Elis S.A. (ELSSF) Q2 2026 Earnings Call Transcript

Thank you. Good afternoon to our participants in Europe, and good morning to everyone joining from across the Americas. Welcome to Elyse's 2026 half-year research presentation. I'm Xavier Martiret, CEO of Elyse, speaking to you from Paris, and I'm joined by our CFO-Drigue. I will begin with a brief overview of the key highlights from the first half of the year. Then I will hand over to Louis, who will walk you through the financial results in detail. After that, I will return to share our main CSR achievements and provide an update on our outlook for the remainder of 2026. We then open the floor for Q&A session, and as always, Nicolas Buron will be available after the call to address any further questions. Before we begin, please take a moment to read the disclaimer.

So, the first half of 2026

confirms Elie's ability to deliver resilient, diversified growth in a demanding macroeconomic context marked by a challenging backdrop across the globe. Revenue reached 2,457,1 million euros in the first half, up 4.9%, including 3.2% organic growth. With a similar pace of organic growth in Q2 at 3.2%, adjusted EBITDA increased by 4.9% to 853.8 million euros, with a margin flat year-on-year at 34.7%. Adjusted EBIT rose by plus 4.6% to €370 million, with the margin also flat at 15.1%. Headline net income per share was up plus 5.1%, reaching €0.89 on a duty basis, once again outpassing top-line growth, reflecting the accretive effect of our share buyback program. Free cash flows to that negative 30.1 million euros. As I will come back to later, this is a purely working capital timing effect and we remain fully on track with the full year trajectory we had in mind. The financial average ratio as of June 30 to 26 stood at 2.09 times. Despite significant macro headwinds, this performance reflects the continued strength of our model, and I want to highlight five things in particular. Our recent investments in the Salesforce are clearly paying off with the record level of new contract signings in H1 and continued productivity gains across all geographies supporting margin. The Middle East crisis had no meaningful impact on any activity. Our aging policy shifts on energy costs, and the limited cost inflation we did see is being addressed through a dedicated cost-saving plan and targeted pricing action. We continue to execute on Value Accretive Vault on M&A with four new acquisitions strengthening our footprint. And a pipeline that remains rich, heading into H2. And on capital returns, our 500 million euro share buy-buy program was completed in mid-July, alongside the planned exercise of the soft-call option on our OCEAT 2029 convertible bond. Taken together, this gives us confidence to confirm all of our 2026 financial objectives on the back of the expected sequential improvement in the second half. Let's now move on to the next slide, which focuses on top-line growth drivers in the first half of 20 years. Our recent investments in the Salesforce are paying off. The group reached a record level of new contracts signing in H1, capturing strong outsourcing demand across all geographies, with new client wins, outpassing churns, and cross-selling of growth services, flat linen, workwear, hygiene, gaming traction. We will come back to this in more detail shortly as we go through each of our geographies. On pricing, we implemented adjustments across our full geographic footprint in the context of high cost-based inflation, especially on workforce costs. Importantly, we saw no significant direct activity derived from geopolitics. Bolton Acquisition added a plus 1.1% to H1 growth, consistent with our value accretive consolidation strategy in fragmented markets, and our pipeline remained rich, heading into the second half. Finally, we recorded a plus 0.6% FX tailwind, reflecting favorable Latin American currency trends. Let's now turn to slide 7, which highlights our long-term ambition to replicate the successful French model in terms of footprint, scale, and breadth of services across all our geographies. True momentum in work were continued, driven by the acceleration in outsourcing, and we recorded additional cross-selling successes in pet control and cleanroom. As local network density in 3Ds, we continue the progressive rollout of our services offered to small clients. This strategy remains a key lever for organic growth. EDITH is continuously reinforcing its sales force in many countries to harness these organic growth opportunities, and we remain committed to investing in local-sized teams going forward. As already mentioned, we are clearly seeing these investments pay off where they have been made, and we'll come back to this in more detail as we go through geography. Our ultimate goal remains unchanged, replicate the French footprint and service branch in all our other geographies. Moving on to the next slide, let me spend a moment on the macro backdrop, which remains difficult across Europe in the first half. France posting record high insolvencies, Germany its highest level of Q2 corporate insolvencies since 2005, to name just two examples. Despite these very gloomy European macroenvironments, this slide presents any organic revenue growth in H1 across a number of our European markets. And as you can see, the trend remains solid despite the difficult context. This isn't about changing spectacular growth in any single market. It's about the structural, resilient nature of the markets we operate in and outsourcing trends that keep advancing regardless of the broader economic cycle. That's precisely what allows us to keep delivering solid growth year in, year out, even when the macro backdrop turns difficult. This is once again the clearest illustration of the resilience of our diversified model in a challenging macroenvironment. Turning to the next slide, let me address the Middle East crisis directly, as I know it's on many of your minds. So in Q1, hospitality activity in Paris was briefly penalized by lower hotel occupancy following the outbreak of the conflict. But with a rapid return to normal. We saw no transport disruption for our Asia source linen. On cost, we did see a material increase in gas and electricity spot prices since the beginning of the conflict of around plus 50%. Thanks to our progressive edging policy. Roughly a third of volumes locked in each year for N plus 3, 26, 27, and 28, are largely shielded. We have 93% H on gas and 94% on electricity for 26, 81% and 87% respectively for 27, and 61% and 53% for 28. We did see some inflation on other commodities used by the group. Fuel, paper, and chemicals, representing a 7 million euro impact on cost in H1. To address these temporary cost increases, a cost saving plan has been implemented alongside additional temporary pricing surcharges. And looking further out, our 2027 pricing indexation should be shown, reflecting the evolution of all prices. All told, we expect energy costs of around €119 million in 2016, below the 25 level, and we have already secured a further

