Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Interpump third quarter and nine month 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, 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. Luca Mirabelli, Head of Investor Relations at Interpump. Please go ahead, sir.
Thank you. Thanks to everyone for your patience and for dedicating your time and attention to our results today. I'm here once again with executive board member, Fabio Marasi, and our CFO, Carlo Banci, and we will do our best to illustrate the results and answer any questions you might have about them. Today is almost exactly eight months since COVID-19 was declared a pandemic. Thanks to the quick and efficient reaction of our subsidiaries at all levels during this time, I am pleased to say that Q3 2020 was a quarter of confirmation of all indications we gave during the development of the crisis. Our sales in the quarter were still down compared to one year ago, but only slightly, -2.5% at EUR 314.7 million. As expected, this represented a sharp improvement compared to the -18% registered in the previous quarter.
The organic performance of -10.8% was almost exactly compensated for by a +11.1% perimeter expansion. Therefore, the reported result of -2.5% can be entirely blamed on the currency headwind of -2.8%. Besides this overall satisfactory result, I am also pleased to report a slow but steady monthly improvement of the year-on-year comparison. Looking at this result by division, we note that the stronger sector this quarter was Hydraulics, and this is new for the year, but not totally unexpected, as a stronger rebound for Hydraulics was somehow in the air given the sizable compression of sales seen in Q2. Reported sales in Hydraulics were up 4.1% compared to 2019. Let's see the split. The organic decrease was a single-digit at -9.5%, with an additional -2.8% from the currency exchange.
The perimeter expansion was worth +16.4%, entirely corresponding to the contribution from Reggiana Riduttori and Transtecno, which as you see, was even stronger than in the previous quarters. Water-Jetting, which has been running at a faster pace so far, apparently felt more fatigue in the quarter. The organic performance was -13.1%. The FX, again, -2.8%. The perimeter expansion, +1.5%. Putting everything together, we get to a quarterly, reported year-on-year decrease of 14.4%. It is worth remembering that the comparison base for 2019 was particularly challenging, and it included, among else, an unusually large order delivered by Hammelmann in the month of July. As we move from the quarterly to the year-to-date figure, Water-Jetting is still demonstrating more resilience at -10.2% organic, -10.3% reported, while hydraulics is down 19.3%, nearly twice as much organically, and down 5.3% after accounting for FX and acquisitions.
Sales in the quarter were characterized by very different performances in different areas of the world. Let's take a quick look around. Sales in Europe were down 10% in the quarter, of which Italy was -14%. North America was down 21%, so twice as bad compared to Europe, although, to be honest, some 5% is due to the currency exchange. Asia Pacific is a bit of a mixed bag. China is registering sales that are 46% above the corresponding quarter of last year. Australia and South Korea are also positive, respectively, +8% and +6%. The rest of the countries in the area are strongly negative, but almost irrelevant. What really drags the sales figure for the area into negative territory is the lack of the Hammelmann order we mentioned above that was delivered last year in Singapore.
In the rest of the world area, the only noteworthy data is that India is finally up 13% compared to one year ago. In terms of sales by application sector, we are finding a lot of sectors and customers waking up after a long sleep. The most lively one in the quarter was construction equipment, which reached a level almost flat compared to the previous year. Other significant applications in hydraulics were still down, but at last, just a single digit. Earthmoving, -8%, agriculture, -7%, lifting, -6%. Trucks, despite a significant improvement from the previous quarter, are still trailing at -16%.
The cluster of applications that was growing the most throughout the first two quarters. Made up, as you remember, by oil and gas, marine, and offshore, is significantly down this quarter, due to the unusual comparison base that is the same, again, a large Hammelmann order, but it is still positive year to date. Among the sectors that are typically covered by our Water-Jetting division, the only positive one is cleaning, registering at plus 3%. While we are, of course, pleased about most of the trends, I would like to remind you that the situation is developing very rapidly and that the comparative strength of areas and applications can change and does change at any time. This is not necessarily bad news for Interpump. As you know, one of our points of strength is precisely the ability to refocus our activity quicker than most of our competitors can do.
