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Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Total Energy Services Third Quarter 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Daniel Halyk, President and CEO. Please go ahead. Daniel Halyk: Thank you. Good morning, and welcome to Total Energy Services Third Quarter 2025 Conference Call. Present with me is Yuliya Gorbach, Total's VP Finance and CFO. We will review with you Total's financial and operating highlights for the 3 months ended September 30, 2025, and then provide an outlook for our business and open up the phone lines for questions. Yuliya, please go ahead. Yulia Gorbach: Thank you, Dan. During the course of this conference call, information may be provided containing forward-looking information concerning Total's projected operating results, anticipated capital expenditure trends and projected activity in oil and gas industry. Actual events or results may differ materially from those reflected in Total's forward-looking statements due to a number of risks, uncertainties and other factors affecting Total's businesses and the oil and gas service industry in general. These risks, uncertainties and other factors are described under the heading Risk Factors and elsewhere in Total's most recently filed annual information form and other documents filed with Canadian provincial securities authorities that are available to the public at www.sedarplus.ca. Our discussions during this conference call are qualified with reference to the notes to the financial highlights contained in the news release issued yesterday. Unless otherwise indicated, all financial information in this conference call is presented in Canadian dollars. Total Energy's financial results for the 3 months ended September 30, 2025, reflect improved Australian financial results following the deployment of upgraded equipment and continued strong North American demand for compression and process equipment. Offsetting these tailwinds was lower North American drilling and completion activity. On a year-over-year basis, consolidated third quarter revenue increased by 8%. Contributing to this increase was $15.2 million of increased CPS segment revenue, $6.2 million from Well Servicing and $1.6 million from RTS segment. Third quarter EBITDA decreased by $7.6 million as compared to 2024 due primarily to the relative increase in lower-margin CPS and Well Servicing segment revenues due to consolidated revenue, the $1.8 million year-over-year negative foreign exchange impact on CPS segment results, and $1.5 million year-over-year increase in share-based compensation due to increase in the market price of Total Energy shares. Geographically, 48% of third quarter revenue was generated in Canada, 27% in United States and 25% in Australia, as compared to the third quarter of 2024 when 49% of consolidated revenue was generated in Canada, 34% in United States and 17% in Australia. By business segment, the Compression and Process Services segment contributed 48% of third quarter consolidated revenue, followed by the CDS segment at 32%, Well Servicing at 12% and the RTS segment at 8%. In comparison, for the third quarter of 2024, the Compression and Process Services segment generated 46% of third quarter consolidated revenue, followed by CDS at 36%, Well Servicing at 10% and RTS segment at 8%. Third quarter consolidated gross margin was 22% in 2025, which was 209 basis points lower than 2024. Contributing to this decline was a [ 417 ] basis point year-over-year increase in third quarter revenue contribution from CPS and Well Servicing segment as these business segments historically generate lower margins than the CDS and RTS segment. The year-over-year decline in North American drilling third quarter gross margin percentage in all business segments was partially offset by improved Australian results. Third quarter CDS segment revenue decreased 5% compared to 2024. The 33% year-over-year decline in third quarter North American operating days was partially offset by a 32% increase in Australian days. Segment revenue per operating day increased 16% during the third quarter of 2025, due primarily to increased pricing on upgraded rigs in Australia that was partially offset by change in equipment operating and competitive pricing in certain areas of Canadian market. Third quarter CDS segment EBITDA decreased by 3% compared to 2024 due to lower North American drilling fees that was partially offset by higher activity and pricing in Australia. CDS segment's EBITDA margin during Q3 of 2025 was consistent with 2024, as the overall decrease in third quarter operating days was offset by higher pricing for upgraded rigs and cost management. RTS segment revenue for the third quarter increased 8% compared to 2024. This was a result of stable utilization and an increased U.S. rental fleet following the June acquisition, combined with a higher revenue per utilized rental fleet due to the change in mix of equipment operating. Higher costs associated with the change in the mix of equipment operating and competitive market conditions that did not allow for the price increases necessary to offset cost inflation, resulted in a 7% year-over-year decrease in the third quarter RTS EBITDA, and 585 basis points decrease in segment EBITDA margin. Third quarter revenue in total CPS segment was 14% higher compared to 2024. Increased fabrication sales more than offset by 3% year-over-year decline in rental fleet utilization. Third quarter CPS segment EBITDA declined $4.2 million or 22% compared to 2024. $1.8 million of this decline was due to increase in cost of services, resulting from a weakening Canadian dollar relative to the U.S. dollar. Also contributing to this decline was the commencement of certain low-margin fabrication project awarded in 2024 when industry conditions were weaker and cost inflation arising from tariff-related supply chain challenges that were not fully passed on to the customers. The fabrication sales backlog at September 30, 2025, was $380.8 million, which is $76.9 million or 25% increase and is higher compared to $303.9 million backlog at June 30, 2025. In Well Servicing, a 5% increase in revenue per service hour combined with 19% increase in operating hours, resulted in a 24% year-over-year increase in third quarter segment revenue. Increased Australian and Canadian activity was partially offset by a substantial decline in U.S. activity. Higher pricing and increased fleet utilization following the upgrade of several rigs over the past year contributed to a 162% increase in third quarter Australian operating income. Offsetting this increase was a decline in North American operating income due to competitive pricing and substantially lower U.S. activity levels. Segment EBITDA for the third quarter of 2025 was 4% lower compared to 2024 due to lower pricing in Canada and substantially lower utilization in the U.S. that was only partially offset by increased Australian utilization and pricing realized for the reactivated upgraded rigs. From a consolidated perspective, Total Energy's financial position remains very strong. At September 30, 2025, Total Energy had $115.5 million of positive working capital, including $57.1 million of cash. Bank debt less cash on hand was $32.9 million at September 30, 2025. Total Energy's bank covenants consist of maximum senior debt to trailing 12-month bank defined EBITDA of 3x and a minimum bank defined EBITDA to interest expense of 3x. At September 30th, the company's senior bank debt to bank EBITDA ratio was 0.25 and the bank interest coverage ratio was 36.47x. Daniel Halyk: Thank you, Yuliya. Total's third quarter results demonstrate the resiliency of our diversified business model. Despite challenging North American drilling conditions and margin pressure in our CPS segment as they work through some lower-margin legacy orders, Total continued to generate substantial free cash flow that was used to fund growth opportunities, pay dividends, buyback stock and reduce bank debt. Stable Australian industry conditions and specific customer needs have encouraged Total to invest substantial capital over the past year to upgrade and reactivate several drilling and service rigs under long-term contracts. The upgrade of an idle drilling rig acquired as part of the Saxon acquisition in 2024 has just been completed, and we expect such rig to commence drilling before the end of this month. This will bring our active Australian drilling rig count to 13, the highest ever. An Australian service rig is currently being upgraded and is expected to be completed and commence operations by the second quarter of 2026. North American demand for compression equipment remains exceptionally strong and continues to be driven by significant infrastructure investment related to growing LNG export capacity and demand for natural gas fired power generation. The record fabrication sales backlog, which exceeded $380 million at September 30th, provides visibility well into the second half of 2026. While the CPS segment works through some lower margin orders received in 2024 when market conditions were less favorable, such projects are scheduled to be substantially completed by year-end, and the impact on those orders -- the impact of those orders on margins will cease. Steps taken to mitigate cost inflation and tariff uncertainty are also expected to improve CPS segment margins going forward. This includes commencements of the previously announced expansion of our U.S. fabrication capacity with plant construction expected to be completed by the first quarter of 2027. In Canada, the upgrade of a mechanical double drilling rig to a state-of-the-art AC electric triple pad rig was completed in early November and such rig is currently drilling for a major Canadian producer in the Alberta Montney. This rig's unique design is expected to achieve significant operating efficiencies compared to conventional AC triples. Should its operational and financial performance meet expectations, we have identified several more idle rigs in our Canadian fleet that could be similarly upgraded should market conditions warrant. Although we remain sensitive to current market challenges and uncertainty, we will use our financial strength to pursue acceptable investment opportunities. Specifically, we continue to engage with our Australian customers in regards to future potential growth opportunities. We also continue to work to identify and evaluate North American acquisition opportunities with a view to gaining critical mass in our existing business segments. As we enter the busy winter drilling season in the northern areas of North America, I would like to acknowledge the focus and dedication required of our employees to ensure our operations are conducted safely and efficiently in often extremely harsh weather conditions. I would now like to open up the phone lines for any questions. Operator: [Operator Instructions] Our first question will come from the line of Tim Monachello with ATB Capital Markets. Tim Monachello: Just wondering about the Weirton expansion and just the way we should think about revenue cadence on your backlog. Are you capacity constrained currently? And should we expect revenue out of CPS segment to be somewhat similar from a product sales perspective to what it's been over the last couple of quarters as we go through '26 until that expansion is commissioned? Daniel Halyk: So Tim, I would say, yes, in the U.S., we're pretty much at capacity without some major, I would say, outsourcing and labor changes, including additional shifts. In Canada, we have the ability to ramp up more if we went to further and larger nighttime shifts. So -- there's a cost to doing that. So we're trying to balance the demand and putting orders through the shop with the incremental cost that would arise from adding additional night shifts, primarily in Canada. So certainly, Weirton, when we have the expansion completed, obviously, we're going to be ramping up our labor force in advance of that. And it will take some time once the shop is completed to fully realize the efficiencies and gains that come with that, just primarily due to labor. But that will certainly take a lot of pressure off of Canada and certainly increase our capacity materially in Weirton. Tim Monachello: That's helpful. And then -- I joined the call a little bit late, but I'm sure you provided some commentary on the compression margins in the quarter. And I'm just wondering if you can provide any additional commentary on, I guess, how -- the pace of expansion given some onetime items in Q3? Daniel Halyk: Yes. I think there's probably 3 components to the year-over-year margin compression and sequential quarter compression. First would be some fairly volatile FX movements. And again, we have a pretty pragmatic approach to dealing with FX changes to lock in economics on orders, but that's never perfect. And when you have volatility, short-term material swings that can impact and sometimes it's positive, sometimes negative. Year-over-year, it was $1.8 million to the negative, that goes straight to cost of goods sold. The second component would be in 2024, we made -- we took in some orders that were fairly low margin. Specifically, there was one large order that we consciously bid aggressively for some strategic reasons I won't get into, part of which was flexibility on delivery dates, and our ability to load level shop production, and that certainly helped our margins on other packages. And in hindsight, it was the right decision in the sense that the market turned significantly in early 2025. And if we wouldn't have preserved our labor force, we probably wouldn't be enjoying the success we have to date. So, we're now working on those projects. They'll have a short-term hit on our operating margins. But by the end of the year, that will be old news. And certainly, given the significant improvement in market conditions beginning in the early 2025, I would certainly hope our sales group there is bidding work at better margins, because we're running pretty hot right now. And the final point I was going to make is there's cost inflation. It's been a -- as everyone knows, a pretty interesting and dynamic marketplace. Steel is obviously a big component of the inputs within the CPS segment. There was a lot of volatility. And there's a timing difference between when an order is received, when the materials required for that order are procured, and when that order is completed. And so, it's a pretty dynamic environment. And like I said, we managed that pretty well, but no one can manage that perfectly. And I think Q3 was a bit of a perfect storm in terms of some lower-margin projects combined with a lot of volatility in the steel market. Thankfully, that settled down. Compression packages are USMCA compliant. So we haven't faced any issues on that front. But there were some serious questions earlier in the year about whether there would be cross-border issues. And candidly, one of the reasons we're expanding our U.S. production is to get ahead of any potential changes to Canadian-U.S. trade relations. Tim Monachello: Okay. That makes a lot of sense. And I mentioned -- or I'm glad that you mentioned the -- I guess, the strength of the compression market, you've been booking record order flow for the first 3 quarters of the year. Do you see that continuing in Q4? Is there any leading edge indicators that would suggest any changes to [Technical Difficulty]? Daniel Halyk: To date, we continue to see very strong demand. Tim Monachello: Okay. And so, like a booking is placed today, when would a customer expect delivery? Daniel Halyk: Depends on the unit, but -- and depends how much they're willing to pay. You want to get to the front of the line, there's ways to do that. How do you allocate scarce resource, price? One of the challenges that we're facing right now, Tim, is some of the lead times for major inputs, notably Cat Engines, are now well in excess of 90 weeks. And so, we're effectively having to make decisions on inventory and supply of inputs based on what we think business will look like almost 2 years in advance. And so -- we've been there before, we've never seen quite the lead times we're seeing now. But I can tell you, that's also a benefit to larger players. To try and compete in this market without a balance sheet is very difficult. And you see it in our inventory levels are going up. And like I said, we're having to make investment decisions on inventory 2 years in advance, which, again, I've never seen anything like that. And at some point, the music will slow down or stop. It has before. We've been through that before. You'll have the working capital unwind. And -- but so far, we've seen no signs of that music slowing down. Tim Monachello: Well, that's positive. And then, I guess the other sort of notable change in the Compression segment in Q3 was a meaningful uptick in your utilization of your rental fleet. Can you talk a little bit about what changed quarter-over-quarter and how you see that progressing as we go -- Daniel Halyk: Well, we had noted that in our Q2 call that we had a subsequent to quarter end, a pretty significant Canadian rental contract for a bunch of our nomads. And it's interesting, the nomads that went out on rent in Q3 are being used by a customer to provide temporary compression as they do a major plant turnaround. And so it's exactly the type of application that the nomads are good for to come in and basically allow a plant to continue operating as the primary compression is rebuilt. So, those things tend to come and go. What we're seeing, particularly in the U.S. is -- and we've seen it before, and it kind of comes in cycles, but pretty aggressive pricing, I'd call it by financial players in the rental market that basically are providing capital leases. We provide an operating lease in the sense we take residual risk. We also build for compression for a bunch of those companies. And so we're not inclined to compete with them. And frankly, our cost of capital is likely higher, so we don't try. So that's put a little bit of pressure on the U.S. rental fleet. But again, for short-term specific applications, that's where we're good at or where customers want the flexibility to keep the units off their balance sheet in terms of not being capital leases. Tim Monachello: Got it. And then last one for me. Can you just talk a little bit about the opportunity set that you're assessing currently? I know you don't have the '26 budget formalized yet, but just like some of the areas of growth opportunities? Daniel Halyk: So certainly, in Australia, our performance has been very good operationally. And I think the quality of our equipment is causing continued interest in us reactivating and upgrading rigs. So we're certainly active in that market and discussions. I would say it's largely market share gains as opposed to a growing market. But the overall market in Australia has been pretty stable. We haven't seen material changes there. I would say most of our -- well, pretty much all of it has been market share gains as we displace other suppliers there. Within North America, there's select targeted opportunities to upgrade equipment. I mentioned the triple that went straight to work as soon as it's done. It's in the Alberta Montney, that's a very special rig. And we're watching it keenly as I'm sure others are. And if the business case exists, we won't hesitate to do further similar upgrades. And I think the other thing we're very interested in doing is gaining critical mass in our existing business segments in North America, particularly the U.S., we're going to be disciplined and focused. So we're not going to force anything, but we were able to do a smaller deal in June on the rental side, and we're open about our interest in growing our business down there. And we continue to see opportunities, and we'll evaluate and execute where it makes sense. Operator: [Operator Instructions] Our next question will come from the line of Josef Schachter with Schachter Energy Research. Josef Schachter: Going back to Australia, you've got 13 rigs out of your 17 working utilization rate, 55%. What is potentially maximum utilization where we talk 70%, 80% in Canada and the States, depending upon what market you're in. Is that the same kind of target utilization that you could get in that country? Daniel Halyk: Yes. Certainly -- we could certainly get there. Like I said, we don't see the market growing. It's going to be more market share gains. One of the big challenges in Australia is labor. And so we've taken a fairly methodical approach to expanding our active rig count, in large part not wanting to strain our labor force, and frankly, put inexperienced people in bad positions. And I can tell you, that's our concern globally. It's less of a concern, obviously in North America, given a bit softer market conditions. But we've seen other companies take a more aggressive approach on expansion, and it usually doesn't end well. And a lot of the problems arise from straining your labor force. So we're going to take a very methodical, controlled approach. And you've sort of seen it, Josef, over the past year where it's been the rig at a time. We could certainly be more aggressive. Capital is not the issue. It's in our view, first of all, quality product. So trying to do too much at once is going to strain our supply chains. And number two, equally, if not more important, is ensuring we've got confident labor to staff the equipment. Josef Schachter: So, of the 4 rigs that are left in Australia, are any of them being looked at by people so that you could upgrade those and put them to work in 2026? Daniel Halyk: They're being looked at. I'm not going to comment on time lines. I think it depends. Again, Australia tends to be a very long-term, they call them campaigns unlike North America, while Canada is the worst where we tend to be much more of a spot market mentality, where Australia, when you commit a rig, it's for years. And so, these upgrades we're doing are substantial, and take several quarters to do, not weeks. So, I'm not going to comment on timing. I will say we are in active discussions though on a number of fronts there. Josef Schachter: Okay. Next one for me. Compression margins this quarter, 15% down from 22% a year ago. You mentioned that through year-end, it's going to be lower numbers. Do you -- what's the kind of number that you could see in 2026? Are we going to get back into the 20s? And what would be peak kind of margins in your view for the CPS business? Daniel Halyk: I think we're learning a little bit as we go. As we discussed earlier, we're starting to push the limits of our plant capacity. Obviously, there's levers we can pull to increase that, but there's cost to doing so. We're also testing continuously the market on pricing. And again, so we're learning as much as anyone as we go into what's been a very strong market. What I would say is Q3, we definitely -- let me put it this way. I hope that's bottom. And from everything I can see at this point, I expect it is. I would say we expect to revert back to margins we saw in the first half of the year. And again, that will occur over the course of Q4 into Q1. And certainly, given the strong demand and strong backlog, the projects we're bidding currently and have bid for the past several months, quoted margins would be substantially in excess of the orders that we're currently -- some of the orders we're working on in Q3 going into Q4. Josef Schachter: Okay. Last one for me. You've done -- as you said the RTS did a small tuck-under acquisition. Are you preferring to do smaller deals and put them into place or into markets where you want to get bigger up in a certain market? Or are you looking -- given your strong balance sheet, $57 million in cash, would you be looking at things of a bigger scale that would be kind of transactionally growing the company faster and bigger? What's your feeling on the M&A front, [ so ] smaller or looking at bigger deals? Daniel Halyk: All of the above. If we could do another Savanna acquisition, we're [ game ]. Josef Schachter: Is there a lot of desperation by people given the tough market, especially in the drilling side, that those would be the first opportunities that might come your way? Daniel Halyk: I would say there's starting to be some alignment between value expectations and current public market valuations for energy service companies. I think -- I would also say there's probably some private companies that are getting tired. So I don't really want to speculate more than that. I would say the pipeline is busy. And -- but it's got to work for our existing shareholders. And again, I use Savanna that we did in 2017 as a prime example where that was an accretive deal, but it also is very beneficial post closing to Savanna shareholders that stayed along for the ride. So this really -- at the end of the day, it's going to be shareholders of the target that decide what they want, and there's public and private. And you can't force those things, but we're also not going to be stupid about it. Tried not to be stupid for 29 years and don't want to start being stupid now. Operator: [Operator Instructions] Our next question comes from the line of Paul Starkman with [ Shareholder ]. Paul Starkman: You've already touched on this with the questions asked by Tim and Josef, but I was going to ask more high level in terms of the competitive landscape in various regions and why you think you're winning market share? It's a long game. You've got a clean balance sheet. You touched on that. You talked about the strong team members and employees you have driving the business. Oftentimes, there's an inflection point where you sort of start winning a lot more business and your customers start listening more and engaging more and want to work with you more. Maybe if you can comment on that sort of longer term thematic maybe by region as to why you think Total has been winning and will likely continue to do so given the disciplined approach? Daniel Halyk: So good question, Paul. First and foremost, when we accept business, we expect to execute that business at our high standards, and we won't cut corners. So, if it's in the CPS segment, it means building quality equipment. If it's on the drilling or well servicing or rental, it means providing good equipment with excellent service and safe. People don't hire us to cause problems. What I would say is good operators appreciate that value. But we also have a balance sheet where we can say no if pricing is not acceptable, because we're not going to lower our standards simply to get work. And for people like you that have followed Total over the years, you will see us lose market share in more difficult parts of the cycle, because our preference is to park our equipment rather than operate it at our standards and lose a bunch of money and end up having to recertify it and have generated no profit to pay for the recertification. I would say you've got a fairly significant portion of the market, operators that appreciate that, and are willing to pay for quality and pay for predictability. And we're really seeing that, for example, in Australia. And it's kind of timely, there was -- one of our -- there was a recent catastrophic service rig event -- service rig event in Australia that I think really opened a lot of eyes in terms of what can go wrong, and it was brand new equipment. And so again, I'm not going to get into -- I don't know all the details, but certainly, those events can spook customers, and they gravitate towards operators that have good track records. And I can tell you to have a good long-term track record, you have to be profitable, because you have to be able to reinvest in the business. And so, I think fundamentally, our discipline in terms of operations pricing serves us well in all markets. Definitely, we'll lose some market share on the bottom half of the cycle, we're okay with that, because we're in this for the long haul, not just to say we've got the best rig utilization in a tough market. So I don't know if that answers your question, but... Unknown Shareholder: Yes. No, that's helpful. I mean quarterly results can be -- can fluctuate. Your model is fairly diversified by region and by vertical. So that's been very helpful. Perfectly clean balance sheet and everything you just touched on, I think everything seems to be moving in the right direction. But it's helpful to hear you reiterate some of the reasons why, again the customers are continually engaging with you, and there's -- and therefore no surprise, there's more opportunities ahead, it seems. Daniel Halyk: Yes. And I look at our customer base in Australia or even Canada and the U.S., it's blue chip. But it's a wide range. It's private, public, small, large. So, I think it's got to work for both sides over the full cycle, and good customers appreciate that. We have the same perspective with our suppliers. We don't expect them to work for nothing, and it's not in our interest to see our supply chain condense down to one or 2 suppliers. That's not in our long-term interest. So we will definitely support multiple suppliers in weaker parts of the cycle. It's in our interest to have competition for our business. And I would assume our customers see it the same way. Operator: And that will conclude our question-and-answer session. I'll turn the call back to Dan for any closing comments. Daniel Halyk: Thank you, everyone, for joining us this morning, and we look forward to speaking with you after we release our year-end results in March. Have a good rest of your day. Operator: This does conclude our call today. Thank you all for joining. You may now disconnect.
Operator: Thank you for standing by. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the M-tron Earnings Call for the Third Quarter of 2025. [Operator Instructions] I would now like to turn the conference over to Linda Biles, EVP of Finance. You may begin. Linda Biles: Good morning, everyone. Thank you for joining our 2025 M-tron Q3 earnings call. Please note that this call will be recorded, and we will make the recording available on our Investor Relations website, www.mtron.com shortly after the call. Yesterday afternoon, we released our earnings for the third fiscal quarter of 2025. Before getting underway, we are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes as contained within our 2024 10-K which was filed on March 27, 2025, with the SEC. This discussion may contain forward-looking statements within the meaning of 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements contain known and unknown risks and uncertainties, which are detailed in our filings within the SEC. Although the company believes that the forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there are no assurances that the company's actual results will not differ materially from any result expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as the result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to our CEO, Cameron Pforr. Cameron Pforr: Thank you, Linda. Good morning, everyone. Thank you for attending our third quarter FY 2025 earnings call. We are pleased to discuss our strong results for the first 9 months of the fiscal year and our outlook going forward. As a reminder, M-tron designs and manufactures highly engineered RF solutions, including electronic components and subassemblies used to control the frequency and timing of signals and electronic circuits. We're a global company with 3 manufacturing sites in the United States and in India. The company's primary markets include aerospace and defense, commercial avionics, space and industrials. We're pleased to report that the company continued to perform well with continued strength in M-tron Q3 sales and backlog. Our revenues continue to be driven by defense-related orders. However, we did see some growth this quarter in other areas as well. With consistent operating performance, we have been able to continue to make strategic investments in research and development and continue to improve the market profile of the company and prime to pump for future growth. Yesterday, we reported the following Q3 2025 results. The total revenues for the third quarter was $14.2 million, which was a 7.2% increase over the $13.2 million for the third quarter in 2024. This increase was primarily due to strong growth in avionics, space and industrial product shipments. Gross margins for the third quarter were 44.3% compared with the elevated 47.8% gross margins in Q3 2024. The decrease was primarily due to product mix and also higher tariff-related costs, which we've discussed in the past. Net income for the quarter was $1.8 million or $0.63 per diluted share compared with $2.3 million or $0.81 per diluted share for the 3 months ended September 30, 2024. This decrease was primarily due to a large reversal of a deferred tax asset called for by the tax law changes in The Big Beautiful Bill. That was almost $1 million of expense or a little bit more than $1 million expense plus the P&L, the lower gross margins from the year prior and also slightly higher OpEx expenses consistent with our growth. Adjusted EBITDA was $3.2 million for the 3 months ended September 30, 2025, compared with $3.3 million for the prior year's September quarter. The slight decrease was primarily due to lower gross margins and a relatively small investment in SG&A. Backlog ended as of September 30, 2025, was $58.8 million, which was an increase of 48% from the $39.8 million for September 30, 2024, and was a 24.5% increase from the end of year December 31, 2024 figure of $47.2 million. The increase in backlog from December reflects robust demand across aerospace and defense programs, new program launches and a recent surge in avionics and space orders. On October 23, 2025, the company announced that the dividend of warrants that granted in April 2025, achieved its early trigger condition and is exercisable through 5:00 p.m. on December 11, 2025. 5 warrants are exercisable to purchase 1 common share of stock. The strike price is $47.50 per share, and the warrants have an oversubscription feature, which allows warrant holders who have exercised all of their warrants to potentially seek and acquire additional warrants if the offering is undersubscribed. Warrant holders are encouraged to review the warrant agreement in the FAQ page on our Investor Relations website, which is ir.mtron.com. We continue to execute on our strategy of continuing and moving into more program business, which now makes up the vast majority of our aerospace and defense revenue. We are involved in over 40 programs of record, and many of these programs are sole-source programs where we stand to reap many benefits as defense spending in the areas we support continue to grow. Just to give you a little bit of flavor for that. This year, we've had some big wins in EW and radar systems. And that's an area where we expect to double our revenue next year just reflecting those wins and some of the programs moving to higher rates of production. In addition, we've been asked to provide plans to dramatically increase our precision guided munitions production for certain programs as well as a new UAV program, which we're very excited about. We continue to innovate, as evidenced by the high rate of revenue from newly designed products. To give you an example of some of this innovation, we and other vendors in this space produce compensated oscillators, which are used in airframes with a great amount of vibration. So usually a helicopter or fighter aircraft. This compensation is done to reduce the drift of the timer. Traditionally, they were externally compensated and a typical size or a unit like this or a module like this was 16 inches by 16 inches. We've developed an internally compensated oscillator, which is a little bit more than 2 inches by 2 inches and performs the same function, and we're seeing dramatic demand for this line of products. This type of innovation was really what keeps M-tron at the fore of the industry. I'd like to thank our dedicated customers for their continued business and partnership and our loyal employees for supporting the company and its mission of serving the nation and its capability to defend freedom. M-tron plays a critical role in the sense of our nation by providing U.S. sourced highly engineered components from any U.S. and allied military programs and having a U.S.-based advanced manufacturing capabilities to support our joint forces is more important than ever. And before I open the floor to questions, I wanted to mention that we will be presenting at the IDEAS conference next week in Dallas, Texas, at the Sidoti Year End Virtual Investor Conference later in December and at the Oppenheimer Conference in February of 2026. Information for these events will be posted on our investor website, and I hope that many of you can join us for some of those presentations and meetings. Operator, can you please open up the line now and allow our first question? Operator: [Operator Instructions] Your first question comes from the line of Anja Soderstrom of Sidoti. Anja Soderstrom: Congrats on the appointment, Cameron. Cameron Pforr: Yes. Thank you, Anja. Anja Soderstrom: You noted the increased spend on research and development. Is there a specific area you are increasing it within? And can you talk a little bit about what you're doing there? Cameron Pforr: Yes. No, it's really bringing on board design engineers. We've been spending a lot of -- we're a filter and oscillator company, but every type of filter oscillator we build takes some different expertise levels of areas. So that's one area we're trying to hire. And this is really something that helps us drive the revenue because we're a very engineering-focused company, and our sales teams really get our engineers engaged very early with our customer prospects to work on a kind of a codeveloped solution. So it's really a hiring. Anja Soderstrom: Okay. And then also, you mentioned industrials have started to pick up for you. What are your sort of main programs there within Industrial? Cameron Pforr: Yes. I think the biggest area in the short term, that's an area that we've put in several markets. So test and measurement is one of the bigger ones, oil and gas, like downhole drilling, telecom also fits into that area. But what's been driving as recent was some test and measurement revenues. Anja Soderstrom: Okay. And then you also mentioned the recent search in Avionics. How are you seeing that trending in the fourth quarter? Cameron Pforr: Right. So I kind of mentioned on some earlier calls that we supply through several other primes, really all the Airbus and Boeing aircraft builds. And those are -- those companies have really started reengaging their backlogs are increasing really dramatically, and they're moving towards higher production rates. We did see orders from Boeing, for example, earlier in the year and maybe earlier than we expected, frankly, just kind of given the events there and the inventory we thought they had. And we did have a big order and a large contract for commercial aircraft earlier in the year, and we're starting to see orders against that contract. Anja Soderstrom: Okay. And then lastly, we've been talking about tariffs before. But what can you do there to sort of combat that? Cameron Pforr: Yes. That's a great question, and it's kind of an ever-moving target, as most of the people on the line probably figure now at this point in time. We really anticipate probably tariffs remaining in place for the next 3 years unless Supreme Court takes some action there. So maybe something we have to live at this point. It's costing us about 1% to 1.5% of revenue in terms of the impact on gross margins. There are a couple of things we're doing. So one is we're examining the materials that we order what has to be shipped into the country and what can be for certain parts we order can they be shipped directly with customers. So we are making some changes in that regard. We are actively working with our customers to enact a clause of the FAR, which allows us to get tariff relief for defense products that are specifically for U.S. forces that doesn't apply to shipments to other NATO countries. And we've also passed along some tariff charges, and we think that's fair and that's part of our contract. But we are, at this point in time, looking to incorporate tariff charges and much of our pricing for new orders. So that's just a reality. Anja Soderstrom: Okay. And like when would that become effective then? How much longer are we going to have this headwind? Cameron Pforr: Yes. No, we're -- on the FAR exemptions, that's really just starting to come into effect now just because the way the program is set up, you need to do it on the front end when you're ordering materials for a future shipment. And so for all inventory that we had in stock, we couldn't use that exemption. But for new orders we are putting that into effect. On pricing, that's something that we're having to factor into our pricing currently. Operator: With no -- Next question comes from the line of Otto Haeg of Farnam Street. Otto Haeg: Congrats on the appointment. A quick question on the Indiana Microelectronics partnership that you announced. Can you -- how the tunable products, if you will, and integrating their technology into or with MPTI, how do you see that working? What products are we talking about? Can you -- what can you tell us about that partnership? Cameron Pforr: Yes. We're actually very excited about it. It's a company we've known for a long time, and we've been keen to work with them in the past. We're glad we've come to agreement about how to do it, how to support each other. They're a really great design team. They've won some very interesting contracts, primarily with the military but other areas as well. And one of the issues, I think, for them was really how do they scale their business. So we've really formed a partnership where we'll work with them on the sales and marketing of their designs. And then also working with them once we procure an order on the manufacturability of the product. So when we go to the market, we provide a quote for someone, our engineers working with their engineers to make sure that we're going to be delivering can be manufactured effectively. And they make a number of tunable filters. They're really kind of software tunable and the processes is not too difficult. So we spent time with their team, really understanding that. We think that's something we can stand up pretty quickly without a lot of CapEx on either party side. And we've already actually had some sales wins. So we're excited about where that can go. Otto Haeg: Do you think this is something where these could turn into rather large orders over time, programs? Or is this going to be kind of smaller programs or smaller products, if you will, runs? Can you just elaborate on that a little bit? Cameron Pforr: Yes. I mean we're obviously very early in the relationship, but we actually think it can grow into some fairly large contracts. They have already made great headway with several customers of their own that would like to scale production. And we think that just with the size of our manufacturer rep sales force, we'll find a lot of other opportunities to work together. Otto Haeg: Excellent. One additional, if I can. Can you give us an update on Connectivity partners have -- it doesn't appear we've made any investments there? Or what's happening in terms of them raising capital? Any update on what's happening with Connectivity? Cameron Pforr: Yes. There's no investment on M-tron's part to date. I do know that they've been meeting with companies and identifying like targets, and so they're trying to really build up a backlog of opportunities to grow their fundraising marketing and just prepped in terms of standing up the firm, but no current news in terms of how it impacts us. Operator: With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Mr. Pforr for closing remarks. Cameron Pforr: Okay. Well, thank you all for joining, and I appreciate the questions, Anja and Otto. Wishing everyone on the call, a great day, and I appreciate your interest in the firm. Operator: This concludes today's conference call. You may now disconnect.
Operator: Ladies and gentlemen, welcome to today's conference call of Wienerberger's Q1 to Q3 2025 Results. I'm Sarah, your operator for today. [Operator Instructions] And the conference is being recorded [Operator Instructions] We're looking forward to the presentation. And with this, I hand over to Therese Jander. Therese Jander: Good morning, everyone, and warm welcome to Wienerberger's Q1 to Q3 results update. Thank you for taking the time to join us today. My name is Therese Jander, and I'm pleased to be hosting this call from the headquarters in Vienna. I'm joined by our CFO, Dagmar Steinert; and a special welcome also to our CEO, Heimo Scheuch, who is calling in today from Hungary. We will begin with a brief presentation of the key developments and the financials for the period. And afterwards, we will open the line for questions. With that, I will hand over to Mr. Scheuch. Heimo Scheuch: Thank you, Therese, and a warm welcome also from my side. You will wonder why I speak from Hungary. As you recall, we explained to you that the roofing is a very major attention point for our future development. And as you are well aware, we have been working on two new factories for concrete roof tiles and one is in Hungary, one is in the Southeast of London. Both of them are now operational. The one in England is already fully on the market and the one here in Hungary is about to go on stream. And so we are glad to say that in a record time of more or less 1 year, we have put two new factories up in this market, and we grow our exposure to this very important segment of ours, the roofing segment in Europe. So that's why I'm here today with our Hungarian management. But let's go now to our set of results for quarter 3. Ladies and gentlemen, if you look at our results and operating EBITDA was EUR 202 million EBITDA in the third quarter comes in more or less or roughly on the level of 2024, so in line with last year's performance, a slight margin expansion when you compare to last year, and the revenue is pretty much on the same level of last year as well. All of this is a very strong performance if you look at the underlying market. Why? Because we have seen, as we have told you, in the New Residential Housing segment, no major developments as far as uptick is concerned. On the contrary, if we move, first of all, to North America. The North American market has suffered considerably in the segment of New Residential Housing, 1 and 2 family houses, especially. Let's start for a change with Canada, Ontario, the Toronto market, down compared to the previous year, 2024, this year with more than 30%. So we had to digest quite a significant decline in activity in this very important market. That's the major market of Canada anyway, Ontario. So you've seen here a strong decline in the new residential housing market. The U.S. as such, has also suffered due to a lot of reasons. The mortgage rates are still pretty high. You have here also the instability, volatility, politically speaking. I don't have to expand on that. Everybody follows it very clearly and in detail. So this is obviously also an impact on the new residential housing market in the U.S. And therefore, we have a decline of about 10% in this market as well to digest when it comes to our activities. Keep in mind that this North American operation is the most exposed one to new residential housing market as it comes to Wienerberger because this is where we still have a majority of our business that is exposed to new residential housing. If we move now more to Europe, we have here, I would say, a situation where we see in the U.K. and in Ireland, a different market development. We have seen that especially now in -- after the summer that the U.K. is also dropping in activity rate. That's due to mortgage rates have not come down as everybody has expected. There's also some instability in the marketplace. And here with about -- when we compare running rates about 9% down in new residential housing market when we talk about September, October in this period of the year. So we have seen no pickup; on the contrary, a decline in activity. And also in Ireland, a slight decline in this new residential housing market. However, and this is now important because this is a major difference. If you look at the U.K., Irish operations of Wienerberger, they have a majority of its exposure already in the roofing and in the piping business. So renovation, infrastructure plays an important role. And therefore, this business has performed overall better because here, stability in turnover and in profitability. So we have not suffered so much when it comes to the profitability of the business in this region due to this new business that we have, a business that is far more oriented to renovation and to infrastructure. So a very important point to mention here to the respect of U.K. and Ireland. On the continent, as such, we have seen a mixed picture. All of us have expected a better running rate when it comes to new residential housing in all of the European markets. This has not happened. The only market actually that performed according to our expectations is the Netherlands. So the rest of Europe, Western Europe, especially was down. There's no sort of uptick in the market as we speak. There are, however, some encouraging signs, if I may say so, in Germany and France because the permits are up in these two countries. So we can expect, hopefully, into the next year, a little better development in new residential housing. Renovation has supported the strong roofing performance in the region. So there's a lot of activity, as I may say so on the roof maintenance. So this has helped our business there. And infrastructures have been more or less stable, the spending. So here, a trend that we have basically built on the beginning of the year. And if you look now to Eastern Europe, Eastern Europe has been also a market where we have not seen any expansion of new residential housing. So I would say, a rather stable, subdued market in a lot of these Eastern Europe economies. The only country where we have seen a little uptick is the one I'm currently in, in Hungary. This is to political reasons. Next year, we have Hungarian elections. So the Hungarian government has launched a special initiative to give sort of better mortgage rates to be first-time homebuilders and buyers. So all-in-all, when you look at Wienerberger's performance in these geographies, and we have added some charts in the presentation. I don't need to go into the details, but you see actually three things. First of all, that the mortgage rates have not come down as we originally expected them to do so in order to stimulate new residential housing. So that's the first very important point. The second one is that the new residential housing markets, nearly in all of the markets except, as I mentioned, the Dutch market and the Hungarian are down. So there's no uptick in these markets. So we were confronted with markets that are below the '24 levels. And thirdly, which is also very positive, that Wienerberger in ceramics and pipes outperformed the underlying market due to our focus on innovation, very strong focus on our customers. And therefore, we were able to outperform the underlying market. So I think this is the nutshell of the current environment that we are in. I don't see any major changes, by the way, for the rest of the year. So after the third quarter into October, November, December, we will see the same trend. So this declining environment will continue for the rest of the year. So this is, I think, from my perspective, the major sort of underlying developments. If we now move a little bit on from the macro and the sort of performance-oriented one to some of the numbers that Dagmar will elaborate a little later. So from a revenue perspective, you see here that we are more or less a little bit up by 4% compared to last year to about EUR 3.5 billion. EBITDA is slightly down from last year. This is obviously due to the fact that we have a lesser contribution from the new residential housing segment and also some cost pressure when it comes to labor cost and energy costs. But here, Dagmar will elaborate a little bit more in detail. On the profit after tax side and the earnings per share side, we have a strong increase due to the fact that, obviously, there's no impact on some of the balance sheet issues that we had due to the sale of the Russian business last year. This year, obviously, is a normalized year. So it will be a strong uptick in these two aspects. If we now move on a little bit more to the migration, as I call it, from Wienerberger's perspective, you see here that over the years, and I explained this already a few times, but you see it, especially in these tough market environments that Wienerberger is operating in, how important it is and it was to migrate the business from a purely New Residential Housing business to now a much stronger resilient business based on new build infrastructure and especially renovation. So I think this has shown clearly that from a strategic path, we are on the right way forward. We will continue to do so. And I think the current environment offers us opportunities. Let's move a little bit on in this external growth field. We have done several acquisitions. I mean when we look at Wienerberger over the last 10 years, it's by far more than 41 (sic) [ 40 ] acquisitions that we did. So all of them are very strongly value enhancing. We have been very disciplined first of all, with the purchase price, with the integration and the synergies. When we take the biggest one that we did, Terreal last year, we are fully on track with respect to synergies. So all the synergies that we have originally planned for are coming in actually a little bit better already. The market as such, the underlying is obviously weaker. I don't have to explain that. I did it already at the introduction. So here, in this difficult market environment from a pricing perspective and synergy perspective, we are doing better as we originally planned. So here, we see the strong operational leverage that we have when we do such acquisitions. So they are from the first day onwards value enhancing. When you look at Terreal, I would say, what the difference or what the changes in prediction is that we see that the full contribution in EBITDA due to the fact that the markets are not yet picking up. It will be probably a year more that we gain this EUR 150 million EBITDA contribution. So we have put here the chart clearly in line for you that we expect this contribution a year later. However, as I said, from a synergy and cost perspective, we have already achieved all of it. Let's look a little bit what we have done so far in this year 2025. Again, here, an interesting set of development because we have focused on water management, clearly when it comes to all sorts of innovative features like creating a scalable platform for capturing growth when it comes to water quality to measure the volume of water and to help water companies in managing their water systems. So that's WIONIQ, a strongly growing business when it comes to IT-based and artificial intelligence-based solutions for water management. Then we have done a very important step in Ireland in order to consolidate further the market when it comes to infrastructure, drainage, roofline and cable duction systems as a consolidation in this market, so fully effective there as well. And then we have bought 100% of our GSEi business. That's a framing business for solar panels. That's not solar panels as such. It's a framing operation where we have now 100%, which is growing fast because here, we have this integrated solution for roofs, and we grow not only in France, but especially also outside France very quickly. So when we look strategically speaking, infrastructure and renovation are the key drivers also this year in this market circumstances where new residential housing is under pressure. So we will focus on this more in -- when we talk about infrastructure, it's the expansion of our piping operations, water management, especially. Here, we see a high degree of growth potential in all of our markets that we are active in. Keep in mind that Wienerberger is now with its operations in the north of Europe, now clear #1. We grow our business strongly in U.K. and Ireland, and we are also very strongly growing in the Benelux, especially in the Netherlands. And the next focus areas will be the Eastern part of Europe where we want to grow this business and obviously also in Western Europe, where we see still potential for further growth. So here, organic and inorganic growth is on the list for Wienerberger in the years to come. Let's move then a little bit to the renovation market. The renovation market is for Wienerberger, especially the roof market. Here with the acquisition of Terreal and now the Framing business for solar panels, we see here a strong potential for further growth. We will focus on accessories and the parts that the roof needs on the roof and under the roof. We have here the necessary platform to do so. And we have seen that especially in situations where the markets get a little tougher, we have now strong market shares in order to have pricing power on one side, but also to push innovation and solutions through. So these are two especially very important markets for growth for Wienerberger. And if I may, before I hand over to Dagmar, say a general word with respect to acquisitions as such. When we look at the current market environment in North America and in Europe, it offers unique opportunities for Wienerberger for attractive growth. Why? Because a lot of small and midsized companies, family-owned businesses in such difficult moments, they are not only driven by the macroeconomic development, but also the regulatory development, especially in Europe with all the new regulations coming its way. So here, we have a strong potential for further growth in order to expand our operations and to deepen the value creation when we talk about Solution businesses on the roof and in the infrastructure field, but also in new residential housing. So I think here, we are ideally positioned as Wienerberger to grow. We have shown that we are a world-class operator when we integrate all these sort of operations very quickly, very efficiently on the platform side when it comes to systems, like the whole back office, but on the front office as well due to our strong sales approach in the different geographies that we are active in, so a good base for further growth at Wienerberger. So Dagmar, I may hand over to you to elaborate a little bit more on the financials. Thank you. Dagmar Steinert: Yes. Thank you very much, Heimo, and a warm welcome from my side here from Vienna as well. I will go now a little bit more into details about our financials. And just to sum it up a little bit, our first 9 months result shows a really solid performance in this weak new build market, as Heimo explained. And our group revenues increased to EUR 3.5 billion, and operating EBITDA came in at EUR 584 million. Our margin amounts to 16.6%. So let's now look a little bit more into detail and let's have a deeper look at the revenue and operating EBITDA bridge. Our revenue development. We increased our sales by 4%, and that is driven, as you can see, by scope. And that's mainly due to our Terreal acquisition, where we have a strong roofing performance and which pays off in the renovation volume increase. Organically, we grew by 1%, what we lost as well on the currency side via translation. If you look at the operating EBITDA, it is slightly below previous year. And organically, we missed our previous year's performance and show there minus 4%, and that's due to still ongoing cost inflation and that our pricing overall for the whole group is more or less in par with previous year. And therefore, we didn't manage so far to cover our cost inflation. On the currency side, it's minus 1% or minus EUR 5 million. And our M&A activities gave us EUR 13 million additional EBITDA. Overall, our profitability remains robust, and it's overall demonstrating the flexibility of our operations. If we now have a look at our segments, starting with Western Europe. There, as you can see, our revenues increased by 8%, and that's a result of strong renovation activities. Roofing is there the main driver and Belgium, Netherlands as well as France remain there the top performers. The new residential housing market, of course, is, as already explained, really weak, but we see a meaningful growth in Netherlands there. The U.K. market is difficult for us, especially in new build. But as we are strong in renovation and piping activities there, we outperformed that market as well. Looking at the operating EBITDA, it's up 15%. Of course, part of that is a result of our acquisitions of scope. But we continued to show a solid performance. We have a solid cost management. And therefore, due to higher utilization, we managed to increase our margin. With that, I would like to come to our development in Eastern Europe. In Eastern Europe, our revenue grew by 2%, and that was mainly supported by slightly higher clay block volumes. On the earnings side, operating EBITDA, it's down by minus 7%, but we are still showing a margin of 18.1%. In Eastern Europe, we have very high burdens on cost inflation, especially on the energy side. And there, it's mainly gas. There, we increased. There, we had to face a very deep increase of prices. Markets are difficult in Eastern Europe as well. And in the new residential housing market, only Hungary shows a significant growth, and that's due to government support because there, they support fixed interest rates for first-time house buyers. Let's now turn to the development in North America. North America at the moment is quite a difficult market. And of course, what you see in these pictures as well is a negative impact from currency translation. Our external revenues came down by minus 8%, and that is due to weaker brick demand and yes, the difficult markets. Our piping volumes improved, but we faced there due to lower raw material prices as well lower prices on our side. Operating EBITDA came in at EUR 106 million, and we still show a very healthy margin of 19%. North America remains for us a really profitable and strategically important region, and we are well positioned for recovery once new residential housing market returns. In this challenging environment, we have set up a new program Fit for Growth. And that program Fit for Growth that will deliver structural savings across all regions. And what are we doing with that? We are focusing on processes. We want to simplify processes. We want to reduce overhead. We want to become a much more agile organization, and we want to be as fast as possible towards our customers. Part of that program as well is the topic of optimizing production. We target EUR 15 million to EUR 20 million annual savings. That definitely is a run rate. And with that, of course, we want to ensure that we are best-in-class serving our customers and have a really lean organization. I already said -- mentioned in our half year call, and of course, it still remains as it is, we face very high cost inflation, especially on the gas prices. And therefore, I would like to give you a little bit deeper insight how it works. As you know, we are fixing prices for our future volumes of gas, which we need. And in the past, we benefited from that quite a lot. So in the years 2024 and 2025, for instance, we are buying gas for prices below market price. Anyhow, the prices we are paying today in 2025 are far above the levels we used to pay in the last year. Giving you a little bit of an outlook for the year 2026 due to the development of the market prices for gas prices compared with the year 2025 came down. We still, of course, fixed a certain amount. But there, in the next year 2026, as far as we are able to see it as of today, we will not benefit as much as we did in this year and the last years. I hope that will give you a better understanding how energy costs work within our group. With that, let me turn to our free cash flow. Our free cash flow came in at EUR 155 million, and that's reflecting a solid cash generation for the first 9 months. As you might see, we are a little bit more investing in our working capital compared to this previous year, but that's just a seasonal thing because as you know, we are always building up inventory during the year, especially during the first 9 months. Maintenance CapEx is on the level of previous year, and there's no bigger change in lease payments as well. Having said that, I would like to move over to our net debt development. Our net debt at the end of September amounts to EUR 1.9 billion. And the leverage of that is 2.5. By the year-end 2024, we showed a number of 2.3. As you can see within the development, we have our free cash flow of EUR 155 million. Our growth CapEx and M&A amounts to EUR 105 million. And of course, we paid dividend and we did some share buybacks, which amount to EUR 135 million. And I can assure you we have an ongoing disciplined CapEx and cash management, and we will keep the leverage stable and of course, I'm sure that we won't increase last year's number. So with that, before we come to the outlook, I would just like to sum up the -- for me, most important topics of our performance for the first 9 months. Looking at our macroeconomic environment, we are still facing high mortgage rates. On the other hand, new residential housing market is developing not as stable or positive as we originally expected, except the Netherlands and Hungarian market. And I would like to point out with our performance with these 9 months, we, as Wienerberger, outperformed the ceramic market and the pipe market regarding the market environment. And with that, I would like to hand over again to Heimo. Heimo Scheuch: Thank you, Dagmar. And I think you made it very clear, and I can only sort of add to that, that in this complex, volatile and really fast-changing environment, Wienerberger has proven that our not only strategy mid and long term, but our sort of proactive management style focusing on costs and being very quickly when it comes to adjustments and efficiency improvements have proven right. Some of you will say, why didn't you start earlier to talk about a change in the outlook because at half year, we said, listen, from a perspective that we see summer months, July, August are always weak months and don't give a lot of indications. When we look at the performance of quarter 3 and the September, especially, we were hopeful that actually the markets as such were picking slightly up or were developing in a better way. However, we have unfortunately seen that especially in North America and the U.K. were driving in the other direction. So again, we had here, obviously, to experience not only further declines but a much weaker environment in new residential housing that we originally anticipated. Obviously, when we gave the full year guidance, we said at the beginning of the year, under two assumptions, that interest rates would come down and that the new residential housing market will slightly improve, especially in the second half of 2025 and show positive trends. Both didn't materialize. On the contrary, and this is, I think, the strong message that we can send to you, we had to suffer a completely different environment than we originally planned for. And under these circumstances, I think this performance that we show that we are actually better performing than last year in an even lower market environment shows that we really work hard on our things that we can influence. As Dagmar has shown, we have already implemented a Fit for Growth project again in order to make us even more efficient in more of the businesses. We have proven that from a pricing point of view, we are very disciplined when it comes to pricing and obviously, also in digesting a very significant cost increase when it comes to wages, especially labor costs and on the energy side. So all of this coming our way, we had to digest this year. And so I think it has to be seen under these circumstances that we have a very solid, strong performance. The renovation markets are the only markets that remain stable as we have foreseen it. The infrastructure markets took a slight hit also due to the budgeting constraints that especially European countries imposed due to the shift more into defense budgets and to defense spending away from infrastructure. So these are things that we have to look at also from a perspective of current development. Let's then summarize everything as the performance goes for the rest of the year. Some of you will ask Dagmar and myself already in a couple of minutes, are you