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Operator: Good morning, and welcome to Q3 2025 Financial Results Conference Call for HLS Therapeutics. At this point, I would like to turn the call over to David Mason, Investor Relations, for the introductory remarks. Please go ahead. Dave Mason: Thank you. Good morning, everyone, and thank you for joining us today. With me on the call is Craig Millian, Chief Executive Officer; John Hanna, Chief Financial Officer; and Brian Walsh, Chief Commercial Officer. Earlier this morning, we issued a news release announcing our financial results for the 3 and 9 months ended September 30, 2025. This news release, along with our MD&A and financial statements, is available on HLS' website and on SEDAR+. Please note that slides accompanying today's call can be viewed via the webcast, a link to which is available in our earnings press release and at our website on the Events and Presentations page. Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's annual information form, which has been filed on SEDAR+. During the call, we will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in our press release and annual filings that are available on SEDAR+ and on our website. Please note that all financial information provided is in U.S. dollars, unless otherwise specified. I would now like to turn the meeting over to Mr. Millian. Please go ahead. Craig Millian: Thanks, Dave. Good morning, everyone, and thank you for joining us. On our call today, I'll review quarterly and year-to-date highlights, along with progress against corporate priorities. Brian will go into further detail on product performance, along with an update on launch preparations. And then John will follow with a detailed look at the numbers. Following John, we'll hold a Q&A session. I want to start by highlighting the progress we've made over the past 2 years, improving profitability and cash flow and strengthening our financial position. We believe these improvements were essential to set the stage for future growth. I'll start with adjusted EBITDA, which was $4.9 million in the third quarter, up 19% year-over-year and $13.9 million year-to-date, up 25% over the same 2024 period. With the progress we've made year-to-date, we are on track to reach our target adjusted EBITDA range for the full year. Following an inflection point 2 years ago in the third quarter of 2023, we've demonstrated steady quarterly improvement in adjusted EBITDA, excluding royalties. And in the third quarter, we continued that positive trend. In that 2-year window, adjusted EBITDA, excluding royalties, has increased by more than 85%. This performance is a result of the operational improvements we've made over the past couple of years, focusing on the key performance drivers for our promoted products, while significantly reducing operating expenses and delevering our balance sheet. Financial discipline we've instilled across the organization is generating results with strong operating cash flow and continued debt reduction. John will provide more details on our financial position in his section. On the revenue side, while Canadian product sales have grown 2% year-to-date in local currency, we have faced several headwinds throughout 2025. And in the third quarter, revenues were down 4%. Let's start with Vascepa. With an eye towards strengthening commercial capabilities for both Vascepa and ahead of the bempedoic acid launch, we made substantial and purposeful changes to the sales force this year. In 2025, more than half of our territories turned over as we proactively recruited, upgraded and onboarded new talent. Those geographies are now filled with highly experienced and motivated sales representatives who are building momentum in their territories. With a fully deployed customer-facing organization, this completes the transition that began late last year with our exit from the Pfizer promotional services agreement. Even with the scope of these changes, Vascepa has managed to grow prescriptions at a substantial rate of 24% year-to-date, and the third quarter was its most profitable quarter since launch. That said, Vascepa prescription growth is below the ambition we set for the year. Based on year-to-date results, we now expect Vascepa revenue growth on a percentage basis in the mid-teens for the full year on a local currency basis compared to our prior range of 18% to 26% growth. We are optimistic that with a fully trained and deployed sales team, we will continue to grow Vascepa in 2026 and beyond. Turning to Clozaril. We had an ambitious plan to grow our patient numbers this year across Canada. And while we still see many targeted growth opportunities ahead, they are taking longer to realize than anticipated. We have adjusted our guidance and now project a decline of 4% to 5% for the Canadian Clozaril business in local currency for the full year. We estimate that about 1/3 of the projected revenue decline is due to fluctuations in inventory at some hospital-based accounts, which had the effect of shifting revenue into 2024. We expect these inventory effects to impact 2025 comparisons to 2024, but not beyond. Clozaril also recently faced increased competitive pressure in Ontario, where we maintain a very high market share. Earlier this year, a number of hospital accounts in Ontario were in play due to a large buying group contract that was up for a multiyear renewal. We successfully defended the vast majority of Clozaril business in Ontario, where a satisfied patient base, differentiated CSAN services and innovative Pronto offering helped support the Clozaril value proposition. Despite the increased competitive activity in Ontario, overall Clozaril numbers in Canada are down less than 1% versus prior year, and this is due to sizable gains we have achieved in other parts of the country, particularly the Western provinces. Taking a slightly longer view, Clozaril patient numbers in Canada are actually up about 1% since the end of 2023. In addition, our U.S. Clozaril business has shown resilience and is currently outperforming expectations for the year. This stable U.S. performance represents a meaningful improvement over the historical trend. So to summarize our outlook for the rest of the year, profitability remains strong, and we expect to grow adjusted EBITDA to meet our guidance range of 17% to 23% growth, which translates to $19.5 million to $20.5 million. Based on our updated product sales guidance, we are now providing a consolidated revenue estimate for the year of $55 million to $56 million. Looking toward 2026, we expect to grow both top line and adjusted EBITDA next year. Although we saw some recent increased competitive activity against Clozaril in Ontario, we have successfully grown our existing patient base over the past 2 years and expect business to stabilize in Canada. For Vascepa, now that our sales force is fully staffed, we're starting to see the positive impact, including recent increases in new-to-brand patients. This makes us optimistic for growth prospects. And of course, we're preparing to expand our cardiovascular portfolio with a second quarter launch of bempedoic acid, which will contribute to revenue in 2026. We'll provide a more detailed financial outlook for 2026 when we issue our year-end results in March. While we manage the near-term objective of profitably growing our existing product portfolio, I want to emphasize how excited we are about the growth opportunity ahead of us as we build HLS into a leading cardiovascular company in Canada. The introduction of bempedoic acid will help address a large and growing patient population of more than 0.5 million Canadians who could benefit from additional LDL-cholesterol lowering. This novel medicine will represent an important addition to the clinical armamentarium as there is a need for treatments beyond statins and ahead of the expensive injectables currently available. And we are excited to leverage powerful operational and platform synergies with Vascepa to position HLS as the leader in delivering novel cardiovascular risk-reducing oral therapies to the Canadian market. Brian will provide more details on our launch preparations and the commercial opportunity. But I want to underscore that this launch represents a pivotal moment for HLS and will drive growth for years to come. Even as we set the stage for future growth, we plan to largely hold the line on operating expenses in 2026. As said previously, we've built a cost structure that can support both our existing portfolio and the new product launches without significant incremental investment. The financial foundation for HLS is solid with improved profitability and cash flow. Our new credit agreement announced in the third quarter with favorable terms, further strengthens our financial position. The agreement has a new syndicate of lenders and provide stability, lower interest expense and greater flexibility to pursue strategic growth opportunities to expand our portfolio. With that, I'll turn it over to Brian to discuss our commercial performance and launch preparations. Brian? Brian Walsh: Thanks, Craig, and good morning, everyone. I'll walk through our Q3 and year-to-date product performance and provide an update on our bempedoic acid launch preparations. Starting with Clozaril. Our U.S. Clozaril business has performed well, and year-to-date sales were up 1%. This is a meaningful improvement over the historical trend and as a result of a durable established patient base coupled with targeted new patient growth through our specialty pharmacy partnership. For Clozaril in Canada, as Craig noted, we continue to drive strong growth in the West, including 11% patient number growth in British Columbia that was offset by expected patient attrition in Quebec and some competitive pressures at select accounts in Ontario. And while we have experienced some unit impact from the pressures in Ontario, we have successfully defended our value proposition in the vast majority of accounts while maintaining our net pricing integrity, which preserves the foundation for a healthy, sustainable business moving forward. Despite these pressures, our patient numbers are down less than 1% at the end of Q3 versus the same time last year and up 1% versus the end of 2023, demonstrating the solid fundamentals underpinning our Clozaril franchise in Canada. Importantly, clozapine is significantly underutilized across Canada as the only approved treatment -- as the only approved product for treatment-resistant schizophrenia. This context creates multiple pathways for our team to bring the life-saving Clozaril brand and our differentiated CSAN services to more patients across Canada. Looking at Vascepa, Q3 unit volume grew 22% and compared to Q3 last year and year-to-date unit growth was 24%. The key story with Vascepa this year has been our sales force rebuild, following the Pfizer transition and the ahead of our bempedoic acid launch. As Craig shared, we made many of these changes with the aim of strengthening our commercial capabilities for both Vascepa, but also before we launched bempedoic acid. But as a result, throughout 2025, more than half of our territories were opened for some period of time as we recruited and onboarded new representatives. At the end of Q3, we had reached full deployment across all territories and we are very excited about the talent that we have attracted to join HLS. And while everyone we hired as an experienced specialty sales representative, it still takes several months for a new representative to get fully trained and establish with their new customers. But we're seeing very good early signs that our new team members are becoming increasingly productive, which is evident by overall growth in new patient starts. For the first time this year, we grew new patient starts each month in the quarter versus the prior year. We are also seeing improved depth of prescribing by growing consistent prescribers, 5% versus Q2 of this year and 29% versus Q3 of last year. We expect this growth to accelerate in the coming quarters as our transformed sales team gains further traction, driving more meaningful impact on our full year 2026. The fundamental supporting Vascepa remains strong. The product remains prominent in the CCS treatment guidelines, and Vascepa maintains excellent formulary access across both public and private payers. And we continue to take proactive steps to streamline the reimbursement process and improving retention rates for patients that are covered by private plans. Now let me turn to the exciting upcoming launch of bempedoic acid. As mentioned previously, NEXLETOL and NEXLIZET are the commercial product names used in the U.S., but we expect a variation in the brand name for the monotherapy once Health Canada approval is finalized. The monotherapy is a daily oral nonstatin treatment containing the novel compound bempedoic acid. Its brand name in Canada will be Nilemdo, which is aligned to the brand name in Europe. The second product is the fixed-dose combination of bempedoic acid with ezetimibe in a single daily pill. And in Canada, it will be marketed as NEXLIZET, the same name as in the U.S. What makes these products differentiated is they add a second completely independent pathway to cardiovascular risk reduction alongside Vascepa's unique mechanism. These new products adjust a very large addressable market focused on LDL cholesterol reduction. LDL is the ultimate biomarker for cardiovascular risk. It's integrated into every clinical guideline and physician practice pattern. 40% of at-risk patients and half of high-risk atherosclerotic cardiovascular disease patients in Canada do not achieve their CCS guideline recommended LDL target. These elevated LDL levels put patients at significant risk to future catastrophic vascular events like myocardial infarction, stroke and cardiovascular death. The unmet need -- unmet medical need is significant, and we estimate more than 0.5 million Canadians could potentially benefit from these medicines. This gives us a clear, well-established entry point for these products into the Canadian cardiovascular [Technical Difficulty]. The clinical profile of these products is very compelling for physicians, patients and payers. We will launch Nilemdo with the results from the CLEAR-outcomes trial, a nearly 14,000 patient randomized double-blind cardiovascular outcome study that demonstrated a meaningful reduction in major cardiovascular events -- major adverse cardiovascular events, or MACE, in patients unable to take recommended statin therapy. Nilemdo and NEXLIZET provided novel oral pathway for LDL lowering while being less likely to cause muscle-related side effects that limit statin adherence and can be used alone or in combination with other LDL-lowering therapies. In terms of clinical practice, physicians typically start patients with a statin, then ezetimibe if additional LDL lowering is needed. If patients still aren't at goal, the current standard of care moves to PCSK9 inhibitors, which are injectable, expensive and general reserved for only the high-risk patients. Nilemdo and NEXLIZET slot in ahead of PCSK9s in this treatment algorithm, providing a simpler, lower-cost oral option for patients who need additional LDL lowering, but aren't appropriate candidates for injectable therapy. Our prelaunch preparations have accelerated since last quarter. We're finalizing our dossiers for pricing and reimbursement discussions. Our medical teams, who have been established for several years with our KOLs on Vascepa have started engaging with their customers on bempedoic acid on the bempedoic acid story this summer, and they have been met with a high level of enthusiasm regarding the significant unmet need that the product addresses. On timing, we expect to hear from Health Canada in Q4, which would put us on track for our Q2 2026 commercial launch. By that time, we expect to have product available and to have achieved meaningful coverage with private insurers. Our engagement on the public reimbursement will continue throughout 2026 with the goal of achieving favorable provincial listing agreements beginning in 2027. The strategic synergies with Vascepa are significant. The Canadian Cardiovascular Society Guidelines recommend both further LDL lowering for patients not at goal, and consideration of Vascepa treatment for patients with elevated triglycerides as a marker of increased cardiovascular event risk. With our expanded portfolio, we'll be well positioned as the Canadian leader in oral cardiovascular risk reduction, able to partner with physicians to address a much broader set of patients working to reduce their remaining risk. And our customer-facing teams are energized and ready to launch these new products. With that, I'll turn it over to John for the financial results. John? John Hanna: Thank you, Brian, and good morning, everyone. I'll focus my remarks on our Q3 and year-to-date financial performance, the continued strengthening of our balance sheet and our capital allocation approach. Starting with revenue. Total revenue for Q3 was $13.5 million compared to $14.1 million in Q3 last year. Year-to-date revenue was $40.3 million compared to $41.1 million in the same period last year. Craig and Brian have already covered off the key factors impacting revenue for the quarter and the year. Excluding royalties, revenue from Canadian product sales in local currency and revenue from U.S. Clozaril sales were both up on a year-to-date basis by 2.3% and 1%, respectively. The timing of orders can impact quarterly results. And for this reason, we view year-to-date revenue as a more relevant measure of the comparison of year-over-year revenue performance. Royalty revenue was $180,000 in Q3 compared to $195,000 in Q3 last year. Royalty revenue comparisons have normalized here in Q3 2025, following the sale of the Xenpozyme royalty in Q2 2024. HLS has one remaining royalty interest. Foreign exchange continues to be a headwind when translating Canadian dollar sales to U.S. dollars for reporting purposes. Year-to-date, foreign exchange has negatively impacted consolidated revenue by approximately $0.8 million. On the expense side, we continue to demonstrate strong operational discipline helping to drive increases in adjusted EBITDA and cash flow. Q3 operating expenses comprising sales and marketing, medical regulatory and patient support and G&A were down 22% compared to Q3 last year. Year-to-date, these expenses were down 20%. This performance reflects our focus over the past 12 to 18 months on operational efficiency and driving product profitability. Cost of sales have increased in the quarter and year-to-date periods, largely due to growth in unit volumes and net sales for Vascepa. As Craig mentioned earlier, adjusted EBITDA growth in Q3 and the year-to-date period was strong, increasing 19% and 25%, respectively. Similar to the discussion on OpEx, this is due to our efforts to optimize operations and drive product profitability. I want to highlight the consistent improvement we've made in our probability trajectory. As shown in the slide in our presentation, on a trailing 12-month basis, adjusted EBITDA excluding royalties, has shown consistent quarterly improvement since bottoming out in late 2023. Q3 continues this positive trend. As Craig mentioned, since Q3 2023, adjusted EBITDA ex royalties has grown by 87%. For the third quarter, the direct brand contribution from Clozaril to adjusted EBITDA was $6.3 million, while the direct brand contribution from Vascepa was $0.6 million. Year-to-date, contributions were $19.2 million for Clozaril and $0.7 million for Vascepa. Cash from operations in Q3 was $2.5 million, up 67% compared to Q3 last year. Year-to-date, cash from operations was $10.6 million, up 121% versus the same period last year. This strong operating cash flow performance reflects our improved profitability. Another driver of our cash flow improvement has been the reduction in interest expense. Year-to-date, we've reduced interest expense by 38%, saving $2.6 million. This reflects the significant progress we've made in paying down debt and lowering our effective interest rate. Turning to the balance sheet. At quarter end, the carrying amount of our term loan stood at $53.1 million, down $12.9 million or 19% from $67.4 million at December 31, 2024, and down $33.6 million or almost 40% since the end of 2023. As a result of our continued debt reduction, net debt stood at $43.5 million at quarter end compared to $50 million at December 31, 2024. Our deleveraging, combined with our improved operational performance has fundamentally strengthened our financial position and created greater flexibility for capital allocation. Further strengthening our financial position, in August, we successfully refinanced our debt facility, entering into a new Canadian denominated credit agreement with total borrowing capacity of $170 million. National Bank of Canada is the lead and syndicate includes TD Bank, RBC and Federal Credit Union. This replaces our previous U.S. dollar facility and extends our maturity to August 2029. The Canadian-denominated structure provides a natural hedge against our predominantly Canadian operations, while reducing foreign exchange exposure. We've achieved meaningful interest rate savings of 25 to 50 basis points on the spreads, plus over 100 basis points from favorable Canadian base rates. This should net us annual savings of approximately $1.5 million in interest expense. This enhanced financial flexibility supports our capital allocation priorities. Our outlook for capital allocation remains balanced and is focused on 3 areas: one, continued debt reduction; returning capital to shareholders through share buybacks; and three, strategic portfolio expansion. Importantly, we funded all 3 priorities, debt reduction, share buybacks and portfolio expansion through operating cash flow without requiring additional financing. In summary, we're delivering our profitability commitments, generating strong cash flow and continuing to strengthen our balance sheet. We've built a solid financial foundation that provides flexibility to invest in our portfolio while also returning capital to shareholders. With that, I'll turn it back to Craig for closing remarks. Craig? Craig Millian: Thank you, John. In closing, our consistently improving profitability demonstrates that the operational transformation we've executed is working. We're generating improved cash flow, significantly reducing our debt burden and building a more sustainable cost structure that can also support growth. The pending approval of bempedoic acid will transform our cardiovascular franchise in Canada and further establish HLS as a leader in delivering novel oral therapies to reduce cardiovascular risk. We remain focused on execution and are confident that our strategy, our team and our growing portfolio of important medicines will continue to deliver results and create value. That concludes our prepared remarks. At this point, I'll ask the operator to please provide instructions for asking questions. Operator? Operator: [Operator Instructions] With that, our first question comes from the line of Michael Freeman with Raymond James. Michael Freeman: Congratulations on all this progress. I think as a quick first one, I wonder if you could describe any interactions you've had with Health Canada on bempedoic acid. Craig Millian: Thanks, Michael, for the question. I'll turn it on over to Brian. Brian Walsh: Michael, we're progressing with the regulatory review. We've had very good engagement on bempedoic acid, and you were expecting to hear from them this quarter. So we're on track for a product launch in Q2 of next year. Michael Freeman: Okay. Okay. Now with the -- on the Clozaril business, you described as well some of these Canadian headwinds. I wonder what your overall plans for maintaining or growing this business, I guess, broadly, but specifically in Canada, you have very strong market share in Ontario that maybe competitors are nibbling away at. And then -- but there does seem to be quite a lot of headroom in other provinces in Canada. I wonder what your game plan is. Brian Walsh: Yes. Yes, it's a great question, Michael. And that's where for this brand, given the significant underutilization of Clozaril, we see a lot of pathways to growth. Over the last couple of years that we've reported on significant growth, double-digit growth in the Western provinces. We still have less than 1/3 of that those markets. So we still see significant headroom, good profitability opportunities in those markets. And we are -- we have been making subtle changes to shift resources to accelerate that growth. And even within Ontario, where there's some modest pressure, there's still significant population growth and growth throughout -- opportunities throughout the province. Craig Millian: And just to add, even in Quebec, where you may recall a year or so ago, a little over a year, we actually changed our model there to really focus on patient retention due to some of the challenges in terms of acquisition of patients in Quebec. And that's been a resounding success. We've been able to limit any sort of attrition in Quebec to low single-digit percentages and really patient-by-patient work to retain every one of our patients and the stickiness of that patient population in Quebec is quite remarkable. Often when there is attrition, it's due to reasons such as a patient passing away, for example, not necessarily due to a switch. So the strategy has worked in terms of maximizing our retention of patients in Quebec, defending our really dominant share in Ontario, and we have fantastic relationships at the major accounts there, the major mental health institutions and we think there are still opportunities to grow. But admittedly, it's certainly a competitive space. And then as Brian said, really a lot of headroom for growth out in the Western provinces. Michael Freeman: And I wonder if you could provide similar color on the -- on Clozaril in the U.S. Brian Walsh: Yes. So very different dynamic. It's more a very stable patient population, but a different share -- lower share, higher value per patient. Our regular -- the core business has been very stable. As accounts there, we tend to have more private pay patients. But we've been able to offset some natural patient attrition through targeted growth through a specialty pharmacy where we're able to offer financial assistance and educational support programs. So we continue to see that. We've achieved, I think, a level of stability with that business and we can see that continuing in the coming years. Michael Freeman: Excellent. And last one for me. On the -- there was some mention of pursuing business development as a result of you guys strengthening your balance sheet. Should we -- what should we expect in terms of sort of structure of in-licensing, perhaps the size of deal? Would we expect something similar to what we saw with bempedoic acid? Or are you scaling up your ambition? Craig Millian: It's a good question. What I would say is -- so we love the bempedoic acid deal. And obviously, there's other deals of that magnitude. We think it was -- this is going to create significant shareholder value. We think these are products that will generate tens of millions of dollars in revenue. And again, fits so beautifully with the infrastructure we already have in place and really building our positioning as a premier cardiovascular company in Canada. So obviously, the opportunity to continue to do deals like that are very attractive, albeit not necessarily an infinite number of those opportunities. So I do think with the strengthening balance sheet and the new debt facility that does, I'd say, widen the aperture in terms of the type of deals we can do. I think right now, our focus is on continuing to bring in assets that are materially significant that will add significantly material revenues to our top