DALLAS, TX -- November 14th, 2025 -- Aquafil Group (ECNL.MI): Stonegate Capital Partners updates coverage on Aquafil Group (ECNL.MI). In 3Q25, ECNL delivered resilient profitability despite softer top-line trends, highlighting the benefits of ongoing efficiency measures and cost control. The Company achieved an EBITDA margin of 13.7%, up from 12.1% in 3Q24, primarily reflecting lower raw material costs, disciplined cost-containment actions, and a richer mix of regenerated products. ECONYL®- branded and other regenerated fibers continued to play a pivotal role, with these products representing roughly 60% of fiber revenues year to date. Regionally, the North American BCF business remained a key growth engine with solid volume gains, EMEA was broadly in line with the prior year, and Asia Pacific remained soft, particularly in textile applications. Management also advanced its reorganization of U.S. carpet collection and recycling operations, recognizing one-off restructuring charges which position the business for structurally lower labor and logistics costs in FY26 and beyond.
Company Updates:
Quarterly results: ECNL reported revenue, adj EBITDA, and adj EPS of €123.6M, €16.6M, and (€0.02), respectively. This compares to our/consensus estimates of €156.4M/€148.0M, €24.5M/€17.2M, and €0.05/NA, respectively. For 9M25, revenue was €402.0M (3.4)% y/y, EBITDA was €54.9M (14.3)% y/y, and net income improved to €0.4M compared to a €(8.8)M loss in 9M24. On a quarterly basis, 3Q25 revenue was €120.9M down (5.5)% y/y, while EBITDA rose to €16.6M, up 7.0% y/y, highlighting continued progress in margin quality despite revenue pressure.
Outlook: Management remains cautious for 4Q25, with margin performance expected to stay at the upper end of the industrial plan despite muted volume growth in certain regions. Profitability should continue to benefit from disciplined cost controls and the ongoing reorganization of U.S. carpet collection and recycling operations. Demand in the U.S. BCF segment is anticipated to remain healthy, partially offsetting softness in Asia and garment-related fibers. On the balance sheet, leverage is trending lower, with NFP/EBITDA now around the mid-3x range, and management is prioritizing cash generation and disciplined capex to support deleveraging.
ECONYL®: ECONYL®-branded and other regenerated products accounted for 60.2% of fiber revenues in 3Q25, slightly ahead of the prior year and above management’s original expectations. North America remains the primary growth engine for ECONYL®, supported by a strong BCF market, while Europe was broadly stable and Asia continued to lag amid a softer textile environment. The sustained shift toward regenerated content reinforces Aquafil’s ESG credentials and strengthens its differentiation with key carpet and textile customers. The increasing mix of higher-margin ECONYL® products has been an important contributor to EBITDA growth and margin expansion, helping to offset 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 €4.68 to €5.07 with a mid-point of €4.87. Our EV/EBITDA analysis relies on a range of 7.0x to 8.0x leading to a valuation range of €4.52 to €5.54, with a midpoint at €5.03.