really sure you will achieve the EUR 750 million? Yes, we will. The impact of FX, as Dagmar has explained in detail, is also an important one which we need to consider. But like-for-like basis, I think the EUR 750 million is the number that we will achieve. We are working hard. It means also for us a good and very strong quarter 4, where we work on right now and where, as I said, all the measures that we implement ourselves and with which we can influence are playing out in our favor. The rest we have to take as they come. So this is, I think, a very important and clear message that Wienerberger does everything in order to improve its business in this, I would call it, a significant slowdown in new residential housing around our markets. However, if I think -- and very important also, I think that what Dagmar says and she is keeping really a strict discipline in the company on the net debt position here. You have seen how disciplined we are on the CapEx and the spending side. So at the year-end, we will be in the range of 2.2 to 2.3 EBITDA to net debt. So here, again, strong performance when it comes to the financials of the company and the balance sheet discipline. Let's not keep out of mind also the midterm and our development. Some of you will say, do you still have the EUR 1.2 billion as a midterm target in mind? Yes, of course. Why? Because obviously, the company has this potential to grow to this number, provided that some criteria play out. And we've put here, I think, four, that are very clear to determine on this slide. First of all, further interest rates cut have to happen. You have seen how high actually the mortgage rates are. So we need to keep more an eye not only interest rates in general, but especially mortgage rates and the mortgage policies in the different geographies that we are operating in because it gives a signal of affordability for people to buy into the housing -- new residential housing market or not. Then something which is very interesting to monitor for us is this European Social Housing plan that might kick in. There's a lot of discussions. We have meeting at the month end again in Brussels with the commissioner and the commission about this. So this could also be of a very important part for the new residential housing market for us in the not-too-distant future. Obviously, potential peace in the Ukraine will boost the whole region of Eastern Europe. And therefore, we hope for that and for the people, especially in the Ukraine. And then also the U.S. market recovery because the potential and the demand level is substantial also in these geographies in Canada and the U.S. However, as I said earlier, the mortgage rates need to come down and a little bit more political stability should be also in the U.S. in order to stimulate the new residential housing market. Under these conditions, I think we are very well positioned in order to achieve this number. And Wienerberger from an efficiency perspective, cost base perspective and also the very important industrial base that we have now is a very strong one that we can work on and continue. I think what you should take away from this call, it is more than a quarter call because we gave you some update on strategy, also the importance of the migration of this business, Wienerberger from new residential to a much broader business and a resilient business proves right, gives the group a very strong direction when it comes to stability in cash flows and in margins, but also a growth base for the future. And I think the U.K. and Ireland is a very, very good example if you compare the two, the U.K. and Ireland to North America. North America, we are still very exposed to new residential housing. That's why we'll take a hit there as far as profitability is concerned. And when we look our performance compared to the competitors that are more into new residential housing in U.K., especially, it's a much stronger one. It's a much more resilient one and margin-wise, a much better one because the business is already very balanced when it comes to infrastructure and renovation. So I would like to close on these statements strategically, and thank you very much for your attention. And Dagmar and myself, as always, will take your questions. Operator: [Operator Instructions] The first question comes from the line from Yassine Touahri from On Field Investment Research. Yassine Touahri: I think I would have two questions. First, I think you had cost inflation of 4%, 5% in 2025. You're expecting, I understand a bit more energy inflation in 2026. Should we expect more of a mid-single-digit cost inflation next year? Or should we expect something similar to what we've seen in 2025? That would be my first question. Then my second question is that we've seen so far that prices has been very broadly stable. So I think you've not been able to offset this cost inflation and all the benefits from the savings that you've been implementing have been absorbed by this cost inflation. How do you think about next year? Have you already started to announce price increase? Do you see your competitor announcing price increase in an environment where the volume is a bit more muted that you were initially expecting? Do you believe that any price increase that have been announced could stick? It would be great to get a sense of the scenario that we've seen in 2025 where a lot of your efforts are absorbed by cost inflation could be [ overproduced ] or not next year? Heimo Scheuch: Thank you very much, by the way, for these very important questions. I will leave, if I may, Dagmar, to you on the cost inflation side, and we'll focus on the price side to start with. I think we have shown a great discipline in pricing throughout the group this year. And you are absolutely right in such an environment, especially in the new build sector, it's difficult to increase prices. However, we were able to do so in some geographies, so that cannot be sort of said with respect to the whole group right now. And 2026, it's too early to give here a statement. However, as always, we start in November working on the markets, working with our customers to prepare them. So you will see a more detailed picture, I would say, in March of next year. If they stick or not, we will certainly do something in the pricing. It's not going to be huge steps, but I would say sufficient steps, and this is what we are going to work on for '26. But as I say, it's a difficult market environment when we talk about new residential housing. So I don't expect here big jumps, but we always work on this very hard in order to improve renovation and infrastructure will be a little different. I hand over to Dagmar. Dagmar Steinert: Yes. Well, regarding cost inflation, yes, we face cost inflation between 4%, 4.5% for the running year. And yes, we will see some cost inflation, of course, next year as well. But I don't expect it to be at the level of the cost inflation 2025. And regarding the energy, what I tried to explain regarding our gas price, what we are paying in the year 2026 that will be not above market price. But as we benefited from energy fixing in the running year, we will face some kind of inflation regarding the energy prices in the year 2026. Yassine Touahri: So just to understand on inflation, how the -- the 4% to 4.5% that you're seeing in 2025, is it mostly -- it's a mix of labor cost and energy costs. When you look at 2026, what would be the difference? You would see less labor cost inflation and energy inflation, something similar. So overall, you would expect something which is less than the 4% to 4.5% that we're seeing in 2025. Is that the right way to look at it? Dagmar Steinert: That's the right way to look at it, yes. Yassine Touahri: And -- but it's too early for you to give an idea if it's closer to 2% or 3% or 4%. Dagmar Steinert: Yes, that's too early because we are still in the phase of preparing everything. And of course, there are price movements on the cost side as well. It will be below the inflation of the running year, but it's too early, far too early to give you a decent number. Operator: So -- and then we have the next question from the line from Cedar Ekblom. Cedar Ekblom: I just had a question on that cost point again. Just to confirm that 4% to 4.5% is across all buckets of costs, so energy, labor, et cetera. Could you give us a little bit of color on what the actual portion was for your fixed cost buckets? So that's the first question, just to get a little bit of differentiation there. And then can you just remind us, there's a couple of cost-cutting programs that are now in the business. And we've got the new announcement today. Can you just remind us how to think about efficiency gains into next year? Is it just the EUR 15 million to EUR 20 million? Or is there anything also coming from other programs that have been in place in this business for some time? Heimo Scheuch: Thank you, Cedar, for the very spot on questions. Let me say something on the cost savings side and the program. The Fit for Growth is obviously, as Dagmar explained, the new program that will be added on to the existing ones. You remember that we said that the existing ones have come to an end and have proven to be very effective in the business. So they will obviously produce some additional input also next year because they are running these programs and they're not finished yet, as you correctly pointed out. So these will be to be added on and Dagmar will give by all due means and respect a number at the beginning of next year. And I think if you bear with us a little bit, I think we are putting together budgets right now in this volatile times, it's not easy. We have also indicated to you that we would like to give you a much more detailed outlook and overview of the business early next year in a Capital Markets Day. So I think if you can sort of be patient with us on this subject to give you here a clear update. But to answer the question, the EUR 15 million to EUR 20 million will be the new program running rate for -- as we speak from next year onwards and some inflow comes also from the existing programs. And for the cost structure and the fixed cost, I hand over to Dagmar, please. Dagmar Steinert: Yes. Our cost structure is mainly dominated by personnel expenses. They account for roughly above 30% of our overall costs and our energy costs are 10% of our overall costs. And these two portions dominate, of course, our cost inflation. And all the rest, if it's like raw material, if it's rents, if it's consultants, IT costs, whatsoever, of course, there we face cost inflation as well. But on the other hand, if we have a very disciplined way to approach that, we manage to keep it low. And therefore, I would like to reduce for you our main cost drivers regarding inflation just to energy and personnel expenses. Cedar Ekblom: That's really helpful. What I'm trying to understand is, can you give us a bit of color on what the sort of personnel expense inflation is? Because what I'm trying to break out is cost inflation on items that are within your control relative to cost inflation on the energy side of things, which obviously, you can do your hedging, but to some extent, that's much more a factor that you can't control. So could you give us a number for personnel cost inflation if the overall cost is 4% to 4.5%? Dagmar Steinert: Well, the cost inflation regarding personnel expenses in the running year in 2025 is roughly for the group overall at 5%, and it will be below 5% 2026. Cedar Ekblom: That's helpful. No more questions from me. Heimo Scheuch: Cedar, keep in mind that we had higher cost inflation, obviously, in Eastern Europe also this running year. You remember when we told you that there is a pressure in the labor market and especially in Eastern Europe, strong increases on labor and the collective bargaining agreement. So this is, I think, what Dagmar was referring to. Operator: We now have a question from the line -- by now the last question from Julian Radlinger. Julian Radlinger: A couple of ones left for me. So first of all, the implied Q4 guidance means that EBITDA in Q4 could actually be up year-on-year despite all the headwinds you've called out. And so if that's the outcome, I'm just wondering what would that be driven by? Is that volume? Is that cost management? And what scenario would EBITDA be up in the fourth quarter? And then secondly, so your margins actually expanded in Western Europe in Q3 on a year-on-year basis. Is that a clean result? Is that just higher capacity utilization like you wrote in the presentation? Or is there any kind of one-off effects in there that we should be aware of? And then just maybe a very quick last one. How much of your energy costs are now fixed for 2026? So how much visibility at this point do you have? I know it's usually quite a lot on a 12-month forward basis. Heimo Scheuch: Dagmar, may I hand over to you to do this or if you want me, then you say. Dagmar Steinert: No, no, that's fine. I do it. I will start with the energy. There, we fixed roughly overall for the whole group between 50% and 60% of the volume. And so there is still a lot of room for movement. Your question regarding our Q3 results, if there are any major one-offs? No, there are not any major one-offs included in our Q3 results. And it's a result of our strong performance in renovation and outperforming the market environment. And of course, regarding our cost discipline, things starting to pay off. And if we look at our adjusted full year outlook for the running year, if we deliver EUR 750 million operating EBITDA. That, of course -- it's mathematic. It's very easy. It means that we have to reach in the first -- in the fourth quarter of the running year, something between -- above EUR 160 million EBITDA. And that, of course, is above previous year. And I mean, we -- yes, at the moment, we are overall in our pricing more or less stable on the previous year's level. But as we told you, we see markets where we a little outperform even on the pricing side, the markets, we have our initiatives, the running ones, the Fit for Growth where we benefit from. And therefore, we are confident to deliver. Operator: There are no more virtual hands at this time. I would like to turn the conference back over to Therese Jander for any closing remarks. Therese Jander: Thank you. I would like to state firstly, that our -- you should save the date for our next Capital Markets Day, which we have scheduled now for the 24th of February next year. So I just wanted to add that to the conversation, and we will get you more information when it's a little bit closer. And by this, I would like to thank you all for joining us today and for all your questions, and we truly appreciate your engagement. And therefore, we also hope to see you again for our next results call, which is on the 18th of February. Until then, take care and goodbye from all of us here at Wienerberger. Heimo Scheuch: May I just add something Therese in the name of Dagmar and myself. We all wish you a happy ending towards the year because with some of you, we won't meet personally. So enjoy this season and all the best in this very volatile times and exciting times. But I think we gave you a good outlook for Wienerberger as far as our markets are concerned and be assured that Dagmar and myself will have our hands full for the rest of the year, as she said. So all the best, and see you soon. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Operator: Welcome to Surgical Science Q3 Report 2025 Presentation. [Operator Instructions] Now I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead. Tom Englund: Welcome to this earnings call for Surgical Science for Q3 2025. My name is Tom Englund, CEO. And with me today, I have our CFO, Anna Ahlberg. Quarter 3 was a clear step in the right direction for Surgical Science. Total sales of SEK 264 million was an all-time high for the company, and this result was despite the negative impact on sales from currencies of 5 percentage points. The group grew by 14% compared to the same quarter last year and by 19% adjusted for currency effects. Adjusted EBIT amounted to SEK 33 million and was negatively impacted by restructuring costs of SEK 2 million. Adjusted for these costs, profitability was 13%. Since around 6 months back, we have initiated a set of activities to improve our profitability, primarily focused on our hardware and software simulator business, that is not the robotics or development business. And we're now happy to see that these activities are beginning to have an effect, and we expect further improvements in the quarters to come. Speaking about educational products, this business unit stabilized during the quarter from the weak revenue of the previous quarter. We saw a growth of 8% compared to the same quarter in 2024 and 26% compared to the previous quarter. We saw good demand and customer activity in several regions during the quarter, with Europe showing the strongest growth at 46%. The entire ultrasound simulation segment, which became a strategic focus area in connection with the acquisition of Intelligent Ultrasound, also developed positively with high customer demand in all markets except for the U.K. In the U.K., we continue to see problems and sluggishness in the allocation of funds from the National Health Service, NHS, which is a key source of funding for our products, and this had a strong negative impact on sales in this market. The Americas grew by 9%, which was lower than our expectations and as in previous quarters, due to extended sales cycles in a tougher budgetary climate for hospitals. Sales in the U.S. for comparable units, that is when we exclude Intelligent ultrasound, decreased. Our sales team in the U.S. report signs that the market is becoming more active, and this is also visible in the number of quotes we send out and how much leads we generate inbound and external events. Still, for quarter 3, sales in the U.S. was a disappointment. During the quarter, we saw 2 prominent associations launch training programs that include certification based on simulators from surgical science. Together with the American Society for Gastrointestinal Endoscopy, ASGE, we launched a plan for training and certification in diagnostic Endoscopy or so-called EUS curriculum, which is based on our GI Mentor simulator. For the first time ever, trainees can earn an ASGE certificate of completion directly through the simulator, marking a major step towards standardization of certification. And this is important since it elevates simulation from a training tool to a recognized certification platform. In addition, our robotics Mentor robotic surgery simulator now includes the GSA curriculum from the European Academy of Gynecology Surgery's recognized framework for training in robotic surgery. AGS and Surgical Science have together developed a robotic psychomotor skills curriculum and test where all exercises have been validated and benchmarked scientifically. These 2 collaborations are important steps in our work to make simulation a widely used and recognized tool in both the training, but also the certification of physicians and health care personnel. The result for Surgical Science will be an increased overall demand for our products required for certification and also that our customers will find it easier to obtain budgetary approval for these products. Very exciting developments. Switching over to industry OEM. Industry OEM performed well during the quarter with sales increasing by 20%. Development revenue increased by 131% compared with the same quarter in 2024. And the business area saw a strong inflow of new development projects, both in medical device simulation and robotics. In the medical device simulation area, we secured what is potentially the largest single deal in the company's history in this segment during the quarter for one of the world's largest medical device companies. The contract spans over 4 years. The first phase will be a development project, including sales of a first batch of simulators for the customers' training and sales activities. And then further simulators will be ordered in the coming years. We initiated the project as well as recognized development revenue from the project during the quarter. Simulation is rapidly becoming a critical tool for these customers in their sales, marketing and customer trading activities. In addition to this, we signed another large order with the same customer during the quarter, which proves our ability to sell multiple broad projects to the same customer and cements our preferred supplier status with the customer. In the robotics product area, our RobotiX Express has been very well received in the market. RobotiX Express is a simulator for surgeons to become proficient in the robotic surgery. The demand for training robotic surgery is very, very strong and is expected to increase further in the coming years as hospitals increasingly switch to this type of minimally invasive surgery. Our ability to offer a solution to this training challenge faced both by hospitals as well as by the robotics companies will enable more surgeons to be trained more effectively in this field. Due to the length of the sales cycles, we expect significant revenue impact from RobotiX Express to start during quarter 1 of 2026. License revenue for the third quarter amounted to SEK 66 million, which is a slight increase compared with the same period in the preceding year despite the stronger Swedish krona. Intuitive, Surgical Science's biggest customer reported 19% procedure growth for the da Vinci system in the third quarter and the installed base grew by 13%, primarily driven by the new da Vinci 5 platform. In the U.S., we continue to see a decline in simulation subscribers on older generation da Vinci systems due to them being replaced with a new platform. For the second quarter in a row, our revenue from new robotic manufacturers remained at a low level. However, at the beginning of the fourth quarter of 2025, we are once again seeing stronger sales to these other robotic manufacturers. Overall, we note that several of our customers in robotic surgery are approaching commercial launches, which is expected to lead to an increase in license revenue in the coming quarters and years. Now regarding profitability. Our gross margin amounted to 65%, which is down from the 69% last year. One of the reasons for the decline is the very strong simulator sales in relation to license revenue, which thus accounted for a lower share of total sales than in the corresponding period last year. Other reasons are currency effects and also the inclusion of Intelligent ultrasound into the financial with a different margin and loss-making at the time of acquisition and Surgical Science. As I stated in the beginning, for several quarters now, we have been pursuing a number of initiatives to improve profitability within educational products. Our goal is to significantly improve profitability in this area, which will in turn impact group profitability very positively. We saw during the quarter that these initiatives started to have an effect despite the headwinds that we see from currency effects. And over the coming quarters and in 2026, I expect continued positive results, thanks to this plan. Anna Ahlberg: So continuing to look at the numbers a bit more in detail for the quarter then we had sales of SEK 264 million. That was up 14% and SEK 19 million then came from Intelligent Ultrasound or IU. And all IU sales are attributable to the educational products business area. And when we look at product groups, it's within the ultrasound product group. In local currencies, as Tom mentioned, sales was up 19%. And starting from last quarter, we now see a negative effect from currencies on our overall sales with our approximately 80% of revenues in U.S. dollars. We are doing some things to try and mitigate this, except from raising prices. We also now quote more countries in euros instead of in U.S. dollars, for example. Going out of Q2, we had an unusually high backlog or order stock for simulators, where the difference between ingoing and outgoing order stock was approximately SEK 30 million, and this was relatively evenly distributed between the 2 business areas. Most of these orders were shipped during the third quarter, and there is no significant difference between the opening and closing order book, excluding this item then after the third quarter. Looking at the business areas, the split in revenues was 53% for educational products and 47% for industry OEM, where educational products was up 8%, however, down 6% if we exclude IU revenues. And as Tom said, U.K. sales here are weak and well below expectations. The Asia region declined by 5% compared with the same quarter last year. Sales in China, they were stronger than in both the first and second quarters, but in line with the comparison period, while sales declined in India, if we look at the comparison period. Sales in Europe then remained strong despite weak sales in the U.K. and increased by 46%, where we saw for the quarter, strong sales in countries such as the Czech Republic, Poland and Portugal. And then the North and South America region increased by 9% compared with the corresponding quarter last year. However, then sales decreased for comparable units, and this is mainly attributable to the U.S. In the quarter, Brazil was a country that delivered strong sales. And yes, as we've said all through the year, then the U.S. market has been tough, a lot of leads and discussions, but the deals have taken longer to close. And for the quarter, we had costs for tariffs and customs duties, approximately SEK 2 million. These we have for this quarter been able to pass on to the customers. Industry OEM then up 20%. We saw all revenue streams increasing, and we also saw very high activity level. And as Tom mentioned, several good deals that potentially can be very large for us. For the first 9 months of the year then, this means that sales were SEK 724 million, an increase of 14% or 20% in local currencies. And IU is included with SEK 59 million, and that means that sales increased by 5% for comparable units. Educational Products up 17% or down 1% if we exclude IU. And again, Europe is the region that continues to show the strongest development and has done so throughout the year. Industry OEM, up 12% for the year-to-date, where license revenues are up 7%. And if we then move on to our revenue streams and continue with license revenues. They were then 25% of total revenues for the quarter compared to 28% last year. As mentioned, many times before, and as Tom talked about, this is lumpy for new entrants. Many of our customers are still in early phase and they purchase their licenses in batches and then that can then cause a timing effect between when the license is purchased and when it's used. So, for the quarter, as also in Q2, this part of the license sales was unusually low. However, at the start of Q4, we have seen better sales to these players. And then when it comes to Intuitive, we had the same effect as in Q2 that we saw a decline when it comes to renewals of subscriptions facing low with the older generations. However, for this quarter, this was offset by higher revenues from DV5 if we compare to Q2. Simulator sales as a whole was up 14% compared to Q3 2024, and this was the second strongest quarter ever for this revenue stream. Both areas increased, however, as we saw not if we exclude IU sales, but Indu was really strong. And also here, we've said before that this is more lumpy than for sales within Indu since it's usually tied to larger projects where development is also involved. And development revenues were up a lot also for this quarter, partly due to the project we have for a Ministry of Defense in the Southeast Asian country, but not at all entirely. Development revenues were good also for other customers. The Southeast Asian project then it's for 18 months and SEK 52 million, USD 0.9 million was recognized in Q3, and we estimate approximately the same amount for Q4 on this order. And we continue to see stable service revenues. Moving on to costs and the EBIT margin for this quarter. As Tom mentioned, our gross margin was 65% versus 69% in Q3 last year. And we had several factors influencing the fact that the margin was lower. License revenues then being a lower share of total sales and also currency effects. They had a negative impact of approximately 1.5 percentage points where the lower U.S. dollar exchange rate has not had an impact on costs yet. Part of our COGS is, of course, also in U.S. dollars, but these inputs were purchased previously and then at a higher exchange rate. The proportion of direct sales also impacts the gross margin, and it was lower within educational products and then mainly -- that is mainly then the U.S. And we talked about Intelligent Ultrasound and that they have a lower gross margin on those products. On the positive side, we see that our price increases that we've done are starting to show effect. Regarding OpEx, sales costs were 21% of sales. And for the quarter, that includes some restructuring costs, approximately SEK 1.5 million. That is then attributable to further reductions in the sales force in the U.S. as a consequence of the acquisition of IU. Admin costs were 8% of sales. And during the quarter, we completed the merge of former IU's U.S. subsidiary with one of Surgical Sciences U.S. subsidiaries, and that resulted in some slightly higher legal costs and tax consultancy fees. R&D costs, 21% of sales, where we activated SEK 7 million, a bit lower than the same period last year. And as you know, the costs on this line vary depending on how much development revenue there is for the quarter as salaries for the portion of development department staff who have worked on these projects that generate development revenue, they are transferred to cost of goods sold. And that means that more was transferred also in this quarter since development revenues were high. Going back to IU. When we acquired IU, we said that we estimated rationalizations and cost savings to between GBP 1.5 million and GBP 2 million on an annual basis. And as of Q3 and on an annual basis, we have made cost savings of approximately GBP 2.5 million in relation to the cost structure that existed in the company at the time of the takeover. And that is then mainly in the form of reduced costs related to the company's previous stock market listing and staff reductions, mainly in respect of sales personnel. For the quarter, cost savings of approximately SEK 6 million are included. And as mentioned before, then restructuring costs of SEK 1.5 million related to further personnel reductions are also included. Still, because of lower sales than expected, primarily in the U.S. -- in the U.K., as discussed before for IU, the operating result for IU was a loss of SEK 11 million. So of course, when we look at the comparison numbers after that, we have made an acquisition in February of this year of IU within the ultrasound sector. That was a loss-making company, and we have made -- taken several measures then as discussed on the cost side, still making loss, but we believe a lot in the ultrasound sector, and we see a lot of positive signs from this sector. It was also an acquisition that we were able to make at 0.5x sales. Other operating income and costs that mainly consists of costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. And for the quarter, we had a negative impact on results of SEK 7.2 million attributable to this revaluation. It was slightly negative also in the corresponding period in 2024. But as you might remember, it was -- there was a large negative due to this in Q2. So, following this, our operating profit for the third quarter, excluding the restructuring costs, was SEK 27 million or an operating margin of 11%. Organization-wise, we were 328 people going out of the quarter, 1% more than going out of Q2. With the IU acquisition, we added 48 people, and then we had a number of redundancies. We continue to employ above all software developers. However, we are also working intensely with efficiency improving projects and employ with caution and cost consciousness. And you can see the split between our sites down to the right. Adjusted EBIT, EBIT exclusive of amortization and surplus values related to acquisitions. That was for the quarter 13% compared to 22% last year. And for the first 9 months, it was 10% compared to 20% last year. Finance net, as most of you know, we have no loan financing. So net financial items for the quarter was primarily interest income on bank deposits. It was also revaluation of internal loan liabilities to subsidiaries and impacted by IFRS 16. Then our tax expense for the quarter was SEK 10 million and net profit was SEK 20 million. That means that the effective tax rate was high. The largest reason for this is that there's a larger portion of loss-making entities within the group, including Intelligent Ultrasound this year, and that then increases the relative effect of tax costs. In addition to that, we had some items that were in relation to 2024 fiscal year in the U.S. and some minimum taxes that were also paid. And as mentioned then, net result for the quarter was SEK 20 million. Looking at the cash flow, negative SEK 4 million from operating activities and from working capital negative of SEK 45 million. That is primarily because of higher accounts receivables, and that is primarily -- that is due to higher sales. We do not see any increased risk in our accounts receivable stock. Inventories decreased slightly. Cash flow from investing activities and financing activities is nothing to mention here for the quarter. And that meant that cash for the end of period September 30 ended at SEK 597 million. Tom Englund: Thank you, Anna. So, to summarize, we see continued rapid development of our company in a dynamic market where we can see positive signals, both in our external work with our customers and in our internal efforts to create a stronger, more efficient and profitable company. The strategic review that began before the summer is in its final stages. The strategy, which will lay the foundation for Surgical Sciences continued growth journey will be presented during our Capital Markets Day on December 8. If you're interested in attending in person or digitally, please sign up. Information on how you can do this can be found on our website in the Investors section. Our new strategy seeks to continue growing the company, both in segments where Surgical Science has traditionally been strong, but also in new adjacent segments with low penetration of simulation. In these areas, we have identified that our technology and expertise can create significant customer value. And the results from these efforts will be a company with several more revenue streams and a company which addresses a significantly larger market than today. And we're looking forward to presenting our strategy in more detail within short. And with that, I would like to open the floor for questions. Operator: [Operator Instructions] The next question comes from Simon Larsson from Danske Bank. Simon Larsson: Filling in for Victor today. So, Tom, you mentioned several regulatory announcements were made during Q3 in the robotics space. Should we expect any impact from these approvals already here in Q4, thinking license sales specifically? I know you stated that sort of it will impact in the coming quarters and years, but specifically Q4? Or what's the timeline here? Tom Englund: Yes, we will see an impact from these other robotics customers also already in quarter 4 of this year, yes. This is also what we stated in the CEO letter in the quarterly report. Simon Larsson: My second question then relates to cost. Given that you're tracking quite a bit below your adjusted EBIT margin target for next year and cost, of course, increased quite a bit also here in Q3. If you could give any more color on how you expect to sort of develop cost here from this point also in the context of you saying that you're implementing cost reduction initiatives. Should we expect cost maybe even to decline sequentially from this point? Or yes, how should we think about modeling cost ahead? Tom Englund: I mean, first of all, profitability is one of the key focus areas for us as a company right now. And we are -- as you said and as I said as well earlier, we are doing a lot of different activities to improve both the gross margin and ensure that we grow costs cautiously and look for efficiencies in our cost base. So, there is a lot of activities such as price increases that Anna mentioned, different types of policies in place to ensure that we can have as high revenue as possible in our educational products business unit as well as different COGS reduction activities that we're doing that will drive an improved gross margin on educational products. And then when it comes to the acquisition that we did with Intelligent Ultrasound, as Anna mentioned, that has had a significant impact on the profitability. But as Anna also said, we believe a lot in the ultrasound simulation space, and we are a much, much stronger company now with an added product portfolio and added competence from Intelligent Ultrasound than we were before the acquisition. And we have added a loss-making company to the financials. So, of Surgical Science. And then we have taken out approximately GBP 2.5 million on an annualized basis. The idea is then to continue to grow the ultrasound business up with good gross margins and then that this will then generate profitability also both as a stand-alone and together with Surgical Science then, of course. So, it's a strong focus for us is the conclusion. Operator: The next question comes from Ulrik Trattner from DNB Carnegie. Ulrik Trattner: You provided some granularity on Intuitive sales in Q2 and its contribution for the quarter. And I was wondering if you could provide some more color on this in Q3 as well as we have seen that the DV5 is increasingly its portion of the instruments sold for Intuitive as well as higher replacement sales as they report it. So just trying to also get some type of sense on when the replacement is starting to become a positive rather than a hampering factor short-term. Tom Englund: First of all, I think that it's important when you look at the robotics market to have this long-term perspective. And to just first, I want to emphasize how inherently attractive this market is because we see such a strong uptake, generally speaking, for robotic surgery. And you can see it in the numbers on procedural growth, for example, communicated by Intuitive. And you can also see it in the strong news from other players that are launching or are planning to launch new robotic systems in the market. So, I think it's an inherently attractive market segment to be in. Having said so, it will take some time until you see kind of the full potential in this market as many of the new entrants have been delayed in their efforts to come out with products in the market, but it's coming slowly. And then to your question about Intuitive and the DV5, it's great to see, first of all, that DV5 seems to be such a resounding success for Intuitive, right? And now also they have managed to get to a production level where they don't have -- where they can produce a lot of systems, which means that their volumes are ramping up, as you could see in the quarter 3 report of Intuitive. And that, of course, will drive the demand for training on these devices. And then as you rightly said, Ulrik, and what we also pointed out in the quarter 2 report, there is this kind of churn effect that we see now in the migration between old devices, DV4 or da Vinci X and Xi and the new da Vinci 5 platforms as some of the customers actually replace the systems when they are buying a new DV5. But it's not all customers who are replacing or trading in the systems. Some customers are also adding the DV5 to their fleet of robots and the DV4 will still stay. And of those customers, some of them will continue to use simulation on the old system and some will terminate it because they feel that the old system can be used clinically instead for as a training tool. So, you have many different kind of scenarios. And then to your question, sorry for the lengthy background, to your question, how will this all play out in kind of the switch in the growth between DV5 and DV4 it's very difficult for us to actually judge that because of these different scenarios or different ways that this can play out. But we feel happy about the fact that DV5 is successful in the market, and we see this kind of strong growth in installed base in general. And you also might remember that DV4, the older generation systems will still also be sold in some markets alongside the DV5. So, there could also be a simulation subscription sales towards all those new units that are going in. So that's the dynamics that we have to deal with and that affect kind of the simulation sales and the subscription renewals as well for Surgical Science. Ulrik Trattner: And just a follow-up on that with Medtronic now really sort of close on approaching FDA approval for urology indication and hernia indication as well as clinical progress on the gynecology indications. So, they look to have products on the market in the U.S. by early '26. Do you believe the lumpiness in your dynamic of reporting sales for licenses will gradually come down? Or will that increase? How should we view that? Tom Englund: Yes. I think it's a good question. And over time, it will gradually come down the lumpiness, of course, since more players are coming out with robots and those players are customers of ours buying licenses from ours. So yes. But I mean, you can't sort of look at that, I think, from within the next 1 or 2 quarters, but rather long-term, that's like within the next 1 to 2 years. So yes, then the lumpiness will come down. Ulrik Trattner: And my second question would relate to Intelligent Ultrasound. And obviously, sort of sales has been below your expectation and thus sort of EBIT contribution has been well below. And like looking at Q3, I guess you didn't expect it to start the year to have a contribution of above sort of around SEK 11 million in the quarter. So just how should we look at this short-term, given the disruption in NHS, the disruption in the U.S. Is it going to be loss-making for the foreseeable future? And will you be able to meet your financial guidance low end on the margins if Intelligent Ultrasound continues to be loss-making? Tom Englund: Yes. As I said earlier, we believe a lot in Intelligent Ultrasound, and we believe a lot in the ultrasound simulation market. And we feel super happy about the contribution of Intelligent Ultrasound's product portfolio into the product portfolio of Surgical Science. And we can already now see in the number of quotes and the sales in many regions of the world that it's going in the right direction. Then NHS is a problem for our sales in the U.K., both for Intelligent Ultrasound, but also generally for Surgical Science. And the budgetary problems that we have in the U.K. have led to dismal sales for both Surgical Science and Intelligent Ultrasound. So that's kind of one of the most important contributing factors to why sales is low. We actually see quite decent uptick in sales in other parts of the world of the ultrasound portfolio. So, we have a good product portfolio, and it will become even better going forward, which means that we can work towards becoming the world leader in ultrasound simulation. Then what we have done is, as I mentioned, we have taken out costs to make sure that we can minimize the losses as much as possible. But we definitely want to sell ourselves out of this situation. We think that we have a lot of assets, both in the team in Intelligent Ultrasound as well as in the products. So that's the plan. It's going slower, primarily driven by NHS, but we feel that we are acting as swiftly and as forcefully as we can with both costs and revenue. Do you want to add anything, Anna? Anna Ahlberg: No. Tom Englund: I hope that answers your question. Ulrik Trattner: Yes, just a clarification. Would you still be able to expect to reach your lower end margin guidance for '26 if Intelligent Ultrasound remains loss-making? Tom Englund: I don't want to comment on that right now. Sorry. Anna, do you want to. Anna Ahlberg: No. I mean, as you said, Tom, we are working and we are also -- remember, when we do our acquisitions, we do full integration. So pretty quickly, it becomes sort of -- it's an overall question and of course, increasing sales, as you said, Tom, both for Intelligent Ultrasound products and also for the rest of the product line. And then we are taking many different measures to improve profitability. This is one of them, definitely, but there are others as well. Tom Englund: I think that you can think about it that we are creating a much stronger company through the acquisition of Intelligent Ultrasound. And long-term, this will be a very, very good addition to the Surgical Science family. And despite the disappointing short-term sales results, we have not changed our positive view on the long-term attractiveness of the ultrasound simulation market and the positive contribution of Intelligent Ultrasound into Surgical Science. Operator: The next question comes from Christian Lee from Pareto Securities. Christian Lee: I have 2 questions, please. I'm curious about what you describe as potentially the largest single deal in the company's history within medical device simulation. Could you please elaborate on the potential deal size here? Tom Englund: No, we can't unfortunately. Hi, Christian. No, unfortunately, we can't elaborate due to commitments towards the customer, we can't elaborate on the deal size here. We have to let it be at potentially the largest deal. But what I can say, which is similar to what I've said previous quarters is that within the industry and within the medical device companies now, we see simulation rapidly becoming a critical tool for med device companies to present and showcase their products towards prospective customers as well as existing customers and users because it allows them to do these presentations or trainings in a safe and very efficient manner. And that's why we see kind of this increasing customer activity generally and the inflow of development projects within industry in the quarter. And this was a trend that went on just now not in this quarter only, but also in the previous quarters, right? And I think this big order now is a testament to this that we are becoming more of like a preferred supplier with some of these med device companies when it comes to providing simulation in a broad array of product areas for them. These are big companies, and they have divisions, and these divisions have subdivisions, and we are now actively going deeper and deeper into these companies. And as they are also big companies, this means that when they adopt a specific technology like simulation for their sales force and marketing efforts, for example, that means that the demand of a simulator can be quite high. And that's hence then the big deal size that this becomes. So, it's a development revenue and it's an initial purchase of some simulators. And then gradually, as this product rolls out globally, we see a very big potential for high volumes towards these customers and for this specific product that we're speaking about. Christian Lee: And my second question, simulator sales declined by almost 9% year-on-year if we adjust for the delayed deliveries pushed from the second quarter. Beyond the negative currency effects, was this mainly due to challenging comparables? And how should we think about the outlook given that you will face even tougher comparables in the fourth quarter? Anna Ahlberg: Yes. I mean, yes, as you know, we don't give guidance. But we -- as Tom said also, we see a lot of activity. We see that some markets, takes longer time. We see it's been tough in the U.K. We talked about the U.S., which is -- and we see some very strong markets like the Europe -- like in Europe, several markets there. So, we continue -- and it's also a bit different, of course, between the different product lines there where we see -- we talked about ultrasound. We have other product lines that we see a lot of activity within. So yes, we don't -- we see a lot of activities and still a lot of positives for the IU product business area, even though some markets are a bit tougher. Tom Englund: I mean we feel that the toughness primarily comes from these shortages of budgets, budget unavailability and primarily in the U.S., as we have said, right? There is a lot of things that you can do anyway to try and maximize sales given the tougher market climate. You can work on different sales activities; you can work on different marketing activities and so on. And we are doing all of those. And rest assured that we are having an extremely high pace out there in the market. And we have a good feeling and there's a very high amount of quotes going out and customer dialogues that we see. The other thing that you can do, of course, is to launch new products because new products usually can get budgets faster in a challenging market climate. So that's also why we're quite excited about the volume ramp-up now of RobotiX Express because RobotiX Express is such a product that can be added on top of the simulator sales that we already see. And that can then, of course, be a revenue contributor. And that product is targeted both towards educational products as well as for industry OEM. So, we have high hopes for this product line once we start selling it more actively here. Anna Ahlberg: And I just mentioned very briefly, but price increases is, of course, something that we continue to work with, and we see that, that has a positive effect and that we can actually take out higher prices and also has to do with how we package our products and hardware in relation to software, et cetera. So, these are all things where we work very actively. When we talk about RobotiX -- sorry, Christian, did you have another question? I don't remember if you already had 2. Christian Lee: I had 2 already. So, I'll get back to the queue. Anna Ahlberg: Okay. Thanks, because we also had a written question around RobotiX Express now that we're talking about it. Tom Englund: Yes. What is the average length of the sales cycle for the RobotiX Express product line? And what is the company doing to shorten it, so potential customers can better understand the benefits of integrating said products to improve the medical staff's curriculums? Great question. So, the sales cycle length depends a little bit on the type of customer that we engage with. We have both educational product customers or hospitals and SIM centers that are buying the RobotiX Express, and then we have the med device companies. So, when we look at the hospitals and SIM centers, you could say that in general, the sales -- average sales cycle for a hospital and SIM center is anything between 6 months to 2 years, depending on region and depending on type of institution. And this is applicable both for our existing simulators as well as for robotics simulators. What we are doing with RobotiX Express, though, is that we're marketing it at a more attractive price point because we believe that this is a product that could be sold in volume because we see a very high demand for training for surgical robotics surgeons. And this means within a more attractive price point, that means also that sales cycle could come down and be shorter than what they are for other simulators. And then when it comes to industry OEM customers, for example, robotic surgery companies that are buying the RobotiX Express platform and putting their software, simulation software onto it and then using it in their training efforts, there, of course, the sales cycle will be longer because they would need to perhaps do some hardware modifications as well as software development for the platform. So that could be perhaps around a year or something like that from the initial discussion until we engage with the customer. But of course, once we have come over that first hurdle, then it will be more like of a transactional sale since they have standardized on our platform, so to say. Anna Ahlberg: Let's see. Did we have any more questions signed up. I don't think so. We have some written questions. I think we talked about the license -- there are some questions on the license revenue side. I think we talked about those. There is one also, when we will transition to a fully subscription-based revenue model, when that will be completed? And that is the case for 2025, that it is fully subscription-based for Intuitive. I'm not sure if the question is related to that or to all. But for Intuitive, yes, it is. Regarding pricing, there's a question DV5 over DV4, we cannot -- never comment on prices for our customers. What we've said is that prices have been set for a period with the MOU with Intuitive, where the prices will go down over time. Tom Englund: Yes. And then we have a question regarding forward visibility we don't comment on. Anna Ahlberg: We will again also invite you all to the Capital Markets Day on December 8. So, I hope to see you all there. But I think with that -- Tom Englund: If there's no more questions. Anna Ahlberg: With that, I think we -- Tom Englund: Yes. But thank you all for your attendance and for the interest in our company. And yes, have a great day. Bye-bye. Anna Ahlberg: Thank you. Bye-bye.
Operator: Good day, and thank you for standing by. Welcome to Persimmon's Plc Q3 Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to turn the call over to your host today, Mr. Dean Finch, CEO. Thank you. Please go ahead. Dean Finch: Thank you very much. Good morning, everybody. I'm joining you today from our Newcastle office, where alongside colleagues I'll later be attending the funeral of our Founder, Duncan Davidson. Of course, our thoughts are with Duncan's family and friends, but it is also a sad and poignant day for us at Persimmon as we remember a man who taught us a lot about business and life. First and foremost, Duncan inspired many, many people. What quickly struck me at Persimmon was the genuine [indiscernible] Duncan's held in by those who knew him and worked with him. I often hear a great man and a great boss. Duncan was a visionary and an entrepreneur. I have the great honor to lead this company inheriting Duncan's great legacy while trying to build on his great insights and strong foundations. Fundamentally, Duncan knew that a great value home built by great people, trusted to deliver excellence consistently would deliver for customers and for shareholders alike. I, we try to maintain these values, his drive and vision in all we do, as I hope today's results demonstrate. We're pleased with today's results as they show we performed well in a challenging market. Across the key metrics, we can see the benefit of our investment in the business and our self-help initiatives. We've maintained a good sales rate despite a clear softening for the industry over the summer and in the run-up to the budget. Customer sentiment is more fragile. So I'm delighted we've also so far maintained a sales rate ahead of last year. Initiatives such as New Build Boost, our shared equity product have helped alongside the broader investment in sales and marketing. Forward sales are up, both our total forward sales and the private forward sales element are up both around 15%. Pricing is robust, and we remain disciplined on incentive use running around 4% to 5%. Our build position is good. We're clearly focused on securing the year-end completions, and we remain on track to deliver our guidance. Our proactive approach has helped drive further planning success. This is reflected in our growing outlet base. We continue to invest in the business to drive growth and returns. We're being presented with good land opportunities and are maintaining our discipline while growing our overall land holdings. As we look ahead, the budget is clearly a crucial moment. How any measures impact customer sentiment, including amongst institutional investors will be crucial. Nonetheless, we're on track to deliver this year's guidance and are determined to continue to drive further growth to meet our medium-term growth ambitions. Thank you very much, and I'll now open it up to any questions you might have. Operator: [Operator Instructions] Our first question comes from the line of Aynsley Lammin from Investec. Aynsley Lammin: Two questions from me, please. Just wondered if you could give maybe a bit more color just on pricing and incentives, how they've kind of evolved through the autumn selling season. I think ASP private is up 1.5%. Is that mix? Is there any HPI in there? And have you ticked up incentives more recently? And then second question, just on -- obviously, you did a good job increasing site numbers. Just as you look into next year, what's the visibility like for kind of site openings, your expectation of planning for next year? Dean Finch: Aynsley, as we said, pricing has been good so far over the course of the year. I mean, we did see a softening -- well, let me rephrase that. We saw a very strong actually July and August. But then that tailed off towards the end of August as speculation mounted as to what's in or not in the budget. Although what I would say is actually over the course of the last couple of 3 weeks, we've seen sentiment improve again as numbers seem to be rebounding. So we did see a softening [indiscernible] 2 halves, very strong first part of the summer, softening in the middle, coming back a bit now. Pricing is robust, good PD performance. The area, I suppose we've seen a bit of softening is in terms of institutional demand as well. But overall, pleased with performance. It's still up, but pleased -- a bit of softening, but overall pleased with performance and incentives have held in the 4% to 5% range. So we've maintained our discipline there. In terms of site numbers, you're right, we've had excellent progress with opening outlets this year. We expect to do a similar number next year, looking to around -- open around 100 outlets subject to planning and looking to drive forward again next year by around 10 to 15 in terms of net. But obviously, that is subject to planning and subject to getting all the various other parties such as Highways, Natural England and all the other good people across the line. Operator: The next question comes from the line of Allison Sun from Bank of America. Allison Sun: Dean, just one question from my side. It's probably more question for Andrew. Is the sales price in the order book, I see it's up by around 1.5% year-over-year. Can I ask it's mostly driven by a mix impact or it's more like underlying increase? Dean Finch: Andrew, do you want to take that up? Andrew Duxbury: Yes, I'll take that. Yes. So as ever, Allison, there is the whole mix effect in terms of geographies and sites and size of products and so on. But I think fundamentally, the point comes back to the point Dean made a moment ago around pricing has been robust. I think particularly the further north that you move, the more robust pricing has been. And so I think there is -- there will always be a mix effect in there, but it's not that it's a question of the mix is driving up and house pricing is coming off. I think pricing has been robust on a like-for-like basis as well. So I think we're pleased with the pricing we've achieved actually across all of our regions. So it's a combination, but pricing has been robust and that is shown through in the forward order book, Allison. Operator: The next question we have the line from Ami Galla from Citi. Ami Galla: Two questions from me. The first one was on the investments that you've talked about in the release. One was on -- in the recent news flow, you had announced that you've acquired a planning promotion company. Can you talk a bit more about the land market? And how do you see that as an opportunity ahead? And the second one is on the new Rezide product. Can you talk about how the initial interest has been and what's the take-up of that product in the market? Dean Finch: Yes. Okay. Thank you. I mean, the land market is certainly very busy for us at the moment. I'm in a happy position of -- we are in a happy position of having choice. We have a lot of opportunities available to us. So that is enabling us to be choosy. So the immediate land bank is in great shape. Strat land is also in a good position, and we have looked to strengthen that in places with, for instance, this acquisition of Lone Star. It's a small company, but it fits where we've got some gaps. So we're very pleased with that. So yes, look, overall, land market is very healthy for us at the moment, and we're feeling good about the future. Rezide only launched last week. I think we've taken one sale so far. But it's -- I think the key point about this with New Build Boost and other products that we either have or we're developing is it gives our customers a range of choice. Clearly, affordability is the main issue still facing the market. So anything you can do to help with that helps boost our numbers. As I said, we've now got Rezide as well as new Build Boost, so it enables us to give customers more options. The key thing actually really is not so much the numbers we sell through these things, but the opportunities they bring us, we often find that the headline attracts people into the door, but then they may not end up taking that product for whatever reason, but it's extremely helpful to have these tools in the toolbox. Operator: Our next question comes from the line of Will Jones from Rothschild & Co Redburn. William Jones: Three, if I can, please. First, maybe just covering off on second half completions. I don't know if you're willing to give us a view on how Q3 looked compared to the roughly [indiscernible], I think you had last year that you gave back then. And just what risks or otherwise you see the delivery into year-end, just noting the 83% exchanged or complete compared to 85% last year. Are you reasonably comfortable around the Q4 delivery? Second, build costs. I think this time last year, you talked about some rising costs looking into this year and a couple of issues on sites with some regulatory costs. But just anything you could give us on the equivalent this time around as we look to '26. And apologies if it was covered right at the start of your intro, I just did miss it, but the comments you gave back in the summer around 2026 volume and margin aspirations, do they still apply an equal measure? Dean Finch: Andrew, do you want to pick those up, please? Andrew Duxbury: Yes, I'll take those Dean. Will, so yes, in terms of the second half delivery, I mean, we're ahead in terms of absolute numbers on exchanges and completions year-on-year, as you'd expect. I think the 83% versus 85% is in the sort of margin in the round, isn't it? So pleased with where we are and continuing to progress well for the year-end, which is why we're able to reconfirm in line with market guidance. So pleased with that. In terms of build cost and inflation, so we said coming into the year, we expected low single-digit inflation, so 2%, 3%. And I think that's around about what we have seen. And obviously, we'll talk more in January and as we go forward and coming off the back of the budget. And of course, this time last year, we just come out of a budget, which has increased national insurance and so on. So that was one of the things we were talking about this time last year, our segment was just after the budget rather than just before. But I think all other things being equal, I'd expect to continue to see that level of some inflation, but not -- certainly not where we were a couple of years ago. So -- but this year, we have seen that 2% or 3% as we said that we would do. And then just casting forward, obviously, we talked and gave some early guidance for 2026 in the summer. And obviously, that was all predicated on relatively stable market conditions. And I think we haven't explicitly given any update to that today. I think I'm reasonably comfortable with where the consensus is for volume for next year, also back in line with the guidance we gave on both volume and the trajectory of the speed of margin growth that we talked to in the summer. The one thing which I have put into the statement today, I do think interest costs next year will be just a tad higher than this year. So probably we guided this year to kind of up to GBP 20 million, next year might be closer to GBP 25 million as we continue to invest in the business. I'm talking about land investment. I'm talking about the investment into work in progress to open new outlets. I'm talking about investment into vertical integration and working through the fire safety remediation work and so on. So that's really the only sort of tap on the tiller, if you like, that I've just called out in today's statement. But otherwise, I think the guidance that we talked to in the summer is still there in terms of volume and speed of margin progression. Operator: [Operator Instructions] Our next question comes from the line of Zaim Beekawa from JPMorgan. Zaim Beekawa: Firstly, my thoughts go to Duncan's family. I hope today goes well. And then on the questions. The first would be just on Charles Church. You mentioned performing well. I was wondering if maybe you could provide some details or figure on this. And then secondly, Dean, I think you mentioned some softening in institutional demand. Is this just the nature of uncertainty around the budget or anything else going on there? Dean Finch: Should I take the second one first, Andrew, and then ask you to talk about Charles Church. Andrew Duxbury: Sure. Dean Finch: Yes. Look, I mean, it is -- and we have seen 1 or 2 of our PRS customers take the decision to pause investments until they know what's in the budget. I mean, I think it's entirely understandable. So they are taking a wait-and-see approach. I don't think it is lost business, but I think it is perhaps deferred business, and we just need to wait and see like everybody else, what comes out of the budget. Not big numbers yet, but I'll just put it out there for you to be aware of. Andrew Duxbury: Yes. Thanks, Dean. Zaim, so just on Charles Church. So we obviously relaunched Charles Church earlier this year in the spring. And we're pleased with how that's progressing. We've opened 7 new Charles Church sites in the period. And we're looking, as we've said before, to double the volume from Charles Church. It was around about 1,000 units in 2024, and we're looking to double that over the next few years. And I think we're making good progress. I think there's a couple of things I would call out, particularly. So one is having that extra product at a different price, it gives us an opportunity to sell more products to different customers, different customer base. That's helpful. It gives another string to our bow, which is particularly helpful. It allows us to drive increased outlets. So we're seeing that is of value. Clearly, it's not for every site, everywhere and some of our sites will just be Persimmon, some will just be Charles Church. In some locations, we can use Persimmon and Charles Church. So I think the extra brand and the extra outlets is giving us opportunity to play choose in a market where you're actually having alternatives and different approaches is very helpful. So we'll give more detail on the actual numbers in terms of completions and so on, obviously, in the new year. But I'm pleased that we've been able to open more outlets and start to drive that growth in Charles Church that we talked about in the spring. Operator: As we appear to have no further questions at this time. I would like to hand the call back to management for closing. Dean Finch: Okay. Thank you. Well, look, thank you all for listening in this morning. I believe we're in -- I think we're in a robust position as we enter the last few weeks of the year. I'll just repeat really what I said in the summer, which is Persimmon is building a differentiated base for itself through its investment in its land, in its brand, in its products, in its factories and its people. That's enabling us to build on our core strengths, as I see it, which is we choose what to build, where to build and how to build. And that does give us an edge, I believe. Our products are more affordable on average than our peers. We're working hard to support those with a range of accessible ownership routes and products. We continue to invest in land and target our approach to planning, which is clearly driving growth. And production is accelerating as we drive more from our factories, both through what we're using and through timber frame. So thank you very much for listening in, and have a good day all. Operator: This concludes today's conference call. Thank you for your participating. You may now disconnect your lines.
