Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining Biesse third quarter 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. Bernabucci, Statutory Consolidation Manager and IR of Biesse. Please go ahead, sir.
Good afternoon, everybody, and thank you for joining this Biesse Q3 2026 financial results conference call. Let's start commenting our Q3 2026 financial results. First of all, with reference to the geopolitical distribution of group's main production assets, there are three industrial hubs located in Italy, India, and Thailand. These are complemented by 20 showrooms strategically positioned worldwide to support the commercial network. As of September 2026, the group employs approximately 3,600 people, and in terms of revenue at the same date, 23.4% is generated in Americas, 64.5% in the EMEA region, and the remaining 12.1% in the APAC region. Before discussing our performance, it's important to recognize that we continue to operate in a challenging environment due to geopolitical tensions, trade disputes, inflation, increasing energy, and restrictive monetary policies.
Let me say uncertainty has become a structural feature of the global economy, affecting investment decisions across our end markets, particularly relevant for capital equipment industries. In response to that, we have continued to evolve Biesse by increasing specialization, simplifying processes, and aligning our cost structure to the current market conditions. Even if visibility remains limited in the short term, our diversified business model and stronger operating platform allows us to catch opportunities as market recover. Summarizing the group's main economic and financial KPIs, the sales of the period report a decrease of approximately -6.6% compared to Q3 2025. The 2026 FX impact was negative for EUR 5.5 million versus Q3 2025, and if we look at constant exchange rates, the decline would have been limited to -5.4%.
EBITDA adjusted amount at 5.5%, a 0.3% margin up on sales compared to Q3 2025 when it stood at 5.2% of sales. It's important to note that the significant reduction in cost resulting from the activation of the contingency plan helped to mitigate the negative impact of lower revenues. Headcount decreased by 161 employees compared to Q3 2025, mainly driven by the reduction in Italy following to the closure of northern manufacturing facilities and workforce optimization measures implemented under the solidarity agreement. In terms of order intake, as you should already know, ongoing geopolitical uncertainties are driving a phase of slowdown, and wait-and-see across global markets, postponing investments, and particularly in Italy. Anyway, Q3 2026 performance is broadly in line with Q3 2025, reducing the Q2 gap from -4% to -0.5%.
The net financial position excluding IFRS 16 shows a deterioration in Q3 2026 from a positive EUR 1.5 million to a negative of EUR 34.1 million, which is in line with the group's business seasonality and lower than the cash absorption recorded in Q3 2025 when it stood at -EUR 43.4 million. If we look to the standalone cash absorption, in Q3 2026 amounted at EUR 14.5 million compared to the EUR 25.6 million in Q3 2025. If we look at our top-line performance by product, by material, and by geography compared to the Q3 2025, we note that revenue mix shifted further towards service and parts and components, partially offset by a softer contribution from machine and lines, which remain broadly in line and stable with Q3 2025 level.
By material, the wood segment delivered slight growth despite a challenging market environment, supported primarily by the lines business, while stone and glass were affected by weaker demand conditions. Finally, analyzing sales by geographical area, we can see a positive contribution by the EMEA region, particularly driven by Spain, Portugal, and U.K., whereas Americas and APAC regions are both negative. In addition to the figures already commented in the consolidation P&L, we would move directly on the gross margin, when it improved by 20 basis points, driven by a positive mix pricing effect for +0.3% and an adverse FX impact of -0.1%. As previously mentioned, the contingency action implementing during the year were the main driver behind the EUR 14 million reduction in operating expenses and labor costs versus Q3 2025. As a result, adjusted EBITDA remained positive at EUR 24.7 million, with the margin improving from 5.2% to 5.5%.