reduction for 2027. Moving on to slide 10, let me highlight two of our fastest

growing activities. Cleanroom posted plus 6% of new growth in H1, reaching 145 million euros, supported by favorable market drivers. We operate in a structurally growing cleanroom market at plus 5% to plus 7% per annum, driven by pharma, biotech, and semiconductor investment. We continue to differentiate through innovation, real-time monitoring, connected devices, smart garments, predictive analytics, and our international footprint supports growing demand for rationalization and harmonization at key accounts. Pest Control posted plus 16% value growth in H1, reaching 45 million euros. Growth was a broad-based across all geographies where the service is deployed, and solid execution by our dedicated pest control team supported continued expansion. Our growing network of regional technical centers and sales representatives is driving growth ahead of the overall market in a highly fragmented industry. Let's now take a look at each of our geography starting with France. So France delivered good commercial dynamism across segments in the first half, with revenue growth at plus 2.5%, of which plus 2% was organized. Hospitality showed an encouraging level of activity, despite the slight decrease in Paris hotel occupancy in Q1, with a rapid return to normal, and some softness during the June heat wave. Pricing adjustments implemented at the start of the year helped to offset labour cost inflation. The EBITDA margin Further, improved to 42.7%, up plus 90 BIPs, driven by sustained operational efficiency, workshop productivity, logistic optimization, lower water and energy consumption, and improved purchasing conditions. Moving on to next 12, Central Europe posted revenue growth of plus 5.9% in the first half, including plus 3.2 organic growth. We recorded many commercial successes in workwear in both standard and cleanroom, despite a difficult macro-environment, and performance was solid in Belarus, Poland, and the Czech Republic. Growth in Germany was still impacted by a selective commercial approach in the healthcare segment, reflecting ongoing budget pressures on clients. Nevertheless, some encouraging signs are emerging. With improving churns and some new signings to be implemented towards the end. We are also seeing interesting developments in the nursing home market, with growing outsourcing driven by the search for higher quality of service. And this is a promising market where we intend to step up our focus going forward. We also secured a contract add-on with a leading German private healthcare group. To be implemented in late H2, which is expected to bring around 20 million in additional revenue on this contract in 2017. Four acquisitions in Germany and Switzerland contributed to plus 2.3% in the half-year growth. On profitability. The EBITDA margin came in at 32% in each one, down 30 basis points, reflecting the temporary dilutive effect from the numerous acquisitions in the region, as well as the significant increase in the minimum legal salary in Germany, which remains difficult to fully pass through. Moving on to the next slide. Scandinavian Eastern Europe is a region made up of relatively small mature markets where the group already holds a strong market position. Reported revenue was up plus 3.4%, including plus 1.6% of organic growth. Finland, Norway, and the Baltics are still benefiting from outsourcing demand. And the competitive environment normalized in Denmark, even if the market remains subdued overall. We also benefited from a plus 1.8% positive FX impact on half-year growth. The EBITDA margin improved slightly by 10 basis points to 34.5%. The margin is now stabilized at a high level. Limited top-line growth currently makes it difficult to benefit from operating average. Moving on to the next slide, let's now turn to the UK and island. Organic revenue growth end up well at plus 1.6% in the first half. Reported revenue, however, was down minus 0.8%, reflecting the negative evolution of the British pound, which had a minus 2.4% impact on revenue. Despite a difficult migrant environment, the UK performed well, with strong contract wins in hospitality, supported by an expanded sales force and elite-recognized quality of service, all while maintaining pricing discipline and a selective approach to winning new clients. Xcare for its part remains stable. Turning to Ireland, the picture was more challenging, with increased competition in hospitality weighing on performance. The EBDA margin of the region came in at 31.8%, down 10 BIPs. The significant UK minimum wage increase remained difficult to fully pass through in a competitive environment. Let's now move on to Latin America. Revenue was up plus 15.4% in the first half, including plus 8% organic growth, and benefited from the plus 5.6% positive impact from local currency movements. Brazil delivered solid commercial performance, posting plus 8.6% organic growth in each one. In Mexico, meanwhile, a public tender has been launched to reset all volumes following a reorganization of the Mexican federal health care system. The tender was previously structured as a single lot, but has now shifted to a multi-lot format and a diversifying supplier. To optimize prices, even at the potential expense of the sales quality as a phenomenon that we have already seen play out in the healthcare market in Europe in the past. As a result, 50% of the volume has been lost, representing around €2 million per month since June, or an expected €14 million impact on full year 2026. That said, despite this episode, revenue in Mexico still stands more than 36% above its level of entry into the country in 2022 in local currency, and this should be kept in perspective. More broadly, this is naturally part of the business we operate in. Tenders get reset, contracts get won and lost, and it is worth weighing this against the German healthcare add-on I mentioned a moment ago. Across our footprint, these puts and takes tend to balance out over time, and this is precisely why our diversified model continues to deliver resilient growth overall. Again, this backdrop, the group continues to expand its offering in Mexico, notably with the workwear for industry and flattening for hospitality, while in Brazil, the acquisition of Aquaflash contributed to plus 1.8% to H1 growth. On the profitability side, the EBITDA margin declined by 180 BIPs. to 30.8%, impacted by workforce cost increase in the region and by the volume losses in Mexico. Labor cost inflation has been particularly strong since the start of the year, with, for instance, a plus 23% minimum wage increase in Colombia and a plus 13% increase in Mexico, and this could not be fully passed through to pricing in Etroam. Reflecting the typical lag between cost increase and pricing adjustments, an effect set to ease in H2, the Mexico volume loss late in H1 temporarily lower capacity utilization. The necessary operation adjustments have since been implemented to limit the impact on margin. We now conclude our geographic review on slide 16 with Southern Europe. Reported revenue included by 8.1%, included 5.7% organic growth. We recorded many commercial successes in all geographies, notably in workwear, and performance was strongly in Spain, supported by a good start to the summer season in hospitality. Acquisition in Spain contributed 2.4% to growth. On profitability, the EBITDA margin further improved in H1 to 32.1%, up 30 basis points, driven by industrial process optimization, delivering further productivity gains. Solid top-line growth also generated some operating leverage, helping margin progression. Moving on to the next slide, to conclude on M&A, the group continued to execute its targeted bolt-on acquisition strategy, with M&A contributing plus 1.1% to revenue growth in the first half. Four recent acquisitions have further stresses their presence in key geographies and strategic market segments. In Germany, we acquired Adrex, located in Chuby, close to the Danish border, offering rental services for flat linen and serving hospitality customers with 12 million euros of revenue in 2025. In Switzerland, we acquired Vesche Perleux, one laundry facility in Interlaken, at the heart of one of Switzerland's leading tourist destinations. Addressing flat linen for hospitality clients with 13.5 million euros of revenue in 25. In Spain, we acquired RSDS, one plant located in the northeast of Barcelona, servicing healthcare customers primarily and hospitality clients in both flat linen and workwear with 5.5 million euros of revenue in 25. And in Brazil, we required self-brazil in July, which operates from 20 smaller scale laundry. Across five states in the central and north-eastern regions in the country, located directly within its client facilities, serving with isolated hospitals with flat linen rental and maintenance services. It generated 5 million euros of revenue in 25. This is a new client source for the group on the Brazilian market, and we are very excited about the opportunity. All these acquisitions are fully aligned with our bolt-on strategy, and our pipeline remains very solid heading into H2. With that, I will now hand over to Louis, who will provide more detail on our H126 financial performance.

