EL.En. S.p.A. (ELN) Earnings Call Transcript & Summary

Good afternoon to everyone, and welcome to EL.En.'s conference call to present the first half 2026 financial results. Today's call will be recorded, and there will be an opportunity for questions and answers at the end of the presentation. With us on the call today are Andrea Cangioli, El.En's Chief Executive Officer; and Enrico Romagnoli, El.En Chief Financial Officer and Investor Relations Manager. Before we begin, please note that during this conference call, management will make certain statements regarding future expectations, plans and prospects. These statements may include the forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates or expectation 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 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. After the end of the presentation, [Operator Instructions]. Thank you for joining us today. We will now begin the conference call, and I would like to give the floor to Andrea Cangioli. Andrea, please go ahead.

Thank you. Thank you, Nicola. Thank you. and good afternoon, everyone. Thank you for joining us in this call. As usual, iporoManioli will hold the call with me. I'll try to limit the number of figures, financial figures and just to stick on a description of what has been going on in the 6 months and leave the financial part to leave the financial part to Enrico. We have several interesting topics to talk about in this first half of 2020. On one side, the excellent performance of our current activities. And on the other one, the announced divestiture of the Liza Cutting division. The first half confirmed the strength of the group growth trajectory and the direction we have been pursuing for some time and increasing focus on the medical sector. Following last year's sale of Penta Laser Zhejiang at Sean, we took a further step finalizing at the beginning of August an agreement for the sale of the majority stake of Catalyst Penta and of the residual parts of our laser cutting business to the market leader tools. To put this deal in the appropriate frame, at Light is leading the laser cutting division of Mailand Group, which includes a few distribution companies, including the long-term old Catlin to Brazil. And in 2025, accounted for EUR 121 million and change in revenues and EUR 2 million in EBIT, basically breaking even in terms of net income, also due to interest expense on a net financial debt of about EUR 16 million. In both the year 2025 and the first 6 months of 2026, the business has been somehow struggling amid a complex market situation. Among others, I would like to recall the uncertainties and fluctuation cast on our main market, the Italian domestic market but the announcements of tax policies supporting CapEx that have been not timely folded up by the actual implementation of such furnaces. But most important, it's now more than 2 years that Catlin in the company. The group has been operating under an imminent M&A condition. At first, when it was supposed to be sold together with our Chinese business and based on such news at risk to lose its U.S. business. And recently, when word-of-mouth concerning the possible sale to truth has been leveraged by competitors to undermine customers and potential customers' confidence in Cutlite. By having Cutlite entered the tranche world, we are positive. We are giving to Cutlite and it's more than 200 employees, the best opportunity to enhance their unique capabilities within an organization which is fully focused on the same business area and that will create the right environment and synergies for Cutlite to continue its growth with the success it deserves. The transaction itself provides a handover of the business at terms that take into consideration its low profitability and material indebtedness. Therefore, as the price will be set according to future performance also, the currently foreseeable price corresponds to a certain loss in terms of P&L, considering the current value of the assets. While on an early financial profile, the net financial position impact is already widely positive as we are releasing the financial net. What's more relevant for our future is the strategic repositioning effect of the sale on our business goal. With the medical sectors weight within our revenues growing from 72% in 2025 to 92% in the first half of 2026 according to the new perimeter. This said on laser cutting, I will complete the industrial sector picture before moving to medical. Following the laser cutting divestment, our remaining activities in the industrial business are now organized around 3 pillars: marking, laser sources and the conservation of artistic heritage. Marking is carried on by Livit that specialized in systems for identification and decoration of typically small surfaces and by solid state laser sources. Small logos, barcodes, QR codes are the typical output of a last marking system, where the outlet markets cover a range that goes from automotive to the promotional and the fashion world from medical devices to electronic consumer goods. Atlas covers the large surface systems for decoration and for selected technical applications. EL.En itself with its industrial division is providing mid-power CO2 laser sources and sophisticated scanning systems to Atlas and also to third parties, also developing an engineering with special purpose systems, which involve both our laser sources and our scanning know-how. The conservation of artistic heritage is by far the most exciting and rewarding business in terms not of financial satisfaction, but based on the beauty of the master pieces that our technologies are returning to lives. Business-wise, is expanding, but it is and it will stay timing. These businesses, both together will contribute to consolidated revenues for around EUR 40 million in 2026. In terms -- I mean for the whole year, -- in terms of sales, this business runs on margins that are more similar, sometimes even higher than in the medical field. The same could apply to EBIT and EBIT margin upon achievement of certain volume thresholds that were not met this year, but that were met in the past. Also in the recent past ballast, which is the largest of this organization, which is worth just shy of EUR 30 million of revenues per year. Now let's look at our main business. Within the medical sector, performance was strong and broad-based across our operating units, Deca, fantasistant, Asclera