Q2 2026 Interpump Group SpA Earnings Call

August 5, 2026

Operator 2: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump Q2 2026 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 star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Federico Pavesi, Head of Investor Relations of Interpump. Please go ahead, sir.

Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump Q2 2026 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 star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Federico Pavesi, Head of Investor Relations of Interpump. Please go ahead, sir.

Speaker #1: Good afternoon, this is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump Second Quarter 2026 Financial Results conference call. As a reminder, all participants are in listen-only mode, and after the presentation, there will be an opportunity to ask questions.

Speaker #1: Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Federico Pavesi, Head of Investor Relations at Interpump.

Speaker #1: Please go ahead, sir.

Speaker #2: Thanks. I'm Federico Pavesi, Head of Investor Relations of Interpump Group. Welcome to the Interpump 2026 second quarter financial results conference call, and thanks to all of you connected for joining us today.

Federico Pavesi: Thanks. I'm Federico Pavesi, Head of Investor Relations of Interpump Group. Welcome to the Interpump 2026 Q2 financial results Conference Call. Thanks to all of you connected for joining us today. Please be aware of the cautionary language that is included in our forward-looking statements, included in the material that we have distributed today. For example, you can find it in the appendix of the presentation, slide 27. With that, I would like now to hand it over to Mr. Marasi, Interpump's CEO.

Speaker #2: Please be aware of the cautionary language that is included in our forward-looking statements, included in the material that we have distributed today. For example, you can find it in the appendix of the presentation slide 27.

Speaker #2: With that, I would now like to hand it over to Mr. Marasi, Interpump's CEO.

Speaker #3: Thank you, Mr. Pavesi. It’s my pleasure to welcome you again to Interpump Group and to wish you all the best for your future within the company.

Fabio Marasi: Thank you, Mr. Pavesi. It's my pleasure to welcome you again to Interpump Group and to wish you all the best for your future within the company. Let's start by looking at our consolidated financial results in slide two of the presentation, which reflect our guidance and expectations. During the Q2 2026, group sales were down by 0.7% on organic basis year-over-year, affected by the decrease in Water Jetting, characterized, as you know, by a very challenging comparison basis with the H1 2025. Hydraulics, on the other hand, delivered the fourth consecutive quarter of organic improvement with a very meaningful +6.2%. I will come back soon with additional color on both divisions. Consolidated EBITDA margin stood at 22.9% in the quarter from 23.8% a year ago. The combination of the stronger Hydraulics and the weaker Water Jetting has negatively impacted the mix.

Speaker #3: Let's start by looking at our consolidated financial results in slide 2 of the presentation. We should reflect our guidance and expectations. During the second quarter 2026, group sales were down by 0.7% on organic basis year over year.

Speaker #3: Affected by the decrease in water jetting, characterized as you know by a very challenging comparison basis with the first half of 2025. Hydraulics, on the other hand, delivered the fourth consecutive quarter of organic improvement with a very meaningful plus 6.2%.

Speaker #3: I will come back soon with additional color on both divisions. Consolidated EBITDA margin stood at 22.9% in the quarter, down from 23.8% a year ago.

Speaker #3: As the combination of the stronger hydraulics and the weaker water jetting has negatively impacted the mix. Our colleagues in operation across both divisions were able to maintain a lean constructure.

Fabio Marasi: Our colleagues in operation across both divisions were able to maintain a lean structure, although in two very different environments. On one hand, in hydraulics, this is the fourth quarter of organic growth improvement after a couple of years of decline. On the other hand, in water jetting, we are stabilizing production after some demand spikes experienced about a year ago. Despite the volatile macro environment, thanks to our diversification and operational flexibility, we keep demonstrating a very resilient margin profile that few industrial companies are able to match. Looking at EPS result, +8.2%, is consistent with the trend of the operating performance we have discussed a few moments ago. A pretty stable tax rate around 30% and a lower share count, supported by the buyback we have been doing so far this year.

Speaker #3: Although in two very different environments, on one hand, in hydraulics, this is the fourth quarter of organic growth improvement after a couple of years of decline.

Speaker #3: On the other hand, in water jetting, we are stabilizing production after some demand spikes experienced about a year ago. Despite the volatile macro environment, thanks to our diversification and operational flexibility, we continue to demonstrate a very resilient margin profile that few industrial companies are able to match.

Speaker #3: Looking at APS result plus 8.2% is consistent with the trend of the operating performance we have discussed a few moments ago, a pretty stable tax rate around 30%, and a lower share count supported by the buyback we have been doing so far this year.

Speaker #3: Net debt at the end of June was 306 million euros, from almost 400 million euros a year ago. The solid year-on-year improvement was driven by our sound cash generation, 62 million euros in Q2, up 35% in comparison with the 46 million euros of the same quarter of last year.

Fabio Marasi: Net debt at the end of June was EUR 306 million from almost EUR 400 million a year ago. The solid year-on-year improvement was driven by our sound cash generation, EUR 62 million in Q2, up 35% in comparison with the EUR 46 million of the same quarter of last year. Let's now look at the details for both of our divisions. Let's start from Hydraulics, which is summarized on slide three. Segment recovery goes on, as this is the fourth consecutive quarter of organic growth. Among the most important application, in machinery, construction, and then moving, both posting a double-digit sales increase, as machinery demand remains solid, supported by infrastructure and data center investments. Also, general industrial vehicles was positive as the overall truck industry keeps showing some sign of stabilization. From a geographical standpoint, the improvement was mostly coming from developed markets.