Thank you, Xavier.

Good afternoon, everyone. Let us start with this chart that we like a lot, and it's the best testimony of our success. It illustrates the evolution of FedEx revenue on EBITDA margin over 25 years, and demonstrates the resilience and profitability of our business model. You see, indeed, a regular growth with some push from major deals, while keeping the margin in a narrow bandwidth, whatever happens. Indeed, you see on this chart, the period 209 financial crisis, the 2012 social crisis, the COVID period, then the energy crisis, then the inflation, and so on. It is a result of a consistent strategy on the pristine execution. And our cash generation model has remained strong through every crisis with steady freighter flow growth expected going forward. Moving on to the next slide, let me walk you through the usual H-126 revenue breakdown by activity and market and geography, which illustrates ELIS highly diversified on the well-balanced profile. Whichever angle you look at it from, activity and market geography, you will see that ELIS is not dependent on any single category, which remains the key strength of the group, especially in times of macro uncertainty. By activity, our offering spans a flat-leaner, work-wear, hygiene-willbeing mix, a mix that reflects the breadth of our service portfolio and our ability to serve a client across multiple needs at once, deepening the relationship over time. On the market side, we serve four major end markets, healthcare, industry, hospitality, and trade-on service, each driven by different fundamentals, and offering complementary growth drivers, which adds to the overall stability of our model. On looking at geography, France represents now less than 30% of group revenue. He's illustrating how the rest of our footprint keeps gaining relative weight, with a solid balance between mature regions, such as Central Europe, UK, Ireland, Scandinavia, Eastern Europe, and more dynamic regions, such as Latin America, Southern Europe, which continue to offer strong structural growth potential. This well-balanced diversification is no coincidence, it's the result of a disciplined long-term strategy built on marketing, commercial execution, targeted M&A, and it's precisely what allows us to keep delivering resident growth even when individual markets are segmented go through a loss of time. Moving on to the next slide, let's now take a look at revenue growth on demand margin by geography. As Xavier mentioned, total revenue growth of 4.9% includes 1.1% from M&A, 0.6% positive Forex impact, mainly reflecting favorable Latin America currency trends. Organic growth is 3.2%. In a nutshell, looking at the growth, we keep in mind that the Forex is very positive in LATAM, negative in UK, so we focus on organic. As expressed in the geographic split, we have Latin America and Southern Europe very dynamic, with organic growth at 8% and 5.7% respectively, which reflects both our commercial successes while addressing the need for outsourcing on probably more dynamic and economic ways. On the other hand, the rest of Europe is more moderate, between 0.6% and 3.2%, which is only in pretty decent. It's a mix of more mature markets and tougher macro environments. For margin, Xavier discussed the evolution per region at group level. The margin stands flat at 34.7%, with some headwinds from inflation coming first from staff costs, with Latin countries in Germany increasing strongly the cost of our own benefits. And second, from the Middle East crisis, with fuel costs spreading to other commodities. Let's now take a look at the full P&L for the first half. Revenue reached 2,457,1 million euros, up 4.9% year-on-year. Adjusted EBITDA increased to 853.8 million euros, with a margin flat at 34,7%. We discussed that already. Depreciation, represented 483.8 million euros, resulting in adjusted debit of 370 million euros, with the margin also flat at 15.1%. The DNA to cells ratio has stabilized, reflecting a decrease in the linen capex to cells ratio, now more in the 12% region on a full-year basis, which is partially offset by higher rates. The main items between EBIT and operating income are the non-current operating income expenses, which amounted to minus 12 million euros, slightly higher than last year. Figure 26 is standard for M&A costs, integration costs, restructuration costs, while H125 was lower than the usual average. IFRS II is expensive. It is accounting treatment of the free-share plans. It decreased to 16.3 million euros compared to 21.1 million euros last year. H-126 is normalized, whereas H-125 included a one-off charge related to the increase in French employer contribution of free-share allocations. Amortization of intangible assets. From past acquisitions decreased to €40.2 million, reflecting the end of the amortization period for A. the industrial contracts, B. the Mexican brand. As a result, operating income increased by 7.1% to €300.2 million. Below operating income, net financial expense increased to €73.9 million from €64.9 million. Reflecting higher average net debt related to the extraordinary 26 share-by-back program and the higher average interest cost following recent refinancing. Income tax expense came in at 62.8 million euros, roughly stable year-on-year. H-126 reflects a normal tax rate of 25.8% plus the French business tax, the CVAE. While H125 was impacted by the French surtax, which is no longer applicable to the group in 2016. Finally, net income rose by 3.3%, reaching 163.6 million euros compared to 152.4 million euros last year. Moving to the next slide, let's have a look now at H126 fully diluted headline net income per share, or EPS. As usual, the main restatements to get to headline net income include the amortization of intensible assets, recognized in past expectations, IFRS II expenses, and non-current operating income on expenses. All in, headline net income for the first half stand at 215.5 million euros, up 1.1% year-on-year. This