Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump fourth quarter 2020 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, please signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Luca Mirabelli, Head of Investor Relations. Please go ahead, sir.
Thank you. Good afternoon, everyone. Good morning to those connected from the States. Welcome to this call. As usual, I'm here with executive board member, Fabio Marasi, with the precious help of our CFO, Carlo Banci. Today, we are going to comment on the results for the fourth and last quarter of 2020. What a year it was. The COVID-19 pandemic brought some entirely new challenges to the world, but also provided a good demonstration of Interpump's flexibility and resilience, attaching a real life meaning to these two words that we use so frequently in our presentations. We will also remember it as the year we finally made it to the main index of the Italian Stock Exchange, the FTSE MIB, and our market capital passed the 4 billion mark, thanks to the appreciation shown by the markets.
There is no doubt that we are all very proud of these results, and we are very well motivated to face 2021, which is expected to be a year of recovery. Let's take a look at what we have achieved. Considering how quickly the situation changed throughout the year, it makes sense to focus on the quarter at first. In the last quarter of the year, we had a confirmation, in some cases, an acceleration of encouraging trends seen in Q3, despite unexpected, somewhat expected, strong headwinds from the currency exchange. Sales in the quarter amounted to EUR 340.1 million, minus 0.7% year-on-year. This is the result of organic sales down 1.7%, a negative 3.4% from the currency exchange, so a very strong one, and a 4.4% increment due to the perimeter expansion. Sales in hydraulics amounted to EUR 236.7 million, an increase of 4.2% increase.
Let me underline, it's an increase of 4.2%, which was partially hidden by the - 3.3% from exchange rates and helped by the addition of a healthy 6.2% from companies added in the previous 12 months, mostly Transtecno. As a result, sales for Q4 are up 7.1% year-on-year. In waterjetting, the top line was organically down 12.4% year-on-year, slightly better than the previous quarter, but still clearly affected by the pandemic induced slowdown. Many of our customers in this division went on working during the pandemic, as they belong to essential industries like food, energy, or pharmaceutical. This is what allowed our waterjetting companies to remain operational throughout the darkest months, especially I'm referring to mid-March to mid-May, while at the same time, hydraulics was suffering from almost complete stop.
However, while sales related to maintenance, replacement, or small expansions went on as normally as the situation allowed, order income was hit much harder as some customers completely postponed their largest CapEx projects, which was because of the more complex nature of the interaction involved. Also because they needed to focus on everyday activity at a time when an initial team presented more logistical difficulties than normal times. The lack of these orders from the first part of the year is the main driver, the main reason for the sales trend in the last quarter. Currency exchange had a - 3.4% impact, and one percentage point was added by the recent acquisition of Macfuge, taking us to a reported figure of EUR 103.4 million, down 14.8%.
Despite the short term trend on a full year scale, the waterjetting division proved once again more resilient, limiting its organic drop to 10.8% versus a 13.6% registered in hydraulics. After factoring in the negative currency exchange and the acquisitions, the final reported sales came to EUR 881.6 million for hydraulics, - 2.3% compared to the previous year, and EUR 412.8 million for waterjetting, - 11.5%, which brings us to the total consolidated yearly sales figure of EUR 1,294.4 million, down only 5.4% compared to 2019, also thanks to acquisitions worth a good 8.7% on last year. A look at sale by area in the quarter revealed that Italy and Europe are flat year on year. North America is down 11.6%, this is the performance in Europe, and more than half of it is due to the weakening of the U.S. dollar.
Latin America is lagging behind, still -25% compared to one year before. China is, let's say, catching breath after two quarters of strong growth and registers a -14% year-on-year. The yearly performance remains positive. China is poised to reach 7% of our consolidated sales, and it already reached that weight on a quarterly basis. South Korea grew 12% in the quarter, reached 2% of our total consolidated sales, and seems overall to be enjoying a very positive momentum. Good news also from India, where a solid 41% increase in the quarter brings the yearly performance in line with the group average, probably even better than the group average in local currency. Hopefully, this is the first signal of the end of a long crisis.