Operator: Hello, and thank you for standing by for JD.com's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Head of Investor Relations. Please go ahead. Sean Shibiao Zhang: Thank you. Good day, everyone. Welcome to JD.com's Third Quarter 2025 Earnings Conference Call. With us today are CEO of JD.com, Ms. Sandy Xu; and CFO, Mr. Ian Shan. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. Then we'll open the call to questions from analysts. Before turning the call over to Sandy, let me quickly cover the safe harbor. Please be reminded that during this call, our comments and responses to your questions reflect management's view as of today only and will include forward-looking statements. Please refer to our latest safe harbor statement in earnings press release on our IR website, which applies to this call. We will discuss certain non-GAAP financial measures. Please refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. Please also note all figures mentioned in this call today are in RMB, unless otherwise stated. Now let me turn the call over to our CEO, Sandy. Sandy, please? Xu Ran: Thank you, Sean. Hello, everyone. Thank you for joining our third quarter 2025 earnings conference call. We achieved a set of solid results across our strategic priorities during the third quarter and further enhanced our capabilities to drive better user experience, lower cost and higher efficiency. Our total revenues were up 15% year-on-year, sustaining our double-digit growth momentum. We are delighted to see growth of our general merchandise categories and marketplace and marketing revenue continue to accelerate sequentially. Both are becoming our important growth drivers. Non-GAAP net profit came in at RMB 5.8 billion in the quarter with the core retail business margin continued to expand year-on-year. Our food delivery business also sustained healthy expansion while its loss narrowed in Q3 from the prior quarter as we continue to optimize operating efficiencies and improve unit economics. Overall, our business are making good progress along our long-term strategic road map. We are confident that our core retail business will steadily expand market share with healthy margin improvement and new initiatives will create deeper synergies and drive healthier financial models, further strengthening our entire business ecosystem. Among all the encouraging developments that underpin these results, I would like to point 3 most notable highlights for this quarter, which I believe should be the key takeaways from today's call. First, strong momentum in our user base and engagement. Our quarterly active customer number was up over 40% year-on-year in Q3, sustaining the momentum built in the previous quarters, thanks to both organic growth of JD Retail as well as contributions from our new businesses such as JD Food Delivery and Jingxi. The consistent growth has led to our annual active customers exceeding 700 million in October, making a new milestone in our user expansion. In particular, the number of JD Plus members, our highest quality user group also recorded healthy growth in the quarter. In addition to user scale, user shopping frequency on our platform also increased by over 40% year-on-year in Q3, a pace we've sustained for 2 consecutive quarters. Notably, we saw meaningful shopping frequency increase across all user groups, including new users, existing users and JD Plus members. This user momentum is clear proof that we have stayed very focused on providing a better user experience amid evolving user demand. In return, our expanding and more active user pool further improves our engagement with users, deepens our user insights and enables us to better address their demand. This virtual cycle ultimately supports our sustainable growth in the long run. Second, our core retail business remained strong in Q3. Retail revenues increased by 11% year-on-year in the quarter to RMB 251 billion. There were a mix of contributors to this. While the high base effect for electronics and home appliances category started to kick in, sales of general merchandise as well as marketplace and the marketing revenues continue to accelerate growth this quarter. Profit wise, both JD Retail's gross margin and operating margin further expanded at a solid pace, demonstrating the continued scale benefits and operating efficiency gains of the business. Looking at the main categories, the electronics and home appliances category has been faced with a high base since the second half of Q3, which has been weighing on its growth momentum. This is an industry-wide challenge and we are working closely with brands and manufacturers to navigate through it. For example, we've been leveraging our market and user insights to support brands and manufacturers in developing new and customized product models. Meanwhile, we continue to lower the cost for brands and strive to secure the best prices for our customers. Thanks to our supply chain capabilities. Although the high base effect is expected to linger the near term, it's clear that the advantages of our business model and market position in these categories remain intact, and we are confident in building on these strengths, to unlock new growth potential in this market. General merchandise category recorded 19% year-on-year revenue growth in Q3, an impressive acceleration from a quarter ago. Within this category, revenues from supermarket, fashion and health categories maintained double-digit year-on-year growth in the quarter. The strong tailwind is expected to sustain into Q4. This is a result of our efforts in enhancing our product portfolio, price competitiveness and service quality, which eventually translates to better user experience and stronger user main share. As we continue to tap into the huge market potential, we believe general merchandise will play a bigger role in supporting JD Retail's long-term growth. In addition to healthier category mix, another bright spot in our Q3 performance was marketplace and marketing revenues which, at the group level, grew 24% year-on-year in the quarter. It has remained on a double-digit growth trajectory for 4 consecutive quarters. In particular, growth of our advertising revenues has accelerated sequentially in every quarter this year and exceeded 20% year-on-year in Q3. This strong momentum mainly stems from the accelerated ad revenues generated by core JD Retail business. Our improved ecosystem for both 1P business and 3P merchants, fighter AI-powered ad tools and improved traffic allocation efficiency all have contributed to the strong trend. As we move into Q4, we expect marketplace and marketing revenues to continue the healthy growth. Our platform ecosystem is taking good shape and gaining positive traction with suppliers and merchants, large and small. The third highlight I want to share is our new businesses. Within the segment, JD Food Delivery continued to make healthy progress in Q3. It's GMV achieved double-digit quarter-on-quarter growth in the quarter driven by both order volume growth and a healthier order mix with high-value orders contributing a vast majority of total orders. While scaling up the food delivery business also narrowed operating loss sequentially in Q3, thanks to the improving UE performance. This encouraging progress is achieved through our enriched supplies, increased operating efficiency, disciplined investment made a competitive market and our efforts to expand food delivery revenue streams. More importantly, food delivery continued to generate strong synergies with our retail business. In addition to user growth and engagement, the cohort cumulative cross-selling rate has been on an upward trend. Products from our supermarket electronic accessories and Jingxi categories remained the biggest beneficiaries of this trend. Going forward, we will focus on further growing the food delivery business scale, UE optimization and unlocking stronger synergies with retail, logistics and other businesses across our ecosystem. Other new businesses, including both Jingxi and international business are progressing well as planned. Jingxi further penetrated into the lower-tier markets and grew its merchant and user base. Our international retail business is gradually establishing capabilities in the U.K. from Germany and Benelux regions, paving the way for our global expansion, both are making solid steps in executing on their long-term strategies. One more thing before I wrap up. We unveiled our AI road map during the 2025 JD Discovery Conference in September. I want to share a few exciting updates here. First, we launched a number of new AI products at the event, including TaTaTa, an all-purpose digital human assistant app and JoyInside, an AI agent for robots, toys, devices, among others. Second, we introduced the industry specific AI applications across 4 sectors of retail, health care, logistics and Industrial. Third, we also made upgrades to a few of our retail technology infrastructure, such as JD Streamer, our new digital human technology that provides e-commerce live streaming and short video production solutions. JoyStreamer has served over 40,000 brands so far with significantly lower cost and better sales performance compared to real human live streaming costs. In addition, we provide 24/7 nonstop AI customer service which handled over 4.2 billion inquiries during our 11.11 Grand Promotion. We are excited about the potential of these AI applications as we foster a comprehensive AI ecosystem spanning across various industries. To conclude, Q3 was a productive quarter with all our business lines moving ahead steadily on our strategic road map. The user momentum on our platform was strong. Our core retail business is in solid shape with multiple complementary long-term growth drivers and great potential for long-term margin improvement. Beyond core retail new businesses, including food delivery, Jingxi and our international retail business are on track for healthy development, both financially and operationally. Taken together, our businesses are operating in synergy, bolstering our conviction in the path ahead, we see great opportunities to further unlock the collaborative value of our business ecosystem and to position us well for sustainable, high-quality growth. With that, now let me turn the call over to Ian. Ian Su Shan: Thank you, Sandy. Hello, everyone, and thank you for joining the call today. In the third quarter, we recorded a set of healthy performance across our business lines. Our total revenues were up 15% year-on-year, outpacing the growth of MBS total retail sales. This was supported by double-digit revenue growth in our core retail business. Despite the high base for electronics and home appliances, general merchandise and service revenues both delivered stronger growth in Q3 and recorded their fastest pace since the second quarter 2023. In terms of profit, JD Retail achieved strong year-on-year expansion in both gross and operating margins in the quarter. And our food delivery business also saw a sequential reduction in investments scale. Overall, our business are moving in the right direction, and we are at a stronger position to drive sustainable growth for the long term. Now let's go through our financial results in the third quarter. Total net revenues increased by a solid 15% year-on-year to RMB 299 billion in Q3. Breaking down the mix. Product revenues were up 10% year-on-year in Q3. Revenues of electronics and home appliances were up 5% decelerating from last quarter due to the high base effect created by the trading program. This is in line with our expectations and we are confident that -- we are positioned to further solidify our leading market position as we leverage our supply chain advantages and stay focused on enhancing user experience, reducing costs and improving efficiency. Revenues of general merchandise were up 19% year-on-year in the quarter, a notable highlight of our Q3 performance. Growth in general merchandise has sustained double-digit growth for 4 consecutive quarters and further accelerated from the previous quarter. Within general merchandising, both supermarkets and fashion categories saw growth rate surpassing mid-teens in Q3. The results were mainly driven by our continuous efforts to enhance our operational capabilities, build up better user experience and mind share, alongside our growing market share. This gives us the confidence that the strong momentum in our general merchandise categories will continue going forward as we capture the huge potential in this market. Service revenues were up 31% year-on-year in Q3, a solid acceleration compared to previous quarters. Notably, marketplace and marketing revenues increased 24% year-on-year, accelerating sequentially every quarter for 7 quarters in a row. Within this line, advertising revenues continue to see robust growth, mainly driven by the notable improvement of user engagement and better advertising tools that we provide for both suppliers and merchants at our core retail business. This demonstrates our more robust ecosystem and the strong growth in the number of merchants and users on our platform. We expect marketplace and marketing revenues to continue solid growth in Q4, contributing to both our top line growth and margin performance. Logistics and other service revenues grew 35% year-on-year in Q3, mainly driven by the incremental delivery revenues from food delivery business. Now let's turn to our segment performance. JD Retail revenues were up 11% year-on-year in Q3. Our core retail business has built multiple growth drivers and we believe growth of the general merchandise category and value-added services, including advertising will be important pillars in retail's long-term growth. JD Retail also saw healthy progress in margin expansion in the quarter. This gross margin has sustained year-on-year expansion for 14 quarters in a row and was up 1.3 percentage points to 19.3% in Q3. This was driven by a favorable mix shift towards higher-margin business, along with optimized procurement costs by leveraging our scale effect and supply chain advantages. In addition, in Q3, JD Retail's non-GAAP operating income was up 28% year-on-year to RMB 14.8 billion, and operating margin was up 76 bps to 5.9%, both continuing strong momentum. Moving to JD Logistics. The logistics revenues were up 24% year-on-year in Q3. Both internal and external revenues grew at a steady pace. And JD Logistics also saw incremental delivery service revenues generated by food delivery business. In terms of profit, JD Logistics non-GAAP operating income was compressed 39% year-on-year to RMB 1.3 billion in the quarter as it continued to invest in customer experience, service capabilities and technology to enhance the efficiency of the entire logistics process. These efforts aim to boost JD Logistics competitiveness in products and services and strengthen its market position, which over time, will translate into sustainable margin expansion. Our net new business generated RMB 15.6 billion in revenues, a steady growth compared to last quarter. This was driven by the continued expansion of our food delivery, Jingxy an international business. Non-GAAP operating loss of new business slightly widened sequentially to RMB 15.7 billion. To break this down, food delivery saw a sequential reduction in its investment in Q3. Our food delivery business continues to scale with a healthier financial model with expanded revenue streams, disciplined spending in users and increased operating efficiency. As to other new business, both Jingxy and international business increased investments compared to a quarter ago. They're in a rapid development stage and are important pillars in JD's long-term strategies. Going forward, we will continue to scale up the new business and further unlock synergies to set the stage for our future growth. At the same time, we are committed to improving UE performance and aim to drive healthy and sustainable bottom line growth in the long run. For our consolidated profit performance in Q3, our gross profit was up 12% year-on-year to RMB 50 billion. And gross margin was 17%, slightly reduced by 0.4 percentage points. This was primarily due to margin dilution from the food delivery business and JD Logistics, which offset JD Retail's solid gross margin expansion in the quarter. Consolidated non-GAAP net income attributable to ordinary shareholders was RMB 5.8 billion in Q3, and non-GAAP net margin was 1.9%, both down year-on-year. This near-term headwinds in profit mainly reflect our investments in food delivery. Our last 12 months free cash flow as of the end of Q3 was RMB 13 billion compared to RMB 34 billion in the same period last year. This was primarily due to cash outflows associated with the trading program. and the decline in operating income. By the end of the third quarter, our cash and cash equivalents, restricted cash and short-term investments totaled RMB 211 billion. In summary, we're encouraged by the solid progress in both core retail and new business. Retail has built a growth metric with multiple drivers and a clear path to our long-term margin target. Food delivery is growing with a healthier financial model and other new business, including lower tier market and international business are also making solid steps to the next chapter. All our businesses are on the right track, starting to generate notable synergies with 1 another and collectively contributing to our high-quality development in the long term. With that, I will turn it back to Sean. Thank you. Sean Shibiao Zhang: Thank you, Sandy and Ian. For the Q&A session, you're welcome to ask questions in English or Chinese, and our management will answer the question in Chinese, will provide English translation for convenience purpose only. In case of any discrepancy, please refer to our management statement in the original language. Operator, we'll open the call for a Q&A session now. Operator: [Operator Instructions] Your first question comes from Kenneth Fong. Kenneth Fong: [Foreign Language] [Interpreted] My first question is on the government trading subsidies. As the year-on-year comparison base is getting higher into the second -- into the fourth quarter, can management share the growth outlook for the electronics and home appliances grow for JD Retail? And financially, as the trading subsidies fade and volume kind of slower in terms of growth year-on-year. How should we think about the margin impact on JD Retail. My second question is on the overseas development. Post the recent acquisition on some company overseas and JD Joy by commenced operation. Can management share about this overseas strategy, including the scale and the pace of investment? Unknown Executive: [Foreign Language] [Interpreted] Thanks for your question, Kenny. Yes, since last year, the training program has stimulated consumer demand and contributed to the sales of home appliance and PCs, so this created an inevitable high base for the industry, which is within the market expectation. Although the trading program has caused short-term fluctuation in the consumer demand, its more substantial impact is driving industry upgrade and promoting products that are innovative, intelligent and green and ultimately, leading to high-quality growth of the industry. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Since the treating program, JD has actively supported the implementation of the policy. As such, we have further enhanced our market share and supply chain capability in the related categories and especially on our 1P model, the continuous enhancement of our core advantage differentiate JD and build our long-term growth foundation we'll continue to leverage our strength in product price and service with the goal to further strengthen user mind share and consolidate and expand our market share will focus on a few areas. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] So this area includes, first, on the product innovation, we'll collaborate with brands to launch more customized products, driving product upgrades and innovation on price optimization will also leverage our scale advantage and supply chain capability to further optimize cost, offering user more competitive price. And on the service, so we're offering omnichannel consumer service will build a seamless online and offline shopping experience for our customer. For example, we have been strengthening our off-line presence in home appliance and 3C categories, focusing on large stores like JD Mall, JD Home appliance, city flagship stores in the high-tier cities, and smaller ones such as JD Home appliance stores in the low-tier market. In addition, we also provide differentiated service, including integrated delivery and installation, offering better user experience and more efficient service to our users. With these efforts will further consolidate our market share. As of Q3, we have built -- we have over 20 JD Malls nationwide and the number of JD Appliance City flagship stores exceeded 100. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] In terms of profit margin, we'll continue to offer users the best value for money product to ensure better user experience and mind share. Additionally, whether during the training program or in a normalized phase going forward, our team will leverage supply chain capabilities and enhance collaboration with brands. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] So overall, we are confident in our user mind share and market share in the home appliance and 3C categories, JD will continue to strengthen our capabilities and strategic positioning, working very closely with brands to address short-term challenges and support the long-term healthy development of the industry. Additionally, our growth drivers are now more diversified. We have seen sustained sales growth acceleration in categories such as supermarket, health, fashion and service revenue from advertising, which are emerging as new growth engines for JD. Furthermore, as I just have shared both our user base and shopping frequency have been on a stronger growth trend during JD 11.11 Grand promotion, the number of our shopping customer increased by 40% year-on-year. This set of momentum will support our healthy growth next year and give us more confidence in the long term. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Regarding your second question on JD's international business. So first, from the strategic perspective, international expansion has always been a key long-term strategy for JD, as the largest retailer in China, we aim to gradually establish a highly efficient global retail network so that we can deliver JD's premium shopping experience to consumers worldwide. We recognize the international market is very big, for example, Europe is the second largest consumer electronics market in the world, only second to China, and there are still many great areas to improve user experience. We also aim to seize the opportunity of Chinese supply chain going global, leveraging our supply chain advantage to better support Chinese brands in their international expansion. In terms of business model, unlike other cross-border e-commerce platforms, we leverage our supply chain capabilities, commit to a local e-commerce approach and localization strategy. We collaborate with high-quality brands and suppliers around the world to create mutually beneficial partnership. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] In terms of progress, currently Joybuy our European online retail business is in the test phase in countries, including the U.K., France, Germany and the Netherlands. This marks an important step in JD's international strategy will continue to enhance user experience and build in key -- build our key capabilities in areas including first expanding product offerings and collaboration with premium global brands; second, enhancing logistics capability to improve the efficiency and stability of warehousing and delivery third, investing in R&D to optimize the product functionality and enhancing shopping experience. We welcome investor analysts based in Europe to experience our Joybuy app and provide us your experience. Regarding CECONOMY, the transaction is still subject to the regulatory approval will provide you guys further updates when appropriate. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] So from the investment standpoint, this is a gradual process. We will continue to advance our international expansion strategy steadily while maintain a gradual and prudent financial discipline. We will prioritize investment efficiency and make dynamic adjustments to adhere healthy and sustainable -- to achieve healthy and sustainable growth. Overall, the scale of the investment in our international business will not be substantial for JD.com and will carefully manage the investment pace and scale. Operator, we can take the next question. Operator: Your next question comes from Ronald Keung with Goldman Sachs. Ronald Keung: [Foreign Language] [Interpreted] The first is on food delivery. What is the duration that the JD will be committed to invest at this loss-making period as part of customer acquisition? And what's the progress in improving economics and commissions and business models like the 7Fresh and even coffee across the 7Fresh brands? Second question is on general merchandise, seeing very healthy growth there in 3P. So how do we plan to further strengthen the competitive edge in the 3P categories, supermarket, health and apparel in terms of speed, selection, quality and price? Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Thank you, Ronald, for your question. Both food delivery and on-demand retail is a long-term strategy for JD. We aim to drive healthy and sustainable growth of the business. We have been optimizing operational efficiency and improving UE. So in Q3, we remain very rational amid the intensified competition in the industry our food delivery business is currently in its first stage of development. Our goal for this stage is to establish better user mind share and market share in the quality food delivery sector. We will be committed to providing high-quality food delivery service to our existing premium user while attracting new users. Additionally, as you guys know, we'll be good at is supply chain. So we'll continue to deepen our supply chain effort such as through our innovative 7Fresh teaching model to offer differentiated experience and service to our users. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] So in the third quarter, JD Food Delivery maintained healthy growth trend. JD Food Delivery GMV achieved double-digit growth quarter-on-quarter. Alongside order volume growth, we also delivered a healthier order mix with a proportion of mill or mail orders steadily rising and contributing `to a bus majority of our total order. At the same time, average price per order also increased quarter-on-quarter compared to Q2 meet intensified competition. So this is remarkable. While scaling up overall investment in food delivery in JD Food Delivery business in Q3, narrowed sequentially thanks to the UE improvement, the revenue contribution of food delivery is still limited as we are implementing a commission-free policy for merchants and only started to generate limited advertising revenues. That said, our team has made solid progress in improving operational efficiency, including enriching supplies the number of high-quality restaurant merchants continue to grow in the quarter. And we also further improved our subsidy efficiency with refined operations and tailored subsidy strategy to different regions, user groups and order types. In addition, as we continue to upgrade our underlying system capability we have seen better operating efficiency. We also launched our new business, 7Fresh Kitchen model in July, which address full safety concerns through supply chain innovation. Our goal is to ensure that consumers can enjoy their meals with peace of mind and at the same time, help quality restaurant improve profitability. Since its launch, 7Fresh Kitchen has been welcomed by our customers with a rapid increase in its order volume. It has also boosted sales and order growth of other quality restaurants within the 3-kilometer range. By the end of this year, people will see more semi-fresh kitchen in the region of Beijing. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Looking ahead, we'll drive our strategic progress with a long-term perspective and focus on long-term ROI. Our goal is to create a sustainable business that drives healthy order growth and at the same time, gradually and long scale effect and enhance operations with better UE. Ultimately, JD food delivery should be a self-sustaining business. Moreover, food delivery is deeply integrated into JD overall ecosystem. We believe there is significant potential for synergies in user momentum, supply and fulfillment within our ecosystem. The way of our business working together is not simply adding 1 and cutting another. JD user acquisition costs -- in the long term JD-user acquisition cost will decrease. And at the group level, we are committed to driving sustainable growth while maintaining profitable and cash flow sufficient. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Regarding your question about our general merchandise category, as I mentioned before, it has sustained a 4 quarter consecutive double-digit growth key categories, especially supermarket, health, fashion and home goods all delivered very strong growth. We see significant growth potential in general merchandise, including supermarket and fashion as our users have substantial unmet demand, we have clear growth strategy for each of these key categories. First, on supermarket categories, we focus on improving user mind share and user penetration through promotions such as -- through our promotions such as Black Friday and Super 18 will build stronger user mind share of our supermarket offering. Supermarket category will also take the opportunity of our rapid user growth on the platform to drive healthy -- higher penetration and conversion. We have been optimizing costs and improving operational efficiencies through our supply chain capability, providing more competitive price to our user which validates the economic scale of our 1P model. Our supermarket category has made solid progress in this area and build strong competitive -- competitiveness compared to other models online and offline. At the same time, we will collaborate with brands further refine our operations and build categories with strong JD mind share and growth potential such as liquor, baby and mom products and household cleaning categories or all have already established strong user mind share, we expect to make breakthroughs in other categories as well. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] Overall, our strategy for the general merchandise category is very clear. We are confident in the growth potential and market opportunity in the general merchandise sector as we enhance operation and user mind share. General merchandise is an important pillar of JD growth metrics and will support our long-term sustainable growth. We can take the next question, operator? Operator: Your next question comes from Alicia Yap with Citigroup. Alicis a Yap: [Foreign Language] [Interpreted] So can management share with us the synergies on general merchandise category that benefit from the food delivery traffic, most of your food delivery users come from loyal JD user -- and what is the retention rate of the newly acquired user through the food delivery? Would you be able to quantify and share the cohort of new food delivery users who become active user of JD Core retail user. And second question is can management update us on your latest AI strategy and investment. Can you elaborate how AI has helped on JD's Core business? And how do we think about the financial impact? Ian Su Shan: [Foreign Language] Unknown Executive: [Interpreted] Thank you, Alicia, for your questions. I will take the first one. So as JD Food Delivery drives healthy development, we also see it's generating deeper synergies with JD Retail. First, on the user growth and user engagement side. In Q3, DAU of JD app maintained a rapid growth with growth rates leading the industry. Our quarterly active customers and user shopping frequency, both recorded over 40% year-on-year growth in the quarter. As we continue to provide quality food delivery, we have seen JD food deliveries user retention rate maintained at a relatively high level and at the same time, boost our overall user engagement and user shopping frequency, while serving our high-quality existing users, our food delivery business also attracts new users to our platform. Our annual active customer number surpassed the milestone of 700 million in October, reflecting our expanding user base and increasing user stickiness. At the same time, we will be accelerating the deployment and further optimizing our user conversion strategies and tools based on the preferences of food delivery users -- we have been providing retail product selection and recommendation in a more precise way, thus driving better user conversion. We have seen that the conversion rate of the new users acquired by JD Food Delivery has been trending up month by month. And for the earliest group of such users, their cohort conversion has reached close to 50% in Q3. Alicis a Yap: [Foreign Language] [Interpreted] Second, on the cross-sell side, we will see a stronger trend of cross-category purchases of food delivery users, particularly of our general merchandise category including supermarket products and live services. We believe food delivery will create new growth momentum to our general merchandise category as it attracts new users and drives up shopping frequency of our existing users. In addition, 3D food delivery has also accelerated the development of our on-demand retail business. We will build a dedicated team that pays close attention to this area. Going forward, we will continue to accelerate the synergies between food delivery and core retail business, in terms of user momentum, cross-category purchases and marketing. In addition, we will tap into more synergies of our broader business ecosystem driving healthy progress in our user base expansion, revenue growth and efficiency improvement. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] I'll answer the second question. So we are in the new era where we see a lot of new opportunities in AI and significant value of business model reform. JD has built a solid comprehensive AI capability framework that covers infrastructure models, platforms, application scenarios and products. Over the next 3 years, we will make a sustained investment to foster a trading RMB scale AI ecosystem across various industries. So at our JDB conference, in September, we have unveiled JD AI strategy road map and launch flagship AI product, including our JD AI TaTaTa and all-purpose digital human assistance and JoyInside an AI agents for robot toys, devices and among others. Xu Ran: [Foreign Language] Sean Shibiao Zhang: [Interpreted] In terms of application, JD's differentiation is that we have extensive application scenarios, including retail, logistics, health care and industry -- other industry sectors -- so taking both retail and logistics, as example, in retail use case, we are providing merchants with over 50 AI tools, such as AI systems, AI agent for advertising allocation and [indiscernible] MDM to help them -- help merchants enhance efficiency and lower cost in content generation marketing, supply chain management and customer service. We also redefined e-commerce experience in the AI era. We launched a smart search and recommendation function through natural language interaction, it can precisely understand user needs and delivering a huge breakthrough in shopping efficiency and truly personalized shopping experience. In the logistics use case, while our logistic robots have been deployed across more than 20 provinces in China and over 10 countries globally, covering the entire logistics chain from warehousing, sorting to transportation and distribution. Looking ahead, the expanding deployment of logistic robots autonomous vehicles and drones will further reduce logistic costs in the society, increase our business partner efficiency and keep optimizing shopping experience for our consumers. Okay, operator, we can take the last question. Operator: Your last question comes from Thomas Chong at Jefferies. Thomas Chong: [Foreign Language] [Interpreted] My first question is about our ecosystem development, including the number of 3P merchants contribution as well as the expectation over the next few quarters. And my second question is about the outlook in terms of our profitability and margin in the next few years. Ian Su Shan: [Foreign Language] My first question is above our ecosystem development Xu Ran: [Interpreted] Thank you, Thomas. We've actually made solid progress in developing our platform ecosystem with a set of indicators growing at a very rapid pace. So in Q3, our active merchant number grew by over 200% year-on-year. We have onboarded more top-tier merchants as well as merchants from industrial belts, providing users further enriched product offering. Meanwhile, our food delivery business has also brought in a large number of quality restaurants to merchants. We have also seen positive feedback from users. In Q3, the number of users who shopped our 3P offerings grew at a fast pace of over 50% year-on-year, outpacing the growth of our total users reflected in the financial results our commission and advertising revenues have been on a very rapid growth trajectory with growth rates accelerating to 24% year-on-year in Q3, which is the highest pace since Q2 2022. Thomas Chong: [Foreign Language] Xu Ran: [Interpreted] We believe our platform ecosystem has a lot of potential. In particular, we will further explore industrial belts to onboard more merchants -- we will also continue to expand our full delivery merchant base to enrich local supplies for our 3P ecosystem. In addition, we will continue to strengthen our platform infrastructure and provide more tech tools to merchants with the goal to help them enhance operating efficiency on our platform. We will also optimize merchant operation rules and traffic allocation efficiency to create a clear growth path and a fair ecosystem for our 3P merchants. In addition to that, we will continue to strengthen user mind share of our 3P offerings. We will see that for our 3P driven categories such as fashion category, users have built growing mind share of shopping for clothing on JD.com. We are committed to developing our platform ecosystem, achieving win-win outcomes with our 3P merchants and better serving our users. Platform Ecosystem business will also be our long-term driver for both revenue growth and profitability expansion. Thomas Chong: [Foreign Language] Xu Ran: [Interpreted] For your second question, in Q3, JD Retail continued to see steady profit growth. This further validates our confidence in retail's long-term margin trajectory. The main drivers for this include: first, the healthy development of our platform ecosystem will drive growth momentum in our commission and advertising revenues, which will be a contributor to our margin expansion. Second, as we continue to build up our supply chain advantages and the scale effect of our core retail business, we are confident to further lower cost and improve our operating efficiency, which will lead to better margin performance. To note, JD Retail's gross margin has been expanding year-on-year for 14 consecutive quarters. Third, our category mix shift will also impact our margin performance. Currently, the operating efficiency and margin performance of most of our categories and brands have been improving. In particular, our supermarket category has built stronger procurement capabilities and differentiated product offerings. We see meaningful potential to further increase supermarkets margins going forward. Meanwhile, as we continue to optimize the product mix for electronics and home appliances, we also see room to increase these categories margins in the long term. In terms of investments in our new businesses, we will be centered around supply chain capabilities to make investments such as in food delivery, international and Jingxi businesses. As we further enhance our supply, performance and services and broadened coverage in categories, customers and regions, we see more growth potential of our businesses. As the new initiatives generate deeper synergies with our existing businesses, we expect to see improvements in operating efficiency and profitability of our broader business ecosystem. Finally, our high single-digit margin target for the long term remains unchanged. Operator: We are now approaching the end of the conference call. I will turn the call over to JD.com's Sean Zhang for closing remarks. Sean Shibiao Zhang: Thank you for joining us on the call today, and thanks for your questions. If you have further questions, please do not hesitate to contact me and the IR team. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you. Have a good day. Operator: Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Good day, and thank you for standing by. Welcome to Better Collective Q3 2025 Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Better Collective VP, Investor Relations and Communications, Mikkel Munch Jacobsgaard. Please go ahead. Mikkel Jacobsgaard: Thank you very much, and good morning, and welcome to Better Collective's Q3 webcast. My name is, as you just heard, Mikkel Munch Jacobsgaard, and I'm the Vice President of IR and Corporate Communications here at Better Collective. I'm joined today by our Co-Founder and Co-CEO, Jesper Sogaard; and CFO, Flemming Pedersen, who will provide today's business update in connection with our Q3 report that was disclosed yesterday. Please follow me to the next slide. We ask you to pay attention to this slide where we display our disclaimer regarding any forward-looking statements in today's webcast. Please turn to the next slide as I hand over the word to Jesper for the third quarter highlights. Jesper Søgaard: Thanks a lot, Mikkel. Good morning, all, and thank you for joining today's webcast. Let's dive into the Q3 highlights, and please follow me to the next slide. Overall, we are happy to show good underlying growth in Q3 when normalizing for the sports win margin. During especially September, the Sportsbook saw player-friendly results, which dampened revenue and earnings by EUR 10 million when comparing to the same period last year. Group revenue reached EUR 78 million and EBITDA came in at EUR 21 million. I'm very satisfied with this performance despite the low sports win margin, which is an external factor we cannot control and also that normalizes over time. In Brazil, we continue to see good activity levels in line with recent quarters with revenue above our expectations. Although the market remains affected by the ongoing regulatory transition, dampening our ability to send new customers to our partners. In North America, revenue share more than doubled compared to last year, further strengthening our base of recurring revenue in the region. Our new KPI, the value of deposits reached EUR 726 million, up 2% year-over-year. Considering the continued regulatory transition in Brazil, this stable development is a strong achievement and confirms the solid quality of our underlying player databases. On the cost side, group costs continued to trend down, reflecting the successful execution of our cost efficiency programs. Finally, we maintain our financial guidance for the year and continue our share buyback, which we announced with the Q2 report. Please turn to the next slide. On this slide, you can see the main factors influencing our revenue performance in the third quarter. First, the sports win margin reached a record low in Q3, impacting revenue negatively by EUR 10 million. Secondly, the ongoing regulatory transition in Brazil continued to weigh on performance, contributing with EUR 4 million negative impact, although this is better than expected. Thirdly, we had an FX headwind of EUR 2 million. On the positive side, the North American revenue share doubled, showing EUR 4 million of growth. Furthermore, we saw underlying growth in the business of EUR 9 million. This was particularly within Paid Media, Sports Media and our talent-led media. Altogether, this brought us to a Q3 revenue of EUR 78 million. Please turn to the next slide where we look at the development in EBITDA. EBITDA was largely flat with key components being the revenue-related effects just discussed accounted for a EUR 3 million negative impact, where the sports win margin had full negative effect. Last year's cost reductions included temporary one-off items such as variable pay reversals, which created a EUR 6 million positive effect last year. We also continued to invest in growth, particularly within Paid Media, where higher activity levels led to EUR 2 million in additional costs. Lastly, our cost efficiency program launched in October last year delivered EUR 8 million in cost reductions. Altogether, this brought us to a Q3 EBITDA of EUR 21 million. Please turn to the next slide. Following Q3, our 2025 and 2027 financial targets remain unchanged and are shown here. We remain confident in delivering on our 2025 guidance with Q4 expected to be our largest quarter of the year, consistent with prior years. The quarter will be supported by a higher top line in the busy sports season and continued cost discipline as demonstrated in Q3. Please turn to the next slide. In September, we reached one of the most defining milestones in Better Collective's history with the launch of Playbook, our new AI-powered betting solution. Playbook marks the beginning of a new chapter for Better Collective as we expand beyond customer acquisition to also include user retention and long-term engagement. This is a vision my co-founder, Christian and I have shared since founding the company to empower fans with smarter, more personal and more intuitive ways to engage with sports and betting. By using AI to understand intent and context at scale, Playbook transform fan engagement into real-time data-driven experiences. This allows fans to seamlessly make bets directly from the communities and platforms where they already spend time, whether that's on X, in messaging apps or across our own media brands. Our partnership with X in the U.S. positions us exactly where sports conversations naturally happen, giving us access to unmatched scale, data and first-party insights. Within just a few weeks, Playbook has already generated millions of bets placed and shown exponential growth, clearly validating both the product and the vision behind it. Ultimately, for me, Playbook represents the next evolution of Better Collective, transforming how we connect with fans, deepening engagement and creating lasting value for users, partners and shareholders alike. Since launching Playbook in September, we have seen exceptional and rapidly accelerating growth. This measures when a user is directed to a sportsbook after choosing a bet slip suggestion. Very encouragingly, almost all of these clicks result in bets being placed, which clearly demonstrates the strong user intent and conversion rates of the product innovation. We are very pleased that only a few weeks after launch, Playbook has already generated millions of bets placed with our partners, a very encouraging start for what we see as a long-term growth driver for Better Collective. Please turn to the next slide and let Flemming take us through the financial performance for the quarter. Flemming Pedersen: Thank you, Jesper, and good morning to you all. Please follow me to the next slide as we dive into the financials. As Jesper mentioned earlier, the result ended in a 4% revenue decline to EUR 78 million. However, when we normalize the sports win margin impact, which hits both revenue and EBITDA, the picture changes and on a normalized basis, we would have seen organic growth. As Jesper mentioned, we do see fluctuating sports win margins from time to time, and it is something we cannot influence and it is just dependent on sports results, which in this quarter and in September, in particular, have been in players' favor. Let's turn to the next slide. A key strategic focus for us continues to be the expansion of our recurring revenue base, which provides a solid and predictable foundation for the business and represents significant unrealized value over time. Year-over-year, recurring revenue declined by around 5% to EUR 50 million. This was primarily driven by the lower revenue share, reflecting the unfavorable sports win margin in the quarter as well as the ongoing regulatory transition in Brazil, where the market was reset by 1st of January following the new market regulation. Importantly, we continue to send new customers on revenue share agreements. In this quarter, the ratio was more than 80% of NDCs sent to partners operating on revenue share terms. A significant portion of this revenue is still unrecognized and will materialize over time, further strengthening our long-term earnings potential. In the last 12 months, we have generated EUR 160 million in revenue share income. Please turn to the next slide. Continuing on recurring revenue, let's take a look at our North American revenue share development. Back in Q3 2022, we began shifting our U.S. business model towards revenue share agreements, gradually moving away from CPA agreements to the extent possible. During 2023, parts of our revenue share agreements included upfront components, which temporarily boosted our reported revenue share income to levels similar to what we are seeing today. However, that structure is now almost fully transitioned to pure-play revenue share. Today, the revenue share we generate in the U.S. mainly comes from pure-play revenue share and only a small degree upfront payments. This entails a significant improvement in the quality of earnings as it means that the revenue we recognize is fully recurring and directly tied to player performance over time, providing more stability, predictability and long-term earnings potential. Due to the nature of the U.S. market where players are often incentivized by large bonuses, it has taken quite some time to get here. But we knew this when we started, and now we are seeing the returns coming. As you can see on this slide, revenue share income in North America doubled compared to last year. We expect this steady buildup to continue, further strengthening the foundation for our recurring revenue base. Please follow me to the next slide. Let me then turn the focus to our cost base. Our cost base reached its peak in mid-2024 at EUR 70 million per quarter. In Q3 2025, costs were 18% lower compared to that peak, now standing at EUR 57 million. This reflects a leaner and more efficient operating structure that positions us well to the future growth. We have communicated a lot about this in previous quarters. And while we are still focused on optimizing the business, we feel that we are in a good place now with the right organizational structure in place for the coming years. Included in the costs during the past quarters are also investments in new business initiatives such as the growth investments in paid media, the development and launch of Playbook as well as a number of new other initiatives. Please turn to the next slide. EBITDA before special items was largely flat year-over-year, resulting in a margin of 27%. However, when we normalize for record low sports win margin, the underlying performance is strong and the result of the business ability to drive new business across platforms and the disciplined cost management. As a reminder, a negative sports win margin impacts both revenue and EBITDA with equal impact. Please turn to the next slide. Take a look at our free cash flow development. Starting from Q3 year-over-year, EBITDA before special items of EUR 65 million. We saw a positive change in net working capital of EUR 7 million. Net financial expenses and tax payments each amounted to EUR 13 million, so EUR 26 million in total. In addition, we had EUR 14 million in other investments where the major part is related to our media partnerships. Altogether, this brings us to a free cash flow of EUR 32 million year-over-year, fully in line with our expectations and supporting our full year free cash flow guidance of EUR 55 million to EUR 75 million. Not shown on this slide, but worth mentioning is that our operational cash flow before special items was very strong, ending in a cash conversion of 168%, which reflects a healthy underlying cash generation from our core business. Lastly, regarding financing, in September, we entered into a new 3-year committed bank facility of EUR 319 million with an additional EUR 80 million accordion option. This facility strengthens our financial flexibility and supports our ability to execute on strategic priorities. We are very happy with this strong backing from our main banks. Please turn to the next slide. Over the past year, we have seen a decline in NDCs largely driven by the slow dropdown in Brazil, where welcome bonuses remain prohibited. However, as we mentioned in our previous webcast, while NDCs continue to be an important metric, the value of deposits provides a more meaningful view of the actual performance of our revenue share databases. As shown on this slide, the value of deposits has continued to grow consistently over time, underlining the health and quality of our recurring revenue base. Even more important to highlight, the value of deposits grew year-over-year, which is a solid achievement considering the ongoing regulatory transition in Brazil. A key driver of growth in the U.S. market characterized by significant higher player values compared to other markets as well as the Brazilian growth in past years. Please turn to the next slide and I hand the word back to Jesper for the key takeaways of today. Jesper Søgaard: Thank you, Flemming. And please turn to the next page. Before we close, let me summarize the key takeaways from the third quarter. Group revenue came in at EUR 78 million and EBITDA at EUR 21 million, both impacted by the record low sports win margin. Despite that, the underlying business showed solid growth across core markets and businesses. Brazil remained active, though still affected by the ongoing regulatory transition, while North America revenue share more than doubled compared to last year, further strengthening our recurring revenue base. Our new KPI, the value of deposits reached EUR 726 million, up 2% year-over-year, confirming both the quality and stability of our player database. Group costs continue to trend down, reflecting the ongoing execution of our cost efficiency program. During the quarter, we launched Playbook, which is a significant milestone for our company. Finally, we maintain our financial guidance for the year and initiated a new EUR 20 million share buyback program, bringing the total share buyback programs launched this year to EUR 40 million. All in all, we are entering the final quarter of 2025 with a leaner structure, a stronger recurring base and positive momentum heading into 2026. Thank you for your attention. Let's move on to the Q&A. Operator: [Operator Instructions] We will take our first question, and the question comes from the line of Hjalmar Ahlberg from Redeye. Hjalmar Ahlberg: Maybe to start a few questions on the Playbook product there. What do you see in terms of operator feedback this far and maybe some comments on how they potentially can pay for this product in terms of the retention you provide? Jesper Søgaard: Well, thanks, Hjalmar. First off, we -- I think what really matters and where this start is that there's great user adoption, like we are really pleased with how the sports betters are utilizing this product and basically are able to place bets more conveniently. And then on our partner side, we are seeing good feedback. And basically, I'm pleased with how they also engage with this product. I think when you consider the current sort of quality of Playbook is that it makes it super convenient to place a fairly complex bet, say you want to put on a bet on a single game with many different parts of that single game parlay. That's very cumbersome to actually place within a sportsbook app, and especially if you have seen on X, where we have partnered, some experts sharing their bet slip with, let's say, 10 different picks, it will take you a lot of time to place that, so we really create convenience about placing that particular bet. And for the sportsbooks, these single-game parlays or multi-game parlays are quite attractive due to the margin profile of such tickets. Obviously, they have higher odds and basically are more like a lottery ticket, but that also leads to an attractive margin profile for the sportsbooks. And we really facilitate a higher number of such bets flowing through to the sportsbooks, so it's -- it has been well received. And yes, we are well aligned with the sportsbooks on this product. Hjalmar Ahlberg: I'm just curious about this product. I mean, how long have you been working on the development of the product? And also, interesting to hear if you have any -- I mean, in terms of product development, are you looking to do more in terms of products that are focused on retention compared to acquisition? Jesper Søgaard: Yes. So, this is actually a product evolution, which started with our quick slip integrations that we did and then basically applying AI as the big unlock here, which allows for that context recognition and matching on the sportsbook side. And no doubt, we are really excited about this product, and I'm so impressed by our product organization who've done a great, great job of delivering this product in a short period of time, ready for the start of the NFL. And we'll continue to invest in this product and develop it, and ultimately, it's about creating convenience for the sports punters and help them place the bets they want to place, but also in the future, place the kind of bets they probably had not considered and could be inspired by our product. So, we're investing a lot into this product and definitely see still a lot to be done in developing the full vision of Playbook. Hjalmar Ahlberg: And also on North America... Flemming Pedersen: No, I think just to be fair, you also asked the question to monetizing, Hjalmar. And I think you can say -- we actually you can say went slow in the beginning, but we have been surprisingly -- positively surprised, I would say, about both the adoption, but also the partner engagement. So, we are already seeing, you can say, that product monetizing. Still, it's in the early phase, of course. And as Jesper said, it's focused on user adoption. But I can say, from my chair, we are quite pleased with that already. Hjalmar Ahlberg: Sounds good. And also, good to see some really strong revenue share income in North America. I just wanted to hear if you can maybe elaborate a bit. I mean if you compare North America, if I understand it correctly compared to Europe, it's maybe not always the same length or lifetime permission contract. How do you think that will evolve over time? I mean, do you think that will -- I guess it is still a long time before that make an impact. But yes, if you can comment anything how we should view that compared to Europe, for example, if you understand my question. Flemming Pedersen: Yes. I think for revenue share in the U.S., as I also mentioned, it has taken us a long time where we have been sort of not seeing a lot of revenue from all our investments we have made in revenue -- sending revenue share players, if you like. Because of the nature of the market where bonuses are so big in comparison to other markets, so it takes a long time before the player becomes profitable. But now we are seeing that, you can say, coming into the positive territory, and of course, that's very pleasing to see and also the player values that we have we assessed in the beginning, we are also happy with what we are seeing eventually. Hjalmar Ahlberg: Got it. And a final question, just on the costs there. I mean you see continued good progress on cost savings. And it also looked like the staff cost was down quite a bit compared to Q2 this year sequentially and also the number of employees, Is that something temporary in Q3? Or is it more like costs that will remain even going into Q4? Flemming Pedersen: Yes, I think it is, you can say, a reflection of the cost efficiency program we have been running. So, I think that's just, you can say, the new base basically. Operator: We will take our next question. Your next question comes from the line of Edward James from Cantor Fitzgerald. Edward James: Great. It's just primarily on guidance, and I'd be interested if you could just unpack what is baked into both the low end and the high end of guidance for fiscal 2025, both on revenue and for EBITDA margins and just to understand that bridge because obviously, the guidance is unchanged, but it leaves quite a wide range of outcomes for the single quarter of Q4. So, any comments there would be appreciated. Flemming Pedersen: Yes. Flemming here. You can say the guidance will basically be that we perform as expected in what is our biggest quarter by seasonality. If you look at the Q4 last year, it's sort of more or less in line with that with some bit of growth. So, we are pretty confident on that. Of course, there is also, you can say, to the higher end, sports win fluctuations. Now we have seen a very low sports win margin in September. So, you can say within that range, there's, of course, also the win margin fluctuations. So, I think that's the comments I can make to that. Operator: [Operator Instructions] Your next question comes from the line of Poul Jessen from Danske Bank. Poul Jessen: Yes. I have 2 questions. Coming back to the Playbook, could you put a little more color on how it works if a client go on to accept a suggestion for multi-bet and that is then placed at non-par at a sportsbook where you have no agreement, it's still put on. But what is then your intention to showcase in the future that you will generate traffic and then make a deal? And then secondly, if he has no -- if he's not a registered player at a sportsbook then you will see revenue from those new players maybe in 2 years. Is that the way we should understand? Jesper Søgaard: Poul, thanks for the questions. Yes, so there are actually different monetization models in place. And like starting with the last one, we obviously have sort of the normal affiliate deals in place with our partners. So, if we send a new customer to them, that player is being tracked to us. And then we also have sort of more retention-based models, where it's based on volume, and where we can also make money from players that we have not sent in the past. But of course, there are different models in place, and we work with several sportsbooks on this. So, there are basically different models in place. But I think overall, we are quite pleased with sort of the ways we can monetize this product and also basically just gaining a lot of very attractive and interesting data insights on this particular audience. Poul Jessen: Okay. And the second question is about the prediction markets. That has been putting a lot of pressure on the betting companies during October and into November. So how do you look at it? Are you totally neutral, so you don't care if it's one or the other who wins that game? You're just happy that it will create more competition and therefore, improve your value. But are you having a partnership across the full space? That's question number one. And then the second is on Flutter yesterday, saying that they're going to launch prediction-based betting nationwide in December. Yes, if you could put some views on that. Jesper Søgaard: Yes. Yes, sure. I can do that, Poul. And I think it is, of course, a very big theme right now, the prediction markets, and clearly, a win-win for us. At a high level, prediction markets are gaining traction in the U.S. because they give a real-time view of what people actually think will happen, not what polls or headlines suggest. They let people express their expectations in a transparent way. And this isn't a new territory for us. I can say personally, I've been betting with Betfair for more than 20 years, and Betfair has been a customer of ours. So, we are very used to the European side of our business, to the prediction markets where you have betting exchanges. From a U.S. sports industry perspective, the growing attention around prediction markets underlines a very strong underlying demand for bet-type products. As these platforms become more visible, they can help push momentum for broader regulation of online sports betting in more states. And I have probably one particular state in mind, like California, being the single biggest opportunity in the U.S., and that would be very positive for the whole ecosystem, including us, if we were to see any progress there. And as I said, for Better Collective, this is clearly a win-win. We already work with the key players in prediction markets and monetize traffic in States where online sports betting is still not regulated. And if prediction markets help accelerate the regulation of online sports betting, we benefit from that as well. So, regardless of which way the market develops, we are in a strong strategic position to capture value on both sides. And also alluding to Flutter that you mentioned, they are also signaling increased spending related to this ecosystem. And I think books have been speaking to increased spending related to this ecosystem. And obviously, I do believe suppliers will benefit from that. Poul Jessen: And in the prediction part, is that revenue share as well? Jesper Søgaard: Well, in general, we have affiliate models in place, and the way we monetize this is not something we specifically comment on. Poul Jessen: And then the final one, just a clarification about the headwind of EUR 10 million in revenue share. Is it fair to assume that more or less all of that is coming from Europe and the rest of the world, as the U.S. was already very low last year? Flemming Pedersen: Yes. Flemming here. Thanks, Poul. It's basically on both sides of the Atlantic, if I can put it that way, that we have seen headwinds. And also, to be transparent, you can say on a normalized win margin, you can say we would have seen a EUR 7 million decline. So actually, we had some tailwind in the previous year's Q3. Hence, why the year-on-year comparison is a bit bigger. But yes, it was basically both in the U.S. and the rest of the world. Poul Jessen: But if you only had EUR 4 million in the U.S. last year, then there is a limit on how much you could lose over. Flemming Pedersen: Yes. But you can say it is growing, and more and more partners are coming into positive territory, hence, where we see the impact. You don't see the impact on a partner where you are in negative revenue share territory. So that's sort of the shift. But I think going forward, we will include the win margin comments. We have only done that when we have seen some sorts of exceptional moves. So, to put a bit more color on that. Operator: There seems to be no further questions from the phone lines. I would like to hand back for any webcast questions. Mikkel Jacobsgaard: We have a few online here. So, if we start with one here, I guess, for you, Jesper. What is the reason for the NDC trend? And last quarter, you reported a split for the NDCs in Brazil and the rest of the world. Why is that not shown this quarter? Jesper Søgaard: Yes. First off, like we don't intend to show that every quarter. But I think the main message from that was the impact of Brazil and no sign-up bonuses, and we are seeing a similar picture in Q3. And then obviously, also last year with Cap America and the Euros, also NDC drivers. So, I think more or less, it's as expected in Q3, what we are seeing from NDCs. Mikkel Jacobsgaard: Thank you. And then we are getting a few questions that I'll bundle into one in terms of what the expectations are for sports win margin heading into Q4, and what normally also happens when you have such a low sports win margin in one quarter? Flemming Pedersen: Yes, I can take that. Normally, we forecast sports win margin on a historical basis, and that's also the case for Q4. So, no extraordinary, you can say, in that for the full year forecast. Mikkel Jacobsgaard: Thank you. Then we have a bunch of questions related to the Playbook that I think have already been answered earlier on in the call in terms of monetization and partners and so on. So, I think we'll leave it at that. But we do have a question on the guidance as well. Also, I think that was also answered. I think Ed asked us that question from Cantor in terms of Q4 and what our guidance expectations were. Then there is a question related to prediction markets, more specifically in terms of new depositing customers, whether that's something that we're seeing already now, and at what levels? Jesper Søgaard: Yes, we can confirm that we are sending NDCs also to prediction markets. Mikkel Jacobsgaard: Then there's a question related to our NDCs and the mix between revenue share and CPA, and that was around 80% for this quarter. So, I'll take that one. There's also a question, I guess, for you, Flemming, related to cost savings. We are being congratulated on the work. And it seems like the question is about whether staff costs will stay where they are or if we have more expectations for those going forward? Any expectations for those? Flemming Pedersen: Yes. I think we have sort of also, in connection with Q2, stated that now we have sort of ended our cost efficiency program. So now we sort of see a normalized level of cost, and that is also what we have built into our future guidance. Mikkel Jacobsgaard: Thank you. Then we have a question, I guess, for you again, Jesper, turning back to prediction markets and whether we expect both to work with prediction market platforms and sportsbooks on, and to work with prediction markets. Jesper Søgaard: Yes. I think right now, it's quite clear that the entire market is being embraced by all participants, both in sports betting and also more on the financial side. And as I alluded to earlier in -- sorry, it’s a bit lengthy reply to Poul's question about prediction markets is that it's essentially a win-win for us as we can work with all of them. When you look at the audiences we have across our big brands in the U.S., this is like key audience for these products. And we also have a significant audience from all states in the U.S. on our platforms. Mikkel Jacobsgaard: Thank you. There are no further questions online. So, thank you very much for showing interest in Better Collective. Have a nice day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and a warm welcome to today's earnings call of the Aumann AG following the publication of the Q3 figures of 2025. I am delighted to welcome the CEO, Sebastian Roll; and the CFO, Jan-Henrik Pollitt, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move over to our Q&A session in which you have the possibility to place your questions directly to the management. And having said this, we're looking forward to your presentation. Mr. Roll, the stage is yours. Sebastian Roll: Yes. Thank you. Good afternoon, everyone, and thank you for the kind introduction, and a warm welcome from both of us. For those I haven't met yet, my name is Sebastian Roll, and I'm the CEO of Aumann. And joining me today is Jan-Henrik Pollitt, our CFO. So I really appreciate your interest in Aumann and this earnings call. Over the next few minutes, we will walk you through a brief snapshot of Aumann, the latest developments shaping our E-mobility and Next Automation segments and of course, our financial performance in the first 9 months of 2025. So let's start with a quick look at our business model. We design, as you know, and build high-end fully automated production lines tailored precisely to the needs of our international customers. With decades of experience in automation, industry leaders around the world trust Aumann to deliver innovative solutions. One of our competitive advantages is staying ahead, especially in fast-growing markets, enabling us to quickly provide customized solutions. This is why the automotive market, especially the E-mobility sector remains so attractive forum. In addition, the robotics and automation market is growing rapidly, driven by demographic change, labor shortages and cost pressure. These trends also drive our Next Automation segment, allowing us to use our automation expertise in many industries beyond automotive. Let's take a quick look at Aumann's solutions. Our portfolio range from modular solution and complex process solutions to large-scale production solutions. In modular solutions, Aumann offers standardized cell systems. They enable our customers to react fully flexible and cost optimized on market demands. In addition, Aumann develops production lines for complex processes such as winding, coating and testing. The aim is to implement special process steps in the most efficient way. Moreover, Aumann offers customized large-scale production solutions built for maximum output while ensuring high quality. Thanks to Aumann's wide range of solutions, we can fully support different production goals of our customers. This slide shows how Aumann became a technology leader in E-mobility. Starting from the traditional automotive market, E-mobility was identified as a target market. Through strategic M&A, Aumann took the first step into the e-motor. Building on our know-how, we developed different solutions for the rotor, quickly followed by solutions for the stator and finally, the full e-motor assembly. After the e-motor, we continued our journey using our skills to sell large-scale production solutions for battery modules and packs. In addition, we introduced our own modular systems, for example, for inverter assembly, but also very useful right now in the field of Next Automation. Furthermore, we entered into converting technology. This enabled us to provide production solutions for electrode manufacturing. Aumann is the leading provider of turnkey E-mobility solutions. This illustration shows the drivetrain of a fully electric car and nearly all components can be produced on Aumann production lines. From the very beginning, Aumann has placed a strong focus on the e-Drive unit. Even today, our customers follow very different approaches in developing stators and rotors. As a turnkey provider, we provide the latest production solutions for both, and we go further. With our modular production systems, we have expanded our portfolio to include production solutions for electronic components such as sensors and inverters. This allows us to offer flexible and scalable solutions perfectly tailored to each customer's needs. Now let's shift our focus to our battery portfolio. Here, Aumann benefits from its strong position in the field of energy storage. We cover the full range from battery modules and packs to cell-to-X solutions. This expertise allows us to meet customer needs and develop new solutions for future battery technologies. Let's take a look at the E-mobility market today and in the future. BEV, so battery electric vehicles sales continues to gain traction. In the first 9 months of 2025, more than 9.5 million were sold worldwide. This means a plus of 36% in comparison to the same period last year. China stays in the lead with over 6.1 million units, but Europe follows with strong growth, reaching more than 1.8 million units with 25% increase compared to last year, including Germany with an impressive 38% growth. The U.S. market, which currently shows the lowest volume in comparison, is at least growing by 12%. So this means by 2030, BEVs are expected to make up 40% of sales by 2035, even 2/3. So despite this positive growth perspective, the industry has been slowing down since 2024. The main reasons are the challenging geopolitical conditions. Nevertheless, rising BEV sales and a more stable geopolitical situation are expected to drive new investments in the near future. Let us return to the beginning of the presentation. As mentioned besides the automotive industry, we are shifting our focus on other industries that need more efficient operations, higher productivity and fewer manual steps and errors. At the same time, rising labor costs and the lack of skilled workers are driving companies to automate. In this context, we have moved our Next Automation segment from an opportunistic to a strategic approach. This segment focuses on growth industries beyond automotive, such as defense, aerospace and life science. Let's take a closer look. In our segment, Next Automation, we have defined 3 strategic growth areas. Aerospace is really picking up speed. Demand is growing in civil aviation. Boeing and Airbus expect over 40,000 new aircraft over the next 20 years. In addition, defense budget are boosting. Drones are our focus. The German Armed Force recently decided to procure systems for about EUR 1 billion. Drones combines exactly what we do best. Electric motors, battery pack, full system integration and end-of-line testing, just like in E-mobility, same technology, new applications. Besides aerospace, cleantech is booming. German government are putting EUR 500 billion into infrastructure and climate. This is driving more investment into renewables, hydrogen and energy grids. Our third pillar is life science. An aging population, strong investment and healthy margins make it a very promising industry. Now I would like to hand over to Jan. Jan-Henrik Pollitt: Yes. Thank you, Sebastian, and also a warm welcome from my side. I would now like to share with you the financial figures of the first 9 months of 2025. Let me start with a quick overview. For 2025, it was clear that we will face a decline in revenue, particularly due to the already weaker order intake in 2024. At the same time, we were committed to leveraging every possible measure to keep our margins at a high level. It is also important to note that especially with regard to the automotive industry, that investment behavior continues to be very cautious. This trend is evident across the entire spectrum of automotive OEMs and suppliers. And unfortunately, we cannot escape its impact. The market environment is still challenging. Under these circumstances in the first 9 months of 2025, we reached a revenue of EUR 158 million, which is 32% below the previous year and in line with our full year guidance. Our profitability remains strong with a double-digit EBITDA margin of 11.6%. Order intake after 9 months amounts to EUR 112 million, which is 29% lower compared to last year. Order backlog reduces from the year-end level of EUR 184 million to now EUR 136 million. Furthermore, our balance sheet remains strong with EUR 160 million net cash. Let us now jump into a few details. Across segments, we achieved a revenue of EUR 157.7 million, which means a decrease of 32% year-over-year. The revenue of the E-Mobility segment decreased by 32% to EUR 129 million. And the Next Automation segment decreases from EUR 42 million to EUR 28.7 million as the previous year contains a larger revenue from a big order in the photovoltaics area. On the earnings side, we only see the volume effect and fortunately, no quality effect. Our profitability shows a stable result despite decreased revenue. EBITDA declines in roughly the same proportion as revenue, minus 28% to EUR 18.3 million, and the EBITDA margin of 11.6% is even stronger than the previous year's level. The solid profitability in the first 9 months is based on a good quality of the order backlog, the strict cost discipline in order execution and the adjustment of capacities to the subdued market situation. The EBITDA margin stands at 11.6%, above our guidance for the full year 2025. So we are currently monitoring the performance of the final quarter and navigating cautiously due to the weak investment climate. Bottom line, 11.6% EBITDA margin mean an EBT margin of 9.5%, which underlines the company's operational performance and volume flexibility. Let us turn to order intake and order backlog. I've already mentioned the weak investment climate. We are operating in CapEx-driven business. And for CapEx, especially large-scale projects, stable conditions and strong, sometimes even bold forward-looking and long-term decisions are required. Currently, many industries and especially the automotive sector are lacking in many of these aspects. But we are far away from desperate. Internally, we are continuously working on optimizing our cost structure and capacities. Externally, we are building new sales and M&A leads. We see significant opportunities and potential for the company, and we are confident that many of these initiatives will resonate well with you. Across segments, we see a decline in order intake of 29% year-over-year to EUR 112.4 million. But on the other hand, the efforts in the Next Automation segment are gradually translated into order intake. Next Automation order intake is increased by 35% year-over-year to EUR 29.4 million, and the sales pipeline is rising. This results in a decreased total order backlog of EUR 135.8 million, which means a total reduction of 39% year-over-year. However, the current backlog is still solid in terms of profitability. Let's take a look at our segments. In the E-mobility segment, order intake of EUR 82.9 million is 39% under the previous year due to the mentioned market conditions. As a result, order backlog decreased by 44% to EUR 105.6 million. At the same time, revenue decreased by 32% to EUR 129 million in the first 9 months of '25. And EBITDA roughly develops in line with the volume effect by minus 27% to EUR 17.1 million, which means a margin of 13.3%. In the Next Automation segment, order intake increased year-over-year to EUR 29.4 million as the new positioning is opening new markets. At end of September '25, order backlog amounted EUR 30.2 million. Revenue decreased due to the large-scale order in revenue last year by 32% year-over-year to EUR 28.7 million. And the EBITDA margin increased by 1 percentage point to 12.3%, which leads to a total EBITDA of EUR 3.5 million. By the end of September 2025, our balance sheet continues to be in a good shape with an equity ratio of 63.5% and [ EUR 120 million ] cash, of which EUR 160 million are net cash. Against the backdrop of the company's solid earnings and net cash position, we have decided today to cancel the acquired shares under the 2025 share buyback program. Around 6,000 shares were transferred in October 2025 to the participants under the 2020 stock option program and the remaining approximately 1.4 million shares were canceled today as a part of capital reduction. Our solid financial foundation will continue to allow us to respond both organically and through increased M&A activities and to ensure further shareholder participation through share buybacks and dividends. To conclude, we confirm our guidance for 2025. In the last years, we increased our revenue by almost 50% and EBITDA by more than 300%. Unfortunately, this year, we cannot continue this trend. The market environment and the noticeable reluctance to invest will lead to a decline in revenue to between EUR 210 million and EUR 230 million. However, on the profitability side, we can benefit from our order backlog and the flexible structure of our company. As said, our current profitability is above our guidance, but we are navigating cautiously and are monitoring the last quarter of 2025. Therefore, we confirm our guidance of an EBITDA margin of 8% to 10%. Let me hand over to Sebastian again. Sebastian Roll: Yes. Thanks, Jan. So to sum up our presentation, unfortunately, our business in 2025 is also again strongly affected by market uncertainties and low investment activities in the automotive sector. As a result, our order intake declined to EUR 112 million with E-mobility down by around 40%. We are not the only ones. Our automotive customers are facing a year that is at least as challenging as ours. So despite these headwinds, we delivered a strong operating performance in the first 9 months 2025. We achieved a double-digit EBITDA margin because we did our homework. We reduced capacities, made our cost structure even more flexible, and we ensured cost savings in project execution. We also focus on maintaining a profitable order intake, ensuring that our order backlog remains profitable. In addition, our financial position is strong with high liquidity and a solid equity ratio. That clearly set us apart from most of our competitors and give us the freedom to shape 2026. In addition, we are pushing ahead Next Automation, unlocking growth beyond the automotive industry. Due to our strategic shift, Next Automation order pipeline is growing and order intake currently up by around 35%. Our clear goal is to accelerate this growth both organically and through M&A. Thank you very much for your attention, and we are happy to take your questions. Operator: [Operator Instructions] And I will read the question in our chat box first before I go over to our hand-up. Congratulations on the strong results in a challenging environment, especially regarding the EBITDA margin. Given Aumann's very favorable valuation, a further share buyback would generate a very good return on invested capital in the medium term. What are your thoughts on this? Aumann AG's 2026 estimates of EUR 255 million in revenue and EUR 26 million in EBITDA realistic? And where do you see these figures in the medium term? Sebastian Roll: Yes. So maybe starting with the question of the share buyback. So our solid financial foundation allows us to respond, let's say, flexible on market opportunities. So for example, this means, for sure, growth in Next Automation, as I said, organically or through M&A and for sure, also to ensure further shareholder participations through, for example, buybacks and dividends. That's why we decided today to retire shares under the 2025 share buyback program to stay ready for sure also for these kind of opportunities. The other question, I think, was concerning 2026. And sure, looking on the current figures, revenue might be weaker again next year. That's something we have to see. But Q4 is not completed yet. So that means relevant customer decisions being made till the end of the year. And then we will put all these information together and to give a picture of 2026. Fortunately, our order backlog is profitable and all the other things we have for sure to calculate and yes, to make our mind after the fourth quarter. Operator: And I will go over to our hand up from Charlie Michaels. You should be able to speak now. Your microphone is unmuted, but we cannot hear you, Mr. Michaels. I will give you a moment to find the words and go back to the questions in our chat box. Can you reveal more details regarding M&A processes? Are you involved in some? If yes, how many? What about geography in terms of M&A targets? Sebastian Roll: Yes. I mean we are involved in a handful of these M&A activities. And I think one is the geographical target to have a bigger footprint in North America, as you know. So this might be very important for us also having in mind tariffs. And the other topics for sure is within Next Automation. So we really try to push Next Automation also through M&A. And therefore, we see also some really nice targets right now with a little bit different technology and with an entry, especially in the growth areas we are right now trying to enter. Operator: And we have the same question in the chat box. I hope all questions are answered by that. Charlie Michaels, would you like to try it again? I can see that you are unmute now, Mr. Michaels, but we still cannot hear you. So sorry. I will go over in the meantime. Charles Michaels: So Charlie Michaels from Sierra, like the prior speakers and questioners, I congratulate your margins, tremendous work there, not easy in this difficult market environment. And I'm also thinking along the lines of the prior questioners on M&A. So that was an area. I think you've done some share buybacks, which we appreciated so far, too. But at this stage, I'd say it hasn't really changed things too much for the company as we've seen with the share price being relatively flattish. So the idea that you mentioned about acquisitions yourself, right, potentially in the U.S. where you're looking, I would just say that on the acquisition front, I would work hard to accelerate it. And it's not easy, but it seems to be vital for the Next Automation group. And a question -- an angle on that acquisition question is, would it make sense maybe even to consider a merger of equals, looking around for a company that's not too highly valued because that would basically, given your valuation, be difficult. But you're bringing a lot of German technical engineering expertise and a lot of cash -- and because one other issue besides making some bolt-on acquisitions to your company is just the scale of your company. So it seems to me that you can think bigger and even merge with someone in order to create scale. As you know from the past, we've been following you for a decade or so, invested for quite a long time. And I think that it's just hard to change the thing when you're small, right? That's just my thinking. Sebastian Roll: Yes. Okay, Charlie, I think, as you know, merge is not our first priority. But for sure, given our liquidity, it is possible even to acquire some bigger targets. And we also had to look on some bigger targets as well. I think it's a little bit depending. I mean if it is technical driven and we see some nice technology, some nice processes where we might to find that it is possible to get in a new market or to add something value-wise, then this would make sense. I mean it's not so easy right now because you're right. I mean, most of our competitors, as I said, are not very strong in the position right now. Some of them has an order backlog, which is not really favorable. So -- but for sure, we are looking around. I mean, merge, as I said, is not our first priority. But if there might be a bigger target, for sure, we also would have a look on it. Operator: And I will move on to Michail [indiscernible] Unknown Analyst: Yes, I have a question regarding your wording in your report. I assume it changed a little bit from the Q2 wording to the Q3. It turned, in my opinion, a little bit more positive on future orders you can get because yes, you're writing from a really a very bigger sales pipeline and significant investment impulses instead of positive investment impulses a right indication or I'm on the wrong track? Sebastian Roll: No, honestly speaking, we really hope that you are on the right track, yes. So I mean, maybe because you said having a look on the half year figures. So within the half year, we were roughly 20% above in Next Automation comparison to last year. So we accelerate this a little bit. So right now, we are 35% above previous year, unfortunately, on a low volume, but we are increasing, as you know. And in addition to this, we submitted more Next Automation quotations to customers than ever before, including large projects. So we really hope that in the upcoming quarters, we will see a really positive impact, maybe 1 or 2 large scale orders. So yes, we -- I mean, it's not so easy. I mean, Next Automation means to have new customers to see some other products and to confirm the new -- or to convince -- sorry, to convince these new customers, but it's developing step by step. And yes, it's starting to get fun. So we are really excited. Unknown Analyst: And then maybe one question on your guidance. I think -- yes, you mentioned yourself that the EBITDA is really -- was really good in the last 9 months or even also in the Q3 stand-alone. So was there any exceptional items we have to think about if you look for Q4 that maybe... Jan-Henrik Pollitt: So until now, there has not been any exceptional items in the first 9 months. We stay a little bit cautious on the last quarter because we saw a lot of volatility this year. So yes, as you said, the current profitability is higher than guided. And the last quarter is a bit of a mixed pocket when we see also a larger order intake, which is being discussed and where we need to see where the margin is in these projects. And of course, on the volume, which is to come in Q4, it is relevant for us how we behave on the capacity adjustments in the company. And therefore, we are driving a little bit cautious on Q4 right now unless we have a good profitability in the first 9 months. Operator: In the meantime, we have received no further questions or one more in the chat box. Going back to M&A, could you shed some light on time line? When can we expect information about acquisition? Is it Q1 2026 or later? Sebastian Roll: I mean we are really working hard on this, but it's a digital process. So I mean, yes, let's see. We hope to be as soon as possible on this. And I think all other things I cannot really confirm right now. Operator: And with this, we will end the earnings call for today. Thank you very much for joining, listening and all your questions. A big thank you also to you, Mr. Roll and Mr. Pollitt for your presentation and the time you took to answer the questions should further questions arise in the time between now and the Aumann Capital Forum in Frankfurt end of November. Please feel free to reach out to Investor Relations. And with this, I wish you all a healthy autumn week, greetings around the world. And with this, I hand back over to Mr. Roll for some final remarks. Sebastian Roll: Yes. Thank you. I hope we have shown that Aumann will stay strong in 2025 in another challenging year for our industries. We are focusing on what we can control. Internally, we are optimizing our cost structure and capacity. Externally, as you have seen, we are building new sales opportunities and M&A leads. So we see significant potential in our company, and we are confident that the results will follow, and we look forward to seeing you at the next conferences, and thank you very much for your interest.
