. And it also marked a further acceleration to a quarterly organic growth of 16.9%, exceeding our expectations. In this last quarter, we had a double-digit growth, both in HVAC and Refrigeration as well as in all regions, apart from South America that discounts a very soft economic environment in Brazil. On a yearly basis, reported revenue has been EUR 629 million, up 8.7% on the full year 2024 or 10.6% organic at fixed exchange rates. All regions and both markets provided organic growth in the second half of the year, confirming the solidity and diversification of our performance. The primary growth driver has been HVAC with an organic growth of approximately 19% in the quarter, sustained by all segments that is Industrial, Residential and Commercial. But also Refrigeration had a strong performance, achieving 11% organic growth in the quarter with a further acceleration in EMEA as well as in North America. Adjusted EBITDA in 2025 was 20% or 19.7% reported. Profitability in Q4 suffered less than usual from the typical seasonality, thanks to the accelerated top line growth, the positive trend in raw material costs and the accretive contribution from digital services. And of course, we maintained our R&D investment at a target level of above 5% of sales. We had this year a very strong cash generation, thanks also to a good optimization of working capital with EUR 140 million of operating cash flow and almost EUR 100 million of free cash flow. Therefore, our net financial position is now positive by EUR 18 million or EUR 48 million if we exclude the IFRS 16 effect. And now move to Page 4, where we can see here again that revenue in 2025 was EUR 629 million, up 8.7% from the EUR 578.5 million of 2024 or up 10.6% if we exclude the almost EUR 11 million of negative foreign exchange impact. Q4 has been the fourth consecutive quarter of double-digit organic revenue growth, taking place almost everywhere, that is in EMEA, North America and Asia Pacific. EBITDA adjusted for nonrecurring costs related to our reorganization grew by 19% to EUR 126.1 million from the EUR 106 million of 2024 and was 20% of sales. This is a solid improvement from the 18.3% of the full year 2024, and we are back to the upper end of our mid-cycle expectation for profitability. Net profit at EUR 73.6 million grew by 17.6% from the EUR 62.6 million of 2024, thanks especially to the operating performance. The tax rate in 2025 has been 22.6%, up from the 20.8% of 2024 due mainly to a different country mix. CapEx at EUR 22.8 million were 27.8% lower than 2024, since in 2024, we had the coincidence, in particular of the expansion of the plant in Poland and the new R&D laboratory. So we had basically peak CapEx -- we had extraordinary CapEx in 2024. Finally, the Board proposes to shareholders the usual distribution of approximately 30% of net profit, that is EUR 0.195 per share. Now on Page 5, we can see the revenue breakdowns. To the left, the breakdown by regions, with EMEA growing by 7.7% net of the foreign exchange in 2025 with solid growth both in HVAC and in Refrigeration. Both markets accelerated in Q4 to a double-digit quarterly growth. We saw in Europe, in particular, a good recovery of heat pumps, but also data centers and Refrigeration performed well. In Asia Pacific, we grew by 5.9% organic in 2025 with double-digit organic growth in Q2, Q3 and Q4. This last quarter, in particular, delivered a 13% organic growth, driven especially by HVAC and especially by data centers. North America saw another excellent quarter with over 30% organic growth, driven in particular by data centers, but also by inverterization in Commercial and by a very strong Refrigeration performance with over 50% organic growth in the quarter. Here, we are starting to see the first significant results of our growth expectations related to the transition to natural refrigerants and energy efficiency. As we can see on the top left pie, in spite of the U.S. dollar devaluation, North America has reached in 2025, 20% of the total group turnover, and we are, in fact, currently planning the start-up of a third manufacturing plant in the country for the first half of 2027. In South America, we had a flat 2025 in organic terms. In Q4, we grew. However, the regional performance is negatively impacted by a very weak economic background in Brazil, while the results in the rest of the region are positive. To the right, we see the breakdown by markets, both of which grew double digits organically in this last quarter. Growth was strong across the board. In HVAC, of course, we see the continued strong performance of data centers, but also solid results in Commercial and a strong recovery of heat pumps in Europe. On a yearly basis, HVAC grew by 11.9% net of the foreign exchange. In Refrigeration, we were up by 7.2% organically in 2025 with a low teens growth in Q4. Very good performance in EMEA after a soft Q2 that, as already explained, suffered from a temporary timing effect, but an excellent performance we also had in North America, thanks to increasing demand for sustainable and energy-efficient solutions. I now leave it to Nicola to comment on the items below EBITDA on Page 6.

