Interpump Group S.p.A. 1Q2025 Results Conference Call Wednesday 15thMay 2025
Moderators: Fabio Marasi, Chief Executive Officer
Elisabetta Cugnasca, Head of Investor Relations
OPERATOR: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Interpump First Quarter 2025 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing "*" and "0" on their telephone.
At this time, I would like to turn the conference over to Ms. Elisabetta Cugnasca, Head of Investor Relations. Please go ahead, madam.
E. CUGNASCA: Thank you. Good afternoon. I am Elisabetta Cugnasca, Head of Investor Relations of Interpump Group, and welcome to this first quarter 2025 financial results conference call. As usual, I must draw your attention to the disclaimer slide inserted in the Annex part of the presentation that I hope you were able to download from the website.
Now, I would like to leave the floor to Mr. Marasi, the Group Chief Executive Officer.
F. MARASI: Thank you, Ms. Cugnasca, and thanks to all of you for joining our call. Once again, past and future numbers. Past numbers; on organic basis in the first quarter 2025, the impact of an 8% sales decline was a 12% EBITDA decrease with a 90 bps EBITDA margin dilution.
Exactly 1 year ago, always on an organic basis and excluding from the first quarter '23, the positive one-offs, we recorded a sales decline of 9% and an EBITDA decline of 14% with a 130 basis point dilution in terms of EBITDA margin. So, despite ongoing sales decline, which made more difficult to
adjust cost basis and leveraging our operating flexibility, we were able to protect our profitability even better than last year.
Moving to future numbers. Both the results of the first quarter 2025 and the sales evolution for the month of April are in line with our expectation. And therefore, we are pleased to confirm our 2025 organic sales guidance that is between minus 5% and plus 1%.
In terms of profitability, as usual in May, we are also providing today more precise indication, and we are expecting an EBITDA margin for the full year between 22% and 22.5%, confirming, once again, our most important goal and focus, which is to protect our profitability in every market environment. I will add more color on our 2025 expectations in the second part of my speech.
Now, let's focus with more details on most important first quarter '25 financial KPIs, sales, EBITDA and free cash flow generation. In terms of sales, the first quarter '25 confirmed trends that have been ongoing for more than a year. The Hydraulic division is recording a normalization phase after the exceptional post-COVID boom. Water-Jetting is in the recovery phase after COVID. This evolution is absolutely consistent with the different industrial and commercial features of the 2 divisions, while the magnitude and length of these evolutions are absolutely unusual.
In Hydraulics, the 14% sales drop of the first quarter of 2025 marked the 6thconsecutive quarter of revenue decline, and the 5thin which the drop was in double-digit. We did a peak of minus 17% in the third quarter 2024. Such a prolonged negative trend is absolutely unusual in the Hydraulic business. The Water-Jetting, on the opposite recorded a very healthy organic growth after 4 consecutive years of very positive evolution and performance.
Going into details, we feel that the Hydraulics division has touched the bottom in the second half of 2024 and that we should now expect, hopefully a sequential improvement during the year. Among the most important categories, generic dealers, agri, earth-moving machines and construction did not deteriorate sequentially; while others, for example, other industrial sectors were less negative.
In the Water-Jetting division, food and beverage, that is by far the most important market application, drove the growth with an almost 10% increase. And worth to be mentioned is the growth of shipyards and marine market application that in few quarters reached more than 5% of divisional sales. This is the strength and the beauty of Interpump Group's diversification strategy. We started many years ago with high-pressure pumps and more recently with Flow Processing, and these are the results.
In terms of geographies, at group level, the most important countries where we are US, Italy and Germany, recorded a performance roughly in line with the one of the previous quarter. Vice versa, China recorded…China recovery seems to be confirmed with 2 positive quarters in a row after many of decline. Once again, it's the power of diversification. Water-Jetting business and Flow Processing precisely that is driving the growth.
Moving now to EBITDA. I would like to come back to what I anticipated during my introduction. We protected our profitability better in the first quarter 2025 than in the first quarter 2024. We recorded an organic margin dilution of 90 basis points, lower than the 130 basis point dilution recorded last year in the first quarter. It's evident that 90 basis points less is better than 130 basis points less. But what I would like to underline is that these better results were achieved in a completely different environment, a much worse one.
The decline in the first quarter of 2025 is correlated to an 8% sales decrease that came after a 14% organic sales decline recorded in 2024. Obviously, in Hydraulics, the effect of the countermeasures was different according to sales decrease magnitude.
In some product verticals, we still recorded a material sales decrease, and therefore, profitability impact was more than proportional. In other product verticals, we recorded a profitability decline more or less in line with sales decline and some other verticals even recorded a profitability increase compared to a minimal sales decrease. These are the benefits of the group's business model flexibility and from a broader point of view, from group diversification, which characterize the group and every single division.
To be noted, I'm very pleased to inform you that the last acquired company, Hidrover, gave a positive contribution both in terms of sales and profitability, and we are super happy of this deal.
Switching to the Water-Jetting division, profitability results are confirming that our capability to manage business inefficiencies coming from sales mix and the booming demand is improving.
Let me remind once again these 2 concepts. Complete systems and order made for projects are complex and integrated products that are realized following more complex and less standardized procedures. Therefore, theoretically, I repeat myself, theoretically, they could have a proportionally lower profitability if we do not manage the entire process in an accurate way.
Booming demand, excluding 2021 distortion, the last 3 years, demand has been perhaps the strongest of the last decade and somehow caught us by surprise in terms of volumes and time concentration. We adjust our