Operator: Welcome to BioArctic Q3 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Gunilla Osswald; CFO, Anders Martin-Lof; and colleagues. Please go ahead. Gunilla Osswald: Thank you. Good morning, and welcome to BioArctic's presentation for the third quarter of 2025. BioArctic is continuing a great way in our new era. With yet another quarter where we see more and more patients are getting access to Leqembi. And we are broadening our collaborations, utilizing our BrainTransporter technology and we are also broadening our portfolio with new projects and new modalities, and we will talk more about that in today's presentation. Next slide, please. BioArctic is listed at nasdaq.com large cap, and this is our disclaimer. Next slide, please. So I'm Gunilla Osswald, and I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Anders Martin-Lof; and our Chief R&D Officer, Johanna Fälting; and our Chief Commercial Officer, Anna-Kaija Gronblad. Next slide, please. So I will start our presentation today by giving some key highlights. We go to next slide, please. So before I come into this quarter and the presentation, I just want to give a high-level introduction to BioArctic, if we have any new listeners today. BioArctic is among the world's leading innovators in precision neurology, and we have 2 key platforms: the first one is about innovation and generation and development of highly selective antibodies targeting aggregated misfolded forms of toxic proteins. And examples here are -- for example, lecanemab, Leqembi and exidavnemab. The second one is when we are utilizing our BrainTransporter platform in innovative ways to deliver antibodies and different modalities to come better into the brain. In today's presentation, we will talk about both selective antibodies like Leqembi, exidavnemab and our new project for Huntington's disease with Huntington as well as our BrainTransporter Technology, which we have utilized now for all our internal targets, and we have also started to use it for external projects. And we now have 3 different partnerships utilizing the BrainTransporter technology, including the recently signed deal with Novartis. Next slide, please. During the second quarter this year, we held our first Capital Markets Day, and then we presented our ambitions for 2030. And I'm really pleased to say that we are already delivering on our ambitions. So if we start with the first one, Leqembi, to be an established treatment in Alzheimer's disease, I'm really happy to see how Leqembi's demand continues to grow. The second one is to have a balanced and broader pipeline with projects in all stages of development. And our pipeline is already broader and continue to increase and develop. The third one is additional successful global partnerships. And of course, we are very happy with the new collaboration with Novartis, and we have more positive discussions ongoing. The fourth one is our aim to be profitable and to have recurring dividends in the future. And we expect to be highly profitable this year, and these will come back to this. Next slide, please. As I said, we are already delivering on our ambitions. And now I will go through a bit about how. We start with Leqembi. And I think now we are really well on our way to get Leqembi established as a treatment for Alzheimer's disease, a disease-modifying treatment affecting the underlying disease. Thanks to our partner Eisai. They're great work with Leqembi. It's now approved in 51 countries around the world, with Canada being the latest one. The Iqlik, the subcutaneous auto-injector, like a subcutaneous pen was called Iqlik was approved for maintenance dosing in the U.S. during the quarter. And Eisai has already initiated a rolling submission for initiation dosing as well and launch has already started for maintenance dosing in the U.S. after the quarter. Next thing I want to say is about Europe, and there, the launch has been initiated in Germany and Austria. And we're really happy to see that Finland has got the first patients that have been treated in a private clinic. Of course, this is great news from us from a Nordic perspective since we are preparing for launch together with Eisai in the Nordic countries. And Anna-Kaija will come back and talk more about this. Then there has been several presentations on Leqembi during the period and after the period. And those have shown that long-term data over 4 years treatment show continued increasing benefits over time. And these are really reassuring to follow the real data coming for Leqembi when it's being used in clinical practice. And we have heard presentations, both from the U.S., Japan and China. And the data have shown that the benefit and the safety profile are at least in line with the Phase III results, which I think is great and encouraging. Subcutaneous administration data has also been started represented, and that supports this great further opportunity for patients, to, in a more easily way, get the injection, buy an auto injector and possible to do that at home in an easier way. Then I also want to mention that we -- of course, we follow with great interest the fantastic progress with the blood-based biomarkers. And the guidance was launched earlier -- or during the quarter about how to utilize the blood-based biomarkers and they can now be used both for confirmation and for charging, and we'll come back to that. If we then look at the second part of the pipeline, which is progressing really well and growing with new projects, I want to mention exidavnemab, our alpha-synuclein antibody currently in Phase IIa, with the second part of the study ongoing in both Parkinson's disease patients and in multiple systemic atrophy patients. And also really happy to be able to communicate that we are also now working on another misfolded protein target called Huntingtin for Huntington's disease. And here, we are working with antibodies, but we are also broadening it into other modalities, utilizing our BrainTransporter technology, and Johanna will talk more about this in today's call. The third one is to have additional successful global partnerships. And as I said, we are very happy about the new collaboration with Novartis regarding an undisclosed target for neurodegenerative diseases. And we will reengineer their antibody to include our BrainTransporter technology and enabling them a better penetration into the brain. I also want to mention the other BrainTransporter collaborations that we have so far is one with Eisai on BAN2802, where we're generating great data and BAN2803, which we are completing now the tech transfer to Bristol Myers Squibb. It's also great to see that we have continued strong interest for our projects and for our BrainTransporter technology for antibodies as well as for other modalities. The fourth part about the financials. We have strong financials, and we are highly profitable this year with increasing royalties as well as several milestones from Eisai and upfront payments from Bristol Myers Squibb and Novartis. Next slide, please. If we think about the Alzheimer's field, it's evolving in a very nice way, and I want to highlight 5 different areas. The first one is that we see that we are getting easier and easier diagnosis by blood-based biomarkers. And I think this is important in helping to build the market in an easier way and to help to get the right patients to come to specialists to get a treatment initiated. The first tests are now available as confirmatory for specialists as well as for triaging for primary care. If we then look at the second one, we see more and more data that shows that earlier initiation of treatment of Leqembi shows better effect. So when we are looking at the earlier patients in the Phase III Clarity AD open-label extension study, where now 48 months data are available. We see that the majority of aducanumab-related patients were stable or even improved after 48 months treatment. I think this is very encouraging. And I think it's also further supports the ongoing AHEAD 3-45 study in presymptomatic individuals with amyloid pathology, but yet without symptoms. The third one is also really important, and that is the data that are being presented show the importance with maintenance treatment to maintain the treatment and the benefit of continued treatment with Leqembi, even after the plaques are cleared in order to continue to clear the toxic protofibrils and that's possible due to the mechanism of action and the low immunogenicity that we see with Leqembi. The fourth one is about more convenient dosing with Leqembi Iqlik, the subcutaneous auto-injector. And I think this is a really important next step for Leqembi. And it's making dosing so much easier for the patients and care partners to handle the dosing at home. And we are also pleased to note that it was awarded as one of the top innovations for 2025 by Time Magazine. And the fifth one is that in the future, we expect to see more combination treatments for even better outcomes. And there is currently an ongoing study with lecanemab, and Eisai's tower antibody. And I think in the future, we will see more and more combination treatments. So to summarize, the key is to identify patients at an early stage. And here, we can use the blood-based biomarkers, and we can start Leqembi treatment early and continue treatment with convenient dosing with Leqembi Iqlik. So great progress in this field for Leqembi. Next slide, please. So now we come to the R&D update, and I hand over to our Chief R&D Officer, Johanna Fälting. Johanna Fälting: Thank you so much, Gunilla. Next slide, please. So as Gunilla mentioned, BioArctic is among the world's leading innovators in precision neurology, where we have 2 key platforms: the antibody platform with highly selective antibodies targeting aggregated forms of toxic proteins. And these are intended to treat severe neurodegenerative diseases with high unmet medical need, such as Leqembi in Alzheimer's disease, exidavnemab in synucleinopathies, Parkinson or MSA and also the TDP-43 project for ALS. BioArtic is also developing a BrainTransporter technology that facilitates the passage of antibodies and other drugs across the blood-brain barrier. And the aim with this platform is to improve the brain exposure and distribution of the drug and thereby allow for lower dosing, improved convenience, reduced manufacturing costs and potentially also better efficacy. And in addition now, we are also further developing our BrainTransporter technology and expanding this into new modalities other than antibodies, such as enzyme proteins and even genetic medicines. And the development of the platform that will enable us to address different diseases by tailoring the modality target combination with the highest potential clinical benefit. Next slide, please. So this is an overview of our R&D portfolio with the 2 platform antibodies and brain transporters and the cross program synergies. The portfolio is a combination of fully funded projects run in partnership with global pharmaceutical companies, innovative in-house projects and technology platforms with significant market and out-licensing potential. So far, our BrainTransporter platform has generated 3 collaborations with Eisai, BMS and Novartis and all of these collaborations are progressing really well. They are all with different targets. But importantly, the BrainTransporter technology is BioArctic's own proprietary and has the potential to generate more collaborations in the future. You will also note a new BrainTransporter project in the portfolio, the [HD-BT 4801] for Huntington's disease, and I will come back to this specific project later in the presentations. So to summarize, we are both advancing and broadening our R&D portfolio with new projects into new disease areas and with new collaborations. Next slide, please. So exidavnemab is an antibody that selectively targets the pathological alpha-synuclein aggregates while sparing the physiological monomers and exist is a Phase IIa study, testing the safety and tolerability of exidavnemab. In this study, we are also exploring a wide range of biomarkers, both biochemical and digital and we have a quite unique approach in including the right patients in the study with a smell test that is an early sign of Parkinson if you have an impaired smell and also a CSF seeding amplification test to really make sure that we have the correctly diagnosed patients with the alpha-synuclein pathology in the study. The high dose cohort is currently ongoing, both in Parkinson and multiple systemic atrophy and the results are expected mid-2026. So following this EXIST study, there are several potential possibilities for future development in different synucleinopathies such as Parkinson MSA and DLB, and we are currently preparing for the next stage of development. Next slide, please. So this is very exciting to me that we are now expanding our portfolio into a new neurodegenerative disease, the Huntington's disease. And this is an inherited progressive neurological neuropsychiatric disorder that is caused by impaired function and degradation of nerve cells in specific areas of the brain. Huntington's disease is caused by a toxic mutant Huntingtin protein in the brain and the mutation in this gene results in a buildup of toxic aggregated Huntingtin protein causing Huntington's disease. The disease onset is between 30 and 50 years old of age, and it's fatal within 10 to 30 years. Current treatments are only symptomatic and there is a large unmet medical need for better treatments. So next slide, please. Targeting the Huntingtin protein in the Huntington's disease is an excellent strategic fit into our portfolio at BioArctic and with our capabilities. So this project is built on BioArctic's extensive experience in developing antibodies against misfolded aggregated toxic proteins and also our BrainTransporter platform that will enable us to increase the brain delivery of the drug. In this project, several modalities is being explored in parallel, antibodies as well as genetic medicine approaches. And since this is a brain target we have, of course, also combined it with our BrainTransport technology. So we are excited that we now expand our portfolio with yet another neurodegenerative disease in addition to Alzheimer alpha-synucleinopathies ALS and Gaucher with the potential to bring hope for even more patients. Next slide, please. So with that, I will hand over to our Chief Commercial Officer, Anna-Kaija Gronblad for a commercial update. Anna-Kaija Gronblad: Thank you, Johanna, and you can go to the next slide, please. And I will go back to Leqembi again. And I'll start with the regulatory update for all of you. So since the last quarterly report, Leqembi IV has now been approved in 3 additional countries. That is in India, Australia and in end October also in Canada. So in total, Leqembi it can is approved in 51 countries and territories. And as of October, in addition to the U.S., the IV maintenance treatment, meaning once every 4 weeks is also approved in China, in Qatar, United Arab Emirates and India. So Anders will soon present the sales numbers. But in short, I would say that the Leqembi growth really continues steadily. So in Q3 versus Q2, when you adjust to the China's actual demand, the growth was 14%. And we have seen recent launches in Mexico and Saudi Arabia. And as of August and September, as Gunilla mentioned, Leqembi was launched also in the EU, in Austria and Germany, where patients have started treatment. So -- and what we hear is that within the first 2 months, it's around 350 centers were registered in the system for the controlled access program. And as educational activities is being rolled out in the 2 countries, registrations and prescriptions continue to increase at major specialist clinics. And finally, in the Nordics, of course, as Gunilla mentioned, there is a private clinic in Finland offering Leqembi treatment to patients willing to pay out of pocket and we know that a few patients have received treatment in October. So this is an important milestone for us in our ambition to also becoming a fully-fledged pharmaceutical company. So in the meantime, the price and reimbursement and the dialogue continues with all the Nordic countries, and we aim to launch gradually across -- throughout 2026. So next slide, please. So additionally, I would like to spend a few minutes again on the Leqembi Iqlik, the subcutaneous auto-injector, which was approved in the U.S. in August and launched as of early October. And as Alzheimer's disease is a progressive disease where neurodegeneration and cognitive decline continues even after plaque removal, it is important to offer both health care professionals and patients the possibility to choose between continuing on once-monthly infusions in the hospitals or to switch to once weekly at home injections after the 18-month treatment. So this obviously could be a benefit for the patient who might want to travel and feel less bound to the hospital but also to health care providers in reducing the resources related to the infusions. Reimbursement for the Iqlik is expected to be included on formulary in the beginning of 2027 but individuals can seek insurance coverage via the medical exception process, which is something that is quite common in the U.S. And Eisai staff is providing information on this process and nurse educators provide support on dosing and demonstration kits, et cetera. So this is truly a major step in the treatment of Alzheimer's disease patients. And recently, Leqembi Iqlik was selected by Time as one of the best inventions in the medical and health care category. In addition, Eisai has also rolling SBLA ongoing also for the weekly initiation treatment in the U.S. since September, which is planned to be completed in the last quarter of this year. So potential approval maybe in Q2 or Q3 next year. And finally, submissions for the subcutaneous weekly initiation treatment is also planned for Japan before the end of this year. Next slide, please. So moving on to my final slide. This is to highlight again the true advancements we are seeing with the Leqembi Iqlik and with the parallel development in the usage of diagnostic blood test. If you remember, U.S. clinical guidelines were presented at the AD/PD congress in July this summer, saying that blood-based biomarker test showing more than 90% sensitivity and specificity can be used for confirmatory diagnosis in patients with cognitive impairment. And the first blood-based confirmatory tests are available in several countries in U.S. and China, for instance. And Fujirebio's test, Lumipulse, for instance, has been granted IVD clearance and C2N is another company has submitted for regulatory filing in the U.S. for their confirmatory test. And meanwhile, Roche phospho-tau 181 blood test was granted IVD clearance from the FDA for use in the primary care test as a triage test. So more tests will be done. 350,000 tests are expected to be used in 2025. And the new CMS payment rate is coming up from January next year. And of course, as more patients are being tested, more patients will receive a diagnosis. So as we see it, these advancements will contribute significantly to the Leqembi growth going forward, especially in the U.S., China and Japan. So that's all for me. And with that, I will now hand over to our CFO, Anders Martin-Lof. Anders Martin-Lof: Thank you, Anna-Kaija. If you start to look at the Leqembi numbers, the global Q3 sales work came in at JPY 18 billion or roughly $121 million. And at first glance that looks quite negative since there was a 22% decrease from the second quarter of 2025, but that is all due to a large stockpiling effect in China in the second quarter. So Eisai calculated what the growth would have been from the second to the third quarter without the stockpiling effect and then the growth would have been 14%. We recorded a royalty of SEK 117.2 million. That's also then down from SEK 162.5 million in the second quarter. But we have also estimated what the royalty would have been without the stockpiling effect. And then we would have been around SEK 125 million in the second quarter and SEK 135 million in this quarter. So I think that's a better reflection of the actual development of the Leqembi sales in the world. Turning then to China. So actual recorded sales for JPY 0.2 billion or $0.6 million. So a 97% decrease from the second quarter. Basically, the clinics in China are receiving Leqembi from inventory right now in the third quarter. The actual demand was roughly $18 million, and that's a 10% increase from $16 million in the second quarter. But all in all, this means that there is still quite a significant inventory left in China. So we expect very low sales in China also during the fourth quarter, and that was reported by Eisai. Turning to the U.S. There, the sales are increasing well. They were up to JPY 10.2 billion or roughly $69 million, representing a 12% increase from the second quarter. And here, Eisai is really trying to leverage the developments that Anna-Kaija was talking about with the blood-based biomarkers that are now being used more and more and acceptance of Iqlik for maintenance therapy this year and for induction next year. But to really get the full effect of this, you have to target the primary care practitioners. So that is what they say it's doing now. They're targeting roughly 2,500 primary care practitioners. They're running very big educational programs and running large awareness campaigns straight to the patients. So they're really building momentum now to start to see an impact from Iqlik and blood-based biomarkers starting probably more from next year, but they're really starting to do the groundwork now. And here, you can say that they're mimicking Japan a little bit. Japan is the market that has come the furthest along in the demand expansion phase. Sales here were $42 million, representing a 13% increase from the second quarter. And here, they have really succeeded in setting up a good treatment chain where roughly 4,200 doctors are referring to 800 initial treatment centers, and there the patients stay for a while, and then they are moved over to follow-up facilities. So that's a system that has worked incredibly well, and that is what they're trying to achieve now in the U.S. as well. I think it's also really interesting to see that the disease awareness campaigns that they are running for mild cognitive impairment in Japan are significantly increasing the recognition rates because we all know that mild cognitive impairment, which is the earliest phase of the disease is really where you want to treat the patients with the disease-modifying therapy, you can have the most effect if you start as early as possible. But today, those patients aren't really diagnosed to a large extent. So these awareness campaigns can really start to build momentum for more patients getting the drug when they really should have it. And then as Anna-Kaija mentioned, the EU launch has been initiated in Austria and Germany. It's really exciting to see that, that is starting well. However, it will take some time before you see any significant impact in our royalties from EU, which is slightly slower market than the U.S. and Japan. If we then turn to the Leqembi Global sales forecast. They have a forecast of JPY 76.5 billion for their fiscal year 2025 for Leqembi. And if you look on the right-hand side of the graph, you see that they have already in the first 2 quarters of that fiscal year, achieved 48% of the forecast in the U.S. and 49% in Japan and already 83% in China. So all in all, if you also include the other countries, they have achieved roughly 52% of the overall annual forecast in the first 2 quarters of that period. And since they are growing, we have a very high confidence that they would reach the forecast for the year. So everything is looking really, really good for Leqembi, and it seems to reach their forecast with some margin. If we then turn to our own numbers, you see that the Q3 net revenues were SEK 133 million. And this quarter, that was mainly based on the recurring revenues with royalties of SEK 117 million and co-promotion revenues of SEK 5 million. So it's exciting to see that we're becoming more and more like a normal company with recurring revenues that make up a larger share of our revenue base. We also recorded some revenues from the new Novartis agreement. As you know, we got in a $30 million upfront when we started that collaboration. And now we recorded SEK 9 million out of that in the third quarter, and we will record the rest during the remainder of that collaboration. Looking at our operating expenses, they increased to SEK 150 million this quarter compared to SEK 95 million a year ago. And this time around, that was basically just normal cost. We have had large currency effects in the previous 2 quarters, but not this quarter. So the underlying operating costs were SEK 146 million. And that's slightly over than our recurring revenues. So we have operating costs that are SEK 24 million higher than our recurring revenues, but we are approaching a point where we will have recurring revenues that are larger than our operating expenses. So we are getting closer and closer to long-term profitability. If we then look at our cost for the remainder of the year, we expect them to keep increasing since we have a more mature project portfolio, and we have built up our commercial organization. I have previously stated that I expect our full year cost to be roughly 50% to 70% higher than the cost of last year. Now we think we will be in the lower range of that interval. So I would say roughly 50% to 60% higher than the cost of last year. And then on the right-hand side, you see that operating loss was SEK 29 million for the third quarter. We expect something similar in the fourth quarter. So the operating profit for the year should be well above SEK 1 billion. On the next slide, you see our net result on the left. It's then, of course, a lower loss or a bigger loss the operating loss, but -- and that's mainly explained by the accrued taxes of SEK 65 million that we also -- we have a positive financial net of SEK 8 million, so that ameliorate a little bit. And then the operating cash flow, you typically see one very big bar, and that's the payment of the $100 million upfront payment that we received from Bristol Mayer Squibb in the second quarter. The $30 million upfront payment, $30 million, I should say, from Novartis had not been received in the third quarter. It was received in October. So the bar you see on the left-hand side with our cash balance right now of SEK 1.9 billion does not include the Novartis payments. So our financial position will continue to be strengthened in the fourth quarter. So we are going to end the year with a very, very solid position. I think that was all for me. And now I hand back to Gunilla for some closing remarks. Gunilla Osswald: Thank you so much, Anders. So we are coming towards the end of today's presentation with some upcoming news flow and some closing remarks. So next slide, please. So we are now in the fourth quarter of 2025. And I think it's great to see that more and more patients are getting access to Leqembi around the globe. And also really pleased to see that we're also starting even if it's small. So we are starting in the Nordics. We see continued regulatory processes on lecanemab, with the Canada approval. And I think it's great to see the Iqlik being approved for maintenance dosing in the U.S. and our partner, Eisai are working hard to conclude the supplementary BLA filing for Leqembi Iqlik in the U.S. for initiation dose. And also to file in Japan for both initiation and maintenance dosing with Iqlik. We are, of course, looking forward to the next Alzheimer Congress its CTAD in San Diego in the beginning of December. And there, we note several presentations on lecanemab, including subcutaneous data and more real-world evidence data from, for example, U.S. registered. So this is something I'm really looking forward to. So I'll come to next slide. So the key takeaways from today's presentation is that BioArtic is now in our new era, and we see great progress both on Leqembi as well as the rest of our portfolio and the BrainTransporter technology. We have already started to deliver on our 2030 ambitions. Leqembi is well on track to become an established treatment for Alzheimer's disease. Sales continue to show increasing demand on a global level, further regulatory approvals, launches reassuring data from long-term treatment and real-world evidence. Our portfolio has increased, and we have initiated program for Huntington's disease with different modalities. Our brain -- or our business development efforts continue to deliver with a third BrainTransporter collaboration now having been initiated during the third quarter. And this was the first of its kind, and it shows that we are also expanding to becoming also a platform company. And the last point is that we have strong financials, as Anders described, with great cash flow with milestones and record royalties during this year, growing more than 180% year-on-year. So I think the future looks very bright for BioArtic and is bringing hope for many patients. Next slide, please. So by that, we say thank you so much for your attention, and we're happy to take some questions. Operator: [Operator Instructions] The next question comes from Joseph Hedden from Rx Securities. Joseph Hedden: Firstly, on the Leqembi Iqlik, do you have any visibility on when regulatory filings might be made in Europe or China or the strategy there is? And then secondly, it's great to see a Huntington project. Just on the BrainTransporter technology. I know that first program is an antibody and you've mentioned genetic medicines. Is BrainTransporter are capable of, for instance, using an AAV vector like, I mean, Huntington's, the uniQure therapy made a lot of noise recently. Does any significant modification need to happen with your current platform to be able to carry a vector such as AAV? Gunilla Osswald: Thank you so much, Joseph. Excellent questions. So I think the first question on Leqembi Iqlik in Europe and China, we cannot comment on that. I mean right now, we are really happy about the progress in the U.S. and Japan. And then we know our partner is doing everything they can to help as many patients as possible around the world. So we'll come back to that. Then your question with regard to Huntington's disease and where we are also really happy to see the BrainTransporter. So I didn't understand any specific question. Johanna Fälting: I think I can take the question. Gunilla Osswald: But if I just -- then I hand over to you, Johanna. And then for the BrainTransporter, I think it's really, really good to see that we can utilize that for several different modalities and definitely help to get different modalities better into the brain. And I think it's important to point out that BrainTransporter is not one thing, it's the platform with many different tailor-made ways to handle depending on if it's what kind of target and what kind of modality. So we have several different approaches that we utilize depending on if it's an extracellular target, intracellular target or what kind of modality we have. And then I hand over to Johanna, who understand the question I missed. Johanna Fälting: Thank you so much, Joseph, for that excellent question. And we are, of course, following the competitive landscape very well, and we understand and we have seen the uniQure data. I think it's excellent data. But that's a treatment that is not for everyone. It's a quite invasive treatment, and you actually need maybe a 15-hour surgery for one patient to administer that drug and you do it with intrathecal administration and injections in different sites in the brain right now. So our approach is a bit different, and I can't speak too much of it today before we have the patents in place and so -- but we have another approach, and we are not primarily targeting AAV with our BrainTransporter technology. Gunilla Osswald: I hope that responded to your question. Thank you, Johanna. Joseph Hedden: Yes. Operator: The next question comes from Suzanna Queckbörner from Handelsbanken. Suzanna Queckbörner: I'd like to ask a question regarding the Leqembi subcu. So listening to the Eisai conference call, there was talk about the Iqlik being listed in formularies only by 2027. There seems to be a medical exemption program, which would address something like 80% of patients. To me, it sounds like there's likely to be more paperwork associated with that, which sounded like it was going to be limited or access was going to be limited at least until 2027. Maybe you can just sort of explain that to me? And then also, how does that impact your competitive advantage versus Elli Lilly's remternetug, which is also expected to read out data in 2026 and they have the subcu formulation as well. Gunilla Osswald: Yes. So we start with your question on Iqlik and the process in the U.S. with the reimbursement agency or CMS is that it's certain times of the year that you need to submit in order to come into the next year. So that's the reason for why we expect Leqembi Iqlik to be on the formulary from January 2027. Right now, just as you said, Suzanna, there is a possibility to utilize the medical exemption program, where -- which I think many of these physicians are used to do for other treatments. And what we have understood from Eisai is that it's not overwhelming paperwork. It's a fairly easy process that can help the patients -- most patients to already be reimbursed right now. And I'll also go on the differentiation part a little bit and then hand over to Anna-Kaija. So I think, I mean, we see then the Iqlik has a really good differentiator versus competitors. And then we will follow with great interest when also remternetug comes with some efficacy data. We haven't seen much yet. So I think each compound has to show itself before we can comment too much. And we haven't seen much of it yet. So -- but I think meanwhile, we're really happy for Leqembi Iqlik, which all the data we have seen so far looks really, really promising. And more data is expected to be shown at CTAD. I don't know, Anna-Kaija, if you want to add something. Anna-Kaija Gronblad: No, not really. I think -- again, I think it's -- we haven't seen that much data on remternetug yet. So I think it's too early to say anything about it. But we, of course, understand that they also see the need of subcutaneous auto-injector because we think that this will be a key driver and for patients also being having an easier treatment. So we see -- so the need from the Elli Lilly as well. They see this as a competitive advantage. Suzanna Queckbörner: If I can have a follow-up question. Also, I saw that Takeda discontinued their alpha-synuclein antibody, which they reported to had Phase II results on. Maybe you can talk about the differentiation to your alpha-synuclein antibody. Gunilla Osswald: Yes. I think it's really important to understand that every antibody is different from each other. And we think that we have a clearly superior antibody, much more selective. The most selective antibody that we know for alpha-synuclein between the pathological forms and the physiological forms. So we have more than 100,000 fault electivity, which is a huge difference from competitors. And also, I think it's important to see the design of the clinical studies that we also think that we are designing better studies for the future. But I will hand over to Johanna. Johanna Fälting: Thank you, Gunilla. I totally agree, and thank you for the question. Of course, it's always sad when a clinical study that being sold to patient does not read out. But I think that we have a differentiated profile, both in terms of the selectivity for what we believe is the toxic species, the aggregated species and a very high affinity for those species. And we also have a superior human PK profile as compared to the AstraZeneca Takeda that recently read out. It was also fairly small, I would say, a Phase II clinical trial. And I think that we can have a clear differentiation versus both in terms of human PK study design and selectivity for the toxic species. Gunilla Osswald: So not much read over, I would say. Johanna Fälting: Absolutely not. Operator: The next question comes from Natalia Webster from RBC. Natalia Webster: Firstly, I was wondering on Eisai's full year Leqembi guidance to March. This is implying a slowdown in growth for Leqembi sales for calendar Q4 into Q1 '26. So just curious to hear if you think this is conservative, appreciating that there may be some further impact from the China inventory adjustment in Q4. And then my second question is on the European launch. I appreciate it's early days and it could take some time to see a more meaningful contribution here, but are you able to provide a bit more feedback on how this is progressing? And if you're counting any of the initial challenges that you saw in the U.S. around capacity or otherwise? And then finally, just on profit. You've maintained your long-term ambition for sustainable profitability. I was wondering if you're able to touch on any key considerations for cost phasing in 2026? And if you're able to confirm that you still expect to reach sustainable profitability from 2026 as well? Gunilla Osswald: So I think it's Anders, who should start this questions. Anders Martin-Lof: Right. So if you look at the Eisai's forecast, I think you're specifically asking whether they will reach for China. Well, all in all, they are already at 52% of the full year forecast after 2 quarters, 87% in China. I think it's correct that the Chinese sales will be very low in the next quarter as well. But then I think more or less the inventory should be used up, so they should have a strong first quarter of next year. So we remain very confident that they will reach their forecast for the full year, and so are they. That's what they communicated on their call. As for the profit for next year, we will not comment on our cost for next year until we finish the year. So you'll hear more about that in February when we communicate our year-end results. Gunilla Osswald: And then there was a question for Anna-Kaija. Anna-Kaija Gronblad: Yes, regarding the EU launches and what I can say is that, of course, I mean EU consists of 27 countries and all of these countries have their national market access processes on price and reimbursement. So I would say that after Germany and Austria, typically being the early launch countries, it takes quite some more time before each country has gone through this process. So I would say that we can be cautious when it comes to the sales coming from Europe next year. I think we are, let's say, infrastructural wise in a better situation than in the U.S.A. But still, I mean, this is a new treatment paradigm also that is being implemented. So each clinic has to really go through and have a checklist on what to have in place in order to start treatments on patients. So I think we should be kind of cautious and understanding of the changes that needs to be in place in the clinic. So it will be rolled out gradually throughout Europe next year. Gunilla Osswald: And I just want to remind also that we have said all the time that Europe is a small, small proportion out of the global sales especially, I mean, the coming 2 years, but also long term. It's really U.S., Japan, China and other parts of Asia and other parts of the world, that also contributes. Yes, a lot. Operator: The next question comes from Viktor Sundberg from Nordea. Viktor Sundberg: So yes, one first on the financials. So I just wondered how we should think about the Novartis upfront payment being recognized over 21 months. Will this be in a linear fashion? Or how should we think about the revenue contribution of that part going forward? Anders Martin-Lof: The short answer is, yes. Gunilla Osswald: Linear. Anders Martin-Lof: So yes, linear. It's very hard to -- we are delivering as we have communicated, we are working on the Novartis compound that we are modifying and we will deliver back to them. And that will take some time, and it's really hard to estimate how large share of that work has been done. So you typically do that in a linear fashion over the expected time course of the collaboration, so linear. Viktor Sundberg: Okay. And also I had a question on your competitive position or Eisai's competitive position versus Kisunla. Looking at the curve, it seems that they are accelerating sales, I guess, Eisai has done a lot of the groundwork already to prepare for that. But I just wonder on your discussions with Eisai, like why are some patients choosing Kisunla over Leqembi, or why some patients choosing Leqembi over Kisunla. What's your feedback here so far in the launch? Gunilla Osswald: Would you like to take it, Anna-Kaija? Anna-Kaija Gronblad: Yes. I mean, of course, we're still -- Leqembi still the #1 disease modifying treatment Alzheimer's in the U.S. as well. But as you say, I mean, of course, Kisunla is having some advantage to us being a front runner in establishing these kind of treatments on the market. So it's -- but what we can see is that at Eisai reports is that it's not kind of reducing the Leqembi market, but it's growing the kind of total market as such. Of course, I mean, there is a difference in the -- they have once monthly today, and we have twice monthly in the 18-month treatment phase, and then you can choose to go to once monthly or Iqlik. So of course, every patient is an individual and has to kind of decide what is -- what works best for that patient. So -- but otherwise, I think Leqembi is still showing a strong growth, so -- and driving, and so in total, it's growing the total market. Operator: The next question comes from Sebastiaan van der Schoot from Kempen. Sebastiaan van der Schoot: Congrats on the progress. Just one from our side. Could you maybe give some color on what would be your goal or non-go discussion decision for further development of the Parkinson's program. What type of signals do you want to see against placebo to push the development forward? And what could next steps for the program look like? Gunilla Osswald: Yes. So I will start and just say that exidavnemab, which is currently in a Phase IIa study. And the main task for this study is to look at safety tolerability and we have 2 doses. We have had first a lower dose where we have had a safety review that supported us to go into the higher dose part in exactly the way that we had planned and wanted. And then we have also broadened it not only for Parkinson's disease, but also for multiple systemic atrophy where we also have called orphan drug destination. So I think -- I mean, we are doing a lot of biomarkers, but that's really in order to prepare also for the next step for Phase IIb. So I think it's really important to see that the expectation here is really to look at safety tolerability for this program. And so far, what we have seen, it looks really good. So I think that's -- but the readout there will be just after summer next year is what we expect. The study is ongoing and still recruiting. So it's a little hard to say exactly when it happened, but the best estimate is a little bit after summer next year. And then there is a lot of opportunities for this asset. And as we have described before, it can be Parkinson's disease dementia, it can be Lewy body dementia. It can be different parts of Parkinson's disease. It can be MSA. So there's a lot of opportunities. And at the moment, we are evaluating different of those kind of indications and preparing for the next step. So I think this is a very interesting asset, very exciting with a lot of opportunities. I don't know if you want to add something, Johanna? Johanna Fälting: No, I have nothing to add to that. Just to say -- to echo what Gunilla said, this is a quite small study and a short study. So not too much should be expected in terms of biomarker readouts. It's a safety and tolerability study, it's 3 months, and that's a bit too short to see efficacy on biomarkers related to disease modification. Gunilla Osswald: That should be the next... Operator: [Operator Instructions] Oskar Bosson: So there doesn't seem to be any people in the phone queue right now, but we have some written questions that have been posted during the call, so I'll read them out loud. And then Gunilla can direct who should take the question, although I think the first one is maybe Anders one. But it's from Peter, who wonders looking forward when we start to record sales in -- for Leqembi in the Nordic countries, how are we going to report that going forward? Anders Martin-Lof: So in our profit and loss statement, you have our total revenues. And then in the notes, we will have our different revenue split up by line, and we already do actually. So the revenues from the Nordics won't be seen straight away. They are part of what is called co-promotion revenue, which is the reimbursement we get from Eisai for profit sharing. But over time, yes, I think we will comment on how things are going in the Nordics. I hope that answers the question. Oskar Bosson: And then a follow-up question from Peter as well regarding OpEx and the difference in OpEx if you compare Q1 and Q2, it's down in Q3, and he wonders what were the reasons for this and then going forward also what is the level that we can expect? Anything you can say there? Anders Martin-Lof: Right. No. So our costs are quite lumpy. So if you deduct the other operating expenses, which is mostly currencies. Yes, our costs were down a little bit in the third quarter, but we expect them to go up again in the fourth quarter, and then we'll see what happens next year. Especially what happens with -- after the EXIST trial, if we enter into significant clinical trials with exidavnemab, you should expect increasing R&D spending next year. But it's too early to tell exactly what that will look like. But of course, with the maturing R&D portfolio, you incur larger costs, which is a great thing for a company like ours. Oskar Bosson: Then we had a question from Frederic, but I think we answered that because it came from somebody else as well. And then Eric from Carnegie has a question regarding the EVOKE trials that are coming up soon in just the next couple of weeks. Expectations on results for the EVOKE trial where semaglutide is tested in early AD in EVOKE and EVOKE+. What's our thoughts on that if that study is positive and how that could potentially impact or not impact Leqembi. Gunilla? Gunilla Osswald: Yes. So I think I'm really looking forward to seeing the results, and it's quite imminent now. I think it's 2 well-designed clinical trials in Phase III. They did not have a proper Phase II. So it's very hard to say anything about what to expect here, I think. But if positive, then I think that it's a complement to Leqembi. I don't see this as a competitive treatment. I see it's a complementing treatment because it has a completely different mechanism of action and potentially then could help patients together with Leqembi. Oskar Bosson: Okay. Thank you. And I think the last one about the risk regarding China. You touched upon it, Anders, but maybe you want to clarify once again what we think about the stocking effect in China and how long that's going to last and when we can expect more new sales coming in, in China. Anders Martin-Lof: Yes. So the stockpile that was built up in Q2, I expect it to run out during the fourth quarter. So you should see an effect of that on the sales in the fourth quarter, but not beyond that, but that would be my estimate. Oskar Bosson: Yes. Thank you. Those were all questions in the queue. I don't believe, operator, that we have any more questions waiting in line either. And if so, I think that concludes today's call. Thank you so much for listening, and we'll see you back in a quarter from now. Thank you so much. Gunilla Osswald: Thank you. Have a good day.
Operator: Ladies and gentlemen, thank you for standing by. I am Gellie, Chorus Call operator. Welcome, and thank you for joining the OTE conference call and live webcast to present and discuss the third quarter and 9 months 2025 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Kostas Nebis, CEO of OTE Group; Mr. Babis Mazarakis, Chief Financial Officer; and Mr. Panayiotis Gabrielides, Chief Marketing Officer, Consumer segment, OTE Group. Mr. Nebis, you may proceed. Kostas Nebis: Thank you, and good morning or good afternoon, everyone, and thank you for joining us today to review our third quarter results. I would like to start with our recent exit from the Romanian market. We are very pleased to have successfully completed a key milestone that will lead to a substantial improvement in our annual cash flow and enhance shareholder value. In line with our commitment, we have adjusted our shareholder remuneration following the completion of this transaction by distributing an extraordinary dividend. Before reviewing the quarterly performance, I would also like to highlight a recent agreement to expand the ultrafast broadband coverage in the remaining lots of rural and semirural areas across Greece through a subsidized projects covering a further 480,000 homes and businesses. This will further solidify our leadership in the market by connecting even more people to fiber speed networks. This initiative underscores OTE's commitment to providing to as many households and businesses as possible, the fastest, broadest and most reliable gigabit connectivity services, driving Greece digitization and transformation going forward. Turning to our quarterly performance now. I would like to stress above all the acceleration of the recovery in our fixed retail service revenues that is supporting our overall growth in both revenues and profitability. The performance of our fixed retail services is accelerating, building on last quarter's momentum. This growth was driven by the increasing adoption of FTTH services, supported by the growing demand, voucher initiatives and our expanding network availability. We continue to lead with Greece's largest fiber network and further enhance our offerings to the customer premises. Our FTTH footprint is growing significantly, enabling more connections as we continue to record strong customer additions. The newly adopted regulatory framework for stop selling FTTC in FTTH already connected buildings will further boost the transition to fiber connection, further accelerating the monetization of our fiber network investments and offer improved services to the end users. At the same time, our fixed wireless access solution powered by 5G stand-alone technology is gaining significant traction, effectively bridging Gigabit connectivity gaps, contributing to positive broadband net adds in a traditionally weak performing quarter. In our TV segment, we are seeing the positive impact of strengthened antipiracy measures and anticipate additional support from the abolition of the special tax at the beginning of next year, making our Pay-TV propositions even more affordable to the end users. Our TV business continues its robust growth and strong customer acquisitions. Building on our leading FTTH network, rising fixed wireless access adoption and strong TV performance, we remain focused on enhancing customer value. In line with this, we have deepened our convergent services strategy by partnering up with one of the major energy providers to enhance further the value offered to our retail customers. In the Mobile segment, we continue our strong growth driven by our network leadership and attractive commercial offerings. The successful transition from prepaid to postpaid plans, the optimization of our prepaid portfolio and the increasing adoption of larger bundles and 5G devices penetration, altogether contribute to our solid performance. The recent CPI adjustments, which were mild after many years of experiencing much higher inflationary pressures on our cost drivers were combined with additional customer benefits and we contribute to some extent in our future growth. We remain at the forefront of the market as the operator of Greece's only commercially available 5G stand-alone network, and the reliability and resilience of our network continue to reinforce our long-term trajectory. We have also recently introduced the Magenta AI portfolio services, aiming to democratize AI access in the Greek market. By integrating the power of AI, we are delivering great value, further strengthening our commitment to innovation and customer satisfaction, partnering up with a number of global leaders in AI innovation, leveraging the partnerships of the Telekom Group. Our ICT business continued its strong momentum with another quarter of double-digit growth, highlighting our pivot at role in advancing the digitization of diverse sectors, supporting the digital transformation and businesses and the public sector organizations across Greece. To highlight, our recent contribution with advanced digital services and innovative educational tools in the educational sector, bringing all stakeholders closer to the gigabit society. In addition, our international ICT business is also growing, including projects for several European agencies. We remain focused on our operating and production model transformation, aiming to build a digital-first organization by actively deploying digital and AI tools. We have already enhanced areas like predictive network maintenance and customer care with AI role in customer interactions steadily growing, boosting efficiencies and delivering further value. Before finishing this review, I would also like to briefly mention that we have undertaken the initiative to provide free of charge high-speed connections to around 600 schools in remote areas of Greece, leveraging our FWA technology, opening up access to the digital world and offering equal opportunities to digitization for all students in Greece. Our strong performance relies on our strategic directions. The strength of our integrated services portfolio provides tangible benefits and helps us confidently navigate competitive challenges while driving our future growth ambitions. Looking ahead, we remain confident in our ability to lead the market, capitalize on new opportunities and consistently deliver on our commitments to our shareholders, customers and partners. Babis, on to you. Charalampos Mazarakis: Thank you, Kostas, and welcome to everyone on the call from me as well. As Kostas already pointed out, the completion of our exit from the Romanian market marks a significant milestone. From a financial perspective, this transaction strengthens our free cash flow on a sustainable base. We have adjusted our shareholder remuneration and will proceed with an extraordinary dividend distribution of around EUR 40 million or EUR 0.10 per share in the next month. Now turning to our quarterly figures. In Greece, we achieved a robust 5% increase in revenue, reflecting continued strength across our Mobile, TV, broadband and ICT segments, which more than offset the expected headwinds in areas such as national wholesale. EBITDA rose by 2%, keeping us firmly on track for our full year objectives. Retail fixed service revenues accelerated the growth this quarter to 1.3%. Our TV segment delivered another strong quarter with revenues increasing by nearly 17%, maintaining a solid double-digit growth trajectory. Our customer base expanded by 6.7%, almost matching the net additions reported in the same period last year despite this being the second year of our content sharing agreements. While we expect the anniversary effect from last year's Q4 price adjustments to impact year-on-year growth comparisons, our outlook for this segment remains positive. The adoption of antipiracy legislation this year, together with the removal of the 10% special tax on Pay-TV, which will be effective January 1, 2026 are paving the way to further encourage the take-up of legitimate platforms and reinforce our strong position in the market. Our broadband segment delivered a strong performance this quarter, achieving positive net customer additions despite the third quarter typically being seasonally the softer. We recorded [ 1,800 net profit additions ], driven primarily by the momentum in our fixed wireless access, FWA offering, which now serves 33,000 subscribers. Turning to our FTTH services. There, we delivered another strong quarter, recording 38,000 net additions and bringing our total FTTH customer to 509,000. Our retail FTTH customers now represent 22% of our total broadband base, up from 15% in the same period last year. This robust growth, coupled with sustained wholesale demand of our infrastructure is driving increased network utilization and monetization. Utilization level has risen to 33%, reflecting both the ongoing demand for our FTTH network and the strength of our wholesale partnerships. In addition, under the new regulation in place, we have now started to stop offering non-FTTH services in buildings already connected with FTTH. This change serves as a key driver for customer upgrades and accelerate the transition to fiber to the home products. Now turning to our mobile operations. Their service revenues increased by 2.7%, sustaining the solid momentum. Our postpaid maintains its strong growth trajectory with the customer base expanded by 6.4%, primarily driven by ongoing pre-to-post migrations. Starting from December this year, we will implement a CPI-linked increase in monthly fees for our mobile customers. The adjustment is modest, 2.6%, averaging less than EUR 0.5 and will apply to roughly 2 million postpaid customers and will support the continued growth of mobile service revenues in the coming quarters. Our network leadership continues to serve as a key competitive differentiation. 5G coverage now exceeds 99% of the population while 5G+ coverage has expanded to more than 75%. Data usage maintains its strong upward trajectory, with average monthly consumption per user reaching 20.5 gigabytes per month, representing a 29% year-over-year increase. In our wholesale segment, revenues increased by 4.2% in the quarter, but that was primarily driven by higher volumes in the low margin international traffic, which helped offset in revenue terms only the decline in national wholesale revenues. Here, I would like to say that the international wholesale contributed approximately EUR 81 million in the quarter. However, we expect this revenue stream, international wholesale revenues, of course, to decline in the coming quarters as certain activities will be phased out. Specifically, we anticipate that approximately EUR 150 million in revenues will be removed from our records in the fourth -- at the end of the fourth quarter of this year and the small amount impacting the first quarter of 2026. The termination of certain agreements where OTE acts as transit carrier will have minimal, if [indiscernible] impact on profitability. Our national wholesale agreements on the other hand, continued to deliver solid volumes with 31,000 lines added to our network in the third quarter and 93,000 net additions year-to-date. On the other revenue streams, our system solution businesses via core of our ICT segment continued its robust growth, delivering almost 38% increase in the quarter. This strong performance builds on the momentum established in previous periods, and we anticipate this positive trend will persist throughout the remaining of this year. The solid results in ICT helped to partially mitigate the decline in handset revenues, which decreased by 15%, primarily due to phase out of certain 0 margin activities there as well. Total operating expenses, excluding depreciation, amortization and one-off items increased by EUR 34.3 million in the quarter, broadly in line with our revenue growth. The increase was mainly primarily attributable to higher costs directly associated with top line expansion, particularly increased third-party fees within our operating expenses, which reflect the strong momentum in our ICT segment, as we discussed before. Additionally, we continue to incur certain operating expenses related to the growing adoption of fiber to the home, notably associated with the final phase of the connection of the customer. We remain, of course, firmly committed to cost discipline across all other several areas with continued savings most evident in personnel expenses, supported by the ongoing benefits from our [ X programs. ] As a result, adjusted EBITDA after leases increased by 2% in the quarter, maintaining the same positive trend as in the previous quarter. Our EBITDA margin reached 41%, representing a decrease of 120 basis points year-over-year, primarily reflecting a higher proportion of lower margin revenue streams. Overall, as we now approach the year-end, our performance reinforces our confidence in achieving our full year EBITDA target and guidance. Now let's take a look at the CapEx and cash flow. First of all, CapEx was up 8.2% in the first 9 months, reaching EUR 437 million, largely reflecting continued rollout of fiber to the home and the expansion of our fixed wireless access infrastructure. Our full year CapEx guidance now stands at approximately EUR 600 million after stripping off the Romanian business. I would like to clarify that the acquisition of the [ repeat ] concession will not alter our CapEx guidance. We now anticipate that we will be covering nearly 3.5 million homes by 2030 as we continue our fiber to home rollout for a couple of more years and therefore, maintain the current levels of approximately EUR 600 million CapEx per annum. Finally, free cash flow after leasing from continuing operations reached EUR 108 million in the quarter, up from EUR 100 million in the same period last year. The improvement was mainly driven by the higher EBITDA in the quarter. Income tax outflows and the working capital figures have been affected by different set limits amounts between these lines related to payments and receivables from the public sector. Today, we updated our guidance for free cash flow to EUR 530 million, up from EUR 460 million due to the disposal of the Romanian business. The revised guidance now reflects exclusively our Greek operations. At this point, we conclude the presentation. And operator, we're now available to provide any further clarification. Operator: [Operator Instructions] The first question is from the line of [indiscernible] Andreas with EuroBank Equities. Unknown Analyst: I have 3 questions from my side. The first question is regarding your updated guidance of free cash flow. You're currently guiding of free cash flow of EUR 530 million for 2025, which seems to be the new basis for your recurring Greek free cash flow generation. Could you tell us what is the read-through for the free cash flow from your recent agreement to acquire TERNA FIBER as you maybe have already mentioned that, that there will be no negative implications from this transaction. This is my first question. My second question, which is also related to the free cash flow is regarding your usage of EUR 120 million cash tax savings related to the Romanian disposal, particularly to the extent to which this will be used to enhance -- this will be used to enhance your cash return or as a firepower for spectrum in 2027? And my last 1 is on mobile. Lately, market participants have been rolling out inflation-linked adjustments to mobile contracts, which on our understanding, marks the first coordinating pricing move since 2022. Could you comment on that and then the magnitude of the pricing and whether this has been consistent across all the operators? Thank you very much. Charalampos Mazarakis: For the questions. And let's start with the updated guidance. As it was clear, and you pointed out, this EUR 530 million, reflecting the organic, let's say, delivery of the Greek operations for this year. So regarding your question about what is the recurring base, this is the starting of this year, of course. To the extent that we expand the business in next year, this organic is also expected to enhance in the coming years. Regarding the TERNA FIBER, there are 2 things there. The CapEx and the acquisition of this company. As we already guided, there is no impact in the cash flow from these acquisitions since it has been done in a symbolic amount. And regarding the CapEx, I have to say that the CapEx envelope, as we alluded to, is not going to increase versus what we have communicated also in the past that this will be the EUR 600 million we guided approximately is the flow -- is the ceiling actually for the coming years, including also the UFBB rollout, which will be rolled out for the next 3 years. And there is also an internal reshuffling of funds from other activities [ that one ] without, of course, impacting the strategic rollout to accommodate all of our infrastructure investment. On the free cash flow regarding the tax break, the tax benefit of selling the Romanian business will be positive the cash item for 2026. And as I think also you mentioned, part of it or all of it or to the extent that this is required, we found the upcoming spectrum auctions, for which the timing is not exactly clear yet and the process is not open yet. So the organic cash flow would continue to be part of our shareholder remuneration. And the cash item being one-off items, I think it's wise in order to maintain a smooth trajectory of our operational, let's say organic shareholder remuneration to match any other one-off hit that we may have, which in this case is the spectrum. Kostas Nebis: Yes. As far as your question around mobile, first of all, I'm not sure I understood what you mean by coordinated. But anyway, I would only comment on what we have actually done recently or announced to do recently. Just to give you a bit of historical information, we have started updating our contracts about 2 years ago, providing for this indexation clause. This is the practice that we see in quite a lot of European countries. So after having updated all our contracts and renewed our customers, we decided to apply the indexation clause, which is as per last year's inflation. This is the 2.6% that Babis also referred to. This is what we announced for our customers. We try to do it as fairly as possible by providing extra value to our customers. It is true that we have suffered out of inflationary cost pressure for a number of years, have adjusted nothing. And now we are doing that -- we are talking about less than EUR 1, which is going to be backed up with extra value to our customers, gigabytes in order to make it as smooth as possible. And this is it. Unknown Analyst: Okay. My question is regarding if this inflation-linked adjustments has been followed and also from other operators. And if there are changes to these adjustments between the operators, differences, I mean. Charalampos Mazarakis: I cannot -- I do not know whether [ we have had any recent changes, ] to be honest with you. [ This is not something that I have picked up ]. Operator: The next question is from the line of Kaparis Efstathios with Axia Ventures. Efstathios Kaparis: Congrats on a solid quarter. I've got 2 questions, if I may. So the higher amortization this quarter, what does it relate to? Is it a one-off? Or will it continue in the following quarters? And also on the FTTH rollout. Traditionally, Q4 is a stronger rollout quarter. Would we potentially exceed the 2.1 million target by the end of the year? Do you see an acceleration as you build up know-how on the rollout? Kostas Nebis: Let me start with the question about the FTTH rollout. The answer is no. We do not expect to close the 2.1 million household. That was target since the beginning of the year. So we are more or less running in line with the plan. What we see being accelerated is the customer take-up. And this was the result to a certain extent or to a great extent, I would say, of the new regulation that allows us to stop selling FTTC in FTTH connected buildings. We have seen, first of all, a very strong quarter, which normally the summer months are not performing extremely well as most of the people are taking their summer holidays. We saw a more or less similar quarter in terms of net ads during Q3. And on top of that, what we have seen is a record high net add in both October, but also the pace of November is following the same logic. So what we can confirm is an acceleration in the FTTH net ads. And yes, landing as far as the FTTH rollout is concerned, more or less spot on the 2.1 million households that we're aiming for. Charalampos Mazarakis: Also regarding the depreciation and amortization, this is seasonalization of Q3. As you may have seen, the D&A at the end of the 9 months year-to-date is flat versus a year ago. Operator: The next question is from the line of Rakicevic Sofija with Goldman Sachs. Sofija Rakicevic: So I would just follow up on a question on mobile. When it comes to CPI linkage, I'm just wondering if you have quantified the benefits from it on the top line growth over the next year or 2. And did you say earlier that this will also include some other services as well. I just wanted to check on that. And do you think that mobile could continue to grow in the range of like 2% to 2.5% into 2026? And my second question is on TERNA acquisition. So you have clarified the expected CapEx spend, but I was wondering if you can comment on the rationale of this acquisition. And also, what is the demand for fiber in those areas actually look like? And yes, the last question is how likely in your view is that the new entrants will manage to bundle telecom services with its energy offering. Kostas Nebis: Okay. Let me start with the first question on mobile. First of all, just to say the record straight, mobile has been growing by these levels of 2.5% to 3% for quite some quarters now. The delivery behind -- the levers behind the mobile growth are more than just the CPI. So we have been moving customers, prepaid customers to postpaid. We still have slightly less than 60% of our base on prepaid tariffs moving into higher value postpaid tariffs. This is the biggest driver of our portfolio growth. The second thing is we still have a lot of customers who are not in unlimited mobile data by shifting them to buy more for more initiatives. This is also fueling our growth. The CPI is just a small on top that will contribute to a certain extent, I would say, a small extent into our total growth trajectory going forward. So yes, we expect to see similar trends in the coming months and moving into 2026. But predominantly on the back of pre to post and more for more postpaid customer development. With regards to the effect of the CPI, I think that Babis has already indicated, we are talking about something less than EUR 0.5 -- slightly less than EUR 0.5 and we are talking about 2 million customers. I would like to repeat for 1 more time that this less than EUR 0.5 price adjustment comes with extra gigabytes in order to make it fair towards our customers. Now going to your question about UFBB. I think it is important to highlight the strategic rationale of this initiative. We are talking about roughly 0.5 million households in semi-rural and rural parts of the country in the networks where we have the lion's share of market share, I mean, this is standard for all incumbents. And we also have -- we are also serving 100% out of our copper -- our wholesale customers, meaning both Vodafone and Nova. So there is a lot of value generated out of these networks. We estimated at around EUR 100 million. So us being in a position to preserve this value, first of all. And second, I'll present also a big part of it as a margin as we will not be [ buying ] from someone else, makes this investment a very, very important one. On top of that, what we expect is that since we will be moving customers from copper to fiber space, we will be in a position to also generate some ARPU upside out of this customer migration. And at the end of the day, adding up this nearly 0.5 million to be already committed the FTTH plan, we will end up at 3.5 million households in total at the end of our FTTH rollout plan, which is slightly more than 70% of the country. Now, I mean, on your last question, I mean, I cannot comment about what our competitors intend to do. I mean, this is something that you should be asking them. Operator: The next question is from the line of [ Colas Vasilis ] with [ Padala ] Securities. Unknown Analyst: I have 1 question about group's growth. The growth in adjusted EBITDA after leases has ticked to 2% while EU peers are running with growth rates above 4%. When do you think the growth will be higher following the government initiatives for accelerated FTTH takeup and stronger contribution from TV and Mobile as well? Kostas Nebis: Thanks for the question. We are also anxious to see this 2% stepping higher. I mean, just to remind everybody that we have to reflect a bit on the history. So we started off in 2023, we started off 2023, we landed at 1.2%. EBITDA growth, which moved up to 1.6% in 2024. Now we are just about to close the 2%, and we have provided an outlook of 2%. I mean, to be honest with you, looking into the underlying trends across a number of different fronts, both fixed and mobile as well as ICT, including Pay-TV, for sure, this is making us more optimistic looking into the future and in particular, looking into 2026. Operator: The next question is from the line of Karidis John with Deutsche Bank. John Karidis: I have 2 questions, please. So first of all, the experience across Europe is that when a late entrant comes in with very aggressive prices, it's sort of the second and the third players that blink first. And because they blink, they sort of rope incumbent into a bad situation. So I'd be very grateful if you could explain or share with us how you see the level of competition, particularly from the likes of Nova and Vodafone and how they're reacting to PPC. I note what you said about us asking them, but I just sort of wonder from your perspective, do you feel that these guys are close to sort of blinking? And then secondly, I'm aware that of the 2 other operators that have been around for quite some time, one of them is not rolling out FTTH fast enough. Unfortunately, that's in areas -- sort of key areas where you have quite a lot of customers. And I just sort of wonder at what point do you sort of act in order to save these customers from going elsewhere given that you can't actually migrate them to FTTH as part of the collective wholesale agreement you have with Nova and Vodafone? Kostas Nebis: Thanks for the question, John. First of all, the fact that we have a couple of technologies available, both FTTH, including our infrastructure as well as our wholesale partner infrastructure, but also fixed wireless access is giving us optionality and what we are going to do is to make the most of both technologies in order to accommodate our customers' needs. This is on the second part of your question. So the first part of your question, I mean, I think that I have already presented our strategy. We are pursuing an FMC strategy. So we are trying to provide extra value to our customers by combining a number of different services as compared to just having 1 broadband-only product. This is what is holding us extremely strongly in the market, defending our base but also growing value. We are providing fixed voice, broadband, Pay-TV services on top of that mobile. We have also introduced an extra element through our partnership with [ Metlen ]. We are also providing extra value through a number of different verticals, be it on the delivery, be it on the insurance. So we feel that we have a very compelling proposition that is keeping our customers satisfied, providing a lot of value, hence, being in a position to defend our customer base, but also you can tell from our performance, our momentum going forward. This is what differentiates us in the market has been differentiating us for quite some time now, and we are trying to further strengthen that going forward. John Karidis: I don't know, if I may, sort of follow-ups, if you want to comment at all, but a bunch of clients are simply sort of taking the retail price of the latest entrant and adding it in the retail prices of our Mobile and Pay-TV and they're still coming out with some that's less than the bundle that COSMOTE offers, and that's sort of a cause of concern for them. And then the second thing is, I just sort of wonder, I think regarding my second question, do you feel that you can -- FWA is a good enough alternative in the middle of Athens, potentially sort of where the parliament is and the customers that you have around there. I mean, FWA is good enough for that, too, you think? Kostas Nebis: FWA for us, it's more of a bridge technology. So it is used in order for us to buy time until we manage to roll out FTTH or either us or a wholesale partners. This is how we have been using it. And based on what we have seen so far, I mean, we have more than 40,000 customers on fixed wireless access in less than a year's time, with very impressive NPS, these customers are very happy. So if it works well as a bridging technology, I'm not recommending a fixed wireless access to be used instead of FTTH. But it is helping us to bridge the timing gap until FTTH is available either in our networks or in other networks that our wholesale partners will be building. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Kostas Nebis: Thanks a lot for your attention, your questions and your interest in OTE, and we are looking forward to our next discussion, which is in February for our fourth quarter as well as the full year results. Until then, have a nice day. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good evening.