translates into 96 cents per share on a basis. It's worth noting that the growth in headline net income per share significantly outpaces the growth in headline net income itself. This is explained by the reduction in our average share count, both basic, minus 4%, and fully diluted, minus 3.6%, reflecting the impact of our share by back programs. Moving on to the next slide, let's now review our pre-cash flow performance for the first half 26. Adjusted EBITDA came in at 853.8 million euros and remains the starting point of our cash generation. After the usual non-cash adjustments, this brings us to a cash flow before net financial cost of on tax of 830.8 million euros, up from 796.9 million euros. Net capex to that 479.1 million euros, or 19.5% of revenue, against 18.4% last year. This increase reflects a phasing effect. With many major industrial projects developing the first half to follow the strong growth, for example, in work or in Poland or Spain and in Rome in Germany. So we are confident that the full year ratio should be just above 18 percent. Change in the working capital requirement was negative at 164 million euros against 13 million euros last year. These kind of figures are usual for us due to the seasonality of the business. For H126, we can outline some flat linen stock building ahead of the hospitality season, some workware stock building to improve service quality, and a slight deterioration in the cash collection. Net interest paid decreased to 51.8 million euros from 66 million euros. This is explained by two coupons less in 26 due to reimbursement of bonds in 25. We still expect circa 90 million euros for the full year. Tax paid amounted to 74.8 million euros up from 67.7 million euros with the cash tax rate stable at 24.5%. Leave liabilities payments total at 91.1 million euros from 87.3 million euros in line with activity levels. The group is also benefiting from a red free period on the new headquarters running until December 28th. All-in, free cash flow came to negative 30.1 million euros for the first half. Slightly penalized by the seasonality of the capex and the working capital, but within the usual bandwidth of H1. You remember, of course, that nearly all the free cash flow is generated in secondary business, reason why we still expect to grow the free cash flow mid single digit this year. Below free cash flow, the capital allocation was split between 36 million euros for M&A, 105.6 million euros for the dividend, and 456.8 million euros for the share-by-buy program. As a result, net financial debt stood at 3,670,000,000 euros at the end of June compared to 3,020,000,000 euros at the end of 2015. Moving on to the next slide, let's look at the debt in detail. On March 16, LD successfully priced a 600-million-euro bond at 3.875%, maturing in March 32, further extending our maturity profile. As a reminder, we are rated investment grade by Standard & Poor's at BBB minus table, and by Moody's at BAA3 table. End of June, we had 1.3 billion euros of away-level duties, comprising 247 million euros of cash and 900 million euros of ungrown capacity under the bank revolver line. Financial leverage ratio to that 2.09 times as of June. Moving on to the next slide, net financial leverage have increased to 2.09 from 1.92 in June 25. As you remember, 26 is not exactly a normative year for the debt evolution, with two events out of the usual. First, 500 million euros buy-back program nearly completed in H1, and second, the probable conversion of the convertible in H2. So looking at the full year trajectory, we continue to expect a reduction of the leverage of 0.1 times versus full year 25 in line with our capital allocation policy. So moving on to the next slide, the remainder of the state capital allocation policy, which we clarified last year, it starts with the free cash flow generation on the structure of around three clear priorities. First, pursuing our bolt-on acquisition strategy with the usual investment between 50 and 150 million euros per year. Second, consolidating our investment grade rating with further delivering of the balance sheet at circa 0.1 per year. And finally, allocating the remaining cash to shareholder returns through a regular dividend complemented by share buyback or, where appropriates, a special dividend. You remember that the year 25 was typical, with nearly 360 million euro free cash flow, speed between M&A for 143 million, dividends for 105 million, and buyback for 150 million euro, leading to a level already done by 0.1 at 175 times. We're going to the next slide. Let me detail our shareholder returns for the first half 26, which again is more out of the ordinary. End of June, nearly 18, 180 million shares were purchased at a weighted average price of 26.25 euros for a total cash out of 456.8 million euros. This part of the 500 million euros buyback program, which was fully completed in mid-July. This comes on top of the cash dividend, at 48 cents per share, up 7% nominal, versus TASTER, paid on May 28th for a total of 105.6 million euros. Moving on the last slide of our section, let me give you an update on our convertible bonds. ELIS intends to exercise its soft-call option on the OCEAN-29 bonds, effective from Eid October 26, subject to market conditions. In this context, and as previously flagged, ELIS announced in March 26 a share-by-back program of 500 million euros for the year, and as of July 28, the group held 18.3 million treasury shares. In the event of the soft call option on the share allocation rights, ELIS could be required to deliver up to 23.8 million shares to holders of the CEAN-29. Looking at the impact on our share count, and factoring in the soft call exercise in mid-October 26, we expect the average basic share count to decrease by 3.5% by year-end, and the average fully visited share count to decrease by circa 5%. I will now hand back to Saturday. We will give you an update on our CSA achievement in the first time.