line. We think that's very important. We're not interested in things that are... [Technical Difficulty] Operator: And ladies and gentlemen, thank you for standing by. The presenter is now reconnected. Please go ahead. Craig Millian: So apologies. We're in a meeting room at a hotel and the Wi-Fi dropped here. So I'm not sure when the call dropped. I know we had a question from Michael. Dave Mason: Meeting the criteria. Craig Millian: Yes, yes. So I mean I'll just be brief. The answer is yes. We're looking at the deals, I think, similar in scope to what we've done, but I would say again, with the strength in the balance sheet and with the kind of the increased flexibility with the lending agreement, we're in a position, I think, to broaden the aperture. But looking for things that obviously fit with our model in Canada and that can easily be broadening, but that have significant sales potential. And obviously, we'll be opportunistic as well. I think we're looking at opportunities to expand our business as well in the U.S., recognizing that those will be maybe challenging to identify, but we're confident we can continue to build out our business there as well. So stay tuned. We're very active, and we're very committed to continuing to grow top line now that we've really put our financial house in order and have a cost structure that we think can support a lot more growth. Operator: [Operator Instructions] Your next question comes from David Martin with Bloom Burton. David Martin: First question, Vascepa scripts were up 22% in third quarter year-over-year, but the net sales were up only 2.1% in local currency. You mentioned inventory fluctuations. I'm wondering, are you seeing inventories more stable or even some restocking post Q3? And are you also seeing pressure on your net pricing? Did that feed into it as well? Craig Millian: Yes. I don't know, John, if you want to comment on this. I would say that -- and this is historically has been the case of -- obviously, the growth in demand outpacing growth in net sales. And this is really an artifact of having launched first into the private markets and then subsequently, launching into the public markets with the different economics of that. And so over time, we went from 100% of our business being private to now a blend. The good news is now we're starting to see stabilization as we've expected. But as we continue to grow in both segments, both channels, we continue to see more significant growth, I would say, on the public side. And so that drives -- that does drive an increase in rebates. And that certainly has some impact on gross to net. So the goal has been to stabilize that payer mix. And when that occurs, we believe we'll see a narrowing of that difference between demand growth and net sales growth, but we're not quite there yet. So I think probably the largest explanation for that, David, is payer mix. I don't know, John, if there's any other elements that you would... John Hanna: No, I wouldn't, Craig. I think you covered well. We did comment a little bit on inventory for Clozaril or Vascepa. It's really sort of the routine wholesaler orders that our biggest wholesalers have placed big orders and depending on where they drop, but there was nothing significant to comment on there for the quarter. Craig Millian: Yes. There is lumpiness for certain in terms of order patterns, which is why we -- especially with a limited number of products, any large order that takes place in one quarter versus another can influence year-over-year comparisons, which is why we tend to focus more on year-to-date versus a quarter because there is that variability. David Martin: Okay. Was there a large order that got pushed from Q3 into Q4? John Hanna: No. As I say, nothing specific to this quarter. David Martin: Okay. And then for Clozaril, the growth out West, is that mainly coming from taking share from competitors? Or are you seeing increasing overall usage of clozapine? Brian Walsh: It's both. We're -- the population growth and utilization of clozapine, but our share has been increasing steadily as well. And it's a population there like other places in Canada where there's this large installed population, and we're competing for the new starts, and I think we're competing even ahead of our market share in that dynamic portion of the market, so it's both. We're winning more in the new start population, but we're seeing the overall -- we're seeing an increase. David Martin: Okay. Great. And last question. You've obviously got good infrastructure to take on additional cardiovascular drugs. If you took on another psychiatry drug, would you need to build out your sales force? Or could that be layered onto the group you've got now? Brian Walsh: It would depend on the indication specifically. So -- but I think most of the opportunities would require on the neuroscience side requires some incremental build. We believe we still have capacity to bring in additional cardiovascular products within our existing footprint, just given the coverage and like even life cycle of the different -- of Vascepa. Craig Millian: Yes. We definitely have capacity, we believe, on the cardiovascular side. So that will certainly continue to be a focus. And we think we've got a really -- now with the upgrade in the sales force and bringing on some super talented folks, a really strong customer-facing organization in addition to our medical team. Similarly, on the Clozaril side, we have a very, very strong multidisciplinary team. As Brian said, there's some really strong foundational elements to that team and then -- which gives us the versatility to bring in a range of products that we could give them adapt accordingly. But that would require most likely some additional salespeople. We have a fairly light footprint. Operator: And we have no further questions at this time. I would like to turn it back to Craig Millian for closing remarks. Craig Millian: Well, thank you, operator. Thank you all for participating on today's call. We look forward to reporting you on progress in the coming quarters and speaking with you again soon. Thanks. Have a great morning. Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Operator: ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Taseko Mines 2025 Third Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Brian Bergot. You may begin. Brian Bergot: Thank you, Jericho. Welcome, everyone, and thank you for joining Taseko's Third Quarter 2025 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tasekomines.com, and on SEDAR+. With me in Vancouver today is Taseko's President and CEO, Stuart McDonald; Taseko's Chief Financial Officer, Bryce Hamming; and our COO, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our third quarter MD&A and the related news release as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+. I would also like to point out that we will use various non-GAAP measures during the call. You can see explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks. Stuart McDonald: Great. Thanks, Brian. Good morning, everyone. Thank you for joining our call today to discuss the third quarter financial and operating results. As usual, I'll provide some commentary focusing on the operational results, and then Bryce will get into the financial performance for the quarter. As outlined in our release yesterday, third quarter results were definitely an improvement over the previous 2 quarters, both operationally and financially. Mining in the connector pit had presented more challenges in the early part of this year than we'd anticipated. But on the positive side, the higher mining rates in the last 2 quarters have opened up higher-grade benches that we've been anticipating. In the third quarter, grades increased to 0.22%, which is up from 0.19% in the first quarter and 0.20% in the same quarter. This higher grade ore and less transitional oxide material both benefited mill recoveries, which increased to 77% in the third quarter. Mill throughput has been very steady this year, consistently operating at around design capacity. So overall copper production in the third quarter was just under 28 million pound and that includes 900,000 pounds of cathode production from Gibraltar's SX/EW operation. Molybdenum production in the quarter was 560,000 pounds, which is also a big increase from prior quarters due to higher moly grades, which typically track copper grades. Costs in the quarter were USD 287 per pound, an improvement over the quarter. Total site costs in the quarter was $7 million higher than the previous quarter, mainly due to SX/EW costs now being expensed as well as increased maintenance costs. Maintenance costs, including parts and major components is one area where we continue to see steady inflation. And all of that translated into $62 million adjusted EBITDA for the third quarter. Looking ahead, we expect to finish the year with a strong fourth quarter. Gibraltar produced 11 million pounds of copper in October, which was the mine's highest production month in 2 years. So the quarter is off to a good start. We will provide formal guidance for 2026 in the new year as we normally do. But generally, we're looking for a more consistent year next year with less quarterly volatility. Now shifting over to Florence, where we have achieved a number of major milestones recently and the operation is now well on its way to producing first copper. In September, our general contractor achieved substantial completion of the SX/EW plant in plant area. This is a huge accomplishment for the project team. In just 18 months since we broke ground to Florence, our team has been able to deliver this major capital project on time and in line with our previous cost estimates. So it's really a great achievement and the project is now into the commissioning phase. In mid-October, we received the final regulatory approvals we required to commence wellfield operations. We then initiated a short commissioning period, which included pumping water from the offer to establish hydraulic control in the wellfield. A number of normal course commissioning issues were identified and resolved and in early November, so about a week ago, we began acidifying the commercial well field. Overall, we're a few weeks behind our original plan, but we're very happy with the wellfield performance so far as initial flow rates in the wellfield are in line with and even exceeding our expectations. So it's early, obviously, but the operation is off to a good start. About half of the wellfield is being acidified now and the second half will start up in the next week or so. And in the weeks ahead, we expect to see the grade of copper and solution or PLS grade from the wellfield start to increase to a point where we can turn on the SX/EW plant and start plating copper cathode. Commissioning of the plant area is advancing in parallel with initial wellfield operations, and we expect to be producing copper early in the new year. An important aspect of the production ramp-up in 2026 will be our ability to develop and integrate additional wells into the operation. We're now preparing to restart drilling activity with 2 drills planned to start up here in November, and an additional 2 drills will be added early next year. The operating team in Florence continues to grow. Recruiting has gone very well, and we're up to about 140 employees on site now. Needless to say, it's a very busy and exciting time for all of them. It's great timing to be starting up a major new supply of refined copper inside the U.S. Obviously, copper markets and pricing remains very strong. And there are some interesting dynamics in the U.S. cathode market. Although there are no U.S. import tariffs on refined copper right now, the possibility of tariffs in the future has led to some speculative trading activity and growing capital inventories inside the U.S. The COMEX space has continued to trade at a premium to the LME recently at a 4% premium or roughly $0.20 a pound. However, our understanding is that the quoted COMEX price may not reflect what can actually be realized in the physical market, and capital sales in the U.S. maybe at a higher discount than normal -- higher than normal discounts that you might normally see to the COMEX price. Although we're still seeing a premium to LME pricing. This is a situation we're going to continue to monitor as we start cathode sales from Florence in the next few months. The U.S. government has aided that it plans to revisit tariffs in middle of next year with the potential for 15% tariff on cathode at the end of 2026, increasing to 30% potentially at the end of 2027. So in the longer term, this shows the strategic value of Florence, which will become one of the few U.S.-based suppliers of refined copper. Before I pass the call over to Bryce, I wanted to say a few words about our recent equity offering that was completed in October. The proceeds of that raise have significantly strengthened our balance sheet. We've now repaid the $75 million that was drawn on our revolving credit facility, and the remaining funds provide additional working capital support ahead of the Florence ramp up next year. We're also planning additional spending at Yellowhead next year on environmental and engineering work to support the environmental assessment process. In the third quarter, we held open houses in the local communities and initial feedback has been quite positive. So Yellowhead project permitting is off to a good start, and we continue to view Yellowhead as an important longer-term growth project for us. And with that, I'll turn it over to Bryce. Bryce Hamming: Thanks, Stuart. Good morning, everyone, and thanks for joining us today. Total copper sales for the quarter were 26 million pounds, which includes 900,000 tons of cathode. This was slightly below production due to shipment timing at the end of the quarter. We achieved a strong average realized copper price in the quarter, just shy of USD 450 per pound, in line with the LME average. And this has still continued to strengthen since the quarter end. This strong copper price translated into total revenue of $174 million, which includes $14 million from moly sales. Combination of higher sales volume and strong pricing drove a 50% increase in revenue quarter-over-quarter. On an adjusted basis, we reported net income of $6 million or $0.02 per share. For GAAP purposes, we reported a net loss of $28 million or $0.09 per share, and that was primarily due to unrealized foreign exchange losses on our U.S. dollar denominated debt and an unrealized derivative loss related to our copper collars we have in place. Adjusted EBITDA came in at $62 million, a significant increase over prior quarter, driven by the higher sales and stronger copper price. Capitalized stripping for the quarter was only $6 million, and it was substantially lower than the previous 2 quarters, and that reflects our progress deeper into the connector pit, where the strip ratio has declined and access to ore has improved. Turning to Florence. We spent USD 27 million on the commercial facility this quarter, and that brings our total capital spend since the start of construction, USD 267 million. We achieved substantial completion with our contractor in Q3, and we only have a few million more on this capital project to finish the year. This is within a few percentage points of our original construction budget since the start of 2024, and it's a testament to the execution of our capital projects team. Operating costs at Florence were $8 million in the quarter, and these will increase as we continue hiring full-time staff and ramp up our well field operations, and that will include the procurement and consumption of asset going forward now our operations are underway. We ended the quarter with $91 million of cash. In October, we closed an equity financing, USD 173 million, and we used $75 million of that to pay down our revolver. And with capital spending at Florence largely behind us now and improving production at Gibraltar. And coupled with this cash injection from this financing, our liquidity outlook is robust. We're well positioned to support the ramp-up at Florence and advance our work at Yellowhead. That concludes my remarks, and I'll now turn it back to the operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from Duncan Hay from Panmure Liberum. Duncan Hay: Just a quick one on the wellfield drilling. What's the -- can you talk through the benefits of accelerating that and bringing that forward? I mean, presumably, you're constrained by capacity in the plant. But yes, what sort of flexibility or comfort does that give you? Stuart McDonald: Well, I think initially in the ramp-up period, the key for us is going to be opening up additional wells. The constraint is going to be not the plant, but the amount of solution flows that we can get off the wellfield. So it will be key to be advancing that forward. So we've got 2 drills starting up here in November, an additional 2 early in the new year. And in Q2 and Q3 next year, we'll see those additional wells start to come online and contribute to the ramp-up. So no, it's a big part of the plan. I think it's always been part of the plan. But yes, glad that we've got a solid balance sheet, and we can move forward confidently with that work now. Duncan Hay: You could see -- I mean you're going to put guidance out in the new year, but that -- if you look at what you were thinking, say, 6 months ago, you could have more production next year given the position you're in? Stuart McDonald: Well, yes, we'll see. I mean we're not -- we're giving -- we're actually not going to give production guidance today. Obviously, the technical report is out there and that had some assumptions about drilling as well. But no, we're optimistic certainly what we see today, the early results from the well field are positive, but it's early days. And yes, we're keep pushing forward. And obviously, first copper is going to be a big milestone for us early next year. Operator: Our next question comes from Craig Hutchison from TD Cowen. Craig Hutchison: I realize you guys aren't going to provide guidance for next year until, I guess, early next year. But just curious how you guys think about the kind of milestones for declaring commercial production. Obviously, ISRs are relatively new for most people. Just how do you guys think about that in terms of production rate you need to get to, to clear commercial product and is it the 60% of design? Or is there some kind of metric that you guys look at to determine that? Stuart McDonald: Yes, Craig, we're not thinking about it in that way. I know that's a conventional way it's been done in the past for concentrators. It's going to be a steady ramp-up of production through 2026. And yes, as I said, the key is going to be bringing on new wells, but we should see sequential growth each quarter in the copper production. I don't know, Bryce, do you want to make a couple of comments about the accounting? So we see, I guess, the rules have changed in recent years. Bryce Hamming: Yes. I think the real focus will be on our -- obviously, our C1 costs. We're going to be looking at what point that our production generates operating cash flow, operating profit. And with this project, given the nature of the operating costs, that happens relatively back from what we're seeing, like we could see that by midyear. And then I think as we continue to do the ramp-up, it's really about free cash flow and making enough money there to pay for the ongoing sustaining capital with the wellfield development. And that we see sort of later by the end of next and then onwards, , of course. So those are kind of the 2 key milestones. I think first is operating profit, operating cash flow and the second really being generating free cash flow. And so that's what we're really kind of targeting as we think about that ramp up into commercial operations. Craig Hutchison: Okay. So I guess until you reach your mid next year, do we assume that some of the costs will be capitalized or the moment you guys are producing sellable cathode, you'll start booking revenues right way in terms of kind of accounting? Do we think about revenues next year? Bryce Hamming: Yes. On the accounting side, the standards changed a few years ago. We now recognize revenue once it's sold. So even the first pounds of capital will be sold. From a capital perspective, there'll be some of the -- until the plant is fully up and running, there will be some of the plant costs which get capitalized until it's sort of available for its full intended use. . But the key, I think, with this operation, as we've looked at it, is the wellfield development cost. So that's the drilling and development of the wells, that is capitalized. So there will be significant ongoing sustaining capital that's put to the balance sheet and then amortized over the life of the well. Craig Hutchison: Okay. Great. And maybe just one last question for me. Just in terms of the capital, you effectively now complete the initial capital spend at this point? Or is there still some lingering costs into Q4? Stuart McDonald: Effectively, the work is complete. There'll be a few costs, commissioning costs that kind of trickle in, in Q4. I think we still probably have some of the cost and payables, right, that will come through the cash flow. But effectively, the construction piece is complete. Operator: [Operator Instructions] There are no further questions at this time. I would now like to turn the call back over to the Taseko team for closing remarks. Stuart McDonald: Okay. Thanks, everyone, for joining. And yes, if there are other questions, feel free to reach out to any of us. And otherwise, we will talk to you next quarter. Thanks, again. .
Operator: Hello, and thank you for joining us for i-80 Gold's 2025 Third Quarter Conference Call and Webcast. Today's company presenters include Richard Young, President and Chief Executive Officer of i-80 Gold; Paul Chawrun, COO; and Ryan Snow, CFO. Before we continue, please note that some of today's comments may contain forward-looking statements, which involve risks and uncertainties. Actual results could differ materially. I ask everyone to view Slide 2 of the presentation, which is available on i-80 Gold's website to view the cautionary notes regarding the forward-looking statements made on this call and the risk factors related to these statements. Following today's formal presentation, we will open up the call to your questions. I will now hand the call over to Richard. Richard Young: Ludy, thank you very much, and hello, everyone, and thank you for joining us today. Looking at Slide 3. The third quarter marked another solid quarter of execution with visible progress toward the key milestones within our development plan that we launched 1 year ago today. We continue to advance towards our goal of creating a Nevada-focused mid-tier gold producer. At Granite Creek Underground, project ramp-up continues. Mine grades and tonnages continue to reconcile well against the model. And groundwater is being managed with greater control, thanks to the newly improved infrastructure installed in Q3, while we make progress on a permanent disposal solution, which is on track for the end of Q1 2026. As a result, we expect to meet our 2025 consolidated guidance of 30,000 ounces to 40,000 ounces of gold. Importantly, gross profit continues to improve as we stabilize Granite Creek, moving from a loss a year ago to a small profit, still a long way to go. On the development front, in September, construction commenced at Archimedes as planned, which is an important milestone marking the start of our second underground mine. Start-up activities and decline development are tracking very well. The Lone Tree plant refurbishment study is substantially complete. At the same time, drilling programs, technical studies, and permitting activities also progressed across the portfolio during the quarter, keeping us on track towards our key project milestones. The prize here is to realize the net asset valuation of the 5 gold projects as outlined in the most recent PEAs, which indicate a total valuation of approximately $5 billion under a $3,000 gold price scenario. Looking at Slide 4. I believe that the company's success depends on its people and culture. In this quarter, we continue to strengthen both. Beyond geology, Nevada's skilled workforce is a key reason it remains one of the best mining jurisdictions in the world. We've hired quality talent over the past 3 months in key roles from engineering, geology, construction management to permitting and community engagement that will help drive project execution from the ground up. With our focus on long-term value creation, we continued with steps to further mature as a company. During the quarter, we advanced an initiative to refresh our mission, vision, and values and establish a sustainability strategy with ERM, one of the leading sustainability firms in the field based on our new development plan. In addition, we're in the process of expanding our focus on performance-based culture across the organization. All of these initiatives will be rolled out shortly, and they are very important as we look to attract and retain the best people in Nevada to execute on our development plan. As i-80 grows, we're building a company that reflects not only operational excellence, but the values that we stand for. We also continue to evaluate ways to accelerate value creation, such as the potential to bring forward a pre-feasibility or feasibility study on Mineral Point, our most valuable asset to enable earlier permitting. That leads me to the recapitalization plan. We're engaged with a number of groups and remain confident that we'll secure a financing package by mid-2026 to support Phase 1 and Phase 2 of our development plan as well as the engineering and permitting efforts required for Phase 3, which is Mineral Point. I'll now turn the call over to Paul to expand on the project updates. Paul? Paul Chawrun: Thank you, and hello, everybody. Turning to Slide 5. Operations at Granite Creek and Archimedes have made good advances over the quarter. There are many moving parts across the portfolio, but we continue to execute and derisk the plan with the necessary work underway. At Granite Creek Underground, mining activities continued to ramp up during the quarter with increased access to mineralized material from ongoing stope development, assisted by improvements to the dewatering infrastructure installed during the quarter. September was a particularly strong month for advancement of the main decline with record monthly development. Total mined ounces and tons continue to reconcile well on a level-by-level basis when compared to the current geological model. As we continue to ramp up operations, we continue to increase the drill density to improve ore control and the overall mining productivity. In the quarter, we mined approximately 15,000 tons of oxide mineralized material at a grade of about 9.8 grams per ton of gold. Note, we continue to encounter higher-than-anticipated high-grade oxide material at depth. We also mined approximately 20,000 tons of sulfide material at a grade of about 10.7 grams per ton, plus an additional 15,000 tons of incremental low-grade oxide material of just under 3 grams per ton of gold. Gold sold totaled 7,400 ounces and 16,400 ounces for the quarter and 9-month period, respectively. The stockpile of sulfide material, which is processed by a third-party autoclave was normalized by quarter end. Regarding the dewatering program, we've made significant progress and are now able to remove this from the underground workings as needed. A more reliable pumping system was commissioned during the quarter, enhancing operational efficiency and enabling more effective water management in the active mining areas. Of the 2 additional surface groundwater wells planned, one is now complete, and we are currently drilling