Looking at sales by application sector, the best year-on-year performance in the quarter belongs to agriculture, which is up 40% compared to one year before. Construction was still strong at plus 24%. Trucks are up 13%. Earthmoving and lifting are also up between 6% and 7%. Unsurprisingly, sectors related to hydraulics are showing the best performance. As already discussed, a recovery in food, cosmetics, and pharma seems to be coming late, and the sector still registers a –11%, awaiting the return of CapEx. We have the cluster that surprised for its resiliency in the course of the year, or to say it more precisely, the cluster that showed how little correlation our business may have with industry-wide trends. I'm referring to oil and gas, marine, and offshore, which this quarter is down 22% but remains above average considering the entire year.
The final comments on our top line, as you have seen, sales at the end of the year are very close to pre-crisis levels, although with a very diverse mix and strong changes from month to month. The road to normality is proving bumpy and full of sudden turns, but we are confident that we have the right vehicle for this kind of road. This also shows very well in the profitability we expressed during the year, and especially at the end. Q4 scored a 23.2% EBITDA margin, equivalent to EUR 78.8 million, which is an absolute record, both in margin and in absolute value, for a fourth quarter, which brings the yearly total to EUR 294.1 million or 22.7% of sales. It's hard to imagine a better demonstration of the resilience of our model.
The EBITDA margin for hydraulics in the last quarter was even nearly two percentage points higher than one year before, bringing the yearly margin above the one of 2019, 20.8% versus 20.7%. This Q4 improvement was not seen in water jetting, which closed the year with a 26.7% EBITDA margin, 120 basis lower than in the previous year, very similar to the situation at the end of September. The overall contribution to personal cost from the welfare systems, Cassa Integrazione for Italy and similar schemes in other countries, decreased further as expected in Q4 and amounted to 0.4% on sales, bringing the yearly total almost exactly to 1%. The higher than usual profitability in Q4, brought to a net income of EUR 49.7 million, which drove the yearly total to EUR 152.7 million.
The corresponding tax rate for the year was 24.6%, lower than our historical average. Mainly for the same reasons explained last year, the fiscal benefits resulting from the installation of Industry 4.0 compliant machinery in Italy. These benefits are going to last for at least seven years and possibly more if the scheme is renewed. Please note that the net income could get an additional boost, thanks to more fiscal benefits granted by the Italian tax authority as a consequence of asset revaluation. At this time, calculations are still going on, so you will have to wait until the final results are announced on March 19 to get a precise idea of the impact. Now, we have reached my favorite page of our record for today, the cash flow statement. Cash flow from operations amounted to EUR 229.5 million.
As expected, the healthy adjustment of our net working capital went on also in the fourth quarter, a further EUR 25 million for a yearly total of about EUR 55 million. CapEx for the year was EUR 61.4 million, which is towards the high end of our usual range of 3%-5% of sales. As a result of all this, Interpump achieved an unprecedented free cash flow, about EUR 200 million, EUR 203.8 million to be precise. This is very exciting considering that a low leverage in our balance sheet gives us more firepower for future acquisitions. Remember that this was not due to a new policy or any out of ordinary effort.
This is rather the structural characteristic of the Interpump model, where cash generation is enhanced in low or negative growth periods, thanks to the very efficient adjustment of our net working capital, which is quite sizable. Conversely, you should be prepared, or hopefully you should be prepared, to see less impressive cash generation in 2021 as a result of the return of organic growth. EUR 16.6 million were spent in the quarter to purchase treasury shares, taking the yearly total spending to EUR 48.5 million.
There was no significant disbursement in acquisitions or dividends in the fourth quarter. In conclusion, our net financial position at the end of the year came to EUR 269.5 million, on top of which we had EUR 62.7 million of commitments related to acquisitions. The increase in the quarter was due to a reassessment following the outstanding performance of Transtecno this year.
Net debt now stands at less than one time EBITDA. Although, as usual, we cannot give you any advanced information about ongoing negotiations, it is fair to point out that for an M&A-oriented company like Interpump, this extra firepower comes at the right time, as the standstill that was due to the difficulty in assessing the value of companies in the middle of the pandemic appears to be heading to an end. At the same time, we are closely monitoring the complex dynamics of organic recovery, which, as mentioned earlier, occurs in many different shapes and timings. There is no doubt that Hydraulics has started earlier than Water Jetting, due to the stronger compression of the business during lockdowns and also due to easier comparables in the previous year.