ASA and our appreciation segment and our application segments, they all contributed positively. The aesthetics segment stood out with double-digit growth, driven particularly by anti-aging applications. where we hold an international leadership position, thanks to our micro ablative CO2 technologies and other innovative noninvasive platform like on the pro and red touch flow. And also a variety of PICO and nanosecond short systems that are extensively used for the tolling application, especially in the [indiscernible]. The growth in the aesthetics segment is especially meaningful given the headwinds we face in the Hermal segment, a trend that is now taking place from several years and that in this 2026 has continued also due to uncertainties that the words are imposing on the Middle East area, which is one of the most important markets for us. And believe me, we are not leaving any stone unturned to relaunch this segment, which still represents roughly 1/3 of our aesthetics Systems sales. Just to give you an example, we had a planned months ago to participate to the Dubai derm exhibit this week exhibition investing both in the exhibition booth and in the traveling of our staff and our selected KOLs, but the move had to stay with our distributor only in a barely visited venue and our staff could not fly to the area. Also, it's not written in my notes. I would like to tell you that the success of a in this moment, which, for sure, is 1 of the main drivers of the growth in last year. is so strong that for the first time, we are experiencing a large number of competitors that are trying to blatantly copy our device. -- especially certain fares manufacturers, made great effort in trying to copy one, and we are trying to distribute systems, which are really I mean we try to call that without even getting close in terms of performance, but of course, by creating -- by creating lots of confusion on the market. I just received the report. This is why I'm mentioning to you, which leaves copies available on the market for -- to Onda pro. Of course, we are fighting with the appropriate legal means this trend. But I mean, it is something that has never happened before for any product in our product range. So back to the fact that in aesthetics, we grow double digits, notwithstanding the notwithstanding the decline in the removal sales. I have to add that the good news here is that even with the declining performance of Hero we are doing very well. And furthermore, the overall margins in the segment are improving since the decline in revenues involve the most competitive application segment. while our flagship innovative anti-aging systems bear higher margins as their value proposition is well accepted on the market, as I just mentioned. Surgical applications also performed strongly, supported by neurology and my CO2 laser solution both for E&P and gynecology. Urology system sales achieved by far, the largest sales volume within the Surgical segment. And the continuous expansion of the installed base is also the driver for future sales of consumables, each surgical procedure performed by a neurology laser system requires sterile optical fiber, and we provide such consumable to our customer base. Therefore, in combination to system sales, fiber sales are nicely aligning to a growth trend, which is materially accretive to our profitability as the sales and marketing and operation expense involved in the sales of steroid fiber are much lower than the expense and effort involved in selling a laser system. In the first half of 2026, we started up an important activity in the neurology field at the expiration of the distribution agreement with its historical distributor in the United States, Quant assistant moved to establish its own distribution and logistics hub in the United States, which started its operation in the second quarter. The positive effects of the subsidiary operation on our business and our P&L are evident from the very beginning with Quanta U.S. providing additional sales volume, gross margin and EBIT and consolidating Pasta Systems leadership within the len Group in terms both of sales volume and profitability. The therapy segment contributed positively as well. with a minor growth. A very significant agreement with our U.S. distributor was signed in July moving to a closer cooperation between our company in charge of the therapy business, ASA, and its historical distributor and the 4 largest customer. As jointly with an funded the distributor with a convertible loan that is expected to convert at first in 20% of the shares of the distributor, also triggering an option to further increase our equity stake in the future. It's a small transaction for the group, but it's very relevant one for the ASA business and for the therapy business. We also experienced in the 6 months, a very important organizational change with the resignation for personal reasons of our General Manager, Paolo Sabadell, whose employment was concluded in this month of July. I would like to thank him for the valuable contribution he made to our activities and also for excellent job in improving the managerial performance of several individuals working close to him. Based on these new capabilities, we were able to design a new organizational structure, particularly in EL.En, in Deka business unit where Paulo was operating here in our premises in Florence, where certain managers emerged to higher responsibility reporting directly to the executive directors without the need of replacing General Manager position. The outlook on our markets remains positive. I'm not telling you anything new. We feel very confident in our capabilities and in the organization that we have crafted for pursuing the growth that our outlet markets seem to be able to sustain. We are now experiencing a phase of high profitability, and this is not taking place at the expense of the investment. And I mean also P&L investment, especially in R&D. I see the products that are granting our current success like on Onda pro, I know how they have been designed, build generated and brought to success in the market. And I know that we have the capabilities to bring them up to the markets, new products that based on new technologies or on improvements of the effectiveness of existing technologies will be able in the future to replicate the success of our flagship devices. I give the floor to Enrico for the comments on our financial performance.