Speaker #3: Let's now look at the details for both of our divisions. Let's start with Hydraulics, which is summarized on slide 3. Segment recovery continues, as this is the fourth consecutive quarter of organic growth.

Speaker #3: Among the most important application, in machinery construction and they're moving, both posting a double-digit sales increase, as machinery demand remains solid, supported by infrastructure and data center investments.

Speaker #3: Also, general industrial vehicles was positive, as the overall truck industry keeps showing some sign of stabilization. From a geographical standpoint, the improvement was mostly coming from developed markets.

Speaker #3: North America improved meet teams in the quarter and remained one of the biggest contributors. Barista and Oceania was up a single digit, while Europe was up low single digit.

Fabio Marasi: North America improved mid-teens in the quarter and remained one of the biggest contributors. Far East and Oceania was up high single digits, while Europe was up low single digit. Latin America, on the other hand, was significantly down, as volatility in the area remains elevated. Business profitability has improved, with an EBITDA margin increase by 30 basis points to 21.2%, supported by the operating leverage and the better utilization rate of the manufacturing capacity across the division. This is an outstanding result as we have managed to improve margins despite consolidating the newly acquired companies in the year, and in particular, Padoan, Tuttoidraulica, Borghi Assali, and FARMA. Turning to the water jetting division on slide four, we have made it clear that the nature of the H1 2025 results was exceptional, mainly because of the big orders Hammelmann got in China in the H1 2025.

Speaker #3: Latin America, on the other hand, was significantly down, as volatility in the area remains elevated. Business profitability has improved, with an EBITDA margin increased by 30 basis points to 21.2%, supported by the operating leverage and the better utilization rate of the manufacturing capacity across the division.

Speaker #3: This is an outstanding result, as we have managed to improve margins despite consolidating the newly acquired companies in the year and in particular Paduan Tutto Idraulicos Borgia Salient Pharma.

Speaker #3: Turning to the water jetting division on slide 4, we have made clear that the nature of the first half 2025 results was exceptional, mainly because of the big orders Hummelman got in China in the first half 2025.

Speaker #3: So the year-over-year sales decline takes into account that weak comparison base. Let's look at the applications in water jetting. Starting from the weak spot, shipyard and marine was one of the most affected businesses, together with chemical, suffering mostly from the very positive result we had in the first half of 2025.

Fabio Marasi: The year-over-year sales decline takes into account that weak comparison base. Let's look at the applications in the water jetting. Starting from the weak spot, shipping and marine was one of the most affected businesses, together with chemical, suffering mostly from the very positive result we had in the H1 2025. The biggest contributor of the division remains food and beverage, which grew its sales high single digits in the quarter, in an industry characterized by trade uncertainty and distinct trend across each sub-segment. From a geographical standpoint, in the quarter, APAC was not surprisingly the weakest region, while North America was down low single digit. On the positive side, we have recorded sales in Europe and Latin America up low single digit. Despite the strong sales drop, we managed to keep water jetting margins above 26%, in line with historical values.

Speaker #3: The biggest contributor of the division remains food and beverage, which grew its sales at a single-digit rate in the quarter, in an industry characterized by trade uncertainty and distinct trends across each subsegment.

Speaker #3: From a geographical standpoint, in the quarter APAC was not surprisingly the weakest region. While North America was down low single digit. On the positive side, we have recorded sales in Europe and Latin America up low single digit.

Speaker #3: Despite the strong sales drop, we managed to keep water jetting margins above 26%, in line with historical values. At a group level, I would like to emphasize once again the importance of the broad diversification we have in Interpump.

Fabio Marasi: At a group level, I would like to emphasize once again the importance of the broad diversification we have in Interpump, which is probably the characteristics of our group that I love the most. The weak water-jetting results were offset by the sound hydraulics performance, enabling us to maintain the excellent level of the EBITDA margin despite the headwinds coming from the mix and from a challenging market environment. Moving to the cash flow on slide five, it's important to underline that the sound operating performance was the main driver of our EUR 62 million of free cash flow in Q2 2026, with a 35% increase in comparison with the same period of the previous year. Capital expenditures stands at 4% of our group sales, in line with our commitment and consistent with the production needs of our group.

Speaker #3: Which is probably the characteristics of our group that I love the most. The weak water jetting results were offset by the sound hydraulics performance, enabling us to maintain the excellent level of the EBITDA margin despite the headwinds coming from the mix and from a challenging market environment.

Speaker #3: Moving to the cash flow on slide 5, it's important to underline that the sound operating performance was the main driver of our 62 million euro of free cash flow in the second quarter 2026.

Speaker #3: With a 35% increase compared to the same period during the freeze the previous year, capital expenditures stand at 4% of our group sales, in line with our commitment and consistent with the production needs of our group.

Speaker #3: Trade working capital absorption was consistent with the revenue trend, and overall it remains a key element both in supporting growth and protecting profitability, especially during these periods of input cost inflation.

Fabio Marasi: Trade working capital absorption was consistent with the revenue trend. Overall, it remains a key element both in supporting growth and protecting profitability, especially during these periods of input cost inflation. Going forward, we reiterate our target of returning to what we consider the optimal level for our group, that is 35% to 36% of sales, from approximately 40% in 2025. In Q2, we have distributed over EUR 57 million to shareholders, between EUR 35 million of dividends and EUR 22 million of share buyback. Let me spend a couple of minutes on M&A. At the end of July, we announced two small but meaningful acquisitions, MVV and Teknoice, both in water-jetting division. MVV manufactures dosing gear pump for chemical and textile applications and will consolidate Alfa Valvole's dosing pump business and expanding our product portfolio and market presence in developed markets.