the second. To support long-term groundwater management and future operating stability, installation of a second larger water treatment plant remains on track for completion at approximately the end of the first quarter of 2026. This plant is designed to enable the ultimate discharge of water to prevent it from re-entering into the underground workings. At Lone Tree and Ruby Hill, we continue recovering gold from the existing leach pads with a total of approximately 2,000 ounces recovered and sold in the third quarter. Moving to Slide 6. Drilling of the South Pacific Zone continues to progress well at Granite Creek underground. Just under 10,000 meters of core drilling was completed by the end of the quarter from 20 of the 40 planned holes. As of today, we have completed 35 holes, but have added an additional 7 holes to the program. As outlined in a press release in September, initial assay results from the first 6 holes confirm robust high-grade mineralization throughout the South Pacific Zone with several strong intercepts that confirm continuity and the potential for expansion to the north and at depth. The deepest and furthest step-out hole intersected primary fault structures where expected and returned standout grades, including 33.6 grams per ton over 2.9 meters and 29.7 grams per ton over 3.6 meters. And overall, this intercept was over 21 meters at just over 10 grams per ton. A summary of the assay results are outlined in the September 10 press release available on our website. Encouraged by these results, drilling advanced beyond the current structural boundary, opening a new untested area to potentially expand the known mineralized areas. The program remains on track for completion in December of this year, supporting a feasibility study with an updated mine plan targeted for completion late in the first quarter of 2026. Overall, we're very excited with the turnaround progress and longer-term potential at Granite Creek. Turning to Slide 7. Things are off to a great start at Archimedes underground. In early September, we received permits to the mine -- to mine the upper level above the 5,100-foot elevation to initiate construction. Underground development is advancing above expectations, reaching approximately 300 feet at the end of the third quarter and over 1,000 feet of drift advance as of early November. Work is underway on the geochemistry and hydrogeological technical studies required to secure permits below the 5,100-foot elevation. Beyond permitting and development, infill drilling commenced in the Upper 426 zone, the first week of November as planned. Initiation of drilling in the Lower Ruby Deep zone is scheduled for the second quarter of 2026. In total, the program comprises of over 175 holes and 55,000 meters of core, forming the basis of a feasibility study targeted for the first quarter of 2027. Next, let's turn to Slide 8 to discuss the progress at the remaining projects. At Cove, over 40,000 meters of infill drilling was completed on a 30-meter spacing across the Gap and Helen zones. The results of this work delivered meaningful advances for the Cove project, which significantly strengthened our geological understanding to improve confidence and continuity and grade, improved understanding of the metallurgical response to optimize feed and gold recovery in the autoclave and positions Cove for a strong resource conversion from inferred resources to higher confidence categories. The feasibility study is progressing as planned with completion expected in the first quarter of 2026. Major permit applications are also underway in anticipation of an EIS process. Moving to Slide 9. At Mineral Point, engineering work continues to progress to support permitting and define the timing of a pre-feasibility or feasibility level study. Given the project's strong economics and potential valuation uplift, a review of the completed technical work is underway to assess opportunities to accelerate drilling and the timing of studies subject to available capital. Moving to Slide 10. At Granite Creek Open Pit, the technical baseline work to advance the project towards pre-feasibility or feasibility study continues. An initial project narrative was provided to the regulatory authorities in the quarter to initiate field studies, and we anticipate an EIS process will be required. Geotechnical drilling and other field studies have been deferred into next year due to ongoing updates to the Granite Creek Underground operating permits, which are a priority. As a result, we are currently reviewing new timing for study completion with a lens to optimize future growth plans. Granite Creek Open Pit remains a Phase 2 opportunity with the potential to contribute to company-wide production towards the end of the decade. Turning to Slide 11, for an update on the refurbishment of our Lone Tree plant. Early works progress is on track and the updated Class III engineering study is substantially complete. The study updates an internal feasibility study that was completed in 2023 with design optimization and value engineering initiatives, includes a filter tail system, updates cost estimates with significant detail as there are approximately 14,000 lines for the project controls and a detailed execution plan completed jointly with our owners team leadership. Overall, the results are largely in line with our expectations. And once finalized, we expect to share these results in the coming weeks. In the meantime, the Board approved a limited notice to proceed in the third quarter, allowing detailed engineering to begin and enable the procurement of long lead equipment, which is progressing this quarter. The plant is permitted for the existing operational components in use. However, new and revised operating permits will be needed updating for the air, water, a new mercury abatement system, and revised closure plan that incorporates dry stack tails. The necessary environmental permit application are underway for the initiation of construction. A construction decision is anticipated in the second quarter of 2026 and a plant commissioning is targeting in the first gold pour for the end of 2027. Restarting the Lone Tree Autoclave is a cornerstone investment for the company, providing increased processing capacity and higher anticipated margins for the high-grade material feed from our underground operations. And with that, I'll now pass it over to Ryan for a financial overview. Ryan Snow: Thank you, Paul. Starting my review with Slide 12. Third quarter gold sales nearly doubled over the prior year period to approximately 9,400 ounces. In addition, the company had approximately 3,400 ounces of gold in finished goods inventory at quarter end due to the timing of sales. Total revenue from gold sales increased to approximately $32 million for the quarter, driven by higher ounces sold and a higher average realized gold price of $3,412 per ounce. Cost of sales for the quarter rose over the comparative prior year period, mainly due to higher processing fees from increased toll milling of sulfide material. As Richard highlighted, we have seen a swing in our year-to-date gross profit from a loss in 2024 to a gain in 2025, a roughly $24 million increase. And Q3 marks our fourth consecutive quarter of gross profit. For the quarter, the company reported a net loss of approximately $42 million or $0.05 per share, which is similar to the prior year period. This net loss reflects the development stage of the company and our current period of strategic investment. Also, under U.S. GAAP, which we transitioned to last year, predevelopment, evaluation, and exploration costs are expensed until we declare mineral reserves. Cash used in operating activities of approximately $15 million compared to about $24 million in the prior year as a result of higher gross profit and higher working capital, partially offset by increased predevelopment, evaluation, and exploration costs that were expensed. We closed the quarter with a cash balance of approximately $103 million, a decrease from the previous quarter due to development spending and continued investment in drilling programs to support our technical studies and development plan. This balance is in line with expectations in our recapitalization plan. Moving to Slide 13. We're actively moving our recapitalization strategy forward. During the first half of the year, we secured sufficient capital to fund just over $90 million in construction activities, drilling, permitting, and technical studies across all 5 gold projects as well as the Lone Tree plant from May 2025 through mid-2026. We continue to execute a strategy that is focused on funding Phase 1 and Phase 2 of our development plan, which could include a new senior debt facility in the range of $350 million to $400 million, a royalty sale, and the potential sale of our non-core FAD project. The positive response from lenders and capital providers to date reinforces the strength of our assets and the significant value creation opportunities we see ahead for i-80 Gold. With that, I will now turn the call back to Richard. Richard Young: Well, thank you, Ryan. Looking at Slide 14, you'll see a number of catalysts on the horizon. We're entering a transformational period with a clear line of sight to major milestones over the next 12 to 18 months. During this time, we expect to complete the recapitalization to fund Phase 1 and Phase 2 of our development plan, complete the engineering study for the Lone Tree plant and commence the refurbishment, achieve steady-state production at our first mine, commence production at our second mine Archimedes and ramp up, and lastly, complete feasibility studies for our 3 underground mines as well as the Granite Creek Open Pit and possibly Mineral Point. These efforts will run in parallel with permitting and ongoing drill programs. From a valuation perspective, i-80 Gold continues to trade at a deep discount to comparable developers despite a significant resource base with a growth profile that few can match, all within one of the world's best mining jurisdictions. And at today's valuation, we think the market is only beginning to recognize the potential. That concludes my remarks. We'll now turn it over to Q&A. Ludy, please, can you open the line for questions. Thank you very much. Operator: [Operator Instructions] With that, our first question comes from the line of Omeet Singh with SCP Retail. Omeet Singh: Thanks for the update on the question. Congrats. I had 2 questions around Granite Creek specifically. So the first was, where are you mining now? And when do you expect to be mining from some of the longer levels in the South Pacific zone? And then maybe the follow-on to that would be, it seems like you continue to be finding oxides even as you go deeper. So what is your thinking around that? And do you expect that to be, say, impacting plans for the autoclave at all? Paul Chawrun: Yes. These are great questions. So first off, we're mostly in what's called the OG zone now. We have started the upper zone to South Pacific. And then next year, we're probably around 60% -- 60-40 South Pacific and then 40% on the OG zone. And then as time goes on, we'll be more and more on the South Pacific zone in the longer-term plans. And then regarding the oxidation, so it's primarily in the OG zone. There's a little bit of oxidation in the South Pacific. But fundamentally, what's happening is you get the surface water, the meteoric water and then it can oxidize some of the sulfide into oxide ore. And longer term, that represents an opportunity for us, as you point out, in the autoclave. But for the moment, we're feeding that off to our third-party processors, and we get slightly lower margins depending on the grade as the sulfide. So that's where we're at. And then would we stockpile? I think your question was, would we stockpile this ahead of our autoclave? Perhaps, and that's something we're evaluating. Omeet Singh: Can you talk about the steps you're taking to put the oxide through the Lone Tree plant? Paul Chawrun: Yes. So the autoclave can be bypassed with oxide ore. And so we're evaluating, once we get close to commissioning of that plant, there's potential for us to feed that through. Operator: [Operator Instruction] The next question comes from Don DeMarco with National Bank. Don DeMarco: So looking at the recapitalization plan, you have a number of different options to increase liquidity. One of them is a potential disposition of the non-core FAD asset. And we saw recently that the research -- the high-grade resource that was published. But in light of this resource, are you reconsidering maybe not divesting this asset? Or has your expectations, in the event of monetizing it, has your expectations increased? Richard Young: Don, that's a great question. We've always been aware that it's a high-grade resource. Unfortunately, when we look at the development plan, we will not be able to get to that until probably the end of 2030s, early 2040s. And so if there is an opportunity where we can get fair value for it, we will look at it as part of the recapitalization. But again, if we don't get a fair price, we paid $88 million for it 2 years ago in shares. It is a high-grade resource, both the polymetallic and the oxide at surface. So we'd consider it, but we are evaluating all of our options with respect to the recapitalization, and that is one potential source of capital that minimizes dilution for shareholders. Don DeMarco: Then looking at the Lone Tree Autoclave engineering studies pending release later this quarter. Of course, we're looking forward to a decision in Q2. So I guess for the sake of our modeling, how should we think about CapEx for the refurbishment and also for Archimedes development in 2026? Richard Young: So looking at the autoclave refurbishment of $400 million, to use a round number, we believe that roughly $175 million will be spent in '26 and the balance in '27. And with respect to Archimedes, we would expect the development to be roughly about $40 million in line with the PEA, and then there will be some ongoing development. The way we see our communities today, Don, is very much in line with the PEA in terms of the spend. While we did commence construction later than as disclosed in the PEA, the team does appear to be making up that ground. Paul Chawrun: Yes, yes. So in fact, if we may spend a little more in 2027 because we're advancing the development quicker. But for your model, I would use the PEA numbers. We're -- even though we started a bit later, we're more or less on track. Operator: And I'm showing no further questions at this time. I would like to turn it back to Richard Young for closing remarks. Richard Young: I'd like to thank everyone. I know it's a busy morning for conference calls. But as we close out the quarter, it was another solid quarter for us. And a year ago, we announced the development plan, and we've made great progress over the last 12 months. And we're very confident that we can execute on this plan, which will require the recapitalization, which is well underway. So we do believe that as we move into '26 and '27, we will be able to unlock the value of this significant resource base. But thank you, everyone, for your time. And if you've got further questions as you digest the materials that we've published yesterday, please give us a call. Thank you. Operator: Thank you, presenters, and ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Operator: Good afternoon, and thank you for joining the PetroTal Q3 Webcast. Manolo Zuniga, President and CEO; and Camilo McAllister, Executive Vice President and CFO, are your presenters. You can submit questions via the platform, and we will do our best to answer as many of these as possible in the time available. Without any further ado, I'll hand over to Manolo and Camilo. Manuel Zuniga Pflucker: Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's Third Quarter 2025 Results Webcast. My name is Manolo Zuniga, and I'm the President and CEO of PetroTal, and I'm joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer. Today, we're walking through the financial and operational results that we published overnight. If you access this webcast via the link included in today's press release, you should be seeing our slide presentation on your screen. Before we get started, I'd like to point out that there are disclaimers located at the end of the main presentation and also on our website. We encourage you to review those after the prepared remarks. I will now pass the microphone to Camilo to give a brief overview of our third quarter 2025 financial results. Camilo McAllister: Thank you, Manolo. Turning to Slide #2. I wanted to give a quick summary of our third quarter financial results. The message may have been lost in the rest of the press releases today, but it's worth noting that our financial results were actually quite good at this quarter. Our production averaged over 18,400 barrels of oil per day in the third quarter. which was a 21% increase over the same period last year. We benefited from unusually wet weather this year, which boosted river levels compared to 2024. We were able to export essentially 100% of our production capacity during the dry season this year, which was a very good outcome. Oil prices rebounded a little bit in the third quarter, but our net operating income fell slightly compared to the prior quarter. Even though our operating costs normalized following some expenses from pump replacements in the second quarter of 2025, our transportation costs were a bit higher this quarter. Lastly, even with a slight increase in capital spending, we still generated just over $12 million in free cash flow during the third quarter bringing our year-end-to-date free cash flow to more than $87 million. We have already returned approximately half of that free cash flow to our investors through dividends and buyback prior to the suspension of our fourth quarter dividend, which we also announced today. I will now pass the microphone back to Manolo to walk through our operational results. Manuel Zuniga Pflucker: Thank you, Camilo. Moving to Slide 3. I would like to have an open discussion about some of the operational challenges that we are facing right now. Overall, I think our track record has been very good for the past few years. But unfortunately, we seem to be dealing with a number of headwinds at the moment. We have already disclosed a series of pump failures and tubing leaks in 2025. And while I have been very happy with the swift response from our operational teams, the reality is that we need to prepare for the possibility that we may experience additional failures in 2026. Our people are preparing contingency plans right now to ensure we can minimize production next year in the event that more wells fail. Water handling has always been an important consideration for PetroTal, but the issue has become more pressing in 2025 after we brought 7 wells on stream last year. If you consider that each of our horizontal wells produce more than 10,000 barrels of fluid per day, the excess water handling capacity must be built out in advance of our development wells. Otherwise, we may have to shut in existing production to accommodate new wells, which is obviously not ideal. Moving into 2026, we had originally expected our drilling rig to arrive at Bretaña early in the year. However, for a variety of reasons, that time line has now been pushed back by at least 6 months with limited ability to generate organic production growth for the medium term, it seems clear now that our base production is likely to decline throughout the first half of 2026. When we combine the impact of falling production with a weak oil price outlook, we have been faced with some difficult choices as we finalize our 2026 development program. We would like to resume development drilling as quickly as possible, but ideally, once we have sufficient water handling capacity in place. The team is working on enhancing the activity on our existing water disposal wells to bring back up to 5,000 barrels of oil per day of currently shutting production. Turning to Slide 4. We have tried to summarize the range of production outcomes we are seeing in our development plan right now. The dark blue line shows our actual monthly production so far in 2025. As you can see, the general downward trajectory is expected to continue until at least the middle of 2026. The dotted green line shows our best case production scenario, which assumes we are able to move a rig to Bretana by the middle of 2026. In this scenario, we believe it would still be possible to drill and complete 3 development wells by the end of the year. Depending on production deliverability, it's possible PetroTal would exit 2026 with production in excess of 20,000 barrels per day. Enhancing our water disposal capacity, as mentioned before, will put us somewhere in the middle of both curves. The lower dotted blue line shows our low case production scenario, which basically assumes we are not able to complete any drilling activities in 2026. I think this scenario is unlikely for [indiscernible] possibility that we do not drill any wells next year. In this case, we would likely center our capital program on investments in water handling capacity, preparing for improvements in oil pricing in 2027. I should point out that we are also considering other scenarios that are not pictured here. For example, it's still possible we could send a drilling rig to Block 131, where we don't have to invest in water handling capacity before bringing new development wells. We are also looking at options to secure a third-party drilling rig, which will give us more flexibility to resume drilling in the event that our own drilling rig continues to be delayed. In any case, we plan to finalize our 2026 budget in January, at which point, we will provide more specific details on our development program. So please stay tuned. I will now hand the microphone back to Camilo to discuss the financial implication of our announcements today. Camilo McAllister: Thank you, Manolo. On Slide 5, we have prepared a summary of the initiatives we are undertaking to preserve liquidity as we navigate this period of uncertainty. Although we have a rough idea of the activities we must undertake in order to restore production capacity at Bretana, the reality is that we won't know our through funding requirements until we have finalized our 2026 development plan. However, we do know that with production declining and considering the prevailing outlook for oil prices, we would not be able to support both a reasonable development program and a regular dividend in 2026 without substantially drawing on our available cash reserves. So at our Board Meeting this week, when faced with a decision to let approximately $14 million out of the company in December, we felt it was in the best long-term interest of PetroTal and its shareholders to suspend the dividend immediately. I would like to stress that dividends are not the only lever we are pulling to preserve liquidity. Our Board of Directors has given us a clear directive to cut costs so that we are better positioned to return capital to shareholders at a wide range of oil prices. We will immediately focus on OpEx, where we have a very high fixed cost base at Bretana. We will also be targeting substantial G&A cuts as this is a metric on which we have not compared favorably with our peers. We will provide additional color on our cost-cutting initiatives with our 2026 guidance in January. But the reality is that any savings we achieve will be paled in comparison to the $55 million of dividends that we pay out annually. The simple fact is that dividends are by far the most powerful lever that we have at our disposal to preserve liquidity. We certainly hope to resume our return capital program as soon as possible. But that would only occur once PetroTal has achieved a structural reduction in its cost base. I will now pass the microphone back to Manolo to provide some closing remarks. Manuel Zuniga Pflucker: Thank you, Camilo. I would like to wrap up by pointing out that although our stock is understandably not reacting well to our announcement today, our conviction in PetroTal's investment case remains strong. As shown in Slide 6, the challenges we're experiencing right now are entirely aboveground issues. I would like to remind you that our team have resolved many big issues before, including COVID and multiple river blockades. Right now, we're working around the clock to resolve our current issues as well. Bretaña is still a great asset, and I am confident that the barrels will still be waiting for us once we have expanded our water handling capacity, resume drilling and oil prices have improved. In the meantime, we are well capitalized to wait things out while we formulate a sensible development plan for the Bretaña field. PetroTal has drilled 19 horizontal wells at Bretaña, and we still have 16 wells left out in our 2P reserves, plus underdetermined amount of inventory in the VS-1 formation. In other words, we're still very much in the middle of this [indiscernible]. These new wells, especially those in the VS-2 sand will require additional water disposal investments. The first 19 wells have seen Bretana generate over $400 million of free cash flow, of which we have returned more than $155 million to shareholders, and we paid a $100 million bond. These are real tangible returns that we have generated for shareholders and which we hope to replicate again in the future. In conclusion, I would like to thank our shareholders for their ongoing support. We look forward to providing more details on our 2026 development program in January. That wraps up our prepared remarks. I would like now to turn the call back to Mark for questions. Operator: Thank you, Manolo, Camilo. So first question, where is the new drilling rig? It's been over a year since it was supposed to arrive on site. Why didn't you rent the old rig for a longer period until the new one was in country? Manuel Zuniga Pflucker: The rig is in Houston in Conroe, Texas. It was supposed to arrive about midyear this year. So it's going to be about a year delay. And the old rig is decommissioned. And the old rig, we cannot use it for the new Bretana wells, which is why we decommissioned that rig. Operator: Can you share the scenarios or assumptions that led the Board to the conclusion that dividend had to be completely suspended? Could 2026 estimated CapEx exceed $100 million despite only 2 wells being drilled? And any guidance on 2027 CapEx? Camilo McAllister: So I mentioned in the remarks just now, we shared a couple of production profiles. Let's hypothetically assume a $60 oil price next year and a 15,000 barrel a day average production. With our current cost structure and discounts to Brent, that would mean the company would have a total source of roughly $175 million. And we have a starting cash balance, say, of $100 million for next year. Now our uses and that we have to pay interest, taxes, debt amortization, CapEx at CapEx levels, say, around $130 million, that leaves our ending cash at about $16 million. We have spoken to all of you in the past that we want to maintain at least $60 million in our cash flow. That is a little bit too conservative. But to us, it's prudent because we don't really know what's going to happen to oil prices next year. So as we finalize our budget, we want to make sure we have enough liquidity to have a good year. Operator: Thank you, Camilo. Is water handling capacity maxed out? And how is this level compared to expectations a year ago? Manuel Zuniga Pflucker: The water handling capacity, it is currently maxed out. And part of the plan is to be able to expand that on an ongoing basis. And the target right now is to bring it up to 240,000 from the current 170,000 barrels per day. And as we drill more wells, we're going to have to continue expanding that water handling