D&A are lower than Q3 2025 due to lower investments, whereas we register lower provision due to the release of previous accruals funds for a positive amount equal to EUR 6 million. We have non-recurring items for EUR 1.6 million referring to restructuring costs, and overall, EBIT is positive at EUR 3.6 million compared to a loss of EUR 6.7 million in Q3 2025. Financial income and expenses are both negative by EUR 2.6 million, mainly due to the lower financial income and adverse FX impact reflective and unfavorable reversal versus the positive contribution recorded in 2025. At the end, the net result of September 2026 is negative for EUR 2.1 million, showing an improvement of EUR 6.9 million compared to Q3 2025. Looking to the bridge, the bridge net result, all these kind of variations are more detailed in the presentation, which is available on our website in a conference call sections.
Regarding the headcount trend, the group's workforce decreased by 161 employees compared to September 2025, of which 121 headcount decreased with the Italy perimeter and 40 decrease in the rest of the world. If we look to the balance sheet highlights, the net operating working capital increases by EUR 30.4 million compared to December 2025, primarily due to the lower trade payables, EUR 29.3 million, and reflecting the reduced purchasing volumes. The decrease in trade receivables of EUR 7.2 million, supported by lower sales volumes and improved DSO, was fully offset by higher inventories, EUR 8.2 million. Although inventory levels started to normalize compared with the end of the first half of 2026. Contract liabilities remain broadly stable, while management expectation a progressive reduction in working capital absorption during Q4, supporting cash generation by year-end. Net equity decreases at EUR 222.2 million.
And finally, the net financial position, excluding IFRS 16, is negative at EUR 34.1 million versus a positive of EUR 1.5 million at the end of December 2025. We can explain this kind of variation with a cash flow bridge, where cash generated by EBITDA is more than offset by net working capital dynamics, CapEx, even if lower than planned, reflecting investment postponements and contingency plan implementation, rentals, and other variations concerning assets, liabilities, and funds. To conclude, no changes have been recorded in the composition of the board of directors over the last few months, as well as in the shareholder distributions. This is all from our side, and now we can open the Q&A session. Thank you.
Excuse me, this is the Chorus Call conference operator. We will now begin the question-answer section. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Alberto Francese of Intesa Sanpaolo. Please go ahead.
Good afternoon. Alberto Francese, Intesa Sanpaolo. I have a couple of questions. The first regards fairs. You have mentioned that you participated in several fairs in Europe, in U.S., and Turkey. If you can give us some color on the feeling that you perceived these fairs in general as an industry, and if you have something to signal to us in terms of possible impact on your order intake for the next quarters. The second question regards the cost reduction, where you have worked carefully, as shown in the CapEx of the profitability despite volumes contraction, particularly on labor cost. If we imagine that at some point, sooner or later, the industry recovers, what could be the impact on this cost structure to sustain growth again in orders first and then in top line? Thank you.
Okay. Thank you, Alberto. I try to answer to your question. First of all, concerning fairs, yes, as you mentioned, starting, especially in this last part of the year, we participated in different events and trade fairs, which are very important for us. We invested a lot in terms of communication and in terms of presence worldwide. Starting from last August, we fair in the IWF fair in Atlanta, which was a fair for wood. Then we participated and we joined Marmomac fair in Verona, and glasstec in Düsseldorf, which is referring, of course, glass, and another fair at Istanbul in Turkey. We have to say that the feedback from these fairs are positive, and we see a recovery in terms of order intake.
Our feelings are good for the proceeding of this fourth quarter, and also for the next month, just reaching one of the most important fair that we will have on May 2027, which is LIGNA Hannover. With reference to the cost reduction, we confirm that our level of attention is very high, and the expectation when market condition improve is to use the leverage operating effect. So, increase our marginalities in concerning EBITDA, and then it could get a good effect in our P&L.
Can you hear me?
Yes.
All right. This means that you do not have to revise significantly. I mean, I am sure there will be some small adjustment, but I say the cost structure is, I would say, more or less able to sustain the recovery in top line when and if there will be a industry starting to be positive.
Yes, indeed. We can confirm this way and this way to operate.
Okay. Thank you.
Welcome.
The next question is from Daniele Alibrandi of Banca Akros. Please go ahead. 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. The next question is a follow-up of Alberto Francese of Intesa Sanpaolo. Please go ahead.