I believe our quarterly results, once again, reflect this. Turning the page to profitability, as you know very well, this is the area where Interpump stands out the most. We closed the quarter with EUR 76 million in EBITDA, with a margin on sales of 24.2%. This is the same record high figure of Q3 2019, despite the organic decrease in sales, despite the better performance of Hydraulics compared to Water-Jetting, and despite the dilution brought about by acquisitions. It is fair to say it represents one of our best performances ever. Going by division, margin for Water-Jetting was 29.2%, only 80 basis points lower than last year's record, 30%. Margin for Hydraulics was 21.7%, 80 basis points higher despite a 20 basis points dilution due to acquisitions, which means it would have been 100 basis points higher as unchanged perimeter.
Year to date, in the nine months, this translates to 26.5% margin for Water-Jetting, 110 basis points lower than last year, and 20.6% for hydraulics, only 60 basis points lower than last year, totaling a very satisfying 22.6% EBITDA margin for the first nine months at a consolidated level. In absolute terms, this means that EBITDA at the end of September stood at EUR 215.3 million. On a side note, the contribution from the welfare systems to cover labor costs at plants that were not operational due to COVID-related limits, like, for example, Cassa Integrazione in Italy, accounted to 0.7% on sales in Q3, much lower, as expected, than the 2.3% seen in Q2. Hopefully, this figure will taper off as we go on with the next quarters.
Net income for the quarter came to EUR 39.5 million, bringing the year-to-date total to EUR 103 million, with a tax rate of 26.7% so far. Last, but certainly not least, the cash flow is very healthy also this quarter. Let's look at the most important items. Cash flow from operations was EUR 65.2 million, EUR 14 million above last year. This growth might appear a bit confusing, but we should consider that June 2019 ended with a Sunday, and so a significant Italian tax deadline last year was extended to July the 1st, so it fell in the third quarter, while this year it regularly fell in the second quarter. To get rid of this swinging and confusing seasonality, it is perhaps more meaningful to consider the year-to-date figure, which is down exactly 7% compared to the first nine months of last year, perfectly in line with sales.
CapEx in the quarter amounted to EUR 16.2 million, accelerating from the previous quarter, bringing the year-to-date total to EUR 45.7 million. Sales net working capital kept decreasing, freeing up a further EUR 9.7 million. Non-trade working capital absorbed EUR 4.3 million, mainly due to the different dynamics and timing in tax credits and employees leave accruals. It is worth reminding that changes in this line item, because of their nature, tend to self-compensate over years. Unsurprisingly, as a result of all this, free cash flow was very strong at EUR 50.3 million in the quarter, bringing the total year to date to EUR 148.6 million. At this point, there is very little doubt that this year's cash generation will make history. The expense for acquisitions in the quarter was EUR 9.3 million. Additionally, EUR 10.9 million were spent in treasury shares.
The overall improvement in net financial position amounts to EUR 33.4 million, bringing our net debt as at September the 30th to EUR 310.7 million. At the same day, the additional commitments for purchase of subsidiaries were worth EUR 58 million. Let me now go back to my initial remarks about Q3 being a quarter of confirmations. We said that the situation would improve, and it did. We had a 6.5% growth of sales in Q3 over Q2, which compares to an average minus 10% seasonal decrease, which is almost regularly seen every year. Since the trough seen in April, consolidated sales improved month after month. Not only sales, but also order intake has ticked up month after month, slowly but steadily. We said we did not expect a significant deterioration in margins. Margins held better than anyone could have hoped for. In fact, they increased.
We anticipated a very strong cash generation for the year, and it just happened, almost twice as strong as last year. We understood, but we did not agree with the worries expressed by some investors about debt and financing throughout the crisis, and I believe those worries are now gone. Everything we said in the past, though, was not based on a capacity to predict the future, but rather it was based on our familiarity with the Interpump business model, our confidence in its resilience and adaptability, and also based on the differences we immediately noticed and highlighted between this and the other major crisis that we experienced, the one of 2009. These will be key factors to keep in mind in the upcoming quarter too. The world COVID-19 situation is taking quick turns like a rollercoaster.