We are still waiting for Water Jetting to do the same. So far, I have to say, we have started registering encouraging signals in terms of order intake. Reality is even more articulated than this. There are significant differences within each of the two divisions. However, this is a perfectly expected consequence of the diversified nature of our business. We said from the very beginning that recovery would not have been an orderly phenomenon, but quite a chaotic one. We have some good reasons for optimism, the rollout of vaccines, the rest of the scientific process in diagnosis and cure of COVID-19, the willingness of all monetary authorities to help with the recovery, the change in policy by the new U.S. administration, and especially the fact that it is supported by a majority in the Senate, and even the hopefully coming soon new government in Italy.
There are also some downside risks. A lot of things can go wrong in the implementation of initiatives of an unprecedented scale. 2021 doesn't really look like a year for short-term predictions. This brings me to my next and final topic. Almost exactly one year ago, we disclosed our ambitious expectations for a three-year period ending in 2022. Okay, if we look back at 2020, to say that 2020 did not go according to plans is a big understatement, so it's about time to update our indications to the market. As you have seen from the press release, after careful consideration, we decided to offer the same indication rolled forward one year. We are envisioning the same growth previously expected for 2020-2022, for the three years of 2021-2023.
In numbers, we believe that the combination of organic growth and M&A can result in a top-line growth around 33%, the preservation of EBITDA above 22%, despite the possible dilution from acquisitions, and a net financial position between one and 1.5 x the yearly EBITDA. By projecting the same path expected one year ago, we are actually making a significant statement. COVID-19 has not forced Interpump to cut, dissect, terminate, or otherwise sacrifice its potential for growth in any way. The other underlying message is as strong as last year. Acquisitions should be viewed as a structural part of our model, not as something accidental that may or may not happen. They have played and will continue playing a fundamental role in our growth.
I would encourage anyone relatively new to our story to pay close attention to some almost unique aspects in our targeting, assessment, and integration processes, which over the years have proven very effective at minimizing costs and risks and extracting the highest possible value. At this point, we'd love to hear from you. Let's open the lines to the Q&A session.
This is the conference operator we will now begin the question-and-answer session. And to ask a question you may press star and one on you touch-tone telephone. To remove you question please press star and two. The first question is from Matteo Bonizzoni with Kepler. Please go ahead.
Thank you, and good afternoon. I have three questions, if I may. On your M&A ambitions, or in any case, these three years, 10% revenue CAGR, et cetera. Historically, if you look at the last 15 years, your 11% revenue CAGR was split in 4% organic and 7% M&A. If you look to 2023, your organic growth should be stronger than the average because of the fact that clearly 2020 was depressed. From my estimates, I expect roughly speaking 7% organic CAGR. It means that to get to 10% per year, you are incorporating a sort of 3% M&A. I would like just to understand if it is based on consideration of your own pipeline, so your current pipeline is larger, smaller, or close to historical average. The second question is on 2021 organic outlook. You are not providing any yearly guidance, let's say.
Also last year, you did the same. I just want to cross-check if an expectation for, let's say, a low double-digit organic growth is reasonable. Also, I would like to understand if after the very good margin defense in 2020, do you expect a flat margin, improving margin, or whatever? Final check on the CapEx and tax rate level for 2021. I think that CapEx this year were, in 2020, around EUR 60 million, and tax rate was good because of the reason that you are mentioning. What about 2021? Thanks.
Okay. Let's address your questions one by one. The first about our three-year expectations. Well, as a general note, any kind of forward-looking statement must come with a good dose of prudence. There is no doubt that there is an upside risk to what we are indicating, but considering that our previous indication was met by the outbreak of a pandemic, you might understand why we didn't feel like splurging with an extremely general indication. Jokes aside, there is a good possibility that the overall growth in the three years, organic growth, is higher than what we are, let's say, encompassing in these numbers. The result could be better than that, but we have three years to adjust our aim and hopefully introduce positive surprises. We believe that we are still in the middle of the pandemic.