Thank you, Andrea. Good afternoon to everybody. Usual, we will briefly comment the first half financial results released yesterday. The half year report has been prepared in accordance with the IFRS accounting standard, reclassifying the contribution of the industrial cutting division of Catlett Penta in the discounted asset liabilities and income statement result according to the IFRS 5 for the current year. While for the previous year, the reclassification concern only the income statement due to the binding agreement send and communicated on August 7, which provides for the sales of 80% of the laser cutting business division. In the first half of 2026, the group closed with revenues exceeding EUR 246 million, up more than 9% compared to the same period in 2025, EUR 226 million, confirming the positive performance of the first quarter. In the first half of the year, the Medical segment posted growth over 10% driven by strong performance in the second quarter, plus 11.4% versus 9.2% in the Q1. Conversely, revenue in the remaining industrial sector declined. Gross margin for the first half stood at EUR 122.8 million, up 12.4% compared to the EUR 109.2 million on June 25. The improved sales margin recorded in the quarter reflects the more favorable business mix supported by the growing impact of the medical sector, which following the sales of the laser cutting business now represent over 92% of the revenue. Operating expense to EUR 26.9 million are substantially unchanged from the EUR 26.5 million in 2025 with their impact on revenue decreasing from 11.8% to 10.9% and highlighting a positive operating leverage effect. Staff costs amounting to EUR 47.1 million increased by 4.4% compared to the EUR 45.1 million in 2025, while the impact on revenue decreased from 20% to 19.1%. National cost for employee stock option plans amounted to EUR 0.5 million for the period compared to EUR 1 million in 2025. EBITDA amounted to EUR 48.7 million, up over 30% from EUR 37.5 million in the first half 2025. EBITDA margin increased from 16.6% in 2025 to 19.8% in 2026. Depreciation, amortization and provision decreased from EUR 5.9 million in 2025 to EUR 5.3 million in June 2026. This change is the net effect of higher depreciation and the provision for risk alongside lower provision for credit risk. EBIT stood at EUR 43.4 million, a significant improvement compared to the EUR 31.6 million in the first half of 2025 with an EBIT margin rising from to 17.6%. In the context of the presentation of the consolidated income stated according to IFRS 5, due to a purely accounting technique, EBIT burns a penalty of approximately EUR 1.4 million, net of which the half year result would have been approximately EUR 45 million. The impact of this cost on the income statement is neutralized by revenue of an equal value recorded in the line of discontinued operation, ensuring that the accounting it has no effect on the net result. Financial income amounted to EUR 1.7 million compared with a loss of EUR 2 million recorded in the corresponding period of the previous year. The improvement was primarily attributable to the net foreign exchange result, which shifted from a loss of EUR 3.4 million in June 2025 to a gain of EUR 0.3 million for the current period. The residual amount was generated by returns on the group's cash holdings, which are invested in short and midterm financial instruments. The share of profit loss -- profit and loss of associated company was mainly attributable to the combined effect of the group's shares in Alesa, a positive result amounting to EUR 93,000 and the share of loss reported by Pentasa in China, EUR 0.6 million. And with us is Japan EUR 0.3 million loss. The majority interest of these 2 companies were disposed during 2025. However, they continue to report negative result also in 2026. The negative balance of other net income and expenses was attributable to the full impairment of the investment in Epic International held by the parent company, Elen. -- pretax income showed a positive balance of EUR 43.4 million, a significant increase compared to the EUR 29.3 million on June 2025. Result from discontinued operation is primarily attributable to the contribution of the county division concepment in accordance with IFRS 5. Specifically, it includes the net loss of the business unit and an extraordinary loss of EUR 3.9 million attributable to the impairment of recurring amount of the discontinued operation based on the price to be received under the existing agreement. Finally, a positive component, the -- as a positive component, the items include the more different accounting classification to the application of IFRS 5, which requires that the economic effect of the sales of the sales need to be summarized regardless of their nature in a single entry of the income statement result from discontinued operation. immediately before the period