DALLAS, TX -- September 4th, 2025 -- Aquafil Group (ECNL.MI): Stonegate Capital Partners updates coverage on Aquafil Group (ECNL.MI). In 2Q25, ECNL delivered strong profitability despite modest revenue declines, reflecting continued operational efficiency and cost control. The Company achieved an EBITDA margin of 15.5%, up from 12.3% in 2Q24, driven by lower raw material costs, efficiency initiatives, and a favorable product mix. ECONYL® products once again proved pivotal, representing 60.7% of fiber revenues in 2Q25, in line with management’s long-term sustainability strategy. Regionally, the U.S. BCF segment recorded double-digit growth, while EMEA held broadly stable and APAC remained soft. The Company also launched a significant cost-optimization project in its U.S. carpet recycling operations, consolidating facilities to reduce labor and logistics costs, with initial savings expected in 2H25 and more substantial benefits in 2026 and beyond.
Company Updates:
Quarterly results: ECNL reported revenue, adj EBITDA, and adj EPS of €140.5M, €21.3M, and €0.02, respectively. This compares to our/consensus estimates of €162.0M/€162.0M, €27.2M/€23.9M, and €0.08/€0.00, respectively. For 1H25, revenue was €281.2M (-2.4% YoY), EBITDA was €38.4M (+17.8% YoY), and net income reached €2.2M versus a €6.1M loss in 1H24. The NFP/EBITDA ratio improved to 3.21x at June 30, 2025, down from 3.42x at year-end 2024, underscoring continued deleveraging efforts.
Outlook: Management remains cautiously optimistic for 2H25, expecting margin benefits from the cost-reduction initiatives and stabilization in input costs, particularly natural gas and energy. Demand in the U.S. BCF segment remains strong, though volumes across EMEA and APAC continue to lag expectations, limiting the pace of overall volume recovery. Despite these headwinds, ECNL reaffirmed its focus on sustaining profitability improvements and capturing additional market share through its growing ECONYL® portfolio.
ECONYL® Expansion on Track: With ECONYL® contributing 60.7% of fiber revenues in both 1H25 and 2Q25, the brand continues to exceed management expectations. North America remains the growth engine for ECONYL®, while Europe is stable and Asia remains soft. The Company’s sustained commitment to regenerated products highlights its ESG positioning and long-term strategic differentiation. We also note that this expansion continues to contribute to the strong EBITDA margin that ECNL has seen, helping to mitigate any volume softness.
Valuation: We use both a DCF Model and EV/EBITDA Analysis to frame our valuation of ECNL. Our DCF analysis relies on a range of discount rates between 10.75% and 11.25%. This arrives at a valuation range of €4.99 to €5.41 with a mid-point of €5.19. Our EV/EBITDA analysis relies on a range of 6.0x to 7.0x leading to a valuation range of €3.92 to €5.00, with a midpoint at €4.46.