Don't forget that the vaccine rollout still has a number of things that could go wrong, especially in terms of mutations of the virus and so on. Although we are overall optimistic, this would not probably be the right time to discharge 100% of optimism. Of course, I will give the microphone to Fabio Marasi, who, being a board member, might have more of an insider look at these kind of topics. Fabio?
Yes. What I believe is important to underline is, of course, on top of the difficulties in making precise analysis or giving precise targets regarding M&A, because you know better than us that M&A occurs, and you know also that we have an opportunistic approach. An opportunistic approach, it means that we are able and prepared to analyze and close small acquisitions, or also to analyze and approach bigger acquisitions.
What is important to underline is related to our strategy, and is absolutely clear within the company, within the top management, that we are more committed than ever in reconfirming our M&A strategy, in reconfirming our idea of reinvesting in M&A, in the growth of our group, and in the consolidation of several of the markets in which we are present, almost entirely the cash flow that we generate every year.
As we have seen before, we also have a stronger than ever balance sheet, thanks to the fantastic cash flow generation that we have had in 2020. For this reason, we are also prepared to look after slightly bigger acquisitions, slightly bigger targets in comparison with what we have done in the past. We are not looking for transformational deals. We are not looking for diversifying or adding another leg. We are prepared, also considering where we are in terms of market capitalization, in terms of size of the company, and in terms of strength in our balance sheet and very low leverage, we are prepared to look at some things that is even larger in comparison with what we have done in the past. One last point that I would like to mention is the landscape in M&A.
Of course, 2020 has been a difficult year for negotiating and closing M&A transactions because of all the problems related to COVID logistics, and also some gap between the ideas or the evaluation made by the buyers and the expectation of the entrepreneurs and the sellers, who are still based on the previous year or pre-COVID situation. I believe, and we believe we are seeing in the market in these weeks, that this situation is easing a little bit, considering that now we have entered in a year that everybody expects to be a little bit more normal. To make a final statement, if I have to look at 2021 and looking forward, I really want to underline how important will be, and how important we believe, will be M&A for Interpump Group growth.
Thanks, Fabio. With your question regarding the expectations for organic growth in 2021, you are correct in saying that we are not delivering a set of numbers as the guidance for the one year. You mentioned a low double-digit organic increase, which is not reflected in the current consensus. This question takes me a little bit by surprise. The current consensus has a very high single digits embedded in it. I think that it looks doable. In terms of commenting on a significantly higher expectations, I would still be cautious at this time of the year. The year will certainly have two different phases, especially the turnaround of the water jetting business, which is expected will happen, but the timing is not certain yet. I wouldn't feel very confident in underwriting double-digit growth at this time of the year.
Of course, this is very well within the reasonable range of expectations. I would not encourage anyone who has that in mind to change their mind based on any material evidence. It's just a matter of prudence. As you know, in terms of delivering messages for the future, we have always been very prudent in the past. Probably 2020 was one of the few times in history where we had to revise our expectations, and we certainly don't want it to happen again. That's pretty much everything I could say. Let's stick to the consensus, the one you can find on Bloomberg, or also ask me if you don't have it. We also collect the consensus, and I'm going to update it after the set of reports that are going to come out after this call.
I will stick to commenting on that number, not on any particular figure proposal. Margins and tax rate for 2021 and years to come. In terms of margins, we have different factors that are suggesting that margins could go up or go down. Therefore, the more reasonable thing is to be looking at a substantial stability of the margins we achieved this year.
Although the exit speed of 2020 is promising, so I wouldn't rule out maybe an inching up a little bit of them. Remember that despite the unflattering behavior of the top line in water jetting, in terms of mix factor, the mix factor in water jetting is quite favorable, which is why, as a percentage, it expressed a very good margin overall, and this might, of course, change as soon as all the companies in water jetting see the recovery.
We are also going to miss that 1% help. Hopefully, we're going to miss that 1% help from the layoff funds. Hopefully, we are going to restart paying travel costs and costs related to trade shows. Of course, the exact point in 2021 when this starts happening again is not known. These are the reasons for prudence. Of course, the reasons for optimism are the fact that our operations in 2020 were anything but optimized.
Of course, we had to face a number of continuously developing situations and unpredictable events. We clearly have room for working in a better way, which should be expressed in higher margins. The tax rate, the ones that we have commented now, so the 24.5, looks like a reasonable indication because the fiscal benefits related to the hyper amortization of Industry 4.0 compliant machinery in Italy are there.