Speaker #3: Going forward, we reiterate our target of returning to what we consider the optimal level for our group, that is 35-36% of sales, from approximately 40% in 2025.

Speaker #3: In Q2, we have distributed over 57 million euros to shareholders. Between 35 million of dividends and 22 million of share buyback. Let me spend a couple of minutes on M&A.

Speaker #3: At the end of July, we announced two small but meaningful acquisitions. MVV and Technoeyes, both in water jetting division. MVV, manufacturers dosing gear pump for chemical and textile applications.

Speaker #3: And we'll consolidate Alpha Valvoles dosing pump business and expanding our product portfolio and market presence in developed markets. Technoeyes engineers and produce complete lines including pasteurization filling lines and wrapping machines, for the ice cream companies.

Fabio Marasi: Teknoice engineers and produce complete lines, including pasteurization systems, freezers, extrusion, filling lines, and wrapping machines for the ice cream companies. This food and beverage application allow us to leverage synergies with other products in our portfolio with a balanced exposure to developed and emerging geographies. On M&A, nothing has changed in our strategy. We continue to actively assess many opportunities that can strengthen our portfolio and create shareholder value. Given the time remaining in the year, we believe there is still scope to complete further transactions, provided they meet our strategic and financial criteria. Most important, that they fit in our industrial portfolio and are priced correctly. We continue to see and process a healthy pipeline of opportunities. We remain selective and disciplined in our approach, there is still sufficient time and capacity before year-end to pursue additional value-accretive transactions, should the right opportunities arise.

Speaker #3: This food and beverage application allow us to leverage synergies with other products in our portfolio, with a balanced exposure to developed and emerging geographies.

Speaker #3: On M&A, nothing has changed in our strategy. We continue to actively assess many opportunities that can strengthen our portfolio and create shareholder value. Even with the time remaining in the year, we believe there is still scope to complete further transactions, provided they meet our strategic and financial criteria.

Speaker #3: And most important, that they fit in our industrial portfolio and are priced correctly. We continue to see and process a healthy pipeline of opportunities. While we remain selective and disciplined in our approach, there is still sufficient time and capacity before year-end to pursue additional value-attractive transactions.

Speaker #3: Should the right opportunities arise. More broadly, we remain fully committed to our long-term ambition of being a leading consolidator in our industry, bringing together complementary businesses across hydraulics, flow handling, and food processing.

Fabio Marasi: More broadly, we remain fully committed to our long-term ambition of being a leading consolidator in our industry, bringing together complementary businesses across hydraulics, flow handling, and food processing. We believe our strong industrial footprint, know-how, global reach, and proven integration capabilities position us well to continue driving consolidation in these attractive applications. Moving now to 2026 outlook on slide six. We reiterate for our group sales our forecast of an organic growth rate range between -2% and +3%. As we have passed the half year mark with a 0.7% organic growth in the most challenging part of the year, we are now much more confident on the positive part of this range. On top of that, you should also consider the contribution from the latest acquisitions that we are now estimating at around 2.5% of sales.

Speaker #3: We believe our strong industrial footprint, know-how, global reach, and proven integration capabilities position us well to continue driving consolidation in these attractive applications. Moving now to 2026 outlook on slide 6, we reiterate for our group sales our forecast of an organic growth rate range between minus 2% and plus 3%.

Speaker #3: As we have passed the half-year mark with a 0.7% organic growth in the most challenging part of the year, we are now much more confident on the positive part of this range.

Speaker #3: On top of that, you should also consider the contribution from the latest acquisitions, which we are now estimating at around 2.5% of sales. The EBITDA margin is reiterated between 22% and 22.5% of sales.

Fabio Marasi: EBITDA margin is reiterated between 22% and 22.5% of sales, despite the headwind coming from the divisions mix, with a stronger hydraulics and a weaker water jetting compared to 2025. As for free cash flow, we confirm the goal to consolidate and improve what we achieved in 2025 to a new record. Let me conclude now with some thoughts about the rest of the year. Tensions in the Middle East are still yet to be considered over. With a more definitive and stable solution, we are closely monitoring how the macro environment is being affected by it. Some projects, some business, some CapEx is being postponed in the region, and this has clearly a direct impact on Interpump business.

Speaker #3: Despite the headwind coming from the division's mix, with a stronger hydraulics and a weaker water jetting compared to 2025. As for free cash flow, we confirm the goal to consolidate and improve what we achieved in 2025 to a new record.

Speaker #3: Let me conclude now with some thoughts about the rest of the year. As mentioned in the middle list are still yet to be considered over, with a more definitive and stable solution we are closely monitoring how the market environment is being affected by it.

Speaker #3: Some projects, some business, some capex is being postponed in the region, and this has clearly a direct impact on Interpump business. As for indirect impact, the cost of transportation and the cost of energy are probably the most affected.

Fabio Marasi: As for indirect impact, the cost of transportation and the cost of energy are probably the most affected. This is something that we are managing also thanks to our higher than normal level of inventories. To offset those higher input costs, in recent weeks, we have been implementing price increases and/or surcharges to our customers. US tariffs have transitioned from an acute issue to a chronic but manageable one, with firms adapting prices and supply chain strategies accordingly. In Q2, we experienced another EUR 6 million of impact from tariffs, which has been completely transferred to our customers. Some markets or applications in hydraulics are recovering, most important, trucks and construction machinery, while agriculture industry outlook has slightly deteriorated.

