Prysmian S.p.A. (PRY) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Prysmian First Half 2026 Integrated Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Massimo Battaini, Chief Executive Officer of Prysmian. Please go ahead.

Good morning, everyone. Thank you for joining this call, quarter 2 results. We are super excited to highlight that this is the best quarter ever of Prysmian, EUR 730 million EBITDA, 13.4% EBITDA margin, 9.4% organic growth. So as you see it's a great quarter from the numbers perspective. It is also great in terms of the achievement of the appeals and mortgage deals with a EUR 10 million in the optical space over the next 10 years. Also, on the sustainability side, we exceeded our expectation with that 46% of the current revenue leading to sustainable solutions. When you read 46%, you need to read almost EUR 10 billion, where we provide customers with low carbon footprint and solution that has achieved their own targets. 42% is amazing reduction of Scope 1 and 2 over the design of 2019, setting great confidence in achieving the net 0 by 2035, well ahead of everybody else. Moving to this quarter 2 perspective, I think is important to share these slides -- not moving up, right? It's important to share this different perspective, which we are very proud of. You see in quarter 2, we delivered -- we created EBITDA higher than what has taken us more than 12 months in the past. In '19 -- 2018, sorry, we generated EUR 700 million EBITDA over the full year. In 2022, it has taken us 6 months, 1 semester, to deliver a similar EBITDA. Now, we did this in 1 quarter. This is a strong sign of the effectiveness and the good execution of the strategy that we designed years ago. So the stats that it is basically set on expanding the transmission business, growing leadership in North America, thanks to the acquisition. And also, shifting our focus from cable manufacturer that was our past driver of growth to solution pivot. Entering to the digital solutions space with more detail, I think you read the press release. I'd like to give you more color around the deals. So these are EUR 10 million revenues that applies to the optical space. There is a time lag in the change -- in the slide change. You see at the bottom on the right that our digital solutions business covered 3 of bits. One is optical, which is -- which account for 40% of the revenues in digital; connectivity, so components to connect cables; and MMS, which is copper cables, both the last 2 accounted for 30% of the total revenue. You see on the left chart, the green bars has played our involvement in data center activities. The horizontal line sets the scene relative to the past situation where we had in '25 green data center exposure -- data center exposure in green and in gray fiber to the old business. You see that we're adding this EUR 1.1 billion at run rate incremental revenue. At the same time, we are reallocating the best parts of the original to the own business to data center to gain even more share. And when you look at the 2021 perspective, you see that 19% of our revenues and even more in terms of EBITDA belongs to data center expansion. And we see ourselves as the company enabling the data center expansion better than anybody else because alongside optical, we have the whole range of -- a broad range of power cable products. Last to mention is the submarine telecom interconnection long haul, thanks to the acquisition. So this is definitely a transformative opportunity for the digital social space in Prysmian. From a very sacral business into a fast-growing business that is meant to chamber a sizable EBITDA by 2030-'31. We'll give you more detail about this at the next capital market. Moving to the semi-business, transmission continues very strong journey in terms of EBITDA margin at 22%, 20.2%. In terms of organic growth, extremely solid, 14.3% in quarter 2, and in absolute value, EUR 180 million in quarter 2. When you compare this to same quarter last year is almost EUR 60 million EBITDA accretion. In Power Grid, we confirm what we basically told you last quarter, you see a significant rebound in EBITDA margin from 12.4% to 13.8% sequentially with EUR 135 million EBITDA, set partly by strong demand in U.S. and also strong demand in Europe. But I will say that there is a kind of solid demand across all the other regions because the strengthening of the grid is a very common underlining driver of growth across all segment or market in our geographies. The organic growth was particularly satisfactory at 13-point -- 13% increase in this quarter. Moving to Industrial Construction. Also here, we improved significantly EUR 228 million EBITDA, EUR 20 million sequentially over 2025 quarter 2 with a EUR 5 million headwind coming from, even better when we excluded the ForEx effect. EBITDA margin rebounded from the 13% of quarter 1. We had a very strong quarter 2, especially in the United States with a very strong month of June inside this quarter 2. Organic growth in U.S. is higher than the group average, 13.4%, driven by data centers, so but not only also driven by the nonresidential market that has showed different signs, new signs of improvement vis-a-vis a kind of a flattish situation in 2025. Specialties is still suffering from weak demand in elevator in oil and gas and profitability under pressure in the automotive business that is remaining with us. But we maintain stable is a solid driver of EBITDA in different regions and is a nice complement to the last and construction business because those are sophisticated -- sorry, cables that we coupled with business, 235 equipment alongside, so it's an important complement and portion of our portfolio. Digital, digital is the start of the quarter, you see the standing EBITDA margin, 24% coming from 20.6% in quarter 1, and 24% is now the end of the day. It's not the end of the story. The 24% we go further up in the future. So this is said to be the most profitable business from the EBITDA margin perspective inside of the portfolio, beating the transmission business at 21% EBITDA margin in the quarter. You see our sizable is the increase over quarter 2 '25, EUR 60 million, out of which EUR 30 million are attributed to the perimeter change. Last year, we had Channell, including the port only for 1 month. This year is for the full period. But the rest from 60 to 90 channel from 90 to 122 is DAC's original perimeter. And you see the power of pricing efficiency, scale and the shift from to data center. Our sustainability and innovation KPIs are also extremely satisfactory. The 25% recycled content in quarter 2 is a sign of lower reliance on the tight copper market in the United States. We recycle more waste than we used to do in the past, globally in our cost and the shortening the -- and securing the supply chain and sharpening anytime. 46% revenues commented already before. This 32% of Vitality KPI is also an important indicator of a crucial and key for this company is to continue be nourished. This is starting at 1/3 of our revenue have been achieved 2 products that we launched in the market in the last 2 years. And when in terms of our revenue accounts for EUR 7 billion. So we have, in this year, EUR 7 billion revenues generated by new products. Why is this important? Because you probably set higher share of wallet, it means higher profitability. It means a different pricing power. It means a different value provided to our customers to strengthen our relationship. So key parameter for our growth in the future as well in the past. For example, of the innovation earlier, fiber is an innovative solution to convey data through air, so that faster, 30% faster than standard glass technology, allowing the center to this further space out involving to create a congestion on existing energy grids, which is the real constraint to the data center structure. And also in the transmission business, a very innovative solution to very deeper, greater than the standard methodology making the network more secure, more resilient and providing customer in terms of reliability of the connection. Let me hand over to Francesco for more details on the financial results of the quarter.

