Welcome to Romi's teleconference call. We will be discussing the 2025 fourth semester earnings. Before proceeding, I would like to clarify that this conference call is for investors and investment professionals only. Any statements that may be made during this conference call regarding the company's business prospects, projections, and operating and financial goals are merely projections based on the management's expectations regarding the future of the company. These expectations are highly dependent on market conditions, the country's overall economic performance, the economic sector, and international markets, and are therefore subject to change. Please note that this conference call is being recorded and held in Portuguese with simultaneous interpretation into English with slides available at the results center on our investor relations website at www.romi.com/investidores.
During this presentation, all participants will be connected in listen-in mode only. Subsequently, we will start a Q&A session. To ask a question, please enter your question along with your name and the name of the company you represent in Zoom's Q&A feature. To ask a question live, further instruction will be provided later. Today, we have Mr. Luiz Cassiano Rosolen, Chief Executive Officer, and Fabio Taiar, Chief Financial and Investor Relations Officer. First, the executives will present 2025 fourth quarter earnings, and then they will be ready to answer your questions. Now, I turn it over to Mr. Luiz Cassiano.
Thank you, Julia. Good morning, everyone. Thank you for joining our conference call for the earnings of the fourth quarter 2025. We concluded the quarter and the year with consistent results, and this shows how resilient we are in our business model, even in an economic environment that remained challenging throughout 2025. Our consolidated order backlog reached BRL 750 million at the end of the quarter, and that is up 15% quarter-over-quarter. We highlight the B+W Machines unit, and this unit is an important growth factor, adding predictability for the next fiscal years.
This result means a demand for higher complexity solutions that are also customized with greater technology content. The diversification strategy is still very sound. Our Romi Machines business still has solid results, and this is a result of machine rental especially, which has become increasingly more relevant in expanding our relationship with our clients, especially in a scenario of greater caution as far as investment is concerned. In B+W, in Germany, we delivered the projects that were scheduled for the quarter following our plan. We have a robust portfolio of BRL 495 million that will be executed along 2026 and 2027.
This performance shows how assertive our strategy is in high complexity niches and how close we are to clients in international markets. The casting and machining unit has, in an environment, more pressure, especially in wind and automotive sectors. We are focused on gradual recovery of our productivity level, reviewing processes and developing solutions that have greater added value, keeping a mid- and long-term perspective. Although the macroeconomic scenario still requires caution, we believe that Romi is really well-positioned. We have a leaner, more flexible structure with an order backlog that is healthy, and we follow a consistent, considered in innovation, AI, machine generation, and developing our team.
So in 2026, we are confident that these pillars will let us go through this cycle with discipline making or keeping our focus on execution, work, cash generation, and above all, the success of our clients. I'd also like to thank everyone, all our employees at Romi, for being committed to our goals throughout 2025. Our clients, business partners, and shareholders for trusting us continuously. I now turn it over to Fabio, who will give you details about our financial results and our earnings for the quarter and the year. Thank you.
Thank you, and good morning, everyone. Let's start with the highlights. We have an adjusted EBITDA of about BRL 66.2 million, and this represents an EBITDA margin of 17%, and that was a result of the evolution of our B+W Machines business unit. As we said before, throughout 2025, this machine had greater results quarter-over-quarter, and it finished this year ready for 2026. Our order backlog at the end of 2025 also grew about 15% quarter-over-quarter.
The highlight is the growth of B+W because of the order intake in 2025, and we will give you further details later on. Our consolidated revenue is BRL 388 million. Even when you consider a smaller number than Q4 2024, as a result of a better B+W revenue distribution throughout the semester, we got better gross margin results, which grew about 1.9 percentage points as compared to the Q4 2024. Business units. We had a very solid result. We are a little below December 2024, but the levels are still high for what is delivered at the beginning of 2026. B+W Machines, both the order backlog and order intake, and also the annual performance. These were really positive. The highlight is the portfolio of about almost BRL 495 million, up 39% with regard to B+W's portfolio in December 2024.
In the last quarter, we also had the distribution of interest on equity that will be paid in 2026. Other highlights in terms of governance. We have updated our integrity guide also for prevention and anti-corruption of institute ethics, and we have a score of 7.9 points now. On November 20th, during that week, we had our anti-racism week as a reference to Black awareness to encourage reflection and increase awareness of this topic. Our circumstantial indicators. What we can see here in this chart, especially the gray line that reflects gross fixed capital formation. It has been slowing down relatively in 2025, and this shows, as Cassiano mentioned, that the current economic situation requires caution on the part of clients in general, and this, of course, means a reduction of investment growth year-over-year.