Thank you, Louis. Let me now take a few moments to walk through our key CSR achievements for the first half of 26 on slide 31. So we roll out our CSR strategy 2030, integrating innovative topics such as the avoided emissions or absenteeism and communicated it widely, both internally and externally. Regarding our circular services benefit for the market, it is received an award at a major recycling textile event in Europe for its workwear to workwear project, and new products are to be launched soon. We also launched new calculator to demonstrate the environmental benefits of our circular services on mops for the cleanroom activity versus single-use products. And on cotton rolls versus paper solution. On other highlights, our alternative vehicle fleet continues to expand, with 174 more electric vehicles to be delivered in front by your end. Thermal efficiency in our European laundries improved by around by 2% between January and May 26, versus the same period in 25. And the EDIF Foundation is expanding into the Netherlands and Sweden. It will allow us to support more and more young talents in our community. Finally, last June, EDIF joined the board of the UN Global Compact Network, France. Moving on to the next slide, our CSR performance continues to be acknowledged by leading non-financial rating agencies. We reached the platinum medal from Ecovalis, which, with our highest ever score of 92 out of 100, positioning ELIS among the top 1% of 150,000 assessed companies. ELIS was included in the CDP ELIS for the second time out of the 23,000 companies assessed. With only 4% making the ELIS, we are among the top 56 French companies recognized. On MSCI, following methodology change across the industry, ELIS was ranked BBB. The data update is still pending from MSCI. And for the S&P Global and ISSEHG ratings, We came in at 52 and 55.3 out of 400 respectively in the prime category. Taken together, these results are a strong recognition of our strategy and above all of the dedication and day-to-day commitment of our teams across the group. Let's now turn to our 2026 outlook on slide 34. On organic revenue growth, through the first part of the year, we were actually tracking ahead of our full year guidance, and the volume losses in Mexico have brought us back in line with the indication we gave in March, and we continue to expect organic revenue growth slightly below the 2025 level. It is worth emphasizing that we recorded a record level of new contract signings in H1 which will progressively kick in and drive sequential organic growth improvement in the second half. We expect a slight expansion of both the adjusted EBITDA margin and the adjusted EBITDA margin. Driven by further productivity gains and the implementation of a cost-selling plan, which is helping to offset the increase in certain cost inputs, such as fuel, linked to the Middle East conflict. We continue to anticipate high single-digit growth in diluted headline net income per share. On free cash flow. The negative H1 figure should not be read as a signal. It is entirely a working capital timing effect, and we remain fully in line with what we had in mind back in March. Free cash flow is still expected to grow at a mid-single-digit rate, reflecting the seasonal cash generation pattern of the business, with very strong cash generation expected in the second half of the year. And we expect the financial leverage ratio to decline by around minus 0.1 times versus 2025 to around 1.65 times by year end as previously guided. All of our 2026 financial objectives as communicated in March are therefore confirmed. Let me wrap up with this slide, which for me really captures why we are so confident in it is going forward. First, we have a highly resilient business model, proven time and again through successive crises, and we keep compounding it further by combining organic growth with value-creative button acquisition. Second, We have an outstanding track record of high margins and strong cash generation year after year, and we intend to keep extending the track record. Third, our EPS growth is consistently outpassing top-line growth this year and in the years ahead, which is exactly the kind of operating leverage that translates into real value creation for shareholders. Fourth, Roche keeps progressing, with the pre-tax Roche expected above 15% in 2026, the truly best-in-class level for our industry. And finally, we offer one of the most shareholder-friendly capital allocation policies out there, combining regular growing dividends with meaningful share buybacks. Put simply, Elyse is a resilient, high-quality compounder, and we have every reason to be excited about what lies ahead. That concludes our presentation. Thank you for your attention, and we are now happy to take your question. Operator, over to you.

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Thank you. We will now go to our first question. One moment, please. And the first question today comes from the line of Annalise Vermoilen from Morgan Stanley. Please go ahead.

Hi, good evening. I have two questions, please. So just firstly, on price relative to volume, you know, given you've lost some volume in Q2 in Mexico, but you're also implementing pricing adjustments to offset cost inflation, could you talk about how pricing has developed as a component of organic growth relative to Q1? And do you expect pricing to be a larger component of growth in the And then secondly, on Mexico, the 14 million euro impact that you expect for full year 26, does that assume that you don't win any of that volume back of that 50%? Or is there a possibility that you do reach some agreement and you can reclaim some of that contract in the second half? Thank you.

So, the gap between price and volume, so it is slightly more price and volume in Q2 and for the full year. I don't share exactly your analysis for the second half when you say that less volume in Mexico and extra pricing, yes, but on top of that, we have also implementation of all the big signatures of contracts in H1 that will start to invoice in H2, And so it will bring some additional volume. So I think that will keep more or less the same breakdown between the price and volume. For the full year. And second part of your question, Mexico. So for now, we have lost the half of the volume. At every moment, they can decide to stop with the small supplier because we know that they have a lot, a lot of trouble in quality of service. But at this stage, no evidence that it can happen. So yes, it's possible. And we could recover some hospitals that are... I'm too much desperate from the low quality of service, but it's impossible for me to say that I'm sure, and it is not included in our forecast for the year 2016.