Thank you very much, Massimo, and good morning to everybody. As usual, let me use the profit and loss to recap some of the messages that Massimo has already passed. The organic growth in the first half was in excess of 7% with a very good acceleration in the second quarter, reaching 9.4% in the second quarter. I have to say that all the segments of the company performed extremely well in terms of organic growth with a growth of 14% in Transmission, 13% in Power Grid, 9% in ILC, 18% in Digital Solutions with the only little exception of specialties, which was substantially flat or slightly negative in the quarter. The performance was very strong in terms of EBITDA, as Massimo said, the best yet quarter at EUR 730 million with sequentially increasing EBITDA margin at standard metal at 15.4% and with a very substantial growth from the second quarter of last year, plus EUR 125 million, but also sequentially from Q1, plus EUR 130 million, as you see, from the right box of this chart. The lion's share of this growth was taken by transmission and digital solutions plus EUR 54 million and plus EUR 65 million, respectively. Of course, with the support also of a great performance of Channell that Massimo mentioned. Power Grid improved the margin sequential, which is very important. And as you have seen, organic growth in Power Grid, both in Europe and North America was extremely positive. Electrification and particularly I&C performed the best quarter in the last, I would say, 18 months Yes. So very positive, specifically in North America. Very good note also on the group net profit that reached EUR 569 million in the first half, by far the highest ever. And this is other than the EBITDA and the operating result, supported by a very nice drop in financial charges that you see here. slight improvement also of the tax rate. And this assess our group net profit estimate for the full year in excess of EUR 1.2 billion, which will mean a growth of earnings per share, which is significantly beyond the original targets that we had set. Let me now turn to the cash generation, which was solid, close to EUR 1 billion in the last 12 months as of June, a bit lower than the 1 that we had in Q1. The main reason -- I would say, the only reason is the very high impact and adverse impact of the rising metal prices, which was -- which reached actually the peak in the Q2 and which will progressively decrease in terms of adverse effect in the second half. Massimo will show you the updated guidance on the free cash flow, but we plan an extremely strong second half on the back, of course, of the contract with Molex, which will bring in a very substantial down payment. But even more importantly, on the back of a very strong cash flow coming from the transmission business. This year, the transmission business cash flow is mainly concentrated in the second half, and we are also doing great in terms of improving our working capital performance and efficiencies. And all this will contribute to this quite, I would say, strong target that we have set for the year, and Massimo will explain in a while. I think I move back to Massimo.