When you analyze another two indicators, one is the installed capacity utilization. In 2025, in the first half of the year, it was very similar. The two years were very similar, as we can see since 2020, in fact, and in the second half, it had a trend for slowing down, albeit a small trend, but it reflects all industrial production indices that we have followed up in the second half of the year. T here's been this cool down. Finally, our Industrial Entrepreneur Confidence Index. This index in the last three years, since 2022 and beginning of 2023, it has been on a little below 50 points, and this is a defining line between a more optimistic environment and a more contracted environment, less optimistic.
Throughout 2025, the level was between 49 and 50 points, and the most recent data shows that it is at 48.5 points, and this shows clearly that this is a moment for caution when you consider the economic perspective for 2026. Anyway, we should stress that the solutions that we have developed for growth, these solutions include the rental of machines. [Non-English content] I am sorry, just a minute. We had a little sound problem. We will be sorting this out. [Non-English content ]. I apologize for the inconvenience, let us resume. We are now on the economic indicator slide. When you look at our installed capacity, in the first half of the year, we had similar levels since 2020 and 2024. There is a slowdown trend in the second half of the semester, and that shows also industrial production indices.
There was a cooling down of industrial production, but sales are still satisfactory. Another index we analyzed was the Industrial Entrepreneur Confidence Index, that in the last three years has been close to 50 points. This line divides more attractive and less attractive investment environments. At the beginning of 2026, we are at 48.5%. This goes a environment of greater caution on the part of entrepreneurs when it comes to investing. I believe we should stress that this trend has been there for the last three years. The solutions that we developed and made available for our clients, I should highlight two solutions. One of them is machine rental and also the reselling of these machines with financial agreements with PRODZ. That is one of Romi's subsidiaries.
This has encouraged alternative means, helping our clients purchase equipment and modernize their facilities, and also keeping competitive even in a more volatile, unstable economic environment since 2023, by the way. As Cassiano said, machine rental has increased and has become increasingly more representative in Romi's operations. This has been consolidated throughout the years with significant growth. When you consider the markets that purchase our machines and our parts, first, Romi Machines. Again, we are still doing good with machines and equipment and service providers. There is a diversity of segments where we can do business with. We can provide equipment, and we can also provide services. You know that in the Romi Machines business, we are really present in many different industrial segments. In 2025, we had that same result. B+W Machines.
B+W Machines has greater added value solutions, and they are more in a niche in some particular industrial segments. The part about engines and systems is undoubtedly a highlight, has been a highlight in the last few years, in fact. Engines and systems include both movement and also energy generation, power generation. These segments are These segments have a very positive perspective, a very positive outlook. Construction and mining. This segment has also great business opportunities for us, for B+W. Machines and equipment. Last year, there was a greater retraction. We are in a more normalized level, if you will. We also have aerospace. That is something new. A segment that B+W Machines had an important history with very competitive solutions. Energy, that we just had one specific client. We sold a solution to this particular client.
In terms of Rough and Machined Cast Iron Parts, the growth was in agricultural machinery, that also, we had a worse base. Since 2023, this segment has been reducing its demand volume for Rough and Machined Cast Iron Parts. They resumed sales along 2025 and are expecting to grow even more in 2026. Commercial car parts. It cooled down. It has remained flat. Civil construction. We had a good volume in 2024, and this trend continued along 2025. Again, as mentioned before, energy, and these are parts that are extra heavy. In this segment, in the last few years, this segment has known a very low demand level. However, we have some perspective for improvement in the following years. Net sales per business unit. The winner this year is B+W Machine.
Because of the revenue growth, i t grew over 45% in terms of revenues, but it is not the only one that grew. It grew and it also diluted the other results, so its share was smaller in consolidated revenue numbers. Consider now sales distribution per geographical region, B+W is the one that grew the most. B+W's revenue is, of course, mostly outside Brazil. Brazil was losing some of its share in Europe, and the U.S. were the market where there was more delivery. I t increased its share and relevance in consolidated revenue. Latin America remained stable this year, with some improvement, especially in Argentina, but it is still a little shy. Asia. Asia is a major market for us, and that is a B+W business 100%. This fall means more projects in a particular year than other years.
Asia, especially China, has a good order intake, and we have good business outlooks for B+W there in this region. In terms of order intake and backlog. When you consider our capital in the domestic market, especially the confidence of industrial entrepreneurs, this is reflected in more orders for Romi Machines. In quarter four, there was a retraction of about 36.5% quarter-over-quarter. Throughout 2025, this reduction was 12.8%, and this shows that we are now in an environment where there is greater caution when it comes to new investment. A part of this reduction of these smaller figures is, in a way, set off by new business, as mentioned before, especially machine rental. B+W, throughout the order, there was a reduction in their order delivery, but this is a result of more concentration.