Very clear. Thank you. And just as a follow-up on those contract signings, I think when we've spoken previously about during periods of macro uncertainty, customers are sometimes more reluctant to sign new contracts, but it doesn't sound like you're seeing that at the moment. So is there anything else driving that record level of signings that you talked about?

So it is a fair comment. Yes, the job is more complex in a context where small customers mainly will be more reluctant to engage for four years and so on. But good performance that we have and it is a record level of signature is just the consequence of all our efforts and also the consequence of all our investments. If you remember what we have always said over the last two to three years, we invest regularly in marketing and sales. To protect the organic growth and to develop the organic growth of the company, we always say that over the last two years, we could have delivered a better margin, but just by keeping the level of investment. But we were preferring a small increase of the margin, but a strong investment in additional marketing and sales effort. So that's why it is normal, if I may, to see this good level of signature. It is a consequence of all our efforts. So it's nice to see that we are able to do that, despite the macro environment that is really complex, as you highlighted.

Perfect. Thank you very much.

Thank you. Your next question today comes from the line of Ben Wild from Deutsche Bank. Please go ahead.

Hi, Xavier. Hi, Louis. Thank you very much. Three questions from me, please. Firstly, back to Mexico. Given you're the market leader in that market with significant capacity, do you believe that your volumes can be redirected to any other customers, and is this really a question of waiting for the customer to come back with a more sensible price offer, and then you can re-engage? And then two questions on the cash flow. Firstly, you've highlighted the normal seasonality in the cash flow, but there's also a deterioration in DSOs in the half. Is there anything further going on in the working capital beyond typical seasonality that we should think about for the full year? And then secondly, on cash and CapEx in particular. The 19.5% of sales versus 18.5% last year, I think in the release you talk about investments in industrial capacity, in flattening and in workwear. Is there anything in particular inside the additional capex that you would particularly call out? And is this a sign that maybe you're feeling a bit more confident on the growth outlook for the rest of this year and into next year? And therefore, driving up the capex as a result of that.

Thank you.

So Mexico and capacity of the landscape of competitors and so on. So it's clear that the level of capacity is limited. And so that's why we know that many, many hospitals today that have switched to a super small. The competitors are suffering because the quality of service is not at the level expected because they are not able to deliver all the volume needed. In some cases also, because a part of the gain that we had with Bienestar Hospitals, very often it was by closing their internal laundry. And so we have some situation probably where the small supplier is not able to deliver the food service, and I'm sure that some hospitals are forced. To reopen part of their equipment to process some additional volume. So it doesn't change significantly the fact that the market today is not able to offer a lot of capacity. And it doesn't change the incredible strong position that we have for the mid-long term in Mexico. Regarding the cash, we will cover the DSO subject. For CAPEX, it's just a question of timing during the year, so nothing behind. And when you will see for the full year 26, we will be close to the 18%. So it's just that we have a big project of new plants. That has been delivered in the first semester. We can be happy that our industrial team has been super efficient, and we have some projects that have been delivered on time in the first semester, even before what we were expecting. And so that's why we have this extra capex in the first semester in percentage, but it's absolutely not a structural change. And we will have for the full year 26, the amount expected in percentage of sales, so close to the 18%, slightly above, but super close to the 18%. No other signal behind this level of capex in the first semester. And now perhaps DSO following.

Yeah, I would say the same for DSO. We are speaking a couple of days.

You remember that we are around 60 days at group level.

So a couple of days is the kind of thing that could happen one month or another month. You know, it just takes, I don't know, this may be 1st of July instead of 30 of June. So I will not overread that, even if, of course, it's a key priority of local management to follow on track the clients. Even more when times are tough, and of course, it's not always a priority of the client.

Thank you. Maybe just one more, if I may. Obviously, there's a huge amount of news flow at the moment in Europe regarding fires. Is there any impact to the business operations from wildfires ongoing currently?

We have two plants in the region, one inside the city of Bordeaux, so the plant is still open and not concerned by risk, and one precisely in Mios, so here this plant is... It stopped because people are not able to reach the plant. We have protected the plant around to avoid any major risk. We have been able to be super reactive and we have transferred all the volume in other plants, one in the north in Luden, one in the south in Bayonne, and another one in Po. People have been, as always, incredible to make a lot of effort. To work during the night in the three plants to assume all the volume that we have moved to these plants. So no disruption in the service that we provide to the customer, which is the first topic. Second topic, what is the impact? We lose some turnover, of course, because we have some customers that are closed now, but it is not so meaningful for the group because we estimate that we have probably reached for this summer around 1 million, not more than that, for this lack of volume in hospitality in this region. It is the magnitude of what we could lose.

Very clear. Thank you.

Thank you. Your next question today comes from the line of Simon Le Chupre from Jefferies. Please go ahead.

Good evening. Just two from me.

First of all, on margin, could you quantify the amount of the cost savings you were mentioning and are those savings permanent or just temporary savings to offset the ongoing inflationary pressure? And secondly, on France, how do you feel about the country as we are going to head into the next election over the coming months? Do you anticipate some sort of volatility in the business ahead of the election?