result. This positive amount neutralized the negative amount mentioned before when we are talking about EBIT. The group net result amounted to EUR 26.1 million compared to EUR 17.9 million in first half an increase of 45.4%. The tax rate for the period is 32%. In this chart, we can see the pro forma income statement without the IFRS 5. So with the consolidation of the cut in division that are discontinued in the previous version. Without the application of IFRS 5 revenue for the first half of 2026 would have been EUR 300 million compared to EUR 285 million of the first half 2025, plus 5.2%. Under this income statement configuration, the industrial sector would have seen a poorer performance, minus 8% versus minus 4% due to the cutting segment. As regard gross margin, the same drivers highlighted in the previous version of the income statement continue to apply, particularly the higher contribution of medical revenue to the total turnover and the more favorable sales mix within the Medical segment. Even including the cutting segment, EBITDA and the EBIT recorded strong double-digit growth of 23.6% and 29.7%, respectively, together with an improvement in both margin as impact on sales. Moving now to the balance sheet. The comparison with the beginning of the year are affected by the fact that the cutting business unit was reclassified as discontinued operation only on June 30, 2026. In terms of invested capital, there is a slight decrease. The net working capital sales ratio is in line with the last year's figure, while Roche shows a significant improvement. Investment during the first 6 months were EUR 7.5 million. Moving now to the analysis of the cash flow and net financial position. The group net financial position increased by approximately EUR 12 million during the first half of the year, rising from EUR 172.2 million as of December 2025, to EUR 184.5 million as of June 2026. As illustrated in the chart, the increase in net working capital is a recurring feature of the group's business cycle during the first half of the year and absorbed approximately EUR 15 million of cash. Capital expenditure already mentioned, amounted to 7.5%, while dividend distributed in May by parent company and certain subsidiaries amounted to EUR 21.3 million. The contribution to the net financial position arising from the asset a for sale reflects the recognition of the net financial debt on December 2025 for EUR 16 million relating to the discontinued business. Revenues increased across all medical application segment. The Aesthetics segment performed strongly plus 11%, driven by anti-aging system despite weakness in high removal. Surgical activities recorded a more significant performance, plus 15% mainly supported by the growth of system for urology. The therapy segment also performed positively, plus 1%. The slower revenue growth for after-service and sales of consumable reflect the loss of revenue from with us last year, EUR 1.5 million, net of which growth would have amounted to 6.2%. Within the segment, nearly 60% of revenues is attributable to sterile optical fibers for urological surgical procedures, which recorded a 12.1% increase in revenue over the half year. On Industrial Applications sector, revenues for the period were significantly lower than in the previous year, mainly due to the disposal of the laser cutting business, which reduced the scope of the operation or the industrial application sector, the chart doesn't show the discontinued cutting division anymore. The performance of the residual division, we are negative marking minus 17% and lasers minus 50%, while after service and components revenue was particularly positive, recording a turnover of EUR 5.7 million in the first half 2026, up 34% on the EUR 4.3 million in the corresponding period of last year. The contribution of these activities also reached 30% of the residual overall industrial turnover, confirming the growing rate of the most recovery and visible revenue components, a more complete representation of the business trend, it should be noted that the turnover for the first half of 2026 attributable to the [indiscernible] was equal to EUR 53.8 million, down from the EUR 60.2 million recorded in the first half of 2025, minus 10.6%. Geographically, the medical sector decline of 16% in Italy compared to the robust growth in Europe, plus 8% and particularly strong performance in non-European market plus 17%, which accounted for the main growth area in the consolidated revenue during the period. In Europe, as plain extensive network supported encouraging result in the DACH region, while non-European market growth was driven primarily by the Paris, the industrial sector showed a strong recovery in Italy, plus 8%, thanks to [indiscernible], while it registered a decline in Europe, minus 15%. The Northern European market, the trend is stable. Andrea, please go ahead on the guidance.