As contagion surge in most areas, we also hear positive news about vaccine effectiveness and also about the election of a new president that seems to care about the matter. For the time being, all the precautions and lockdowns that were imposed for the current wave of contagion have not had any impact on highly automated industrial plants, which represents the bulk of our activity, and by now have proven to be very low risk environments. Therefore, given the unpredictability of the situation, I can only reiterate my indication that the recovery will be there, the recovery is there. We just don't know a lot about its timing and shape.
Remember, today you are listening to a company that has consistently delivered the best possible results across all the different phases we have gone through, and there is no reason to believe that anything different might happen in the future. As you noticed from yesterday's press release, M&A is still going on. While waiting for some larger deals to mature, we keep picking the low-hanging fruit represented by smaller companies, with a clear and easy integration path. DZ Trasmissioni, announced yesterday, is a good example, and its product range complements, in a very nice way, the reduction gears offered by Transtecno. At this point, I would like to thank you for your patience for listening so far, and the line now goes to the operator for the Q&A session. Thank you.
Thank you sir, excuse me this is a [audio distortion] conference call operator . We will now begin the question and answer session. Anyone who wishes to ask a question my press star and one on their touch-tone telephone. To remove your question, please press star and two. Please pick up the receivers when asking questions. The first question comes from Domenico Ghilotti of Equita. Please go ahead, sir.
Good afternoon. A couple of questions. The first is an indication, so if you can elaborate a little bit more on the Reggiana and Transtecno contribution, if you have any kind of comparison, because they sounded very, very stronger and higher than my expectation. I'm wondering, they are performing better than the rest of the group, and if this is the case, why? Also in terms of profitability, what is the level of profitability they have really achieved? This is the first question. The second question, I'm trying to understand if you are seeing an improvement on quarter-on-quarter also for Q4 so far. I understood that COVID is not an issue so far. I'm trying to understand if there is an underlying demand that is improving for the two divisions.
Okay. I'm Fabio Marasi, and I will take the answer, and then I will leave to Luca for some further comment. Reggiana and Transtecno are so far this year performing very, very well. Very, very well considering what's happening into the market in general for the COVID situation. In particular, Transtecno is performing very, very well also on absolute terms. Transtecno is up in terms of sales in comparison with the same period of last year, at the end of September, then the first nine months, while Reggiana is slightly down. Transtecno is up 7%, and Reggiana is down in line with our hydraulics division, or maybe even slightly better. In terms of profitability, both companies, both Reggiana Riduttori and Transtecno, are performing very well and are on a consolidated level above 20% EBITDA margin. When we acquired the two companies, they were slightly below.
Today, despite the very difficult market situation, they have surpassed the threshold that is satisfactory for us.
We still believe that there are rooms for further improvements in margins, because we have only taken the easy action, the low-hanging fruit, in terms of rationalization of the commercial structure around the world. For example, we have merged the subsidiary that Reggiana Riduttori had in Brazil with Interpump Hydraulics Brasil, in order to achieve cost synergies and better opportunities also in terms of sales. We have integrated the subsidiary that Transtecno had in Florida, in the U.S., that was very small, just $2 million, with the very strong and important subsidiary that Reggiana Riduttori has in the U.S., that is very well managed, with more than $30 million sales and a good profitability.
We have integrated the Transtecno business and Transtecno distribution in the North American market in Reggiana Riduttori, in order to have a stronger presence, stronger network, and a suitable organization and inventory in the American market. These are just the first examples, and we really believe that we have further potential of improving the profitability, thanks to the reorganization or some normalization action that we can take and we can implement. Also, the development is expected quite positive, because the order intake is very good on both companies. We have an order backlog that, in particular in Transtecno, is well above comparison with the same period of last year. Reggiana is below the level of last year, but is improving every month. We have a good expectation for the last quarter, but more important, on a mid-term perspective.
To answer your second question, Domenico, let's say that from what we can see of Q4 so far, all the good trends went on in the month of October. This is, of course, I can't be much more precise than this, but I'm absolutely pleased by the trend in October, and I didn't see any sign of a U-turn coming up.
Just to complete a follow-up on the Transtecno. I understand the profitability that you are already integrating, so taking some opportunities. On the top line, what is driving top line such a tough year, so that you are able to grow the top line? Was it something related to cross-selling, so to the synergies, or something that was already in Transtecno?