They started last year. They will last for seven years. That's a fairly good indication of what to expect. Remember that you may hear more positive news on the tax rate for 2020 when we announce the final results, because calculations are still ongoing regarding another fiscal benefit that will probably be a one-off only for 2020. I think I've answered your question, Matteo.
Yes. Thank you.
Thank you. Next question, please.
The next question from Domenico Ghilotti with Equita. Please go ahead.
Good afternoon. My first question is a follow-up on the guidance. I am trying to understand if you see today a pipeline on the M&A that is different, lower in particular, compared to, say, 12 months ago. At the end, if I put your 33%, I end 2023 with around EUR 1.7 billion sales compared to EUR 1.8 billion before. Either you see COVID having a structural impact in 2023, so depressing to the organic recovery, or you have a lower pipeline for M&A. The second question is some color on what is going on in water jetting and hydraulics. You were mentioning that water jetting is sign of recovery in the order intake, I think that probably we will wait for a few quarters before seeing this translating into top line.
Should we expect water jetting still down in the first part of the year and then recovering, and while hydraulics being already continuing the positive trend that we have seen in Q4? Could you give us a sense of, you were commenting on the margin? My third question is, give a sense on the margin specifically for the two divisions? Should we see some upside on hydraulics more than water jetting?
Okay. Well, first, I would like to make an observation, which is a very superficial one before leaving the answer to Fabio, about your comparison. You said that we are aiming at EUR 1.8 billion, now we are aiming at EUR 1.7 billion, and you are asking whether this should imply less ambitious plan for M&A. As a matter of fact, it's not exactly the same kind of attitude, because even the companies that we plan to acquire have had exactly the same, or in some cases, even higher decreases than we are.
By acquiring exactly, if we had a set of companies to acquire, by acquiring exactly that set of companies, we would probably achieve the same result in %, and this explains why everything being unchanged, the numeric target would go from EUR 1.8 billion to EUR 1.7 billion. This is, of course, just a very small and superficial observation. Maybe Fabio wants to add something substantial to this.
No, on top of this, I would not like you to not to encourage you to take this point, saying that the 1.7 instead of 1.8 means that we are looking for lower turnover or lower M&A activity. It is exactly the opposite, as I commented before. We are motivated than ever. We don't have any problem in terms of balance sheet, of course, or firepower . Also considering the level of the interest rate. We, just to add another comment, we will have probably to be prepared to enlarge a little bit our evaluation range for the company because of the situation of the market. When I am commenting this, I have in mind to add zero point something or a maximum one point to our usual multiple points.
This is not in some way affecting our growth capabilities and our willingness to go ahead with our M&A strategy. I will not encourage you to take this conclusion that we are looking to easier targets for M&A.
Just to clarify, the pipeline is similar or even stronger than last year. When you are referring to larger, should I assume, say, EUR 100 million-EUR 200 million sales?
This is something absolutely reasonable, yeah.
Okay.
Also, another superficial observation is that when we issued the same indications last year, we already had in our pocket Reggiana Riduttori and Transtecno. We had already an 8.5% of external growth, which we could already count on. If you wanted, our target was a little bit simpler to achieve than it appears today. Anyway, what Fabio said about the richness of the pipeline is, of course, much more important. Onto your question about the trend affected by both divisions. We are seeing a real explosion of orders in hydraulics, so I would expect some very strong numbers for the next quarters, especially as we are going to face easier and easier comparison dates. For those of you who like to take a look at year-on-year trends, this would be a fun year to comment on.
In water jetting, the easier comparison dates will not be there until Q2. Q1 last year was still quite good. So you're right. You mentioned the second part of the year. I could be a little bit more optimistic and hope that we're going to see the effect on the top line as early as the second quarter. Of course, your mileage may vary. Things will have to really to actually happen before we can comment on that. There is no doubt that there is a different timing and a different shape in the recovery. The recovery in hydraulics appears to be very strong proportion of what happened. Remember that on a yearly basis for 2020, hydraulics still lost more than water jetting. Probably if we extend this 12-18 months into the pandemic, when water jetting is still.
