Article
EARNINGS ANALYSIS: Evoca Q2 EBITDA, Revenue Growth Too Early to Call Full Recovery After Weak FY’25; Carlyle, Park Square Weigh PIK Equitization
Relevant Documents:
H1’26 Presentation
H1’26 Report
Italian coffee-machine producer Evoca reported solid headline metrics for the second quarter of 2026, showcasing year-over-year revenue growth of 14.1% to €94.2 million while adjusted EBITDA grew 38.8% to €22.6 million. We see this as signs of underlying demand recovery, although volume growth was supported by price reductions, particularly in the vending segment that posted 21.8% year-over-year growth.
While the results signal an element of more customers returning to capital expenditure on new machines, we acknowledge that both revenue and EBITDA growth are built off particularly weak Q2 ’25 bases. Second-quarter revenue and EBITDA in 2025 were down 28.8% and 46%, respectively, compared with their corresponding Q2’24 values. In our view, it is too early to call 2026 a recovery year after a poor 2025 as H1’26 revenue is down 1%.
Despite continued top-line demand uncertainty, particularly across selected key accounts, the ongoing delivery of Project EVO savings and associated operational efficiencies are supportive of margins, which grew to 24% (adjusted EBITDA) in the quarter. Management asserts that EBITDA has benefited from €15.7 million of LTM run-rate savings as of first-half 2026, with further savings expected from the Barcelona production closure – an approximate €3 million annualized EBITDA benefit – although €8.8 million of restructuring costs were incurred in the first half.
Its €550 million of senior secured floating rate notes due April 2029 are now yielding 14% and trading at 87.7, up roughly one point after the Sept. 1 earnings call, according to IHS Markit.
We have noticed new language in the H1’26 report: “We or our shareholders may from time to time engage advisors…”. This was absent in the Q1’26 report, potentially indicating a deal on the horizon.
Octus suspects this new language may be in relation to the estimated €441 million of PIK debt (including accrued interest) due 2029. Given the PIK is deeply out of the money, according to our estimates, and the size of the PIK claim relative to the equity value, a potential equitization of the debt is plausible in our view, with PIK holders taking control from current sponsor Lone Star.
The PIK noteholders include Carlyle and Park Square, according to sources. The investors have held preliminary discussions to explore options regarding the PIK debt, which has ballooned to about €441 million from €210 million in 2019, according to Octus estimates. While a deal may not be imminent, sources noted that addressing the PIK debt and potentially having the creditors taking over may help revamp the business and accelerate a turnaround. They added that incumbent sponsor Lone Star, which has been at the helm since 2016, may be amenable to an exit, given it has little, if any residual economic interest in the business. As reported, in 2019, Evoca’s parent raised the €210 million PIK note, leaving less than €50 million of remaining equity.
On the earnings call, management has preliminarily guided to flat revenues in the third quarter, with modest profitability improvements based on summer activity. This means, absent a strong fourth quarter, Octus calculates that FY’26 revenue will be flat in the €350 million range, which is better than our base forecasts in our June analysis.
Although potentially arriving earlier than expected, demand recovery remains uncertain, as wholesale coffee prices remain elevated and volatility is expected to persist, impacting key customers, while macroeconomic uncertainty may also defer machine upgrades. The threat from cheaper Chinese entrants continues to be largely unquantifiable for Evoca due to its diverse range of products across the pricing spectrum, although, as highlighted in our recent analysis, this is a key threat for European players.
Carlyle, Lone Star and Park Square declined to comment. Evoca did not return a request seeking comment.
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