Operator: Ladies and gentlemen, welcome to the Hapag-Lloyd Analyst and Investors 9 Months 2025 Results Conference Call and Live Webcast. I'm Iruna, the Chorus Call operator. Hapag-Lloyd is representative by Rolf E. Jansen, CEO; and Mark Frese, CFO. [Operator Instructions] The conference is being recorded. The presentation will be followed by a Q&A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf E. Jansen. Please go ahead, sir. Rolf Jansen: Thank you very much, and welcome, everyone, and thanks for taking the time to be with us today. Yes, short presentation, as always, before we jump into the questions that you may have. I would say that when we look at the first 9 months, a couple of things to mention. I think good strong volume growth over the first 9 months, again, a decent quarter in Q3, on the back of that, good revenue growth. When we look at Q3, I think earnings improved sequentially. But of course, year-to-date performance remained below last year. When looking at Q3 in isolation, I think that was actually a fairly solid result. I think we start to see that the first cost savings from Gemini are starting to come in. We see the network running smoother and smoother. So that gives us a lot of confidence that we'll see further improvement as we go towards the end of the year and moving into 2026. We will continue to invest into the future. We also have some things -- we also continue to work on our Terminal division, but nothing specifically announced there at the moment. think we have narrowed our outlook a little bit going forward. And when you look at the midpoint on EBIT, then you see that we have slightly raised that compared to what we had a couple of months ago. Switching to market. Let's still say it's a fairly robust market. When you recall all the forecast that there were for the container trade in the beginning of this year, but also in fairness in the beginning of last year, then certainly over the last 7 quarters, we have seen a stronger market than many people had expected. In 2024, the market grew over 6%. The first 9 months now, we are again looking at close to 5%. That's a lot more than people had anticipated. And I think that's pretty encouraging and shows also that global trade is quite resilient. We still expect the last quarter to be somewhat weaker, but of course, that remains to be seen. Spot rates under pressure after the relatively early peak season, seen a bit of an uptake in the last couple of weeks with last week again a bit weaker. But I think we also see that demand still remains fairly strong and utilizations remain high. So hopefully, we'll see some further recovery of those spot rates as we move forward. Switching briefly to Gemini. I think it is fair to say that we have set a new benchmark for reliability in the industry. I think with very consistent performance even in very volatile markets and under difficult market positions. I think the network has delivered on its promise pretty much every month. I also believe that drives our above-market growth. We also see customer feedback very positive with our Net Promoter Score that we measure twice a year at the moment at an all-time high. And we also still see, as I mentioned before, quite a lot of things that we can still do better. And we will continue to implement those smaller improvements month after month after month, and that will allow us to get to our anticipated cost saving run rate in the course of 2026. Next steps. make sure that we continue to grow volume on the back of an excellent product and also make sure we get adequately paid for that because if we are able to help our customers to run their supply chains a lot better, then that must be more efficient for them as it allows them, for example, to take out inventory. And of course, we would like also to be adequately paid for that. We will also come with the introduction of a new quality promise for on-time delivery on box level because that's, in the end, the ultimate promise to customers that we make that we deliver their box on time. A little bit on investments before I hand it over to Mark. We have announced also this morning a decision to invest in up to 22 new ships in smaller vessel classes as we have a significant amount of tonnage in those vessel classes that is going out of service in the second half of this decade. That means we need to replace them. We also have to reduce our exposure to the highly elevated time charter at the moment -- market at the moment. And of course, that also helps us to reduce our operational cost base, and it helps us also on our decarbonization journey. The ships that we will order will probably be in a couple of different classes, one around 1,800 TEUs, class around 3,500 and class around 4,500 TEUs. With that, let me now first hand it over to Mark. Mark Frese: Thank you, Rolf. Good morning also from my side, and thank you for joining us today for our 9 months results presentation, which will show that in a complex and volatile market environment, we have delivered a solid operational performance. Our strong volume growth, which is well above the market average, demonstrates the benefits of our strategic positioning, particularly the successful implementation of our Gemini East West network. In the coming quarters, we aim to sustain this growth momentum and still keeping the flat capacity stable. As anticipated, earnings are lower than last year's exceptional performance, and that is primarily due to softer freight rates and continued cost pressure. To address this, we are intensifying our cost discipline and further optimizing our network to enhance efficiency and competitiveness. At the same time, we maintain a robust balance sheet with ample liquidity and a moderate leverage, providing the flexibility to pursue whatever strategic priorities. We focus on or opportunities come up, and we navigate market volatility effectively with that. Let's now take a closer look at our financial performance. Revenue and earnings in the third quarter improved sequentially, driven by a temporary higher spot rates resulting from front-loading effect in the U.S. EBIT increased from USD 189 million in Q2 to USD 228 million in Q3. However, compared to last year's exceptional results, earnings were lower due to the significantly weaker overall freight rate environment. Looking at the first 9 months, revenue grew by 5%, supported by strong volume growth across both operating segments, which helped offset partially the lower freight rate environment. At the same time, persistent cost pressure weighed on operating performance, for the period, group EBIT reached USD 905 million and group profit totaled to USD 946 million. Looking now at the performance of the Liner segment, we can see that revenue in the business segment increased to USD 15.7 billion in the first 9 months. This development was driven by above-market volume growth, particularly in the Gemini trades. EBIT amounted to USD 858 million in the first 9 months, that is compared to USD 1.9 billion during the same period of previous year. In Q3, EBIT improved sequentially to USD 219 million, a temporarily higher cost -- higher spot rates out of Asia lifted our average freight rate by around about 5% compared to the quarter before. After the 9 months of '25, we transported or in the month '25, we transported 10.2 million boxes, representing a volume growth of 9%. As said, well above market rate. This strong performance reflects our sustained investment in efficient fleet capacity and the successful transition to the new Gemini East West network. Particularly noteworthy given the tariff-related demand fluctuations we have navigated through. So growth was especially strong on the Pacific and Asia-Europe trade routes. In contrast, Atlantic volumes improved only modestly due to the soft demand between Europe and North America, while transport volumes between Latin and Europe -- Latin America and Europe were constrained by operational disruptions in ports. Following a persistent decline in the average freight rate improved, which improved 5% in Q3 2025 quarter-over-quarter, driven by front loading effects. However, the first 9 months of '25, the average freight rate stood at USD 1,397 per TEU, almost 5% lower compared to the prior year. Having a look on the unit cost in the first 9 months of '25, they increased by 5% to USD 1,338 per TEU, and this increase was driven by higher storage costs due to port congestions and operational delays, increased hinterland transportation costs from growing the growing share of door-to-door business and plant start-up investment associated with the Gemini Network. In addition, external factors such as rising trade imbalances, higher regulatory compliance cost and for sure, as we all know, the FX effects, which we have experienced generally, elevated the cost base. To mitigate these external factors, you can assume we structured strong, and we are executing already a comprehensive cost program. I would also like to provide more context on the Gemini startup costs as these are likely more pronounced for Hapag-Lloyd than for Gemini partner, as well as on the initial cost savings that are already becoming visible. For us, the new network represents a more significant transformation, which is temporarily associated with higher unit costs. We have not only redesigned the network but also changed the terminals we call the capacity we operate. While we already see clear cost benefits per available slot right now, such such as reduced ship system costs and lower bunker consumption, the unit cost per transport book are still elevated for now. But when we look ahead, growing volumes at stable capacity and further network optimization will drive unit cost down, resulting in tangible positive impact on our P&L in the coming quarters. Let's now have a closer look on the T&I segment. Revenue in the Terminal business increased, as you can see here, by 15% to USD 370 million -- USD 375 million in the first 9 months. This growth was supported by encouraging throughput developments. We have seen and the acquisition of our Terminal in Le Havre, in France this year in March. EBIT amounted to USD 46 million, which is below the prior year level, primarily due to weaker performance at Latin America terminals. This was driven by the U.S. tariff related market volatilities. And we have seen strong unfavorable weather conditions there. Additionally, we continue to ramp up this relatively new business segment which is quite normal that is associated with a temporarily higher cost base. Turning to our cash flow development on the next chart, operating cash flow for the first 9 months. As you can see here, '25 amounted to USD 2.6 billion. We invested around about USD 1.5 billion, mostly investment in containers, as well as in the modernization of our fleet, under our fleet upgrade program. These investments are designed to enhance the cost efficiency and to reduce CO2 emissions across our operations. Including income from interest, dividends and divestments of USD 309 million in net cash outflow from investments totaled to USD 1.2 billion resulting in a robust free cash flow of USD 1.4 billion. Financing cash outflows amounted to USD 2.5 billion, primarily reflecting the dividend payment of more than $1.6 billion to our shareholders, along with debt redemptions and interest payments. Overall, the cash position decreased by USD 1.1 billion, resulting in a still robust cash balance of USD 4.6 billion at the end of Q3. For sure, we continue to maintain a very resilient balance sheet with ample liquidity and moderate leverage. Strong liquidity reserves still there, which includes cash fixed income investments, undrawn revolving credit facilities, which totaled to USD 7.5 billion. This provides us with significant flexibility to fund strategic initiatives and for sure, navigate effectively through difficult market period and volatility. And with that, I will hand it back to Rolf now for the market update and our outlook. Thank you. Rolf Jansen: Thank you, Mark. Yes, maybe just a few words on supply and demand. I think we see here the trend that we have seen over the last years, I would say, a remarkably strong growth in '24. Personally, I would also expect that the '25 is going to come in a little bit stronger than we anticipated. That's a better picture we have seen over the last couple of years. Of course, it's uncertain what's going to happen in '26. It's, however, quite encouraging that over the last 2 years, if you add them up, I think, 6-plus percent in '24, I think we're going to be close to 4% in '25. That's accumulated close to 11% in 2 years, which is well above what everybody expected. For next year, the expectations for now are a little bit lower, but also also fleet growth will be a little bit lower. So for now, we anticipate an environment where there is going to be somewhat lower growth. But when we look at the last couple of years, there's certainly also a scenario thinkable where things remain fairly robust because also when we look around the globe this year, then we certainly see that trades to and from the U.S. have been under pressure, but quite a few other trades have actually done fairly well. Looking at the order book. Order book is still quite big. Could that be lower? Yes, could be. On the other hand, let's also not forget that we are still expected until the end of the decade, overall growth will be 15% to 20%. And we also expect that there's quite a bit of the capacity that is going to be taken out as towards the end of this decade, more than 4 million TEU of capacity will actually have to be replaced by newer tonnage, which is also the background of the order that we just earlier talked about. And on the back of the demands that are being put upon us to work on decarbonization. Also, that is certainly an incentive to sell a little bit slower, which normally would require a bit more capacity. So all in all, no very significant change in the order book. It definitely remains on the high side, but it means it also covers a much longer period as when people order ships today, you can get them in '28, '29 or sometimes also only in 2030. So contrary to what we used to look at in the past when we had an order book typically covering 2.5 years. Today, it covers more to even 4, 4.5, sometimes even 5 years. Moving to the outlook before we hand it -- before we wrap it up and then hand it over to you. We made some slight adjustments to the outlook. As you can see here, mainly on group EBITDA and group EBIT, where we narrowed the range, which we would also expect, if we get closer towards the end of the of the year, and we also raised the midpoint a bit. Then when we look at priorities, I would say, make sure that we leverage the Gemini performance to continue to grow our business at adequate pricing but also make sure that we get all the savings into the book, make sure that we continue to focus on high customer satisfaction. We've been doing that now quite consistently over the last number of years, and we need to make sure that it stays like that. We will try to further expand our Terminal division through acquisitions and potentially also investments here and there also because it drives quite a lot of synergies with the Liner business. We also will invest in the expertise and resilience of our team amongst through a large leadership program. And then finally, we have to ensure that we maintain strict cost discipline as costs are currently definitely at an elevated level. We already mentioned [indiscernible] , and we need to ensure that over the next 12 to 18 months, we see the planned improvement in unit costs. And with that, I would hand it over to the operator, as I think we now move to Q&A. Operator: [Operator Instructions] The first question from the phone comes from Omar Nokta with Jefferies. Omar Nokta: I have a couple of questions. Maybe just first on the new buildings. Can you give us a sense of what kind of capital expenditure you're anticipating for these vessels? When you expect to take delivery of them? And also, where do you plan to deploy them? Are these going to be in that sort of the ideal workhorse for the Gemini network? Rolf Jansen: Okay. If I take that, maybe, Mark, you can say probably something around the CapEx but I think if we look at delivery, most of that will come in '28 and '29. And when we look at where we can deploy them, those are many places across our network, but it would not be illogical to expect quite a few of them to be deployed in our shuttle or feeder networks in Europe or Asia, but only some of them will also be used in IoT Americas or in Africa in Latin America. Omar Nokta: And then in terms of cost, any sense? Rolf Jansen: I mean, I think in the end, we will commit to those ships. I think we're still figuring out what will be the exact split between the various categories and some of it will be time charter and some of it we will own. So it's a bit too early to say something about what the overall CapEx will be. Omar Nokta: Okay. And then just a final one for me, just on the operational costs. I know you mentioned that 2026 is when we'll start to see the benefits of Gemini. Are you able to give any kind of maybe quantify the type of cost savings you anticipate to show next year? Rolf Jansen: I mean what the type or the -- sorry, I didn't hear it -- type or size? Omar Nokta: Yes, just like the dollar amount you anticipate or percentage change versus this year, any kind of range you're able to share? Rolf Jansen: I think when you look at the cost savings that we expect from Gemini, we have, I think, earlier on, gave an indication that we expect it to be net [ $350 million to $400 million ]. And at the moment, I have no reason to have -- to pull out a different number. Operator: The next question from the phone comes from Alexia Dogani with JP Morgan. Alexia Dogani: I have 3 please. Just firstly, on the 4Q outlook, clearly, the low end of the range is very negative and we're only 6 weeks away from the end. How should we interpret that low end that you've provided today? And should we see this as the potential exit rate into 2026? That's my first question. Secondly, Rolf, you made some comments about the Gemini pricing. And can you elaborate a little bit on what the alliance wants to do in terms of kind of capturing the value of this new operating model? Is it really about pricing? Or is it about volume gains? And there has been in the press some discussion around Maersk considering an on-time surcharge. This is slightly counterintuitive because obviously, you operate a scheduled business, customers should expect it to be on time, otherwise, the schedule -- kind of point is missed. And I think at the 2030 strategy presentation, you showed that actually the top thing that customers want is low price. How does that actually change given your experience over the past 12 months? And then my final question is, you helpfully show that the market expects container volumes to grow 15% to 20% by 2030. That implies a 4% to 5% per annum volume CAGR and suggest a multiple of 1.5 to 2x real GDP based on kind of current global forecast. What gives you confidence the multiple can be staying at these higher levels? Because clearly, in '24 and year-to-date, '25, we've had a lot of, let's say, external events affecting demand, be it disruption and tariff front loading. Is that your feeling? And if not, isn't it slightly counterintuitive that tariffs have no impact on trade? Rolf Jansen: Let me maybe try and take them one by one, and then Mark, you may want to add something on the outlook. Maybe start from the bottom. To be honest, I can't really reconcile your math, yes. Because when I look at 15% growth until 2030, that's 5 years. So that's roughly 3% a year growth, which is roughly a multiplier of 1x of GDP when you look at the long-term average of 3%. So personally, I think that's actually not looking at 1.5x GDP, but more looking at just onetime GDP, which I think also when you look at the last number of years, it will not come every year, but on average, we're actually not so far from that. Then when we look at Gemini pricing, I think there is definitely value to be captured from a difference in reliability and a difference in OTD between one and the other, whether you should call it a separate charge for being on time. I think I can relate to your comment that putting a separate charge for being on time is probably odd. But I would also say that if I can choose between 2 carriers, where one of them is going to be on time, and the other one is very unpredictable, that I am willing to pay a little bit more for people that are on time because it allows us to take -- it allows me to take money out of my supply chain. And we have clearly seen in discussions also with customers that they see that and that they do see real opportunity to take 1 or 2 weeks' inventory out of the supply chain, which clearly has value. And then, of course, we need to make sure that we sell that value as well. And part of that to your point, will come in terms of hopefully higher prices or adequate prices and the other one may also be above market growth. I agree with you that there's a those 2 value components in there. And then maybe, Mark, do you want to comment on the outlook. Mark Frese: Yes. Thank you. Yes, on the outlook, you might call it a cautious view. It's maybe 2, but it's due to the scene short-term volatility, which is more attributed not only to the general shipping volatility but also due to the geopolitical uncertainties we are facing, and we are looking at a freight rate environment, which is under pressure right now. Volume growth is slightly slowing down. So let's see what the last weeks are bringing for this year, but I think that is the character of our outlook overall. Alexia Dogani: Thank you for clarifying the growth rate. Can I just do a little follow-up on the GEMINI pricing. When you're competing or when you are on the same route, and you're offering kind of your customers a contract price, should we expect much differentiation between you and your partner? Or given you operate the same network, you're on the same alliance, kind of the pricing opportunity is equally spread? Or just trying to understand a little bit kind of the potential divergence or not. Rolf Jansen: I think your pricing differential you should mainly see with those that have a different product. So I would expect, but I don't know -- and we operate completely independently from that perspective. But I would assume that the Gemini partners are able to get a price premium for being on time compared to those that are not on time. So that's where I think the delta that you will see and that will not come from one day to another, and it will not come in every customer segment. But I think the delta that you will see will be more between Gemini and the other networks then between the partners within Gemini. Operator: The next question from the phone comes from Cristian Nedelcu, with UBS. Cristian Nedelcu: If I can please come back on the cost savings. Could you help us a bit what was the run rate in $1 million that you expect in terms of cost savings in Q4? And what is the time line to get to the $1 billion cost savings that you are flagging in the past? The second one on Gemini. Could you remind us, looking at your ocean volumes, what's the percentage split between BCOs and forwarders. And within your customer base, what proportion do you believe are the time-sensitive BCOs that most likely will find on time proposition as very appealing? Rolf Jansen: Maybe start with the cost savings. I think what we have said is that we expect that in 2026, well over half of that $1.3 billion that we are targeting is going to be effective. We expect to get to full run rate in 2027, and we will see some effects already in the fourth quarter, but those will be limited. In terms of ocean volume, our split traditionally, we have been a bit more focused on the forwarder side. I think at some point in time, we were like 70-30 for orders for BCOs. Today, we are closer to 60-40. And as far as it's around what's the percentage of the customer base are time sensitive, I would say that probably the majority of the BCO business. Cristian Nedelcu: Understood. And could I please add one question if you allow me. Coming back on the very strong volumes from China to the rest of the world. So leaving aside the U.S. for a second. The last 4, 5 months, we've been seeing China, Europe, up 10%, 12% and so on. Do you have any data from your customers, what are the inventory levels in Europe or other LatAm or other countries? I'm just thinking to what extent part of this growth has been just an export push that is currently leading to higher inventories and we actually might see the consequences of that over the next months. And I'm asking this because the value of Chinese exports in October was down 1% year-over-year, and there was a steep deceleration in the exports from China to Europe from double digit to low single-digit growth year-over-year. Rolf Jansen: I think what we saw in October, it's definitely a slower return to work, if you want after Golden Week than we have seen in previous years. In some years, that's good, some years, that's a little bit worse. I think you shouldn't look -- I don't think we should read too much into that. If I look at the last couple of weeks, demand has really been, again, quite strong. We just were a little bit slow coming out of the [indiscernible] After Golden Week. So I don't see too much into that. In terms of inventory, I think that speculation is always out there. I think I'm now hearing since 1.5 years that we are front-loading. At some point in time, one would argue that, that has to stop I think listening to speaking to customers, I do not think that there are many of them that sit on very excessive inventory. What will be critical is what consumer demand will be towards the end of the year, which typically for retail is a peak season, that will probably drive what's going to happen post-Christmas. But I don't see huge amount of front-loading. And yes, you hear -- you speak to one or the other that has high inventories. We also speak to people that have actually fairly low inventory. So difficult judge and there's only a limited amount of really reliable data on that out there. Operator: The next question from the phone comes from Marco Limite with Barclays. Marco Limite: My first question is again on the '25 outlook. This time on the upper end of the guidance because the upper end of the guidance basically implies Q4 EBITDA as strong as Q3, but Q4 is seasonally weaker from a volume perspective. So basically, I guess, implies spot rates up quarter-over-quarter. I mean, is that possible? Do you think that, that sort of scenario? Second question is on your Gemini start-up costs. If you can remind us how much startup costs you had in Q2, how much they have been in Q3 and how much we should expect in Q4? And the third question, if you allow me. I mean if I look at the Q3 results, it just like OpEx was behind of consensus. Is there a single factor or maybe among the many factors that you will point out for higher inflation? Could that be, for example, very strong headhaul growth, but backhaul growth and backhaul volumes not being that strong. And therefore, how can you offset that going forward? Rolf Jansen: Maybe I'll start with the -- I think when you look at the Gemini costs, I think we overall once gave an indication that, that was between [ EUR 150 million and EUR 200 million ]. I think that prediction still holds. The majority of that we incurred in the first half of the year, and we have still a little bit in Q3 and Q4. When you look at OpEx, I think we already mentioned that we also started [indiscernible] Because we believe that OpEx needs to come down. We start seeing that also. So from that perspective, pretty comfortable that, that is indeed going to happen. I think your point to backhaul volume, I think we have certainly seen in the repositioning costs. We've seen a little bit of a spike. Some of that is catch-up and there's still something to do with Gemini, but that's certainly a factor that plays a role. And then I'll leave the comments on the outlook to Mark. Mark Frese: Yes. When we look at that right now, for sure, that scenario is thinkable in the sense that what's reflected in the perspective. And that's why you can see it. But overall, it stays, I think a cautious outlook. Marco Limite: Okay. Just a follow-up to that. Is it fair to assume that you still have got a lag in revenue bookings, so the weak September that includes Q3 actually was in Q4. So basically, we are implying a very strong October, which we have seen also November remaining at very strong with October. Rolf Jansen: I'm not sure we fully understand the question. I think I mentioned earlier that -- and I think it was called out by the previous person asked the question that export volumes out of China have been -- have been a little bit slow following Golden Week. So that's why volume is not exceptionally strong in the month of October. In the last couple of weeks, we see demand picking up again. That's basically what the comment was that we made. It's not technical time shift in a sense when that was your question, too. Marco Limite: I was referring to revenue recognition delay between spot and your revenues, but any your answer was clear. Operator: The next question from the phone comes from Lars Heindorf with Nordea. Lars Heindorff: Also a few one on Gemini. I wonder if you could maybe quantify a bit more about the start-up costs that you have Maersk -- on their call said that I mean, Q3 was the first full quarter with Gemini up and running. So what is actually the difference there between you and them in terms of the start-up cost? Why do you incur maybe later start-up costs compared to Maersk? And then a second one on Gemini, which is the balance again between you and Maersk, are you a net seller or a buyer of capacity? And maybe if you can -- I don't know if you can say anything about the magnitude of that sort of balance in terms of the vessel sharing agreements that you have on -- in the Gemini Agreement? And then the last one is on the rates. Well, I think you said you had a comment in your starting remarks that you said you hope that rates will rebound a bit here into the fourth quarter? Maybe just what is behind that? Are you seeing any signs of recovery? I know there has been a few FAK and GRI successful increases in October and then you have seen a bit of weakness as of lately. But yes, just wondering exactly what is behind that comment. Rolf Jansen: Let me maybe start with the last one on rates. Of course, nobody can predict the rate, unfortunately. I think we saw a bit of a -- we saw some seasonal weakness after Golden Week, then I think we saw rate eroding, which was sort of logical because it took a little bit of time before volumes came back. And we've had a couple of GRIs that ,as you rightfully point out that have been that [indiscernible]. Now we see actually fairly strong bookings. Last week was strong. The beginning of this week is very strong. So I think that gives us some momentum in the market to hopefully get some further rate increase in the short-term market because those [ fleets ] are really very low. I think your second point on the balance. I mean, from all the mainline capacity that we operate and that Maersk operates, I mean, we are balanced in terms of provision. I think we have -- I think we announced it also earlier, we have a 60-40 split roughly on the main line of capacity and Maersk provides 60% of that, and we provide 40% of that. So from that perspective, we're not a net seller or buyer. I know there was a comment on the earnings call of Maersk, and that may have to do with the technical arrangement that we have made on the shuttle space, but I can't look into Maersk books, so I don't know why they exactly treat, but that's my hypothesis. On the Gemini start-up costs, I think it is right. I think you are right. The start the changes were probably a little bit bigger for us than for Maersk because we changed a lot of terminal providers. Maersk was doing a little bit more of hub and spoke already. And whereas the corporation runs really well. And I think we're also happy with network. I think it's also fair to say that there was in some processes, that's probably a little bit more learning for us than there is for Maersk because, for example, in our case, also the empty flows change a lot, and that takes a little bit of time to stabilize that. And that's why, I guess, that some of those cost savings might come a little bit later in our case than what we see at Maersk. Lars Heindorff: Can I just have just another follow-up, but just another one, sorry, is on Suez. there has been a lot of talks lately. We've seen having a few versus going through Suez, also larger vessels. And also now here this morning is some news about Maersk in talks with the authorities down there. Apparently, maybe of course, depending on the security situation that they will return. What's your view on that? I mean, what will it take for you to return to Suez? Rolf Jansen: I mean, I think we've always said that as soon as it's again sufficiently stable and safe, then we will consider a gradual return to Suez. I think we're talking very closely to our partners which is Maersk but also others in other services on when that is the case. We're following it closely while at the moment, I do not see us returning very soon. Operator: The next question from the phone comes from Andy Chu with DB. Andy Chu: Just one question for me. Just on the cost savings, there are quite a few numbers flying around this morning. I think you mentioned in the presentation the full run rate of savings is expected by 2026. But just in terms of the net cost savings, what should we be putting in for 2026 and 2027? Rolf Jansen: I think when you look at our -- there's 2 or 3 things I think that were mentioned. One is, what are the run rate savings we expect from Gemini, that we have previously indicated $350 million to $400 million. And there is no reason to deviate from that number. Then we talk about the [indiscernible] Program, where we are targeting $1.1 billion plus in cost savings, and we expect the vast majority of that to be effective in '26, and we expect the full amount to be effective in '27. Andy Chu: Maybe just one strategic question. Obviously, Maersk has had a pretty good performance in Terminals. So when I look at sort of the weighting of Hapag's business mainly being container shipping focus, does that kind of -- does the current environment sort of shift any kind of thinking in sort of the mix of the business? Rolf Jansen: No, not really. I think we've been -- we've, of course, been in a way we entered the Terminal space much later than some of our competitors. But we will continue to grow that business. I think that if you take into account that we effectively only started somewhere in the beginning of this decade. And today, we are engaged in 22 terminals. I think that's actually a pretty good result, and we will continue to grow that. But of course, we are -- APMT started, I think, in the last century or around 2000. So of course, they have a lot more history and track record there than we have at this point in time. And that's something that we simply need to catch up. Andy Chu: And then just on logistics, you mentioned sort late to the party and Terminals. Is it a party that you'll never join with logistics? Rolf Jansen: We have no plan to go into logistics, the way that others do. Operator: We have a follow-up question from the line of Mr. Nedelcu with UBS. Cristian Nedelcu: Two questions. I wanted to add, the hub and spoke model, how are you thinking about potentially deploying it to other trade lanes and what is the time line there? And secondly, if we leave aside the cost savings initiatives that you mentioned earlier, what is the inherent cost inflation you would expect for 2026? Is it 2%, 3%? Is that reasonable or more or less? Rolf Jansen: I think to take the last one first. I think when you look at cost inflation going into next year, if we would not take measures, then I think that is -- that would unfortunately definitely be more than 2%, yes. I think that's a low mid-single-digit number that you realistically would have to have in mind. And then when you look at hub and spoke, yes, we certainly see the hub and spoke model working. So will that also be used in other trades over time. Probably yes, but I don't see that tomorrow. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf E. Jansen for any closing remarks. Rolf Jansen: Not much to add. Thank you for your time, really appreciate it. Also, hopefully, we were able to give you some insight, and thanks also for the questions. Take care. Bye-bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Welcome to the Dürr conference call for the third quarter of 2025, followed by a Q&A session. Let me now turn the floor over to your host, Mathias Christen. Mathias Christen: Thank you very much, and welcome to today's call, ladies and gentlemen. The corresponding presentation is available on our website, and I assume you have it in front of you. Our CEO, Jochen Weyrauch, will start on Page 5 before Dietmar Heinrich, as CFO, will take you through the financials. Jochen, please go ahead. Jochen Weyrauch: Thank you, Mathias, and good afternoon to all participants on the call. As our main focus is on profitability, I would like to start with pointing out the high earnings level in Q3. The EBIT margin before extraordinaries increased to 6.6%, which is almost 2 percentage points more than last year, based on earnings growth in all of our 3 divisions. In the year-to-date, the margin amounted to 4.9%, which means that after 3 quarters, we are almost at the midpoint of the full year guidance. Order intake continued to be impacted by heightened macro uncertainty caused by geopolitical and trade conflicts. However, we expect Q4 to be much better. Sales accelerated in Q3 after the moderate first half and should gain more traction in Q4. Free cash flow continued to be strong in Q3, bringing the year-to-date figure to a high level of EUR 85 million. The recent months were also marked by pushing ahead with our sustainable automation strategy. We successfully closed the sale of environmental technology and thus completed the process of turning into a lean company with only 3 instead of 5 divisions. At the same time, we began to streamline our administration, aiming at cost savings of EUR 50 million. The guidance given in March and partly revised in July is being confirmed. Let's turn to Page 6. Regarding the 29% drop in order intake in the first 9 months, please keep in mind that last year's figure was extremely high due to a unique EUR 500 million contract and further large orders. Sales were slightly lower than last year. We saw sequential improvement in Industrial Automation and woodworking in Q3. Automotive should benefit from an accelerated execution of large projects in Q4. I already touched the positive trend in operating EBIT. With regards to earnings after tax, please note that this position is burdened by the EUR 120 million goodwill impairment in Q2, whereas last year's figure included a EUR 19 million book gain from the sale of Agramkow. Adjusted for both special effects, net income was up a good 50% this year. Slide 7 shows the same key figures for the group as a whole, still including the discontinued Environmental Technology business. Page 8 shows our quarterly order intake. After a decent start to the year, the effects from the high level of investment uncertainty in Q2 and Q3 are playing to see. However, there were some positive aspects in Q3. Industrial Automation [Audio Gap] than in Q2. And in general, I would like to emphasize that despite the macro turmoil, customers are not paralyzed. Many of them are pushing ahead with large investment projects, and the pipeline looks solid. This is true, for example, for strategic projects in the automotive industry, but also for HOMAG's timber house construction business. Q4 has the potential for several large orders if our customers stick to their timing. Let's move to regional order intake on Page 9. New orders in Germany dropped sharply as last year's figure was boosted by the huge EUR 500 million contract. The increase in Asia without China was driven by India and Saudi Arabia, which has become a very attractive market for Dürr. Next one is the Automotive division on Page 11. Q3 order intake was marked by the absence of large orders, but this does not mean that there are no such projects being planned. It's rather a characteristic timing issue of our plant engineering business. There are quarters with no large orders, and there are quarters with several big-ticket orders placed all at once. The EBIT margin before extraordinaries exceeded last year's high levels in Q3 and in the year-to-date, based on the good margin quality of the order backlog. Revenues were up sequentially in Q3 and should further accelerate in Q4 as the execution of large orders is speeding up after customer-induced delays in the first half. Page 12, please. Industrial Automation saw a good Q3 with order intake and sales clearly exceeding low Q2 levels and returning to the encouraging Q1 levels. BBS Automation picked up with continued strong MedTech business and improvements in the other business. The EBIT margin before extraordinaries almost doubled year-over-year and clearly exceeded the full Q2 level, spurred by volume effects and the recovery in service business. Please note that for 9 months figures, there is limited comparability as last year's figures still included the Agramkow Group that was sold on July 1, 2024. Reported EBIT was burdened by the EUR 120 million impairment in Q2. As the battery business has been suffering from poor market conditions, we initiated restructuring in Q3 to lower fixed costs. Slide 13 is on group working. The division has implemented a number of self-help measures and thus successfully strengthened earnings resilience. This is testified by the fact that the operating EBIT margin increased by almost 2 percentage points on slightly declining sales in the year-to-date. Order intake was impacted by the tariff uncertainties, causing additional investment restraint in the furniture industry. As of now, the exact timing for market recovery is hard to predict. This is why HOMAG's improved earnings resilience is so important. Looking at the timber house construction business, the outlook is brighter as we see an increasing demand and good opportunities for large orders in part already in Q4. Slide 14 gives an overview on Environmental Technology. As this business was effectively sold 2 weeks ago, there is no need to comment on the figures. Next one is Slide 15. Service sales recovered in Q3, beating the Q2 level by 14%. Under the impression of the tariff chaos, many customers immediately cut service spending in Q2. So it's good news that there was sort of normalization already in Q3. Now it's time to hand over to my colleague, Dietmar Heinrich, who will explain the financials. Dietmar Heinrich: Thank you, Jochen, and a warm welcome to everybody also from my side. Let me start with Slide 17 and our key financial indicators. As Jochen has already touched a couple of them, I will limit myself to gross profit and net income. We managed to increase gross profit by 5% despite slightly lower sales. This was mainly an effect of rising margins in the equipment business due to the value-before-volume strategy, as well as capacity adjustments and lower extraordinary expenses. Net loss in the 9-month period was marked by the goodwill impairment in Q2. In Q3, net income stood at EUR 26 million versus EUR 21 million 1 year ago. However, last year's figure included a EUR 19 million extraordinary book gain from the Agramkow sale. Adjusted for this, net income was up by almost 50% in Q3 2025. Slide 18 is on sales. In Q3, we came close to the prior year figure and exceeded this year's low Q2 level. The latter was mainly based on sequential improvements in Industrial Automation and woodworking. Automotive is expected to speed up revenue recognition in Q4, which in terms of sales is usually the strongest quarter. On Slide 19, you can see the strong margin performance in Q3, which was supported by all divisions, with Automotive achieving an outstanding figure of 8.7%. The EBIT margin before extraordinaries for the first 9 months increased to 4.9% and clearly reached the full year target corridor of 4.5% to 5.5%. In terms of absolute EBIT before extraordinaries, Q3 was by far the strongest quarter, not only in 2025, but also compared to last year. In the first 9 months of 2025, we saw an increase of 9% based on the higher gross profit. Overhead costs were up 2.6%, mainly due to higher R&D costs. Slide 20 shows that after a strong second quarter, free cash flow was clearly positive also in Q3 and climbed to EUR 85 million in the year-to-date. The main driver for this was lower CapEx spending. Please note that EBIT and DA were marked by the impairment in Q2. Our guidance for free cash flow is EUR 0 million to EUR 50 million. This implies a negative figure actually in Q4. But if you ask me if this will really happen, my answer is we stay on the conservative side, as free cash flow is difficult to predict in our business, but I can't rule out the possibility that free cash flow might develop a bit better than guided. Slide 21 is on net working capital. Compared to the end of 2024, there was a 16% decline and an improvement to 31 days working capital. Positive effects resulted from well-managed contract assets and considerable prepayments that are reflected in higher trade liabilities. These 2 effects overcompensated the temporary rise in trade receivables. Net debt shown on Page 22 was stable at a level of EUR 480 million in 2025. In Q1, liquidity was reduced by EUR 97 million payment for the acquisition of 2.5 million HOMAG shares after our cash settlement offer had ended due to a final court decision. Net debt will strongly decline as of December 31 as a consequence of the gross proceeds of EUR 290 million to EUR 310 million from the environmental technology transaction that was closed on October 31. Let's look to Page 22 and our funding situation. The funding situation is comfortable, and it will additionally benefit from the environmental technology proceeds, which are not yet reflected on the chart. The maturity profile is also favorable. We repaid Schuldschein tranches of EUR 55 million this year. The next maturity will be the EUR 150 million convertible in January 2026. So far from my side, I'm now passing back the word to Jochen, who will continue on Page 25. Jochen Weyrauch: Thank you, Dietmar. I would like to briefly comment on the sale of our Environmental Technology business. My personal judgment is that we were able to conclude a very good deal for Dürr and its investors, but also for the environmental business that will benefit from better growth perspectives. Enterprise value and proceeds clearly met our targets. We will use the proceeds to further strengthen the balance sheet and bring down net debt to presumably less than half of the pre-deal level. Please note that the EUR 290 million to EUR 310 million are gross proceeds after having acquired the 25% reinvestment share and before tax payments that will be mainly due in 2026. We anticipate a book gain of EUR 160 million to EUR 190 million after taxes, which is at the higher end of expectations. Moreover, the transaction was a major strategic step to finish D's transformation into a lean group with a clear focus on highly automated and sustainable production processes for our customers. Slide 26 visualizes our transformation. Within not more than 1.5 years, we divested the non-core businesses of Agramkow and Environmental Technology, consolidated our automotive business in one powerful division, integrated the automation business under the BBS brand, and reduced the number of divisions from 5 to 3. The new Dürr Group acts under the motto of sustainable automation with automation as a joint technology platform and further synergies, for example, bundled purchasing, cross-selling in the auto sector, shared services, and business locations, as well as best practice processes in order execution. And on top, we are more focused and easier to understand for our investors and analysts with only 3 divisions. Page 27 shows the result of our transformation process. This structure is the right setup for the coming years. We are not planning any larger M&A transactions, but will put the main focus on further improving efficiency. Our target is an EBIT margin before extraordinaries of 8%. Even though we are not yet there, we have already done a lot of homework. The Automotive division reached its mid-cycle margin target of 8% last year and is set to repeat this in 2025. Woodworking has strengthened its earning resilience and will return to an 8% plus margin under normal market conditions. In 2026 and beyond, we will put special attention on improving the margin of Industrial Automation. There is still work to do. Nonetheless, I'm fully convinced of the potential of our automation business, especially as we continue to expand the well-performing activities in the medtech sector. Slide 28, please. A consequence of our lean group structure is the planned resizing of the administrative sector. As outlined in July, we are planning to cut 500 jobs to make admin structures leaner and more efficient. This goes in line with empowering the 3 divisions and give them more entrepreneurial leeway. We are targeting for cost savings of EUR 50 million, which requires provisions of EUR 40 million to EUR 50 million in Q4. We have already started to reduce the admin workforce abroad and entered into negotiations with the Works Council in Germany. Page 30 brings us to the outlook. We are confirming the targets set in March and partly revised end of July. The order intake guidance requires a strong Q4. There is still work ahead of us, but I'm very confident that we will be successful, as there is a good level of investment activity on our customer side. Regarding sales, we are confident to reach the lower end of the EUR 4.2 billion to EUR 4.6 billion target corridor, backed by a strong Q4, especially in automotive. The EBIT margin before extraordinaries almost reached the guidance midpoint after 9 months. So it's fair to assume that last year's level should be exceeded. Regarding free cash flow, Dietmar found the right words before. We maintain a conservative approach, even though there is an opportunity to beat the upper end of the guidance. Given the book profit from the Environmental Technology sale and the good earnings performance since Q3, we are confident regarding the net income guidance of EUR 120 million to EUR 170 million. The target for net financial debt is absolutely realistic, given the environmental technology proceeds. Slide 31 is a rather technical one, designed to help you to follow the guidance, especially the information on the influencing factors for net income may be helpful. The divisional guidance on Page 32 is unchanged compared to August 7, when we made some adjustments marked in blue. We are confirming the divisional targets, especially the improved earnings performance in Q3 is a sound argument to be confident. Slide 34 brings me to the summary. The sale of the Environmental Technology business was a milestone, not only because it was a financial success, but also because it represents the final element of our transformation. Dürr has become a lean engineering group. Our leading competence for highly automated and sustainable production processes is a distinguishing feature that sets us apart from the competition. We are confirming our guidance and expect a high order intake in Q4, provided that there will be no customer-induced delays in order placement. The good performance in Q3 underscores our earnings resilience and our ability to brie margins even in a challenging environment. Free cash flow and net financial debt should meet the targets set in our guidance, maybe even more. We continue to improve earnings resilience and margins with the planned adjustments in administration, targeting for annual cost savings of EUR 50 million. And after having reshaped the group, we will direct our focus even more on improving efficiency in 2026. Ladies and gentlemen, thank you for listening. Dietman and I will now be happy to answer your questions. Operator: [Operator Instructions] And the first question is from Sven Weier, UBS. Sven Weier: I just have one regarding the order intake and what you said on Q4. I mean, with a view to the group guidance, is it also fair to assume that it's more likely that you will end up at the lower end of the range? And I was also curious how you see that on an individual divisional level. Jochen Weyrauch: Thank you, Sven, for asking the question. Yes, that's fair to assume in terms of rather the lower range of the guidance. And from a divisional perspective, we see some momentum in HOMAG, but the bigger part at this point is assumed to come from automotive. Sven Weier: So HOMAG is also going to be more towards the EUR 1.3 billion level, I guess? Jochen Weyrauch: Let's see. I would guess rather somewhat above, but let's see. Operator: The next question is from Nikita Lal, Deutsche Bank. Nikita Lal: First, congratulations on the strong profitability we saw in this quarter. Is this a run rate we can expect for the next quarter? Or what is it dependent on? My second question is on any comments on dividend already. Should we expect a payout ratio of roughly 40%? And the third one, when we think about 2026, do you see any improving KPI for HOMAG? Jochen Weyrauch: Thank you, Nikita, for your questions. Let me start with the run rate for the remainder of the year. If you make the math with the midpoint of the guidance, which we've now reached, we would expect Q4 probably not be exactly at the Q3 levels, but at least to a point that it -- I shouldn't say easily, but that it well confirms what we've guided. On the dividend, no, we have not yet discussed anything. But I would say we are probably known for some sort of continuity, whatever that means at the end of the day. And then your last question was on HOMAG, I think, for next year. Let's see how things develop. HOMAG has made good steps this year. And you can clearly see, I mean, HOMAG is up almost 2% compared to last year, that we've made our homework in terms of efficiency, and the effect of our restructuring program kicks in. But next year, to some extent, really depends on the outcome for the remainder of the year. And being at this year's level would already, I would say, is -- would be a good starting point, and let's see what's possible. Operator: And the next question is from Adrian Pehl, ODDO BHF. Adrian Pehl: Actually, a couple of questions. Well, first of all, on HOMAG again, actually, you're phrasing it a little bit differently. Since in the past, we have been talking a little bit about the quality of discussions that you had with your clients. And I was just wondering if there was some sort of incremental change on that, hopefully, towards improvement, but happy to take any color you might share. The second one is on -- as you were referring in your presentation to probably not pursuing bigger M&A transactions. Nevertheless, I wanted to hear your thoughts on the proceeds that you will be collecting from the sale of the environmental business. Is that -- will you pay down debt with the money? Or how should we think of the respective capital allocation here? And thirdly, before I might have a follow-up, on the phasing of the cash out on the restructuring, maybe you could remind us how this will unfold starting Q4 going into 2026, that would be helpful. Jochen Weyrauch: Okay. Thank you for your questions. I will answer on HOMAG, and Dietmar will probably take over for M&A proceeds and the phaseout of the restructuring. On HOMAG, the -- yes, obviously, it's -- I've been burning my tongue a few times on this topic, always looking at when things would become better. It's twofold. It's very difficult to guess action from the discussions I have with customers. So we're careful when it comes to furniture at the moment. I don't think there is more room to go down, but still, you don't see any real recovery in the numbers. I think there is with some customers in Europe, maybe discussions become a bit more positive. On the other hand, we see some uncertainty in the U.S. from customers who now, of course, have to suffer from tariffs. How this will play out in the end and when really there will be momentum upwards, downwards, I don't expect any -- hard to say. Where we see definitely activity is around wooden houses and timber processing. And there, we really are discussing with a number of customers on significant projects. And there, I'm quite optimistic. Dietmar Heinrich: So I will pick up as Jochen already mentioned, the other 2 questions in regard to the use of the proceeds of the Environmental Technology sale. We are going to use it for debt reduction. We have the maturity of the convertible bond coming up in January of next year, and we have another Schuldschein then coming up in April of next year, and we are targeting actually to repay this through debt. In regard to the cash out for the restructuring, then in the administration area that Jochen explained, we are targeting to build up the provisions in the fourth quarter of this year. We are already getting closer to the negotiation results with the works council. And so I'm confident that we will build up the related provisions in Germany, but also outside of Germany, until the end of this year. In regard to the cash out, I do not expect the real cash out to happen within this year. The majority will for sure be done in 2026. But depending on the individual agreements and the impact that we are having in there can also be that some portion of the payout still will be done in 2027. We can provide more information in regard to this when we are really having the progress in conjunction with getting the agreements with the individual employees who are targeted to leave the company. Adrian Pehl: And then last question from my side again on automotive, just also probably a bit more color, just to what you said already. I mean I took obviously, and the order intake in Q3 was pretty low. But I want to hear your thoughts. Is that just a function of shifts in projects that, on the other hand, are very likely to materialize anytime soon? Because I'm actually asking you referred in the press release to, I think that was a half sentence saying that if these projects are then finally been signed, so there's still a high level of uncertainty, obviously, and there might be some shift into 2026, but anything on color, clients, regions, investment behavior would be helpful. Jochen Weyrauch: Yes. Thanks for the add-on question. We have a few -- a bit -- yes, some large orders that are very much progressed in terms of the negotiations. And so still not signed, but it gives us the confidence that we have expressed in our comments before. On the regions, I ask for your understanding that it's also from a confidentiality point of view, and you know that the market is quite sensitive at the moment. I would rather comment on that we have booked the orders. Operator: And the next question is from Philippe Lorrain, Bernstein. Philippe Lorrain: I wanted to bounce back a little bit on automotive. From today's point of view, would that be fair to assume that the kind of order intake level that we could expect for Q4 kind of matches the one that we've seen in Q1? Jochen Weyrauch: It very much would match, yes, what we had in Q1. Philippe Lorrain: And then a second question to specify a little bit more what you were saying on the adjusted EBIT margin guidance. So I take it that you are saying, okay, you are very confident with the midpoint of the range, but the midpoint of the range at 5% would imply actually, like another 5% or so in Q4, if I'm not mistaken. So to circle back with your comment, like saying, okay, if we look at Q3 and maybe we assume that it's not exactly the same level of margin that we can generate for Q4, that would imply actually that we'll land well within, let's say, the upper half of the margin range. So is that fair to see it that way? Dietmar Heinrich: Yes. Maybe, Philippe, I take this question in that regard. As you know, we are always a bit conservative, and projects have sometimes their own dynamics. So we stay on the conservative side. And then we stay to what Jochen explained before, staying at a very -- or we stick to staying with the guidance, we are in the midrange of the guidance. We will feel comfortable in that regard; in case we perform better, of course, that will be the case. But I don't want to raise the bar right now that would not be reasonable. Philippe Lorrain: And my last question, again, on -- probably a bit more on automotive and to some extent, also on HOMAG, but now with the trend that we've seen that Q2 and Q3 were slightly longer in terms of order intake, how should we expect actually sales to evolve in the coming quarters? And I'm trying to extrapolate a little bit further than just Q4. Dietmar Heinrich: Yes, especially in automotive, we still have a very good backlog. So the orders we are now fighting for are rather further down in '26. So there, we have a nice buffer independent on whether we get one of the bigger orders a quarter earlier or later. HOMAG, we'll have to see. I mean our -- you can see it in the numbers. The order backlog has somewhat come down. This is even more visible on the furniture side. So we will have some measures in place already for Q1, which should help. And you've all -- I mean, we've seen a similar thing this year. So we're working -- I mean, we're working from, how would we say, hand to mouth. And -- but that's why I said expecting something similar to start with for next year, compared to this year, I think, is a fair assumption. Philippe Lorrain: But on a full-year basis, probably still continue on an improvement trend margin-wise? Dietmar Heinrich: That would be our aim, definitely, but let's see how the market helps us or doesn't help us. Operator: At the moment, there seem to be no further questions. [Operator Instructions] And the next question is from Holger Schmidt, DZ Bank. Holger Schmidt: Just one question on the battery side. Could you give us an update on your battery business? I mean you are making some capacity adjustments at the moment. Do you see any kind of improvement of -- or potentially deterioration of the business? Jochen Weyrauch: Yes. Thank you. Good question, Holger. No, it's tough to be quite fair at the moment. That's why we are restructuring. We see a challenging market. We still believe that there will be some activities coming back. There is a few smaller orders, but nowhere near to what we've been planning for. This is why we make significant capacity adjustments. And this is where we obviously see some earning issues at the moment. But we are adapting the team. It's not too huge anyways, and then see what we can get out of it. But it definitely is an issue at the moment, and that's why we already announced significant restructuring, and let's see how it goes forward. Fortunately, it's not a big ticket in total. Holger Schmidt: And let's assume the market would remain weak at the current level, would you also consider to step out of this business? Jochen Weyrauch: We don't do that right now. Let's see how things develop. If you listen to what is said in public, there is a confirmation that, especially in Europe, that we need some sort of a supply chain in the battery business. There is some projects. And actually, we are hopeful also to collect a few orders, at least 1 or 2 double-digit. So we will, in a way, deal with what we have. Hard to rule anything out, but at the moment, that's not our plan. Operator: And the next question is from Elizabeth Weisenhorn, Portikus Investment. Elisabeth Weisenhorn: Mr., Jochen, you very often go to China, as I noticed. And I would like to know what you think about the competition there. I read and see pictures about the automation degree that is going on there and how competitive it is. Jochen Weyrauch: Yes. Thank you for the question. Yes, indeed, I go to China quite often because it's an important business for us. And China is very competitive in any industry. And in automation, definitely, there is a number of very strong players, obviously, including us, because the majority of our employees in production automation are sitting in China, mainly in Suzhou and Kunshan, and we're playing a significant role. That's why it is important to play in China to learn what's happening there, but the dynamics are incredible. I can really only say -- and that's why, again, it is important to be there to be successful, and we are successful in our automation business with our strong local team, but you have to continuously develop, be efficient, be cost-driven. And this is why the business that we run and the competition we play with in China makes us also quite strong for the business outside of China. I hope that helps a little bit. That's all I can say at this point. And it's -- I'm always impressed. Operator: Then we come to the last question. It's a follow-up from Philippe Lorrain, Bernstein. Philippe Lorrain: Just wanted to follow up with 2 little more questions on automotive. So the first one was just like to make sure I understood you were saying your, let's say, confidence with regard to the statement speaking about an improvement in Q4 order intake trends is based more on the fact that you see orders being like nearly assigned. But how about orders that you've signed, maybe at the beginning of Q4? How has been like current trading, so to say? And the second question would be -- and perhaps it ties also together a little bit with all of that generally. But I remember you were speaking about a bit of a slowdown in execution this year. However, it seems to pick up, especially with regard to Q4. Would you say that all these issues are now behind us? Or has there been like a structural shift somewhere? Jochen Weyrauch: Yes, on auto and bookings in Q4, in general, our pipeline overall doesn't look very bad, I must say. Actually, let me turn my words around. It looks quite solid. And that is not only Q4. It is -- we're always watching the next 12, 18 months. And this is what I can say. It is solid. Is it fantastic? Probably not, but it's very solid, and there is enough projects out there to feed the organization at this point. When it comes now to Q4, there is 2 to 3 larger orders that would turn the needle. And on most of them, negotiations have progressed quite well. And then based on that, let's see how things turn out. Does that help a bit, Philip? Philippe Lorrain: Yes, perfect. So I understand it's really, yes, something that needs to be signed. And with regard to the question on the pace of execution on sales. Jochen Weyrauch: Sorry, I missed that one. I would say we are running a relatively normal pace at this point. There was a few orders or a few projects where there was some modifications at customer ends. There was a few delays on progress of buildings, which, by the way, can happen always in that business. But what we are currently seeing is, I would say, normal project execution. Operator: And as we have no further questions from the audience, I would like to hand the floor back over for closing remarks. Mathias Christen: Well, thank you, Heike. Thank you, ladies and gentlemen, for your questions and the discussion in today's call. If there are follow-ups, please don't hesitate to contact me. We are looking forward to meet some of you on the investor conferences during the next few weeks. Take care and have a wonderful end-of-the-year season. Bye-bye from our side.