Making its first step towards recovery, hydraulics is already running. Probably hydraulics might appear to be better than waterjetting, this will be probably an anomaly in history that is not going to last very long. In terms of margin by division, I already hinted at the fact that the margin as a percentage for waterjetting is currently in the best range in terms of the mix factor. I would not expect it to go up. I could be contradicted very easily, as we've seen in the past, by the appearing of some very large order that comes with a significantly higher than average margin, as happened last year.
We have seen in the past years that mostly thanks to Hammelmann, the waterjetting trend has been characterized by some very large orders, so the granularity has become a little bit too big to be able to comment fruitfully on very short-term trends. However, I would reiterate my comment that the mix factor in the margin for the waterjetting starts the year from a very favorable position. In terms of hydraulics, the increase in margin that has been seen appears to be, let's say, long-lasting, or at least headed for long-lasting. There is no expectation or no particular reason why it should go down.
If you want to look at it another way, if you think of a large part or a significant part of the waterjetting market like India, that have been suffering for two years, well, the coming back to life of those markets will undoubtedly have a very positive effect on margins, which is possibly the one that you are seeing in Q4 this year. Q4 in hydraulics was not only quite high in absolute terms, but the dynamic and the increase seen in Q4, in the last quarter of the year, where usually there is a negative seasonality, is quite telling. I expect that kind of benefit to be stable and so to be reflected in 2021 and ongoing years.
Last, a follow-up. You didn't mention raw materials. I know that you have a good backlog inventory level, so you don't see any typically pass pricing created in raw materials. You are still confident that raw materials are not an issue on profitability?
At this point, we do see, of course, all kinds of crazy things happening on some raw material prices. At this point, there is no indication that this could have a negative impact on margins. Unless you want to consider margins on a weekly basis, then in that case, maybe this could happen. Generally speaking, we are absolutely not moving from our policy. All increases in the production factors should be passed on to customers, and we typically have enough strength, both towards customers and compared to our competitors, to pass them on quite nicely. At this point, I would not sound any alarm about that.
Very last one. On the hydraulics strong orders, which you were mentioning, is it up also compared to 2019? Because the 2020 comparison is a bit, say, useless probably. I tend to look at 2021 versus 2019, so on a normalized basis. Basically, you had probably just in March some impact on the orders. I'm trying to understand if the market is so strong as it was in Q4 2020 to be up compared to 2019.
Sorry, were you referring to hydraulics or to waterjetting?
Yeah, hydraulics, sorry.
Yes. In hydraulics, yes, I would confirm that the situation is better than one year before, also in terms of order income. This is quite an easy answer. Remember that the last part of 2019 saw a top line that was decreasing very fast. Actually the decrease in the order income was seen from as early as the middle of the year. There is no doubt that the level of order income that we are seeing now is something which probably is comparable. I didn't make any actual comparison, but I have the impression that it could be similar to something that we saw in 2018, which is, of course, a very good indication.
Okay. Thank you.
Thank you.
The next question is from Alessandro Tortora with Mediobanca. Please go ahead.
Yes, hi. Good afternoon to everybody. I have three questions. The first one is on the CapEx side because, sorry, I didn't get if you provide an indication on the CapEx, which is organic CapEx for 2021. The second question is on the U.S. or North America, if you can elaborate more over what happened in this market, which for some other, let's say, industrial company, did quite well and say it was extremely driven. Just to understand if the weakness you experienced there, you are able to do some, let's say, specific aptitude from some of the clients? The third question is on the new strategy that you mentioned before, that is understood well, that the focus of the company will be on bigger, let's say, size targets, maybe seeing an average multiple, a bit higher compared to the past.
The point on this side is, what will change? It will change the way you are going to integrate your target, because here in Interpump, as well as other soft integration approaches, just understand the consumer in the bigger size. What's the lesson on the integration side? Thanks.
Okay. Well, in terms of CapEx, we are looking to a very strong plan for 2021. If everything goes as it should, and this of course, will depend on how the pandemic develops, we might actually exceed our usual 3%- 5% range on sales. It's a bit too early to say whether we'll be able to achieve all of the ambitious plans that we have put together. The CapEx plan for 2021 looks much richer than in recent years, which can be understood because, of course, 2020 was compressed by the logistics difficulties in implementing some of the plans that had been devised. In terms of the U.S., well, there is not a lot that I could add, because as you know, it is always difficult to identify common trends throughout our very diverse range of companies and customers.