Okay. So you see that we firmed basically the guidance. We're going to grow revenues over 5%, and we are going to improve EBIT margin. We're going to improve EBIT margin on the previous year. This deserves maybe a few more words. At Board level, we had this discussion about the message surfacing from the confirmed guidance apparently disappointing since you would have expected once the least performing business unit is removed from financial reporting that better financial results are achieved and therefore, a stronger guidance would be released. Let me clarify why that's not the case and why we are guiding you to a very strong financial results, our guidance, the one we released in March, was and is defined in terms of improvement with reference to the previous year. Part of the recovery in sales and in profitability that we were expecting in 2026 was to be generated by a strong recovery in the cutting business whose performance was quite weak in 2025 and loss in the second half. Therefore, under the new scope, the Match mark is much more demanding also considering the outstanding performance of the Medical business in the second half of 2025. So by confirming the numbers of the guidance with a different benchmark, we are confirming that the results in the second half will be extremely strong. And at this point, we are -- we closed our prepared remarks, and we are open to answer your questions.

[Operator Instructions]. The first question comes from Giovanni Selvetti from Berenberg.

Congratulations for the results. I have a couple of questions. The first one is what's driving the weakness in the Americas sector in Italy and if you expect any improvement in H2. The second is maybe just to kind of remind us with the new capacity expansion of optical fibers in Samarate with Quanta, what would be the maximum revenue that can be generated in this field. In your H1 report, you also mentioned higher efficiencies and automation in this new plan. So I was wondering if it's reasonable to assume an optical fiber run at an EBIT margin, which is higher than the 20% of the overall medical sales. The third is maybe about Juan, if you can elaborate a bit more about what you were mentioning before that you start to see already positive results and I was wondering if you will use quant distribution sales also for Asclepion in surgical that based on your financial report, there's already some new FDA approved devices. And the last one is more strategical in the sense that you have been doing an excellent job in, let's say, disposing assets recently. I was wondering if given also the cash position, which increased further and is going to increase further in -- do you also have some targets for buying something or if you just prefer to invest in organic growth.

So taking the questions in order, medical sector in Italy, yes, we had a decline in revenues we are quite confident the main component of the decline comes from the professional aesthetics -- last year, we also had net sales quite expensive 1 place sales. I mean, we had a burst of sales generated by a very uncommon lead, let's say. We know that we are recovering in this segment in the Professional Beauty segment, and we already did in July and August also closing almost closing the gap. And we know that also in medical, where we sell through the network of DeCA, the Renaissance brand, which covers both DeCA and Quanta has a very strong backlog. And I don't know if we will be able to completely catch up. But for sure, we will be able to close to make the gap much smaller in the second half of the year. About the sales of fiber optics, there, they were up about I mean, more than 10% in the half in the first half. This is a trend that should be maintained and will not count on any production capacity improvement because we still have enough capacities until the 1 year from now, because the investment in the new fiber optic manufactured facilities is articulated -- we started with the real estate, and we put in white, then we installed the automation which is a revenue in place, but it will take longer to get the full certification to provide this medical device and the full certification for the plans to be active is not expected until the second half of next year. In the meantime, I mean we expect, especially based on the continuous sales of system and so the enlargement of the installed base this growth trend of sales in fibers to continue, as I said, without the need of increased capacity because we can get the with the current capacities. But with the new capacity being ready to step in 1 year from now when the quant disease will be materially higher than today if everything goes according to the plan. The new distribution in the United States for Wanda is 1 of the investments in terms of internal growth on the internal growth path also to set a relation to your fourth question me. This company is a managing more than direct sales is more managing other distributors. And this is a job that was doing the former distributor. And I mean they accounted for about EUR 6 million of sales in the quarter because we are talking about quarter only, even though we are making comments on the 6 months, but the company wasn't operating until the beginning of the second quarter. And so this will be a main contributor to the sales in the surgical business. And concerning let on sales, you are right, Asclepion is getting the FDA clearance for the new device which has served the peculiarities, which diversify it from the plant offer. But no, there are no plans to have the Quanta distribution hub to be used also for escalation as system at the time. according to our business strategy, Asclepion and plant combines, of course, compete on the market, and the only place where they share a distribution network is in Italy. -- where Deca Renaissance streamlines the products of Quanta system. And it was like that in Germany also. But recently, Quanta System decided to exploit a different distribution channel and they're also running themselves unless something changes. But I mean, in principle, you know that our brands compete monthly but compete worldwide. And so they don't use the same distribution partners. Finally, M&A, cash, you're right. The net financial position is improving and will improve. There is nothing new about any possible transformational M&A transaction. As we did in the recent past, we are targeting smaller transactions in which we feel more comfortable in widening, especially our distribution footprint. I can tell you we are examining new transactions both in Europe and in the Far East. Both with Quanta and with other companies, we are quite active according to our standards in pursuing initiatives under this point of view, but none of the initiatives we have on the table today is expected to be of a size that I mean uses a considerable part of our cash. So this is the answer. There's nothing really new under this point of view from what we have been always saying that in the last years about the attitude of the company to expand. We are expanding nicely in our own business, and we are making all that is needed to expand this. We didn't find yet anything interesting to put down a sizable investment. It's not that we're not looking for it. But as I explained to you, we want to be very cautious because when becoming much larger, there are a certain complex, it is a certain number of complexes, which are driven on the management of the group and on the market position of the group that we -- we want to make sure we are not getting into by investing a lot of our cash and creating problems in the organization of the group. So we -- it's not that we are not thinking at all, but we are very cautious in making a very important step.