capacity. It is part of the plans. It is just taking longer to implement all of that. Operator: Okay. Next question. Please tell us about the leakages on the 5 wells. Does this indicate that preventative work will have to be done on the other older wells? Manuel Zuniga Pflucker: The issue with the tubing that brings the oil up to the surface is that we have a corrosion caused by CO2 in the oil and the water. And that's -- the chemicals that we were injecting we're not reaching the proper point. So we have now -- we understand now the issue. We have already replaced a number of pumps where we have provided the corrective measures and the ongoing cooling campaign will do that. Of course, there are other wells that were set up in the past. Right now, we don't see any evidence of any failures. So we're hoping that nothing happens next year, but we just wanted to caution our investors that maybe we'll have more than one well that will also fail because of the same situation. But the important thing is that we now understand the issue, and we have taken the corrective measures. Operator: What happened to you expecting between 500 and 1,500 barrels a day in additional production from Los Angeles after the workover? Manuel Zuniga Pflucker: When we did the workovers, we noticed that the existing cement behind [pipe] was actually not completely stopping the water from below. And that then has forced us to evaluate how to remediate that while we plan to bring a drilling rig to start drilling an initial well -- development well in Los Angeles. So that's why production at Los Angeles has not increased. But now we have also a good understanding of what's going on, and we plan to ideally drill a well next year. Operator: Are you going to buy back shares at these low prices? Camilo McAllister: We will continue to evaluate. I mean, our message today was clear in suspending our return to shareholders, and this is obviously one way of doing it. And depending on what share price does, it's something we continue to evaluate. Operator: Thank you, Camilo. What are the reasons behind the equipment failures, quality of product, poor installation, et cetera, will they be identified as possible risks beforehand and how can you ensure they don't happen again? Manuel Zuniga Pflucker: As I mentioned before, we now understand why is that the chemicals were not reaching the proper point. And now that we are changing the pumps and the tubings, we are actually setting up the electric submersible pumps much, much higher. That also reduces the cost of these replacements. It also reduces the amount of energy that we need to lift all of the fluids as the pumps are much, much higher and also allows us to ensure that we have the chemicals at the right entry point, and we should not have issues in the future. Operator: Okay. What's PetroTal's all-in corporate breakeven oil price, including all costs and debt finance? Camilo McAllister: From a cash perspective, is about $60 per barrel. Operator: Thank you, Camilo. There's an exploration commitment to drill 2 wells in Block 107 by February '27, will today's update affect this commitment and any update in finding a farm-out partner? Manuel Zuniga Pflucker: The commitment that we have, we plan to have an extension given to us. So that will give us more room to maneuver. And we continue to try to find a partner or partners to come in. There's a couple of companies looking at information. So we will continue looking to be able to drill a well in the future. Operator: Can you explain delays behind the rig? You didn't explain why it was going to be delayed by at least 12 months. Can you expand at all? Manuel Zuniga Pflucker: Yes. We had issues during the commissioning of the rig. We ended up switching contractors, and that has delayed the process all of this time, unfortunately. So when you do a change in contractors, there's always delays, as you can imagine. Operator: Okay. Can you give any more guidance on how much CapEx you may spend on increased water handling capacity? And when? And has this expectation changed over the course of the year? Manuel Zuniga Pflucker: The expectation, it doesn't change. We have a plan that we try ideally to have the water disposal capacity at about the same time as we have -- we drill new wells. I have explained this since I raised the initial capital 8 years ago. Unfortunately, it's always difficult to have a perfect match. And so now, as I mentioned earlier, from the 170, we want to go to the 240, eventually, we're going to go to the 300 as more wells come in. Operator: Thank you, Manolo. Next question, it sounds like the need for increased water handling facility has been a bit of a surprise. Have the recent wells been seeing higher water cut levels than you expected? Manuel Zuniga Pflucker: The water handling facility has not been a surprise. We always knew this. I will always give examples to our investors that we have 20 wells, you're going to have to manage 200,000 barrels of fluid. And that's a 10,000 per well. If the wells produce 15,000 barrels per day, then you're going to have 300,000. So that's always been that. Our original 3P case had a total of 20 wells. So I will provide that example to the investors. Amazingly, we are now surpassing the original 3P case. That's something I promised investors that we would do, that we are limited right now on total fluid handling of about 200,000, which, again, initially, that was my 3P goal, 200,000. Right now, if I open all of the wells fully, we will be at 300,000. So we're short. So we need to carry up to add more handling capacity. We believe we can go up to 240,000, and that will allow us to open up oil wells to bring an additional 5,000 barrels of oil per day in the next few months, and we're working on that, which is why in that graph in the presentation, I mentioned, with that, we will be somewhere between the 2 curves as shown. Operator: Thank you, Manolo. Looking at the reserves auditors 2P profile and future development cost at year-end 2024, how much peak water handling capacity were they assuming? And how much of the $645 million of the future development cost in the 2P case was for water handling? Manuel Zuniga Pflucker: How much was water handling? I will need to go back and check that. I can -- I see the person that asked that question to answer that. I don't have the number exactly with me. But again, given that the wells on average produce about 10,000 barrels of fluid, on the 2P case, we have 32 wells. So we're going to need to manage 320,000 barrels of fluid per day and that is the follow-up goal. So from 170, 240, 320, and then we event -- actually, of the 1P case nowadays is 32 wells. The 2P is 40 wells. So that will mean that we will go to 400,000 in the future and beyond. And the more we can process, the more oil we can produce and the more money we can make because here, we are to add value, not only production. Operator: Okay. Thank you. How much CapEx does the low case full year '26 production profile of 12,000 barrels a day assume? Camilo McAllister: We will provide that guidance in January as we finalize the budget. Operator: Thank you, Camilo. And a follow-on, in light of production and the rethink on development, how are you seeing 2P reserves directionally versus year-end 2024? Manuel Zuniga Pflucker: Well, we have -- we are going to end up producing about 7 million barrels this year. And given that they have been no drilling, I imagine the reserves are going to drop accordingly. So 2P reserves were a substantial number of 108 million barrels. So we are going to still have a lot of oil to be produced. As mentioned in my remarks, we're in the middle of the game. Operator: Thank you, Manolo and Camilo, if you want to move on to any closing remarks at this stage. Manuel Zuniga Pflucker: Well, I want to thank our shareholders for all their support. As we have mentioned, we have some headwinds against us right now. As also mentioned, these are all aboveground issues that we need to tackle and we are tackling. I have promised also investors that this project was going to be a free cash flow machine that requires that we complement the number of wells with the water handling capacity because it is to be truly a water -- a free cash flow machine in the future. So this is a hiccup that we're going to have for a year or so, and we will try to go back to paying dividends as soon as possible. Well, with that, I want to thank everybody. Camilo McAllister: Thank you, everyone.
Delphine Cassidy: Good morning, everyone, and welcome to Orica's 2025 Full Year Results. I'm Delphine Cassidy, Chief Communications Officer; and I'm delighted to have you with us today. In the room with me is Sanjeev Gandhi, our Managing Director and CEO; and James Crough, known as Jamie, our CFO. Both Jamie and Sanjeev will be presenting shortly. We thank you for your support and value your participation and interest in Orica. As per normal, there's ample time for questions after both Jamie and Sanjeev present. So feel free to queue up, and we'll address your questions as soon as possible. I can confirm that the materials that we'll be covering today have been lodged with the ASX and can be found on the ASX and Orica websites. Before we start, can I ask you to have a look at the disclaimer on Slide 2. Thank you. And with that, I hand it over to Sanjeev. Sanjeev Kumar Gandhi: Thank you, Delphine. Good morning, everyone, and thank you all for joining the call today. I'll start very quickly with Page 3, which is just a very brief recap of who we are: The world's leading mining and infrastructure solutions company. Let me start with our #1 priority, safety, on Slide #5. I am extremely pleased to report that this year, we've had 0 fatalities across our operations, and our serious injury case rate has fallen to 0.093, the lowest ever on record for Orica. This outcome reflects our focus on safety leadership wherever we operate. We have empowered our people to speak up and stop work whenever they identify risks. While we celebrate this amazing improvement, we remain absolutely vigilant. Safety is nonnegotiable given the environment that we operate in. We are continuing our targeted safety programs, for example, focusing on preventing vehicle and equipment collisions to ensure every Orica employee and contractor goes home safe. I'm also pleased to note that we recorded 0 significant environmental incidents in FY 2025, underscoring our commitment to operating responsibly in every community where we work. Turning now to sustainability on Slide 6. There is a small typo, and I'd like you to correct that, which is under the Scope 3 column in the second last line, the word phase is missing, so it should read as reduction pathways as part of the next phase of decarbonization. I'm sorry about that. Our commitment to decarbonization is delivering measurable results. We have significantly cut our greenhouse gas emissions and have already eliminated 1 million tonnes of CO2 equivalence at our Kooragang Island site alone through new abatement technology. Overall, our gross Scope 1 and 2 emissions are now 51% below 2019 levels, well ahead of schedule, and we are firmly on track to meet our interim target of a 45% net reduction by 2030. This puts us in a strong position as we work our way towards our ambitions of net zero emissions by 2050. During the year, we completed the first full year of tertiary abatement at Yarwun and commenced sourcing renewable electricity in Australia and in Canada, lifting our renewable power coverage to 22%. Renewable electricity procurement in Australia and Canada is currently supporting our goal of achieving 100% renewable electricity by 2040. We continue to explore emerging low-carbon technologies from renewable hydrogen to alternative raw materials to carbon capture and utilization. These efforts demonstrate that our focus on sustainability is not only the right thing to do for the planet, but it's also supporting efficiency and innovation in our business. Turning now to our financial results for FY 2025 on Slide 7. Financial performance in FY '25 has been outstanding. Double-digit profit growth, strong free cash flow and value generation for shareholders, all while strengthening our balance sheet. This gives us a great platform to build on for the future. Let me walk you through the highlights. Our EBIT rose 23% to $992 million year-on-year. This is the highest earnings we have achieved in the last 13 years. This reflects the strength of our strategy, the resilience of our business model and the outstanding execution of our global teams. Net profit before significant items increased 32% to $541 million, and earnings per share rose by 29% to $1.118. This represents the value we are delivering to shareholders through disciplined growth and operational excellence. Notably, we've seen earnings growth across all 3 of our core segments and across all of our regions. Blasting Solutions, digital solutions and specialty mining chemicals have contributed to the strong earnings growth. This demonstrates the strength and resilience of our diversified portfolio and the success of our Beyond Blasting strategy. Our cash generation remains robust with net operating cash flow up 18% to $949 million. Leverage ratio is now at 1.39x. Return on net assets has improved to 13.8%, reflecting our continued focus on capital efficiency, asset utilization and profitability. The growth in earnings has translated into higher returns for shareholders, enabling the Board to declare an increased final dividend for FY 2025, bringing our full year dividend well within our targeted range of 40% to 70% payout ratio. We are pleased to share our success with investors in this way. In addition, our on-market buyback of up to $400 million is nearly complete, and the Board has approved an increase of the buyback by a further $100 million to a total of $500 million to be completed by March next year. This capital management initiative, our first ever share buyback in more than a decade, reflects our confidence in Orica's future and our commitment to maximizing shareholder value. Jamie will talk more on the financial performance shortly. Looking at the earnings across our segments and our regions. Earnings were up across all regions and all business segments. Starting with Australia, Pacific and Asia. APA delivered EBIT of $658 million, up 23% on the prior year in an environment with significant weather events in Australia and also in Asia. In Blasting Solutions growth was driven by higher demand for value-added products and services, which improved our product mix and margins. We benefited from successful contract renewals and wins and increased manufacturing output due to the nonrepeat of the major turnaround at Kooragang Island in the prior year. These gains more than offset some softness in demand in some areas, for example, lower thermal coal volumes in Indonesia. We also realized a one-off $15 million benefit from selling carbon credits generated by our abatement projects in Australia. In Digital Solutions, robust fundamentals in gold and copper fueled greater uptake of our Axis mining intelligence products, and we saw significant customer adoption of OREPro and OREPro 3D for blast modeling. In Mining Chemicals, strong gold demand drove record sodium cyanide sales supported by new customer wins and our ability to reliably supply customers through our global network of assets. Moving to North America. North America reported EBIT of $212 million, up 15% year-on-year. Our technology leadership and focus on future-facing commodities like copper and gold has provided a strong platform for growth in this region. Demand for our premium blasting products remained strong, and adoption of our patented WebGen wireless blasting system, accelerated, driving growth in the region. These positives helped offset external headwinds, including reduced demand from the U.S. thermal coal sector and a subdued quarry and construction market in the United States. We continue to maintain disciplined cost control in our business. In Digital Solutions, North America saw an uplift in demand for blast measurement tools like FRAGTrack and for in-situ geotechnical monitoring instruments. In Mining Chemicals, we successfully completed major safety upgrades at the Winnemucca cyanide plant in Nevada, which will support higher production going forward. The integration of the Cyanco acquisition in North America is substantially complete, and we are already unlocking customer synergies between explosives and the cyanide business. In EMEA, which is Europe, Middle East and Africa, EBIT delivery was $101 million, which is up 18% on prior year. This strong result was underpinned by increased demand for advanced solutions in underground mining as well as a pickup in construction and mining activity in key markets across this region. Leveraging our global experience, we achieved deeper penetration in important emerging markets across Africa and Central Asia. At the same time, we maintained a firm focus on commercial discipline and strategic portfolio optimization, which improved the quality of our earnings. In Digital Solutions, EMEA's earnings benefited from new contracts in major growth regions, and several new partnerships were executed for environmental monitoring solutions. We also saw a growing uptake of OREPro and OREPro 3D software and continued growth in GroundProbe radar deployments and services across the region. In Mining Chemicals, better customer mix and the use of our multi supply sources boosted cyanide margins, and we expanded our emulsifier products into new emerging markets. Finally, to LatAm. Latin America's EBIT was $90 million, up 4% on the prior year. This was a good outcome given the challenges in this region. We achieved rapid customer adoption of new blasting technology, notably increased use of WebGen wireless blasts and 4D tailored explosives. While the competitive dynamics remains challenging in this region, good progress has been made on securing new business and new contract wins. The Latin American team have also implemented portfolio adjustments and operational improvements aimed at managing costs and the ongoing supply challenges. In Digital Solutions, Latin America saw a very strong uptake of our RHINO monitoring technology and continued growth in GroundProbe and Axis product sales. We are leveraging the Terra Insights acquisition synergies to accelerate adoption of our Geosolutions products. In Mining Chemicals, we successfully expanded into new high-growth mining regions in Latin America and benefited from customer synergies between Orica and Cyanco, which are driving higher market penetration for our cyanide and blasting offerings. We also ramped up our Cyantific technical services in the region, providing added value to our gold mining customers. Moving to a segment view, starting on Slide #9. Starting with Blasting Solutions. Across all our regions, the core explosives and blasting services business performed exceptionally well. EBIT for Blasting Solutions was $868 million, up 15% year-on-year. We achieved margin expansion by shifting further towards higher-value premium products and by deploying more of our patented LP and the non-repeat of last year's ammonia shutdown at Kooragang Island contributed to the earnings uplift. Moving to Digital Solutions on Slide #10. The Digital Solutions segment is rapidly scaling up and has firmly established itself as a key growth engine for Orica. EBIT from Digital Solutions was $92 million, up 32% versus prior year. This step-up in growth reflects accelerating customer adoption of our digital products and the integration of the recent acquisitions. All parts of the digital portfolio contributed strongly. In Orebody Intelligence, improved exploration activity drove higher demand for our Axis analyzers and sensors, we are also advancing a strong pipeline of new products for release in 2026 focused on gold and copper exploration and production. In Blast Design and Execution, recurring software and sensor subscriptions are growing steadily, supported by robust gold prices that encourage mining customers to invest in or precision tools like OREPro and OREPro 3D. In Geosolutions, cross-selling is driving growth with many blasting customers also adopting our monitoring systems. GroundProbe's recurring monitoring services revenue continues to increase. Terra Insights, which we acquired last year, delivered earnings ahead of its investment case. Cross-selling opportunities are being realized, for example, by offering monitoring solutions to our blasting customers. The combination of growing revenue streams and high customer retention demonstrates Orica's delivery of technology-focused growth, reinforcing our position as a leader in digital mining solutions and clear demonstration of growing beyond blasting. Turning now to Slide 11, which demonstrates how Orica is driving growth by expanding not only our addressable market, but also deepening our market penetration in the digital space. We continue to see robust fundamentals in the digital space. Exploration activity is accelerating, and the mining industry's rapid digitization is driving demand for advanced instrumentation and integrated digital solutions, areas where Orica is setting the pace. Orica's innovation and R&D are not just responding to market needs, they are actively creating new markets. By bringing innovative solutions to the mining sector, we are expanding offerings to our customers, and in turn, growing the total addressable market itself. Our total addressable market has expanded at a 39% compounded annual growth rate since 2023, driven by both organic innovation and the successful integration of strategic acquisitions, Axis and Terra Insights. Digital Solutions revenue has grown even faster at a 30% compounded average growth rate after adjusting for the timing of the acquisitions. The years following the Axis and Terra Insights acquisition have delivered clear synergy benefits, accelerating both our TAM and the revenue growth. As shown on the previous slide, the high proportion of recurring revenue and low churn demonstrates the value and stickiness of our offerings and the strength of our customer relationships. Moving on to Specialty Mining Chemicals on Slide #12. EBIT was $101 million, up 47% on the prior year. Robust gold market fundamentals with gold prices and demand hitting all-time highs have driven significant demand for sodium cyanide and our services. We achieved strong sales volume, supported by new customer wins and by leveraging Orica's unrivaled global manufacturing and distribution network to ensure reliable supply. Our integration of Cyanco, which we acquired in 2024, has progressed very well, and we are beginning to realize the synergy benefits across the blasting and the cyanide businesses. During the year, and as previously disclosed, we completed planned safety upgrades at the liquid cyanide facility at the Winnemucca plant on plan. Similar safety upgrades are being completed on the solid cyanide facility in October. We expect full production at Winnemucca from FY 2027 onwards, and we expect to start up the Winnemucca site with full production from the end of next week. Our Yarwun and Alvin cyanide plants ran at record rates. And despite undertaking major safety and maintenance upgrades at our Winnemucca plant, our global supply chain allowed us to meet customer needs without any interruptions. We have continued to expand our emulsifier product portfolio, increasing exposure to copper and iron ore markets and entering into new regions and growing our revenue streams. We've launched the new OptiOre range of mineral processing reagents targeting future-facing commodities like copper and critical minerals. Our scientific technical services offering for gold processing has seen steady uptake, providing extra value to customers beyond the chemical itself. In summary, our Specialty Mining Chemicals business today is the world's largest mining-focused sodium cyanide producer with an integrated sodium cyanide production network of approximately 240,000 tonnes annually. This, along with the positive outlook and demand for gold, underpins the continued growth forecast in the medium term. I will now hand over to Jamie to talk about our financial performance in detail. James Crough: Thank you, Sanjeev. Good morning, everyone, and thank you again for joining us today. I'll move to the key financial metrics shown on Slide #14. As Sanjeev mentioned earlier, the continued successful execution of our strategy is reflected in our financial performance. Whilst top line sales revenue grew by 6% to $8.1 billion this year, our earnings before interest and tax rose to $992 million, an increase of 23% compared to the prior year. I'll provide more details on this in the next slide. Net profit after tax, pre individually significant items, increased by 32% to $541 million. As previously disclosed at the half year and our business update in September, significant items totaling $379 million after tax have been recognized this year, primarily relating to impairment and restructuring of our Latin America blasting business, in addition to litigation costs. Of the total significant items, approximately $235 million is noncash in nature, mainly relating to the Latin America impairment. After inclusion of these significant items, statutory net profit after tax finished at $162 million for the year. Net operating cash flow finished at $949 million, an increase of 18% versus the prior year, reflecting continued strong cash generation across the business in addition to disciplined working capital management. Return on net assets improved to 13.8%, an increase from 12.8% in the prior year. Our strong performance in 2025 has enabled us to deliver continued improvement in EPS, pre-significant items, to $1.118 per share, an increase of $0.254 per share or 29% from last financial year. A key highlight of our results throughout 2025 is the strong alignment between improved earnings, stronger cash generation and importantly, maximizing total shareholder returns over time in line with our refreshed capital management framework. Turning now to Slide #15. We shared our refreshed capital management framework in March this year, and the framework is designed to provide clarity and transparency in how we think about deploying capital across the business and through the cycle. We've applied the framework consistently throughout this year and the quality of our earnings demonstrates a number of proof points. These include continued strong operating cash flow, efficient working capital management, disciplined capital expenditure and investment, and importantly, we have safeguarded the strength of our balance sheet and, as a result, delivered increased returns to shareholders. A clear example is our successful on-market share buyback. In March, we announced an on-market buyback of up to $400 million to take place over the following 12 months. I'm pleased to share that this initial program is substantially complete with $399 million of shares repurchased to date, representing 4.1% of issued capital. Given our robust position, the Orica Board has approved an increase of up to an additional $100 million to the existing on-market buyback for a total program of up to $500 million. The buyback is expected to be fully completed by March 2026. Over the coming slides, I'll talk to you the key aspects of our 2025 results in more detail, which highlight the continued successful application of our capital management framework. Turning now to the EBIT bridge on Slide #16, where you can see that we've delivered improved earnings across all reporting segments. Starting with Blasting Solutions. Volume mix and margin increased by $81 million from the prior year, inclusive of $15 million of proceeds from the sale of carbon credits recognized in the first half. This was driven by continued strong demand for our higher-margin premium products and