Certainly, one significant weakness was noticed in contractors, following the oil and gas sector in the Texas area, which is quite a significant component of NLB's business. There was also, I would say, a general continued weakness for the power take-offs, which was seen at Muncie, looking at Muncie, which is quite reasonable, because when you look at the statistics for trucks, the good news coming from the truck sector, well, they refer to orders of trucks, but it's not like someone orders a truck and buys a PTO at the same time. The PTO will be bought after the truck is delivered or maybe one day before. It is not surprising to see that Muncie is not reacting in exactly a linear way to the trends in the truck sector. These are probably the only two significant trends that we can see.
Otherwise, I could blame some of the weakness which can be applied to the water jetting sector in many, many other countries in the world, to the logistics difficulties as a consequence of COVID. For all those customers that we are serving from Europe or from other countries, in some cases, complex implementations, delivering to the U.S. might come with some added difficulties, at this particular time. This is something that, of course, is going to be solved quite soon, and certainly in the course of 2021. We will monitor closely the situation and let you know in the next presentation how it is evolving. I could also, but just for lack of better ideas, I would also consider that possibly the pre-election uncertainty had some impact on the purchasing decision.
This is something that we saw in 2016, so it's quite reasonable to imagine that it may have had a role also in 2020. Again, I apologize for this. This is a very generic answer. In terms of M&A and integration, of course, I leave the microphone to Fabio.
Yes. Taking this answer, I confirm, and it is true that we are looking at larger transactions in comparison with what we have done in the past. This point doesn't mean that we will not be looking for small acquisitions like the one that we have made in 2020, or we have made in the past, because we still believe that we have the capability to identify, to execute, and to manage even small acquisitions, even an acquisition of the size of DZ Trasmissioni or Servizi Industriali, that are both in the EUR 5 million range of turnover. We believe that these kind of companies may add significant know-how, significant expertise, or some specific experience in a market niche or an application. We believe that this acquisition will enrich, even in the future, our know-how and our competencies.
When we say that we are looking at, and we are prepared to analyze and execute even larger deals, it is the consequence in some way of the size that the group has reached, the market cap in the stock exchange. In order to do this, we are in some way prepared to increase or to pay slightly higher multiples than the average multiples that we've done before, but without changing strategy or without leaving and abandoning what is our usual discipline in our approach.
If I may add a comment, in terms of the validity of our soft integration approach, I would point out that a hypothetical large company would probably come with its own organization, so it lends itself very well to maintaining that organization. This is especially evident if you compare that to Fabio's nightmare, the integration of GEA AG, which came with no organization at all, so it required some kind of emergency care, if you see what I mean. I don't think that our soft integration would change based on the size of what we acquire. It's more of a philosophy than a technical requirement. We will still consider that the way to go.
Okay. Thanks, Luca. Thanks, Fabio. Just, sorry, a quick clarification. When you mention about the impact with the last year, 2020, on the Nordica and the savings temporary lay-off scheme, blah, blah, could you also say on a clear basis the impact could be closely 1%, you mentioned before?
Okay, sorry. The audio quality is like you're speaking from the bottom of a box. I will try to summarize. Did you ask about Cassa Integrazione and the other lay-off schemes ?
Yes.
Okay. Yes, the final contribution for 2020 was almost exactly 1% on sales. It was 0.4 in the last quarter, and going down quite fast. I don't expect it to disappear completely because, of course, there is no reason for refusing this kind of help when it is available, but we expect to have less and less occasions to benefit from it. Hopefully, by the end of 2021, its contribution will be really minimal. Personally, I would not encourage you to factor in any kind of significant contribution from these funds into your margin expectations.
Okay. [Foreign language].
Prego.
The next question is a follow-up from Domenico Ghilotti with Equita. Please go ahead.
Hi. I had a follow-up on your CapEx plan. Can you elaborate on where are you investing? What are the key drivers for this CapEx plan?