Thank you. For cost savings, so it's the

magnitude of the cost savings, we are talking about something that will be close to 10 million euros at the group level. It is more or less the impact. So for the full year, the Middle East, the Middle East extra costs due to fuel, chemicals and so on. Of course, it will depend on the length of the war, and so we have also kind of uncertainty there, but let's say that it could be 20 to 25 million euros, and what we have in mind to offset that is a part with some temporary price increase linked to some indexes, so it's a temporary additional fees, and second half with the cost-saving program. So this cost-saving program, the majority, it is a temporary cost-saving, so we postponed some projects, and only a small part is a definitive saving. So that's why for 27, because it can be the second part of your question, what will happen in 27? In 27, we will be much more strong to start the year thanks to the indexes that will sustain the price negotiation at the end of the year 26, because we see today all the indexes related, of course, to labor costs and wages, but also all the indexes related to the other component of our P&L, so energy, fuel, even textile. Everything is growing fast. So we'll have some strong indexes during the negotiation that will take place end of 26 that will support some super nice price increase in 27. And so with this permanent price increase in 27, we will be in a good position to stop the temporary cost saving program that we have put in place for 26. From now... So I would say that I know that everything is under severe pressure and super worried about French election in 27 and so on. But you know, it was the mess in 26 and so on. When you see the mess with a budget and the super bad. Economic climate for all the small customers. We know that this year, it is a record level of bankruptcy in the French economy. So really, the country is in a bad shape, even in 26. And I think that when you see the level of performance in this context... You can understand why we are quite relaxed, even for 27 in France, because we are so strong and we are exposed to so many, many end market type of customer. We have such a broad level of services that we provide in the country that, of course, we would prefer to have a less volatility, to have a more stable parliament, to have a president in 27 that has a... That is business friendly. Of course, we would prefer that. But I think that during all the crises that we have known in France, we have always demonstrated that the resilience of our business, especially in France, is so impressive that we don't worry too much what will happen

in 2017 with the French election.

Thank you.

Thank you. Your next question today comes from the line of Christoph Greilich from Berenberg. Please go ahead.

Good evening, and thanks a lot for taking my questions. I wanted to... Come back to the new contract signings, and if I recall correctly, you had a pretty soft Q4 last year and then a nice pickup in Q1 where you had already flagged the record number of newly signed contracts. I was just wondering if you could provide a bit of color. How are the momentum? In Q2 compares to Q1, was it kind of a stable situation? Was there any further acceleration in the commercial momentum? And then also, if you could clarify how fast those new contract signings, how fast they will translate into the organic growth number.

So it's exactly the sequence that we had, end of Q3 and beginning of Q4, quite a low level of signature of new contracts. Q1, much better, return level, and even better in Q2. So that's why we are super confident for the second half of the year. And of course, it's just a summary, but we need at least... three months in average, three to four months to implement a new contract. Of course, it depends on the size of the contract because when you take the example of the super big contract in Germany with one of the leader or the leader of the private healthcare, we have signed just at the end of 25 and we will Only start to invoice in November, I would say. So it depends on the size of the contract. But rough summary could be three to four months between the signature of the contract and the bugging of the invoice.

Great. Thank you.

Thank you. We'll now go to the next question. And the question comes from the line of Tim Ramskill from Bank of America. Please go ahead.

Thank you. Good evening, gentlemen. I've got three questions, please. So, the first is about your outlook, perhaps, into 2027. So, if I take the combination of your confidence around new contract wins, coupled with your observations around pricing negotiations, it seems highly likely you'll see an acceleration in organic growth into 2027. So, interested in whether you'd agree with that and anything that we should sort of consider as an offset to that set of observations. My second question is around the progress on margins in France in the first half. In your pre-prepared remarks, you noted that in Scandinavia, it's difficult to drive margin improvement, given modest levels of growth, but growth in France is also relatively modest, yet the margin gains were really good. So just interested in whether there's anything happening in France at the moment on the efficiency side that you think you can explicitly transplant into other geographies. And then the final question is, again, so just slightly coming back to Mexico, but just a little bit more broadly on the Latin American segment, you've obviously seen some margin pressure in the first half, and you've called out both the lost volumes as well as the labour cost characteristics there. Just thinking about the second half, clearly taking actions to mitigate some of the lost volumes, but do you think overall that margin pressure will continue at a similar pace through the course of the year in LATAM? Thank you.

Oh, okay.

So for 27, so we are not in position, of course, to give any kind of precise guidance for 27, as you can imagine. Nevertheless, I share one more percent of your analysis.

So we shall have better volumes and better pricing effect in 27.

So the organic growth will be better in 27. Margin in France. So yes, it's not due to a lot of additional volume with operating leverage and so on. And by the way, at this level of margin, the operating leverage effect is more limited by definition because we... We have such a high level of margin that the additional volume will be slightly better without fixed cuts, but not a huge effect. So it is really the efficiency of our operations. And as always, each time we have a new idea, new project in the group, the first laboratory will be France. When we decided, for instance, to launch, thanks to AI, a logistic tool to optimize the rules and so on, we started in France. So it is always the same story when we have a new idea. We start with France. It is where we have the highest level of competence in our team. So it is a reason why we are much more efficient in every topic in operation. So it is all the story and the strategy of the group. It was the second part of your question. How could we imagine to allow this efficiency in the other countries? So it is all our strategy. So it is what we are doing to regularly share the best practices and to improve the margin everywhere. We have still some room to improve in some countries, of course, and the efficiency, even in Scandics, in Nordic countries, in many topics, we know that the operational KPI could improve and that they are not exactly at the level of the best-in-class operations that we can have. So, yes. It is thanks to this share of best practices that we aim to increase the margin everywhere outside of France. Latam, now it was the last question, margin Latam. So, margin Latam, yes, it is the loss of volume in Mexico in H1. It is a super small part of the explanation of the decrease of the margin because it has only one month effect, June. And the rest is more linked. To the fact that as we have a majority of healthcare, big hospitals, where the price index is more or less linked to the inflation of the country and not the reality of inflation of our costs. And when you have a mismatch with, as we had at the beginning of the year, a lot of increase of the cost of the workforce. And when you see the minimum wage increasing by more than 20% in Colombia, above 10% in Mexico, and so on, that means that in reality, in our balance of inflation, our costs are increasing much faster than the global inflation of the country. And so you have always a lag effect where you will increase your price less than the increase of your costs. At the opposite, we know also that progressively when the country will see more inflation due to this increase of minimum wage, and we knew it in the past, we will have some situation where it will be exactly the opposite. So that means that the inflation of our costs will be below the inflation of the country. And then, of course, we will have a favorable effect in pricing. So I don't believe it will come in as fast as the H226. What I expect is regarding the price effect, it will be more balanced. In H2, at the opposite, we will have the full effect of loss of volume in Mexico that will put pressure on margin because we will lose the operating leverage in Mexico. So that's why all in, what we expect in the second semester in LATAM is to see a decrease of the margin that will be more limited than what we see in 26, and it is too early to advance any figures for 27. But our internal forecast and so on are more favorable for 27 in LATAM, where we shall see the recovery of the land.