It's something that was already in Transtecno, it is mainly explained by China. You are aware that Transtecno has a strong presence in China, both in terms of manufacturing activities. We have an important manufacturing plant with almost 200 people in China for Transtecno. We realize in China, products for Europe or for exporting in general, but also for internal market. The internal market in China, for Transtecno China, is performing very well. Transtecno is succeeding in having better penetration also on Italian and European customers. So far, we have just started discussing potential cross-selling opportunities within the group, with Mariotti & Pecini, with Inoxpa, in particular with the companies that are part of the Water-Jetting division. So far, we have not achieved any significant benefit in terms of cross-selling for sales.
It's a sort of standalone performance in terms of sales development.
Okay. Thank you.
Thank you.
The next question is from Alessandro Tortora of Mediobanca. Please go ahead, sir.
Yes. Hi. Good afternoon to everybody. I have three questions for me. The first one is given that we had discussed before on order intake, order backlog. Can you give us an idea of what is happening in terms of order intake trend for the Reggiana? You mentioned before that due to the COVID, the lockdown, order collection was basically negatively impacted in the previous quarter. Can you give us an idea if order collection recovered in this specific segment? At least, if you think about Hammelmann , NLB, if there are significant differences in terms of order intake trend for these companies. This is the first question, maybe I will add two more for me.
Okay. Well, as you know, we do not comment on specific numbers for order intake for single companies, for single periods. Of course, maybe we can have some general comments to make. Are you aware of any significant difference Fabio, between order intake in the two?
My impression is that on a long term, so year to date.
The behavior is quite similar, although, of course, it had a different behavior during the crisis. The order intake, just like sales for Water-Jetting, let's say, was decreased in a less significant way during the darkest months, during April and May. For many of our companies in hydraulics, the order intake was almost suspended and went down to almost zero. I'm thinking, for example, to the Indian companies for hydraulics. There's no doubt that during the crisis, hydraulics took a strong hit also in terms of order intake. Exactly as it happened with sales, they also had a quicker pick-up. I'm not in a position to have any comment about specific companies in either of the sectors.
No, the only comment that I would like to make is about the different trends that Luca just mentioned, it is also explained or related with the different time to market for the two divisions. You have to imagine that, generally speaking, of course, there are differences between the different companies of the two divisions. Generally speaking, hydraulics is really focused on component manufacturing and sales. When the lockdown stopped the manufacturing activity, we had a significant and immediate hit as an immediate consequence. In the Water-Jetting division, we have had some sort of delay, because part of the Water-Jetting division is in some way related to projects or to more complicated or bigger plans, execution, or project deliveries. For example, we have some cases in Inoxpa or in Hammelmann, or even in some case maybe in NLB.
Generally speaking, we have part of the business that is more related to more complicated projects that were probably not immediately stopped during the COVID-19. This is the reason why we had a better performance in that period. Now we are probably suffering a little bit more in this division because of the time that we have been stopped for discussing the project or for developing together with some customer this project at the time of COVID-19. Of course, this is just a postponement, and today activity is almost back to normal, we will see improvement. The level of the cyclicality or the level of time to market, in particular, not the cyclicality, is different in the two sectors.
Okay. The second question is in the U.S. As you said before, not really performing so well, okay, so far. Can you give us an idea of what is happening there? If, for instance, maybe also the election in the U.S. affected a bit, as you mentioned before, I don't know, any postponement of some orders. Just to have an idea, because across the two divisions, the media say a shared weakness, okay, in this area.
Okay. Well, I wish we knew exactly the answer to this question. Of course, it makes sense to think that there might be some postponing of orders due to the uncertainty of the elections. At least this is something we didn't see four years ago. There are good reasons to think that this might be going on also this time. Only time will tell. Only when, hopefully, there is the end of the complex procedure that we are witnessing in these days, we will see if the order situation and the activity of the sectors we cover will resume, and how much. Generally speaking, I think that this is just an indication that the U.S. economy was doing great in terms of stock market, in terms of technologies. Not exactly in terms of everyday industry. At least, this is our perception.