Thank you, Francesco. The Slide #6 details the group result from the EBITDA to the net profit. The increase in G&A costs is related to the relevant CapEx activities performed last year. The financial charges improved compared to last year due to the combined effect of a reduction of interest rates and the improvement in average net financial position of the period. The evolution of ForEx result compared to last year was mainly impacted by the evolution of NOK against the euro. The line gain on liabilities from options on minorities reflects the change of the fair value of the liabilities of the put and call option of Kiona and the earn-out of Senva. Both companies are performing well. In 2025, they have grown double digit with an EBITDA level accretive for the group. Anyway, the result was something below the previous business plan. The tax rate of the period was 22.6% higher than 2024 level due to a different country mix. The group net profit at the end of 2025 was equal to EUR 73.6 million compared to EUR 62.6 million of 2024. Slide #7 shows the net financial position evolution of 2025. The cash generated by the group in the period was very strong. The free cash flow of 2025 was equal to EUR 97.4 million compared to EUR 53.8 million in the same period of the previous year. In 2025, the cash conversion improved to 98% due to the combined effect of effective working capital management, higher profitability and lower CapEx. In June 2025, the group paid dividend for EUR 18.6 million. At the end of 2025, the net financial position is positive for EUR 18.4 million. I leave Francesco to go on to the presentation.

Thank you, Nicolas. The line was interrupted. So I'm starting again from Page 8. Here, let me briefly step back and frame how we see the evolution of our field control architecture. What we're building is a field ecosystem where intelligence is distributed and connected across multiple layers of the system. So instead of having isolated devices, we're moving towards an architecture where controllers, sensors and supervisory systems work together as an integrated platform. A key principle behind this architecture is that intelligence and algorithms are pushed as close as possible to the field level. By embedding decision logic directly into controllers and supervisory systems, we can ensure faster response times, higher reliability and lower operational costs while also improving cybersecurity and system resilience. This distributed and connected intelligence enables a new generation of capabilities directly at the field level, including performance optimization, advanced diagnostics and increasingly sophisticated analytics. In other words, the field system itself becomes progressively smarter with algorithms running across different layers of the architecture. Of course, a key component of this ecosystem is also our broad portfolio of sensors, which provides the data foundation for these capabilities. By combining sensing, control and supervision within a unified architecture, we can capture high-quality operational data and use them to continuously improve system performance and reliability. At the supervisory level, at the field level, new boss plays a central role. It acts as the gateway that integrates the entire field ecosystem and connects it with the cloud layer of the architecture. Through this platform, field devices can be seamlessly integrated with our cloud software environment, enabling remote monitoring, advanced analytics and the progressive rollout of new digital functionalities coming from the cloud to the different layers of the field system. On a side note, the new boss, which was introduced earlier this year, has a no-code graphical architecture that significantly simplifies configuration and system management. It also includes native integration with Kiona and advanced energy monitoring capabilities together with native functionalities designed for CO2 refrigeration systems. The solution has also been recognized with the German Design Award 2026, reflecting the strong focus we are putting on usability and system integration. Coming back to the general architecture, the cloud and field layers are designed to work in synergy. While advanced services and large-scale analytics can run in the cloud, the core operational intelligence remains embedded in the field, ensuring speed, security and robustness of the system. So this approach allows us to move beyond individual devices and offer customers