And now the next question is from Carlo Maritano from Intermonte.

Good afternoon, everyone. I just have 3 questions from my side. The first one is on the medical business. As you said before, Italy was a little bit weak in the second quarter, while the rest of the world was strong. You mentioned the Far East. I was wondering if you could provide us more color on the countries that are performing the best. And if you can update us on the situation in the Middle East, if the situation is going back to normal after the first quarter or if the current situation is still causing some disruption. The second question is on the marketing business. that remained fairly weak in the second quarter. But if I look at your results, it seems that gross margin and EBIT are basically at the same level of last year. So I was wondering if you can provide us some color on the drivers behind the higher profitability despite the lower sales. And the final one is on duties I don't remember exactly how duties work for you, but asking other companies, some are reporting the reimbursement of some duties -- so I was wondering if you had any news on this.

Okay. Again, in Joe, Far East and Middle East -- the -- we are very strong in far east for sure, the most successful country for us in [indiscernible] Korea, which especially in the aesthetic business, it's something extremely significant. Because, as you know, there is a shift in this moment in the trend when you look to aesthetic procedures, wins Goods Korea as one of the main sources of the aesthetic trends in the work. So being able to sell a technology in a country where there are -- there is plenty of technology developers. I mean, many of them are engaged in coping our systems today, is a sign of great vitality and great strength. We -- I mean, when we talk about Middle East for aesthetics, the most relevant countries typically are Korea, Japan and Thailand. And also now, we are doing very well in Indonesia, which is something new but -- which is by far the most relevant country in terms of population, most part of China, it's the most relevant part country in terms of population. So this is the Far East. Middle East, what is normal and what is not normal, the more not the word that I was mentioning before, and I'm seeing that Dubai the exhibition being mainly held our distributor with all these people in both I mean we're getting used to something, which is not a or but close to a war in that area. Bottom line, there are certain countries in the area which are performing very well. There are mean there is commitment to continue. We're expecting several visitors for the Deca Academy, which is an academy we hold from time to time here in Florence, they are coming from Iraq, coming from Saudi Arabia. But I mean, the overall the sales in the Middle East continue to be weaker than last year. They didn't drop to 0, but they are just weaker compared to last year. The market business, I'm not sure at the numbers you are looking to in terms of profitability. But I can tell you that this year, we had smaller sales both in lasit in land where -- last is 100% marking even though it has its service part as well. And Eland has both marking and laser sources as it manufactures both laser sources, then laser scanning heads. We had a higher volume of sale in Atlas, which is the the company that manufactures large surface marketing systems. And so the Otas recovered in profitability, Lasit lost in profitability. This is the situation. And maybe we can see together where we have seen an improving in the profitability of the marketing business. I believe it should be in overall a little bit -- I mean, more or less on the same situation because even though mark, even though high margin is improving. The volume wasn't enough to cover. So maybe when I said that they have high margins, mergers comparable to the medical system. I was referring not to EBIT margin, but to gross range. This is what I was referring to. In the they have historically last EBIT margin, which is comparable to the medical system and gross margin, which is even higher. The other companies have high gross margin, but due to the missing leverage effect, than ever reached interest in EBIT margins in the past. So I'm very prepared on tariffs because I talked to our distributor actually in the -- for the cutting systems, but -- which is, I mean, somehow in the past, but still, I mean, we work with him. And it's an important customer for Catlight.We are not operating -- we're not operating any company in the United States when the tariffs kicked in, -- now the only operational company we have in the United States is Quanta Inc., which started, as I said, operating in April 2026. -- the companies received reimbursement in the month of July and in the month of June for the tariffs, they paid under the first -- the first round of tariffs, the 1 that the Supreme Court deemed unconstitutional. And by this way, allowing the path for reimbursement of these tariffs. The other tariffs that have been levied on the companies based on different principles are currently being paid. We -- I mean, our U.S. distributors, given panels, if they get revorsed for the -- this part of the tariffs they paid, probably they'll try to hide this information to us because, of course, they were claiming they had higher cost than they wanted us to somehow participate in the past to this new expense that out of the blue emerged on the transaction between them and as I expect that they have been reimbursed for the share of the tariffs that paid for that period, but I don't have evidence today. Anyway, it's not us. We don't receive any wire -- so the IRS because we are not directly operating any activity in the U.S. and the tariffs were levied paid by our distributors.