Speaker #3: And this is something that we are managing, also thanks to our higher than normal level of inventories. To offset those higher input costs, in recent weeks we have been implementing price increases and/or surcharges to our customers.

Speaker #3: US tariffs have transitioned from an acute issue to a chronic but manageable one, with firms adapting prices and supply chain strategies accordingly. In the second quarter, we experienced another 6 million euros of impact from tariffs, which has been completely transferred to our customers.

Speaker #3: Some markets or applications in hydraulics are recovering, most importantly trucks and construction machinery, while the outlook for the agriculture industry has slightly deteriorated. We are accelerating sequentially, but we still have situations in which we are not utilizing 100% of our internal manufacturing capacity, and we are very focused on optimizing profitability.

Fabio Marasi: We are accelerating sequentially, but we still have situations in which we are not utilizing at 100% our internal manufacturing capacity and in which we are very focused in optimizing the profitability. Overall, July sales trend is a clear support for our full year 2026 forecast amid the uncertain geopolitical environment and volatile supply chain. After a H1 characterized by a stronger hydraulics versus water jetting, as the latter was faced with a weak comparison base, H2 should be characterized by a more balanced contribution between the two divisions.

Speaker #3: Overall, July sales trend is a clear support for our full year 2026 forecast. Amid the uncertain geopolitical environment and volatile supply chain, after a first half characterized by a stronger hydraulics, versus water jetting, as the latter was faced with a weak comparison base, the second part of the year should be characterized by a more balanced contribution between the two divisions.

Speaker #3: This keeps us in the right trajectory for our 2028 targets, that are around 2.5 billion euros in sales, which includes some M&A consistent with what I discussed a few minutes ago, about 22.5% EBITDA margin, which represents a level of excellence that cannot be compromised, and a net financial position that will be close to zero, supported by the cash flow generation that we aim to deliver and considering the usual bolt-on M&As.

Fabio Marasi: This keeps us in the right trajectory for our 2028 targets, that are around EUR 2.5 billion in sales, which includes some M&A consistent with what I discussed a few minutes ago, about 22.5% EBITDA margin, which represents a level of excellence that cannot be compromised, and a net financial position that will be close to zero, supported by the cash flow generation that we aim to deliver and considering the usual bolt-on M&As. This concludes our prepared remarks. We can now start the Q&A session.

Speaker #3: This concludes our prepared remarks, and we can now start the Q&A session.

Speaker #1: Thank you, this is the current call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone to remove yourself from the question queue.

Operator 2: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. First question is from Matteo Bonizzoni, Kepler Cheuvreux.

Operator: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. First question is from Matteo Bonizzoni, Kepler Cheuvreux.

Speaker #1: Please press star and two. First question is from Matteo Bonizzoni, Kepler Chevreux.

Speaker #2: Thank you, thank you, and good thank you everybody. Sorry, two questions. The first one is on the guidance which we had provided or let's say fine-tuned on the organic.

Matteo Bonizzoni: Thank you. Thank you, everybody. Sorry. Two questions. The first one is on the guidance which we had provided, or let's say fine-tuned on the organic part. You expect to meet, let's say, the high part of the range. Personally, I'm there because I am 2.5 for the year. The question is as regards the two divisions, the comparison will reverse in H2. It will become easier in water jetting, but more difficult in hydraulics, which last year was already significantly recovering in H2. I would like to ask, is it, in your view, reasonable to assume a lower organic growth but still positive in hydraulics for H2, and around a mid-single digit organic growth in water jetting?

Speaker #2: Part, so you expect to meet, let's say, the high part of the range, personally I'm there because I'm 2.5 for the year. But the question is as regarded to division, the comparison will reverse in the second half, so it will become easier in water jetting, but more difficult in hydraulic, which last year was already significantly recovering in the second half.

Speaker #2: So I would like to ask is it in your view reasonable to assume a lower organic growth but still positive in hydraulics for the second half?

Speaker #2: And around the meeting of digital organic growth in water jetting. Also, if you can comment about the book to bill and the order, which we know is something which you like to do during the conference call.

Matteo Bonizzoni: Also, if you can comment about the book-to-bill and the orders, which we know is something which you like to do during the conference call. The second question is on the margin. I'm doing some reasoning on the margin. H1 was 22.4%. Here, if I am right, you are not commenting about low or high part. You are commenting on the high part, if I have read correctly on the organic and not on the margin. Typically here, I would say that H2 tends to be a little bit weaker, particularly over the last 2 years. Q4 was significantly weaker, maybe this year is not the case. Is it fair to assume that 22.4 can be considered a sort of ceiling or cap for a full year also? Thanks.

Speaker #2: The second question is on the margin. I'm doing some reasoning on the margin. The first half was 22.4%. Here, if I am right, you are not commenting about the low or high part.

Speaker #2: You are commenting on the high part, if I have read correctly, on the organic and not on the margin. Typically here, I would say that the second half tends to be a little bit weaker, particularly over the last two years. Q4 was significantly weaker, but maybe this year is not the case.

Speaker #2: So is it fair to assume that 22.4 can be considered a sort of ceiling of cap for a full year also? Thanks.

Speaker #3: Okay, thank you. Thank you, Matteo, for these questions. Regarding the fine-tuning of the guidance, you are absolutely correct in underlying that this fine-tuning refers mainly to the range that we have provided for the top line.