Francesco, thank you. So quickly, to main challenges, the EBITDA, we raised this EUR 2.7 billion of the original guidance to EUR 2.850 billion, so a range of EUR 2.8 billion, EUR 2.9 billion is were saying that we have super high confidence to be the EUR 2.850 to end up in the top portion of -- in the upper part of the range to EUR 8.529 million. You'll see that safety South is already quite close to the target we set for 2028 at the capital market in 2025, which means that we will certainly in the next quarter 1 -- sorry, we will go out for a new Capital Market Day, providing and disclosing the trajectory from 2027 through 2030, 2031 with organic growth and a strong driver explanation of where we see this growth in the different geographies. And is an amazing number. Now EUR 1.7 billion is of course the say free cash flow of the company. It is true that there is a EUR 550 million coming from Molex as a down payment, but important to mention that there are significant increase in CapEx, partly to support digital solution capacity expansion, but partly to start showing the growth that we had to underline that we will disclose next year at the Capital Market Day. This is organic across many segments and main geographies, North America, but also Europe, but also other regions in transmission. So the EUR 1.7 billion is the effect of Molex on the 1 hand, some additional CapEx in '26 that will continue stronger in '27, and beyond, with the efficiency and the additional EBITDA offsetting the metal versus the original guidance. And the metal impact is around EUR 250 million. With this, I move to the closing remarks, so great performance, super satisfied by the change in pace of the company, the company showed this quarter. As I said before, we have -- we are pleased unique opportunity to be the only 1 serving data center with the whole product range they need for this function. We are on investing growth in '26 and beyond '26, and acceleration, I mean, paves the way for a new Capital Market Day in 2027. I would like to hand over to you for your questions and more details about our success story.

[Operator Instructions] We will now take our first question from the line of Daniela Costa of Goldman Sachs.

I have 2 questions. I'll ask them 1 at a time. But first, I just wanted to follow up on sort of the going forward, how should we think about fiber margins from here? Should we think about sort of having a linear step up. I think in the past, you have commented about mid-20% EBITDA margin, given all that happened in that segment and your new exposure. Is that still appropriate and sort of how the path is more linear, more back-end loaded? If you could give some color on that, and then, I'll ask the second one.

Yes. The path, Daniela, is pretty linear through 2029 because the shorter market will continue until then. And we I mean, accurate targets, then we'll disclose at the Capital Market Day. We see us in the upper part of the range, 25% to 30%. So we will beat the 25% mid 20s and consider that's not only fiber will drive the growth, but also connectivity, especially the channel portion, which is also partly exposed to the data center will support the EBITDA margin growth in the coming quarters.

Sorry, 25% to 30%, that's kind of what, for the '29 period that you've mentioned or that's sort of throughout the period and then you...

Is linear from '27 to '28 to go as high as between 25% and 30%...

Okay. And then just second question. I think in the past, you had tied up doing a date on the medium-term targets with sort of your M&A ambitions. I wonder if should we read anything into the timing of the CMD and that, if you could update a little bit how you're progressing on sort of your ambitions there?

We are making progress. We analyzed a lot of companies in the last 12 months, and it could well be the case. We cannot comment much, but it could well be the case there before then will have a perimeter change. So that new ambition will include both organic and M&A perimeter -- additional benefit from the perimeter. .

We will now take our next question from the line of Vivek Midha of Citi.

Hope you can hear me well. My first question is around the Molex deal. You've highlighted the figure of over EUR 10 billion of cumulative optical data center revenues, of which Molex is EUR 5.5 billion. So within the other portion of that figure, could you maybe give us an indication of how much of that has already been signed as of today versus how much you're anticipating in deals to come?

Thank you, Vivek. The [indiscernible] as you said, bonuses hyperscalers, all players in the infrastructure deployment of data center function. And the balance is not as long in terms of duration as the Molex deal which is a 10-year deal. But for the next 5 to 6 thesis also covered by deals already signed. We are also thinking of making a second wave of capacity expansion because there's still a lot of demand unsatisfied the market. We keep receiving a request for additional volume delivered through existing customer, new customer, and I'm sure we are pretty confident that over the next 2 quarters, we will sign new deals in addition to the 1 that we agreed will end in the last 2 months.

Just a follow-up to clarify. So is that -- are those -- that second wave of deals over and above the EUR 10 billion? Or is this part of the EUR 10 billion?