What I believe is important to consider for 2021 is a double effect. One is the delay with some of the investments that were planned for 2020, has been had as a consequence of the COVID. Second aspect is related to some real estate investments that we have in mind, or we have a target for 2021. On this second aspect in particular, I want to mention that I don't have the precise number, but in our target, we have already decided to go ahead with some new plans for some of our companies. This is, in some way, a normal real estate process that time by time should occur. In some of the companies, is the answer for the growth that we have had in recent years, and for the limit that the existing plants are having for future growth.
I have in mind, in particular, the plant of NLB in the U.S. that is too small, and it is rented for a very high cost from the previous owner of the company. Last year, we decided to start with a new greenfield real estate project. Several other examples in different companies in the group. This is contributing to what we are expecting for CapEx in 2020. This is bringing our expected CapEx for 2021 to a higher level than the average 3%-5% of our sales. Of course, as Luca was mentioning before, the final number will depend on the progresses that we will make, in particular with this real estate development or this new building.
Okay. Can you share some geography? You mentioned NLB, if possible, just to have a better understanding of what is driving this, or it is really at full capacity, or do you see growth that is exceeding your existing capacity in a couple of years?
The three most important new buildings that we have in mind for the group companies, apart and to precise some minor plan, are related to NLB, to the plants of Marflee in Oklahoma, and to the new plant of Tubiflex in Turin. These are the three most important interventions that we will have to plan in 2021 and 2022.
The first two, probably, if I'm not wrong, were already planned before COVID. As you are mentioning, it's a postponement of some investment that were initially maybe projected for 2020.
Yes, it is something that we have been discussing for a while now. We started discussion even before COVID, and with COVID probably we had some delay, but we are going on with our plans.
Okay, thank you.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Bruno Permutti with Intesa Sanpaolo. Please go ahead.
Yes, good afternoon. If I may follow up on your M&A strategy, because I'd like to understand if the larger target will translate probably in a different timing of the distribution of the acquisitions. We can imagine something in 2021, or we have to imagine something for 2022, and in all, we have to imagine something equally distributed along the three years period.
The second point is, I wanted to have clear your additional revenue target from acquisition. If I assume your indication of high single digits growth in 2021 for the top line, and probably a low single digit, to be conservative, low single digits organic growth in 2022 and 2023, I will come out with an amount of revenue from external growth between EUR 200 million-EUR 250 million. Is this something reasonable or is it in line with your view?
Yes. Starting from your first question regarding the execution difficulties or the timing for the execution of the larger deals that I mentioned as potential targets. The answer is yes, larger transaction usually takes longer, but it is also important to consider that we are not starting today. We have not stopped, in 2020, our M&A strategy and our M&A activity. We have, as always, several dossier on the table at different stages. I do not believe that it's fair to say that if we look at larger transaction, we have not to expect any closing for 2021, and everything will be postponed to 2022 and 2023 because larger deals means longer execution times.
It's also important to consider that we have many dossiers on the table that have been held or in some way postponed because of the logistical difficulties or the evaluation gaps in 2020. I am expecting Luca will not be happy about my statement, but I'm expecting a very positive 2021 for M&A. In terms of additional contribution of the M&A to the growth in 2021 and following years, I want to mention that regarding the top line contribution, it's important, and it will be important, the closing date. Because if we close an acquisition in June, we will only have half of the year as a contribution. Detailing which will be the contribution from the M&A to the 2021 growth, it will depend also on the timing of the closing that we will be able to do.
I think that on, sorry, on a three years period, do you believe that it's a reasonable assumption, EUR 200 million-EUR 250 million?
I was focusing on the first part of the period because you mentioned 2021. If we look at 2022, 2023, it's absolutely reasonable to have this kind of expectations.
Thank you.
Thank you, Bruno.
Once again, if you wish to ask a question, you may press star and one on your telephone. For any further questions, please press star and one. Mr. Mirabelli, there are no more questions registered at this time.
Okay, thank you. Our next appointment for the quarterly result is set for May 14th for the Q1 results. Thanks for attending. Have a happy New Year for those following the lunar calendar, and have a good Valentine's Day for everyone, which is this Sunday, and I probably saved someone life with this piece of news. Goodbye and stay safe.
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