Fabio Marasi: Okay. Thank you, Matteo, for these questions. Regarding the fine-tuning of the guidance, you are absolutely correct in underlining that this fine-tuning refers mainly to the range that we have provided for the top line. As you know, the -2% to +3% was a pretty large range that we provided in February when we had the full year in front of us, with a lot of uncertainty and very limited visibility. Considering that now we have passed the first 2 quarters that were the most difficult ones in terms of comparison base, because of the very strong water jetting performance, the very important order that Hammelmann got in China last year.

Speaker #3: Because as you know, the minus two plus three percent was a pretty large range that we provided in February, when we had the full year in front of us with a lot of uncertainty and very limited visibility.

Speaker #3: Considering that now we have passed the first two quarters that were the most difficult to answer in terms of comparison base because of the very strong water jetting performance because of the very important order that Amelman got in China last year, we are now much more confident that at the end of the year we will be in the positive side of this range than in the upper part of this minus two plus three percent in terms of top line, in terms of organic growth, and of course we are very happy about this, having closed with a growth, with an organic growth in the first half of the year was not something that we were taking for granted in February.

Fabio Marasi: We are now much more confident that at the end of the year, we will be in the positive side of this range than in the upper part of this minus 2% plus 3% in terms of top line, in terms of organic growth. Of course, we are very happy about this. Having closed with an organic growth in the H1, was not something that we were taking for granted in February. We are in some way much more confident because of the results of the H1, because of the order backlog that we have, because of the book-to-bill that remains above one in the full H1 in both division, and because of the discussion and the feedbacks that we are having from our customers.

Speaker #3: Then we are in some way much more confident because of the results of the first half, because of the order backlog that we have, because of the book to bill that remains above one in the full first half of the year, in both division, and because of the discussion and the feedbacks that we are having from our customers.

Speaker #3: Going in more granularity, more details between the two division, I believe that your assumptions are correct in saying that we may expect a still positive but lower organic growth rate from hydraulics and a positive contribution from water jetting.

Fabio Marasi: Going in more granularity, more details between the two division, I believe that your assumptions are correct in saying that we may expect a still positive but lower organic growth rate from hydraulics and a positive contribution from water jetting. I believe that is something that we can expect from the next couple of quarters. Regarding margins, 22.4% in the H1, we believe that we don't need to restrict further the range, considering that the range that we have provided in May was much more precise than the range that we provided in February, regarding the top line, because 22% to 22.5% is a very narrow range. We are not restricting it further, or we are not reducing it further, this range.

Speaker #3: I believe that is something we can expect over the next couple of quarters. Regarding margins, 22.4% in the first half of the year, we believe that we don't need to further restrict the range, considering that the range we provided in May was much more precise than the range we provided in February.

Speaker #3: Regarding the top line, because 22, 22.5 is a very narrow range, and then we are not restricting it further or we are not reducing it further this range clearly as much as we will be able to grow organically during the year as much we will have the possibility to be in the upper part of this range.

Fabio Marasi: Clearly, as much as we will be able to grow organically during the year, as much we will have the possibility to be in the upper part of this range. We consider that 22% to 22.5% range, in terms of EBITDA margin, is a pretty accurate and pretty precise range that we are confirming. You are also right in saying that the last three years, not only the last two, but the last three years, have been disappointing in the last Q4, mainly because of the very weak performance of the hydraulics division. The hydraulics division demand has been very negative in the last three years. At the end of the year, we had faced huge postponement or order cancellation from customer.

Speaker #3: But we consider that 22 to 22.5% range in terms of EBITDA margin is a pretty accurate and pretty precise range that we are confirming.

Speaker #3: You are also right in saying that the last three years, not only the last two, but the last three years, have been disappointing in the last quarter of the year, mainly because of the very weak performance of the hydraulic division.

Speaker #3: The hydraulic division demand was very or has been very negative in the last three years, and at the end of the year, we have faced huge postponement or order cancellation from customer.

Speaker #3: This year, considering that hydraulics is recovering or has recovered already, we are much more confident that we will not see or we will not face the same magnitude at the end of the year from our customer aimed at managing their own inventories and so on.

Fabio Marasi: This year, considering that hydraulics is recovering or has recovered already, we are much more confident that we will not see, or we will not face the same magnitude at the end of the year from our customer, aimed at managing their own inventories and so on. For this reason, we do not expect the same reduction in EBITDA margin in the H2 in comparison with what we achieved in June.

Speaker #3: And for this reason, we do not expect the same reduction in EBITDA margin in the second half of the year in comparison with what we achieved in June.

Speaker #2: Julian, thank you.

Matteo Bonizzoni: Yeah. Thank you.

Speaker #3: Grazie. Grazie, Matteo.

Fabio Marasi: Grazie. Grazie, Matteo.

Speaker #1: Next question is from Domenico Ghilotti, Equitas.

Operator 2: Next question is from Domenico Ghilotti, Equita.

Operator: Next question is from Domenico Ghilotti, Equita.

Speaker #2: Good afternoon. I have a few questions. First, just to clarify on the tariff—you mentioned you were still paying the tariff in the second quarter. Should we expand on that?

Domenico Ghilotti: Good afternoon. A few question. The first, just a check on the tariff. When you were referring to the tariff that you were still paying in the Q2, this will remain. I think tariffs are not over. If you had any tariff refund book in the Q2, if you expect anything going forward. Second question is on hydraulics profitability. Still, after 4 quarter of organic growth, the margin expansion has been quite muted. As a matter of, you were referring to some agro sluggishness, it is not same trend that you have seen in construction. Some limited recovery in Walvoil or the other agro. How do you expect this to move in the H2? Last, just a check on, you were running at EUR 41 million CapEx.