fully connected and intelligent field ecosystem with sensing control, supervision and cloud software working together to improve efficiency, reliability and system performance. So now we are showing here on Page 8, in particular, the field ecosystem that was recently completely redesigned for Refrigeration, but it's basically the example of how we are starting to translate this vision for a multilayer smart system integrating the cloud and the field part with intelligence running at as lower level as possible at the field -- in the field environment. Now let me move to Page 9 and briefly touch on our decarbonization strategy. For us, decarbonization is embedded in our climate transition plan, and we see it not only as an environmental commitment, but also as a strategic lever to strengthen our competitive positioning. By developing increasingly energy-efficient solutions, anticipating regulatory trends and responding to growing sustainability expectations, we believe we can open access to new markets while reinforcing trust with all our stakeholders. Our climate targets were validated by the Science Based Targets initiative in early 2025, confirming the robustness of the approach. Specifically, we're targeting a 54.6% reduction in absolute Scope 1 and 2 emissions by 2033, starting from the 2023 baseline, together with a 32.5% reduction in Scope 3 emissions across key categories such as purchased goods, logistics and product use. To achieve these goals, we are implementing a clear and pragmatic pathway, combining operational improvements, product innovation and supply chain engagement with key initiatives like the electrification of the heating systems through high-efficiency heat pumps, expanding photovoltaic capacity and progressively moving towards 100% renewable electricity across our plants. These actions are already delivering tangible results. Scope 1 and 2 emissions have already been reduced by 34%, and our progress is also reflected in our CDP rating, which improved from C in 2021 to A- in 2025. And looking ahead, we plan to build on this progress by defining new net zero targets for 2050, covering Scope 1 and 2 emissions. And this renewed ambition will guide future investments, will strengthen the resilience of our value chain and will support the development of increasingly efficient and low-impact solutions. Now finally, let me come to Page 10 for the closing remarks. We are very pleased with the strong performance delivered in the fourth quarter. Q4 exceeded expectations with double-digit organic growth across all geographies with the exception of South America due to the weakness of the Brazilian economy and across both HVAC and Refrigeration. This confirms the strength and balance of our portfolio and the effectiveness of our positioning across the different verticals. At the same time, we achieved very strong profitability despite the usual seasonal headwinds of the fourth quarter, which is typically the least profitable period of the year. In Q4, EBITDA margin reached 20%, while for the full year 2025 EBITDA margin stood at 19.7% or 20% on an adjusted basis, placing us at the upper end of our midterm guidance range. This is thanks to the sustained top line growth in Q4 as well as the other operating elements, reflecting the solidity of our execution like the margin expansion for digital services and the positive development of raw material costs. Solidity of execution that is reflected also in our disciplined financial management that has reached a record cash generation. And so for the first time since our IPO, Carel closed the year with a positive net cash position. Looking ahead, the momentum we built during 2025, especially in the second half of the year, has continued into the early weeks of 2026 with positive trends across most of the verticals in which we operate and a solid order intake. Of course, the macroeconomic and geopolitical environment remains uncertain and recent developments, including the conflict in the Middle East, continue to limit visibility and make forecasting more complex. However, based on the information currently available, we enter 2026 with confidence and a solid starting point. And for the first quarter of 2026, we therefore expect consolidated revenues to be in the range of EUR 160 million to EUR 170 million, corresponding to a year-on-year growth between 9% and 15%. Thank you very much for your attention. We're now more than happy to answer any questions you might have.

