Good morning, and welcome to the Romi conference call, where we will discuss the results for the first quarter of 2026. Before proceeding, I would like to clarify that this conference call is exclusively for investors and investment professionals. Any statements made during this conference call regarding the company's outlook, projections, and operational and financial goals constitute mere forecasts based on management's expectations regarding the company's future. These expectations are highly dependent on market conditions, the overall economic performance of the country, the sector, and international markets, and are therefore subject to change. Please note that this conference call is being recorded and conducted in Portuguese with simultaneous translation into English, accompanied by the slides available in the results center section of our investor relations website at www.romi.com/investors. [Non-English content]
During the presentation, all participants will be connected in listen-only mode. We will then begin the question-and-answer session. To ask a question, type it along with your name and the name of the company you represent in the Q&A tool on the Zoom application. For audio questions, further instructions will be provided later. Joining us today are Mr. Luiz Cassiano Rosolen, CEO, and Mr. Fabio Taiar, CFO and Investor Relations Director. Initially, the executives will present the results for the first quarter of 2026 and will then be available to answer your questions. Now, I yield the floor to Mr. Luiz Cassiano Rosolen.
Thank you, Julia. Good morning, everyone. Thank you for joining our earnings conference call for the first quarter of 2026. I want to start objectively. This has not been a good quarter for Romi, and the results were below our expectations. We experienced pressure on revenue and profitability in an environment where demand is reduced both domestically and internationally. We acknowledge this transparently and are treating this moment with seriousness and a sense of urgency.
At the same time, it's important to look beyond the quarterly results. We ended the period with a consolidated order backlog of BRL 814.2 million, an 8.5% increase compared to the fourth quarter of 2025, in line with the previous year's level. This shows that we continue to preserve our ability to generate business and maintain a relevant basis for the coming quarters. At B+W, we continue to see positive signs from our strategy. The quarter ended with an order backlog of almost BRL 500 million and the operation improved in margins. We remain confident in the positioning of this unit and its role in the recovery of our results for 2026. In Romi Machines, the diversification strategy continues to advance.
The rental business continues to gain relevance with 81 new machines rented in the quarter. This is an important front for value generation and building recurring revenue, the effect of which appears gradually in results over time. In the Rough and Machined Cast Iron Parts unit, the scenario is still challenging. We remain focused on recovering productivity, reviewing processes, and maintaining operational discipline. Therefore, the message I want to leave today is clear. We are not satisfied with the quarter's results, but we remain confident in the company's strategic direction. We have a robust backlog, B+W gaining traction, and the discipline to navigate this moment and improve our performance going forward. I thank our shareholders, employees, customers, and business partners for their trust. I now yield the floor to Fabio, who will detail the quarter's results. Thank you very much.
Thank you, Cassiano. Good morning, everyone. I'd like to start with highlights for this quarter, where our order backlog has reached BRL 814 million, a growth in comparison to a robust backlog that we've had in 2025, which shows us a good prospect of recovery for the next quarters. EBITDA was at BRL 7.4 million, a margin of 3.3%, under a lot of pressure, especially due to the reduction in revenues in the first quarter of 2026. We have a large volume of order entry, especially with challenges in Rough and Machined Cast Iron Parts and Romi Machines, but still, the volume is quite consistent, which allowed us to conclude the quarter in a good position. Gross margin is approximately 25.1%, which is a 0.7% increase compared to the same period of 2025, boosted by the increased profitability of our German subsidiary, B+W.
B+W Machines achieved BRL 64.9 million in net operating revenue, delivering its orders within the schedule between January and March. There are projects that have been executed with a great efficiency, and it allowed us to make progress in the gross margin, reaching 32.2%, which also resulted in an EBIT margin of 5%, a significant evolution in comparison to the first quarter of 2025. B+W remains consistent when it comes to its order entry and backlog. At the end of March, we reached almost BRL 500 million, a 16.1% growth compared to the same period of 2025, with orders to be delivered throughout 2026 and 2027. With regard to other highlights, as part of our consolidation of the brand and growth of the brand in international markets, in the first quarter, we've participated in two large fairs.