However, there is not a lot we can do about it. As you know, I understand that we are all obsessed with order intake and organic growth, but as a matter of fact, that's the only thing that we cannot control entirely. Of course, we can listen to it, we can keep our ears and antennas on and make sure that we don't miss any opportunity, but we're not in control of how many opportunities we are presented with. All we can do is make sure that our company, at all levels, react in the most flexible way to whatever situation they are presented with.
Okay. The last question is just a clarification on the impact on, let's say, one-off action related to temporary scheme. Can you tell me exactly what is the impact you had, the positive impact, let's say, you had in nine months, or in absolute term, or as a percentage of sales for the action? Thanks.
I'm sorry. There might be an audio problem or a problem with my brain, but I didn't understand your question. If you could please repeat it.
It's related to the advantage you got on margin, related to Cassa Integrazione in Italy and the similar scheme implemented in nine months. Let's say maybe on the full impact so far.
Okay. Let me get the number for you. It was 0.7% in the quarter. It was 2.3% in the previous quarter, of course, the emergency quarter. It's currently around 1% year to date. This is going to taper off. It's not going to disappear. Of course, it can only disappear when we are having some, let's say, beautiful, predictable, and regular growth going on. This is not the kind of scenario that we are expecting for the next quarter. It will not go down to zero completely. It will certainly stay at, let's say, marginal levels. In history, it goes usually from zero to 4.5%, depending on how good the situation is and what happens during the year. Remember that Cassa Integrazione, especially for non-Italians, this might be useful to remember, Cassa Integrazione is not only an emergency tool, welfare tool.
It's actually a standard structural part of Italian welfare, of Italian labor market. You could see that as the other side of the coin, when you think of the proverbial rigidity and expensiveness of the Italian labor market. It also provides for some flexibility to face bad moments. This is never going to disappear. It will simply be deflated to, let's say, ordinary levels, and they are levels that have never demanded a comment in the past and will probably not be worth a comment in the future.
Okay.
I don't expect this to go down to zero, probably until well within 2021.
Okay. Thanks. Very clear.
Thank you.
The next question is from Matteo Bonizzoni of Kepler. Please go ahead, sir.
Yes, good afternoon. I have two questions. First one is, can you remind us if Hammelmann has a difficult comparison also for next quarter of this year? The second question is, according to your feeling, how much of the recovery which you are experiencing, in particular in hydraulics, in order intake is due to restocking, so maybe is going to disappear going forward? How much is, instead, a more genuine recovery in your intake? The third and last question is, if you exclude that perimeter, which should account, roughly speaking, EUR 20 million of EBITDA, do you expect 2021 to return broadly to the same level of EBITDA of 2019? Thanks.
Okay. You said of 2018? I'm going to ask to the people at the table about the Q4 for Hammelmann last year, whether it was a particularly challenging, particularly good quarter or not. I'm sorry, I don't remember this off the top of my mind. The Q4 last year seems like primary school age to me, so 1900. I can see it registered a plus 18% year-on-year in the last quarter, last year. It was definitely a strong quarter. It didn't have the granularity, the big order, which is missing. Hopefully, the business that was gained in Q4 last year by Hammelmann is not exactly the same situation as what we see this quarter. Yes, it was certainly another very strong quarter.
Thank you.
As to your second question, restocking is not something that we can measure. We don't have a restocking meter for our sales. I do remember that the same question was asked about the recovery in China after the lockdown, and we all see how it went. As of today, we have a +46% over a quarter that was not particularly weak last year. Definitely, restocking, if it was there, had absolutely no importance, and it didn't play any significant part. It should be remembered that most of our OEM customers work with very little stocks. They use just-in-time or kanban or other very, very quick delivery options. Only a minor part of our business goes through dealers. It is accurate to expect, it is safe to expect that dealers might have exhausted their inventory during the crisis.
On the other hand, some of them were closed. Again, even when limiting our products to dealers, I would not expect a significant part of this pickup to be related to restocking. Any volatility that we are going to see might be connected to future development in the COVID contagion, but not in any major way to a restocking mechanism. Your third question was our expectations for EBITDA in 2021. Clearly, it's easier for us to comment about margins in EBITDA rather than absolute levels, because absolute levels will depend a lot on the curve of the recovery and the timing of the recovery. I have to say that almost invariably since the month of May, all the news that we have heard about the recovery were marginally better than the previous ones.