[Operator Instructions] The first question is from Niccolo Storer of Kepler.

I have 3 questions. The first one is about cost inflation. I mean, I see that it's the fourth year in a row you're able to lower your cost of goods sold to sales. Are you seeing any signs of resurfacing inflation? Are you worried by, for instance, the increase in RM prices? What are you seeing at the moment on that? And linked to this aspect, your EBITDA has already reached in 2025, let's say, the upper end of your long-term guidance. What should prevent you to further, let's say, improve this metric in 2026 in the context of further revenue growth? The second question is linked to the boost you had to your P&L from the changes in the put and call liability. I mean the change is quite big after a good year. So I was wondering here if there is anything major to highlight because after, let's say, the impact of 2024, I would have not expected any further, let's say, reduction in the value of the liability. The last question is on M&A. You have shown a great cash generation. You are now net cash on your balance sheet. So maybe an update on potential M&A pipeline.

Thanks for the questions. So in terms of cost inflation, let's see that in this moment, there are some signs of coming tensions on some categories of raw materials. You know that in general, our components, which are industrial electronic components have a deflationary trend. This is the usual, let's say, mid-cycle expectation, which is what happened in 2025. There are in this moment some signs of tension, as you mentioned, on the memories. So on the memories, we don't have any tensions in terms of availability. So we don't foresee any kind of shortage. We also for -- let's say, for safety reasons in the second part of last year, we also increased our safety stocks. But in any case, we don't expect any signs of shortage. However, there are, of course, some tensions on the cost of these components. Fortunately, the weight on the total value is pretty limited. So overall, we are talking about the expectation of possibly a few millions totally due to the ramp cost. So nothing really material that -- especially for the products where the incidents could be higher, we would pass this, of course, to prices because there will be no other way around that. Then some other tensions, of course, are for the metals, especially aluminum. So the metals that we use for the heat exchangers and the mechanical production, they already started growing, I mean, in the last few months. And now the increasing cost of the energy could also have an impact on the cost of these materials. This is related just to the part of our production manufacturing, again, the heat exchangers. And for this, of course, we're monitoring the situation, and we will probably be forced to, let's say, adjust prices. So let's say that in general, overall, we -- the cost tensions that we could have this year are limited to some specific categories. The incidence overall is relatively limited. And in any case, we will work to compensate that by acting on prices. Overall, in general, besides the specific elements in this moment, our general expectation is for a deflation in raw material cost that we partly pass through prices, but just partly like we did in 2025. So in general, let's say, we had mid-cycle expectations of positive effect on the gross profitability. And then -- so in terms of the EBITDA, you asked about the possible further expansion of the EBITDA. The point is that we do have positive elements on the EBITDA. One is the one I just mentioned. Again, mid-cycle now besides some short-term tensions on the cost mid-cycle. We do have positive expectations for the gross profitability also because of the impact of the digital services. Now Kiona had this year, close to 30% EBITDA margin. So the effect is becoming more and more visible. On the other hand, please let me again emphasize that our main target is growth more than margin expansion, and we want to stay more and more at the leading edge of technology. So we would invest more. And so I mean, these positive elements will not necessarily translate into an expansion of the margin because we would invest more, and we are happy with the current level of 19% to 20% EBITDA margin. I'm jumping to the third question on M&A, then I leave to Nicola for commenting the liabilities topic. So for M&A, yes, we have now a very significant firepower. And I mean, we -- of course, we want to continue going on with our M&A strategy. And we have several discussions in place with always the usual guidance, in particular, the -- in my opinion, the most interesting in this moment is -- let's say, is the accretion of complementary technologies to our system because there are some complementary technologies that are interesting especially to complement the system. This is what is particularly relevant to us now in this moment. And of course, our target is to use this firepower we have for investing and also for M&A. That's for sure. Now Nicola?

Yes. Thank you. And with reference to the valuation of the put and call option of Kiona, the company is performing something better than expected in terms of profitability, margin and profitability and something below in terms of net sales. And how is drafted -- how is the agreement in terms of the put and call option, this effect give this result that is material. But on the overall magnitude of the deal, there could be this kind of effect based on this fact. Then in the concession of Senva, there is even an impact that is driven by the exchange rate since it is expressed in the U.S. dollar and even this part give a reduction in the liability that is reported in the financial statement in euro.

The next question is from Hollie Cooper of Goldman Sachs.

My first question is focusing on the data center end market. How are you thinking about the continuation of this strong growth into 2026? And maybe we can also think about how Carel's data center cooling business might be affected by NVIDIA's hot water cooling technology, and which parts of the portfolio would be most affected by this potential change in data center cooling architecture? And then on my second question, sticking with North America, Refrigeration saw the strongest quarter. You mentioned more than 50% organic growth. Is there any more color you can give on the significance of this growth, maybe particularly on the transition to natural refrigerants?