It will be over and above EUR 10 billion agreements.

Okay. Understood. My second question is on the IMC margin. The very strong organic growth, particularly in the U.S. The margin is down year-on-year. The U.S. is typically margin accretive in that business or it is margin accretive in this business. So why is the margin not stronger? And maybe could you elaborate on how the margin has developed in both Europe and the U.S. ?

Yes. Thank you, Vivek. Yes, you actually an update. We also have another region that is highly accretive, which is LatAm. And so the margin LatAm are not as high as U.S., but close to. And in LatAm, we have, I mean, soften in margin in a couple of countries, 1 is Columbia, 1 is Argentina. And this is the reason why year-over-year, the margin are still slightly down. Also mentioned that the quarter 2 was a strong quarter in U.S., but June was the strongest quarter -- the strongest month ever. April and May were not as strong as last year. And so when you compare the year over year, the margin of quarter 2 '26, '25, bring it to cost did very well in June, but not as well as quarter 2 last year in April and May. But mainly the major effect is this weakening in the LatAm region.

The next question comes from the line of Akash Gupta of JPMorgan.

And I got 2 as well. The first 1 is a follow-up on these framework agreements and that you have signed in optical fiber cable business. So Massimo, you previously said margins of Channell are higher than your remaining digital solution business because they sell directly to hyperscalers while your products were going through some intermediary companies that buy your products and then sell it to hyperscalers. So the question is that when you sign these optical fiber cable framework and you have Molex, you have directly with some hyperscalers. My question is that does the margin in framework agreement directly signed with hyperscale-er -- hyperscalers differs then when you sign with companies like Molex? Or are they same? So that's the first 1 to start with.

Yes, interesting perspective. The margins today are even higher than what we have in the long-term deals. The first was that we wanted to trade a longer duration and security margin over a longer time than the best margin possible in the spot business. . When it comes to comparison comparing Molex to the hyperscalers, the margin across these 2 different customers is pretty much the same. Marcos new deals or recent deals have better margins than what we signed 2 months ago. And some of those agreements, Molex was signed 3 weeks ago, but some of the other agreements were signed 2 or 3 months again. So there is a close alignment in margin between the 2 them. There is a certainty today and is a terminal or October, November for sure. Better opportunity to enhance margin with new builds because they said the capacity is still what was 1 year ago, and for the next 2 years, we remain unchanged. And what matters is the ability to shift from all the traditional fiber customers to data center. But also bear in mind that the market is buoyant within favor of our customer because they are the reform volume as well. So margins are similar across the whole customer base, but they will be progressively grow. So new deals will be a stronger profitability. China margins are higher because it's not cable. It's component is plastic, metal frame or the stuff, and the bespoke solution, partly for data center and partly for fiber today.

And my follow-up question is on guidance. Today, you are raising guidance by EUR 150 million at the midpoint. And I'm curious if you can help us split how much of that is because of digital solutions versus the rest of the company? And when we look at the upgrade that is coming from Digital Solutions, how much of that is already secured based on your renegotiation and higher prices from some contracts that are getting rolled over? And is there any scope for renegotiating some of the existing contracts in the second half that might bring upside to this EUR 150 million?

Very pertinent question. The 2 drivers of growth behind this guidance is solidity in power grid and electrification, which is the baseline but certainly, transmission and digital solutions are the 2 main contributors to this EUR 150 million or to whatever the number would be that result with would be definitely higher than EUR 2 billion under. Transmission this year will add EUR 200 million EBITDA to last year. Last year, we ended up with EUR 580 million. You can imagine a number this year, EUR 200 million higher. And this is impact in this guidance, not fully, but in this guidance. . Digital solution is adding easily EUR 60 million, EUR 70 million, EUR 80 million to the previous guidance due to the repricing of the old business, we see margin improvement in digital solutions every single week. Every single week, we continue renegotiating contracts, frame agreements more content with existing fiber to their own customers. But every single week, we are telling customer, we are disappointing customers because we have more fiber to give them. So there will be additional chances to build extra profitability and digital solution in the coming months. certain point, we rationale. Now the market will be fully saturated by existing capacity is for sale, but it's the capacity. There will be no room for new deals, but new room for the deals will come from the additional capacity expansion that we are thinking or negotiating with other players, hyperscalers or infrastructure players in the second half of 2027. So EUR 150 million basically solid growth in power grid electrification the 1 and a stronger contribution from transmission and it solution to top up this number to EUR 850 million and beyond.