I'm referring to anything from the Italian drop of GDP to the timing of the vaccines, to the other practical details about fears of other interruptions to industrial productions that have vanished so far for now. I'm quite optimistic, but certainly I'm not in a position of giving you an absolute indication for EBITDA margin in 2021, unless Fabio has anything to correct me.
It is, of course, too early to comment. We are starting the budget season in these days, we will be discussing the budget for every single company in the next four to five weeks. Four weeks, let's say. It's too early to say, but we do not expect any major changes. We have been able to maintain our very strong and satisfactory performance in terms of profitability and EBITDA with all the uncertainty and all the problems related to the pandemic, the COVID, the collapse of the oil price of this year, we do not see big uncertainty or big problems related to maintaining at least the profitability margins for next year. It's too early to say.
Okay, thank you.
Excuse me, sir. As a reminder, if you wish to register for a question, please press star and one on your touchtone telephone. The next question is a follow-up from Domenico Ghilotti of Equita. Please go ahead.
Yeah, I have a follow-up question on the profitability in the Water-Jetting division in the sense that I'm quite surprised to see, well, of course, you're starting from a regular high level. There is a lower contribution from Hammelmann, and there is a lower organic phase, and the decline is very small, and is still basically very close to record levels. What's the magic behind? It's really surprising to see this level of profitability.
Well, I'm afraid it's a very simple magic, and I am sure that if you look at the numbers, you will notice that the key is the geographical distribution. U.S. was very weak, and I think it's no secret, and of course, it's no secret from now on, from this set of numbers on, that EBITDA margins for NLB are among the weakest in the Water-Jetting sector. This is an internal rebalancing of weight between contributors. Hammelmann didn't lose some business, but NLB lost much more, and so the comparative weight was tilted towards the higher margin companies anyway.
The second question is more strategic. Clearly, you are still missing a relevant exposure to China, so it could be some of your competitors. Is it something that you can fix with M&A? Transtecno is a good example, and now is delivering high growth thanks to geographical exposure. Are you looking for this kind, and do you have in pipeline this kind of M&A opportunities to try to increase this weight of China?
Domenico, this is a never-ending discussion about the exposure to the emerging countries. In some times, we are questioned because of the very low exposure. In some other time, you are a little bit exposed. This year, of course, China is performing far better than other markets or other regions, it would have been better to have a more significant exposure. Generally speaking, I believe that we are quite satisfied about our organization and our diversification in many different aspects, of which the diversification in terms of geographical exposure is one of them. I would say that we have a very balanced exposure to the different market trends, to the different regions in the world, and we are not looking for significant or meaningful adjustments in terms of our exposure in this sense.
Of course, if or whenever an interesting acquisition will happen, we will be ready to follow it with an opportunistic approach. We are not looking for major acquisition in China or in other particular region in the world in order to rebalance our presence and our exposure.
Of course, we are very happy about the development of Transtecno, thanks in particular to the presence of the company in China. After a very difficult first quarter, because you remember very well that China was the first to be completely blocked by lockdown, we recovered very well, and now we are performing in a really impressive way, supporting the growth of the whole Transtecno Group and having a very positive development expectation. We don't see a strategic reason to rebalance our presence as a group.
Again, if I may add a reminder to those who are maybe less familiar with the company, we have proven numerous times in the past, in both China and India, that we are able to scale up our activity in a very quick way. In both countries, we nearly doubled our production in a little more than one year. Clearly, we are not going to let any opportunity be wasted because we lack the organizational life, we lack the operational presence. This is not something that we are very afraid of.
Okay. Thank you.
Once again, if you wish to ask a question, please press star and one on your touch-tone telephone. The next question is a follow-up from Mr. Matteo Bonizzoni of Kepler. Please go ahead.
Yeah, just one question. 2020 has been clearly helped by the significant contribution of Reggiana and Transtecno in terms of delta perimeter. Looking to 2021, we know that you are not used to comment specifically on your M&A pipeline, my question is just to have a flavor, could 2021 be a year with significant contributions from acquisition, or do you see more likely more inside this? Thanks.