Thanks for the questions. So in terms of the data center growth we are experiencing, this is particularly strong in the U.S., even if it's pretty visible also in Asia and in Europe, but it's particularly strong in the U.S. We currently see no signs of a slowdown. On the opposite, it's -- I mean, it's continuing to go very, very strong with a full order book reported by our customers. And I mean, the visibility we have is that the market will continue, at least for the time being, will continue very, very strong. So no signs of a slowdown. In terms of the NVIDIA technology that was announced, basically, let's say that we don't see any meaningful impact for us for several reasons. The first reason is that we don't really work on the -- let's say, on the part of the liquid cooling that goes on to the rack, onto the board. We work mainly on the part of the loop that is at the CDU level and then at the cooling of the water loop -- of the secondary water loop. It can be done by dry coolers or with chillers. What NVIDIA said is that they can work with higher temperature, so they will need, let's say, dry coolers instead of chillers. But in any case, even if it's a dry cooler, it's good for us because we control also the dry cooler. And by the way, if there is a dry cooler, then you need to control, let's say, the thermal load distribution in an even better way because you're more border line in terms of, let's say, cooling heating removal. So there is an even higher need for our technology in terms of the redundant sensors in the different parts of the circuit and the software. But then the second reason, which is the main one is that chillers are not going away because maybe there will be a little less chillers maybe, just maybe, but chillers are needed in any case for backup reasons because you cannot risk that if there is like a heat wave or a spike in the temperature, I mean you fly the data center. So you, in any case, need chillers for backup reasons. You need chillers because in the data center, there are also many so-called gray spaces where you have auxiliary components that require cooling because the boards that use -- I mean, the GPUs that require liquid cooling are, for the time being, just a fraction of the total, and you will continue to have a lot of racks and servers that don't require liquid cooling. And then another third point is that in any data center, in any case, there is normally a ventilation system, which is required again because of the gray spaces of the auxiliary equipment because there are humans also in the space. So you need to have a proper temperature for backup reasons and again, because we don't have only liquid cooling in the data center. So normally, there is also air. There is also a ventilation system and the ventilation system, which is always present, all of our range of products can be used. So the -- let's say, the effect of this announcement by NVIDIA, even if it's true, would be, in any case, negligible for us. In terms of Refrigeration in the U.S. now, the fact is that the trend of transition to new refrigerants has started. It started more or less last year because new regulation was enacted. Now it's true that there are discussions from the EPA to reverse this legislation. But especially the largest retailers will, in our opinion, continue to move forward with this transition because this is a long-term transition. And normally, supermarket installations have a lifespan of 10 years or more. And so they cannot incur the risk that the legislation is changed again in a few years down the road. So especially the biggest retail chains will continue with the transition, which concerns the transition to the natural refrigerants and to more energy-efficient solution. And in this respect, we have a very strong know-how, which is normally not present in the U.S. because it's something which is very new in the U.S., while we have a long experience coming from our exposure in Europe and elsewhere. And so this is opening up a big range of opportunities and projects and prospects. And we are starting -- and we've been saying this for a while now, but we are starting to see now the results. So we're starting to deploy this. And so we have very positive expectation for sustained growth in Refrigeration also because our market share is very small. So there is a lot of space for growth.

The next question is from Natasha Brilliant with UBS.

I've got 3 questions. Firstly, can you just remind us of seasonality in your business? I think the quarters are quite even. So if we were to take your 1Q revenue guidance and simply multiply it by 4, is that a sensible assumption for the full year or anything I've forgotten? And can you just tell us what your FX assumptions are for the first quarter guidance as well? That's the first question. Second question, can you just talk about the impact on your logistics and supply chain from the ongoing conflict in the Middle East? And then finally, a question on pricing. So you talked about with inflation, you might change pricing. But in the absence of that and if inflation is quite normalized, what's your typical price increase policy? And how should we think about it for 2026?

Okay. Thanks, Natasha, for the questions. So in terms of the seasonality of the quarters, you're right, they're normally quite even. There are some fluctuations, especially in Q1 and Q4. Q4 normally is softer. It didn't happen in Q4 last year, but normally, Q4 is softer. And also Q1 tends normally to be slightly softer because of the Chinese New Year and because of the fact that especially in Europe for several days at the beginning of January, many factories are closed. So for this reason, Q1 could be softer than the other quarters, not much, but there could be some differences. In terms of the effects, we don't make any big assumptions on the effects looking forward, let's say. So we more or less project the current situation. I remind that we have a pretty good natural hedging. So the -- let's say, the cascading at the EBITDA level of the decrease we had on the top line, which was approximately EUR 10.5 million is much more contained at the EBITDA level, thanks to the natural hedging that we have. In terms of the conflict, so the direct exposure in terms of the market, let's say, the market in the Middle East and Gulf region, not considering Turkey, is -- would be slightly more than 1%, so not big. So that would be the maximum level of risk for the market. But in any case, our customers are still working pretty normally, I would say. The main disruption we're having is, as you say, logistics. So we're having some disruptions in the shipments, and we're now finding ways more or less to cope with them. But we don't expect any material impact, let's say, directly from the conflict directly also because we are not energy intensive. The total utility cost for energy that we have in the group is slightly more than EUR 3 million in a year. But fortunately, we managed to fix the price of energy for the vast majority of the consumption of 2026 before the war. So we also secured a pretty good supply in any case. But again, we're not energy intensive. We could have an indirect impact owing to again, some metals that we use as raw materials that could increase in price or, of course, if there is a general deterioration of the macro environment. But direct impact of the conflict for us is pretty negligible. In terms of the pricing, so our usual policy with the pricing is to have close, let's say, to 1% average decline in prices on a yearly basis because we have some savings on the -- especially raw materials and the process, and we pass through part of those savings. So we normally have a 1% price decline. In 2025, the decline was slightly less than 1%. But again, this is in a regular situation, of course, barring any exceptions related to short-term inflation in the raw materials, as you said.