technology solutions, a positive recontracting cycle and continued commercial discipline. Growth in volume mix and margin slowed in the second half due to lower sales volumes in Indonesia and the U.S. due to reduced thermal coal demand. Margin growth from our blasting solutions technology product range increased by 46% in 2025 on top of the 55% increase delivered in 2024 with strong continued demand for the safety, efficiency, environmental and cost benefits delivered to customers through our WebGen wireless blasting, 4D and Fortis specialty emulsion ranges. In the Digital Solutions segment, earnings increased 32% to $92 million, an increase of $23 million from the prior year. Growth was underpinned by strong customer uptake of our digital platforms and sensor technology and acceleration in global exploration activity, particularly in the gold and copper segments and increasing recurring revenue. We also benefited from the full year contribution of the Terra Insights acquisition, continuing to realize the benefits of cross-selling opportunities across the Geosolutions portfolio with the integration of GroundProbe and Terra essentially complete. Our FRAGTrack, OREPro and OREPro 3D products continue to attract significant customer demand, together with our Axis Mining Technology business, acquired at the bottom of the cycle, well positioned to support existing business and new contract wins, in line with strong metals exploration activity. In the Specialty Mining Chemicals segment, earnings increased by $32 million to $101 million, an increase of 47% from the prior year. This growth reflects the full year contribution from the Cyanco acquisition, a critical investment supporting continued strong demand for sodium cyanide amidst sustained high gold prices, together with new contract wins in both the cyanide and emulsifier product ranges. Pleasingly, our recent acquisitions have created opportunities to further bundle digital monitoring and optimization services with cyanide supply. As Sanjeev mentioned earlier, Cyantific and OptiOre provide opportunities to expand revenue streams and importantly, grow the segment beyond cyanide. Across our blasting solutions and specialty mining chemicals manufacturing assets, we've also delivered improved performance versus the prior year. Earnings increased by $36 million primarily attributable to the non-repeated costs incurred from the 6-yearly Kooragang Island ammonia plant turnaround conducted in the first half of 2024. Pleasingly, the strong production performance at our Yarwun cyanide facility continued throughout the second half, which is important as we progress through critical safety upgrades at our Cyanco-Winnemucca production facility. Maintaining uninterrupted supply to our customers and having the flexibility to adapt supply points across our chemical supply chain reinforces Orica's position as the world leader in the mining-focused production of sodium cyanide. And finally, global support costs are lower than the prior year, primarily due to the classification of litigation costs as a significant item in 2025, some small property sales and ongoing disciplined cost management. In summary, our earnings growth has been broad-based, supported by increased contributions from every segment with a continued focus on execution and commercial discipline. Consistent with our capital management framework, this demonstrates our objective of resilient through-cycle performance and pleasingly, this has continued into the start of the new financial year. Turning now to trade working capital on Slide #17. Encouragingly, the improvements that we've focused on over the past 18 months have been maintained this financial year. Total trade working capital cycle days on a 12-month rolling basis are in line with the prior year. Days sales outstanding remained consistent at 46 days, reflecting our sustained commercial discipline as sales revenue grew by $482 million or 6% during the year. Days inventory held increased by 2 days, seen as a prudent measure given significant geopolitical uncertainty, particularly in the U.S. and raw material shortages occurring through 2025. Importantly, we've been able to fully offset this through a 2-day improvement in rolling days payable, closing at 51 days and moving us closer to top quartile total trade working capital performance, relative to industry benchmarks. Absolute trade working capital finished at $620 million. Foreign exchange had a $30 million unfavorable impact, partly offset by $14 million in efficiency improvements with ending trade working capital to sales finishing the financial year at 7.6%, improving from 7.9% at September last year. This disciplined working capital results supported the increase in net operating cash flow and remains a key focus area for the organization. Turning now to Slide #18. Total capital expenditure for 2025 was $460 million, broadly in line with the prior year. Of this, $286 million was allocated to sustenance capital expenditure. This included successful completion of turnaround events at our Carseland and Kooragang Island sites in the first half and the Winnemucca and Alvin facilities in the second half. We continue to invest in our mining services downstream business, including enhancements to our mobile delivery systems fleet in growing markets to support increased sales of specialist emulsions such as 4D together with investments in our cyanide barge fleet to support increased sales. Allocation to growth capital expenditure was slightly higher this year with $172 million invested in line with our strategy of supporting growth in the Digital Solutions segment, capacity expansions and efficiency improvements in our continuous manufacturing plants and further development of technology-focused blasting solutions. Growth capital expenditure is closely managed in line with the capital management framework where investment must achieve hurdle rates significantly above our pretax weighted average cost of capital as evidenced in our growing margins this financial year. Sustainability-related capital expenditure was $2 million following completion of key projects such as tertiary catalyst abatement across our nitric acid plants. We expect 2026 capital expenditure to remain broadly in line with the prior year. Moving now to Slide 19 on the balance sheet and liquidity. We continue to strengthen our balance sheet during the year with a number of key funding initiatives successfully executed. During the year, we refinanced or extended $461 million of existing committed bank debt facilities and added a new $90 million debt facility. In July, we also announced the successful issuance of USD 390 million in the long-term notes in the U.S. private placement market. Now as an indicator of how Orica's balance sheet is viewed externally, investor demand for the notes were strong, with a total order book of circa USD 4 billion, and this resulted in funding at favorable pricing. As a result, at 30 September, the average tenor of drawn debt was 5.5 years, an increase from 4.7 years at the end of September 2024. Net debt ended at $1.9 billion, excluding lease liabilities, an increase of $304 million from the prior year. This increase was driven by cash outflows, including $630 million of on-market share buybacks and dividends, together with $415 million of strategic capital investment. This was partly offset by our strong operating cash inflows. Consistent with our capital management framework, our leverage ratio is 1.39x EBITDA and sits comfortably within the lower half of our target range of 1.25 to 2x. We maintained a robust liquidity position. At year-end, we had $747 million in cash and $1.6 billion in undrawn committed facilities. And in December 2024, Standard & Poor's reaffirmed Orica's BBB stable investment-grade credit rating. In summary, our balance sheet is strong. It positions us well to weather external volatility, support continued delivery of our strategy and, ultimately, increased returns to shareholders. Turning now to the dividend slide on Page 20. Under our capital framework, we have maintained our target dividend payout range of 40% to 70% of underlying earnings. The Orica Board of Directors today have declared a final dividend of $0.32 per share, which brings the full year dividend to $0.57 per share, unfranked, representing a full year payout ratio of 50.2%. This represents a $0.10 per share or 21% increase on the 2024 full year dividend of $0.47 per share. This increase, together with the successful on-market share buyback, demonstrates our commitment to delivering enhanced returns to shareholders in a sustainable and disciplined manner, consistent with our capital management framework. In closing, Orica's outstanding financial performance and disciplined capital management have positioned us for sustainable and enduring growth and to maximize shareholder returns. Our resilience, strategy, talented global team and commitment to innovation, ensure we are well prepared for future opportunities and to drive continued success for all of our stakeholders. With that, I'll now hand back to Sanjeev. Sanjeev Kumar Gandhi: Thank you, Jamie. Moving now to Slide 22. Our strategy is driving growth and market leadership by delivering innovative solutions that create value for our customers. This approach has underpinned consistent performance improvement over the past 5 years and notably the strong performance in FY 2025, a 13-year high. The successful integration of acquisitions, the technologies we have deployed and the markets we've entered are all translating into strong results. Orica today is an exciting and innovative company with a resilient business model and continues to deliver shareholder value going forward. Moving to Slide 20 to Slide 23. We continue to increase our exposure to resilient commodities while reducing reliance on thermal coal. This shift ensures we are aligned with global trends and future-facing commodities, supporting both growth and sustainability. Our strategic priorities remain fully aligned with the growth drivers I've discussed, continue to grow our core blasting business, drive uptake of digital solutions and the recurring revenue they bring and expand our specialized offering in mining chemicals. Underpinning these priorities is an unrelenting focus on commercial discipline and quality of earnings, operational excellence and collaboration with our customers on new technologies. Turning to Slide 24, I will give you an update on our strategic scorecard. Orica remains firmly on track with our safety, sustainability and financial targets. We are maintaining a strong safety record and have achieved our 2026 net Scope 1 and Scope 2 emission reduction targets ahead of schedule with further reductions planned by 2030 and 2035. We are driving organic growth, accelerating technology adoption and expanding into high-growth markets and future-facing commodities. Our average 3-year RONA is tracking within the target range of 13% to 15%, and this has been increased to 13.5% to 15.5% for FY 2026 to 2028. We maintain a dividend payout ratio, and our annual capital expenditures aligned with strategic priorities. Turning now to the outlook for FY 2026 on Slide 25. We remain excited about Orica's future. The strong performance in 2025 has given us an excellent momentum entering the new year. Despite external uncertainties, our core markets and business fundamentals remain robust. We expect to continue growing EBIT across all 3 business segments in the year ahead. In Blasting Solutions, demand for premium products and advanced services is expected to stay strong, driven by increased customer penetration and ongoing technology adoption. Earnings growth will be supported by improved product mix, recontracting margin uplift and commercial discipline despite lower thermal coal demand in Indonesia and the U.S. and a planned turnaround at the Carseland plant in Canada. In Digital Solutions, we see continued strong earnings growth. Mining companies are increasingly embracing digitization, automation and productivity analytics. We plan to further use the adoption of our digital offering across our customer base and use AI to improve productivity outcomes. This, combined with recurring revenue streams and an expected further uptick in exploration activity, will drive earnings higher in this segment. In Specialty Mining Chemicals, the outlook is very encouraging. Gold prices remain elevated, and industry forecasts point to sustained strength in demand for gold and hence, sodium cyanide. With our integrated sodium cyanide production network, we are well placed to supply this demand and win additional contracts and anticipate further earnings growth from this segment. Beyond the segment outlook, we expect depreciation and amortization to be $520 million to $540 million, slightly higher, reflecting recent investments. Given the ongoing geopolitical challenges and external market volatility, we will increase our focus on cost management to protect and strengthen our business performance. Net finance cost, effective tax rate and capital expenditures should be broadly in line with FY 2025. The sale of our Stage 2 surplus land at Deer Park is on track to complete during 2026. We do expect ongoing litigation costs will be around $50 million to $60 million, as previously disclosed. As Jamie mentioned, the increased share buyback of up to $100 million is expected to be completed by March 2026. Following the recent incident at CF Industries Yazoo facility on the 5th of November, we received a notification on 10th of November from CF Industries claiming force majeure that will impact certain of its contractual obligations and indicating that it is presently unable to manufacture industrial ammonium nitrate. We are assessing the notice, and we will leverage our global manufacturing and supply network to minimize any potential impacts. Looking beyond 2026 on Slide #27. We are confident that Orica will deliver sustained profitable growth and accelerate value creation for shareholders. Some key drivers over the midterm in the next 3 to 5 years. In Blasting Solutions, we expect our core blasting business to deliver GDP plus earnings growth through the mining cycle. We expect to grow faster than the mining industry. This will be driven by increased penetration of our products and services, continued rollout of our advanced blasting technologies and further improvements in our margin mix. The fundamentals of our core market are strong. Commodities like gold, copper and critical minerals are in high demand, and customers are seeking productivity and sustainability improvements that our solutions provide. In Digital Solutions, we expect further acceleration in earnings growth moving from low double-digit percentages into the mid-teens EBIT growth. The mining industry's digital transformation is just beginning. And Orica, through our BlastIQ, OREPro, GroundProbe and Axis Technologies, is at the forefront of this trend. We have opportunities to grow our digital services in both our existing customer base and in new markets like civil tunneling and infrastructure. High recurring revenue and low churn will underpin this growth, making it a prominent earnings stream. In Specialty Mining Chemicals, we now expect earnings will grow from mid-single digit to high single-digit EBIT growth over the medium term, reflecting the strong fundamentals in gold and potentially increase demand in base metal processing. We will continue to be laser-focused on translating growth into improved returns. We are targeting to deliver a 3-year average RONA of 13.5% to 15.5% over the next 3 years, an upgrade from the previous 13% to 15% range. This will be driven by higher earnings and disciplined capital use. We will maintain a strong balance sheet with a leverage range of 1.25 to 2x EBITDA and continue our dividend policy of 40% to 70% payout ratio. In summary, the outlook for Orica is very positive. We have built considerable momentum in FY 2025, and we expect that momentum to continue into this financial year. Our markets, especially in commodities like gold, copper and critical minerals, are favorable. Our technology-led strategy is resonating with customers as demonstrated by the uptake rates. And our financial discipline provides a strong foundation. We are confident in our ability to continue delivering profitable growth across all segments and to create substantial value for our shareholders and customers in the years ahead. With that, I'll now open to Q&A. Operator: [Operator Instructions] First question comes from the line of William Park of Citi. William Park: Firstly, just with respect to the headwinds that you've called out in Indonesia and the U.S., could you be able to provide some quantitative color around the earnings impact that you've seen in FY '25 for your Blasting Solutions business and your expectation of those headwinds into '26, please? Sanjeev Kumar Gandhi: Yes. So I'll start with the U.S. We've seen -- William, we've seen a 10-year trend of coal extraction in the U.S. declining gradually. That has not changed. Now we do have the new U.S. government talking about bringing out more coal, and that might give us a bit of an uplift, but it's still early days. Now I'm not sure whether this is going to happen, but I can tell you structurally the challenge that the United States has today. There's a lot of investment going into data centers driven by AI. And as you all know, data centers need a lot of energy. Now the U.S. power grid is kind of maxed out at the moment. There's not been significant investments there, and they have shifted from coal-based power to gas-based power obviously because of the cost arbitrage because gas is still very competitive there. Now if there is the surge, this predicted surge in electricity consumption as these data centers come online, the grid does not have capacity to supply power. The only latent capacity that the U.S. grid has is coal-based power plants because they are not running at full loads today. Now if that comes true, then we will see an uptick in coal consumption. But I'm not -- I can't predict if that will happen and when that will happen, but that's a possibility. So in our forecast for 2026, we have expected and we have anticipated a continuous gradual decline in coal output in the Permian Basin in the United States, and that is reflected basically in our forecasts. Indonesia is interesting. Indonesia has been a relatively new trend. Since June of this year, we've seen a decline in exports of Indonesian coal into China and into India. And so it's been recent and it's been low -- I would say, around 10% decline in exports of coal from Indonesia overseas. And there are 2 reasons for this. One is obviously the coal pricing has corrected downwards. And the gap and the premium that customers pay power customers for the high-quality coal, so the low ash content, high low sulfur content, high calorific value coal versus the lower quality coal, which Indonesia offers has shrunk. And this means that the higher quality coal, which is mainly Hunter Valley coal, Mongolian coal has stronger demand. So there's been a bit of a shift from Indonesian coal to the Hunter Valley coal and to the Mongolian coal. Now this obviously benefits us because it's a shift from the Indonesian demand into Australia and Mongolia, where we are active. But that has been the first trend. The second trend is that there's been an increased coal output of Chinese coal. So as a result, we have seen this decline in Indonesian coal exports. And we've seen a similar trend in India. India has been increasing their own coal production where we are active as a mining services provider, but they have slightly reduced imports from Indonesia. Now whether this is a long-term trend, whether this is going to continue, it's hard to say because China issues, coal quotas once a year. So we'll have to wait till after Chinese New Year to see what the new coal quotas are, which are indicators of how much China will import in 2026, '27 onwards and what would be the impact of Indonesian coal. So that's all I can tell you at the moment. It's a very recent development. We are watching it closely. But obviously, we do have exposure to thermal coal in Indonesia because we are the largest mining services provider in that country. William Park: That's very clear. And then my second question relates to the force majeure that you've alluded to involving CF Industries. Can you just remind us, so the volume take-up on an annualized basis was around 800,000 tonnes from memory. Presumably, all of this is at risk. And can you just provide some color around some of the options that you have available to effectively replenish these volumes? And maybe some color around, I guess, the contracted price and spot price. Any color around that would be great. Sanjeev Kumar Gandhi: Yes. Thanks, Will. Look, it's a very recent development. It's just -- we received the force majeure letter 2 days back. So we are obviously looking through it and analyzing what it means to us. You're right, the contract has an obligation to offtake up to 800,000 tonnes, but our nominations depend on our market needs. And obviously, given in mind the coal decline and all of that, we have not nominated to the full extent. So the risk is not 800,000 tonnes, if it is a risk at all. So that's the first answer. The second answer is, obviously, we have our own global network. We've got the big manufacturing in Carseland. We've got all the other alternatives. So at the moment, we are busy mobilizing our global network. You have to remember, this is not the first supply disruption that Orica has faced in the last 5 years. We've gotten, unfortunately, pretty good at managing supply disruption. So the team is busy working and we have lined up supply, and we don't foresee any immediate disruptions of supply to our customers. We need to wait and see what the supplier tells us in terms of duration. So once we know that, we'll have more information and then we'll have more planning. But again, just to keep in mind, we've got this notice just 2 days back. So it's very early days now. And our focus today is, first, to ensure that our customers don't get disrupted, which we are planning to do with our internal network and obviously through sourcing options. William Park: And just the last one around the trend, I guess, with respect to exploration that you're seeing and I guess the acceleration in momentum, particularly in Axis that you've alluded to. Could you provide some comment around some of the observations that you're having with respect to the exploration levels across the regions that you're operating and how Axis is sort of performing in the first 1.5 months in FY '26. Sanjeev Kumar Gandhi: Thanks, William. I mean, look, you know the exploration market value, you've been following us. We've been telling the market now for the last 18 months that we've seen an uptick in exploration after a nearly 4-year decline in exploration activity. So we've seen some record lows in exploration and with the juniors not investing capital and all the other challenges. On the other hand, demand continues to grow. So we're falling short on supply. So it was inevitable that exploration would pick up. We first saw this in gold. We've seen this now for the last 18 months, extremely strong pull in exploration activity in gold. We now start to see this in copper. This is obviously going to go forward into critical minerals and rare earths. So we continue to see a strong uptick in the exploration pipeline. We are a global player today. We've scaled up Axis globally. We operate in all parts of the world with the major drillers everywhere in the world. So we are at the front line and seeing what the pipeline is, and it looks very, very promising. That's the first piece of good news. The second news is when we met in Sydney when we did our digital roadshow there, we did say that we are going to launch into production drilling. So we are on the verge of launching the first Axis products into the production drilling market, which is obviously another exciting entry -- market entry for us. This, by the way, will double the TAM that we have in the exploration market. So just another example of when we bring in new technologies, we acquire new businesses, we grow the TAM very, very strongly, and then we obviously increase our penetration and market share. So it's looking very promising. And obviously, the pricing reflects the need for more exploration and more mining to happen and follow. So let's put it this way, I'm very optimistic about the exploration market. Operator: Next, we have Brook Crawford from Barrenjoey. Brook Campbell-Crawford: Sanjeev, just a quick one on the outlook. Just note that you expect growth in blasting in FY '26. Just want to check if you expect GDP plus type growth levels in FY '26 in blasting, I guess, adjusting for the carbon credit benefit you had in FY '25, which would be similar to the midterm target. Sanjeev Kumar Gandhi: Yes. Thanks, Brook. So yes, that's the guidance that we are giving you that during -- through the mining cycle, over the midterm, we are expecting GDP-plus growth, which means growth faster than the mining industry because of increased penetration. I did call out that for next year, we have a major Carseland shut at the end of the financial year, and you know what this means. This is a big shut. So it's more than a month. And this is basically led by our own maintenance schedules, but also our supplier turning down the ammonia unit for their own maintenance. This -- as you can imagine, as it did in 2024 with Kooragang Island and ammonia has an impact, obviously, on the blasting business and then the non-repeat of the carbon credits. But despite all of that, we do expect blasting business globally will grow, and we will perform better than in 2025 for a couple of reasons. One is, obviously, we still have recontracting benefits coming through, not just from 2025 but also new contracts that we are winning as we speak. We've got further penetration and scale up of blasting technologies. So wireless 4D, everything else that goes around with it, specialized emulsions and all the other products and services that we have there. So that's another area where we continue to see growth in mix and margin. And then we obviously have also new wins in new regions, in new markets that we have entered now in the last 18 months, and that starts to scale up as we speak. So we'll also see some tailwind coming from that. So overall, the segment will be growing, the blasting segment, but there will be these 2 impacts. One is the one-off carbon credits that has to be taken out. And then we will have the Carseland shut, which, as you all know, has some impact on our earnings. Brook Campbell-Crawford: That's helpful. And just on the buyback, you have increased to $100 million. It just seem a little bit light. I mean, for context, I think you did more than $100 million in the month of September alone. So just want to check why perhaps it's a conservative increase in that program through to the end of March. Sanjeev Kumar Gandhi: Yes. Thanks, Brook. It's a good question. As you can imagine, we have discussed this intensively with the Board. Look, my view is this is the first buyback we have announced and successfully completed in more than a decade at Orica. It's all about building our credibility and we tell you what we'll do and then we do what we tell you, as I've been saying over the last 5 years. First of all, I'm very happy that we completed the first tranche. We were expecting to do this over 12 months. We finished it earlier. We purchased below VWAP. So that's all very, very positive. And we still have a few more months to go. So we thought the best thing to do was to just extend the buyback so that we still completed within the 12 months. And we did want to buy 5% of our equity and we ended up with 4.1% because the share price went