Speaker #2: Did we remain? So, I think tariffs are not over. And if you had any tariff refund booked in the second quarter, do you expect anything going forward?

Speaker #2: Second question is on hydraulic profitability. Still, say, after four quarters of organic growth, the margin expansion has been quite muted. So is a matter of you were referring to some agro slugging-ish, so it is not the same trend that you have seen in construction.

Speaker #2: So some limited recovery in valve oil or the other agro. And how do you expect this to move in the second half? And last, just a check on you were running at 41 million capex.

Domenico Ghilotti: It's still fair to assume, I add something more than EUR 90 million. Can you give us some update on the CapEx plan for the year?

Speaker #2: Still fair to assume? So I had something more than 90 million. Can you give us some update on the capex line for the year?

Speaker #3: Okay, thank you, Domenico. Regarding tariffs, in the second quarter, we had an impact of €6 million that we have clearly recharged to our American customers.

Fabio Marasi: Okay. Thank you, Domenico. Regarding tariffs, in Q2, we had an impact of EUR 6 million that we have clearly recharged to our American customers. Now we are thinking about how to manage the reimbursement regarding the previous tariffs that we have paid, but we are not foreseeing any benefit in terms of P&L. We are not factoring any contribution to our 2026 profitability regarding this reimbursement. As you know, from the end of July, tariffs will normalize to 10% to 15%, depending on the countries. It is something that is much more normal than what we have seen so far in the last 12 months. Hopefully, that nothing will change again.

Speaker #3: And now we are thinking about how to manage the reimbursement regarding the previous tariffs that we have paid. But we are not foreseeing any benefit in terms of P&L.

Speaker #3: We are not factoring any contribution to our 2026 profitability regarding this reimbursement. As you know from the end of July, tariffs will normalize to 10 to 15 percent depending on the countries.

Speaker #3: And it is something that is much more normal than what we have seen so far in the last 12 months. Hopefully, that nothing will change again.

Speaker #3: Regarding profitability in the hydraulics division, you have to consider that the 30 basis point increase is, I believe, a very positive result because we are enjoying some operating leverage in the companies that suffer the most in the previous downturn while drive valve oil.

Fabio Marasi: Regarding profitability in the hydraulics division, you have to considering that the 30 basis point increase is, I believe, a very positive result because we are enjoying some operating leverage in the companies that suffered the most in the previous downturn, White Drive, Walvoil, some companies in the cylinder business and so on. There is some mix also within the division, and there is some dilution coming from M&A. I've mentioned in my speech that we are consolidating, for the first time in this quarter, four different companies that we have acquired in 2025 that are slightly diluting our profitability. On organic point of view, the hydraulics division profitability has increased a little bit more than the 30 basis points reported. EUR 41 million in CapEx that are below 4% in comparison with sales.

Speaker #3: Some companies in the cylinder business and so on. But there is some mix also within the division, and there is some dilution coming from M&A.

Speaker #3: I've mentioned in my speech that we are consolidating for the first time in this quarter four different companies that we have acquired in 2025 that are slightly diluting our profitability.

Speaker #3: The non-organic point of view, the hydraulics division profitability was or has increased a little bit more than the 30 basis points reported. 41 million euros in capex that are below 4% in comparison with sales.

Speaker #3: I believe that is well within the range that we have commented many times that apart extraordinary projects or the extraordinary investment plan that we put in place in the post-COVID boom or to manage the post-COVID boom, we are now well in track to stay around 3 to 4 percent on sales range.

Fabio Marasi: I believe that is well within the range that we have commented many times, that apart the extraordinary projects or the extraordinary investment plan that we put in place in the post-COVID boom, or to manage the post-COVID boom, we are now well in track to stay around 3% to 4% on sales range. I believe that your EUR 90 million estimates of 2026 CapEx are, I believe, more than enough.

Speaker #3: Then I believe that your 90 million euro estimates of 2026 capex are, I believe, more than enough.

Speaker #2: And just to follow up on the book to be, you were mentioning before, you were referring to the semester. Have you seen deterioration in book to be in water ejecting in second quarter or is still up?

Domenico Ghilotti: Just to follow up on the book-to-bill you were mentioning before. You were referring to the semester. Have you seen a deterioration in the book-to-bill in waterjetting in Q2, or it is still up on your goal?

Speaker #2: Still up?

Speaker #3: If you still it is still above one. It is still above one, slightly below the 1.15 that we recorded in the first quarter of the year.

Fabio Marasi: It is still above one. Slightly below the 1.15 that we recorded in the Q1 of the year.

Domenico Ghilotti: Okay.

Speaker #3: But we are commenting about zero point something.

Fabio Marasi: We are commenting about zero point something.

Speaker #2: Okay. Thank you.

Domenico Ghilotti: Okay. Thank you.

Speaker #1: Next question is from Michele Baldelli, BNP Paribas.

Operator 2: Next question is from Michele Baldelli, BNP Paribas.

Operator: Next question is from Michele Baldelli, BNP Paribas.

Speaker #4: Hi, good afternoon to everybody. I have a couple of questions. The first one is always if you can give us a little bit of color on the pipeline of M&A if you can provide it.

Michele Baldelli: Hi, good afternoon to everybody. I have a couple of questions. The first one, as always, if you can give us a little bit of color on the pipeline of M&A, if you can provide it. The second one is on the growth in US. Do you see an acceleration in the hydraulics division in the coming quarters or not?

Speaker #4: And the second one is on the growth in US. Do you see an acceleration in the hydraulics division in the coming quarters or not?