One of them in Bilbao, in Spain, called BIEMH, and the other one in Italy called MECSPE. Both fairs were very productive. Romi had a significant presence at the event, and we were able to showcase our product and establish new connections and relationships with customers in general. Now, about the conjunctural indicators. The fourth quarter is a quarter where we observed a deceleration, and we still observe a deceleration, especially in gross fixed capital formation, yielding negative results. In this case, especially due to investments in capital goods, which end up causing a direct impact in Romi's key businesses. Still talking about economic indicators, as Cassiano has mentioned, there are challenges that we've been facing. In the first months of 2026, our capacity utilization is still at a decent level, 66%, although it is slightly below the history over the past five years.
Lastly, the Industrial Entrepreneur Confidence Index, which has been close to 50%, which is the middle point between optimism and pessimism, because the environment became more turbulent at the end of last year. We observed the index deteriorating even further, ending the quarter at 46.6 points in March this year. This is translating that entrepreneurs in general are still cautious when it comes to making decisions on new investments. In terms of our business units, Romi Machines, with machines and equipment and service providers, which are two very diverse segments. These end up playing a lot of relevance because of the type of machine that we produce. These are still the two key demand factors.
Packaging has demonstrated a significant growth, especially with blowers, and the other segments are virtually unchanged. B+W, in this first quarter, was concentrated in engines and systems. As we know, B+W is a company that has more niche clients than general purpose clients. It is only natural that we observe a certain concentration in a smaller number of sectors in the industry. But still, these are sectors that drive demand, especially in engines and systems which are more dedicated to energy generation. Lastly, in Rough and Machined Cast Iron Parts , the sectors are still the same.
What we observe, though, is a significant reduction in comparison to 2025 in agricultural machinery. This sector is still quite retracted, as well as the energy industry, which virtually showed no relevant participation in our business in 2025, nor in 2026. Now, in terms of net sales per business unit, the first quarter of 2026 shows an increased participation of B+W Machines, especially because Rough and Machined Cast Iron Parts and Romi Machines have experienced a reduction in their revenues. This has caused B+W Machines to demonstrate a growth in the consolidated revenues. Now, in terms of sales distribution in Brazil, things are still stable, with Brazil driving 62% of sales.
Asia is under 3%, which is due to the fact that the B+W Machines delivered recently were in Europe and the U.S., so Asia's share has been reduced. However, Asia is still a very significant market for B+W, with deliveries due throughout the year to the continent. The U.S. gained relevance in light of what we just mentioned. We had a substantial delivery to an American client by B+W, which elevated the participation to 17%, and LatAm is stable, as well as Europe, with 15% in total revenues. Now, when it comes to order entry and backlog, Romi Machines has had a reduction of 24.7% in this quarter.
This reduction happened mostly in the domestic market, where we just covered a macroeconomic environment that is more delicate, requiring more caution and with lower confidence. This translates in longer decision-making processes for new investments by our clients. Now, as to B+W, this is only natural when we look at this quarter, because B+W sells large projects, and we have had excellent projects coming into the first quarter of 2026 due to be delivered by 2027, and this has allowed us that although we have had significant revenues coming from B+W, this also allowed us to continue to expand the backlog to BRL 500 million, as mentioned previously. In Rough and Machined Cast Iron Parts, we have observed great challenges, especially in agricultural tools. This has caused Rough and Machined Cast Iron Parts to experience another reduction of 34% in comparison to the first quarter of 2025.
In total, this reduction has reached about 31% due to the reduction, in each business unit. Now, for order backlog and Romi Machines, because our revenues have been low in the first quarter of 2026, the order entry has allowed us to increase the portfolio because looking at the future prospects here, this makes us somewhat optimistic to recover results and performance in general for this business unit for the next few quarters. B+W, as we have mentioned several times, they have a lot to be executed in 2026 and a significant order backlog for 2027. And in Rough and Machined Cast Iron Parts because order entry remains at a low. At the end of March, we have observed a reduction of 17% in comparison to March 2025.
The backlog, in general, is stable with an 8.5% increase in comparison to December last year, reaching BRL 814 million in March this year. Now, as to profitability in the first quarter of 2026, as we've mentioned earlier, we've observed a gain in comparison to the first quarter of 2025, especially due to the increased performance of B+W in this quarter. However, we observed a reduction of around 20% in profit and operating margin.