We will now take our next question from the line of Max Yates of Morgan Stanley.

So I just wanted to start up on the hyperscaler agreement. So I think in that press release, you said that you expected your hyperscaler revenues to be around EUR 1.1 billion by 2031. I was just trying to get a feel for how much of your total digital solutions you were expecting the hyperscalers to be? Because look, where I'm going with this is I was slightly struggling to reconcile the numbers. I think you previously said hyperscalers would be most of your optical business, your optical business is typically 60% of your total business. So it just seems like quite a low number given where consensus revenues are. So maybe just any kind of -- any color around that, how much of that business should you be that number actually doesn't seem that high in the context of where consensus is?

Yes. I like to -- I already said that, first of all, the breakdown the digital until revenue between the 37 optical connectivity and MMS. Take 2025 revenues, digital solution amounted to EUR 1.6 billion, out of that EUR 1.6 billion, you should see EUR 600 million more or less optical that is more or less equally split between connectivity and MS. When I say EUR 1.1 billion, data center is increment. So the EUR 600 million plus EUR 1.1 billion will make EUR 1.7 billion in the optical space. In the data center piece, inside of the space, EUR 1.7 billion of revenue by 2030 will account for 85% of the total debt. Today, in the '25, the EUR 600 million revenues in Optical, we had more or less EUR 200 million of data center revenues. So from EUR 200 million to EUR 1.1 million additional, but at the same time, the aero the own business, we have shifted to data center. So overall, I said EUR 1.7 billion revenue optical total for 2030, take 90% that will be deficit. So EUR 1.5 billion.

Yes. That's very helpful. And maybe just a sort of bigger picture sort of question on tariffs. So we've seen obviously a huge amount of moving headlines. And I imagine it's very difficult for you to kind of keep on top of. But maybe just sort of your latest on-the-ground perspective of what all of these tariff headlines may be split by copper and aluminum is actually meaning for your business in terms of kind of underground activity? How it's driving competitor behavior? Whether you've seen any noticeable change in that in the last 3 months? And whether these kind of newer tariff headlines you expect any change maybe in the next 3 to 6 months as a result of any of the developments?

I think we confirmed the trend that we noticed in the market in the last 2 months. One in as far as the cable is concerned, when they shifted from 50 percentile to 25% of platinum value of the cable, we noticed changes in there in the market, in part has become less relevant because they had to be clear the all value cable and pay on total. This brought them out of competition in terms of price that could not offer any longer a better price than the lower player artisanal cables benefit from more pricing or margin power in the last 3 months. As far as there is a concern copper, nothing changed. As far as the future targets concerned, I don't have a clue. But I think will help again local player to strengthen their position in the market to become even more relevant than importers, and hopefully, to bank it from incremental markets.

We will now take our next question from the line of Sean McLoughlin of HSBC.

Can I start with Power Grid? I mean, impressive organic growth. And you talk about the positive trajectory continuing. I'm just wondering where you are in terms of your current loading capacity. And if we look out over the next 12 months, what is driving that positive trajectory? Is it more capacity coming online? Is it pricing? If you could just maybe flesh that out a little bit in more detail. That's the first question.

The growth that we planned for our perimeter in power grid is coming from additional capacity. We approved that 1 year ago, additional medium base capacity in West and in Europe. And 2 months ago, we approved another wave of medium capacity increase in U.S. partly on that capacity, we serve the -- in City in the asset construction market, call it EPC or data center expansion, faster than remote will be for utilities because don't forget, this 4 grids that we have in U.S., mostly in Europe needs continuous reshaping and strengthening and hardening. Because the additional electricity demand increase across the globe. We are also positive about infamous cost increase pass-through to the market in order this time lag effect due to the existing formula -- and -- but since the market is buoyant, prices is increasing the market, we will be able -- we should be able to restore this famous 14.5% or 15% EBITDA margin in the coming quarter, maybe part, maybe quarter 1, I would say, but the growth opportunity is amazing. We are currently flat out in terms of capacity in Europe and North America. If you any more, we will sell more at a good price.

That's very clear. The second question is back to Digital Solutions. Just on Slide 5, to understand, firstly, the cadence of the incremental revenues, which look to be peaking in '28. And then, you have a kind of a further pickup in 2031 after state -- I mean, I guess, '28 is related to higher CapEx in '26 and '27. Just wondering what's happening on the tail. And also the substitution switch of current revenues into optical. Is that -- again, should we assume kind of a linear progression, '25 to '31? Or is that switch are going to happen much more quickly?