Great. It's very rude to ask four questions, so I thought I'd do three and then one follow-on if that's okay. So really, really quickly, you've described the pipeline of M&A as rich. Is that sort of even richer than usual? Obviously, it's been a relatively quiet period in recent months for M&A activity, but just a little bit of extra colour on how rich is rich.

You know that you need always to be cautious in M&A because when it is not signed, it is not signed. Nevertheless, yes, the pipe is significantly higher than usual. So we are quite confident with some ongoing discussion with some players that are bigger than usual. We will see. This is always in our existing countries, so mainly in Europe, where we have this pipe, interesting pipe, and I would be disappointed if we are not back in front of you before the end of the year with some good news.

Excellent. That's great. Thank you very much for your answers.

Thank you. Your next question today. This is from the line of Christophe Chaput from OdoBHF. Please go ahead.

Good evening, gentlemen. Thank you for taking my question. My first question was actually on M&A pipeline, so it's already been asked. Just to be sure, during the CMD, you say that five to ten targets... Are, let's say, available in theory with a unit size above 200 to 300 million euros? You are speaking about that, let's say, until the end of the year. One target could be in terms of size above 200 million euros, say that is. The second question is about the saving on electricity and gas. You say that it's going to be 190 million euros for 2026 below the 2025 level. Just to be sure, the saving will be close to 20 million euros in 26 and 10 to 15 million euros going forward in 27. Is it still the same magnitude? And the last one is just a quick question, but on the new contract wings for the first half, obviously there is a lag effect, as you mentioned, but what is the amount of sales for a full year, let's say for 2027, that it could represent?

Thank Okay, so M&A, no, we have no, it is not a discussion with an elephant in the list of the 5 to 10 above 200 million euros, but several targets that are bigger than what we deliver usually at 15, 20 million euros.

And the phasing,

and just to remind you what I said regarding the M&A target and pipeline, it is in existing countries in Europe. So to be sure, I don't want to come back three years in the past regarding the mess in the US. So it is exiting countries in Europe. Energy, yes, it's close to 20 million, the selling in 26. And for 27, yes, we still have a part that is not fully hedged, as you have seen in the figures. It's limited, but still a small part. So, of course, we need to be cautious because we cannot anticipate and discover what would be the spot price for what is not yet hedged. So, we shall have, I would say, the half. So, we will be slightly below 10 million, I think, for the saving in 27. And then contracts, so it's smart to try to have guidance for 27 that I will not provide today. So, yes, I cannot just confirm that, yes, we expect a better organic growth in 27 because we'll have the full effect and report effect of the nice signature plus some positive

index to sustain a price increase.

Okay. Just on M&A, obviously it is on existing country, where you are in, I mean. Just in terms of activity, most of that will be in flat linen, correct, versus workwear.

Majority, flatly none, but not only.

Thank you so much for the answer.

Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone and wait for your name to be announced. Thank you. We will now go to the next question. And your next question today comes from the line of Oliver Davis from Rothschild & Co. Please go ahead.

Yeah, good evening, guys. Just two from me. So, I mean, you obviously mentioned the kind of success in the recent investments in the Salesforce are having. So do you have any plans to invest, I guess, more than usual in certain geographies to drive higher organic growth going forward? And then secondly, just a question on, you mentioned that cross-selling is gaining traction. So, you know, is that because the Salesforce is specifically focusing on those areas or, you know, has there been a change of strategy or competitive dynamics?

So, investment in Salesforce, no, we don't have in mind to increase significantly the investment everywhere, because you know that it is an investment, and in some cases, the payback in cash is not immediate, so we need to monitor carefully the pace. of this investment. And by the way, you cannot invest in all the different end markets, all type of reps, if you want to cover smaller customers, for instance, and so on, because it takes some bandwidth of the local management team, and we need to be cautious and to invest progressively. So we keep the same level of... of regular investments in marketing and Salesforce, and we don't plan to do more, to increase more the pace of investment there. Cross-selling, so we have launched some specific initiatives also to develop more existing customer base, and we start also to have the fruits of our efforts in the investment in the new CRM IT2 that we have rolled out now in some countries, so in France, in Netherlands, in Ireland, and we are on the way today to roll out this new IT system in In southern Europe, in the UK, and some Nordic countries. And of course, we have a much better management of our existing portfolio of customers, and we can target some specific campaigns to push the cross-selling.

Great. Thanks very much.

Thank you. This concludes the Q&A session for today. I will now hand the call back to Savia Matare.

So thank you for your interest in the company as usual, and it's time to wish you a wonderful summer. Bye-bye.