The next question is from Alessandro Cecchini of Equita.

The first one, actually, it's on heat pump business. Can you, I mean, remind us the percentage of sales this year after the very substantial growth in 2025? And I mean, if you expect that this -- I mean, probably not so strong, but what kind of trend do you expect for 2026 in terms of heat pump business? My second question is an overall question on cash generation. Maybe if you can give us more insights on 2026, I mean, CapEx and working capital that it's already very good in level, Commercial working capital, 19%, if I am not wrong. So if you can elaborate a little bit more on these 2 topics. On the 2025, I saw a net negative impact on cash generation of EUR 16 million. I would like to better understand this line that is named other.

Okay. Thanks, Alessandro. So heat pumps, we -- in 2025, there was, again, a good recovery of the market. And now the weight -- overall in 2025, the weight on the total turnover would be something in the high single-digit level, so something around 7% approximately. The expectation that, let's say, this, in any case, is going to remain -- we believe there will be a sustained long-term trend of growth. But it remains a volatile market because it's very much subject to the price of electricity compared to the price of gas to the subsidies, interest rates and so on. But in general, our expectation, let's say, is to have mid-cycle a high single-digit growth rate. So more or less, that could be our expectation also for 2026 of a high single-digit growth rate. In general, this remains an important market for us, even if the weight is limited. Again, it's around 7%, remains an important market. And also, we are developing continuously new technology for this market, but we are not, let's say, counting on it for our long-term growth because of its volatility, basically. But in any case, we are confident it will continue to grow. In terms of the working capital, I leave it to Nicola.

Okay. Thank you. Thank you, Francesco. So let's start with the last question. And so on the net financial position bridge, the other refers mainly to the Kiona evaluation and the Senva evaluation and even there are other effects like all the other aspect of the impact on the financial -- on the balance sheet, but mainly refer to the liability valuation. Then in terms of trade working capital, we are confirming the result of 2025 was similar to the guidance that we have given. So we give -- our target is to have a trade working capital around 20%. We did something better. And -- but this is the guidance even for the next year. As we said even in the other calls, for us, cash is not a big issue, but we want to be very disciplined on the working capital management. So we can have some variation about this target, but just from a tactical reason in order to give guaranteed service to our customers, and we can work on this maybe having some higher level of inventory. Then in terms of CapEx, we confirm our trend, this midterm trend of the 5%. And as you know, the starting on the project can have some different impact on quarterly basis, on a yearly basis.,, as we were telling in the previous call, we are evaluating an investment of a new plant in Europe. And even as was told by Francesco in the beginning of the call, we are even evaluating an investment in 2027 to have a facility in the U.S. So this can have some impact, but we confirm the trend of 5% of the net sales.

Okay. And the final question is technical. So we saw, I mean, tax rate of 22.6%, but of course, including the EUR 19 million of fair value. So just to have an idea, this kind of item has an impact on taxes or not because if you deduct this, of course, tax rate is much higher than 22.6%.

This line has not impacted the lines of the valuation and -- but we confirm for the future to have something like the 22%, 23% in terms of tax rate.

The next question is from Alessandro Tortora, Mediobanca.

I have some questions, let's say, [indiscernible] okay. Maybe just, let's say, a quick follow-up on North America, Francesco. If you can help us, let's say, to understand the driver behind the over 30% -- sorry, 26% for the full year performance organically speaking of North America. So if you can split or help us to split a little bit the performance, but also, let's say, the weight between HVAC and RF in this region. And overall, if it is fair to assume that more or less, let's say, data center in this region accounts for, let's say, half of the total sales. So this is the first question. Then I can go one by one, please tell me.