Speaker #3: Thank you. Thank you, Michele. Regarding the M&A pipeline, we are first of all, we are satisfied of the two acquisitions that we have announced last week, because these are typical acquisitions of Interpump Group are reinforcing our existing business, are consolidating further our presence in the flow handling and food processing part, and are demonstrating once again our commitment to consolidate that business as well, not only hydraulics, but to consolidate flow handling and water jetting business as well, and to maintain a balanced exposure to the two division.

Fabio Marasi: Thank you, Michele. Regarding the M&A pipeline, first of all, we are satisfied of the two acquisitions that we have announced last week, because these are typical acquisitions of Interpump Group, are reinforcing our existing business, are consolidating further our presence in the flow handling and food processing part, are demonstrating, once again, our commitment to consolidate that business as well, not only hydraulics, but to consolidate flow handling and water jetting business as well, to maintain a balanced exposure to the two division. This is a fundamental characteristics of Interpump, we would like absolutely to protect these characteristics and this balancing between these two division.

Speaker #3: This is a fundamental characteristic of Interpump, and we would absolutely like to protect these characteristics and this balancing between these two divisions. Regarding hydraulics performance, I do not see a further acceleration, considering that the comparison base in the third and the fourth quarter will be a little bit more challenging because, as you may remember, since the third quarter 2025, we have recorded organic growth in hydraulics.

Fabio Marasi: Regarding hydraulics performance, I do not see a further acceleration, considering that the comparison base in Q3 and Q4 will be a little bit more challenging, because as you may remind, since Q3 2025, we have recorded organic growth in hydraulics. In any case, we are seeing a pretty positive market environment, mainly in construction or in truck outfitter business, in comparison with agriculture. We are positive, we are confident that this positive momentum will continue in the second part of the year. Thank you.

Speaker #3: But in any case, we are seeing a pretty positive market environment, mainly in construction or in the truck outfitters business, in comparison with agriculture. But we are positive, and we are confident that this positive momentum will continue in the second part of the year.

Speaker #4: Thank you.

Speaker #1: Next question is from Alessandro Tortora, Mediobanca.

Operator 2: Next question is from Alessandro Tortora, Mediobanca.

Operator: Next question is from Alessandro Tortora, Mediobanca.

Speaker #5: Yes, hi. Good afternoon. Good afternoon to everybody. Ciao, Fabio. Let's say I have three questions, okay? The first one is sorry, just a follow-up on your M&A pipeline, but also the fact that I see in the presentation that when you reiterated your 2028 targets, you're also highlighting the fact that you may explore or you are exploring the possibility of undertaking a larger transaction.

Alessandro Tortora: Yes, hi. Good afternoon. Good afternoon to everybody. Ciao, Fabio. Let's say I have three questions, okay? The first one is just a follow-up on your M&A pipeline, but also the fact that I see in the presentation that when you reiterated your 2028 targets, you also highlighted the fact that you may explore, or you are exploring the possibility of undertaking a larger transaction. Let's say, I would like if you can elaborate a little bit more about, let's say, this opportunity that is clearly on top of your usual bolt-on M&A activity, and if you can help us understand, how can I say, the major or the identity or the target that you are looking for in case. This is the first question. Thanks.

Speaker #5: So let's say I would like if you can elaborate a little bit more about, let's say, these opportunities that scale on top of your usual volatile M&A activity and if you can help us to understand how can I say the major or the identities of the targets that you are looking for in case.

Speaker #5: So this is the first question. Thanks.

Speaker #3: Okay. Thank you. You mentioned 2028 target, and we wanted to reiterate the feasibility of this target without considering any larger transaction that may happen, but that we are not factoring in our numbers.

Fabio Marasi: Okay. Thank you. You mentioned 2028 target. We wanted to reiterate the feasibility of this target without considering any larger transaction that may happen, but that we are not factoring in our numbers. The two acquisitions that we made are clearly bolt-on acquisition. The first one, MVV, was a clear add-on for Alfa Valvole, and the second one, Teknoice, was an expansion in a new business in equipment for the ice cream world that is expanding our portfolio of products. Because of the size, these are two small to mid-size companies or acquisitions in line with what we have done in the last couple of years. We have a pretty interesting pipeline that is diversified, but it is clearly very difficult to factor any future contribution.

Speaker #3: The two acquisitions that we made are clearly bolt-on acquisition. The first one, MVV, was a clear add-on for Alpha Valvole. And the second one was a techno-ice was an expansion in a new business in equipment for the ice cream world that is expanding our portfolio products.

Speaker #3: But because of the size, these are two small to mid-size companies or acquisitions in line with what we have done in the last couple of years.

Speaker #3: We have a pretty interesting pipeline that is diversified, but it is clearly very difficult to factor any future contribution. We are actively pursuing with our usual opportunistic approach many different opportunities, but we are not confident in commenting anything further in a more precise way in particular regarding the larger transactions that are clearly understand are the most interesting for you and that are the basis of your questions.

Fabio Marasi: We are actively pursuing, with our usual opportunistic approach, many different opportunities, but we are not confident in commenting anything further in a more precise way, in particular regarding the larger transactions that I clearly understand are the most interesting for you and that are the basis of your questions. It is very difficult to budget this. This is the reason why, in our three-year plan, we did not factor any larger transaction, but only the bolt-on or add-on acquisitions.

Speaker #3: It is very difficult to budget it, and this is the reason why in our three-year plan, we didn't factor any larger transaction. But only the bolt-on or add-on acquisitions.