Of course, it will depend on the M&A opportunities that we will be able to do in the next few months. You never know. We have always said that we have a significant number of dossiers on the table every day or at any given time, but the execution and the realization of this opportunity is something that we cannot absolutely predict with some sort of reason. We believe that we will be able, despite all the problems in terms of logistics and in terms of negotiating an agreement related to the COVID pandemic and the effect also on the results of the company, we believe that in any case, we will be able to go ahead with our M&A strategy, and that is to reinvest in external growth and to reinvest in acquisition, the vast majority of our cash flow.
The acquisition of this DZ Trasmissioni, which is, of course, a small acquisition, is representing our commitment and our execution ability despite all the problems that are related to this period. We cannot predict now which will be the contribution of acquisition to 2021 results, of course.
I think it's safe to say that, we all know that we can count on a significant firepower, though. Again, we are not going to let any opportunity go wasted because of lack of means.
Okay. Thank you.
Thank you.
The next question is from Michele Baldelli of BNP Paribas Exane. Please go ahead.
Hi, good afternoon to everybody. I have a couple of questions. Sorry if I may repeat from my colleague, I was not in the call at the start. The trend in October, if you can elaborate a little bit and give color or even a number, if you can. In terms of synergy and cost opportunities for the group companies, what do you still see in 2021 that needs to come through? I mean, cost synergies from the newly acquired companies, if there are still some that should flow through. GS-Hydro, though, is the profitability already at the margin, or should we think about improvements? If you can elaborate a little bit on this. Thank you.
I'll just repeat what we said about October, which, of course, cannot be dealt with in great detail. It's not the object of a disclosure, all the positive trends, both in terms of sales and in terms of orders and order income and size of portfolio, went on in the month of October as well, which is what we have said before. In terms of the synergies, also, Fabio has said a few words about Transtecno and Reggiana. I don't know if you want to repeat it or integrate that with any other.
I believe that apart the Reggiana and the Transtecno that I've already commented, and then the potential opportunities in terms of cost synergies and commercial cross-selling in the gearbox division or transmission division, I believe that we will have on a mid-term perspective than two, three years. Significant opportunities in realizing cross-selling opportunities and project based on application, thanks to the newly acquired companies. Newly acquired companies means, on my mind, the companies that entered our group in recent years. You have to imagine that only five years ago, we didn't have Walvoil, we didn't have Inoxpa, we didn't have GS-Hydro, the transmission companies. We had huge developments with new fields, new components, and new applications. In particular, this is true for the hydraulics division.
If you think about the period that is needed to develop a new vehicle, that is usually, it will last a couple of years. You can imagine how strong and how important are the potential for our companies, and in particular, for the companies that entered just recently our group, to enter in the customer list, in the customer portfolio that is already present in Interpump Group. We really believe and we really count on this opportunity on a midterm in order to outperform the market, whichever will be the performance of the market. Regarding your last question about GS-Hydro. GS-Hydro, of course, suffered this year in terms of top line. We are down mid single digit.
This was the worst possible year for a company like GS-Hydro, that is in some way related to the oil price that collapsed, and part of the business is related to the installation and on-site job that has been postponed or delayed because of the measure put together or put in place in order to prevent the COVID-19 pandemic. Despite the very difficult market condition and the market situation, we have been able to further improve the profitability of the company. Month after month, we are confirming these very good results in terms of profitability and cash flow. In the first nine months of the year, we have reached 13 point something % EBITDA margin. That is a significant progress, three, four percentage points, in comparison with the same period of last year.
We are very satisfied about the development of the company, and GS-Hydro, again, represents another opportunity for entering new customer or for bringing the product and component that are present in Interpump Group catalog to new areas of the market, to different end customers. We see a lot of opportunities looking ahead.
Thanks very much.
For any further questions, please press star and one on your touchtone telephone. Mr. Mirabelli, gentlemen, there are no more questions registered at this time.
Very good. I thank you again for your time today. Remember, we are available for meeting, unfortunately, only virtual meetings, directly or through your favorite broker. We will speak again on the Q4 results presentation, which as far as I'm aware, has not been set yet as a date, but we will definitely publish the calendar for 2021.
12th of February.
The 12th of February, Mr. Banci is informing me. You will find the date on our website, and you will definitely receive the usual invitation. Thanks again, and have a nice day.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.