So the steady level our capacity expansion run rate will be achieved by 2030. So in 2030, we'll have additional capacity equivalent to EUR 1.1 billion incremental revenues in the data center space in the optical business. Until then, we will have a marginal improvement on capacity from '28 onwards, but the full run rate is 2030, but will have an important benefit by shifting away from fiber to data set. And so I don't know if I answered the question. But imagine today, we have EUR 600 million in optical business. In 2030, we will have EUR 1.7 billion in optical business. Today, last year, we had EUR 200 million in datacenter out of the EUR 600 million revenues. In 2030, we'll have EUR 1.5 billion revenue in data center. I hope that this answer the question, Sean.

And I suppose just to follow up on an earlier comment you made about 2029. You're talking about the fiber shortage continuing up for them. Is -- do you already then assume that by '29, there is more of a supply-demand balance? Or is there likely to be more, let's say, demand upside risk pushing that date further back?

Unfortunately, Sean, I would be unfair to say, if I'm able to read the market in 2029. The comment I would like to make is that it will take 3 years, '27, '28, 2029 for the players to build this capacity. And bear in mind that the place I'm talking about is us and corn because none of the others are in U.S. -- we are talking about U.S. fiber. The fiber, the origin country , the original production as to avoid the unbearable tariffs if you were produced in 5. And so the volume demand, I think, will continue. I don't think we reached the balance in '29. In fact, we have a new opportunity to expand capacity now beyond what we're really committed to doing for Molex and the others because there is additional demand in the market. What else to say, in the end of the day, for as far as our count is concerned, what the volume would be in demand in the market will be in '29, '30, '31 is not that relevant because we have security of the margins in absolute value over the next 7 to 10 years to the contract. But I believe that this balance will continue beyond 2029.

We will now take our next question from the line of Chris Leonard of UBS.

And maybe a few from me as well, 1 by one, perhaps. Starting on is solutions and thinking about the connectivity piece, obviously, you've spoken about the incremental revenue you see coming through directly into data centers. I wonder if there's anything you can give us looking out to 2030 on the connectivity portion of the division and whether or not that will also benefit from similar tailwinds and how you kind of think the Channell business will progress because, obviously, it's a very high margin?

It is already, Chris. I think it's already a great uptake in the performance on connectivity in the current month because as the market rebounded in the U.S. across fiber to data center. Also, these components of connectivity, closures, boxes, evolves all the stuff that China mix front benefit from additional demand and better prices. So we had in quarter 1 and also quarter 2 '26 outperformed the result of Channell in quarter 1 and quarter 2 2025, significant. And we expect this to continue. At the same time, we are developing new products, larger boxes that goes underground for data center application. So this will give us the opportunity to add additional similar revenue to the Channell business the origin was only fibration adding the data center opportunities to Channell business. . And the margins in connectivity Channell is as high as 35% EBITDA, that 36%, 37% EBITDA. So very accretive to the division.

On digital, can you maybe talk about the phasing of the Molex contract this year? Are we anticipating a more material step up in revenue here for Q3, Q4? And with that, obviously, higher margins too on the basis of that basin being captured from the center customers, while Molex being 1 of them? And equally, the new contracts you just pointed to, that could be signed and maybe already have been signed to take you to EUR 10 billion or above, and those also contribute into the back half of this year?

Yes. I mean the whole market is really demanding more already in '26. And the phasing of Molex growth is consistent with -- on the 1 end, I was telling expanding capacity in U.S. and not only in U.S. but certain the fiber space and with our speed in the allocating volume from existing customers. But I tell you, we are proceeding a very high base both on CapEx and on shifting from further to the old to data center. So quarter 2 is much higher than quarter 1 in terms of EBITDA and EBITDA margin. Quarter 3 will be higher, and Quarter 4 will be higher. And this would be a journey that we see our capacity increase immediately released to the market. Also, our ability to renegotiate existing contracts with avoid adding profitability, but also our speed in reallocated volume from fiber to the data center and the additional opportunities. The run rate level -- so the run rate level, as I said before, will be reached in 2030, when the full capacity will be coming online. Sorry. .

That's super helpful. And as a follow-up to your earlier comments of margin expansion being quite linear, sort of a 25%, 30% and confident in the upper end of that range. Should we think 25% is achievable for your '26 performance in digital solutions. Is that kind of what you're pointing to today?