This has prevented us to maintain the same level of gross profit. We observed a reduction of BRL 11 million in gross profit. Operating margins tend to be more fixed than variable, so this has contributed with the reduction of operating costs. This has driven our EBIT from BRL 1 million or 0.4 margin to BRL -9.8 million margin or a 4.4% lower margin for 2026. EBITDA is also under pressure due to the decrease in revenues.
The EBITDA that summed BRL 18 million in the first quarter of 2025 has been reduced to a 3.3% margin in the first quarter of 2026. Now, in terms of net income, there's also been a reduction as well as the net margin, showing a significant drop. Now, in terms of results per business units, we've seen a reduction of revenues in Romi Machines. The margin has had a reduction also. We should emphasize at this point that a small part of this reduction is due to additional discounts or pricing policies. The largest part of this reduction took place mostly due to the mix of products. That is, we have a lot of confidence that with higher revenues, we can reestablish the balance in the revenues mix and recover over the next quarters.
Due to the reduction in gross margin and revenues, this has brought our EBITDA margin to a lower level in the first quarter of 2026. At B+W, there has been a slight reduction in revenues. B+W is more complex to analyze because as we've mentioned earlier, these are large projects. But B+W has delivered all the projects that were due to be delivered in the first quarter of 2026. At this point, in spite of its lower revenues, it's demonstrated a significant growth and gross margin. This took place due to the projects we've held in pricing. B+W has been operating at an increasing level of operational efficiency. This has been allowing us to experience a significant evolution in gross margin at B+W. With that, B+W concludes the first quarter with a significant evolution in terms of EBITDA margin reaching 7.7%.
Lastly, in Rough and Machined Cast Iron Parts, revenues were already low in the first quarter of 2025, and it has been deteriorated in the first quarter of 2026. Even though we have observed an improved level of operating efficiency, it wasn't enough to compensate for the lower volume of activity. Both gross margin and EBITDA margin remain under a lot of pressure. Now, in terms of our financial position and liquidity, we've had a consumption of cash in the first quarter. This took place mostly as a reflex of reduced operating revenues. However, we remain with a very sound financial position with almost BRL 400 in cash, especially to execute the short-term commitments we have.
Now, as to the capital market, our performance in the past couple of years has suffered a lot of impact from macro elements, and this has placed us below the performance of IBOVESPA in the last 24 months analysis. With that, we conclude the presentation of results for the first quarter of 2026. Once again, I would like to thank you for joining, and we remain at your disposal to address any questions that you may have. Thank you very much.
Ladies and gentlemen, we will now begin the question-and-answer session. Please note that this conference call is exclusively for investors and investment professionals. To ask a question, type it along with your name and the name of the company you represent in the Zoom application's Q&A tool. For audio questions, use the Raise Hand tool so that we can unmute your microphone. Then please identify yourself. Excuse me. As there are no further questions, I would like to yield the floor to Mr. Luiz Cassiano Rosolen for his final remarks. Please note that Romi's investor relations department is available to answer any remaining questions. Please, Mr. Rosolen, you have the floor.
Actually, before we wrap it up, we have a question from Mairenke Martins, from Maivel Research. He says he would like to know if the European dynamics with Germany at fiscal expansion, since they have gotten rid of their ties in the budget in 2025, after the Merz election, of course, if this holds any relationship with B+W's performance. Well, actually, B+W is a world reference in motors, engines, and systems, and a great part of B+W projects are motors used in stationary energy generators.
These generators are crucial for the construction and expansion of data centers, because they provide energy for data centers. This is actually causing B+W, who is a reference in this type of product, to have very good performance in 2026 and 2027. Our order entry is quite robust for providing this type of solution. In addition to this type of solution, there are other solutions offered by B+W for the energy industry, which are in high demand by its clients.
Because B+W also is a reference in performance for manufacturing this type of machinery for this type of application. B+W's backlog and portfolio is quite sound, and a great part of these orders are being delivered in the United States and Asia and England and other countries, not only in Germany. T hank you for your question. [Non-English content ] A s there are no further questions, I would like to thank you all for your participation, and we remain at your disposal. Thank you very much. Have a good day.
[Non-English content ] The Romi conference call is now concluded. Thank you for participating. Have a good day.