up. So obviously, we still want to do that 5%. Now in the new year, once we are finished with all of that, you know we have a Board refresh. We will have a new Chair coming in. We are also thinking about a strategy refresh with the new Board. So we'll put all of that together. And once we finish the March milestone, then everything else is again on the table -- back to the table. I'll hand over to Jamie. He wanted to add a few things there. James Crough: Brook, it's Jamie here. So as Sanjeev said, we were targeting around 5% of market capitalization for this buyback. To date, we've bought back about 4.1%. And I think I said at the Investor Day in March that we were targeting this over the 12 months. So we've been quite successful in terms of volume and cost. So the weighted average purchase price has been around $20.15, and you can see we've been trading about 12% above that recently. And given the time frame that we've got until March of next year, another $100 million would get us up to about 5%. And I quite like the March timing for a few reasons. So we delivered the net operating cash flow to our results in September. We release our results in November. We do our strategic planning cycle in February. So we look at what does the business look like for the next 2, 5, 10 years? What are the growth options that we have in front of us? How do we deploy capital to support that? What delivers the greatest return to shareholders? So I like the March timing. So we'll complete the balance of the $100 million, and then we'll come back next March and talk about what the focus is for the business then. Brook Campbell-Crawford: And just really a quick one on the blasting in term growth. I just want to confirm, are you talking nominal or real GDP growth? Sanjeev Kumar Gandhi: Nominal, Brook, just to make things easier for everybody. Operator: Next question comes from Mark Wilson from RBC. Mark Wilson: Sanjeev and Jamie. just a couple of quick comments about the CF Industries' force majeure, and I realize it is early days. Just with your contractual arrangements, should this be a prolonged shutdown? And you do have to take on additional freight and sourcing costs. Would you be able to recover those from other customers offering CF Industries or insurance? Sanjeev Kumar Gandhi: Yes. I cannot comment on CF. We've got the legal team looking at this force majeure announcement. So -- and it's an old contract, a complex contract. So we look through all of that. But yes, we will do everything we can to ensure that this does not come back and hurt us in terms of earnings and margins. There will be increased costs if you have to source for a longer period of time, we don't know. So we have -- our supplier has to tell us how long they are out and when will the supply restart, and we have a valid legal contract in play for the next 6 years. So it's obviously a discussion we'll have with them. Their clear focus right now is to look at the safety of the operations, and then there will be an investigation and all the other stuff that happens around the regulation. So it's still very, very early days. But as I said, we have covered supply. At the moment, we are fine. And the most -- more important data point is how long is the outage so that we can start preparing for all kinds of eventualities, including passing on costs and managing costs and everything else that gets related with this kind of disruption. Mark Wilson: Okay. That's great. And then just on the cash flow, good improvement there, particularly on the trade working capital side. Just wondering how much more progress you think you can make. And I did notice there was a reasonable increase in non-trade working capital. Can you just touch upon that? James Crough: Yes. Thanks for the question, Mark. We focus very heavily on working capital and have done a number of years now. We've done some benchmarking work on where we sit in the industry. So we've looked at as many companies in the blasting business or the agricultural space or the chemical space to sort of benchmark each part of our working capital. I think on the receivables side, if you look over the last 5 years, the region has done a great job renegotiating terms as contracts have come up for renegotiation, which is the best way to improve DSO. So I think in terms of benchmarking, we're probably in the top half in that space. There's more that we can do there. On the inventory side, it's interesting. We're quite hard on ourselves in the way that we manage inventory in the business. Comparatively, we're in the top quartile. If you look at our DIH, it's relatively strong, particularly if you look at inventory to sales. In our benchmarking work, we were top 2 in that space. But our issue was really around DPO. And comparatively, we were very much in the bottom 25%. I don't think that we were leveraging our buying power as well as we could have. So this year, the supply chain team has done a great job. We've renegotiated around $400 million of supply agreements. Around $250 million of those were below 30 days, they're now above 30 days. And around $150 million were between 30 to 60 days, which are now on greater than 60-day terms. So that supported the increase in DPO. But that remains our area where I think there's the most room for improvement. But we are very, very conscious of the conversion of EBITDA to cash, given we are a very working capital-intensive business. And the increase in non-trade working capital was basically due to restructuring costs, which have since been paid. Operator: Next, we have John Purtell from Macquarie. John Purtell: Just had a couple of questions, please. Just the first one, obviously, you've upped your medium-term EBIT growth targets for mining chems and digital. And I know you've alluded to some of the factors, Sanjeev, here. But obviously, the gold price moves around. So just be interested in what are the factors outside of the gold price that are giving you the confidence to up those targets? Sanjeev Kumar Gandhi: Yes. Thanks, John. So I'll touch briefly on digital, and then I'll go back to chemicals, which is a very special macro that plays out there. Digital, it's just a matter of us getting comfortable with our recent acquisition, Terra Insights. So the acquisition is complete. The business has delivered above acquisition business case. So we just get more comfortable with it. You know it was a new technology. This was the part of the sensing and monitoring piece in the value chains, both in civil and in mining that we were not active in. We were only active in monitoring through GroundProbe. So we have significantly expanded -- doubled basically our offering in that industry. So the first year was all about integrating, taking control of the business and getting comfortable with the technology. Now we feel comfortable. We see the runway. And that is why we've said instead of the low double digit, we'd like to grow this thing, the digital business and earnings in mid-teens. And this also then goes back to Axis. Axis has been with us a couple of years. We have invested capital. We have scaled the business up. Today, we are a global player with a significant market share, a clear #2 in the exploration space. And then as I said earlier, we are entering into production drilling. That's going to double our TAM, and we are starting from 0 market share. So we're going to go there and increase our growth. So -- and then obviously, our core blasting technology business, it's all about optimizing blast outcomes, fragmentation and less waste and all of the other stuff that we do there, which is very, very successful and appreciated. So digital business will grow. Earnings will grow harder to mid-teens, as we have said. Chemicals is interesting because it's not directly connected -- our business is not directly connected with the gold price. It obviously helps -- our gold is at $4,000 an ounce. There is a structural issue in the gold industry. There's not been enough exploration. The ore that exists today, proven ore deposits is very, very dilute. So you're talking 1 gram, 2 grams per tonne of rock blasted. And the demand is there. So what this means is you're -- first of all, you need to explore more, which is what we have seen in the Axis business, so that's coming through. Secondly, you see marginal gold assets over the on the right of the cost curve. They become more competitive now with the pricing of gold. So they start to come back into production. That means more demand for us. Thirdly, because the ore is so diluted, you have to blast more to get that gold ore out and then you have to use more extraction chemicals to get the purity we want. So even if gold supply doesn't increase, you have to increase servicing of the gold industry to keep with your output. And that's a very interesting macro that plays to our favor because we do the digital part in Axis. We do the blasting for the gold customers and then we do the extraction using sodium cyanide. So that's the first macro that gives us confidence. The second one is that we are now nearly finished with the Winnemucca safety upgrade. So we had one major turnaround plan. We split it into 2 to straddle the financial year 2025 and this one. Because the demand was so strong, I did not want to shut the site down. So we kept some part of the site running to cater to customers. And we have got 3 lines there. So we shut the first line then the second line for the liquids. We finished with the safety upgrades. We will finish the solid safety upgrades by next week, then we'll have the plant up and running, and then we're going to test capacity. And we're going to max our production, and that's where the uptick will come. And that's why we said let's increase our earnings forecast from the middle single digits to the higher single digit earnings. And that's what gives us confidence to do that, John. John Purtell: And just a second question on the profit bridge slide there, the margin mix is obviously up $81 million for EBIT in blasting. I think you mentioned that, that includes the $15 million carbon credit benefit. So you've got a $66 million underlying there. So I think the broader question is, do you think you can maintain that level of improvement in '26? Or is that going to be difficult given some of the thermal coal regional weakness you've called out? Sanjeev Kumar Gandhi: John, our focus has always been mix and margin optimization, right? I've told the market several times, our volumes don't really drive our earnings. So it's all about scaling up our blasting technologies. The WebGen has got a lot of runway to go, right? And we have now gone open cut in WebGen. So we started with underground the first couple of years. We have launched the second version. We are now looking at even the next iteration of WebGen, which is very, very exciting. So this thing has a long, long way to go. And our biggest success has been our new emulsion, the variable density emulsion, where we are able to basically control energy intensity within a hole and to provide the outcomes that the customers need. And now we're bringing it together. So now we are selling solutions, including WebGen and 4D together. And the upselling potential there because of the value proposition is huge. And this is going to drive continuously our earnings. And we are launching new products. We are launching new emulsions for cold climates. We are now launching new products for the underground sector. We are going hard into the metals industry. And as you know, the macros and mining are -- it's going deeper. It's going underground into more difficult geographies. And we are so strongly placed with our global footprint to cater to new demand coming everywhere in the world. That's why mix and margin will continue to drive this. And then on top of that, the digital business is all mix and margin right? There is no volume there. It's all about services, recurring revenue, SaaS. So that's continuing to grow. And then the specialty mining chemicals expectation is that volumes will grow and margins will also grow. So yes, pretty confident. The only call out, as I said earlier on the call, is 2026. We've got the Carseland shut down, and you have to pull out the $15 million from the carbon credit that was a one-off. Operator: Next, we have Scott Ryall from Rimor Equity Research. Scott Ryall: Sanjeev, I just want to follow up on your carbon credits comments just then, you still get carbon credit issued under the scheme that you've agreed with government, right? Sanjeev Kumar Gandhi: Yes, Scott, that's a good question. Look, we are generating the highest -- one of the highest quality -- I should temper that. One of the highest quality carbon credits in Australia. We've started on this journey even before the safeguard mechanism existed. So we obviously have got a head start over the other 214 heavy emitters in Australia who are under the carbon credit regime. At the moment, we are banking them, right? And that's why you see the difference. If you look at our sustainability results, you see a difference between gross and net emissions, which is significant. And that difference is basically the carbon credits that we are generating every day at Kooragang Island and Yarwun, but which we are not monetizing or we are not surrendering. So we are banking them at the moment. And we'll continue to do that until 2029 when the safeguard mechanism kicks in, which is basically a 5% reduction year-on-year. And at that point of time, we will be well under any kind of penalties, right? And then -- but what we are doing is we are banking these carbon credits for future because at a period of time, as our production grows, our emissions will -- we continue to mitigate them. But at some point in time, we are going to be caught by the safeguard mechanism credit, and that's when we are going to start to utilize those carbon credits. So my expectation is in the foreseeable future, we do not expect to pay any kind of penalties under the safeguard mechanism. Now if you have excess carbon credits and if the market is very strong and if a good customer or a partner comes to us and says, can you help us out, at the right price, we are willing to sell them. But our base strategy is that we would like to bank them because we don't need to sell them today. And we can bank them and keep them in our inventory. And at the right time, we can either monetize or use them to offset our emissions in the future. Scott Ryall: Right. Perfect. And then just if I can touch on the CF Industries issues again. You've given color, I guess, that it's all very recent. If I look at the facility in question, just -- it does just shy of 600,000 tonnes of ammonia, which, if that was all channels to ammonium nitrate, would be over 2 million tonnes. And you've said you're up to 800,000, but obviously less than that. Do you have a sense of how this puts the U.S. or the North American market more broadly than just your supply of ammonium nitrate? And I guess what I'm looking at is, you made a good comment that during COVID, you managed your supply chain pretty well as a global player. Do you have regional players who are highly exposed for this incident as well? Sanjeev Kumar Gandhi: So I mean, look, I don't think the numbers you quoted are correct, but you should check up the website to see what the right numbers are because I think these are published numbers. They are a big fertilizer player. They are not really an explosive player. We are the biggest explosives customer. So a lot of the excess capacity that they might have in their system mainly goes to the fertilizers industry. It doesn't really go into the explosives industry. If you look at the U.S. supply and demand for nitrogen, the U.S. market is long, and it will remain long because, obviously, the ag business is a seasonal business. And because of the coal decline over the last 10 years, we've seen length coming in the U.S. market. So the market was never short or tight. It's been long. And we have to see now what the tenure of the shut is and when can they get these assets up and running. And then we have to decide what -- if at all, there's a longer-term impact. But again, it's really, Scott, early days. I can't really tell you more than that. Scott Ryall: Okay. So you're more -- you're more focused on your internal ability to service your own customers' needs as opposed to the competitive advantage that may give you from being a global player? Sanjeev Kumar Gandhi: Absolutely. Because we don't produce in the U.S., so right, we are kind of agnostic to what happens to other people, and especially the fertilizers industry because we don't play in that industry. Operator: Next, we have Nathan Reilly from UBS. Nathan Reilly: Sanjeev, just with your East Coast gas supply, previously, you've indicated that you've recontracted, I think, out to 2031. Can I just confirm, is that you're fully contracted out to that period now. Can you also maybe sort of talk through the cost impact doesn't feel like it's that material going forward? Sanjeev Kumar Gandhi: You're touching a nerve here, Nathan. No, no. We are fully contracted until 2031 on the East Coast, both at Yarwun and at Kooragang Island. These are not easy negotiations. But we've got leverage because we are big. I think we are one of the largest consumers of natural gas in New South Wales. So we've got some leverage. I'm not happy because I have to pay more. But as you said very rightly, we have smart ways of managing that and mitigating that through internal efficiency measures and then also through pass-throughs. So I don't expect any kind of material impact on the -- on our margins in the -- on the East Coast of Australia. But this whole gas discussion is now really coming to a head. I think both gas suppliers and gas consumers like ourselves, we have come to the realization something has to give. The equation has to be more equitable. The government is working. We have submitted our own submissions to them and our own imports and facts and figures, and everything is in black and white. In this country, gas has quadrupled in the last 12 years, gas price, right? So we used to have average gas prices of $4 today, the market talks about $18, $19. So that's just ridiculous. It's not sustainable. So I'm now hoping and waiting for the government to come up with some kind of reservation policy, first step, on the East Coast because getting more supply in, that ship has sailed, right? It will take 3 to 5 years to get in more supply. So the first thing to do is use the Western Australia model, have reservation for genuine users like Orica. And then the second step to get in more supply, and then also look at the pricing so that everybody has an equitable stake in this industry. So that's where I'm hoping, Nathan, and we'll watch what the government does. Nathan Reilly: Okay. Very clear. And finally, just on your legal fees. I think you've guided that you're expecting that to be -- will be a significant item, but $50 million to $60 million, I think, in '26, but that's on top of the expenses you incurred in '25. It seems like it's an awfully big number. Can you just give us a breakdown in terms of what's -- obviously, there is CF arbitration issue in there, but just give us an idea of what else is hitting that number? Sanjeev Kumar Gandhi: Yes. So this is ongoing. We've had legal fees since 2020, 2021. We always had legal fees. Given the nature of our business, we are global, there's always some kind of contract issue with the supplier, with the customer, some IP issues. Last year, we spent some money on a significant IP issue in Australia, and we came out winners there. So that was money well spent. We are going to continue to invest in protecting IP and defending our IP also in 2026. There's a bit of that. There's a few legacy issues about some acquisitions and divestments made in the past, where we are tackling some of these either claims from our side or claims on the other side that we are defending. And then obviously, we've got the ongoing litigation. So it's a mix of everything, but it's in a similar ballpark as to what we had in 2025, and we will have them in '25 -- in this new financial year. Post that, we will see what happens in terms of the ongoing litigations and then we'll have -- we'll take a call. Operator: Next, we have Daniel Kang from CLSA. Daniel Kang: Sanjeev and Jamie, just have a few questions, which I might just ask all at once. So firstly, just on your upgraded medium-term EBIT forecast for Digital Solutions and Specialty Mining Chemicals. Can you just help us with your medium-term margin expectations? Secondly, given the strength of gold markets, just wondering if you can provide some color on sodium cyanide pricing trends. Is there scope to improve pricing terms on your customer contracts? And just finally, your Digital Solutions slide on Slide 11, I think. Great to see TAM has grown by 39% CAGR, but it seems like revenue has lagged that at 30%. So theoretically, it does imply some share loss. Can you just talk about market share trends? Sanjeev Kumar Gandhi: Thanks, Dan. It's the other way around. The day you acquire a business, the TAM comes into your accessible market and then you grow your market share. So if you look at the timing of the acquisition, we have grown faster than the market. And now the fact that the market has grown faster is because the full TAM is accessible to us with our new products and solutions, which are now integrated. And now we have the potential to increase our penetration by increasing our market share. So it's the other way around, not the way you put it, but it's the other way around because you first get the TAM and then you get the growth and the earnings out of it. So that's an upside that we'll do better. And then I mentioned in Axis, we were doing only exploration. So the TAM included just the exploration. Now we are launching this year into production. So the TAM has doubled, but our sales are still 0 because the product is being launched now. So as we grow into the production market, you'll see our sales revenue catch up. So that just tells you there's more upside. It's not a loss -- share loss. It's basically us starting into a new market and then bringing in new products and solutions and growing our share in that market. In terms of margins and pricing in sodium cyanide. Pricing is not that relevant. It's a commodity. It's the margin that we make out of it, and that's what we do here is play our supply network. So we've got 3 manufacturing sites in 2 continents, and we've got 4 distribution centers globally on top of that. So it's all about landing the product at the lowest landed cost to our customers, which basically gives us the best netback. And there's nobody else in the world who can do this because there is nobody else with multiple locations and supply chain facilities that we do -- we have. So that's where the upside is. So there are situations where sodium cyanide price might come down because the byproducts producer might ship a consignment through a distributor and dump it somewhere, but that does not decide margin. The margin is decided by how you optimize delivery and supply chain and handling of the product, which, as you can imagine, is a very difficult product to manage. So it's not directly relevant, the pricing mechanism. It's an input. It's a factor of input. So there's natural gas in it. There is a sodium hydroxide in there, and there's a bit of ammonia that goes into conversion. And obviously, the cost of these ingredients is very different in different parts of the world. So it's more a margin game and a netback game in this business. It's not so much a pricing game there. Operator: Next, we have from Ramoun Lazar from Jefferies. Ramoun Lazar: Sanjeev and Jamie, just one for me just around the capital position. Obviously, you've got Deer Park that you're expecting to monetize at some point in '26. I'm just trying to understand how you're thinking about capital deployment. Is there anything in the M&A space or in the portfolio that you think you need to add -- to continue to add to the strategy of growing beyond blasting? Or should we think about those surplus funds coming back to shareholders via buybacks? James Crough: Yes. Thanks for the question, Ramoun. Just your question on Deer Park. So we look at all of our land portfolio and whether it's surplus to need. So just in Deer Park, in particular, so the market engagement, so far, has been very positive. I think we're approaching conclusion of discussions with all interested parties. I think we'll know more by around March of next year who the most likely successful party will be. In terms of funds from that, I think it's going to be Q4 next year. The challenge will be, is it Q4 of our financial year or Q4 of the calendar year. So I'll know more about that in March of next year. We're also looking at the land that we have at Botany. Now first and foremost, our priority here is our environmental and community commitments and remediation. That's the primacy and the thing we focus on there most. As we work through the individual lots through remediation milestones, there may be opportunities to divest parcels as we move through remediation. That probably won't be until 2027. And obviously, if you look at the location of the land, it's in a very favorable spot. So you can imagine that, that would be well valued, but that will be probably 2027. What do we do with those funds? It really comes back to the capital management framework, right? So if we've got surplus balance sheet capacity, we will look at what options we have to deploy. If it's M&A, it has to be enduring investment consistent with the strategy. It has to deliver the requisite return above pretax WACC to be accretive to shareholders and accretive to EPS. We look at things all the time. We probably look at 50 things a year, most years we do none. Last year, we did 3 or 2. If there's no way to deploy that capital in terms of M&A that's consistent with strategy and EPS accretive and enduring, then we'll look to return it to shareholders. That's exactly the reason why we spent so much time on the capital management framework this year. Ramoun Lazar: Yes, understood. I guess what I was trying to ask is, is there anything in the portfolio that you think is missing that you could look at potentially adding to via M&A or that you can, I guess, develop internally? James Crough: Yes. It's a good question. So we're obviously the market leader in terms of the provision of sodium cyanide into the gold industry. If you look at the energy transition, right now, we don't have a chemical offering in the copper space. Now we won't get into sulfuric acid or hydrochloric acid, they're very much commoditized, but some of the specialist chemicals in the purification process, we will potentially have a look at. I don't expect that to be significant M&A. They're probably smaller bolt-on acquisitions at this stage. So we're actively looking at that. We may do something in that space next year, maybe not, but there's no significant M&A that we're looking at as we sit here today in that space. I don't know, Sanjeev, if you want to add to that? Sanjeev Kumar Gandhi: No, Ramoun, I don't think there's anything else missing in our portfolio. So what we are trying to do at the moment with specialty mining chemicals, given the business is so successful and we understand chemistry -- we were a chemical company or we are a chemical company -- is look at offerings beyond gold, so replicate the same model, do digital blasting and extraction in other commodities. So copper is an obvious target. We're also looking at rare earths and critical minerals because there is also a lot of processing that goes into that. And for processing, you need to handle hazardous difficult chemistry, reagents, flocculants, floaters, extractors. And this is specialized chemistry. This is basically, I would say, a black box chemistry where