That is why B+W, you should consider the entire year. The year of 2025 was greatly favorable to B+W, generating new business. It grew about 54% with regard to 2024, especially in large size engines, especially power engines, power generation machines. Throughout the year, it was stable. The part of castings and machining, it remained quite stable, and throughout 2025, there was no major resumption of this segment. Our order backlog.
Again, Romi Machines, there was a reduction in order intake in the last quarter, but it finished the year with solid numbers, about BRL 200 million. T hat for 2026, now we are expecting, this is for the deliveries that will be made in the next few months. B+W, there was a substantial growth, about 40% quarter-over-quarter. T his portfolio means that in 2026, part of it will be delivered also in 2027.
And again, Rough and Machined Cast Iron Parts, as we saw, there was a reduction. The number is BRL 55 million, and it does not show any recovery with regard to previous years. The consolidated figure. The order backlog is BRL 750 million, and that is 15% growth, 15% with regard to the fourth quarter of 2024. Margins or profitability. We had an evolution in our gross profit. That means because B+W's margin improved, so they delivered all the projects that we had committed with our clients. That led to great productivity levels with a good margin that had a very good impact on our consolidated figures.
There was a slight fall along the year, comparing to other years. This came from the castings and machining unit with less capacity. Indeed, this means also lower productivity levels as a result. What we see in 2025 is a reduction of their operating margins in this particular business unit, castings and machining. That means a reduction of their gross margins.
EBIT. The reduction was 1.4% when you compare fourth quarter 2024 and 2025, but there was a growth of our gross margin. T here were lower sales figures. That had an impact on our EBIT. We will be seeing more details later. When you look at the entire year, what you can see again, is that there was a decrease when you consider, especially as a result of our casting and machining unit performance. The EBIT is slightly lower than 2024. Especially as a result of the performance of the castings and machining unit. That is how we see this. In terms of net income, our net margin came from 10.8% to 10.4%.
The reduction was BRL 49 million to BRL 40 million. That is the reduction in the quarter and for the end of year. The reduction was 0.9%. The financial earning in 2025 was better than 2024. Although the net debt, we have a very controlled debt. W e have less profitability. Our earnings ended up being positive with a good impact on net income. Performance per business unit. Romi Machines is stable in terms of revenue with a gross margin that is slightly above what was expected. W e have a good profitability level for this business unit. As a result, we have also achieved a greater growth of 0.5% in the EBITDA margin of that particular unit, Romi Machines. B+W. Growth of revenue was substantial, and this had a positive impact on operating margins.
Again, you see an evolution of our gross margin with greater productivity, and as a result, with an expansion of our EBITDA margin. Finally, castings and machining, like B+W, the productivity level is still low. This low utilization of its capacity means a lower productivity level. Over a longer period of time, means lower operating margin. W e see a reduction both in the gross margin and the EBITDA margin. Our financial position. We are still very sound with a BRL 135 million net debt. We raised significant investment funding that was BRL 200 million in the last quarter, and the goal for this is to support growth for the company, especially in the Romi Machines unit. For 2026, we have about BRL 130 in debt to be paid off with a cash that is enough after our financial obligations are addressed.
That the last quarter, we had cash generation with a better performance, both in terms of EBITDA generation, and we also deallocated capital from the inventory. We reduced our net debt. Capital market performance, our shares in the last two years have performed really below the Bovespa Index as a whole. This is the end of our earnings results presentation of 2025. Thank you everyone for joining the call, and we will now available for our Q&A session.
Thank you. This is a question from Mr. Antonio Fonseca. "Good morning. Did the company get a loan from the Brasil Soberano program? How do you see B+W for 2026? How do you expect to address this week's scenario?"
I'll answer the first question, and then Cassiano will talk about B+W. The loan that we raised at the end of the year, this was part of the Brasil Soberano program. The major goal is to support growth of our exports, Romi exports in the next few years. Yes, this was part of the Brasil Soberano program. Cassiano, over to you.
Good morning, Antonio. B+W for 2026, B+W has a very sound portfolio. The one that we are releasing also includes 2027 projects. Throughout 2025, B+W had good projects that were closed, good deals, and for 2026, we have a challenging activity, a challenging performance, and we want to deliver this in 2026. For 2026, B+W is expected to have a very good result, a consolidated result. For 2026 in Brazil with a weak scenario, it is already challenging. It's been challenging since 2025. In 2026, we're working hard to have new orders month after month. In the last few years, when you consider Romi Machines, is that by renting machines, we have a better margin. We deliver better margins.