Giuseppe Esposito: Good morning, everyone, and welcome to Poste Italiane Third Quarter and 9 Months 2025 Results Conference Call. Shortly, our CEO, Matteo Del Fante, will take you through some opening remarks, and then the CFO, Camillo Greco, will cover the financials. As usual, the presentation will be followed by a Q&A session where you can ask questions either via phone or through our webcast platform. And for any topics we won't be able to cover today, please do contact the Investor Relations team. We will provide any clarifications you might require. With that, over to you, Matteo. Matteo del Fante: Thank you, Giuseppe. Good morning, and thank you for joining us today for our Q3 and 9 months 2025 results call. As we celebrate 10 years since going public, we're proud to report another record-breaking quarter, reflecting sustained growth as we approach the end of 2025. The positive momentum established in the first half of the year has continued in the third quarter. We remain focused on executing our strategic plan, and we're fully on track to achieve our updated '25 guidance. In the first 9 months, we delivered record results across group revenues, adjusted EBIT and net income. Each business unit contributed to a robust 4% year-on-year increase in top line, reaching EUR 9.6 billion in total revenues. Adjusted EBIT grew by 10% to just over EUR 2.5 billion for the period and net profit reached EUR 1.8 billion, representing an impressive 11% compared to the previous year. Since the start of the year, we have seen solid net inflows in investment products, confirming strong commercial performance in insurance product and improved net inflows in postal savings. I'm pleased to report that the migration of our clients to the Super App has been successfully completed. To date, the app is used by 15 million clients with 4.1 million daily active users in November '25, which is more than our previous apps combined and the highest level among Italian apps. Our balance sheet remains extremely solid with our insurance Solvency II ratio at 312%, well above our stated ambition of 200%, providing us with significant financial flexibility. On November 26, we'll pay a record interim dividend of EUR 0.40 per share, totaling EUR 518 million, up a remarkable 21% from last year. I'm pleased to share that our initiative to unlock synergies with TIM are currently underway. At the end of September, we launched TIM Energia powered by Poste Italiane in more than 750 TIM retail outlets. This marks a significant step in combining the strength of both organizations, expanding our retail customer reach through TIM's network and Poste Italiane trusted energy offering. In the coming months, we will continue the strengthening of the strategic partnership and roll out additional joint initiatives to deliver synergies and value creation for all stakeholders. While our investment in TIM remains strategic, we are also pleased to note that the value of our stake has nearly doubled, now at EUR 1.1 billion. These results underscore the strength of our business model, flawless execution and our ability to adapt and grow in a dynamic environment, all while maintaining strict cost discipline. Let's move to group financial results on Slide 4. Poste delivered a very strong performance in the third quarter and first 9 months of the year. These were the best Q3 and 9-month results ever reported by the group in terms of revenues, EBIT and net profit. Focusing on the 9 months, revenues at EUR 9.6 billion, up 4% year-on-year, adjusted EBIT at EUR 2.5 billion and net profit at EUR 1.8 billion, up a remarkable 10% and 11%, respectively. In the quarter, we achieved record group revenues at EUR 3.2 billion, up 4% year-on-year. Adjusted EBIT reached EUR 856 million and net profit is at EUR 603 million, up 8% and 6%, respectively. On Slide 5, the strong revenue momentum across all our business segments continues into the year. In Mail, Parcel & Distribution, revenue growth was driven by higher parcel volume and supported by increasing client diversification. The anticipated decline in mail volume is effectively mitigated through ongoing repricing actions. In Financial Services, revenue increased by 5% year-on-year to EUR 4.2 billion, supported by NII and solid commercial performance. Insurance Services delivered strong profitability in both Life and Protection segments. Revenues rose 10% in the 9 months, reflecting stable CSM and higher release. Postepay Services' unique and integrated ecosystem of everyday services delivered sustainable revenue and profitability growth. The telco customer base remained solid and stable, while the number of energy clients has grown to approximately 950,000 on track to reach the target of 1 million clients by year-end. TIM Energia powered by Poste Italiane launched on September 29 will provide an additional boost to this business. Let's go to Slide 6 and EBIT evolution by segment. Mail, Parcel & Distribution reported an adjusted EBIT of EUR 137 million for the 9 months, in line with our full year guidance. Financial Services operating profitability is up a sound 23% in the 9 months to EUR 790 million, driven by NII and overall strong revenue trends. In the 9 months, Insurance Services adjusted EBIT is up 9% to EUR 1.2 billion, supported by both Life Investment and Protection. Finally, Postepay Services EBIT growth of 9% to EUR 416 million is driven by resilient top line performance, significantly outperforming the market. On Slide 7, let's take a closer look at what we're building through our strategic partnership with TIM. Several work streams are underway to maximize synergies between the 2 groups. We have signed a contract that will allow the migration of Poste Mobile MVNO operation to the TIM mobile infrastructure starting in Q1 2026. On the commercial front, we have reached the first significant milestones with the launch of TIM Energia powered by Poste Italiane now available through more than 750 TIM retail offices with very encouraging early results. Looking ahead, we're actively working on additional cross-selling opportunities on both retail and SME customers, including in the areas of insurance and payments. At the same time, we're exploring cost efficiency initiatives through joint procurement. We will communicate these developments to the market in a phased manner as relevant agreements are finalized. Poste Italiane is taking a decisive step forward in digital innovation through a new joint venture with TIM Enterprise dedicated to cloud-related IT services. This partnership will drive Italy's cloud transformation, harnessing the potential of generative AI and open source technologies. Our mission is to accelerate the nation's digital evolution, empowering public administration and private enterprises with secure and advanced solutions. The joint venture will deliver services across both leading public cloud platforms and sovereign national infrastructures. With that, let's look at the detail of the financials. Over to you, Camillo, please. Camillo Greco: Thank you, Matteo, and good morning, everyone. Let's move to Slide 9 on Mail, Parcel & Distribution. Revenues amount to EUR 934 million in Q3 and EUR 2.8 billion in the 9 months, up 3% and 2%, respectively. Mail revenues for EUR 180 million in Q3 and at EUR 1.5 billion year-to-date are in line with our fiscal year '25 guidance presented in February. Parcel revenues were up 10% to EUR 420 million in Q3 and up 8% to EUR 1.2 billion in the 9 months, supported by all customer segments, which continue to improve our revenue diversification. Distribution revenues from other business units are up 3% in the 9 months, reflecting positive commercial trends. Adjusted EBIT at EUR 137 million year-to-date is in line with the guidance provided for the full year. Let's look at volumes and tariff on Slide 10. Parcel volumes are up a solid 14% in Q3 and 12% in the 9 months to 245 million items. In Q3, we also increased the portion of items delivered via the wholesale network to 45%, up 5 points versus last year, leading to a positive contribution to the overall profitability. Looking at pricing, the average tariff was impacted by higher volumes with lower pricing and unit costs as we continued to have high volumes in secondhand items and boxless returns. On Mail, the volume trend is in line with expectations, showing a slower volume decline in Q3 compared to the first half of the year. The bulk of the volume decline remains concentrated on lower value items such as direct marketing and registered mail. We continue to compensate anticipated volume decline with ongoing repricing actions across both regulated and market products. Moving to Financial Services on Slide 11. Gross revenue for Q3 landed at EUR 1.6 billion and just shy of EUR 5 billion for the 9 months, up 3% and 6%, respectively. Net interest income came at EUR 669 million in Q3, up 3% and at EUR 2 billion year-to-date, up 6%, benefiting from higher average deposits and lower cost of funding. Postal saving distribution fees amounted to EUR 443 million in Q3, up 3% and EUR 1.3 billion, up 5% year-to-date, supported by improved gross inflows driven by commercial initiatives as well as longer maturity of products sold. Consumer loans distribution fees reached EUR 63 million in the quarter and EUR 203 million in the 9 months, both up 15%, driven by higher margins, confirming the strength of our multi-partnership model. Asset management fees came in at EUR 47 million in Q3 and EUR 136 million in the first 9 months, impacted by a different product mix with lower upfront fees, while AUM continued to grow, thanks to positive net flows. Finally, adjusted EBIT came in at EUR 262 million in Q3, up 16% and EUR 790 million in the 9 months, up 23% compared to 2024 on the back of strong revenue performance. Moving to Slide 12. TFAs continued to grow, reaching EUR 601 billion, up EUR 10 billion from the start of the year. Let's look at each component. We reported strong EUR 2.3 billion net inflows in investment products, confirming the positive momentum in life insurance where net inflows totaled EUR 1.2 billion. Postal savings net outflows improved in Q3, supported by strong performance of 100-year anniversary postal bond. Deposits were up, benefiting from stable retail balances at EUR 58 billion and higher, though more volatile balances from TA clients. Moving to Slide 12 -- moving to Slide 13, sorry. Insurance Services revenues amounted to EUR 446 million in Q3, up a strong 12% year-on-year and EUR 1.4 billion in the 9 months, up 10%, supported by both Life and Protection. In Q3, we continue to report positive Life net flows driven by strong GWP, up 7% year-on-year with an increased share of multi-class products now with over 70% of Life investment and pension GWP. Our advisory offering built in the context of the new commercial service model is leading to proactive rebalancing of our clients' portfolios, resulting in a lapse rate of 8.3% in the quarter, more than 50% of which have been reinvested into new Life Investment & Pension products. Life Investment & Pension revenues are up 11% to EUR 393 million in Q3 and up 10% to EUR 1.2 billion year-to-date on the back of stable CSM stock and higher CSM release. Protection revenues were up a solid 11% in the 9 months to EUR 147 million, supported by higher gross written premium and up 14% in the quarter. Combined ratio stood at 83%, while we confirm our fiscal year '24 guidance of about 85%. Adjusted EBIT of EUR 1.2 billion in 9 months, up 9% compared to 2024 and up 11% in Q3, reflecting top line trends. Our stock of CSM is stable at EUR 13.7 billion, driven by strong new business and positive financial variances. This provides us with strong visibility on the future profitability of the business. Normalized CSM growth stood at 3.5% on an annualized basis, up from 2% in 2024, with strong increase in new business value and expected return more than compensating the release. Let's look at the solvency ratio evolution on Slide 15. PosteVita Group Solvency II was 312% at the end of September and well above the managerial ambition of circa 200% of the cycle. This ratio already includes the impact of foreseeable dividend based on 100% net profit remittance. The marginal reduction in the ratio was mainly related to economic variances such as higher risk-free rates. Our Solvency II ratio currently stands between 305% and 320%. Moving to Postepay Services on Slide 16. The Postepay ecosystem continues to represent a sustainable engine of growth, innovation and customer engagement for the group. Revenues rose to EUR 409 million in Q3 and EUR 1.2 billion in the 9 months, up 3% and 5%, respectively. Payments are up 1% to EUR 298 million in Q3 and are up 2% to EUR 878 million in the first 9 months, supported by transaction value growth of 10% in the quarter and 9% year-to-date, offsetting shortfall due to EU law change. We are significantly outperforming the market and growing our market share in a competitive environment. Net of instant payment shortfall, payment revenue growth is at around 5% in both the quarter and the 9 months. Telco revenues are stable in the quarter and are up 1% in the 9 months to EUR 247 million, supported by our resilient client base and the fiber offer. Finally, energy net revenues totaled EUR 86 million in the 9 months, reflecting an increased customer base that now stands at around 950,000 clients and comfortably heading towards our 1 million client base target by the end of the year. Adjusted EBIT grew a robust 6% to EUR 140 million in Q3 and 9% to EUR 416 million in 9 months, underpinned by solid top line performance and in line with guidance. Since the start of the year, our average workforce has remained just under 120,000, consistent with the level of full year 2024, with hirings broadly offsetting exit of circa 6,000 FTEs. Our workforce productivity improved year-on-year as the growth in value-added per FTE exceeded the increase in HR cost per FTE. Moving to group HR costs on Slide 18. At the end of September, ordinary HR costs increased by 2% to just under EUR 4.2 billion due to higher FTEs. The new salary increase effective September 1 as part of the latest collective agreement and variable compensation. In the 9 months, ordinary HR costs on revenues are down to 39% with improving operating leverage. Moving to Slide 19. Non-HR costs increased by EUR 168 million year-on-year, mainly driven by EUR 112 million additional variable COGS, reflecting higher business volumes. Fixed COGS are basically flat, while D&A are up by EUR 54 million, in line with increased investments driving our transformation. In general, our focus on cost and CapEx discipline across all divisions remains sharp and protecting the bottom line profitability as well as cash flow remains our top priority. Thank you for your time. Let me hand over to Matteo for a wrap-up. Matteo del Fante: Thank you, Camillo. Following 5 straight quarters of record performance, we have once again achieved outstanding results with 9 months revenues of EUR 9.6 billion, up 4% year-on-year and adjusted EBIT rising 10% to EUR 2.5 billion. On the strength of these results, we can confirm that we are absolutely confident of hitting our EUR 3.2 billion adjusted EBIT and EUR 2.2 billion net profit for 2025 guidance. We continue to build on solid momentum with a clear commitment to creating long-term value for our stakeholders. Our focus remains on driving revenues growth and diversification, further improving our cost and capital efficiency and maximizing the potential of people, technology and data. We continue to maintain a robust balance sheet with low leverage and a Solvency II ratio at 312%, well above our managerial target. This strong financial position provides us with ample flexibility and underpins our confidence in a competitive dividend policy. As a result, we're distributing an interim dividend of EUR 0.40 per share, up 21% year-on-year, totaling nearly EUR 520 million to be paid to shareholders on November 26. I'm pleased with the progress of our collaboration with TIM, which will generate meaningful synergies for both groups. The first of several projects, TIM Energia Powered by Poste Italiane was launched in September is now available through more than 750 TIM outlets. This partnership will deliver significant value for all stakeholders in the future. Once again, these excellent results are a testament to the dedication and professionalism of our people whose daily commitment remain at the heart of our success. With that, thank you for listening, and Giuseppe, over to you for the Q&A. Giuseppe Esposito: [Operator Instructions] The first question is from Tommaso Nieddu at Kepler. Tommaso Nieddu: The first one is on the Super App. So the migration of the Super App has now been completed with 15 million users and over 4 million daily active users, which is kind of impressive. So could you elaborate on the next phase of that in terms of cross-selling across all your main verticals, I don't know, like payments, insurance, energy. And any more color would be highly appreciated. Then on the SPID, you currently manage almost 30 million digital identities and it's still growing. So if you can give us any update on a potential introduction of a fee-based model similar to other providers. So basically, if you could update us on your latest thinking around SPID monetization. And just a third one, very, very quick on insurance. If you can give us more color on the negative operating variances that impacted the CSM evolution this quarter. So was it mainly different lapses assumptions? Matteo del Fante: Thank you, Tommaso. I will take the first 2 and leave Camillo for the third one. Yes, so we're very proud that moving clients and users from one app that you close into a new app is a risky exercise because there is an attrition percentage of clients that don't get used to the new app. So doing this migration process in a smart and organized way is crucial in terms of not losing business. And 4.1 million daily active users, which is almost the double of the second Italian player in our -- on our data is a level of daily active users that we never reached in the past, not even adding the daily active user or a single app we had in the past. So that's good. In terms of the revenue and the business impact of the new app, we have basically an increase of the diversification and cross-selling that is coming with the use of the app. And that cross-selling is increasing in a very meaningful way our revenue and margin figures. So we don't disclose our cross-selling indices, but I can tell you that one additional product, so moving by one, our cross-selling index creates a multiple of revenues additional to the firm. So this is really the way forward. I'm very happy with that. Second question on SPID, yes, since several months, several key identity provider under SPID have started asking a limited amount of money to users on an annual basis, something in the range of EUR 6 to EUR 7 per year per user. And that's something that we are observing in the market and we'll make our consideration before we announce the plan in 2026. But we're a strong believer of SPID. We believe that SPID not only is serving over 1 billion cases of utilization per year in public administration service providers. So that has become the standard and very effective standard with very good use cases for public service provider. But as you know, there is also the use of SPID by private service provider. That is increasing. It is also creating meaningful and increasing revenues to post, but we believe that there is a huge potential in the system to double up from public to private service providers. Camillo Greco: With respect to the last question on operating variances, they were driven -- the amount was driven by 3 different factors. The first was a higher degree of lapses, where, however, I want to remind the audience that half of that amount is of self-help as we moved customers to more sort of market-oriented products, i.e., multi-class. So there is half of that lapse rate that is associated to that around 4.3%. The second point that impacted operating variances is an update of the mortality tables. And the third point was a time value of money related to the upfront payment for the insurance provider of stamp duty tax. Giuseppe Esposito: Next question is from Alberto Villa at Intermonte. Alberto Villa: A couple of questions from my side. One is regarding the trend in card stocks. We have seen some decline there, especially for Postepay cards in total number, but then transactions and all the other metrics are positive. I was wondering if that's related to Reddito di Cittadinanza or other events that impacted the number of cards issued. And the second one is if you can help us modeling for the financial income 2026. So in terms of -- we have seen some different indications from banks regarding the evolution of NII. Obviously, you have different levers. But in order to understand what we can expect in terms of evolution of financial income next year, what to bear in mind? Matteo del Fante: I -- on the first question, you have half of the answer related to the Reddito di Cittadinanza. But don't forget that we have started already 5 years ago a trip to replace our prepaid card, the yellow card without IBAN migrating into our Evolution. So you have and you have -- in the past 5 years, you had a very meaningful increase of the Postepay Evolution that actually increased in the quarter by 3%. We're now EUR 10.7 million Evolution. And Evolution is clearly for us, producing EUR 18 per year of revenues and giving to our clients the best proxy to a current account because with the IBAN, you can have your salary credited and you can do basically everything you do with a current account. On the second topic of NII. Obviously, we will disclose our targets in 2026, but we see clearly a slightly lower interest rate environment, especially on the short term of the curve. And that means for our floating rate portfolio, lower net interest income. As we said since ever, basically since March '18, we will always compensate lower NII with higher capital gains. And this, I can make the statement today, will remain our objective also for 2026 and onwards. And to that respect, I'm pleased to report, and this is really the market coming this way that for the first time, we have our investment portfolio that has a positive mark-to-market. It's around EUR 700 million as of yesterday. And on a gross basis, we have over EUR 2 billion of positive capital gains that we can use next year and onwards to sustain our investment returns with a slightly lower NII scenario. Giuseppe Esposito: Our next question is from Gian Luca Ferrari, Mediobanca. Gian Ferrari: Two for me. The first one is on the EUR 1.8 billion revenue guidance on Parcels. Even if I take a low end of this number, so EUR 1.75 billion, it would imply kind of 15% increase in Parcel revenues in Q4, which seems to be implying a strong acceleration versus Q3. So I was wondering if the EUR 1.8 billion is confirmed or not? The second is on the role of net insurance in the mandatory cat coverage for SMEs. I think net insurance will be your company dedicated to explore this opportunity. And can you confirm that you will not retain any cat risk and net insurance and Poste Group will outsource to reinsurers all the cat risk? And sorry, the final one, if you can give us the impact on the revision of the standard formula in 2027. Matteo del Fante: Okay. I will start with the first 2 and let Camillo go on the last one on the standard formula. Revenues. I mean part of revenues grew 7%, 9% and 10% in Q1, Q2 and Q3. Q4 is the peak year -- the peak quarter, sorry, Gian Luca. And that's where we usually more than outperform the market. So it's clearly ambitious. But if I look at the volumes, we have 12% growth in 9 months and 14% growth in Q3. So certainly, Q3 has shown an acceleration. And if I combine the acceleration of Q3 to the positive commercial momentum we have to the peak, hopefully, we will get broadly in line with our EUR 1.8 billion. We might be short a little bit if things don't go well, but we're broadly in line. The second question was net insurance. Yes, it's correct. One, net insurance is the company in the group that will take care of the new cat insurance product. Two, it's correct the fact that it will be fully reassure. Three, I can tell you that it's not a big budget product at the moment, but there is a strong focus and all I can say at this point is that I'm relatively optimistic that this will give us some additional growth in protection from '26 onwards. On the third question on solvency regulatory changes and the standard formula, please. Camillo Greco: Okay. So we do expect from 2027 a marginal improvement, think about mid- to high single-digit impact on our Solvency II ratio. That is driven mainly by 2 factors. The first one is the reduction of cost of capital for the calculation of the risk margin and the second is the changes to the volatility adjustment. Mid- to high single digit can mean up to 10 points. Giuseppe Esposito: Next question is from Giovanni Razzoli, Deutsche Bank. Giovanni Razzoli: Two questions. The first one is on the parcels. There is a lot of narrative on Italian press about the possible taxation -- fixed taxation on small inbound parcels. I don't know whether it is included in the budget law or is something that is rumored by the press as an idea. Do you think this is a challenge vis-a-vis your volumes of parcels inbound, especially from China? And can you share with us what is the perimeter of these activities, which could be potentially impacted? And in general, what -- how do you see the potential negative initiative going forward on the parcel volumes? And the second question is on the postal savings. I think that the performance of the third quarter was very, very good, very strong inflow. You mentioned that there has been an ad hoc marketing campaign for the 150th anniversary of this product. Shall we take this as a reversal of the trend? For instance, you had lower redemptions in the Q3? Or shall we assume that this is a reversal -- structural reversal of the negative trend that we have seen in the recent past because of the redemptions? Matteo del Fante: Okay. Thank you, Giovanni. Very good question on taxation. I mean this is not, from what we understand, the national initiative, but it comes at European level. And it would be an additional duty today, the FTE was referring to EUR 1. I heard from other postal operator that it can be as much as EUR 2 per item import from countries outside the EU. The first order impact is clearly for those players that are more involved with delivering those items. And we have a meaningful distribution role of parcel coming specifically from Chinese platforms. So if this tax lowers the amount of items shipped from China, the first order could be a marginal impact. Usually, what we have seen in the past, it's not the first time there was already something on customs 18 months ago that the market readjusts and EUR 1 or EUR 2 will not really change the attractiveness of those platform. There is also a second level of impact, which I think is positive or we should try to consider it and to play it on the positive side, which is this is making for the Chinese platforms less interesting to infrastructure theirselves in Italy. So you know that today, the largest platform in Italy is Amazon, and they have their own network. And looking forward and looking at what's happening around the globe, the Chinese platform are also getting organized with their own logistics. This kind of barriers probably put their investment appetite in any specific region a bit more distant. On postal savings, there is no reversal on the net, Giovanni -- on the net funding because the amount of redemption that we face every year is extremely significant. It's only showing that the CDP that is issuing the product has done a very good job in providing products that are in line with the market that are attractive and that help us -- and it's no coincidence the fact that given the number of Italian, we counted them a couple of weeks ago when we celebrated 150 years of postal savings. There are 27 million Italians that own postal savings. So our daily activities in the consultancy firms, in other teller on postal savings is very intense. And when we have a product, we have our salespeople being able to engage clients, not only on postal savings, but generally speaking, on all our products of savings and loan. So for us, the quality of the offer of CDP is extremely important to keep a positive dialogue with our clients. And I think, Giovanni, this is the most important news that we can take out of this positive trend. Operator: The next question is from Andrea Lisi, Equita. Andrea Lisi: From my side. The first one, I was really interested on having more detail for what you can share about the joint venture with TIM for the cloud-based services. What should we expect here? Obviously, also the timing for the setup of this joint venture, the kind of services you expect to provide? And also, obviously, I know that it is really preliminary, but the kind of penetration and growth you expect to achieve here? And the second is on dividend. You have indicated that you want to keep the dividend policy really appealing for shareholders. So also considering the interim dividend of EUR 0.40, what should we expect in terms of evolution of the dividend policy and the dividend payout? Matteo del Fante: Thank you, Andrea. The JV would require a bit more time, and I'm sure TIM will -- and Pietro will do his own care and [indiscernible] care and duty to explain it to investors along the road. What I can tell you at this point in time is that there is a clear process of migration to cloud, which is not only moving data from on-prem data warehouses to cloud. The beauty of moving to cloud is changing your operation and using that data in a more flexible way. So it's adding services to clients that are moving to cloud. So when you offer -- when TIM offers and the commercial responsibility of the work of the JV remains with the TIM that obviously has a commercial sales force dedicated to this offer to migrate into cloud. Increasingly, they will add products, services and value for clients. When it comes to public sector clients, there is a couple of additional consideration that needs to be made. The first one is related to the PSN, the next-generation EU big effort, which has achieved a very meaningful result in terms of moving the majority of the public administration into cloud. And now is the second wave of increasing the services and the value of using that cloud for the public administration. And the JV will allow TIM to internalize some of the work and value-added integration of system that was previously mainly outsourced. And the second consideration is the preliminary indication we received from core public sector clients, public administration clients that this initiative and the role of TIM in this space is very welcome because with our acquisition, we finally have in the country a national cloud provider. Think about the sovereign cloud topic, for example, with -- in the current geopolitical situation is clearly a very hot topic in the hands of the public administration. So finally, there is an Italian player that gives total confidence to the public administration to move and use data in a smarter way in the future. And this is the role that the JV will have to perform in supporting the commercial activities of TIM. And I think you will see more on this from TIM side, especially and also from our side with the announcement of the 2026 guidance in Q1 of 2026. Dividend, you said it all. We always stated that we want our dividend policy to be competitive, which basically means we look at our peer group that is clearly in the insurance space, is clearly in the banking sector. We look at the banking sector, including the buyback programs that we don't do. So when the share performs, we have left some room in terms of dividend payout to follow and make the dividend in terms of dividend yield appealing and competitive to our investor base. This is the work that we will perform over the next 2 to 3 months and second half of February when we will announce the 2 preliminary results, 5 results, 6 guidance, we will also have our position on 2026 dividend. Giuseppe Esposito: The next question is from Daniel Wilson at Morgan Stanley. Daniel Wilson-Omordia: Just 2, one on CDP and one on the Solvency II review again. On CDP, can you walk us through the kind of process of the renewal of the agreement with them whether there's any potential upside to the floor and the ceiling of the fees you can generate on postal savings? And secondly, on the Solvency II review, I know you spoke about it just now. I thought the mid- to high single-digits benefit seemed a little bit lower than I was expecting, especially given that you guys have quite a high risk margin versus your solvency capital requirement. And I would have thought that the kind of risk margin changes would have been a pretty big benefit to you guys. So I'm wondering what are the offsetting factors from the benefits you're getting to bring you to that mid- to high single-digit benefit? Matteo del Fante: I will let Camillo answer both questions. Thank you, Daniel. Camillo Greco: So the first question carries through until CDP agreement carries through until the end of 2026 with respect to how the agreement is performing. I would say that it is performing well. We guided for the year at a number of around EUR 1.7 billion in terms of revenues. We are going to be at least towards the high end of that, and we still have an additional year to perform. This was done in order not to have the agreement overlapping with the CEO change in potential change at the end of the summer. So that is the first point. With respect to the second question, I confirm that at this point, the estimate is around 10 basis points from 2027. We have both positive and negative factors. But at this point, you should stick to what we advise, which is around 10 basis points incremental benefit, percentage points, obviously. Giuseppe Esposito: And finally, we have a last question from Michael Huttner at Berenberg. Michael Huttner: Two. One is the EUR 1.1 billion TIM valuation. Where is that or the benefit of that, if you like? Where can I see it? And the second is on your lovely Slides 36 and 37, where you talk about Life net inflows and the mix between multi and segregated and all that. The feeling I have, but I'm more interested in what you're saying is you're not particularly interested at the moment in the big numbers, the volumes. So Generali this morning announced that their volumes went from EUR 3.3 billion in Q2 to EUR 4 billion in Q3. So quite an amazing number. Your numbers are lagging a lot, but it's not a criticism, just an observation. And the feeling I have is you're much more interested in transforming your portfolio, so moving your policyholders from the old segregated accounts into the multi-class. I wonder if you can explain how is that working? And what the benefit is, obviously, both for your policyholders, but also for investors? Matteo del Fante: Okay. Thank you, Michael. I will let... Giuseppe Esposito: Michael. Yes. Sorry, Michael, on TIM, to be clear, the current market value of the stake is EUR 1.9 billion, not EUR 1.1 billion. EUR 1.1 billion is roughly speaking, the amount invested. Michael Huttner: And where is the benefit of that? Where -- does it boost your solvency or your capital or anything? Giuseppe Esposito: No, no, no. The stake is equity accounted, so we don't do any mark-to-market. So basically, the changes in the accounting value will follow the pro rata net profit and dividends of TIM going forward. So there's no mark-to-market. But obviously, the mark-to-market is important from a balance sheet valuation perspective. Matteo del Fante: Yes. Basically, if you want to be precise, if we have put EUR 1.1 billion, which we could have invested at, let's say, 3.5% in government securities, we have basically giving up around EUR 40 million of NII. The strategy there is to extract 2 things. The first one is synergies. And we already signed the MVNO contract, which is making us saving versus the previous contract, EUR 20 million per year from next year. So that's already in the bin. I mentioned several times in my presentation, the Poste Energia contracts sold, that's additional value that is created by this partnership and this stake basically in our accounts. I spent a few words on the JV, and there is certainly more to come in terms of synergies. So that's the first block that will more than compensate the capital return that we would have had investing the EUR 1.1 billion in government securities, which is, as you know, the only thing we can do by law. The second benefit for investor, Michael, will be once the company and is already in the strategic plan announced by TIM, we start paying dividends. So there will be a return on capital as an investor and that return on capital now has also the benefit of being on EUR 1.9 billion when we invested only EUR 1.1 billion. So it would be clearly more than compensating it would be with the leverage component. The second question, I leave it to... Camillo Greco: Yes. So the second question was what are the trends towards shifting customer policies from capital guaranteed to partly noncapital guaranteed. And the answer is that in provided that the customers we do interact have the right financial profile, moving from capital guaranteed to noncapital guaranteed in an environment where rates are expected to go down, the expected return of a noncapital guaranteed product is superior. So the expected return for the customer should be to have a better return on the policy. And as far as we are concerned, we have different pricing between capital guaranteed and noncapital guaranteed with a different mix are sort of similar, but in the interest of customers, it's a more performing instrument in this rate environment. Michael Huttner: And so is there a capital benefit to you guys from doing this in terms of less required capital? Camillo Greco: There is a marginal benefit in terms of less capital for us, yes. Matteo del Fante: Yes. Sorry, just the last word, Michael. The capital benefit is marginal because the equity exposure embedded in our multi-class is residual. So our products always have -- even if it is a multi-class contract, there is always a minimum of 60% of Class I and the 40% has again a fixed income component. So at the end, we have less release than doing purely equity-linked unit products. Giuseppe Esposito: So that was the last question. So thank you very much for joining us today. Matteo del Fante: Thank you, everybody.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Pan American Silver Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Siren Fisekci, Vice President, Investor Relations. Please go ahead, Ms. Fisekci. Siren Fisekci: Thank you for joining us today for Pan American Silver's conference call and webcast to discuss our third quarter 2025 results. This call includes forward-looking statements and information and references non-GAAP measures. Please see the cautionary statements in our MD&A, news release and presentation slides for the Q3 2025 results, all of which are available on our website. I'll now turn the call over to Michael Steinmann, Pan American's President and CEO. Michael Steinmann: Good morning, everyone. I'm glad you could join us to discuss Pan American's Q3 2025 results. Over the past quarter and into Q4, we have benefited from the increase in silver and gold prices and a solid performance on cost. As a result, we achieved record attributable free cash flow of $251.7 million in Q3. On September 4, we completed our acquisition of MAG Silver. While we have had only a 1-month contribution from our 44% interest in the Juanicipio mine in Mexico, we're already seeing the impact on lowering costs and improving margins, underscoring the strategic rationale for this transaction. We account for Juanicipio using the equity method, but report production, cash cost, all-in sustaining costs and capital expenditures on an attributable base to reflect our 44% interest. I'm pleased to say that we have delivered another quarter of strong financial results. Attributable revenue in Q3 was a record of $884.4 million. Net earnings were $169.2 million or $0.45 basic earnings per share. This includes a $21.7 million loss from the sale of a subsidiary and $16.3 million of income from Juanicipio. The loss from the sale of a subsidiary is primarily due to a $28.6 million reduction to the $137.4 million gain we had previously booked on December 2024 of the sale of La Arena related to net working capital adjustments. This was partially offset by a $6.8 million gain on the sale of our 80% interest in La Pepa, a noncore development stage project in Chile, which we've sold for $40 million in cash proceeds in September 2025. Adjusted earnings were $181 million or $0.48 basic adjusted earnings per share. Attributable cash flow from operations was a record of $323.6 million. Cash and short-term investments at the end of Q3 totaled $910.8 million, plus $85.8 million of cash at Juanicipio for our 44% interest. This is after spending a net of $409.3 million on the MAG acquisition, including transaction costs. With $1.7 billion of total available liquidity, we remain in a very strong financial position. Given the strong financial position and cash flow generation, I'm happy to report that the Board has approved an increase to the dividend to $0.14 per common share with respect to Q3 2025. Despite the cash balance at the end of the quarter, reflecting the impact of the cash paid for the MAG acquisition, the Board exercised its discretion with respect of the dividend this quarter given the strong cash flow being generated. While we did not repurchase any shares in Q3 due in part to the blackout associated with the MAG acquisition, we remain prepared to act opportunistically. During the first 9 months of 2025, we have returned $146.9 million in dividends and share repurchases to shareholders, and we will add another $59.1 million with the dividend payment approved yesterday. Turning now to operations. Attributable silver production in Q3 was 5.5 million ounces, including 580,000 ounces from Juanicipio's 1-month contribution. We continue to be pleased by the performance at La Colorada, where the improved ventilation conditions are allowing mine rehabilitation and development rates to accelerate, thereby increasing the number of production areas, particularly in the deep high-grade zones of Candelaria East. Silver production was impacted by lower silver grades at Huaron, reflecting increased development and reduced stope ore mining rates in order to grow the inventory of prepared high-grade stopes, which are expected to enhance future production stability and reliability beginning in mid-2027. Silver segment cash costs were $10.41 per ounce and all-in sustaining costs were $15.43 per ounce. These costs are lower than Q2 2025, already demonstrating the positive impact Juanicipio is having on reducing silver costs and improving margins, even though it has only been in our portfolio since early September. The quarter also benefited from low all-in sustaining costs at Cerro Moro due to high by-product gold production and prices compared to Q2. Partially offsetting these factors was the lower silver production at Huaron and the royalty expense at La Colorada of $8.3 million in Q3, largely payable to a third party as part of a profit-sharing agreement for mining on an adjacent concession. Attributable gold production was 183,500 ounces. As we mentioned during our Q2 call, various technical issues at Cerro Moro, Peñon, Timmins and Minera Florida, as described in our MD&A, were expected to linger into Q3, consistent with our expectation of a back-end weighted gold production. The technical issues at Cerro Moro and El Peñon also reduced silver production in Q3. Gold segment cash costs were $1,325 per ounce and all-in sustaining costs, excluding NRV inventory adjustments were $1,697 per ounce. Overall production and cost across both the silver and gold segments remain in line with our 2025 operating outlook. However, we have raised our attributable silver production guidance to 22 million to 22.5 million ounces and lowered Silver segment all-in sustaining costs to $14.50 to $16 per ounce to incorporate Juanicipio's contribution. All other cost and production guidance remain unchanged. We invested $35.3 million in capital projects this quarter, mainly at La Colorada and Jacobina. At La Colorada, we continued exploration and equipment investments to further expand access to high-grade zones in the deeper eastern extents of the Candelaria ore zone. In September, we announced new high-grade drill results and added 52.7 million ounces of silver to inferred mineral resource, which substantially extend resource potential to the East and Southeast beyond our current mining areas. This is an exciting development that offers significant synergies through a potential 2-phase development approach to our large La Colorada Skarn project. The first phase would combine development of the Skarn with the vein mine, which is expected to result in a higher grade, lower tonnage and less capital-intensive development to what was described in our 2024 PEA. The second phase would involve the cave mine expansion. This phased development approach allows an enhanced vein mine to operate in parallel, utilizing shared infrastructure synergies and enhancing overall project value. A PEA for this 2-phase development approach combined with enhanced vein mining is underway and is expected to be issued in Q2 2026. Furthermore, we are well advanced on partnership discussions that consider this enhanced development approach. At Jacobina, results from the extensive optimization study have identified a number of opportunities to relieve constraints that could potentially benefit mine life, production and operational efficiencies. These opportunities include, but are not limited to: a tailings filtration and filter stack project to relieve existing long-term tailings capacity limitations; mine paste backfill plant project to take advantage of the tailings filtration circuit, thereby enabling an increase in ore recovery in selective high-grade ore zones; and a significant process plant streamlining project to improve reliability, release throughput constraints, reduce mine operating costs and enhance gold recovery. We have recently commissioned a pilot plant on site to demonstrate the benefits that can be obtained by streamlining a planned flow sheet, which has been defined through branch scale metallurgical laboratory testing. We have also engaged a leading engineering firm to develop detailed designs, schedules and cost estimates for completing these optimization projects. We will continue to provide updates on implementing these exciting projects as these engineering efforts advance over the next year. At Escobal, the Guatemalan Ministry of Energy and Mines has held several separate working meetings with the ministries involved in the ILO 169 consultation process, representatives from the Xinka Parliament and the company. The Ministry of Mines has also made several appointments of key personnel to oversee and continue activities for the Escobal consultation process. The ministry has not provided a time line for the completion of the ILO 169 consultation, but discussions remain active and respectful. Before closing, I would like to recognize Steve Busby for his remarkable contributions to Pan American Silver over the past 22 years with 17 years spent as Chief Operating Officer. Steve is transitioning to the role of Special Adviser to the CEO, and I'm grateful we will continue to benefit from his deep technical expertise. I also want to welcome Scott Campbell as our new Chief Operating Officer. Scott brings 25 years of operational experience in Latin America, and I look forward to continuing to work closely with him as we advance our strategy. I will now be happy to take your questions together with the other members of our management team. Operator: [Operator Instructions] First question is from Wayne Lam with TD Securities. Wayne Lam: Just curious on the guidance increase. Would it be safe to assume that the prior guidance for Juanicipio has remained the same as under MAG previously? And just wondering if there's been some modest tweaks for within the Silver segment on the guidance. Just given the deal closing in September, I would have thought the pro forma silver guide would have been slightly higher. So just wondering if there are any other offsets from the other operations in the portfolio? Michael Steinmann: No, it's pretty similar to what MAG had. Obviously, as you can imagine, this is -- we're only in the second month really of having that operation with us. But we assume that the production should be pretty similar to what we've seen in September for the remaining months of the year. Wayne Lam: Okay. Great. And then maybe at Huaron, just on the grades and the increase in the development ore being processed. It's been a couple of quarters now where you've encountered a bit higher dilution on the mining front. And just wondering if that maybe has also a bit a function of the reduction in the cutoff grade just in terms of the process grades come down a bit? And just curious if we should expect a bounce back in grades over the coming quarters or if that's more of an active strategy that you guys are employing to lower the cutoffs to bring in a bit more economic material? Steven Busby: Wayne, this is Steve. I can address that one. Yes, the initiative we started last quarter was to accelerate developments, trying to get ahead, trying to get some high-grade stopes prepared and develop an inventory of stopes to give us more reliability on production. This initiative is going to take us through all of '26 into '27. And so what you're seeing is a lot more contribution of ore from development, which is more diluted than from stope mining. And it's really an initiative to try to build inventory of stopes in the mine that will give us more flexibility in the future once we get all this development ahead of ourselves. That's what you're seeing. Wayne Lam: Okay. Great. And then maybe just last one, just at Jacobina on the optimization studies that are being undertaken. Can you give us a bit more detail on what's being optimized on the mine or at the plant and how that might impact the future operations, if that will be on additional tonnage or lower costs and when we might be able to see the results of that? Michael Steinmann: Yes, great question. And there's a lot of work going on at Jacobina. I'll pass it on to Steve. As you heard there, Steve will retire here as the COO, but he will stick around with us with his incredible wealth of knowledge. Steve will be very important for that kind of expansion work at Jacobina. So Steve, maybe if you want to answer that question? Steven Busby: Sure. I'd be happy to, Wayne, great question. It's very exciting what we're seeing there. The mine itself, the -- it's pretty flexible because we're really mining 7, we'll be bringing on an eighth mining area with Maricota, and it gives us a lot of flexibility in terms of how the mine delivers ore to the plant in terms of throughput expansion, tonnage and that sort of thing. The main focus of the optimization is around the plant itself. This is an old plant. It was originally built in the '80s as a less than 4,000 tonne a day plant. And it's been piecemealed over the years. A lot of components have been added. A lot of circuits have been added to the flow sheet. And it's kind of a complex network of flow, if you will. So we see an opportunity to go into the plant and streamline that plant, remove some of the circuits we don't need, clean up some of the circuitry, try to go to bigger machines, less numbers of them, reduce maintenance costs, improve reliability, improve efficiencies and reduce costs overall, coupled with -- when we look long term at Jacobina, we really see an opportunity to go to a filter stack tailings facility. That opens up a lot of disposal space for us. Conventional tailings, we're going to run out of capacity here probably in the mid-2030s. So we want to bring a filter plant into this flow sheet. We've been working hard. We're looking at vacuum filters like we run at El Peñon. They look quite favorable, and we're kind of proposing a vacuum filter plant that would be situated down at the tailings facility, and it allow us to put a stack that we're designing down below the B2 dam, we call it. And the location of this also provides benefits to us because we can add a modular temporary paste plant and use some of the tails to build cemented paste that we can pump into the north part of the mine where some of our higher-grade mining areas are, and it allows us higher recovery of some of the higher-grade stopes that we wouldn't get without some type of cement at backfill. So that's where all this optimization is coming together. I hope you can appreciate it's a significant brownfield project in and around the plant. So it's going to be -- it's going to require some very careful planning, very careful sequencing of how we make these modifications. And that's where we're working intensely with an engineering company. And as we start to get the designs and the sequencing and the costing sorted out, we'll start to deliver truly what the value of this project is going to be overall. But we're very excited about it. Wayne Lam: Okay. Great. That's a lot of good detail. And best of luck to you, Steve. Steven Busby: Thank you, Wayne. Operator: The next question is from Fahad Tariq with Jefferies. Fahad Tariq: Maybe just on the gold guidance, which didn't change. Can you talk about how you're thinking about the fourth quarter in the context of some of the dilution that you cited at Timmins, El Peñon, some of the development delays you cited at Minera Florida? Just trying to get a sense of kind of the confidence in the fourth quarter on the gold side? Scott Campbell: Yes. Scott Campbell here. We had our challenges certainly in Q3, but we're maintaining the guidance for Q4, and we're confident that, that will be achieved. We did have some dilution in Peñon, and we had some challenges and slight delays when it comes to ground support at both of our mines in Chile, but we're maintaining guidance and things in November have already started to look up for gold production in the southern countries. Fahad Tariq: Okay. And then maybe just switching gears to the updated development approach at La Colorada Skarn. Just in the opening remarks, you talked about the partnership discussions are well advanced. Maybe just any detail you can provide would be helpful. Michael Steinmann: Yes. Look, it's a bit -- well, the discussions are very advanced, but it's too early to share them here publicly. It's looking very interesting. I think that new approach, which we had an eye on, obviously, for a long time to see how we can advance the really high-grade part of our Skarn ore bodies. If you recall, we published a few press releases over the last couple of years with some very impressive long, very wide high-grade intercepts in 2 of the 3 Skarn ore bodies that we discovered. Really the discovery of those high-grade structures in addition that we found during 2025, and we published in September and increased our resource there by, I think, about 53 million ounces already. Really that combination of that high-grade discovery close to surface together with the high-grade wide intercepts of the core part of the Skarn really allow us to go to this phased approach and look forward here to 2 phases, as we said, smaller tonnages will still be an impressive mine, very similar silver output than the original plan we had envisioned, but obviously, higher grade, less tonnage, less capital and then go to the larger cave mine later on in time. So very interesting advances. As we indicated, we'll come out with the PEA in Q2 next year, but a very positive advance on La Colorada and looking forward here to look at those partnership agreements and involve a very strong partner for this really exciting project as well. Fahad Tariq: Okay. Great. And then maybe just lastly, is it fair to say that the partner would only be really for Phase 2? Or are you envisioning them also contributing to the CapEx and being involved in Phase 1? Michael Steinmann: I could very well envision a phased approach there, too, with a more reduced partnership option in Phase I and a larger one in Phase 2, but that still remains to be determined. Operator: The next question is from John Tumazos with John Tumazos Very Independent Research. John Tumazos: We know that you produce a little bit of base metals, too. And a large differential exists with zinc at $1.44 and lead at $0.93. Why do you think the zinc price outperformed where world steel output is down a couple of percent this year? And why do you think lead lags when world auto output is strong, China trending towards 33 million cars record, et cetera? Michael Steinmann: John, look, obviously, the base metals -- and by the way, it's I think, at the moment, only about 8% of our revenue. That will, for sure, increase once we have the La Colorada Skarn in production, but it's a small part of our revenue. When you look at the base metal, I'm sure zinc is pushed and outperforming as being included in several countries in their list of critical minerals. By the way, I'm sure you have noticed that silver got included in the U.S. as well on that list. But as you know, the base metal prices really reflect the outlook on the world economy and where that's moving. And I guess there's still some people worried about where this is going over the next few years, and that's reflected in those prices. But for sure, the inclusion of zinc and critical minerals helps the price. Operator: The next question is from Ovais Habib with Scotiabank. Ovais Habib: Michael and Pan American congrats on a good quarter, leading to a good free cash flow as well. Scott, congrats to you on your new appointment as well. Michael, a lot of my questions have already been answered, but some follow-ups to those questions. Starting off with the question on Cerro Moro, El Peñon, Timmins and I think Minera Florida as well. Obviously, they've had some issues in terms of reconciliation, geotech issues. Do you see these issues lingering into Q4? Or have most of these issues now been resolved? Just to clarify on that front. Michael Steinmann: Ovais, and you recall in Q2 and actually some of those technical issues started, we already mentioned that they will linger into Q3, which we see. So that's obviously the reason why our production profile, especially on the gold is more back-end loaded. As Scott mentioned, we see already an uptick on those grades. So looking forward to meet those guidance goals that we have. And maybe, Scott, do you want to add a bit more color to this? Scott Campbell: Sunil (sic) [ Ovais ], thanks for the kind sincere words. Regarding Timmins, some of the issues -- some of the geotechnical challenges we have involved the squeezing of our production drill holes in the deep central mining zone at the Bell Creek operation. We've been mitigating that through the use of casings, PVC casings and in some cases, we use a sealant or a polymer, and we've had some success with that. We're also installing additional ground support in development headings as we pass through high strain and stress areas using dynamic support. The paint backfill system at Bell Creek recently commissioned is also becoming more and more utilized. We're getting better utilization and the learning curve has really flattened out on that facility. And so we're getting some -- we're seeing a lot of success. And again, the numbers are looking favorable as we head into November, sort of halfway through Q4. Ovais Habib: And just going into 2026, I mean, is this more in terms of getting -- obviously getting ahead of production and development and accelerating development going into 2026? Scott Campbell: Yes. Generally, yes. At several of our operations, we've initiated additional development programs in Q4 to really give us more optionality as we head into 2026. In a couple of cases, we got behind in our development. So we had to acquire new equipment, in some cases, hire external third-party contractors to do that. Huaron and Timmins included. But yes, it's all in our best interest to really ensure our success coming up in later in -- at the end of 2025 and really into 2026. Ovais Habib: Okay. And then just moving on to Juanicipio on the closing of the MAG transaction. Michael, is everything progressing according to your expectations? I mean, are you looking -- how involved are you with operations? And is there a push to get more exploration started around the area? Michael Steinmann: I'm incredibly happy where it stands. I think we all saw a glimpse here what Juanicipio will do for us with only 1 month in Q3, and you see the strong production, strong cash flow coming out of that operation. You can imagine that even higher metal prices right now, how well that asset is doing. Actually, I was just there like last week, and it's just again an impressive operation. And a lot of involvement on the operational teams here on all levels really from operation to metallurgy to geology to exploration, a lot of exploration going on as well. So I'm really, really happy how this has worked out so far. I'm really looking forward to see a full quarter of Juanicipio in Q4, as I said, with a combination of very favorable metal prices as well. Obviously, we come out in early January or mid-January normally, mid- to late January with the forecast for next year, which will include also our -- in our budget, our exploration spending. So you will see all the details there, Ovais, how it looks like for the production profile. But yes, it's -- I would guess it's -- I would say it's at least met or quite a bit exceeded my expectations at Juanicipio. Ovais Habib: And my last question is on La Colorada Skarn. You're looking to announce the PEA in Q2 of next year. Is the announcement of the partnership exclusive of this event? Or you will need to see the PEA before you kind of come to some sort of terms with the partner? Michael Steinmann: No, I think we will be able to announce the partnership earlier. I think as soon as we have a document executed on that, we will release that information. Operator: The next question is from Cosmos Chiu with CIBC. Cosmos Chiu: Michael. Thank you, Steve as well, and congratulations, Scott. Maybe my first question is also on the Skarn technical report that's potentially coming out next year or not potentially, it is coming out next year. As you mentioned, Michael, you got to take a phased approach now with a higher grade lower tonnage deposit upfront. I seem to remember the Skarn deposit is centered around some high-grade centers, the 901 zone, 902, 903. So is there one particular zone that is higher grade? I don't know if you have that answer yet. Are we looking at higher-grade portions from all 3 areas? Are we looking at the upper portions of all 3 areas? How should we incorporate what I know about 901, 902 and 903 into what we can see next year? Michael Steinmann: Yes, Cosmos. The high-grade core zones are mostly 901 and 902. We are actually doing quite a bit of drilling still on 903 and some pretty interesting success here with the Skarn seems to even further extend by quite a good distance. So I think on 903, it's still out there to see if there is a high-grade zone there as well. But when you look at the press releases we put out over the last 2 years on those high-grade intercepts of the Skarn, they're all of them located in 901 and 902. But as I said, it's really the combination together with those high-grade closer to surface structures that we published in September. And then after that showed in a big increase in resources with our reserve and resource update. It's really that combination that allowed us this phased approach. As you can imagine, we were trying for a phased approach from the beginning on it with -- obviously, a very strong project, if you can do it in a phased approach, less capital upfront and increase later when you really understand an underground and you know the orebody well. And as I said earlier on, that doesn't mean that our production profile of silver will be much lower than what we had envisioned in the full large cave option. So there's less execution risk, less capital, probably faster in bringing the project on. And overall, just an exciting development at La Colorada Skarn. Cosmos Chiu: Yes, that sounds great. Maybe a follow-up then. Michael, as you mentioned, with this phased approach, the possibility is that the vein mine could run parallel with both Skarn phases. So is there some thinking in terms of some of that ore from the Skarn could actually go through the current mill? Michael Steinmann: No. The current production mill capacity is around 2,000 to 2,500 tonnes a day. I mean we're talking here about a multiple of that. So we will build a new mill much larger and then have that mill build with the potential to expand down the road way bigger to the Phase 2. But yes, the current operation, the current mill is too small. But the metallurgy is very, very similar mineralization of the Skarn and the veins. So it's an easy project for us to kind of commingle the veins and the Skarn and put that through the same mill. So it's not -- the metallurgical difference is just the current mill is too small for that. Cosmos Chiu: Okay. Okay. Sounds good. So it's going to be a new mill from day 1 for the Skarn, but it could still run in parallel with the potential expansion later on? Michael Steinmann: Yes, that's the exciting advance here is that, obviously, putting the cave mining a bit later allows us to continue to mine those high-grade veins, which it seems like with the exploration, we keep finding more and more of it. Cosmos Chiu: Yes. Maybe I do apologize. I do have a long accounting question here. I just want to get a better understanding of the equity method of accounting for Juanicipio. I was looking at Note #9, and I could kind of follow through. My understanding is that it's 44% of what Juanicipio report 100%. So I can understand the $72 million in revenue, $11.9 million in production costs, $15.1 million in depreciation, so $45.1 million in mine operating earnings. But then it jumps to $37.1 million in net income and comprehensive income, and that's a gap that I don't really fully understand, which drives the $16 million pickup for Pan American Silver at the consolidated level. So could you maybe help me out in terms of that little gap? Ignacio Couturier: Cosmos, it's Ignacio here. And if you want, we can take this offline as well. Yes, if you want, we can take this offline because there's a lot of detail. But basically, we -- this is -- the reporting requirements are -- don't require us to put all the detail in there, but some of the lines that are missing are taxes and other items that are material. But yes, basically, there's a whole bunch of other stuff there that's not included in the income and comprehensive income. Cosmos Chiu: So I work it out to about 18%. Is that a good number to kind of use in terms of that difference or each quarter is a bit different? Ignacio Couturier: I think let's give it a couple of quarters here because this is only 1 month of results. So I would say let's see what the next quarter looks like. And as I said, I'm happy to take this offline with you, and we can talk a little bit about. Cosmos Chiu: I do apologize before asking the question. So I knew it'd be a little complicated. Any other accounting nuances that we should be aware of in terms of Juanicipio? Ignacio Couturier: No, I would say, look, this is the same method that MAG used to report Juanicipio. And yes, it's a little bit tricky because we haven't had this before. And it is difficult to talk about the company performance now given that the performance of Juanicipio is buried into the equity line or the investment in Juanicipio line, both in the income statement and the balance sheet. So we've introduced a few new non-GAAP metrics, including attributable revenue, attributable free cash flow and attributable operating cash flow to help us better understand and talk about the company performance, including Juanicipio. And another thing to keep in mind is really the cash from Juanicipio doesn't -- that's sitting at the JV level is buried in the interest in Juanicipio -- investment in Juanicipio line in our balance sheet. That -- only once Juanicipio JV distributes dividends, will that cash appear in the cash and cash equivalent lines in our balance sheet. Cosmos Chiu: And that cash distribution is somewhat discretionary, correct? Ignacio Couturier: Yes. No, they're on the schedule. Given the transition between MAG and ourselves, it's been a little bit delayed. So it's been a couple of quarters since they haven't -- since the JV has not issued dividends, but there should be a catch-up in Q4 on that. Cosmos Chiu: Okay. Great. And then maybe lastly, on the dividend. Great to see that you've increased it again the second consecutive quarter in terms of that increase. But in terms of the calculation, the $0.14 is a bit of a detour away from the matrix that you've given to us in the past in terms of dividend based on net cash. So I guess my question is, how should we not predict, but what should we expect for the next quarter? That's number one. And number two, how much of the fact that you were not able to use your NCIB in Q3, does that factor into you increasing on a discretionary basis, your dividend in Q3? And will you use the NCIB again in the future? Michael Steinmann: Yes. Look, regarding the dividends, great news. And that's really -- this is kind of a departure from our dividend policy for this quarter and this quarter only. And the reason for it is a very simple one, very strong cash flow generation. You see we nearly recovered already a large part of the $500 million that we used the cash portion that we used for the acquisition of MAG. So it was the Board's view that with this incredible strong cash flow generation, it's just the right thing to depart from the dividend policy for 1 quarter and have the shareholders participate in that a bit earlier. It has nothing to do with the blackout we were in until the transaction closed on the NCIB. We will obviously look again at the NCIB from now on and like before, make share purchases on an opportunistic way. So that is not the reason for the increase. The reason for the increase is that we look at our cash forecast. We look at a strong Q4. And it was just the right thing to have our shareholders to participate a bit earlier in that really, really strong quarter. Cosmos Chiu: I agree as well. Congrats again on a very good Q3 and look forward to the rest of 2025. Operator: The next question is from Don DeMarco with National Bank. Don DeMarco: First off, we saw consolidated AISC guidance lowered substantially. Was there any other contributors to this other than the addition of Juanicipio? Michael Steinmann: No, it's the strong impact of Juanicipio. I mean we will be on track with what we had in our original guidance like we are on the gold side. But as we alluded to when we announced the transaction that this transaction will have a meaningful positive impact to our cash cost on the silver side. And that's really the result that you've seen only with 1 month on it, you already see that result and calculating in the advantage of having Juanicipio for a full quarter in Q4 led us to the lower guidance on our costs. Steven Busby: Yes. I was just going to add, Don, this is Steve. Just to a lesser extent, we are enjoying the benefit of the higher gold prices as well relative to what we use for guidance. So that is helping to offset some of the cost increases we're seeing is that byproduct gold price. Michael Steinmann: And just to remind everybody again, I said that probably every call, there's a lot of factors, important factors on our cost. There can be tailwinds or headwinds that are out of our control and one is exchange rates. Of course, when the U.S. dollar declines, normally our local currency increase and that automatically is a headwind on our cost. But as the added benefit with a lower dollar that we see higher precious metal prices. So that's kind of the system how it plays. When we see a strong dollar, we see pressure on the metal price, but we see a tailwind on our costs in local currencies and vice versa. So keep always in mind that exchange rates are an important part as well. Don DeMarco: Okay. And we look at Minera Florida and Timmins, costs are a bit elevated in the quarter, but of course, the margins are still good. Do you have any performance criteria to identify potential divestment candidates? And can you walk us through your potential divestment pending order? Michael Steinmann: Look, I mean, we did a lot of divestments over the last few years. You probably saw we divested a project in Chile, La Pepa as well for $40 million cash in the quarter. And there's quite a few other smaller projects that are in the pipeline in the works right now by our business development team. I'm pretty happy with what we have right now on our operational side in our portfolio. So looking forward to continuing with those assets. Don DeMarco: Okay. And then on the flip side of that, after MAG and previously the Yamana acquisition, what's a good long-term silver or gold production level that you'd like to achieve or maintain? Michael Steinmann: I think we need to see the final budget on the Juanicipio side before I can answer that question. As you can imagine, it's a very large and important part of our silver production going forward here. Don DeMarco: Okay. Great. Well, we'll keep an eye out for guidance next year on that then. And good luck on the rest of the quarter. Operator: This concludes the question-and-answer session. I'd like to turn the conference back over to Michael Steinmann for any closing remarks. Michael Steinmann: Thank you, operator, and thanks, everyone, for calling in. And another great quarter, record revenue of nearly $890 million, record operational cash flows of $323 million, record attributable free cash flow of nearly $252 million, very strong numbers. That obviously led us to increase for the second time in a row now since Q2 to increase the dividend. It's great to have our shareholders participate not only in increase of our share price, but also in additional return to our dividend policy. So great quarter. I'm really happy where it stands. As I said, we saw the first glimpse of what Juanicipio is able to do here in the full quarter, which will be the first full quarter in Q4. We only had 1 month of the mine in Q3, and we see already a very positive impact. And just to the last question there from Don, we will see an important impact to our silver production here from Juanicipio looking forward. So I'm very happy where we stand. looking forward to a great and strong Q4 and report that early next year, but also report our outlook for '26 and show you in detail how our guidance for that cost guidance and production guidance looks like. So thanks, everyone, for calling in, and have a good rest of the year, and we'll talk in early year, I guess, February or so for our Q4 results. Thanks, everyone. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Unknown Executive: Good afternoon, everyone. I think we are pretty much at 2:00, so ready to crack on. Richard Godden: Yes, afternoon, everybody. This is the Premier Foods Half Year results Bond Investor Call. We had our main webcast call of the results that Alex Whitehouse and Duncan Leggett posted this morning, which should be available to view as a replay. We're hosting this to answer any questions that anyone may have from a credit perspective. So that's the purpose of the call. Duncan is going to do just a couple of slides from the presentation this morning, and then we'll open to any questions. Duncan Leggett: Perfect. Thanks, Richard, and good afternoon, everyone. Yes, I thought I'll just do a couple of slides. Some of you may have dialed in this morning. There's a webcast on the website for anyone who wants. So I'm just going to take Slides 3 and 4 of our analyst presentation that's on the website. And in terms of the summary, we're really pleased that after a bit of a softer weather impacted quarter 1 that we've seen quarter 2 sort of snap back into slightly more normal levels. So you can see in the middle here, Q2 U.K. branded growth up at 3%, and that brings H1 up to 2%. So really good trajectory. And actually, if you look at quarter 2, July was actually pretty warm. So delivering the 3% after pretty much only August and September being more normal, we're really pleased with. Again, that's where we expect it to be, but it's always good when it comes through. Total branded revenue for the half up at 1.9%. And then market share. So we've had a really good run of market share gains. You can see 130 basis points over 3 years. And that's all around deploying the branded growth model and effectively driving growth that in most cases has been some way ahead of the market. I think we're really pleased that we've been able to hold on to that growth, notwithstanding a bit of a weather impacted first half. So I think we're really pleased we managed to maintain and keep hold of those gains. In terms of profitability, so a slightly unusual one this half because we've got this extended producer responsibility levy, you may have seen from other corporates, but this is -- this is a levy based on producers all around the packaging it uses, the energy intensity, the recyclability. And the way the accounting works is that it's forced us to take a full year's charge in our first half numbers. Now if you think about how we deal with this, we would offset it and recover it over the full 12 months. So on the left-hand side or bottom left, you can see the reported profit delivery. So we have still growing trading profit and adjusted PBT with this full year charge in. But actually, if you exclude the amount that relates to half 2, effectively, we will recover and offset it over the second 6 months of the year. So if you take half of that out on a basis that will be dealt with in H2, then actually trading profit is up 7% and adjusted PBT up 10%. So really good underlying profit generation, which we're really pleased with. And then leverage, I mean, it's been coming down for a while, isn't it? We're well in the rearview mirror in terms of the net debt that we inherited. And as long as we have associated with Premier, I think really positive news that we bought Merchant Gourmet in the half year and net debt to EBITDA is still only 1%. So in terms of strategic progress, so obviously growing the core. And again, we've got good U.K. branded revenue growth, good recovery in grocery and a continued, frankly, pretty stonking performance from Sweet Treats so that grew 9.4% from a branded perspective, really successful consumer insight-driven and BD really, really doing performing well. CapEx, we continue to deploy capital. Everyone will be aware of, this is a key pillar of how we grow our gross margin and that creates the room to reinvest behind our brands, which clearly then drives future growth. CapEx is a big part of it. We are investing in pretty high returning opportunities still in the sort of 2-, 3-, 4-year payback for many of them. And doing pretty well in terms of laying that capital down this year, so well actually that we think we might spend a bit more than we thought, which for us is really good news because it means we're spending money on the projects that drive return and therefore the quicker we can get at those, the better. Category expansion. So this is something that's been growing really well for us. It's still a relatively small base, but you can still see really good growth. So you can see a picture of a FUEL10K yogurt. This is our latest expansion, which is a sort of protein-rich yogurt with a bit of a lid that includes what is now the U.K.'s best-selling Granola SKU, which is our Chocolate Granola for FUEL10K. So a really good combo there. Pretty early days, but seems to be performing pretty well. We've also got Ambrosia Porridge and the Cape Herb and Spice really driving growth in there. International, I think it's -- from an in-market performance perspective, we're very pleased. We are gaining listings of things like Spice and FUEL10K in Europe. We are getting new listings in the U.S. as well, and North America was up -- went into double digits for the second quarter. And in Australia, which is still by far the biggest component of our international business, in market performance, we're growing at 17% for Cake, which is fantastic. That doesn't translate into revenue, which you would have picked up, no doubt because the retailers have decided to reduce their overall stock holdings, if you like. They have been holding a bit of a buffer because of the inconsistent shipping lead times as we've come out of COVID and then the Suez Canal has not been used. And now shipping times and shipping routes are becoming a bit more established and a bit more reliable, they've decided to bring down the in holding stock. So what does that mean. Clearly, it's not anything we can control, we can just control driving the model in Australia, which is working really well. All that means is they just -- the in-market forms isn't flowing through to our revenue because they are effectively -- we are selling all that -- making all those great sales out of stock that's already in market. So that's just a bit of a timing adjustment, if you like, but certainly not a reflection on the overall health of the business. And inorganic opportunities, FUEL10K and Spice Tailor are flying. So U.K. and the U.K., they are growing well into double digits. And as you will know, Merchant Gourmet we acquired in September. So really, really pleased with that, early days, but performing well, and we're getting on with the integration of that and looking to, again, use the benefit of our broader scale and our model to help grow distribution, supercharge the NPD pipeline and generate value. So really, really excited about what that's going to bring. So that's all I was planning to share. I thought it would be a good overview, but I think most important is that we have time and able to answer any questions from yourselves. So happy to pass over, which will facilitate. Richard Godden: Thanks, Duncan. [Operator Instructions] I think the first one is coming from Neill. Neill Keaney: Congrats, Duncan, strong set of results. A couple for me. On the acquisition pipeline, you've been pretty consistent on how picky you are and how that fits into the -- how your potential targeting fits into the 5-pillar strategy, et cetera. But just on cadence of acquisition, it's -- I think it's been on average one a year for the last 3 years. I appreciate the gap is wider between FUEL10K and Merchant Gourmet. But if another opportunity came along in the next sort of 6 to 12 months, is that something you would look at? Or do you worry about distraction risk and integration risk with merchants? And then just on the bridge facility and interest guidance, the interest guidance that you've given seems to indicate to me that you would not be looking to refinance the '26 notes until after the end of this fiscal year. Is that the right way to read it? Or is it just you'll be opportunistic as and when you think the right time to come to market is? Duncan Leggett: Perfect. Thanks a lot, Neill. So taking your second question first, just before I forget it. I think, yes, clearly, what we've done with the bridge facility is just sensible financial planning really, isn't it, just buys us a bit of time, gets us through audit and sign off and stuff and just make sure that we can do our best as best we can to try and pick the market at the right time. I think your interpretation of interest guidance is pretty spot on. I think we're looking at sort of back end of this year, maybe early next will be what the guidance suggests. But clearly, if we thought the right thing was to go somewhere between now and then and we thought it was the best thing to do for the business, then we would seriously look at it. And the first question... Richard Godden: M&A. Duncan Leggett: So cadence. I mean, we are always looking. And as you say, roughly one a year, a couple of years almost since FUEL10K one, and we've been looking at a lot of stuff during that time, but we've decided not to get involved or decided that some of the stuff wasn't as attractive to us or -- 2 questions. So if something comes up in the next 3, 6, 12 months, we'll be seriously look at it. Yes, we are looking at stuff now. We always are. And clearly, when we're assessing whether to do a deal, clearly, financials, our commercial criteria, financial criteria are really important as well as our facility headroom. And to your point, we would make sure we don't buy stuff more than we can chew. I think the Merchant Gourmet, we are in the middle of integration. It's relatively straightforward. It's U.K. We are relatively known. So I think in the next few months, we'll be pretty integrated and then flowing that through the existing business. So that will be dealt with pretty quickly. And therefore, yes, clearly, if something comes up. And with these things, you can never tell that something is going to come up. You need to be prepared to act if they do -- isn't it? So yes, we could considerably do another deal if we felt it was the right thing to do in the next 6 to 12 months. Richard Godden: [Operator Instructions] Duncan Leggett: In the meantime, just maybe ask a question that you may have heard from this morning, but I guess just in case anyone's got any questions on working capital. So we do build stock during the first half of the year. That's very much how we operate on the basis that going into our Q3 peak sales period, we are sitting on a lot for obvious reasons because that is when we need it and when it sells through. That's probably shown through a bit more in the cash flow than it would normally do, and that's just around, a, the stock build was a bit bigger during H1 than it was the previous before, and that's just making sure that we've got everything ready for the second half. And the other bit is we've just phased the stock build a bit more evenly through the half. So therefore, there's a bit less of a natural offset with the creditors. So you might have seen there's no change to our full year view or full year guidance. But just in case it's a bit more of an outflow than people are expecting purely just a timing piece of when we build stock during the half, and we expect that to sell-through and get the cash in by the year-end. Richard Godden: Thanks, Duncan. No hands being raised just yet. Maybe just a minute on CapEx guide. Duncan Leggett: Yes, sure. So we've -- clearly, we're stepping up CapEx investment over the last few years, haven't we. And we guided to GBP 50 million for this year. And that's all around putting -- deploying capital in the way that we see the best way back into the business and generating pretty attractive returns. We guided to GBP 50 million for this year. We're just making really good progress in putting that to work and again, putting that to work for the value-creating projects. And we actually think we're making a bit better progress than we thought we would going into this year. So we've just ticked up guidance from GBP 50 million to GBP 55 million. Looking forward, whether it's GBP 50 million or GBP 55 million probably doesn't matter too much, but it's that sort of range going forward, and we have a good pipeline of effectively margin-enhancing projects we can see over the next sort of 3, 4, 5 years, a great visibility of, I guess, the fuel that's going to drive margin growth, which is going to drive investment back into the brands and drive future growth. So feeling pretty good about that. Richard Godden: Great. One more question coming from Neill. Neill Keaney: I'll take the opportunity if no one else does. There's a lot of noise in the press around supermarket price wars, real imagined anywhere in between. In terms of what you're seeing and negotiations, I guess, ramping up around this time of year and into first quarter of next year, any change to the sort of competitive tension between suppliers and retailers that you're seeing, anything we should be aware of this time? Duncan Leggett: Yes. It's a really good question. I think short answer is no. But you're right in terms of the amount of coverage it gets. What are we seeing? I think quite a lot -- not exclusively, but quite a lot of the, call it, price war, quite a lot of it is around fresh and areas that we're not part of. So we're probably not feeling it there. Clearly, negotiations with customers are never easy, and we're not going to -- otherwise, but they're not really changing. So we just manage them in the usual way. And clearly, having market-leading brands and pretty strong relationships, I think we are pretty well placed. In terms of, I suppose, the other piece is the relative performance of the customers, that's getting probably a bit more polarized with Tesco's winning, Morrisons not having done great, but probably shown some better signs and Asda still in a bit of a trouble. And clearly, therefore, when Asda is declining, we're declining in Asda. But what we're trying to do is grow within Asda even though it might be declining so that we can help Asda help themselves turn around. So we sort of leverage the strong relationships to try and grow the people that are growing, but also help the people that are struggling a bit more to grow their categories through growth of our brands. So that's the other piece that we're just keeping an eye on. But I think summary is no real change to the aggressiveness or otherwise in terms of negotiations. Neill Keaney: And given that backdrop, is there any change to your promotional strategy? I know that's the other thing we're hearing is promotional rate is elevated and remains so. I think it was 30% in October, which I think we normally only see in the peak weeks before Christmas. Duncan Leggett: No, we generally agree the promotional plan with the customers at the beginning of the year and broadly stick to it. So I mean, things like cake are generally on promotion a bit more than the grocery, but that's no change. So I wouldn't think there's anything that was called out. Richard Godden: We did have one question come in on the Q&A unattributed how you're thinking about your short-dated October '26 bonds. I think we've already sort of essentially answered that one. Duncan Leggett: Yes, I hopefully covered it -- is where we need to refinance. We've just used the bridge facility just to enable us to buy a bit more. So yes, hopefully, that's dealt with. Richard Godden: Great. Okay. Well, we have no further requests for questions or any further questions. So I think we'll probably wrap it up there if there's no more incoming. All the documents are -- that you might want to refer to are on our website and say -- there should be a recording of the webcast from this morning as well, if that's of help to anybody on the results center of the website. So with that, thank you very much for joining. And we'll have -- next time we'll come to market will be our Q3 trading update, which will be third week in January. Thanks, everybody. Duncan Leggett: Thanks, everyone. Appreciate you joining.