you sell small ingredients at very high margin, very high pricing, and it's all about value delivery in terms of optimizing extraction. So that's the area that we really would like to grow into because we don't own the chemistry there. The chemistry is available in the market, we know who has it, we have been engaging with quite a few people. But whether we make a deal or not, time will tell. It has to be at the right value for us. And if it is not, then we'll continue with the capital management framework here. In Digital, we don't need anything else. We are investing in AI, but it's all homegrown AI. We are developing our own agents. We are developing our own AI tools to leverage our sensors, our data, our software and the cloud that we have put into place to monetize more value out of that. So that's more organic growth. I don't expect unless something falls into our lap at the right valuation that we'll buy anything in digital. Operator: Our last question comes from Lee Power from JPMorgan. Lee Power: Sanjeev, just on Slide 10, where you chat about churn rates that have come down. Is there something specific going on with the type of contracts up for renewal? Or something else going on around how you're approaching pricing or your competitors approaching pricing that might explain the change in churn rate? Sanjeev Kumar Gandhi: Yes. So the churn rate has improved, which is a positive that tells you that -- so the churn rate basically means the percentage of businesses that we are losing, and that's come down, which is great. And this tells you that our offerings are getting better, the business is getting stickier, and customers are seeing value. So they are -- so we are obviously winning new business with new customers. What is really exciting is we win a lot of business in digital at our competitors' blasting sites, which is a lot of fun, as you can imagine. But we are also able to retain business and then expand businesses because digital business is fast moving. We come up with a new offering every, whatever, 6, 8, 9, 10 weeks. And it's all about putting stuff together and then adapting the solution to your particular ore body or your particular mining method or your particular commodity and then coming up with a new solution. So churn rate going down is very, very positive, and this means the business is getting stickier, and customers are loving what we are able to offer. Lee Power: Yes. I guess I was coming from like the other side, often like churn rate and price go somewhat in opposite direction. So I was trying to work out if there's something else where maybe the rest of the industry has kind of started pushing price as well and that's starting to show through in churn rates. Sanjeev Kumar Gandhi: We use the same philosophy as we do with blasting. We are here price leaders. We are the market leader in the digital space globally. So we are the one who set pricing and benchmarks. We are not a price taker. And we have not yet seen a reason to compete for share on pricing because our products are just superior and better. Lee Power: That's a good sign. And then sorry, just to go back to Brook's question around Blasting Solutions. Is your point that -- you've obviously got the medium-term targets, you're going to grow, but you -- given the Carseland shut, you might be below that medium-term target you've set. Is that what I should take out of your answer to Brook's question? Or if I'm mistaken, what should I be taking out of that? Sanjeev Kumar Gandhi: I did not hear you very clearly because I lost you for a minute there. Would you repeat that and summarize it, the question? Lee Power: Yes, sorry. So I was asking just a follow-up on Brook's question around Blasting Solutions and the '26 guide. There's obviously a lot of moving parts. You said there is going to be growth. I'm just trying to work out is, do those moving parts end up that your growth rate will be positive and yet below the GDP plus EBIT growth target you have in the medium term? Or is it going to be at or above that rate? Sanjeev Kumar Gandhi: Look, we'll try and grow earnings as hard as possible. I'm just trying to remind everybody of the one-offs, which is the 15 million carbon credit and the Carseland shut, right? So always keep that in account when you factor in earnings growth in blasting for 2026. Going forward, obviously, because these things will not recur in '27 onwards, then we will go back to a more normal cadence. Why am I calling out Carseland? Because this is as significant an event as we had Kooragang Island in 2024 where the whole site was down for a very extended period of time. And that's why I'm calling that out specifically. So yes, obviously, that will have more of an impact in 2026, and then it will wash out in 2027. So again, that is just something to keep in mind. Otherwise, we are committed to the forecast we've given you, which is GDP plus. Operator: Thank you for all the questions. That concludes our Q&A session. I will now turn the conference back to Delphine. Delphine Cassidy: Thank you all for joining us today. If there are further questions, please feel free to reach out to me. And we look forward to meeting you over the next couple of weeks. Thank you, and have a good afternoon.
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.
Eric So: Good morning, and thank you for joining us. This is an important quarter for Cybin, one that sets the stage for an active year of milestones. In September, Doug Drysdale stepped down as Chief Executive Officer. On behalf of the Board and the company, I want to thank Doug for his contributions. As Co-Founder and Executive Chair, I stepped in as Interim CEO while maintaining continuity and momentum. The Board's search for a permanent CEO is underway. Through this transition, our priorities remain the same: patient-focused rigorous science, disciplined education as our execution and clear communication. We have tightened operational cadence and disclosure discipline, and we'll be adding targeted talent and scientific advisory board expertise to support late-stage execution and launch readiness. Our strategy starts where care happens in the clinic. What I mean by this is that we are designing therapy days that fit within existing schedules with short predictable sessions and a staff-light workflow that clinic teams can run without new infrastructure. From there, we focus -- our focus turns to maintaining wellness. Durability is built into the plan with an efficient retreatment approach that aims to reduce visit burden compared with today's multi-visit standards, so clinics can scale capacity and patients can plan their lives. Progress with regulators follows the same discipline. We move step by step anchored in data rather than speculation, and we'll communicate milestones as they are achieved. The capital plan matches that pace. Following our recent $175 million financing, we are focusing on advancing our programs towards major data readouts. With that context, let me turn to the quarter and the progress we've made. Before we proceed to the agenda, a brief overview of our pipeline. For those of you who are new to the Cybin story, we have 2 lead programs. CYB003, our proprietary deuterated psilocin analog is in Phase III studies for potential adjunctive treatment of major depressive disorder. And CYB004, our deuterated dimethyltryptamine or DMT program for the potential treatment of generalized anxiety disorder is in Phase II. Clinically, our Phase III CYB003 program, which is an a breakthrough therapy designation in major depressive disorder has continued to progress, including being granted additional clearances to commence EMBRACE, our second Phase III study in new geographies. In generalized anxiety disorder, the Phase II 004 study completed enrollment and remains on track for our first calendar quarter 2026 top line readout. Amir will share more details about both programs shortly. At the same time, we advanced preparations for scale, including manufacturing and commercial groundwork aligned to a practical clinic workflow. We also strengthened our capital position with the closing of a significant registered direct offering, which provides flexibility to execute through upcoming milestones with clear internal decision dates by program. Across both programs, we are deploying capital with discipline. We are prioritizing global site activation and conduct for EMBRACE and APPROACH, database lock and analysis for CYB004 and manufacturing readiness for CYB003. With that framework in mind, I'd like to turn the call over to our Chief Medical Officer, Amir Inamdar, to review our clinical and regulatory process. He'll begin with CYB003 in major depressive disorder, focusing on that study status, global footprint and how the design supports real-world clinic operations and durable outcomes. Dr. Inamdar will then review CYB004 in generalized anxiety disorder, including trial design, operational status following enrollment completion and the timing and scope of the next data update. Amir Inamdar: Thank you, Eric. Our Phase III PARADIGME program is moving forward as planned. Dosing is underway in approach across U.S. sites and participants have rolled over into extend to generate durability data once the double-blind period concludes. In parallel, EMBRACE has been cleared to commence in the United States, U.K., multiple countries in the European Union and Australia, giving us a truly global footprint. The study targets approximately 330 participants across about 60 clinical sites and is structured with 3 arms to evaluate 2 active doses against placebo in patients with depression whose symptoms remain inadequately controlled on background therapy. The primary endpoint is the change from baseline in MADRS total score at 6 weeks after the first dose. The design is built for clinical reality. CYB003 is intended to run as a predictable staff-light session that fits within existing clinic infrastructure. Prior clinical data showed sustained response and remission at 12 months after 2 16-milligram doses, and our extension work is aimed at translating that durability into an efficient retreatment approach that reduces visit burden compared with today's multi-visit standards. On the regulatory front, our posture remains conservative and specific. Near-term touch points focus on clean study conduct, global site activation and data quality reviews as we advance towards pivotal readouts. In anxiety, the work is tracking on schedule. We have completed enrollment in the randomized double-blind Phase II study of CYB004 and remain on track for top line data in the first calendar quarter of 2026. The study evaluates 2 intramuscular doses given 3 weeks apart with efficacy assessed at 6 and 12 weeks and optional follow-up out to 12 months. The design permits concomitant antidepressants or anxiolytics and allows comorbid depression, which helps the results reflect real clinical populations. Just as important, intramuscular administration supports short, predictable sessions that fit a standard clinic day, so sites can manage throughput with existing rooms and personnel. The protocol also captures information to guide an efficient treatment -- retreatment approach if patients need it. aligning durability with practical clinic operations. I will now turn the call back to Eric to discuss the platform and commercial readiness. Eric So: Thank you, Amir. Our focus is to make these therapies workable in the real world, not just on paper. Achieving that goal begins with dependable supply. With Thermo Fisher in place for both drug substance and capsule drug product in the United States, we have a manufacturing footprint size for Phase III and commercialization, which gives sites the predictability to plan therapy days within their existing 4 walls. From there, we extend into the clinic. Through our partnership with Osmind, we have access to a broad network of psychiatric practices, point-of-care software and real-world data, so clinics can map out our protocols onto the schedules they already run. Staggered starts, defined observation windows and clear rule definitions are intended to support predictable session scheduling within existing rooms and teams without requiring new infrastructure. Throughput only matters if the session itself is practical. CYB003 is designed to live inside a standard interventional psychiatry day, offering predictable timing for patients and staff. CYB004 delivered intramuscularly targets a briefing clinic experience that simplifies room turnover and staffing compared with all-day alternatives. The combination is intentional, one program suited to establish clinic rhythms, another built for speed and simplicity, both aiming to raise capacity without raising complexity. Durability is the other half of practicality. Phase II CYB003 data showed sustained response and remission at 12 months after just 2 doses. And our extension work is there to translate that durability into an efficient retreatment approach. The goal is fewer visits and more efficient planning for clinics and payers alike with clear criteria for when patients should return, how long a session should take and how that fits across a full clinic day. We're advancing this platform with a conservative regulatory posture and a disciplined capital plan. Underpinning it all is steady leadership. We manage the CEO transition in an orderly way. The permanent CEO search is active and our governance cadence and disclosure discipline keep the organization aligned as we execute towards the next 2 major data events. Before I turn the call over to Greg Cavers, our CFO, let me touch on our capital structure. Last month, we closed a registered direct offering with participation from prominent institutional health care investors. The structure paired common shares with prefunded warrants with a partial warrant, aligning capital to near-term objectives and giving us the flexibility to execute. As noted earlier, this was an important step for Cybin. The financing provides the resource to advance our ongoing Phase II and Phase III trials towards key data readouts. We have used a portion of the net proceeds from the financing to repay the outstanding convertible debentures to High Trail. For the avoidance of any doubt, this debt has been fully retired in full. We believe that participation from such high-quality institutions in the financing reflects confidence in our science, our programs and our ability to deliver. I'd like to take this opportunity to thank our new investors as well as existing shareholders and investors for their continued support of our mission. We could not be happier with the partners that came into this financing and all prior financings that drive our programs forward. Capital deployment is paced to measurable milestones. For CYB003, funds support global Phase III execution and manufacturing readiness, so sites have reliable supply and predictable therapy days. For CYB004, resources moved to database lock, protocol-specified analysis and operational lift to top line. Corporate use remains limited and targeted. The plan bridges us to the next 2 major data events while preserving flexibility. From the path, we will adjust with discipline and continue to communicate clearly about our progress and next steps. I will now hand it off to Greg Cavers, our CFO, to walk through our second quarter financial results. Greg Cavers: Thank you, Eric. During the quarter, cash-based operating expenses consisting of research, general and administrative costs totaled $28.5 million for the quarter ended September 30, 2025, compared to $18.2 million in the same period last year. Net loss was $33.7 million for the quarter ended September 30, 2025, compared to a net loss of $41.9 million in the same period last year. Cash flows used in operating activities were $34.5 million for the quarter ended September 30, 2025, again, compared to $19.1 million in the same period last year. Operating loss was $28.9 million and net loss for the quarter was $33.7 million or $1.39 per basic and diluted share based on a weighted average share count of 24.2 million shares. We ended the quarter with cash, cash equivalents and investments of $83.8 million. Subsequent to quarter end, we closed a financing of $175 million, which together with our quarter end balance provides flexibility to execute our plan. We continue to allocate capital to measurable milestones and corporate uses remain limited and targeted. Based on our current operating plan, we expect our cash resources to fund key data readouts in 2026 and fund operations into 2027. I will now hand it back over to Eric for closing remarks. Eric So: Thank you, Greg. In the quarters ahead, our focus is execution against measurable milestones across the business. For CYB003, we will continue dosing and approach and expand EMBRACE site activation across clear geographies, keeping study conduct and data quality at the center of the plan as we progress towards a Phase III top line in Q4 of 2026. For CYB004, the path runs through database lock protocol-specified analysis and preparation of a clear top line package in the first quarter of 2026. In parallel, we will advance commercial and manufacturing readiness, so sites have reliable supply and a practical clinic day model as data matures, and we will continue to pace investment to milestones. This forward plan also includes leadership. The CEO search is active and progressing, and we'll provide an update when there is news. Day-to-day execution remains stable under the current structure with operating cadence and disclosure discipline intact. Taken together, clinical progress, measured capital deployment, commercial preparation and leadership continuity position the company to navigate the next 2 data events and the steps that follow. To summarize, we have executed through a leadership transition, advanced our late-stage programs, strengthened the balance sheet and prepared for scale with a model built for clinical reality. The work ahead is clear: deliver clean data on time, maintain a conservative and specific regulatory posture and keep capital focused on milestones that move the programs forward. I want to thank all of our employees, investigators, investors, partners and most importantly, the patients and families who make this progress possible. We look forward to updating you as we meet our milestones. Operator, please open the phone line for questions.[ id="-1" name="Operator" /> [Operator Instructions] And we'll take our first question from Pete Stavropoulos with Cantor Fitzgerald. Sarah James: This is Sarah on for Pete. Two questions from us. One on the CYB004 and the other one on the 003 program. First off, around 004 and GAD, you completed enrollment in early September. Congratulations on that. And you have a readout on 1Q '26, where you enrolled a total of 36 patients. What would you like to see from this study that would give you confidence to move forward into P3s? Is it statistical significance on the primary endpoint? Is it directional data suggesting improvement sufficient? And then what can we expect to see in 1Q? Are you going to provide the 6-week data for the primary endpoint, HAM-A? Or will you provide efficacy data through 12 weeks? Amir Inamdar: I can take that one. Thank you, Sarah, for the question. And yes, we've completed enrollment in that study. As you probably know, it's a study with 2 arms, 1 low dose arm, which potentially is sub-psychedelic and a full threshold dose. We look at that as a sort of dose response type of study. We would love to see some separation between the 2. As you state there, directional data is what we are looking for, a trend in change or trend in separation between the 2 and also within subject differences in change from baseline, at least with the threshold dose. This is a proof-of-concept study, not necessarily designed as a fully powered study. But if we see a statistically significant difference, we'll be thrilled. But as you say, directional data, trend in improvement and a dose response between the 2 arms is what we are looking for. And we'll share this in first quarter. We will aim to share HAM-A data out through 12 [Technical Difficulty]. Sarah James: Awesome. And then one more question from me. The P2 CYB003 data suggests that 2 doses may keep patients in remission for up to a year commercially. And then taking into account the psychologic experience associated with psilocin, what do you see as the minimum durability threshold needed to compete with SPRAVATO? And how are you thinking about the trade-off between durability versus time spent in clinics from both a payer perspective reimbursement? [ id="-1" name="Operator" /> One moment please while we reconnect Dr. Amir. Amir Inamdar: Can you hear me now? Sorry, I'm back. [ id="-1" name="Operator" /> Yes, sir, loud and clear. Amir Inamdar: Apologies for that. Can you repeat the question? Sarah James: The P2 CYB003 data suggests that 2 doses may keep patients in remission for up to a year commercially and taking into account the psychedelic experience associated with psilocin, like what do you see as the minimum durability threshold needed to compete with SPRAVATO? Amir Inamdar: Yes. I mean when you look at the guidance that the agency provides for evaluation of these therapies, they want data up to 12 weeks, which is 3 months. We will be thrilled to see effects that are maintained out to 3 months. We are hoping for better. As you know, with our Phase II data, we showed durability out to a year. But based on what is the expectation of the agency, 12 weeks at a minimum would be great. [ id="-1" name="Operator" /> Our next question will come from Patrick Trucchio with H.C. Wainwright. Patrick Trucchio: Congrats on all the progress. I just wanted to get a clarification on the CYB004 program, just in terms of what we should expect as far as statistical powering and the definition of clinically meaningful HAM-A improvement? And then separately, I'm just wondering for CYB003, what operational milestones remain to complete enrollment in APPROACH and our site activations tracking to plan? Amir Inamdar: [Technical Difficulty] As I stated earlier, it's not a formally powered study. We would, however, be looking at an improvement from baseline within subject within the arms. A clinically meaningful effect would be somewhere around 4 to 5 points on the HAM-A. A trend to difference between the 2 arms would be important as well because we want to look at some dose response between the 2 arms. [Technical Difficulty] study in the sense that it's not a pivotal study, those statistical significance would be amazing. You had a question on CYB003 as well. CYB003 is tracking as to plan. So we remain on target to complete enrollment by mid of next year and deliver top line data by the end of next year. Patrick Trucchio: Great. And if I could, just a separate question on -- as these programs are advancing into later stage and are in late-stage development, I'm just wondering what has been your engagement with payers at this stage and CYB003 and CYB004 and as well with the product profile that's emerging for both of these compounds, how you would expect positioning of them in the market relative to what's already available in TRD with SPRAVATO, given that this is with CYB003, we're looking at MDD, CYB004 GAD. But I'm just wondering how you're thinking about this early payer engagement and as well the product profile positioning against both compounds available, but also those that are in development. George Tziras: Thanks for that, Patrick. I'll take this one. So I mean, as you might imagine, at this stage, it's a little bit early, but payer engagement, of course, has begun. Commenting further, I guess, on how that develops and how ultimately with SPRAVATO, you could compare to the commercial... [ id="-1" name="Operator" /> All right. One moment. It looks like he has disconnected. If anybody else wants to take this question, while we reconnect him. Amir Inamdar: So while George is dialing back in, so we have been doing some preliminary market research. But as George reiterated, it is a bit early for -- at least for CYB004. And both the programs, we see them fitting into what is emerging now as an interventional psychiatry paradigm, which really has been spearheaded with SPRAVATO, creating the infrastructure out there. We see these as intermittent treatments that will fit right into that model where patients come in for treatment on an intermittent basis, have the treatment in the clinic and then return for their additional dosing as and when necessary. The infrastructure is there. And we believe with the GAD for CYB004 and with adjunctive and inadequate responder for CYB003, those kind of address the spectrum of the most burdensome or most resource-intensive patients that you typically see in a psychiatry practice. [ id="-1" name="Operator" /> And George has reconnected. We'll go to the next question from Jim Molloy with Alliance Global Partners. Laura Suriel: This is Laura Suriel on for Jim Molly. So for the ongoing APPROACH trial, you mentioned how you're planning to have a total of 45 clinical trial sites within the U.S. So you may just provide a bit more detail on the criteria behind choosing these sites and the activation process involved and also as well as when you might think you have all 45 of these sites fully activated and onboard for the study? Amir Inamdar: Yes. So I can take that. So we are using a mixture of sites that are experienced in clinical trials and a smaller proportion of sites that are less experienced in psychiatry trials. We also have a mixture of sites that are experienced in conducting trials with psychedelics. And then there are other sites that we have included that are experienced in CNS trials in general, but not necessarily psychedelics. As you can imagine, with the number of clinical trials ongoing right now in psychedelics, there is, of course, competition for resources at sites, and we've been very careful in selecting sites that one either have a proven track record of delivering high-quality data or have the -- if they are not experienced in psychedelics, they have the necessary experience and expertise in the psychiatry space in general in other trials, and we are confident that they will deliver good quality data. You referred to the number of sites. Yes, we've got 45 sites selected for this study. Virtually all of them are onboarded by now. What's important is with the number of sites that we have activated, we still remain on track to deliver or complete enrollment by mid of next year with top line data by the end of the year. Laura Suriel: Great. And then also, I know the current focus right now is on the CYB003 and the 004 programs. But can you just provide a bit more color on the preclinical 005 program, maybe just on the status of the preclinical studies and any potential partnership opportunities that you may be in discussions with? Amir Inamdar: Yes. For CYB005, we are doing a number of preclinical profiling studies to characterize the receptor profile, the brain penetration as well as the primary and secondary pharmacodynamics with a range of compounds in that class, which we believe would be well suited to -- actually with some of the neuropsychiatric conditions where there is significant unmet need. So that work is ongoing. And when there is information to share with the market, we will do so. [ id="-1" name="Operator" /> Our next question will come from Eddie Hickman with Guggenheim. Eddie Hickman: Congrats on all the progress. Just 2 for me. How much visibility do you have into the blinded baseline patient characteristic data from the APPROACH study? And can you talk at all about how this patient population will differ from a TRD population as it relates to baseline? And secondly, what agreement do you have with the FDA related to the safety database for 003 and what you'll need to provide a regulatory filing? Is there a minimum number of