Yes, it's okay, Alessandro. So in terms of the growth drivers in North America, they are pretty differentiated, which is very good. So there is, let's say, good results across the board. So in terms of data centers, they're, of course, growing a lot in the region. There is a very high growth. The weight of this market on the total would be approximately 30%, probably slightly more than 30%. And that's related, of course, to the growth of the market, which, as everybody knows, is booming, but also to the fact that we've been able to take some very, very interesting projects, and we are taking continuously new projects. Then we have Commercial. Commercial is also performing very well. And this more than to the market is related to the fact that we are expanding our system. So basically, we are cross-selling. You know that we have been investing in the last few years to expand our offering for ventilation. And one of the reasons was to address the Commercial market in North America, and now this is happening. So for example, the dampers of engineering for ventilation systems are growing a lot in North America. Plus we are introducing the inverter technology, especially in Commercial. So -- and this is, I mean, going to be a very important opportunity for the future. Now inverters, for example, grew more than 80%, 8-0 percent in 2025. Of course, they still have a single-digit weight on the sales in North America, but they -- I mean, are growing more than 80%, and this is continuing. So this is the introduction of the variable speed compressor technology that has been going on in Europe for now 10, 15 years is now starting in the U.S. So we are in a very good position to benefit from it because we have a very strong know-how with this technology. Then moving to Refrigeration. This is also a very big opportunity moving forward. As I said, there's this transition of the natural refrigerants on the one hand and to energy-efficient technology on the other hand, which is -- which has started and we are starting now to deploy our solutions in terms of projects with customers. We have excellent prospects for the future, and this is also growing very well. So all in all, basically in terms of data centers, it's mainly market growth. In Commercial and in Refrigeration is mainly cross-selling and market share growth, thanks to the introduction of new technologies and especially in Refrigeration market share is so small that the room for continuing [indiscernible] is really very, very high.

Okay. Then sorry, just a follow-up. It wasn't clear, let's say, your indication on CapEx because I understood that the startup of the production plant in the U.S. was confirmed. So just to understand if you see this year already 5% of sales in terms of CapEx or this is still under discussion, the investment in the U.S.

Yes. So yes, the plant is close to certain, let's say. So we are very confident that we will -- because the volumes are growing so fast that it's -- I mean, it's pretty necessary. So this plant will be -- probably will start working in the first half of 2027. In terms of CapEx, we are not -- our plants are not so capital intensive. So we will remain in the 5% of sales, no spike due to this plant.

Okay. Okay. And then if we can come back a little bit now to the comment on Kiona. So basically, Kiona was able, let's say, to approach this 30% profitability. Can you comment a little bit, let's say, on the sales growth, which was below expectations? So just to understand if it was a matter of, I don't know, mix or, let's say, some rationalization you did into Kiona in order to get, let's say, this very high profitability.

Yes. Okay. So as Nicola said, Kiona is performing very well. We are very satisfied. As you also said, Alessandro, profitability is close to 30%. So this is ahead of the expectation. Top line growth is in the -- well into the double digits. It's slightly below the initial plan, which was pretty ambitious, by the way. And the main reason is that the international deployment of Kiona took longer than expected for a number of reasons. So it's a matter basically of part of the execution of the plan to [indiscernible] slightly longer than expected. So the technology part of the execution was absolutely in line and even better than the expectation, while the commercial part took a little bit longer. But -- so it's a little bit of delay. By the way, now we are hiring, as we speak, the international people in the different countries. We are going to enter, including people for the United States for Kiona because Kiona, thanks also to the growth we are experiencing with supermarkets in the U.S., we will push Kiona into the U.S. pretty soon. So let's say that we had some delay in the international expansion, but nothing concerning. And in general, we're very, very happy about how it's going. And the same applies to Senva, which has been performing extremely well also because sensors are increasingly used in the data center application. So they're growing very, very well.

Okay. Francesco the last is probably for Nicola. So you commented, Nicola, before on the cash flow side. Honestly, I see many items beyond the trade working capital helping this year. So can you give us a sense of what you say next for this year also because if I understood well, we may see maybe also some reversal in Q1 considering the very good performance in Q1 also with very low level of inventory. So just a comment on this because the net working capital was very, very low.

The indication that I gave before, it was related at the end of the year. Typically, we have some cycle around during the year. And typically, the first part of the year, in particular, Q1 is not so strong in terms of cash generation because of a seasonal effect that we always have, but the data that I have given before. And so the target around 20% of the trade working capital is for the year-end view. Then I do not expect a big trend different from prior years during the quarters.

The next question is from Michele Baldelli, BNP Paribas.

I have just a curiosity question on the North American performance. How much was due to the acquisition of new customers in the Refrigeration segment, which grew 50%, or is growth on the same customer base?

It's -- Michele, it's mainly new customers. So it's -- let's say -- we could say more properly customers that were already customers before, but the volume was negligible. But now they are starting the rollout of big projects. So I would call them new customers. So it's absolutely market share acquisition.

Mr. Nalini, there are no more questions registered at this time.

All right. Thank you. Thank you so much for your attention and for your questions. I'm looking forward to speaking with you again for the presentation of Q1 2026 results. Good afternoon. Bye.