We can reduce volatility in a more challenging investment environment in this country with rental machine, rental solutions, and also with our fintech solutions to fund part of these machines that come back from their renting. It's really hard to predict what will happen in 2026 in detail. We are lean. We're able to react to whatever happens. In the Romi Machines unit, we have a great aspect. Again, we suffered in 2025, the two major investment. We looked or tried to increase automation and productivity in order to generate value or income, even with very low volumes. We've already have that for the fourth quarter. We're working on this since quarter four. We are confident that in 2026, we need to show a production turnaround with better execution. Thank you.
The question by Mr. Antonio Fonseca says, "Thank you. The limit for the company to pay dividends will be 25%?"
Thank you. We do not have that limit by contract, but we will have that in our explanation notes that 3.5 x our EBITDA.
A question by Ms. Adriana Passos Pereira. "Good morning, everyone. Fabio, can you please comment a little more on your machine rental business and the new sales of used machines? How do you account for this revenue?"
Good morning, Adriana. Let me start with the accounting, or bookkeeping, or rental contracts, and also resales of used machines. This is closely linked to the Romi Machines business unit. The bookkeeping is in the operating revenue of that unit, and the costs also in the same business unit. Both the part of machine rental, this is a 12 - 24 months contract, and the price is fixed, and there is only inflation adjustment. At the end of the contract, the machine is sent back to Romi. This client can start or renew that machine rental contract or rent another machine.
The machine will come back to Romi anyway, it will be reviewed, overhauled in detail, and then it will be put on sale as a used machine, but with all the Romi guarantee. Also the customer service that Romi provides for the new machine. These used machine clients enjoy the same benefits as a new machine buyer. In these used machines, there is no funding provided. In order to help or encourage clients to buy these used machines, was to have a fintech that is called PRODZ. This fintech, PRODZ, provides funding to help sales or purchase of these machines by these clients. This segment has grown consistently in the last few years. Our machine rental business grew almost 30% in 2025 as compared to 2024.
Our next question is by Geraldo Germano. "Good morning. Congratulations on these earnings. What is the impact of U.S. tariffs on Romi's business?"
Yes, we do have a major impact on Romi Machines as the exports of Romi Machines to the U.S., they now have a 50% tariff. That is 10% + 40%. W e will still try to work on that. We have made some adjustments, and we are expecting to minimize, to mitigate this impact. We are also hoping for the best and working with all the agencies to at least remove that additional 40% tariff on our machines. Anyway, the U.S. market is an important market for our exporting. W hen you consider the entire Romi Machines market is not that relevant for B+W. American tariffs are 15%, but they are all negotiated with clients before you close deals, projects to avoid impacting B+W's earnings. That is it.
Our next question by Frederick Melo. "Good morning. Congratulations on your earnings. Can you give us more details about the internationalization of Romi Machines? What is the idea to produce in Brazil and then export them, or produce them in another place like China, where interest rates are lower and the currency is better for exports?"
Our strategy is to produce in Brazil, Romi Machines, machine tools, plastic injectors and blowers. You need a lot of R&D, and we have a tradition of investing consistently in R&D. We have over 100 people, engineers doing research and development in Brazil. Being close to the client, both in direct sales and also for services, we get instant feedback so we can improve our products time after time, and we can improve fast. This is not a business where it's just about production cost. The value chain is much more complex than that, and it requires much more than production cost reductions.
Our strategy then is to keep producing in Brazil and also to export from Brazil to other countries, preserving our brand and showing that our machines are much more robust and with a really great technological quality. We are in a high-end market. That's where we work with, robust in higher technology machines rather than a low-end market. In the low-end market, we use machines that are rented and then sold again as used machines, also for lighter machines. Thank you.
A question by Antonio Fonseca. "In your articles of association, Article 45, you say 25% of dividends on net income and the contract of the Brasil Soberano project has a restriction, has a limit on the profit sharing between 25% and 27%. Can you explain that better for Fibraza? The company is limited to distributing 25% of its profit."
I don't know about this Fibraza contract. We don't have that limit of 25% in terms of net income distribution. We, of course, cumulative profit has restrictions, but that's a very small number. This is what we have on our agreement.
[Non-English content] If there's any other questions, please enter your question, your name, and the company you represent in Zoom's Q&A feature. Thank you.