Speaker #5: Okay, okay. Thanks. Then the second question is, I just read—let's say, also let's say on your website or some local website—that you have been expanding the capacity of Valvole in China.

Alessandro Tortora: Okay. Thanks. The second question is, I just read, let's say also on, let's say, your website or some local website, that you have been expanding the capacity of Walvoil in China. Related also now to your comment on, we see, let's say, a positive trend in construction, maybe some deterioration, light deterioration into ag. Just a comment on your strategy on the investments that you are going to do in this field, also considering that the level of capacity saturation has improved, but maybe is not yet at the level you are targeting. Thanks.

Speaker #5: Now, related also now to your comment on we see, let's say, a positive trend in construction, maybe some deterioration, slight deterioration into ag. So just a comment on your strategy on the investments that you're going to do in this field, also considering that the level of capacity saturation has improved, but maybe is not yet at the level you were targeting.

Speaker #5: Thanks.

Speaker #3: Yeah. You are following us very, very carefully, Alessandro. Congratulations. And this investment and this expansion of Valvole in China is following the very meaningful growth that we are experiencing now.

Fabio Marasi: Yeah, you are following us very carefully, Alessandro. Congratulations. This investment and this expansion of Walvoil in China is following the very meaningful growth that we are experiencing now. You may note that the hydraulics division in Q2 grew 8% in Far East, but Walvoil, in China in particular, grew much, much more. We are benefiting from the recovery of the construction activities in China and the recovery in the production plans of our very important OEMs that are based in China and that are also exporting their machines. I'm referring to Sany, XCMG, Zoomlion, this kind of players that are becoming more and more global and that are relying more and more on export for their products and their machines.

Speaker #3: You may note that the Hydraulics division in the second quarter grew 8% in the Far East, but Valvole in China, in particular, grew much, much more.

Speaker #3: And we are benefiting from the recovery of the construction activities in China and the recovery in the production plans of our very important OEMs that are based in China and that are also exporting their machines.

Speaker #3: I'm referring to Sun E, XGMG, Zoom Lion, these kind of players that are becoming more and more global and that are relying more and more on export for their products and their machines.

Speaker #3: And we are very, very well positioned because Chinese OEMs are in general utilizing low-quality, low-cost components for the machine, let's say, the poor machine for the internal market.

Fabio Marasi: We are very well positioned because Chinese OEMs are, in general, utilizing low quality, low cost components for the machine, let's say, the poor machine for the internal market. They are using top quality international components manufacturer for the top of the line part of their product range and for the machines that are aimed at exporting. We are having a very important development and growth in this part of the market. This is the reason why we are moving to a new, far larger plant in China for Walvoil, almost doubling the size of the building.

Speaker #3: But they are using top-quality international component manufacturer for the top or the high part of their product range and for the machines that are aimed at exporting.

Speaker #3: And then we are having a very, very important development and growth in these part of the market. And this is the reason why we are moving to a new far larger plant in China for Valvole almost doubling the size of the building.

Alessandro Tortora: Mm-hmm. Okay, thanks. The last comment. Sorry, Fabio, I didn't catch your comment on the net working capital on sales. In the current context, you are targeting, let's say, an improvement. I didn't get if it was related to this year or, let's say, in a kind of one to three years to have a lower level of net working capital on sales.

Speaker #5: Okay. Okay. Thanks. And the last comment, sorry, Fabio, I didn't catch your comment on the trade working capital on sales. So in the current context, you are targeting, let's say, an improvement.

Speaker #5: I didn't get if it was related to this year or, let's say, in a kind of one to three years to have a lower level of trade working capital on sales.

Speaker #5: Sorry.

Speaker #3: Yes, I've been commenting on this target for many quarters so far, and I'm not super happy with the results that we have achieved.

Fabio Marasi: Yes. I've been commenting on this target for many quarters so far.

Fabio Marasi: I'm not super happy of the results that we have achieved. Considering the global uncertainties, considering the difficulties in sourcing some material from some region, and more important, considering the increase or the inflation of some raw material costs, once again, our inventories are protecting us. The investments, let's put it this way, on working capital is a good investment that, on an an industrial point of view, we historically made. This is, I hope and I assume, a temporary situation, and I believe that in a normal world, we can live easily with a 35%-36% net working capital on sales range. We still room for improving our ratios and our return on capital employed and our free cash flow generation.

Speaker #3: But considering the global uncertainties considering the difficulties in sourcing some material from some region and more important considering the increase or the inflation on some raw material cost, once again, our inventories are protecting us.

Speaker #3: And the investments, let's put it in this way, on working capital is a good investment that on an industrial point of view, we historically made.

Speaker #3: But this is I hope and I assume a temporary situation, and I believe that in a normal world, we can live easily with a 35, 36 percent networking capital on sales range.

Speaker #3: And then we still room for improving our ratios and our return on capital employed and our cash flow generation.

Speaker #5: Okay. Thanks.

Alessandro Tortora: Okay, thanks.

Speaker #2: As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone.

Operator 2: As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. Mr. Pavesi, there are no more questions registered at this time.

Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. Mr. Pavesi, there are no more questions registered at this time.

Speaker #2: Mr. Pavesi, there are no more questions registered at this time.

Speaker #3: Okay. We can close the call. Thanks, everybody. And enjoy the summer. Thank you, everybody. Let's be in November. Bye-bye.

Federico Pavesi: Okay. We can close the call. Thanks, everybody, and enjoy the summer.

Fabio Marasi: Thank you, everybody. Let's speak in November. Bye-bye.

Speaker #2: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Operator 2: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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