Operator: So ladies and gentlemen, a very warm welcome to Bilfinger's Third Quarter 2025 Results Conference Call. My name is Jasmin Dentz, and I'm joined today by Thomas Schulz, our Group CEO, and Matti Jakel, our Group CFO. As always, all documents related to our Q3 reporting have been made available on our website. As usual, we will start our webcast with a presentation of the quarterly highlights, the current market environment and our financials and then open the webcast for your questions. [Operator Instructions] The webcast will be recorded. And I will now hand over to our CEO. Thomas, please, the floor is yours. Thomas Schulz: Thank you. Hello, everybody. As always, we start with our highlights for the -- this time, the quarter 3 2025. We had quite a good stable development in a very volatile market. Our orders received increased by 1%, at least by 1% absolute and our revenue by 8%. Our EBITA margin is on 5.8%, and our earnings per share moved slightly up to EUR 1.47. Significant improvement close to 30%, we had in the free cash flow, which went from EUR 55 million to EUR 71 million. We updated our outlook and gave a new revenue outlook of EUR 5.3 billion to EUR 5.5 billion for the year and 5.4% to 5.6% EBITA margin. I would like to repeat what we said in the last few calls, we always hit the midpoint of the guidance, what we give. That's what we are after. And very important, and you are all invited, and we hope that you all participate, we will give new midterm targets on the upcoming Capital Markets Day in the area of Frankfurt on December 2 this year. Before we go more into market data and so on, as always, our ESG topics, and it is with a strong focus on safety. When you look here into that slide, on the left side, we have the total recordable incident frequency. It's based on 1 million working hours, and you see that we moved quarter-on-quarter from 0.88 to 1.01, which is a slight, yes, creating of a disadvantage. We work on to have 0 as a figure there. We put a lot of effort, time, actually emotions and money into it. With our current result and what we proved in the last few years, we are actually playing in the top league, not only in the industrial services segment. The other figure what we report on, which is quite important, too, is the lost time injury frequency on 1 million hours, too. And there, we have an improvement from 0.29 to 0.17, and there, we are, let's say, closer to the 0 and 0 means we have no accidents in whatever we do. And that in a company with more than 30,000 people is definitely an achievement if we come there. Out of that, we look into the market. And for us, we have one indicator what we show since several quarters, it's the production index. It's based on 2019, and it is for Europe, Middle East and North America. And we show our 4 biggest industries where we operate in, which means where we have more than 10% of our revenue line for a longer period of time. And when you see, it's the typical gap, the green line, which represents pharma, biopharma is still on a growth, which means this industry develops quite well. Whereas the other 3 like energy, oil and gas versus 2019 is slightly up in the production index and chemicals and petrochem is actually below 2019. When we then look into the specific industries, I just said that chemicals and petrochem is below 2019 in these areas for the base of -- for the production index, it's predominantly Germany, which lowers here the figures. When we look into the demand is on the side movement. Again, it's Germany, which has a negative impact here. It makes 23% of our revenue share, but the outsourcing potential, the potential where we can as Bilfinger can go to our clients to offer them to take over all the maintenance and for us to in-source, for them to outsource, to have a stronger efficiency gain if professionals like us, like Bilfinger is doing it is quite a good market, predominantly based on the pressure what our clients see in the global market for chemical and petrochem products. The second industry is energy, 23% of the revenue share. The demand is good, and the outsourcing potential is good. What we see especially and that for a longer period of time is the increasing demand for storage and transmission. The third one is oil and gas. There, we have a strong LNG demand, and we have lower refinery demand. It means 20% of our revenue share is in that part. Demand is good overall, and outsourcing potential is good. About pharma, I already said, where it comes from that they are on that good growth path for quite a while now, the demand is good and the outsourcing potential is good, and it makes -- made in that quarter 13% of our revenue line. Out of that, some selected orders to see what we really do on the client side, let us start with Germany in adjacent industries. Adjacent industries are all the industries we work in, which are not belonging to the 4 big ones, what I showed before. And here, it's about a semiconductor manufacturer in Germany where we got the order for prefabrication and installation of the wastewater treatment system, for, of course, efficient resource, efficient chip production. The second one is out of the area of energy in Sweden from the German client, E.ON. It's the prefabrication and assembly of heat accumulator to increase reliability and sustainability in district heating supply. I hope you remember that we, as Bilfinger, are a leading company in district heating solutions. It's all about liquids and gases, and there we are really great. Then the last one is oil and gas out of Kuwait. It's with our well-known KNPC client, and it's for the North Oil Pier. It is about a front-end engineering design service. And of course, the background is enhancing operational efficiency, which is the core of our offering. When we talk about core of our offering, we are on innovation. This time, we introduce to you the so-called DRIS 2.0. It is a system to inspect insulation during routine operations to describe where the challenge comes from. If you are in an area with low temperatures, northern part of Europe, for example, and you open the insulation on a pipe with a higher temperature, you always create moisture in between the insulation and the pipe. If you then close the insulation, you actually create a situation where rust and other damages can happen. That's the reason that in general, this kind of investigations and opening of insulation on these type of pipes are only happening during a so-called turnaround schedule. And the turnaround schedule means shutdown of that part of a plant or the whole plant. When you do that, shutdown of a whole plant or a part of a whole plant, then you can imagine it costs the customer a lot of money. So we worked on how to reduce the turnaround schedule. One part is that we can inspect and repair and work on the insulation in these weather conditions without harming the system, and we came up with a portable solution to do that. This kind of solution actually gives us a possibility to shorten the turnaround, the shutdown of the complete plant time by more than 10%. We see always more than 5% cost savings, and it helps the clients to do what we call case-based execution. It's another word for if they believe or if we see there could be a damage and we don't need to shut down the whole plant, we can do then the repair and everything during regular operation. This is a big advantage in a more efficient world. Out of that, I would like to look into the Bilfinger demand. You know our opportunity pipeline. The opportunity pipeline is that what we, as a Bilfinger Group, quote and work with inquiries and possible upcoming business in the market judged by, if it really will happen and how likely it is that we have a share as Bilfinger in that. And we go 2 years back, that means July 2023 is the 100. And when you look into, we actually have from last year, third quarter 2024 to this year's third quarter 2025, quite an increase of 15% of the opportunities. When we look more into detail into that, it is clearly that the demand for enhancing efficiency on customer side, no matter which industry is increasing, and it's a proof of that, what we said before, Bilfinger will perform if the market goes up or if the market goes down, and we have that mixed picture in the world between the center of Europe and, for example, the Middle East and North America and the growth part on the other side. Orders received is 1% up to EUR 1.36 billion coming from EUR 1.344 billion. For us, important in that is, of course, the development, as we always say, of the order backlog, that's 7% up. If we look year-to-date, we actually have a book-to-bill year-to-date of 1.1 which is good. We are in the order intake as revenue year-to-date because we are already in the mid of November, quite a growth as we predicted as midterm targets. Out of that, I would like to give to Matti, our Group CFO. Matti Jakel: Thank you, Thomas. Good afternoon, ladies and gentlemen. I guess, by now, you will have studied the material that we published earlier today or in the early hours of the morning. Let me add some comments to our financial performance for the third quarter 2025, which was the CEO said a good quarter, the CFO says it was a solid quarter. Thomas Schulz: Thank you. Matti Jakel: Important, if you look at year-to-date performance, it does demonstrate the progress that Bilfinger is making. Into the numbers, revenue up by 8%, 7% organically to almost EUR 1.4 billion for the third quarter 2025. You see the changes there. Contributors were all segments. Europe at plus 5%; E&M International at plus 8%. Organically, even 14% in International. However, you all know how weak the dollar has developed over the last few months, and hence, we have a foreign exchange effect here. Technologies up almost a quarter, 24% or 25%. And I'll come to the segments in a moment. Thomas talked about the movement and changes in our core industry. They are reflected in the 2 pie charts here. The share in chemicals and petrochemicals went down by 2 percentage points, 25% to 23%. Conversely, oil and gas went up from 17% to 20%. So we see a bit of a revival here in oil and gas is well known. However, it also demonstrates our strong position in oil and gas offshore in the North Sea on the Norwegian side as well as the British side but also increased activities in facilities for the production of hydrogen. Looking into profitability. The third quarter 2024 was very strong in terms of gross profit at 12.3%. This quarter, in absolute numbers, we are on the same level as last year, 11.3%. An interesting feature this year is that all 3 quarters now were above 11.0%, which means we have also, like you've seen in cash flow, leveled out the profit generation throughout the year. On the SG&A, we made some progress. The ratio went from 6.1% down to 5.8%. In absolute numbers, we went from EUR 78 million to EUR 80 million. That's due to the acquisitions that we communicated early on, the Rodoverken in Sweden and the nZero in the U.K. On the EBITA margin, also slightly down from 6.0% to 5.8%, in absolute terms, an increase of EUR 5 million, everything as we had expected and communicated earlier. A little bit on to the segments. If we look into E&M Europe, which is our largest segment, so what you see on the group number is also reflected here. Revenue grew by 4%, overall flat. And if you look at it organically, again, the 2 acquisitions added to the overall growth. Sorry, that was on the orders received. On the revenue, it's up 5%, 2% here, you can see the additions of the 2 acquisitions as well. So where do we see growth, in energy and oil and gas industries and chemicals, as we all know, petrochemicals remain challenging there. Profitability, slightly down by 0.2%, but absolute an increase of plus 2%. On International, quite some progress. Orders received up at 17% organically and 10% due to the U.S. dollar weakness, 10%, up to almost EUR 200 million for the quarter 2025. Interesting in the U.S. is that the business in the industry or for the industry, is very active, while the business that we have for the U.S. government and governmental entities has slowed down quite a bit due to DOGE activity of Mr. Musk earlier this year, but also due to the shutdown, which luckily for, I guess, a lot of people was finished or completed last night. So it will not release everything that was not done in the last few quarters immediately, but we will see some better numbers there in the future quarters. Revenue growth predominantly in the Middle East, but also in our maintenance business in the United States, again, here, plus 14% organically, including foreign exchange adjustments plus 8% to EUR 182 million and a book-to-bill of 1.05, indicating further growth. On the profit side, you may remember that we had an impact last year in the third quarter from an arbitration case, which was then offset at group level. But here for the segment, we've done quite well to 4% for the quarter, proving that especially the transition and transformation in the U.S. is taking good shape. In Technologies, order intake is flat, about EUR 270 million, plus 1% organically, that's the business where we see more of the larger projects. And we do see some volatility in the order intake, as you can see from the graph, but EUR 270 million is a strong quarter as was the quarter 3 in 2024 as well. Revenue up 24%, 25% to EUR 239 million. Very strong business in life science and nuclear, where we had received a good order intake in the last few quarters, now sort of in execution. On the profit side, plus 42%. So a good increase, not only in absolute terms, but also 90 basis points from 6.9% in to 7.8%. And again, operational excellence, derisking efficiency improvements, all of this is at work in the segment Technologies. Net profit for the quarter remained at EUR 55 million last year and this year. You can see that the tax rate increased from 21% to 25%. That's the impact of a change in law in Germany, where the corporate tax rate will be reduced by 1 percentage point per year until 2028 and thus lowering the value of our deferred tax assets. So that's a onetime effect in this quarter. The earnings per share is EUR 1.47 this time versus EUR 1.45. Why the difference? We have a smaller number of shares as we are progressing with our share buyback program. The number of shares is reduced. Cash flow. Free cash flow, operating cash flow, both benefiting from what you see on the right-hand side. The net trade assets or trade working capital over revenue as a percentage came down to 8%, which is the target that we have given ourselves, thus improving the free cash flow over and above what we generate in profitability. Positive contributions from all segments, and I think I now stop counting because it's the ninth consecutive quarter of positive cash flow. Maybe in -- or the fourth quarter 2025, we counted 10 and then we stop this. Thomas Schulz: Solid performance. Matti Jakel: Yes. Group net liquidity and leverage, nothing much to report here. Liquidity follows the free cash flow. Leverage at about 0.4, way below the threshold of 2, which then brings me to our outlook. Let's look at the segments first. This is based on the current performance or the year-to-date performance 2025, where we narrowed the bandwidth for E&M Europe on the revenue side from EUR 3.5 billion to EUR 4 billion, now to EUR 3.6 billion to EUR 3.9 billion. On the margin, 5.8% to 6.2% now. E&M International is unchanged, performing there as we planned. And with some of the uncertainty in the U.S., we've felt more comfortable to leave it as is. Technologies, as you saw, the very good performance. We increased revenue update or outlook from -- to EUR 800 million and EUR 850 million and profitability quite an increase to 6.8% to 7.2%. And then on the Reconciliation Group, some minor adjustments. Group totals. On the revenue side, EUR 5.3 billion to EUR 5.5 billion for the full year, targeting the midpoint. EBITA margin, 5.4% to 5.6%, targeting the midpoint. And free cash flow based on the good performance so far, quite an increase to EUR 300 million to EUR 360 million for the free cash flow, again, targeting the midpoint. So much from my side, and I turn it back to Thomas for the wrap-up. Thomas Schulz: The -- as you saw with that what we announced, we are always referring, of course, to the midterm targets, what we set ourselves at the beginning of '23, where we clearly see that we are on a good level to achieve that what we promised. And it's, of course, quite nice to see that we -- with the NTA, net trade assets, are already on 8% down, which is quite good. So to summarize that, let's say, solid performance with orders received fairly flat, revenue 8% up, EBITA margin 5.8% versus actually, the third quarter last year was the highest operating real EBITA for more than 15 years and longer, we couldn't look back. Earnings per share up to EUR 1.47. Cash flow close to 30% up in the quarter. We narrowed the guidance. And as we communicated quite often, we actually always hit and have in mind the midpoint of guidance range and there we are on a good way. And very important new midterm targets will -- which we then will talk a lot about for the coming 5 years on the Capital Market Day on December 2. And with that, Jasmin? Operator: Thank you, Thomas. Thank you, Matti. [Operator Instructions] So the first one comes from Michael Kuhn from Deutsche Bank. Michael Kuhn: I'll start with the opportunity pipeline. I think that number looked particularly strong compared with what we had over recent quarters. So interested in the underlying drivers and let's see where you see the most pronounced pockets of strength. Thomas Schulz: Yes. That's true. It is. And -- the -- of course, our acquisitions, what we did in the last few years. This year, it will be 3 acquisitions, for example, they are enablers and kind of unlocking more potential with the existing business, what we have to make it in more crisp wording, if we bid on a service contract and we got here and there some more additional competence, we actually can enlarge that what we bid towards the client with the whole base of the Bilfinger offering. This is part of our M&A strategy, and that works out. That's one part of the stronger opportunity pipeline. And the second one is, and we will talk more about when we come to the Capital Markets Day, we know what we have to, how to say, put on the next development step within the company to achieve more leverage in the different markets because we see quite a lot of growth in our existing markets, but we have to get more aggressive in sales. Michael Kuhn: Understood. Then one on E&M Europe, and I know it's a bit nitty-gritty because the margin was just down 20 bps, still we got so used to margin increases. Was there anything particular you would like to find out? Or is it just a normal fluctuation? Matti Jakel: Michael, this is Matti. I would say it's a fairly normal blip, which we see from quarter-to-quarter, 0.2 percentage point is not disconcerting at all. Sometimes the contract mix or product mix offers a different composition of margin generation. What we do see, although is we don't see sort of a harmonized picture. We see variances from quarter-to-quarter between the regions. So sometimes the German-speaking region is up, and United Kingdom is down, and the next quarter, it's different. I think it's also fair to say, Michael, that Technologies is operating in Europe exclusively. So if we combine or look together at the performance of the E&M Europe segment plus Technologies, which is the total of our European business, I think we're quite well underway. Michael Kuhn: That's for sure. And then I also wanted to actually ask about Technologies. Obviously, very strong year-to-date development also order-wise and that more and more translating into profitability. You pointed out some pockets of strength here, nuclear, life science. Could you give us an idea, let's say, in terms of percentage contribution of those particular growth drivers and let's say, what margin differentials you see within Technologies, so bandwidth in terms of what's the lowest margins you generate there and the highest and how the mix is evolving? Thomas Schulz: Yes. The -- we are generally not going too much into details within the segment. But actually, the thing is that we see regarding Technology that especially in the pharma, biopharma area was quite a lot of revenue growth in it. And oil and gas, some, energy keeps roughly the same level. It is fair to say that all the improvements, what we did in the last few years on the Technology segment worked out quite well. It's fair to say that our people there are doing a great job. But as Matti rightly said, it is actually part of Europe. And we are very much combined with that what we do in the E&M Europe segment, too. So both together is maybe a better view than to separate them. Operator: So the next question comes from Olivier Calvet from UBS. Olivier Calvet: First one, maybe on order wins. You showed an increase in opportunities, but orders received are flat organically. Can you comment on your order win rate perhaps? This is the first one. Thomas Schulz: Yes, I can comment that we will not give more further comments on that. But the thing is orders, what we see in the opportunity versus that what we already have then in the order intake. There is, of course, always a time delay in it, too. And the time delay is related with that what the clients are doing, permitting the whole thing what you have, number one. Number two, we always have this with the order intake and the opportunity pipeline. Last quarter, we had a very strong order intake growth. And we had to explain why it was strong. Now we explained why it was only, which is still a very good level, flat order intake. We have these movements in between the quarters. For us, more important in the order intake is actually the year-to-date order intake movement, the order backlog, and that's then in relation with the opportunity pipeline and then, of course, the hidden win rate and so on. And we see here in the year-to-date order intake was roughly 5%, is going exactly in the direction as we actually promised at the beginning of '23, where we -- what we said before, already could recognize that at the beginning of '23, our 2% industry growth, what we believed year-on-year for the next 5 years, was too high. We see actually in hindsight that the industry growth, which was realized in the areas where we are in '23 and '24 was not hitting the 0.4%. Despite that, we are in our 4% to 5% growth area, which shows that our self-propelled growth actually worked quite well. Olivier Calvet: Yes. That makes sense. Second one is on staff. I see employee numbers up 1% year-on-year. Just wondering if you're facing any issues in hiring and if that's a limiting factor for your growth going forward? Thomas Schulz: We are not seeing any real issues in that. You always have issues if you are in remote areas. I think that's obvious. If you are in an area with a lot of people living, it's easier to recruit. If you are more on the country side with low people living per square kilometer, it's, of course, tougher. But in general, we don't see that. We are, as Bilfinger, especially in the blue color range, very attractive. We have a good learning and development program. We can bring regular educated people up to engineering level and so on. So with that, we don't see that discussion what we always have in the newspaper that there's a shortage of staff. We don't have that in that way. Olivier Calvet: And then just on the U.S. shutdown and sort of government-related demand. Could you quantify the share of your revenues within E&M International that is directly impacted by the shutdown or by sort of government demand generally? And do you see any upside to your E&M International sales now that the shutdown is over? Matti Jakel: The share of revenue in International is about 20% to 25%, that we do for government entities across all levels within the United States, be it federal, state and sometimes municipal. Things that linger for months and months, even if a compromise has been found, will take a few more months until the administration goes back into normal working mode. So we're not expecting anything to change quickly. The U.S. is having Thanksgiving later this month, and then Christmas is around the corner. So I would think we see improvements starting in the second quarter of 2026 because that will take some time to get going again and then issue contracts and then we can get started on the work there. So more during the Q2, Q3 2026. Operator: So now that we've talked about the opportunity pipeline already twice. I also received a question on this behalf via the chat function. It comes from Nikolas Demeter from Bankhaus Metzler. And he says, looking at the opportunity pipeline, we see growth of around 15% compared to last year. While the order backlog shows organic growth of 7%. I have 2 questions on this. I recall you once mentioned that the current reported order backlog essentially reflects only the orders to be executed over the 12 months. With that in mind, has the total multiyear order backlog beyond this 1-year horizon increased more strongly than the 7%, which will support revenue growth in 2027? I think he means '26 and the years after. And second, what should we expect for Q4 in terms of order intake? Can we expect a solid level of new orders, given that the opportunity pipeline appears to be quite strong? Thomas Schulz: Yes. The order backlog -- at first, thank you for your question. I look, of course, to my solid CFO, the -- any comment on the order backlog development? Are we going that much in detail? Matti Jakel: Well, let's make sure that we all understand how we report contracts. On multiyear contracts, we only show the next 12 months as order backlog. On project contracts, which have a fixed duration, be it 6 months, 12 months or be it 24 or 36 months or any time, we show the full contract value. So only on framework contracts where the drawdowns, the call-offs are uncertain, we show the expectation for the next 12 months. Comparing the order pipeline and the backlog development is something that we do all the time. But it's not easy to find a correlation. The order pipeline includes anything from what we have heard is going to come, anything that is in assessment, anything that -- where there is a tender out there or anything that we're negotiating even without a tender with our clients. All of this goes into the pipeline. So there's a lot of judgment in the order pipeline. Internally, we certainly have rules, how to judge what's in the pipeline. And hence, that determines the development. So I think it would be wrong to assume that the development of the order pipeline is exactly then to be seen in the order backlog. Many things happen between an opportunity in the pipeline and then the contract award. So I would think that the relation of a 15% increase in the pipeline that converts into 7% order backlog growth is a very good conversion. Thomas Schulz: Yes. And to look -- when you look several quarters back where we showed a percent you see that actually very often our order intake development is on a higher percentage than the pipeline development. Just to say that we eat market share out of that is too simple. We have a lot of variables, as we call it, in the opportunity pipeline, but you have to have that because you forecast is actually that work happening, what means that the customer makes an order out of it. And second, is it -- which part is coming to Bilfinger and not only into the peer group. And third, the timing element. And you can imagine that a direct correlation is tricky, but it gives us the opportunity pipeline, a good view in the detail how to reestablish our resources for the future to be early enough aware of where we go up, where we go down and so on. And of course, it helps very much in the discussion with the single customers how the actually workload out of the industry -- in the whole serving industry is, which makes it easier for the clients to manage their timing too. We hope that was not too theoretical. I actually can talk for hours about it, but the -- it is a good indicator how we see opportunities for Bilfinger developing. But it's not a direct correlation to the order backlog development. Operator: Okay. Our next question comes from Craig Abbott from Kepler Cheuvreux. Craig Abbott: Yes, I'm trying to just understand a little bit more on the accounting impact on these acquisitions. I think you've done 3 to date. If we could maybe just like have a combined -- some combined figures here for sales and EBITA that have been realized so far and what do you expect them to contribute on a full year basis? Rough figures are fine, of course. And then also how much you paid for these? And if you could also point us to the line item in the cash flow because maybe it's just been folded up in a general line item. I didn't see it, but how much you've been paid -- you paid for these acquisitions? That would be my first question, please. Matti Jakel: Yes, Craig. Accounting impact of the acquisitions. We have made 2 acquisitions that are included in the year-to-date numbers of -- for the group. The third acquisition just closed on October 1. So nothing included in until the end of September. The top line figures are the contribution to order intake is about EUR 35 million to EUR 40 million. The revenue is about the same number. So compared to the group, it doesn't change or it doesn't move the needle much in terms of numbers, but it puts us into a much better position. Profitability wise, they do deliver what we said when we talk about M&A, it needs to be accretive, and they have added above-average EBITA margin year-to-date. And we expect this to continue throughout the fourth quarter. The third acquisition, Nordic Mechanical Solutions, which we did or closed on the 1st of October, will add a small portion again, but not move the needle much in terms of revenues and profits. In terms of purchase prices, we don't disclose those. And if you didn't find them in our publication, then that's not a surprise. The free cash flow is not impacted by our M&A. Craig Abbott: No, I know. But I was looking at the statement of cash flow in the Slide 27 and 28 of your quarterly statement. But anyways, we can follow up afterwards... Matti Jakel: Yes. please. Craig Abbott: Okay. Now the second question is just on the cash flow in general, obviously, we saw a very good trend in the first 9 months, and you obviously raised your guidance there on your target. So congratulations there. That's all obviously in the right direction. But I'm just trying to get a feel for how sustainable this is. I know there was a big swing in the trade payables and advanced payments there, about EUR 90 million was a big factor. Not to get like too nitty-gritty, it is just to get a feel for -- do you see this development as like being sustainable? Or were there may be some special factors there you'd like us to be aware of so that we don't like extrapolate this kind of development going forward? Matti Jakel: But as I said before, it's 9 quarters in a row that we are positive in cash flow. So I guess you can call that sustainable. So going forward, that should be the measure for us. This year is stronger than what we had expected, but it also includes, as we communicated earlier this year, a onetime payment from the arbitration settlement last year, which was a mid-double-digit number. That's not recurring next year to say that. With -- if you look at the midpoints and everything, then our cash conversion rate for this year will probably come out somewhere between 100% and 110%, which is higher than the above 80% that we're targeting. So in the long run, the plus 80% that we have set as midterm targets is what you should be expecting from us. Operator: So Nikolas from Metzler has another question regarding the E&M International segment. He says you mentioned that a larger M&A transaction in North America or the Middle East could be on the agenda if valuations were appropriate. That makes sense to me as these markets appear to offer strong growth and potential and improving profitability. I would, however, ask you to remind us why a large acquisition is considered necessary. Looking at the numbers, with order intake up 15% organically and organic revenue growth of 14%, the segment already appears to be performing very well, especially in the Middle East region and the 9-month figures also reflect solid momentum. It would be great if you could elaborate on this again. Thomas Schulz: Yes. Very good question. At first, thank you for the appraisal what we get here. But I make it like this 14%, 15% of very little is still very little. And our issue in North America and, to a large extent, in the Middle East, is that we are just subscale. Size matters in our business. If you have hundreds of people on a location or only 50 people on a location, if you are bigger, you are the one in the top position to get the big, quite profitable long-term agreements. If you are the small one, you are more like fast in, fast out supplier, which is not that stable and creates actually more internal work, more admin work. So out of that, we have to get bigger. We have 2 opportunities to get larger scale as we have it in our positioning, strategic lever. We do an organic run. That is what you see in the figures. But to have based on the timing with that good growth environment in North America as well as in the Middle East, we already said last year, it is necessary to look more into M&A, into unorganic growth, and that is what we will refer to on the Capital Markets Day more in detail, but it is necessary to do larger steps in that. Last thing what I have is when -- there is no definition on larger M&A. Our definition on larger M&A is we are conservative people, Matti and myself, and we are actually very proud of it. And we will not do anything which would put the company in any kind of risk. On the other side, an acquisition of a EUR 50 million revenue is not seen as a larger M&A. It's as a bolt-on M&A. So when you then look to the cash flow, our conservative positive approach in how we manage the company, I think it's clear that large for us is maybe not as big as for our bigger corporates. Operator: There's another question in the chat from Chaima Ferrandon from ODDO BHF, and it reads, regarding Germany, could you please give us a sense of the performance you have seen in Q3? And what to expect for the end of the year? Can you give us an update regarding the infrastructure, defense plan in Germany? Have you seen any signs of first orders towards your clients? Thomas Schulz: Yes. Let me start with the second one, infrastructure, defense. In defense, money is spent. Quite a lot goes into Ukraine, as you know. Some is going into infrastructure. Germany will be a kind of a logistic hub in a situation of self-defense to follow our German government wording. And as you know, compulsory service voluntarily and then a little bit with, let's say, additional motivation will come on the way. So there, money will be spent. Infrastructure just takes longer to get money into investment because we are blessed with not only Brussels regulation, we are blessed with Berlin regulation. And that makes investments into infrastructure quite a long-term item. So out of that, we don't see yet on our customers that they had additional top line through these -- through the infrastructure package. In defense, we are actually more or less not in. So out of that, as we said before, we don't believe that we would see something coming towards us from our clients who then got something before the end of '26. When we look in general into Germany, you saw most likely the announcement of the chemical industry in Germany. They are fairly under pressure. Utilization is low. Production is low. Costs are high. When you hear that, then you can get quite negative. We out of Bilfinger, for us, it's a call to support our clients more with enhancing the efficiency on the assets, what they have to get them best performing under the current situation. And in that respect, we think that, a, our strategy to be the one who delivers efficiency improvement to our clients is quite a good one. It pays off quite good. And last thing, what I have is, and that is what I learned on my own side out of by far more cyclical industries, if companies go through a tough recession, as some of our customers in Germany do and they survive with all the necessary activities, they are actually very competitive when that is over. So we are for the mid- to long term, not too negative. Operator: [Operator Instructions] And there is another in the chat. It comes from Metzler from Gerard O'Doherty, could I ask for 2 points of clarification, please. In the pipeline, you mentioned opportunities in the chemical sector. I assume this is outside Germany. In your comments at divisional level, you mentioned the jump in profits and Technologies was part due to derisking projects. Could you expand on this, please? Thomas Schulz: Yes. At first, with the pipeline, yes, we have quite a lot of chemical customers or customers out of the chemical industry outside Germany, too. And in some parts, there is actually the business going quite well. So Germany is in the chemical industry, actually very much the very far low end in the development. Matti Jakel: Yes, Gerard. On derisking, it's not about derisking projects. It's derisking sort of the contract profile that we have in not only Technologies, but also in the other 2 segments, Europe and International. What we have started 2.5 years ago with setting the updated strategy is looking at the entire contract portfolio and look at where we had larger and smaller risks or more significant risks in the past. We tried to stay away from lump sum turnkey projects, which was a part where Technologies had suffered quite a bit. We don't do those. We don't do those anymore, full stop. We talk to our clients. We ask them to award large projects in phases, an engineering phase or a design phase and engineering phase and then a construction phase so that everything is quite clear when things have to happen. We looked at long-term contracts, framework contracts, where we didn't make the margins that we think we should be making, and we renegotiated rates. Sometimes we walked away when the client wasn't willing to come to the table. So in that sense, we increased the level of profitability slowly piece by piece by piece. And you can see that in the margin -- gross margin development, but also profit margin development over the last 2.5 years. So it's not something that we did just in quarter 3 and not just in Technologies, but for the last 10 quarters across the entire group. Operator: So thank you very much, Thomas and Matti. There are no further questions at the moment. So thank you all very much for your active participation in today's call. And as mentioned twice already, but also from my end, our next event will be our Capital Markets Day on 2nd of December. And I'm really hoping to welcome as many of you in person there as possible. So please make sure to find your way to our Capital Markets Day. It will be worth it. And if there are any remaining questions, of course, as always, please reach out to me or the Investor Relations team. So thank you very much, and goodbye.
Reese McNeel: Hello, and welcome, everyone, to this Q3 presentation for Prosafe. I'm Reese McNeel, and I'm the CEO, and thank you for joining the presentation today. I would like to start the presentation today by just giving a little bit of a highlight of Prosafe again, reminding people who we are. Prosafe, we are the largest operator of offshore accommodation rigs. We currently have 5 accommodation rigs. We've been in this business for over 30 years, and we're one of the leading operators worldwide, headquartered in Norway, but with offices, as I'm speaking from here today in Rio and operations in the U.K. and Australia. Talk a little bit, I'd like to spend a bit of extra time during this Q3 presentation to talk a little bit about what we have been up to the last couple of quarters and particularly the last quarter. Prosafe has been through quite a transformation. We've got a new management team in place, and we've been really refocusing and repositioning the business. So I'll spend a little bit of extra time on that during this presentation. So as mentioned, we got a high-end fleet. All modern units that we currently have are contracted to 2027. We have a very leading position in Brazil. We got backlog extending into 2030, very strong market fundamentals. I will spend a bit more time on that during this presentation, particularly talking about what's happening on the tender side. We're driving -- we've set ourselves an ambitious goal to be the most efficient operator in the accommodation segment. And at the same time, we're exploring strategic and M&A opportunities, and I'll talk a little bit about why that is the case and why we are looking into that. Jumping back just slightly to Q3 and how we did during the Q3 specifically. I'm very proud to say that this was a quarter where we actually had all 5 of our units working during the quarter and 100% utilization in September. We got to go several years back since we actually had that. So I'm very proud to be here and to be able to say that all 5 of our units are working. But a good safety performance, 99% to 100% uptime during the quarter. And very happy to say that we are well on the way to getting Safe Boreas onto her gangway connection in Australia. She's on a standby rate from 1st of September, and we're now expecting her to be gangway down between the 10th and the 15th of December in Australia. Also Safe Caledonia, those who have been following us will see that she did have 2 of the 10 weeks -- sorry, 2 of the 12 weeks of options called. So we have 10 weeks of options remaining. I will say that we are very optimistic that several of those options will be called in the very short time and really impressed with how Safe Caledonia has been delivering for Ithaca. To the financials, a very good result this quarter as well, $12.8 million in EBITDA. I'll say that's before reorganization costs. I'll come on to some of the cost initiatives we've been doing, but in particular, part of that is restructuring the organization, and we did have approximately $1.5 million of one-off reorganization costs in the quarter. We completed the recapitalization in the quarter. I'll talk a little bit more about that to establish a sustainable cap stack. And we currently have a solid liquidity position at over $83 million. Looking a little bit ahead, we're still on track with our guidance at $35 million to $40 million, which we've communicated several months ago. I think the market is very strong. I'll spend quite a bit of time on that in this presentation in this quarter. And again, we're looking into more strategic opportunities. The refinancing, we talked about, I think, in the last quarter, but again, a highlight here for us. We have significantly reduced the debt on our balance sheet. We've gone from net interest-bearing debt of $400 million down to $200 million. Approximately, that's cutting almost the debt load in half. And in addition, we've obviously, through that exercise, gained extra liquidity. And I can say that we have a sustainable capital structure now in place with liquidity to get us through to meet these working capital and CapEx needs, which we have coming at us. So it's very pleased again that we were able to close this refinancing exercise early in Q3. The management team and the strategy. This is very important for me. We have been through a difficult time in Prosafe, but we are coming out. We're seeing the back end. I think we're very well positioned. If you look at the position in the market, we did in the past 12 months, extend the safe notice on a substantially better contract than she was before. So we are capturing the market potential that is there. We have gone from $6 million EBITDA to $28 million annual EBITDA on the notice contract. And I think what we see, and I hope I can demonstrate a bit of that in the slides to come, is that this market is actually very tight. There's a very high utilization. I think we will continue to see high day rates and potentially even increasing day rates going forward. At the same time, coming out of the restructuring, we got a new management team on board. We got a new Board. I think we're very focused on what we have outlined strategically, reducing the cost base, becoming the most efficient operator and really leveraging particularly our position in Brazil. And part of this initiative is obviously to reduce not only operating costs, but also our general administrative costs. And we've set ourselves an ambitious target of reducing that by greater than 15%. As I commented on, we have had some one-offs this quarter, and I think that's part of driving that. I think we already are on a good path to reach that 19% number on a run rate basis and in 2026. Little bit on the new management team. Very happy to say that we've got a very experienced team, very experienced Board, very interactive Board with Carey Lowe on board, who was at Valaris as the COO. We've got Monique, who's the Deputy CFO in Constellation with a really strong Brazil experience. We've got also some banking experience and some good experience with Knut from TechnipFMC. And on our side, you got myself, who've been with the company for 3 years. I was the CFO. I'm very pleased to step into the CEO position. And alongside me, I have Ryan, who's been with the company for 20 years. I think Ryan is Mr. Floatel, if I can say that he knows this market in and out. And Claudio is a long-term employee, I think is very focused together with myself and driving efficiency and supporting our Brazil business going forward. The fleet. During the last year, we have actually trimmed back the fleet. We sold the Concordia and we also sold the Scandinavia. So I think if we look at our fleet now, we are very much consolidated around the high-end fleet. We have the Safe Caledonia, which is working for Ithaca. She is a more unit. But with her as side, we are very focused now on DP3 high-end units. And if you just look at them and where they're able to operate, we operate in the harshest, most difficult environments, whether it's in Norway or down here in Brazil. I'll say that I was on board, for example, the Caledonia a few weeks ago. 15 odd wins, quite a lot of swell. The performance of these units is very impressive. And even in Brazil with high swell, DP3 units, follow target mode on a moored, on a turret moored unit with [indiscernible], we are able to hold position. So we have very high and high-performing assets. And those assets, as I mentioned, are largely booked. We have backlog into 2030 with the recent notice extension at a much higher rate. And we have the Safe Zephyrus, Safe Eurus and Safe Boreas all working and all booked out during 2026. So we're very happy about that backlog picture, and we have an eagle-eye focus, particularly going into '26 of extending the Zephyrus and Eurus. I'd like a little bit in this presentation to, as I mentioned, to go a little bit more in depth on the market and what is happening in this market because it makes me very excited. I think it's a very exciting market and a very exciting time that we find ourselves in. As we know, there has been some discussions about the oil price, the oil price has been down, some discussions about operators pulling back on exploration spend. I would like to say that Prosafe and in particular, the accommodation sector, we are very much a Brownfield maintenance-driven business. If you look at our operations, where we're earning our revenue, approximately 80% of that is coming from maintenance and operations of installed installations. So we are much more focused on what has already been installed, maintaining what's already been installed than we are on hookups, commissioning new projects. So I think that reduces our exposure to the short-term volatility. And I'll come back to that, our correlation is much more to the age and number of installations rather than sort of new developments. And I think that positions us in a very positive place in the market despite the short-term fluctuations. Looking at the global market of accommodation, we define the accommodation fleet as 31 units. These are the units, high-end units at the top, and we have some lower-end units. I think some of our competitors, they define the market a little bit more narrow. We define the market as those players who we see participating in tenders or participating in RFIs, RFQs where we are also participating. So this is the sort of in-scope competitive fleet and how we see it today. It's a relatively limited 31 units. One thing I will say is that this market is quite fragmented. We are the largest player in this market. If you look through, we have several one asset owners. And despite there being sort of a significant increase in the number of units, we've also seen a number of -- an increase in the number of owners. And we feel that ourselves as the largest player with the sort of market position that we have and the strength of our operations that we should be well positioned to be able to consolidate some of this market. We know that these units for some of our competitors are noncore. And therefore, we think there is a positive opportunity here when it comes to consolidation and M&A. There's a lot of SG&A floating around this marketplace, and we think that, that can be -- we can create a much more efficient marketplace for all participants. When we look at that market and these 31 units, where are they? Where are these units? Where are these units working? Brazil. Brazil is the main focus of the accommodation market today. It's approximately 50% of all active units. If you look there, we've got 13 units currently in South America at the moment, they're actually all in Brazil. By far, this market has shifted. It used to historically be a bit of a North Sea market. It has shifted. It's now very much so a Brazilian driven marketplace. And on the back of that Brazil demand, we see that -- which has increased, I'll come on to that in my next slide. This Brazil demand is driving us to all-time highs in across the accommodation segment. So if we look at the contracted demand at the moment is at a 10-year high. That means that we haven't seen this much demand in the last 10 years. You got to go back to sort of the last cycle before you can see this higher demand. And we see utilization rates getting up to 90%, particularly on the high-end units. And I think when you see utilization going above 80% into 90%, that's when we really tend to see historically, and we see it now, good increases in day rates going forward. And this, I would like to highlight is on top of the fact that there has been an increase in the supply. So the supply has been absorbed and utilization remains at a 10-year high and at approximately 90% for the high-end units. So a very positive market dynamic for us. What is driving that? As I mentioned, a key driver to this is Brazil and a key driver to this is not necessarily the installations or new developments, which is the installed base of FPSOs in Brazil. There are 67 floating production units in Brazil. There's a forecast that's going to go up to over 80. When we are working in Brazil, what we see is that after approximately 2 years of new installation, they are getting serviced by an accommodation unit. It's a quite harsh environment. Some of the players here, Equinor, others, they mentioned to us that the corrosiveness of the environment in Brazil is 2x to 3x what they see in the North Sea. So the maintenance demand is very high, and these very high-end FPSOs producing 180,000 to 200,000 barrels a day. They require more extensive maintenance, more beds and it's in a relatively difficult met ocean environment, and that's where the demand for high-end accommodation units is really picking up. And you see that on the graph on the right. This is a graph that shows from 2024 peaking up into 2026, we see a substantial increase in the actual demand for units in Brazil. And this is what is sort of being that -- as I mentioned, with this being 50% of the market, this is driving the utilization and driving the rates much higher. We, as Prosafe, I think it's very fair to say we have seen this trend for a couple of years out. We strategically positioned the Safe Zephyrus down here a couple of years ago, and we are proactively taking initiatives to align our organization to this growing market and be best positioned to capitalize on this. So we've taken some actions even recently. We've closed -- recently closed our Stavanger office. We have an office in Oslo. We're also closing our Singapore office, and we're moving many of our core functions to Brazil to align ourselves with this growing market and also to be much more cost efficient in serving this market here where we do see the most opportunities going forward. What does that really mean for us? When we say that the market is increasing, Brazil is a big demand driver. How are we going to actually capitalize on that and drive improved earnings, improved EBITDA shareholder value? I think the key to this is we have 2 units, the Safe Eurus and Safe Zephyrus. I think they're both very well positioned with contracts rolling over in '27. They're very well positioned to capitalize on this increase. We see the trend. You can see it in the charts here. Again, notice from 75 to 140 a day. When we see that there's additional tenders coming, not only from Petrobras, what we see historically from Petrobras is that they are out retendering or negotiating extending contracts approximately a year before units roll off of existing contracts. For us, these contracts, Eurus rolling off in April, Zephyrus rolling off in September of '27. So that means that realistically, we think that Petrobras is going to be in the market. There's going to be concrete discussions, tenders, negotiations really starting here in the first half of '26. And I think not only do we see demand from Petrobras down in Brazil, but we also see an increase in demand from others. Recent RFI from MODEC for multiyear accommodation job. We see also Karoon, Brava, SBM, Yinson, many of the other players here, PRIO, all now using accommodation services in Brazil. So it's not only a Petrobras game, but it's also a growing market, again, driven by the need to support this installed FPSO base, which is increasing. Now when you look a little bit further over the horizon, you have to say that the real planned FPSOs, the number of FPSOs that are sort of in planning, I'm not talking about the number of installed or existing FPSOs, but those which are planned in the future, again, where is this demand coming from? What you see is that future planned FPSOs, actually, it's the rest of the world that's dominating looking over the horizon. And here, we are talking about Guyana, potentially Suriname, Namibia, again, locations with a met ocean condition or environment relatively similar to Brazil. And I think what we're going to see is that the combination of Brazil with a high installed base and new additional FPSOs coming into this market in new markets, which, again, they're already planned. I think we're going to see a very solid base upon which we should see rates increasing. There are actually tenders out in these markets as well. Recent tender now from SBM for work in West Africa, and there's currently several units working in West Africa. So -- and one unit almost consistently working in Guyana. So this is actually happening and coming to fruition. And we see the similar day rate trend, particularly looking at the rest of the world that we've seen in Brazil, maybe not such a steep curve, but still steadily increasing also in these markets. So we're going to wrap up on the market side, I think we're very optimistic and positive on the market, driven in large part by installed base and increasing number of FPSOs in Brazil and a supply, which is relatively limited at 31. So we're very positive that we will continue to see market rates, and we are very well positioned as Prosafe to capture that. Little bit on our operations and what we've been doing, particularly in the quarter and looking a little bit ahead. Again, in the quarter, very good utilization, 86%. As I mentioned, all the units operating at a certain point in this quarter, which is the first time many years. Looking a little bit ahead, I think this quarter is also going to be very good, very high utilization expected, 88%. And as I mentioned, expecting shortly to have a full day rate on the Safe Boreas in Australia and expecting also to know a little bit more on the South Safe Caledonia options, which cross fingers, we should see more of those options called and increasing utilization also in Q1 '26. Backlog, I think this very much ties into what we're talking about in the market. We're seeing utilization at 10-year highs. We're actually seeing our backlog. We've got to go quite a way back. We got to go all the way back to 2017 to see the backlog level that we have now. So we are very focused on expanding that backlog, particularly as, again, re-contracting on the Eurus and Zephyrus, but it's good to see that actually it's not only that the market is highly utilized, but we're seeing the backlog coming through. Caledonia, I'd like to highlight there. Again, these 10 weeks of options. I think we're quite optimistic that we will see some additional options called going forward. And with the performance that Caledonia has had on that field, we are optimistic that we'll also be able to find work for her in 2027 in particular. A little bit on the financials for the quarter. Income, $42 million, I think very solid income in the quarter. I think some of that is actually -- is reflective of the fact that Boreas is on hire on the standby rate. So we do start to allocate the mobilization fee, which we have received. So that's a positive impact on our income. And we also have now a significant portion of reimbursables coming through, the reimbursables for the Boreas heavy lift contract and other reimbursables largely related to the contract for Boreas with Shell down in Australia. Income statement. The one thing to highlight on the income statement from my side for this quarter is the financial gain related to the refinancing. I think that has taken us again from being a little bit undercapitalized to having sufficient capital in the balance sheet to go forward. So in the balance sheet, again, cash position, $83 million, solid position coming out of the restructuring and a significant decrease in our net interest-bearing debt, again, having that position from where we were the previous quarter. Very important for me and very much on my mind, cash flow. If we look at the cash flow in the quarter, it was, of course, heavily impacted by the restructuring. We got some new money in. We had to pay, of course, or we closed out some of the refinancing costs or costs associated with the refinancing. So there are some impacts in the cash flow from that. But I think when we look at EBITDA, CapEx and net working capital, very much driven this quarter by the mobilizations. So we have invested a significant amount of working capital into Safe Boreas and in preparation for the Safe Zephyrus SPS, which should start here in a couple of weeks' time. So major working capital movements and CapEx are associated with these projects. Good cash position at the end of the quarter, $83 million. And if we look a little bit ahead, I do think that we're in a decent cash and liquidity position for the coming quarters. Looking a little bit at where we are as far as potential. As I mentioned, we see a significant increase in rates. We've seen rates go from $8 million run rate to $28 million run rate. If we take those sort of run rate EBITDAs per vessel, and we mark-to-market the contracts which are coming up and we take into account the cost-saving initiatives which we are driving today, we see that there's an EBITDA uplift potential from where we are today at $35 million to $40 million to $90 million to $100 million looking out in a couple of years. So significant potential in driving the rates up and also that would lead to a significant reduction in our net interest-bearing debt position. So I think we're in a good position again to capitalize on this increase and to see a significant improvement in earnings and a significant decrease in our leverage and a strong value creation for all of our stakeholders and our shareholders. This is also supported by the rig values. If you look sort of where we are EV-wise, it's significantly lower than the broker values in the market and also, of course, significantly lower than the replacement cost on these vessels. So I think as we see the market pick up, utilization pick up, rates pick up, EBITDA pick up, I very much expect that the valuation here will increase significantly and come much more in line with broker values. I'd like to just wrap up a little bit with a couple of slides on where we are in the outlook and what some of our strategic objectives are. On the outlook, we reiterate our guidance, $35 million to $40 million. We do expect Boreas to be on hire -- full day rate on hire. She's on hire on the standby. We expect it to be full day rate sometime between the 10th and the 15th of December. We're expecting Safe Caledonia to stay working a little bit longer. We got options extended into mid-December, very much expecting that this will take us a little bit further. And looking a little bit into 2026, I think we're going to have Safe notice on a new contract into 2026. And also, we're going to have, I think, a good utilization from the rest of the fleet with Safe Zephyrus having completed her SPS, Safe Boreas on a full contract. So I think we've got a good outlook looking into 2026 as well. I would like to talk first before I come to sort of my strategic priorities, I'd like to reiterate a bit again what we're very focused on is sort of a new Board, a new management team. I think we've achieved a lot. We've got an uptick in the rates and uptick in the EBITDA run rate, particularly on notice. We're actually delivering on that. I think we have taken some tough cost reduction measures, reducing both senior management and the organization, realigning the organization to the Brazil market where we see a really strong potential. We have also a cost focus now on improving our operational OpEx. We've got long contracts in Brazil. We can actually really focus on driving cost efficiency in our operations. I think we're doing some of that. We got key projects kicked off in procurement, key projects kicked off in sort of some of our maintenance and inventory management. So I think we are very much focusing on becoming this most efficient operator. When we look out, key focus, key priorities, continuing to execute on what we've been doing, safe operation, high uptime, get the backlog, as we talked about at higher rates with the reset of the Eurus and Zephyrus coming, focus on keeping our capital structure, it's all about good execution on the projects that we have coming. A final key priority for us is continuing to pursue strategic opportunities and M&A and what we continue to see as a very fragmented market. I would like to highlight that we intend to go on a non-deal roadshow in the coming weeks where we look forward to presenting the recapitalized and reenergized Prosafe to many of you. With that, I would like to thank you very much for participating in this presentation, and I will be back very shortly with the Q&A. Reese McNeel: Welcome back. I have a couple of questions here. So let's get started. The questions are from Braga at Clarksons Securities. And Braga is asking if I can give a little more color on Safe Caledonia and what is the expected outcome of the unit as it rolls off its current contract? I think as I mentioned previously, we are very positive that the vessel will continue working. We're expecting additional options to be called. And I think that she will be working into early 2026 with Ithaca. Beyond that, our expectation is that 2027 will be quite positive for her. We see an improving market and opportunities in 2027. We're still looking after opportunities in '26, but I think the most likely outcome is that once you rolls off the current contract, we will probably be looking at a contract in 2027. I don't see that I have any more questions. So with that, I'd like to thank everyone very much and look forward to seeing you all again either on the upcoming non-deal roadshow or at the next quarterly presentation. Thank you very much.