Just so far the question is on interest rates that are increasing in the past month I was wondering if you have any evidence of a slowdown from your clients, especially in the U.S. or if the demand is so strong right now that interest rates don't come too much. In this small line in the U.S., overall, we're doing very well. We have some let's say, minor concern, but it's not a general concern, but it's a specific concern of certain line of products. I -- we will meet our distributors in the next weeks and have a clear picture about this. At the time being, we are not being let's say, we don't receive any claim, any request based or any excuse because of order not being placed or being proposed related to the raise of interest rates and to higher cost for customers that keeps customers away from purchasing our system. So for the moment, there is no effect under this point of view.

We now -- we have another question from Andrea Bonfa from Banca Akros.

Congratulations for the results, Andrea and enrico very quickly, some of my questions are being answered by the way. But -- would like to know a quick update on your side on the timing to close the disposal of the Metacaton business? And then a clarification, the performance of medical services because if you are claiming that the fibers keep growing double digit. And although there is some perimeter effect, the services is flat. So if you can maybe comment on that. And we would love to have a pro forma EBIT for 25, if that's possible or we can try to figure it out and more or less, these are my question for [indiscernible] case, I will add something at the end.

Okay. The pro for 25 we get sold media stock and every would prepare a problem. Yes, the service has An excellent performance in fibers for urological business has a weaker performance in general in the static field, I mean, it's basically time and material and has a onetime effect that we are deconsolidating the -- with us. We had the Japanese company that -- of which we saw the majority in March 2025 was still accounted for in the 2025 financials in the first 2 months and was -- actually, they had relevant contracts on the installed base. There were -- I mean, their revenues was in in service only. And so there is a deconsolidating effect, which is worth, I believe, something like 3%. Net of this effect, the growth would have been 6-point something. And we believe that concerning certain aesthetic devices. Also, there is a reduction in the consumption of -- in the cost because we are selling more devices that are less demanding in terms of maintenance and continuous expense and less of devices, which are more demanding in terms of maintenance and continuous expense, especially you have to consider that the high-power removal lasers is a high consumer of service because it needs replacement of laser lamps and laser hand, which is not only a consumable, but is also a relevant technical service that needs to be performed by qualified service technicians and so as the market for these devices is comparatively reducing with respect to the other sales of simpler systems, we are also experiencing a lower a lower demand under this point of view. But in general terms, I expect the whole aggregate to be growing more or less in line with the rest of the business when we will get at the rest of the year -- at the end of the year.

And on the timing to close the...

The timing to close Andrea, yes, there are certain conditions that needs to be fulfilled. I actually have meetings today with a potential buyer. They have expectation to close very quickly. I mean the contract has 6 months long stop, so-called long stop period. Really, I mean, today, I will say that we are very confident that we will close within the end of the year. If within the end of the year, will be October, November or December is hard to say at this moment. But I mean, it shouldn't be a matter of several months just this period. I really count that we will be closing as soon as possible. I mean we would like to close in the month of October, if it could be possible. We have to see if we get all the related permission and small things that are missing in order to finish the deal in the way and the form that needs to be finalized.