Thank you. Alberto Francese again. One last question. You mentioned that you expect cash generation in the last quarter of the year. If you can give us a little bit more color on that, or if you can give us also more or less a guidance where net debt could arrive at the end of 2026.
Okay. Yes. The expectation is to recover and to rebound in the fourth quarter. Speaking to, if we have a look to the order intake, the expectation is of an increase of the order intake during the fourth quarter, together with and mirroring with the amount of sales. Our expectation of closing is, in terms of sale, is between EUR 650 million to EUR 620 million at the end of the year. While concerning the balance sheet dynamics in terms of working capital, we are very focused on the inventory reduction. As mentioned during the call, the reduction processes and the first effects we have seen starting from last first half. Our expectation is to, in terms of forecasting, to reduce it again till the end of the year. This could trigger a benefit in terms of working capital dynamics.
And of course, on the other side, recovering in terms of EBITDA marginality and working on net working capital dynamics, we will see an improve also of net financial position with it would stood at roughly EUR 20 million, excluded IFRS 16.
Thank you very much.
You're welcome.
The next question is from Daniele Alibrandi of Banca Akros. Please go ahead.
Yes, hello. Can you hear me?
Yes.
Hello, can you Okay, hello. Thanks. Thanks for taking my question. I have two. The first one is on order intake. I come back on this. Sorry, but I was interested in understanding if the improvement you mentioned in September was broad-based across geographies and customer categories or concentrated around some products or regions. The first one. The second one, if you can provide us some indication for 2027 or at least some feelings. Based on your current order intake and backlog, do you see 2027 as a year of stabilization or return to grow? What's your assumption on this? Which kind of visibility do you have right now? Thank you.
Ciao, Daniele. Thank you for your Sorry? Can you hear me?
Yes, I can hear you.
Okay. Sorry. Okay. I try to answer directly to the first question concerning order intake. As mentioned before, the feeling is good and the feedback from fairs are good. If we look deeply inside our composition, some of this kind of order intakes comes out from lines. Because lines are one of our high-range products and is very important for us because it's a diversification product that we have also against competitors. Another important positive sign comes out from both the segment. Specifically these two items. Referring to 2027, we have to say that we are ready to restart and the organization and the commercial workforce and also our products are, in terms of developments, are ready to restart and to work for bring Biesse at its historical level.
At the moment, the feeling is good, but we have to say that for the moment we see a stabilization better in wood and different in the other sector concerning glass and stone.
Thank you. Maybe a follow-up regarding the CapEx, which kind of development should we factor for the year-end and for next year? Should we expect a sort of normalization or if you can give us some indication, this would be helpful for our models. Thank you.
Okay. In terms of CapEx, for the moment, we are postponing some investments in, let me say, new wait-and-see behavior that gives us the possibility to invest more when the market condition give us the possibility. Our maintaining CapEx level is roughly between EUR 20 million and EUR 25 million. Also, if we work in terms of stabilization, we will maintain this amount of CapEx. Of course, we are ready to increase this when market condition give us the possibility to do that.
Thanks a lot.
You are welcome.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further question. The next question is a follow-up of Alberto Francese of Intesa Sanpaolo. Please go ahead.
Sorry, it is me again. Just a curiosity on the last question we answered on CapEx. You said that, I would say, in a normalization phase, we are EUR 20 million-EUR 25 million as usual. If not, there might be the need. But what CapEx are needed for, or better, I change the question. How is the level of saturation of your capacity, and if you need CapEx for capacity or for what else? Just to understand what could be the additional CapEx versus, let us say, the maintenance level.
Our maintaining CapEx are roughly EUR 20 million per year, and we have the possibility, as we did last year, to increase the CapEx level between EUR 10 million to other EUR 20 million, as we did last year with the purchase of the land in India, for example. We have to say that till 20 and EUR 25 million are maintaining CapEx concerning R&D development, and we can add on top of that other EUR 10 million or EUR 20 million. It depends on the project and on the year.
Mr. Bernabucci, there are no more questions registered at this time.
Thank you all for joining this call.