Operator: Good afternoon, ladies and gentlemen, and welcome to Terna's 9 Months 2025 Consolidated Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir. Stefano Gamberini: Thank you very much. Good afternoon, everyone, and welcome to the presentation of Terna's 9 month results 2025. This call will be hosted by our CFO, Francesco Beccali. Following the presentation, there will be the Q&A session. So we kindly ask you to send your question to our e-mail address, investor.relations@terna.it. Please, Francesco. Francesco Beccali: Thank you, Stefano, and good afternoon, everyone. Before moving at the figures, I'd like to take a moment to highlight some of our most recent achievements. Let's start with grid development, where we have made significant progress across multiple fronts in the past few months. Starting with the Tyrrhenian Link, one of the flagship projects in our 2024-'28 Industrial Plan. Let me remind you that before the summer, we completed the laying of the first submarine cable of the eastern section. And on September 16 Terna and Nexans began the first installation phase of the western section, connecting Sicily and Sardinia. Once completed, it will set a world record for the deepest high-voltage subsea cable installation, reaching 2,150 meters below sea level. This project will also represent a significant step towards Italy's urbanization target. On October 21, the Ministry of Environment and Energy Security formally launched the authorization process for the Central Link project, which plans to rebuild the 220-kilowatt backbone between Umbria and Tuscany, a crucial step to enhance transmission capacity, grid robustness and renewable integration. Shortly after on October 27, the Ministry initiated the authorization procedure for the Sardinian Link, a project to reconstruct and modernize Sardinia's grid infrastructure, strengthening the island transmission capacity and ensuring a more stable and resilient electricity system. These projects are included in the development plan and are scheduled beyond the business plan horizon. A distinctive feature of both the Central and Sardinian Links will be the use of Terna's proprietary 5 phases technology in their construction, an innovative design that represents a major step forward in the evolution of transmission infrastructure. These new pilots are lighter, more environmental integrated and capable of increasing transport capacity while reducing electric and magnetic fields, contributing to a more efficient and sustainable growth of the grid. Moreover, with regard to the authorization update, we signed a 5-year memorandum of understanding with the Marche region to enhance the planning of new infrastructure and the ministry kicked off the approval process for overhauling in the city of Ferrara's electricity grid. Lastly, in September, Terna completed the acquisition of part of the high-voltage [ Rome ] from Acea for EUR 227 million, an operations aimed at strengthening the continuity and security of the electricity transmission service. These acquisitions will also allow for more effective decision-making for renewal and development investments across the Central Italy Transmission Network, while having only a limited impact on Terna's financial leverage and remaining neutral for our credit rating. Beyond infrastructure development, we have also made important progress on the procurement front. Let's move to the next slide. We continue to effectively manage potential supply chain risk through timing and efficient mitigation actions. As of today, around 88% of our 2024-'28 CapEx plan is already covered by procurement contracts, up from more than 80% in March. All major projects, including the Tyrrhenian, Adriatic and SACOI 3 Links are fully contracted. For the ELMED Interconnection between Italy and Tunisia, the [ camel ] portion is already secured, while tenders for the converter stations are currently underway. The residual and sourced portion of planned procurement contracts primarily relates to projects scheduled for the latter part of the period, which procurement will naturally be finalized over time. Turning now to regulation. A few days ago, ARERA published Resolution 476 of 2025, verifying whether the conditions for the applications of the trigger mechanism for 2026 were met. As the variation in market parameters of the formula remained below the 30 basis point threshold defined in the regulatory framework, the current WACC of 5.5% for electricity transmission will remain unchanged in 2026. As regards to ROSS mechanism, the regulator published in August, the Resolution 390 of 2025 launching the experimental phase of ROSS Integrale mechanism for 2026 and 2027 period. In October, Terna submitted to ARERA its 2026-2027 business plan and proposals for incentives linked due to operational and performance efficiency. The business plan will be the reference for the [indiscernible] mechanism and for the new incentive penalty mechanisms introduced by the regulator for the accuracy of CapEx. Still on the regulatory side, in October, ARERA also published resolutions 440, recognized Terna EUR 93 million of output-based incentives for additional interzonal transmission capacity and investment efficiency. Finally, regarding shareholder remuneration, today, the Board of Directors approved the 2025 interim dividend at EUR 11.92 per share, flat compared to last year interim dividend. Please note that the new dividend policy communicated to the market in March set a minimum dividend per share equal to the 2024 dividend for the entire duration of the 2024-'28 business plan. Now let me briefly give you the usual overview of the Italian electricity market, turning to the next slide. As you can see from the chart, in the first 9 months of 2025, national demand was about 233 terawatt hour, recording a negligible contraction of 1.2% in comparison with the same period of last year when national demand was about 236 terawatt hour. Over the period, renewable sources covered about 43% of national demand, in line with the level registered last year. For what concerns national net total production, this stood at 201 terawatt hour, up by 1% compared to the same period of 2024. In the period, renewable sources accounted for about 50% of the national net total production, essentially in line with the level recorded in the same period of last year when renewable energy sources covered about 51% of net total production. To conclude, let me highlight the remarkable increase in photovoltaic production, which grew by 23% versus the first 9 months of last year, compensating the reduction in hydro generation. With renewables continuing to play a major role in Italy's power mix, flexibility becomes crucial. So before moving to the financial results of the company, let's turn the storage to storage and the progress made under the MACSE mechanism moving to the next slide. As you know, storage is the next frontier of the energy transition, essential to ensure flexibility and the system increasingly powered by renewables. As of September 30, Italy's total electrochemical storage capacity stood at 17.4 gigawatts hour, mostly small-scale systems, of which around 4.4 gigawatt hours were installed since December 2024. While small-scale installations still represent the majority, we are now witnessing a sharp acceleration in large-scale battery projects. In September, we successfully held the first auction under the MACSE framework. The auction awarded a total of 10 gigawatt hour of storage capacity, fully covering the demand. Results confirmed strong market interest in the [ mechanism ] with bids exceeding demand by more than 4x and average clearing prices around 65% lower than the reserve premium. Around EUR 30,000 per megawatt hour a year compared to a cap of 37,000 units. The contracted facilities are expected to enter into operation by 2028, alongside renewable plants from the FER X auctions, helping to balance the system and reduce reliance on fossil fuels for power generation, in line with the national decarbonization objectives. On this, the first auction the so-called transitional FER X closed in September with final rankings expected by December 11. It saw strong participation awarding up to 12 gigawatts of wind and solar capacity to be commissioned by 2028. The second FER X auction, which focused on resilient photovoltaic system was held in October and offered an additional capacity of almost 2 gigawatts. The final rankings are expected by the end of December. Overall, these results mark a major step forward in Italy's energy transition. Now let's move to the main figures of the period as Slide #8. In the first 9 months of 2025, group revenues and EBITDA increased by 9% and 7%, respectively, versus last year, increasing by approximately EUR 235 million and EUR 134 million compared to the first 9 months of 2024. We also reported a group net income of EUR 853 million with a growth of 5% compared to the same period of last year. Group CapEx reached around EUR 2.1 billion, marking an increase of approximately 23% versus the first 9 months of last year and setting a new record in Terna's history. This confirms once again our effort to accelerate investments to serve system needs. To support this CapEx acceleration, at the end of September 2025, net debt stood at EUR 11.7 billion, slightly higher compared to the value recorded at 2024 year-end of about EUR 11.2 billion. Now let's have a closer look at the results moving forward. Let's start, as usual, with revenues analysis. In the first 9 months of 2025, total revenues increased by 9%, reaching EUR 2.882 billion, up by EUR 235 million versus last year. The growth was attributable both to regulated and nonregulated activities which contributed for EUR 135 million and EUR 99 million, respectively. Let's now take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached EUR 2.357 billion with an increase of more than 6% versus previous year. The growth was mainly driven by the RAB growth deriving from the recognition in tariff of 2024 capital expenditure, including the update and revaluation of capital cost parameter. The early recognition in tariff of depreciation related to 2024 capital expenditure 1 year in advance compared to the previous regulatory framework. And the fast-money component set on the conventional capitalization rate defined under the ROSS application. These factors more than offset the weighted average cost of capital reduction from 5.8% to 5.5% in 2025 and the lower output-based incentives contribution versus last year. Non-regulated revenues reached EUR 525 million, recording a double-digit increase of 23% in comparison with the same period of last year. The improvement mainly reflects the higher contribution from the Equipment segment, which includes Tamini and Brugg Cables and from the Energy Services segment. Now let's go to operating cost analysis. As you can see in this chart, total operating costs stood at EUR 856 million, 13% higher than last year. The regulated activities cost increase is mainly driven by the rise in the headcount and the higher average cost of labor, partially offset by higher capitalization. The non-regulated activities were primarily impacted by higher costs for materials and services related to the development of activities, mainly in the Energy Services segment and Equipment segment. This increase were driven by higher volume of activities reflected also in revenues growth. Regarding EBITDA, moving to the next slide. Thanks to the acceleration in revenues, 9 months 2025 group EBITDA reached EUR 2.026 billion, 7% higher than the same period of last year. The improvement was mainly attributable to regulated activities, which contributed for about EUR 99 million more versus the first 9 months of the previous year, showing an EBITDA of EUR 1,923 million. EBITDA from non regulated activities increased by 51% to EUR 103 million, mainly driven by a stronger contribution from the Equipment segment with improving margins from both the Tamini and Brugg Cables groups as well as better results from the Energy Services. Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 679 million. The rise versus last year's figure was mainly related to the entry into service of new infrastructure. As a consequence, the EBIT reached EUR 1.348 billion, 7% higher versus the first 9 months of 2024. The net financial expenses amounted to EUR 132 million. The slight, year-on-year increase of EUR 27 million is mainly due to the draw donw of new financing and the lower financial income resulting from cash investments, partially offset by higher capitalized financial charges. Taxes stood at EUR 362 million, EUR 24 million higher versus last year, essential due to improved results. Our tax rate was 29.8% compared to 29.4% in the 9 months of 2024. As a result, group net income reached EUR 853 million, marking a 5% growth versus the same period of last year. Moving now to CapEx analysis. In the first 9 months of 2025, total CapEx reached around EUR 2.1 billion up by 23% year-on-year, confirming the solid CapEx acceleration in line with planned targets. We invested about EUR 1.972 billion in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Adriatic Link, SACOI 3, the modernization of the high-voltage grid in the locations due to the Winter Olympics in 2026 and the Chiaramonte Gulfi–Ciminna power line. Moreover, we should consider the investments planned under the defense plan, which play a crucial role in reinforcing the resilience of the National Transmission System through the installation of synchronous compensators, shunt reactors and dumping resistor systems. Among CapEx categories, development CapEx represented 57% of total regulated investments. Defence CapEx stood at 13%, while Asset Renewal & Efficiency was at 30%. Non-regulated and other CapEx stood at EUR 115 million. This includes capitalized financial charges and other investments. Turning to the next slide. Cash flow generation for the period amounted to around EUR 2.2 billion. This was the result of around EUR 1.5 billion of operating cash flow and around EUR 700 million of working capital and other items. Net debt at the end of September 2025 was about EUR 11.7 billion, around EUR 500 million higher than 2024 year-end level, primarily due to the CapEx acceleration and the dividend payment. Let's now make a deeper analysis of our debt profile, moving to Slide 17. At the end of September 2025, we registered a fixed floating ratio on gross debt of around 83%, with an average duration of approximately 6 years. Consistent with Terna's strategic approach of aligning capital allocation with sustainability goals to enhance long-term value, as of the end of September, Terna's sustainable financing portfolio included EUR 3.75 billion in senior green bonds and EUR 1.85 billion in perpetual subordinated hybrid green bond. On this, let me remind you about the successful launch of the first European green bond with a total nominal amount of EUR 750 million made in July. This bonds, which received a very favorable market response will pay an annual coupon of 3%. In addition, Terna can rely on EUR 2 billion in an ESG-linked term loans, 3 ESG-linked revolving credit facilities for a total of approximately EUR 4.300 billion and a EUR 2 billion Commercial Paper Program dedicated to the issuance of short-term conventional or ESG notes. To conclude, as already communicated to the market in July, the European Investment Bank Terna, Intesa Sanpaolo and SACE have signed agreements totaling EUR 1.5 billion to support the development and construction of the Adriatic Link, the submarine power cable linking the Italian regions of Marche and Abruzzo. Thank you for your attention. Let me now conclude this presentation with some closing remarks. First of all, I would like to emphasize that we remain strongly focused on executing our industrial plan. As highlighted during the presentation, alongside delivering a solid set of results we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front despite a still challenging environment. All of this confirms once again our ability to deliver on our commitment. At the same time, the broader energy transition continues to advance rapidly. The recent FER X and MACSE auctions have shown clear evidence of this progress with over 12 gigawatts of new renewable capacity awarded under the FER X scheme and 10 gigawatt hour of storage capacity contracted in the first MACSE auction, both at competitive prices well below the respective caps. These results confirm the market's strong momentum and the soundness of the regulatory framework supporting the transition. To conclude, we firmly confirm our full year 2025 guidance. We expect to achieve revenues of EUR 4.03 billion and EBITDA of EUR 2.7 billion and a net profit of EUR 1.08 billion. In terms of investment, the group has set a target of approximately EUR 3.4 billion for 2025. Thank you for your attention. We are now ready for the Q&A session. Stefano Gamberini: Thank you, Francesco. Now we are ready to start with the Q&A session. Francesco, we received many questions regarding the press rumor about potential sale of transmission grid stake. Could you comment about it? Francesco Beccali: Despite we do not use to comment on press rumors, let me be clear on this point. At current stage, this is not an option on our table. We constantly analyze all the possible instruments available to finance the development and maintenance of the National Transmission Grid and the results of these analysis are always reflected in the decision set out in Industrial Plan. In this sense, let me confirm what we have been stating since we presented the update of our plan back in March. Our CapEx plan to 2028 is fully sustainable under a financial standpoint. The upgrade of our rating to A- for Standard & Poor's and the revision of the outlook to positive from stable by Moody's registered in April are for further confirmation of our financial solidity. As of today, the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which is worth more than EUR 2 million as well as seeking additional public contributions to strengthen the financial structure and considering options to valorize and monetize our nonregulated activities. Stefano Gamberini: Now move about output-based incentive. What is the number of OBIs accounted in the 9 months 2025? Is your expectation for the full year confirm? Francesco Beccali: In the 9 months revenues, there is no contribution coming from the output-based incentives related to dispatch and services market efficiency incentives. This will be recognized in the last quarter when we will have full visibility and certainty in line with the accounting principle. In the 9 months, we have instead registered EUR 16 million relative to the interest incentives. With reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allow us to reach and possibly exceed the guidance already provided after the first quarter of 2025 of more than EUR 50 million of OBI's contribution. Stefano Gamberini: Thank you. Still about guidance. Why are you not increasing the guidance for full year despite you are already at around 80% on full year net income guidance? Francesco Beccali: Well, the strong results we registered in the first 9 months increased the visibility and the reliability of the guidance we communicated back in March. However, as I've just underlined in the previous answer, we still miss full visibility on some elements, such for example, dispatching incentives for which we need to wait the end of the year to determine the early performance with full certainty. Let me remind that this is the first year of the new dispatching incentive framework renewal. So all the incentives we will account for this in 2025, will depend on 2025 performance. Stefano Gamberini: Given our Resolution 440/2025 on interzonal incentives recognized to Terna, do you upgrade guidance on OBIs? Francesco Beccali: As we have already stated in the presentation, we wish to highlight that this around EUR 93 million of interzonal incentives improved the visibility on EUR 900 million guidance of total OBI for the 2024-2028 period. As we always reported, these interzonal incentives will be accounted for over 3 years, starting by next one. In the first half of 2025, we have already registered EUR 16 million of interzonal incentives recognized from previous years. We did not disclose the breakdown of our OBI guidance among the different mechanisms. However, let me remind you that the overall amount mostly refers to existing output-based incentive framework with a bigger contribution from the dispatching service and for a residual part relative to instead the ROSS Integrale schemes back loaded. Stefano Gamberini: Okay. Can you comment on the ROSS Integrale expected incentives and potential time line? Francesco Beccali: The last resolution published by ARERA basically confirms ARERA's focus on the need to incentivize companies to deliver strategic high-value energy infrastructure in an efficient way. ARERA allows companies to submit proposals for new reward-only output-based incentives as part of the business plan, which will be subject to the regulatory scrutiny and approval. We do not rule out the possibility the regulator will issue new incentives before the end of the current regulatory period. Stefano Gamberini: Okay. Now on data centers. Do you see any significant acceleration in data center projects? Francesco Beccali: In Italy, the connection request to the grid associated with the construction of data centers have experienced strong and continuous growth in recent years. As of the 31st of October of this year, the total high-voltage connection request reached approximately 64 gigawatt with around 378 active requests. Geographically, around 80% of connection requests are concentrated in northern parts of Italy, especially in Lombardy around Milan, confirming the region as the primary hub for data center development. For this reason, data center will represent one of the drivers together with the electrification of domestic consumption and electricity mobility, underlying the expected increase in power demand in future years. Stefano Gamberini: Now could you please provide an update of authorization and procurement status over Industrial Plan horizon? Francesco Beccali: Sure. The procurement process for our investments is progressing in line with Industrial Plan. Projects currently still in the authorization phase with expected completion beyond the plan horizon are not strategic and have a limited impact on total CapEx. The authorization processes for major projects planned after 2028 will be launched in due course. As of today, all our main HVDC projects included in the current plan, have received the necessary authorizations and around 92% of the projects in the plan have completed the approval process. Moreover, we are actively working to complete all the authorization procedures according to the planned implementation time line, both for 2030 and for the longer-term horizon towards 2024. On procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry. To manage this risk, we have taken several steps to ensure continuity. Thanks in part to the support of Brugg Cables and Tamini transformers around 88% of 2024-'28 CapEx is already covered by existing procurement contracts, up from the 80% in March. Stefano Gamberini: Very well. Now moving to the working capital. Could you give a bit of color on the dynamics in 9 months '25 and your expectation for year-end working capital figure? Francesco Beccali: In the third quarter, the working capital and other item reports a decrease of about EUR 700 million compared to the end of 2024. This variation has a positive impact, obviously, on our cash flow. This result is mainly attributable on the one hand, to an increase of about EUR 390 million in net pass-through energy payables mainly due to higher debt from the essential plant for the security and electricity system, the so-called [indiscernible] and the capacity market, partially offset by higher credit from the cost of procurement of procuring resources on dispatching market services. On top of that, we have to take account of the increase in other net liabilities, essentially due to the increase in security deposits received from operators participating in the capacity market and the higher planned subsidies received from third parties. Then we also have to take into account the decrease of about EUR 156 million in the receivables resulting from regulated activities attributable to the collection of the previous year's dispatching market efficiency incentive, partially offset by the higher receivables attributable to the transmission revenues due to the tariff update set by ARERA Resolution 579 of 2024. Finally, this amount includes also the effect of the closing of the acquisition of high-voltage grid portion from Acea. Regarding working capital forecast for year-end, due to the ordinary seasonality, let me remind that we expect a significant reduction in working capital liabilities, pending payment resolutions from ARERA. Stefano Gamberini: Thank you. Finally, about regulation. When do you expect new Board of ARERA? Do you see any risk of ARERA changing approach towards the energy transition and thus support for investment in the electricity networks? Francesco Beccali: Well, as we always say, the rationale underlying the energy transition in Italy is very strong because it basically allows to reduce the dependence of the country from imported energy and commodities. The energy transition could not go ahead without investment and we play a central role in such process. We understand that the new Board of ARERA should be appointed before the end of the year, and we do not expect a significant change in ARERA's approach towards the energy transition. Law 481 establishes that commissioners must be choosing among people of outstanding competence. We are confident that what we mentioned -- we just mentioned represents good rationale to prevent regulatory risk. Stefano Gamberini: Many thanks, Francesco. Francesco Beccali: Thank you. Stefano Gamberini: So the Q&A section is now over. As always, the Investor Relations team is available to answer any follow-up questions you might have. Thank you, everybody, for your participation, and have a nice evening. Francesco Beccali: Thank you, everybody. Nice evening.
Nina Grieg: Good morning, and welcome to Grieg Seafood's third quarter presentation. My name is Nina Willumsen Grieg, and I am the CEO of Grieg Seafood. Together with me for presenting today is also our CFO, Magnus Johannesen. Our agenda today is quite standard. I will start by presenting operations and some details, and Magnus will follow an update on financial review and capital allocation. Summing up, I will restate a little bit what we said last time on our strategy going forward. So starting with the highlights of the quarter. I am pleased to report that we have received full regulatory clearance for both U.S. and Norway. That was important for us. The progress in -- process in Canada is progressing, and we remain confident in closing the transaction during Q4. This will allow us to going into 2026, focusing on our core Norwegian operations and strengthening our financial position. Harvest volume for the quarter was almost 7,000 tonnes for continued operations. Due to lower market prices and higher costs, the operational EBIT for our farming activities was NOK 3.2 per kilo and close to 0 for the group. Operationally, Q3 has seen strong Freshwater results, but the environment at sea has been challenging as for many others. However, by taking out our nonperforming fish groups at higher cost this quarter, we were able to ensure a maximum MAB into Q4 and keep our guidance for the year at 30,000 tons. I will get back to the details on this. This quarter has also been a lot about setting up the structure for the new Grieg Seafood and getting started on cost reductions. As we emphasized last quarter, we are moving forward with a clear direction. We will go from global to regional and from growth to profitability. Our goal is simple: operational excellence. And we have made significant progress this quarter even before closing of the transaction. We have defined a new operating model with operational capabilities centered in Rogaland. We have reduced or postponed NOK 110 million in 2025 CapEx and made significant headquarter cost cuts -- cost cuts, sorry. Cost discipline remains a top priority. The main change we have done is the reduction of 55% of our staff across sales and shared service functions. It has been a tough task and a tough quarter for us, having to say goodbye to talented and valued colleagues. But today, we have a rightsized and highly capable team ready to deliver. Deep diving into operations and the quarterly performance all our Freshwater facilities, including our joint ventures and delivered solid production. At sea, however, this quarter has been challenging, as I mentioned, with high water temperature and sea lice pressure. As a result, some pens have had increased mortality and lower growth, and we decided to change our harvest plan to take them out. I am of the strong belief that success in fish farming is flexibility and robustness in our plants. Incidents will happen, but the higher average weight from post-smolt improves our risk profile and flexibility. The nonperforming fish we harvested was put to see as late as this year in March but was already at an average weight of 2.8 kilos. So while it's still small, it was ready for harvesting. Having this flexibility to harvest, our actions ensured optimal MAB utilization for Q4 as well as fish welfare. As a result, the farming cost for the quarter was high at NOK 70.4 per kilo, mainly due to this harvesting of small fish and also write-downs of biomass in general. We expect farming costs to decrease in Q4, but it will still be somewhat above our long-term target of NOK 60. So summing up, the key figures for this quarter, our cost level is not satisfying, but due to our high contract share, we are still profitable in Rogaland, with an operational EBIT of NOK 21.7 million. Post-Smolt is increasingly becoming the strategy for Norwegian salmon farmers, whether in closed containment or on land. However, few have advanced as far as we have in Rogaland. Our post-smolt is gradually increasing in average size, and we are seeing real economies of scale as both Tytlandsvik and Årdal Aqua are putting large smolt to sea. Årdal is expected to increase fish sizing significantly in Q4, with one batch already above 2.6 kilos. The post-smolt we put to sea now is significantly higher than any of our peers. The distribution of smolt size has shifted dramatically over the last few years, as you can see on the middle chart, with more than 50% being above 1 kilo. Our main objective for 2025 have been to minimize the lower-sized groups. And this year only our Broodstock smolt is below 500 grams. Finding the right sized smolt for each site is a key part of our production planning. And the benefits are clear, and we have presented them many times. We are seeing improved survival rates, reduced sea lice treatments and less time in sea per generation. This means that we can utilize our best farming sites more efficiently, and it is changing how we plan and how we optimize and how we harvest. Turning to the opposite side of our value chain with some comments on sales and processing with high price volatility and changing consumer trends, maximizing the value of our fish is a key success factor. So even with lower volumes, we will retain an internal sales team as we see several positive effects. While we are not focused on building brands, our packing station and sales team have a good standing within strong markets, and we have consistently outperformed the price benchmark. We also as we have tried to illustrate in the right chart here, we also see the value of strong collaboration between our farming and sales team. While difficult to achieve, we strive to plan harvest timing, responding to price changes from week to week. Value-added processing will also be part of increasing the value of our fish. The new facility at Gardermoen will ramp up through next year towards 10,000 tonne capacity, 8,500 tonnes next year, utilizing both internal and external raw material. We are actively seeking partners for external fish. Constructions will be finalized in December, and we expect production to begin in early January with organization and training already underway. And with that, I give the word to Magnus and finance. Magnus Johannesen: Thank you very much, Nina, and good morning, everyone. My name is Magnus Johannesen. I'm the CFO of Grieg Seafood. As last quarter, these financial numbers have been prepared in accordance with IFRS 5, which means that we are splitting between discontinued and continued operations in our financial reporting. This makes the figures somewhat difficult to interpret when going through slide by slide, but I will make sure that we try to stay on the right path. Starting with profit and loss for the continued operations. We see a decline in our sales revenues due to lower prices and lower average weights in combination with the lower volumes due to advanced harvesting. This is, however, offset by our very high share of contracts as well as very high superior share of the fish that we did harvest. All in all, we did come in with an operational EBIT of negative NOK 1 million, corresponding to a EBIT NOK 0.2 per kilo. However, it's important to note that this is heavily influenced by transitional cost increases coming from the changes that we are in. Hence, we do expect this to come down significantly moving forward quarter-by-quarter. There's also some tax effects from the transaction that we are now doing. We have reversed a deferred tax benefit as we no longer see the Canadian loans being in a loss position. This is the reason why we have an increased cost in our taxes this quarter. Moving on to cash flow. This is prepared for the continued and discontinued operations. Starting with the operational cash flow. We see net cash flow from operations coming in at negative NOK 304 million. It's driven -- it's positively contributing that we have a positive EBITDA of NOK 101 million. But at the same time, we have a significant biomass buildup in all regions, including the discontinued and continued. Moving to investment activities. The net cash flow for investment activities is negative NOK 168 million. However, out of this NOK 130 million is relating to the continued financing of constructing the postman facility in Finmark. And this shows how much we need to do until closing despite being a locked-box transaction. To compensate, we have a positive contribution from our net cash flow from financing activities of NOK 340 million. This is due to the continued financing, both for operational losses but also the CapEx commitments that we have in our divested regions. Isolating the discontinued operations, we have a net change in cash and cash equivalents of negative NOK 437 million, if were only looking at Finmark and Canada. Moving then to net interest-bearing debt, which is prepared for the continued operations but have elements from a discontinued operations within the bridge. I will try to walk through those numbers. So we started with the continued operations having a net interest-bearing debt level of approximately NOK 3.7 billion. However, going through the quarter, we still have to finance the discontinued operations, both in terms of operations but also in terms of investments. As such, we have an increase of net interest-bearing debt of a bit above NOK 700 million. But out of this, almost NOK 400 million is directly attributed to financing of ADAMSELV, Finmark operations as well as the Canadian operations. This shows how much pressure we still have on our liquidity and net debt levels from the discontinued regions but it's still a box transaction, and we do expect some of this to be repaid at closing. Focusing then on capital allocation. We wanted to clarify the numbers that we communicated that we prioritized dividend last quarter. As such, we have a preliminary estimate of NOK 4 billion in dividend distribution to our shareholders following the closing of annual accounts next year. As such, this is both through the 2 important elements. Grieg Seafood will have a very strong liquidity position despite this dividend. But we do have to ensure that we do have to comply with the equity ratio constructions as we start new Grieg Seafood. As such, we are focusing on 2 key aspects: we are still optimizing and reviewing our balance sheet. And as part of this, we are in the final phase of negotiating a new bank syndicate backed by Nordea and SEB. This will provide sufficient liquidity, sufficient financial partners as well as a very strong margin. As part of this exercise, we are optimizing our balance sheet as we move forward. And hence, we are -- we have every intention to redeem the hybrid bond either through a tender offer or through replacement capital. Secondly, we are focusing on liquidity. We need to make sure that Grieg Seafood going forward have sufficient liquidity to be a strong player in the aquaculture industry. We stand firm on our estimate of our operational liquidity buffer of NOK 250 million, but we have yet to determine the amount of liquidity needed to account for other risk. But we have intention to comply with paying further dividend as we move along in line with our dividend policy. And with that, I will give back the word to Nina to go through the future building blocks. Nina Grieg: Thank you, Magnus. One slide to sum it up. I will restate our strategic building blocks because they are becoming important for us. Strengthening, prioritizing and future proofing our operations. To strengthen Rogaland and enhance profitability is our main focus going into 2026. As we have started, we will do this through post-smolt development, MAB optimization, aligning our cost base with a new scale and ensuring a strong sales performance. This will form the basis for any new future development. Going along, we will consider potential growth opportunities. However, future investments will focus on projects that truly strengthen Rogaland, prioritizing the regional synergies that we can see there, not just increasing volume. And as our third building block, we will look into how we will position Grieg Seafood for the future. We are seeing a lot of regulatory uncertainties in our industry at the moment and our ambitions and plans remain flexible, but we are -- we will establish a structured process to expand the use of new technology also at sea. The Q3 results have not met our expectations. However, looking at the underlying fundamentals of our production, the organizational changes we have implemented and a positive market outlook for 2026, I am optimistic ahead to next year. Thank you. And I can open for questions. Henrik Knutsen: Henrik Knutsen, Pareto Securities. You have quite a lot more biomass on your balance sheet. You're going to harvest out less volumes year-over-year in Q4. And still, you're only guiding 1,000 tonnes of growth into 2026. Is that conservative? Or should we think that you have a very tilt towards the first half of the year in 2026 in terms of harvest profile? Nina Grieg: I think we -- for now, we stick with our -- what we have said, and we will get back with an updated trading update, but I think it is a -- I at least believe in that prognosis that we have set. So call it realistic. Magnus Johannesen: On the harvest profile. Nina Grieg: It's always naturally is good towards second half, of course, but we have a lot of big fish at sea. Herman Dahl: Herman Dahl, can you say something about the size you're harvesting out in Q4 and compared to more challenging sites you've taken out in Q3? Nina Grieg: Do you have the average size for Q4? I don't have that on the back of my head. But as I said, we -- of course, since we changed our harvest plan, we kept bigger fish, so some increase from this quarter. Herman Dahl: And one more, if I may. The price achievement in Q3 was very good. What should we think about price achievement going into Q4 with regards to contract, particularly? Magnus Johannesen: We still have a very strong contract position also in Q4, similar to the contract position we have had in Q3. Christian Nordby: Christian Nordby, Arctic Securities. In terms of the hybrid bond, you talk about the tender offer or replacement capital. Can you elaborate what you mean by replacement capital? Magnus Johannesen: Yes. So in accordance with the term sheet of our bond, we can replace the hybrid with subordinate capital to the hybrid and pay out the hybrid at [indiscernible] But we do -- we are important for us to maintain a good dialogue with the hybrid owners. So we will both see -- we have a dialogue with them in terms of a tender offer. And if a tender offer is not successful, we do have progressing discussions on our replacement capital facility. Unknown Analyst: [indiscernible]. Could you say something about the health of the fish groups expected to be harvested into 2026 and how that could compare to your long-term target of NOK 60 per kilo? Nina Grieg: We are done harvesting out the challenging groups early and end up Q3, early Q4. So the health now is good. Of course, we don't know what will happen with downwards and winter wounds this year, but I'm positive with the trend we saw last year. So all in all, it looks much better now than it did during Q3. Tore Andreas Tonseth: Tore Andreas Tonseth, SB1 Markets. A follow-up first on the question. You state that you see a normalization of the cost in Q4, so that means that you're looking at around NOK 60 in Q1? Nina Grieg: We don't guide specifically on that level, but towards our... Magnus Johannesen: We -- so the cost for the full year is expected to slightly above NOK 60, around NOK 62.5 and that gives you the estimate for Q4 as well. Nina Grieg: He asked for Q1. Magnus Johannesen: Q1, that will be a very strong quarter. Tore Andreas Tonseth: And also a follow-up with the locked-box, you are allowed to have a minus NOK 100 million EBITDA. The locked-box ended in October. So what's the -- are you within that? Magnus Johannesen: We are well within that yes. I would say, basically, it's -- there's no impact as of 30th September in terms of the EBITDA losses -- excess losses. Maybe open questions from the web. Unknown Executive: There are currently no questions from the web. Magnus Johannesen: Good. With no other questions, thank you very much for coming. Nina Grieg: Thank you. Have a nice day.
Operator: Hello, and welcome to the Agfa Q3 2025 Results Conference Call hosted by Pascal Juery, CEO; and Fiona Lam, CFO. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to Pascal Juery to begin today's conference. Thank you. Pascal Juery: Good morning, everyone, and thank you for attending our call. I'm sitting here in Warsaw with indeed Fiona Lam and Viviane Dictus for Investor Relations and some of the executive team. So what are the headlines of Q3? Well, first, a very difficult situation for medical film with a very strong decrease that calls for more cost actions from our side, which we are taking, and I will explain in more details. But that's the main highlight for the results of this quarter. Point number two, Healthcare IT, actually, the good news is we are seeing an accelerated shift to the cloud and to SaaS business model. The flip side is it's impacting our short-term results, and I will explain why and how this is the case. But overall, this is good news because in doing so, we continue to see a very good dynamic of order intake and mainly we are able to win net new customers in Healthcare IT. And three, DPC is, I would say, slightly above last year overall. So here, I would say, a rather steady performance in a market backdrop that is not fully favorable. Pleased with the cash flow performance of the group in Q3, and it's not only about AgfaPhoto, it's also due to the fact that it's -- sorry. It's also due to the fact that we have -- we are managing working capital and other cash components in a very efficient way, I would say. So these are really the highlights of the performance of the group. Now if I turn into more details, you see that the impact of the medical film and also Healthcare IT with this switch -- rapid switch to a SaaS business model. So the impact on the top line is quite significant, minus 4.7% at equal currency. The only business delivering top line growth is digital printing, but I would say the top line growth is subdued and actually more price driven than volume driven today and mainly in the industrial film area rather than with the growth engines. Very good cost control overall in this context. However, not enough to make up for the impact of the film decrease. Positive cash flow, EUR 21 million in the quarter. So it's, as I said, of course, due to the AgfaPhoto settlement, but not only, we are also very vigilant in our working capital management, and that provides also significant benefits. And if you look at the cash flow performance after 9 months, you can see a very significant improvement versus last year. So now a little bit more details on each of the business. Healthcare IT, here, we had the first 6 months where we had quite a significant number of project traditional, I would say, business, and that's reflected on a quite strong performance on the P&L delivery. Q3 and probably Q4, it's a very different story because the share of SaaS contracts in order intake is increasing significantly, and it means that the project order book is decreasing, while the recurring order book is increasing very much. It has a short-term impact of the transition that I will try to explain later in the presentation on very practical terms. But the good news is that our 12-month rolling order intake is increasing again, actually plus 6%. And we are expecting, by the way, this trend to continue and amplify during Q4, and we'll end up the year with double-digit increase. The top line decrease is clearly due to this model, this revenue model change, while at the same time, our recurring revenue is growing by 5%, including currency. That also is a good way to illustrate the underlying transition. Currency is important for Healthcare IT because as you would remember, about 2/3 of our business are in North America and therefore, dollar denominated. So it's a translation impact here that we are seeing. But therefore, it translated to a weaker EBITDA for the quarter. DPC, as I said, step-up in revenue, profitability slightly up, but we are operating in difficult market conditions, to be fair. So the 5% top line growth is mainly driven by specialty films. The reason being, actually, we have -- it reflects the price increase we have achieved following the especially silver price increase. However, the performances of Green Hydrogen Solutions and Digital Printing Solutions are more influenced by softer market conditions. In ZIRFON, we see very little growth over last year. We continue to make progress in terms of productivity and especially it will be even more the case with our new plant. And in DPS, we're operating in a more difficult market context actually, especially in North America for equipment, where we have seen a significant slowdown. So these 2 businesses are, I would say, more impacted by the current market conditions. Radiology is where we see the most significant decline. Our revenue is declining by 20%. Actually, what happens is the China market is disappearing quite fast. Today, this market that used to represent about 45% of our total volumes has been divided by 3 in the course of 2 years, and the trend will continue until the fast disappearance of the market that might be as fast as the end of '26. So actually, what we are seeing here is a bit of a race between taking the corresponding cost out of the business and the market decline. And for the time being, we are behind because it's not possible in the current social agreement to, I would say, go as fast as we need. So what we are doing is, I will detail in the -- actually in the next slide, what are we doing to face the situation. First, we had a 3-year program and a EUR 50 million cost decrease program. Actually, we are bringing it forward, meaning we are accelerating the program, things that we plan to do in '26, actually, we start doing in Q4 '25, and we are going to try and condense the program in a short-term time frame in order to have the maximum impact in '26. But not only that, we are launching an additional program of EUR 25 million related also to manufacturing activities. So it means we are expanding the current EUR 50 million program for manufacturing, but we are also touching a new area. We are going to adjust our go-to-market for film, and that will also be a significant cost-out program indeed that is actually ready to go. We are starting the discussions with our social partners, and we will start implementing as soon as we can. We are -- we have also implemented some short-term cost saving measures across the group that will -- for which the benefit will mainly be seen in Q4 to make sure that we mitigate the current results group. And we have also launched an initiative to right size the overall group organization. I cannot communicate any details for the time being with you, but we are actively working on resetting the group cost base to the right level and the new situation that we are seeing in the field. And last but not least, as already communicated, we are working on the potential redevelopment of part of its site in Mortsel and we have actually started a discussion to have a brownfield covenant. As you know, we have a campus in Mortsel that is probably quite for the size for our needs, and we are trying to look at the possibility to monetize part of it. So we are not staying idle in view of the current situation that we are seeing in the field. We are addressing this at first and we already have a lot of programs in place, but we are already -- which we are also working on more in order to secure the profitability of the company. Now if I turn to numbers, you will see the impact of -- which is, by the way, not currency corrected here. You see the strong impact of the decrease of the radiology business here 20%. You see also the decrease in the HealthCare IT top line. But here, again, we are winning share, but the transition to cloud means our bottom line is impacted and the growth in DPC, slight growth in DPC. And you see on the right-hand side, the corresponding effect on our bottom line, less top line for HealthCare IT is translating also to less bottom line stability plus for DPC and radiology results that are still very negative, hence, the actions that we are taking. If you look at -- we show this slide with our mature businesses and our growth engines, I would say what we are seeing here for the first time is we have a negative performance of the growth engines, mainly due, in fact, to HealthCare IT and the situation that I explained. And for the first time in many quarters, actually, we have a bit of a setback in terms of the growth engine businesses. But again, I insist it's not the case that we are losing share, actually, absolutely not. We are doing extremely well in HealthCare IT. Most of what you see here is the impact of this cloud transition that I'm going to detail in a few numbers for you. I'm going to turn now to Fiona to walk you through more numbers. Fiona? Fiona Lam: Thank you, Pascal. Like Pascal already said, Q3 adjusted EBITDA ended at EUR 5 million, which is EUR 10 million down versus last year. And you see also the exact numbers coming from the bridge, which was a decline in medical spend on gross profit only in radiology context has an impact of -- negative impact of EUR 7 million and also temporary impact of HealthCare IT due to cloud and SaaS transition. So that also in Q3 has a EUR 4 million lower gross profit. Unfortunately, there's also unfavorable exchange rate impact. So you see also exchange rate unfavorable impact of EUR 2 million. Good part of the cost control, like Pascal earlier also mentioned, we control the cost pretty well. And there you see offsetting part of this downside on the market, and that led to EUR 10 million lower EBITDA in -- adjusted EBITDA in Q3. On the other hand, we look at free cash flow of Q3, which is a positive of EUR 21 million, despite adjusted EBITDA -- lower adjusted EBITDA of EUR 5 million. That, of course, has been helped largely by the AgfaPhoto's income, which is in Q3. On the other hand, we also have say that lower CapEx investment fee -- sorry, working capital improvement. This is worth to see also Q3 working capital improved by EUR 16 million, and you will later on also see the working capital improvement is significantly contributing to the group's free cash flow in the first 9 months as well. CapEx is slightly higher than last year. As you know, we have still other investments, which were paid in Q3. Provision others are seasonality, you will not see any increase or decrease too much. It's stable if you look at the 9 months, this is just quarterly seasonality. The rest is quite stable, like adjustments and restructuring, et cetera, is quite stable compared to last year. Next slide related to the debt evolution. You see Q3, we reduced the net financial debt excluding IFRS 16 by EUR 20 million with the cash in of AgfaPhoto. The rest of the debt also the pension debt slightly decreased in line with expectation. And if you look at the syndicated loan withdrawal of EUR 119 million versus the total facility of EUR 118 million has been quite roughly stable on syndicated loan withdrawal. Applicable covenant test for Q3 is the minimum liquidity of EUR 30 million. There we have in Q3 2025, EUR 126 million on the minimum liquidity. The rest of the covenants are only for reference. So we also share with you the references of the ratios, but they are not applicable for testing until year-end, which is the leverage ratio, the interest coverage ratio and the adjusted EBITDA is IFRS 16. This is the ratio for your reference. Next slide is a bit more on the numbers, which you can see now the P&L. Q3, the growth was minus 7%, but year-to-date is minus 4%. That has been helped by the first half year strong HealthCare IT. Q3, like we just said, the cloud transition is very, very evident visible. And therefore, we also see HealthCare IT did not grow in Q3. The full year until first 9 months is minus 4%. Gross profit slightly decreased because of the mix as we have industrial film are the main growth areas in this year and then the first half year of HealthCare IT, but of course, because of the film under loading and the mix of growth, we see a slight drop of gross profit percentage. What is good that you also see the first 9 months operating expenses with the top line reduced the good cost control has delivered and maintained the percentage at 30% in the trend top line of lower top line. That led to year-to-date adjusted EBITDA of EUR 19 million versus last year. If we look at next slide, which shows the net results, thanks to the help of basically AgfaPhoto, both on EUR 38 million in adjusted restructuring expenses and also the interest income and net finance costs, which lowers it. So you see a net result for the period of EUR 20 million improvement compared to last year for the first 9 months. Also to mention about -- have a look at the free cash flow in the first 9 months, despite our adjusted EBITDA has been lower for the first 9 months by EUR 19 million. You clearly see here we improved the free cash flow for the first 9 months by EUR 72 million, even though it's still minus EUR 9 million negative, but this improvement is enormous. So it's not only because of AgfaPhoto EUR 38 million cash in, in this free cash flow, but it also has EUR 51 million improvement in net working capital in the first half -- first 9 months. Part of that, of course, in the net working capital improvement, you can anticipate because you are doing lower volumes and lower turnovers. On the other hand, a part of that is also really structural improvements because we also see between 2% to 3% improvements to sales on the net working capital, primarily driven by industry controls, et cetera. And we also compared to last year on the first 9 months, we spent less on CapEx. And therefore, you see in total EUR 72 million step-up and this is quite important, of course, contribution to our free cash flow position. Pascal Juery: Thanks a lot, Fiona. Let's go also very quickly to HealthCare IT to the details of the business. Well, I'm kind of repeating myself, but here, what you see for Q3 is 70% of the order intake is in the recurring part and 40% is in cloud deal. By cloud deal, we mean SaaS deals, okay? The difference, the 30% is some deals that are also recurring that can be cloud, but not SaaS and that could be managed services. So you see that this is a shift that is extremely significant. The good news is 70% of this order intake is done with net new customers. So it's a very good sign. It means we are winning share here, and we are winning contracts against the leaders of the industry. We are leading -- we are today winning contracts competing with the likes of [indiscernible], for instance. We are exactly on par, I would say. Last 12 months rolling order intake is plus 6%. As you know, it's pretty lumpy. Last year, we had a very high Q2. This year, we believe we are going to have also a very good Q4. So we believe, we're going to end up the year with mid- to high teens in terms of progress for order intake. And as you know very well, the leading indicator for us that describes our ability to win business. So what we are seeing today is a faster transition to the cloud and probably a bit faster than what we originally thought in the past quarter. Today, I would describe it in this way, all North American discussion more or less is a cloud contract. There is not anymore, any possibility of project contract. We thought that the mix would still be a bit different a few months ago, but this is a market reality. And the good news is we are able to take new contracts in this context. Now we added a slide to show you what is the impact of transition to the cloud, okay? And you see here on the top part of the slide, the traditional project revenue profile. When we take a EUR 10 million contract, we have EUR 10 million revenue on the year. So we invoice EUR 10 million with the corresponding gross margin, which for us is about 50%, as you know. And then we have the recurring maintenance and some managed services. And you see it's quite -- it's about 20% to 30% of the amount of the total contract. Now take exactly the same contract and get it in the cloud. You are not invoicing the first year 10, you're invoicing 4. That's a 60% decrease in top line, okay? That's a 60% decrease. And then what you are seeing over -- actually the course of the year, here we ended the numbers is actually an increase year-on-year, a small increase that is not only in year for all purpose, but that we are invoicing year after year. So the contract is definitely richer in cloud. This is a longer-term contract. Typically, the traditional project is selling the license and have for the 3-year contract for maintenance that can be renewed. Here in cloud, we are talking 5 to 12 years contract actually that could be as long as, yes, double digit in terms of years. Of course, stable and recurring revenue streams. Switching customers. Switching is more difficult for customers, of course, and we have profitability uplift driven by the strong operating leverage, meaning we can make more money over time. However, when you look at the 2 models, it takes 5 years to breakeven. And when we are entering in such a transition, the short-term impact is quite significant on the top line, but also on the bottom line for the first year. So this is what we are seeing. We are not seeing, of course, a 60% decrease in top line overall for the group. As you've seen, it was minus 13% because it applies only to the nonrecurring part of our business, but it is still a very significant impact. And what we are seeing today, as I said, is actually more and more SaaS contracts coming our way. Good news is we are winning these contracts, but it has an impact short term on this year. I wanted to be clear about that. So again, nothing is broken in this market. On the contrary, we are well positioned to grab these SaaS contracts, but it has a short-term impact. Now if you look at the numbers, you see minus 13% in Q3 in terms of top line. And of course, it has an impact on the bottom line due to this mix of contracts. This is the same slide with the P&L. To be noted after 9 months, we are still above last year. We had a year where the first half of the year, we have more project business in the second half had mainly SaaS and cloud contacts, which is a reason of the difference between the 2 halves. Q4 will still be by far the strongest quarter of the year, of course, as it is usually the case. Now if I turn to DPC -- DPS first. DPS is a business that was growing about 12% per year the past couple of years. And this year, it's not the same performance. Mainly what we are seeing is the North American market, equipment market that is very subdued. A lot of our customers in the U.S. have been delaying their decision -- their investment decision. This is due to the uncertainty in the economic policy with the change that happened at the beginning of the year. Although we are a little bit more optimistic for the end of the year, it definitely it has impacted, I would say, the business and therefore, for this business in an adverse market environment, we believe we're going to be slightly below last year, or best performance would be to be almost on par. Seeing sales growth has slowed as well in such environment, but has not disappeared. So nothing is broken here in this market. We are hitting, let me say, short-term difficulty, but our strategic growth initiatives around packaging are going on. Here again, the packaging market where we want to operate is actually in recession today with negative growth, which probably slows down the introduction of our solutions. But it's really a temporary situation, and we remain extremely confident with our growth initiatives going forward. Different -- actually, very different situation in Europe and outside Europe. Today, Europe is stalling a bit in terms of doing the transition into green hydrogen. And we have not a lot of projects in Europe compared to the original ambition of the commission. However, Middle East, Africa and especially Asia are showing great momentum in green hydrogen, and this is where we have redeployed our efforts. And actually, the 2 main countries where we are applying our efforts today are China and India. With some success already in India, and we believe that in China, we will be also able to, I would say, break the market for [indiscernible] due to the sheer quality of our membrane. So apart from that, as you know, we have inaugurated our new unit for the membrane. And we are meeting today all the conditions to receive the subsidy of the European -- of the European Commission that we will get before year-end. We are already using the new plant. It's already providing some more productivity improvement. And therefore, this year, even if it's -- the growth will be quite subdued, actually we continue to increase our margin through this productivity improvements, so that's more different. So now in numbers, as you can see, DPS before Q4 in negative growth territory overall. We still expect Q4 to be a very strong quarter as usual. For ZIRFON actually some growth, but probably not at the level that we were expected. And the growth in the film part is mainly price related. So in numbers, good stability of DPC. We probably we are expecting growth in DPS that we are not seeing this year. But again, nothing is broken in this business. Radiology, medical film, this is, of course, the negative story of the -- now already more than a year and especially in China and the rate of decrease of the market is probably higher than what we were expecting from our experience of what we have been through already in Europe and North America. The market will probably disappear quite quickly, meaning that we are taking action to further restructure, I would say, our cost base and also address our go-to-market. DR, a very specific situation this year because for the first time in many, many years, I think for the first time ever, the market environment is very negative, 7% decrease of the market for the first 6 months of the year, and we are directly impacted by that. We used to grow DR, I would say, high single digits. This year with a negative 7% market, we are in negative territory also for DR, which came also a bit as a surprise. We are reviewing our geographic footprint as I speak to make sure we are really investing in the right markets -- geographic markets for us as well as reviewing our product supply strategy in order to continue our ride for DR. So that's you see still in the numbers, so needless to say, this negative EBITDA situation is what is prompting us to accelerate and extend our cost-cutting programs. And this is the P&L. As you see, we are evacuating cost, but of course not fast enough given the rate of the decrease. Now the outlook. HealthCare IT, we believe the transition to cloud will continue and will probably continue to accelerate in terms of SaaS contract. So it will impact temporarily our financial performance. And therefore, we are changing a bit outlook in this context, saying that we expect now to be slightly below last year. But again, the good order intake momentum continues and the fact that we are gaining customers is giving us a lot of confidence going forward. It's a normal situation of a transition and go a little bit faster than expected, but we are well positioned to take advantage of it. And again, in the total number of suppliers in the market for HealthCare IT, actually, we are part of the [indiscernible] issue. We are ready to be able to grab market with this foundation. DPC moderate top line growth, slight profitability growth expected for the year in spite of the soft market conditions, a bit of less growth story for DPS to perform, but still holding our own in this condition. Radiology I think I already discussed it. A word on settlement because there is some news here. We have actually received a draft report from the experts actually. So things are moving. And the draft report, I would say, is very close to our expectation. We have now -- we should have by year-end the final report after the parties can also give some input. And therefore, for the first time, I have something very tangible to report and we should expect in Q1 a resolution -- in Q1 '26 resolution of the release story. For the year, we still believe, and we have not taken into account, of course, the settlement, we still expect a slightly negative net cash flow. So that's probably where I'm going to stop for your questions. And I will take questions from the analysts and from the press. Operator? Operator: [Operator Instructions] The first question today comes from the line of Guy Sips from KBC Securities. Guy Sips: Yes. Three questions from my side. First question is on the Packaging Printing segment. Can you indicate why the mid-segment is still performing quite good? And yes, how it is separated between, let's say, bigger machines and the smaller ones? And can you also give us an indication on the number of Orca's you sold in the quarter and what your expectation is for the remaining of this year? That's the first one. And the second question is on your net debt situation and especially on the, let's say, the updated slide you gave on the pensions, which is, of course, very helpful for us. But now you can give a quarter-on-quarter position of your net pension debt, while previously it was... Pascal Juery: We lost you... Operator: We seem to have lost connection with Guy Sips. The next question comes from the line of Laura Roba from Degroof Petercam. Laura Roba: I have 2 to start. First of all, regarding the cost saving plan. So the current plan is being accelerated. And did I understand correctly that you mentioned that what was supposed to happen in 2026 will take place in Q4? That was the first one. And then the second one is on the short-term measures that are implemented across the group to help mitigate the current results. Could you provide some example of that, please? Pascal Juery: Yes. Of course, thank you, Laura, for your questions. Cost saving plan, actually, we are not going to do in Q4 '25, the full of '26, but we have brought forward a number of things. And for instance, as an illustration in terms -- we had a schedule for people leaving the company. And actually, we have added a lot more people leaving in Q4 '25. The total plan we mentioned was about 470 people, and we have put forward like about 100 people in Q4 '25. And that's just to give you an example of how we are accelerating, but it doesn't mean that we do everything that we plan in '26 in Q4 '25. We do as much as we can, actually. Laura Roba: Okay. Pascal Juery: And regarding the short-term measures, well, I would say, our short-term measures are very diverse. For instance, that's what I described regarding what we are doing to anticipate is part of it. But we are -- it's clear we are taking measure about discretionary expenses, travel, hiring, of course, which are the classical set of measures. We are also very careful to make sure -- we are exhausting, I would say, vacation and over time before year-end. And we have also taken some extra measures, which are quite significant because we have -- actually, we have put a significant number of people in temporary unemployment until, I would say, the end of the year. That's some examples of the short-term measures that we are taking. Operator: We'll give the line back to Guy Sips from KBC Securities. Pascal Juery: So we got your first question, Guy. The second question, you didn't -- we didn't hear until the end. Guy Sips: Yes. Just on the net financial debt and pension debt. So now you give on a quarterly basis an indication of your net pension debt, while previously, it was only possible on a full year basis. What has changed with the auditors in that regard? And so is it now expected that at year-end, we will see smaller shifts on -- like compared to the EUR 391 million number? That's the second question. And the third question is related to Aurelius. So am I correct that you hinted that in your view that you expect now a solution or -- and a payment in the first quarter of 2026 and perhaps even earlier? Pascal Juery: Well, let me -- let's start by net debt, and I'm going to give the floor to Fiona. Fiona Lam: I think on the net debt question, there has been no changes of methodology. It has been always available in the balance sheet on the half year quarter year results release. The only difference is that I think at year-end, there's actuarial calculation. This actuarial calculation is only happening at year-end. So what you see in the quarter, every quarter, the evolution is actually the pay the people who die -- the update of the position of that. Until year-end, we will also update the actuarial calculations where the discount rate, the interest rate, all those calculations will be done by the actuarial. Pascal Juery: Does it clarify, Guy? Guy Sips: Okay. Pascal Juery: On -- I'm going to take the question on Aurelius. Well, Aurelius, as I said, we have now a draft report and the expert has given, of course, some time for the 2 parties to make their comments. And the current time line is we should get the final report after she took the comments, the expert takes the comments and decide what to do with it, so to speak. And we expect a final report at the end of the year. So realistically, we say we should be -- we should have a settlement in Q1 '26 given the time, we have 6 weeks until the end of the year. But I think for the positive news is -- 2 positive in this story. First, for the first time in more than a year, I mean, almost 1.5 years, things have moved, and we have now a practical report from the expert. And the second part is for the time being, what we are seeing from the expert is according to our expectations. Okay. And -- but the payment realistically, Q1. Okay, on this... Guy Sips: Okay. Pascal Juery: And now the packaging question. Well, on the packaging question, I just want to rephrase to understand if I understand, if I got it well. For Orca, you're asking us specifically, have we sold any SpeedSet? The answer is not yet, okay? The answer is not yet. We are going probably to sell our first SpeedSet in Q4 to our existing customer, but the contract is not signed, but should be signed, I would say, before year-end. But apart from that, no other Orca being sold. And this is, as I said, 2 reasons. First, the packaging end market today is not really favorable for our customers to invest in digital is probably a solution, they are willing to implement when they have the opportunity to increase their capacity. But so -- and the sales cycle for such product is a bit longer, of course, given the situation. And on the packaging printing, I mean, you made a comment on packaging printing regarding low and mid-range. That I'm not sure I understood fully your question. Guy Sips: Am I correct that the mid-segment in the packaging printing is doing rather good compared to the, let's say, the small segment? Pascal Juery: Actually, we have no mid-segment in packaging. We are -- the only thing we do in packaging is really Orca. So maybe what you refer to is more our traditional sign and display business... Guy Sips: Yes. Yes, sign and display, yes. Pascal Juery: [indiscernible], can you comment? Mid-segment, low segment? High segment. Unknown Executive: So indeed, in the Sign and Display segment, I would just -- which is our traditional segment and today, 90% or so of our sales. That part -- and that part of the market we have seen this year specifically that people are postponing investment decisions on the larger type of equipment. So we certainly don't see a slowdown on the smaller and midsized equipment printers, but the larger-sized printers or tower range, which is still very much appreciated technically, but is indeed people are taking less quickly or postponing investment decisions. And we do hear that in the market from other players as well. So it's not only an Agfa thing, it's really a market given, especially in North America actually for '25. Pascal Juery: Thank you, [indiscernible]. Next question. Operator: We currently have no questions coming through. [Operator Instructions] We seem to have no further questions. So handing back to you, Mr. Juery for conclusion. Pascal Juery: Thanks a lot. So again, a quarter that shows, first, situation in film that we are addressing with all energy through cost measures, amplifying and speeding, accelerating our measures. A transition to cloud for HealthCare IT that happens probably faster than we expected. But good news being we are on the winning side of this transition. And third, a DPC that will broadly deliver a slight improvement in profitability, but where the adverse market conditions have somehow dampened our hope for more rapid growth with the backdrop of a very stringent cost management and cash management at the company level to ensure, of course, the company profitability. Q4 will continue being the strongest quarter of the year as it is, although these trends will also apply to Q4 for film and HealthCare IT. So thanks a lot for attending the call. Thank you, and speak to you soon. Operator: Thank you for joining today's call. You may now disconnect.