retreatments per year needed in extend? Amir Inamdar: I missed the second one. Can you repeat the second question? [ id="-1" name="Operator" /> Dr. Amir, you're cutting in and out. connect Dr. Amir... Amir Inamdar: Can you hear me now? Eddie Hickman: Yes, I can hear you. Amir Inamdar: Sorry, do you mind Eddie repeating that question? Eddie Hickman: Yes. So I was asking the first question is how much visibility do you have into the blinded baseline patient characteristic data from the APPROACH study and how this population may differ from a TRD population? And then on the safety database, what you'll need in a regulatory filing, is there a minimum number of retreatments per year needed in the EXTEND trial? Amir Inamdar: Yes. Thank you. So the safety -- as the trial is ongoing, the data is blinded. We are performing checks as necessary or as possible with blinded data, which essentially are quality checks in a blinded manner. And since this is a pivotal trial, we are, of course, being very careful with the data. There are other checks built into the database, which ensures that there any flags with respect to data quality. They are raised to us immediately if there is a reason for concern. So far, we haven't had anything flagged in the database. So we are confident that the data quality is being maintained. In terms of how this is different from the TRD population. So this group of patients is earlier in the treatment cycle. So these are patients who are inadequately responding. And they may have failed 1 treatment or they may have failed 1 and been on their second treatment, but not adequately responding, but not fully failed. So they are not that 1/3 of the patient population that remains after multiple treatment trials. So it's about 2/3 of -- if you think of the depression population as a whole, this is the first 2/3 of those patients in the treatment cycle, whereas TRD would be the last 2/3 left after multiple treatment cycles. In terms of ends, the -- or safety database, the safety database really is a function of the frequency of administration. Given that this is an intermittent treatment, what we have discussed with the agency as part of our BTD discussions is that the data that we will provide to them, the numbers that we provide to them across the 3 studies would be sufficient to support an NDA. But of course, again, it depends on what we find out in the long-term extension study with respect to treatment frequency. [ id="-1" name="Operator" /> Our next question will come from Elemer Piros with Lucid Capital Partners. Elemer Piros: Yes. I just wanted to get maybe just one tiny detail on the loan repayment. If you could clarify how much was repaid and what was the prepayment penalty or the early repayment fees? Greg Cavers: Thank you. Yes, we repaid High Trail $20 million and the repayment fee ended up being 10%. Elemer Piros: 10%, so it wasn't a $50 million loan. Greg Cavers: The loan -- yes, the loan was structured as a convertible debt, and they had converted the other $30 million. Approximately. Elemer Piros: Converted the other. [ id="-1" name="Operator" /> Our next question will come from Sumant Kulkarni with Canaccord Genuity. Sumant Kulkarni: Nice to see the progress. I have 3. On CYB003, during your pivotal trial program, how important is it that patients remain compliant with their background antidepressant use? Amir Inamdar: Sorry, I was speaking on mute, Sumant, taking that question. The -- so for our patients in the APPROACH study and EMBRACE because this is adjunctive, the instructions to the patients and requirements in the protocol is that they remain on their background antidepressant medication. We do not expect them or advise them to come off their antidepressant medication during the treatment period. Sumant Kulkarni: Got it. And then on 004, do you see an eventual pivotal program involving an intramuscular route of delivery? And what are some of the key challenges of developing an oral formulation? And my last question is, what are some of the specific qualities that you believe are must-haves for an incoming CEO? Amir Inamdar: I can take the first 2. Eric can take the last one. So right now, yes, intramuscular is the route of administration that we plan to progress in Phase III. It's a very convenient form of administration, which also gives us what we need in terms of the plasma exposures and the acute experience, which cannot be achieved with something like oral. With oral, the elimination is pretty rapid. And DMP or CYB004 does not reach the plasma PK levels, the threshold that is necessary for a breakthrough experience, which, as we know, is necessary for therapeutic efficacy. That we are achieving with intramuscular. It's well tolerated. So that is what we are going to take into Phase III. George Tziras: And maybe I can also add, Amir, that the intramuscular route is one that as we are aware from our market research with the interventional psychiatry clinics is one that is also being used currently by interventional psychiatrists administering ketamine. And so that gives us some confidence that it is a route that will get -- will reach adoption in the market. Eric So: And with regards to your question regarding CEO qualities, I mean, obviously, we've been at it for only about 8 weeks right now. The Board is spearheading that process. And at the moment, we're looking for the qualities that this company and its shareholders deserve, a successful steward of capital that investors can feel confident in, someone that has executed in the past, bringing a novel drug to market ideally through commercialization, an individual that has transacted and dealt with big pharma in the past as well. These are all table stakes for us and the next individual that will be sitting in the chair. [ id="-1" name="Operator" /> At this time, there are no further questions in the queue. So I'd like to turn the call back over to Eric for any additional or closing remarks. Eric So: No further remarks. I just want to thank everybody for attending the call today. It's been a very exciting time for Cybin, and we look forward to delivering some fantastic updates for everybody in the future. Thank you all for your support. [ id="-1" name="Operator" /> Thank you, ladies and gentlemen. This does conclude today's program, and we appreciate your participation. You may disconnect at any time.
Operator: Ladies and gentlemen, welcome to the Aareal Bank 9 Months 2025 Investor and Analyst Conference Call. I'm the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jurgen Junginger. Please go ahead, sir. Jürgen Junginger: Good morning, everybody. I'm pleased to welcome you to our today's conference call. The agenda covers our results for the first 9 months of 2025 together with an outlook for the full year. I'm joined by our CEO, Dr. Christian Ricken; and our CFO, Andy Halford. They will take you through our presentation, which will be followed by a question-and-answer session. Now I'm pleased to hand over to Christian. Christian Ricken: Yes. Many thanks, Jurgen. Good morning to everyone, and thank you all for attending today's call. I'm very pleased to present our results for the first 9 months of 2025. The good developments we reported for the first half continued in the third quarter. Adjusted operating profit for the first 9 months of 2025 is up by 15% compared to the same period last year. Therefore, we are confirming the outlook for 2025. The economic and geopolitical environment remains challenging, but as always, we are, of course, taking a very conservative approach to risk. I would like to highlight some key features in the good results we are reporting today. Net interest income is stabilizing and in line with expectations, reflecting lower market interest rates, while loan impairment charges are markedly down on last year's first 9 months. In addition, admin expenses benefit from the ongoing tight controls that we have put in place. In the Structured Property Financing segment, we recorded good margins and conservative loan-to-value ratios on newly acquired business. Overall, we achieved EUR 8.5 billion of new business in the first 9 months of the year, which is substantially ahead of the same period in 2024. Our capital and liquidity ratios are very robust, and the 2025 funding plan has already been executed. We also strengthened housing industry deposits, which reached an average of EUR 14.2 billion in the third quarter. I will now hand over to Andy, who will provide further details on the results for the first 9 months of 2025. Andy, over to you. Andrew Halford: Thank you, Christian. Turning to Slide 5. Aareal continued its good progress throughout the first 9 months of 2025, as Christian has just referred to. Whilst net interest income is down by 13% to EUR 691 million, this is entirely as we expected. I'll say a bit more about net interest income when we turn to the next slide. Loan impairment charges are down by 34% to EUR 190 million. This is a significant decrease when compared to 2024's first 9 months and reflects the work we have done and continue to do in carefully managing the loan portfolio. The cost measures, which we have put in place have led to a reduction of 8% in adjusted administrative expenses, which are down to EUR 229 million for the 9-month period. The other components line includes a EUR 20 million positive one-off from Q2, which came from the successful restructuring of a former legacy nonperforming loan. So overall, adjusted operating profit of EUR 306 million is up by 15% over the same period last year. The effective tax rate for the 9-month period was 27%. AT1 costs are up by EUR 8 million compared to the first 9 months of 2024, but most of this increase is because our new AT1 issue overlapped with the previous AT1 for about 3 months. Taken together, the adjusted return on equity was 8% compared to 7.6% in the first 9 months of last year. In addition, our robust CET1 ratio fully phased increased to 15.5% at the end of September from 15.2% at the end of last year. Now let's take a look at Slide 6 and at the key profit and loss account elements. Net interest income, as I mentioned, is down by 13%. This is in line with expectations and reflects a significant decline in most European interest rates compared with the first 9 months of 2024. There are 2 other important contributing factors, namely the interest effects of proactively strengthening our Tier 2 and senior non-preferred funding positions over the last 12 months. And secondly, foreign exchange rates with the euro strengthening against other currencies, notably the dollar in the second and third quarters of 2025. In the second chart on this slide, we've shown the stepped effects on the net interest income of the main factors driving change between this year's first 9 months and the comparable period in 2024. An increase in our loan book margins added around EUR 16 million, whilst the effect of lower interest rates in our Banking & Digital Solutions segment reduced net interest income by EUR 23 million. Returns on treasury assets declined as a consequence of lower market interest rates and led to a reduction of EUR 68 million, whilst the strengthening of subordinated funding, which I've just mentioned, explains a further EUR 18 million reduction. Turning to admin expenses on Slide 7. They continue to be tightly controlled, and we are benefiting from the efficiency measures that we have put in place. Our adjusted administrative expenses are down 8%. This excludes one-off charges of EUR 25 million in the first 9 months compared to EUR 5 million in the same period in 2024. Our cost-income ratio for the first 9 months of 2025 was 32%. Let's now turn to risk provisioning. The loan impairment charge is down 34% to EUR 190 million. Impairment charges on non-U.S. portfolio are running significantly below long-term averages. Provisions on the U.S. office portfolio continue to be the majority of the charge. Management overlays stood at EUR 14 million at the end of September compared to EUR 17 million at the end of June. The remaining management overlay relates to the U.S. office market. I'd now like to hand back to Christian, who will talk about business developments in more detail. Christian Ricken: Yes. Thank you, Andy. Now let's turn to new business on Slide 9. We achieved a strong EUR 8.5 billion of new business in the first 9 months, and we are well on our way to meeting our outlook of EUR 9 billion to EUR 10 billion of new business this year. Looking at the geographical distribution of new business in the first 9 months of 2025. 3/4, 74% was in Europe; 22% in North America, which includes Canada; and 4% in the Asia Pacific region. Around 1/4 of the North American new business originates from Canada. As planned, we reduced activity in the U.S., concentrating on premium assets and long-standing trusted partners. Our strategy on asset classes has also evolved. Hotel finance continues to be our largest area of new business; however, we are currently taking a more selective approach to new office financings while maintaining our increasing conservative financing of logistics and retail properties. The average loan-to-value ratio for newly acquired business in the first 9 months was a conservative 56%, which provides a comfortable risk buffer. Margins were also good, averaging 245 basis points. These figures continue to demonstrate that we are actively identifying attractive market opportunities. Let's now turn to the next slide, which shows our current portfolio. The portfolio, as shown on Slide 10, totaled EUR 32.9 billion at the end of September, which is down when expressed in euros; however, a EUR 1.3 billion reduction, clearly more than the net decrease is explained by foreign exchange rate movements. As you can see from the 2 pie charts at the bottom of the slide, we are still broadly diversified both by region and property type. We continue to have a clear focus on properties in the major metropolitan areas. We are not financing new construction and have exposure of only around 9% in Germany and no exposure at all to Russia, China or the Middle East. Green loans stood at EUR 9.5 billion at the end of September. The next slide tracks 2 key performance indicators for our performing portfolio, loan-to-value and yield on debt. Our conservative approach is reflected in the indicators shown on this slide, which are both at very healthy levels. The average loan-to-value ratio for our overall performing portfolio stands at very respectable 56%. At 61%, the loan-to-value ratio for the office asset class continues to improve. I also like to highlight the development of yield on debt, i.e., the ratio of a property's net income to the amount of the loan. This is a key indicator for assessing a property's profitability relative to the financing structure. Yield on debt for the entire performing portfolio is now at 9.8%, up from 9.6% at the end of 2024. Hotels, shopping centers and logistics properties have particularly good yield on debt ratios. The ratio for offices is currently a little lower, but has improved over the last 9 months. Residential with a yield on debt of around 8% is also in a satisfactory position. Let's now turn to nonperforming loans on Slide 12. Our nonperforming loans stand at EUR 1.25 billion. This is down compared to the balance at the end of June and compared to the balance at the end of last year. The coverage ratio remains at 28%. We are continuing very active management of nonperforming loans. The U.S. office market remains challenging and continues to represent around 2/3 of total nonperforming loans. Other asset classes and geographies are operating normally. The nonperforming exposure ratio according to the EBA's methodology stands at 3.5%. Let's now turn to our Banking and Digital Solutions segment on Slide 13, where business with clients from the housing and energy industries have been very encouraging. First Financial Software, our joint venture with Aareon is also successfully attracting new clients. The average deposit volume further strengthened to EUR 14.2 billion in the third quarter. Rental deposits and maintenance reserves have increased yet again, confirming 2 particularly granular and sticky components of the deposit structure. To remind you, deposits come from around 4,000 clients managing more than 9 million units. BDS net interest income for the first 9 months of the year is down 11%, driven by lower market interest rates. We expect net interest income to be around current levels for the rest of the year or better looking at deposit volume development. Now let me hand over to Andy for an update on our funding, liquidity and capital positions. Andrew Halford: Thank you, Christian. Slide 15 shows our broadly diversified funding mix, solid liquidity ratios and capital markets activity. Following a very active funding program, we have executed our full year funding plan and liability terms have been successfully extended. Deposits now total around EUR 18 billion, representing around 45% of our total funding volume. The largest part comes from the housing industry and an additional EUR 3.2 billion is from retail deposits via platforms like [ Horizon. ] These retail deposits have an initial term of at least 2 years. Our liquidity ratios are solid with the net stable funding ratio at 121% at the end of September and average liquidity coverage ratio at 237% for the third quarter. We are also pleased to report that Fitch recently upgraded our outlook to Positive from Stable, whilst affirming its senior preferred rating at BBB+. As I said, our full year funding plan has been executed. We increased our AT1 capital by approximately EUR 100 million by replacing the former outstanding EUR 300 million issue with a new issue of USD 425 million earlier in the year, and we issued EUR 100 million of Tier 2 capital. In addition, we placed Pfandbrief equivalent to around EUR 2.1 billion in total. This included both euro and Swedish krona issues. This was Aareal's first Swedish currency issue since 2006. Next, let's look at our treasury portfolio, which is shown on Slide 16. The treasury portfolio stood at EUR 9.6 billion at the end of September, up from EUR 8.2 billion at the end of 2024. In terms of asset classes, the portfolio comprises public sector borrowers, covered bonds and a very small portion of bank bonds. It, therefore, has a strong liquidity profile. High credit quality requirements are reflected in the ratings breakdown. 100% of the portfolio has an investment-grade rating with 89% having a rating of AA or higher. Asset swap purchases ensure that there is low interest rate risk exposure. The portfolio is almost exclusively in euros and has a well-balanced maturity profile. Turning now to capital on Slide 17. First of all, I'd like to reemphasize that last quarter, we moved from phase-in numbers in the charts on this slide to fully phased Basel IV figures. Now looking at our ratios, they continue to be strong. Our CET1 ratio was up at the end of September and stood at 15.5% on a Basel IV fully phased basis. The increase over the first 9 months of this year is mainly driven by a decrease in risk-weighted assets from the lower lending portfolio caused by foreign exchange rate movements. Both the Tier 1 and total capital ratios were further supported by additions to AT1 and Tier 2 capital during the first 9 months of the year, as I have just mentioned. Our capital ratios are significantly above SREP requirements. Positively, the Pillar 2 requirement for 2026 has been reduced by 25 basis points. And our leverage ratio of 7.1% at the end of September is also well above regulatory requirements. The results of most recent ECB stress test were published in August and demonstrate the strength of our balance sheet. After the end of the third quarter, active management of our balance sheet has been extended to include our first significant risk transfer transaction. Investors have assumed a portion of the credit risk attached to a high-quality EUR 2 billion portfolio of European commercial real estate loans in return for a risk premium. This transaction has strengthened our capital efficiency and freed up equity, which we can invest in attractive new business. We were delighted that the offer was oversubscribed and that we were able to implement the SRT and introduce this efficient tool to our bank management. Now I'll hand back to Christian for an update on our outlook for the year. Christian Ricken: Thank you, Andy. Now let's turn to the 2025 outlook. Our results for the first 9 months of the year are in line with expectations and, therefore, we are confirming the 2025 outlook. We recognize the uncertainties evident in the economic and geopolitical environment and remain vigilant. So let me summarize our outlook. In the Structured Property Financing segment, we aim to expand our credit portfolio to between EUR 34 million and EUR 35 million. Recognizing foreign exchange movements over the course of the year, this might translate to EUR 33 billion and EUR 34 billion. We are targeting between EUR 9 billion and EUR 10 billion of new business. In the Banking and Digital Solutions segment, our conservative estimate of deposits continues to be between EUR 13 billion and EUR 14 billion on an annual average. All in all, we are targeting an adjusted operating profit of between EUR 375 million to EUR 425 million for 2025, excluding expected one-off charges of around EUR 25 million. I would like to thank you all very much for your attention, and Andy and I are now very happy to answer all questions you might have. Thank you very much. Operator: [Operator Instructions] We have a question from Sharada Patel, Citi. Sharada Patel: I have 2. So firstly, on the NPLs this quarter, obviously, they've come down both in the U.S. and Europe. Can you give us some color on what those sort of individual files look like? And then a second more kind of broader question. I see that the new business has picked up in terms of your exposure to the U.S. So what's the appetite to grow in the U.S. like? Obviously, it's well flagged, but a competitor of yours is selling or trying to sort of exit the U.S. business. What would Aareal's perspective on that be? And what's the appetite to grow there? Andrew Halford: Yes. So let me just pick up on the NPLs. As you've seen from the slides, we've got a further reduction in the overall NPL values during the quarter. It's been a big area of focus, as you know, over the last several quarters, and we are pleased to see the overall trend on that coming down further. So we're now at about EUR 1.25 billion. We continue to lean into that. And as quickly as we can economically resolve some of those situations, we will do so. Majority of the nonperforming loans, the vast majority of the nonperforming loans are in the U.S. and particularly in the U.S. office space. So a lot of the workout activity is actually happening in that area. And I think it's sort of worthy of note that actually, if you look at the rest of the world outside of the U.S., the nonperforming loan levels are very, very low and the provisioning, hence, very, very low as well. So the key for us really is working down the U.S. office, particularly, which has come down quite significantly over the last 12 months, and we are continuing to focus heavily on further improving that over the coming quarters. Christian Ricken: Yes. Thank you, Andy. On the U.S., I can only repeat what I said last quarter. So we remain committed to the U.S., but we are significantly more selective as far as new business is concerned, which will result in a recalibration, let's say, of the portfolio size, but also in the portfolio composition as far as asset classes are concerned. So we have a USP in hotel financing, as I have said, maybe that is also then the focus of new business in the U.S. going forward. So no exit is being planned, but new business will be done in a much more selective fashion. Sharada Patel: And would that sort of new business growth be obviously -- clearly, the prime focus is organic, but would you be open to inorganic growth in the U.S.? Christian Ricken: Inorganic growth in the U.S., no. Operator: [Operator Instructions] We have a question from Corinne Cunningham, Autonomous. Corinne Cunningham: Just on the new business side again, can you comment on what you're doing, if anything, in data center lending and maybe describe to us some of the sort of underwriting thought processes there? And then a couple of technical ones. Your Pillar 2 reduced by 25 bps. Are there any other changes to the SREP this time around? And then on the SRT that you were able to undertake, what has -- what pro forma impact does that had on RWAs and capital ratios? And then just a quick follow-up on the U.S. asset quality. I think, not sure, if it was yourself or your competitor was talking about more weakness on the West Coast coming through. Are you able to say anything about the geographic trends on asset quality in the U.S.? Christian Ricken: Yes. Thank you very much. I would take the first and the last one, and then you may comment on the SREP and the SRT impact. Data center, yes, is a new asset class. We have done our first transaction. I think we published the respective press release. So data center financing here in Germany. It's a new and exciting asset class. That's a positive. And there's much more to come in terms of volume, which is also positive. On the other hand, not everybody is jumping on it as it is new and interesting, and the development and construction phases are much shorter than with other property classes. Yes, but given the competition, you have to have a close look on the margin side still. So that's why we have done 1 transaction so far, and we may do more of it, but it may not become a major new asset class in the coming years, but a nice addition. That's how I would phrase it. Then on asset quality in the U.S., yes. So I think that's a common narrative that you have more weakness on the West Coast as compared to the East Coast. If you look at the office sector, for example, in New York, there is a clear and a continuing tendency of people moving back into the offices, which is less pronounced at the West Coast. And also the economic dynamics are taking more place in the, let's say, Sun Belt areas, where you have more business supportive governments, regional governments as compared to the West Coast. So -- and then that is telling you something that the U.S. market is extremely fragmented in terms of regional attractiveness of property class attractiveness. So you really have to have trophy assets in major metropolitan areas with a good economic momentum. And that is the, let's say, art of also selecting new business. And that also, of course, refers to hotel financing and other asset classes. So yes, so it's not 1 market. It's a lot of different markets, which have the currency, the language and the legal system in common, but you have to understand the regional markets and you have to be very selective. On SREP and SRT, please, Andy? Andrew Halford: Yes. I mean, the answer to those, I think, fairly straightforward. There's no particular changes on capital requirement other than the SREP one. If there were, we would have read them out. So that's the primary one. The SRT, we would expect the transaction was booked in Q4. So obviously, the impact will be in Q4 numbers, not in Q3 numbers, but we'd expect roughly EUR 0.5 billion, maybe a fraction over reduction in the RWAs. If you work the math through, that probably gives us 40, 50 basis points uplift on the CET1, something in that range. Corinne Cunningham: Are you able to actually say something on the margin that you're achieving on the data centers in Germany or in general? Christian Ricken: Yes. As I said, margins are tighter than in other asset classes, but we have our very stringent risk return requirements. So we are doing also these transactions selectively if our risk return requirements measured in RAROC are being met. And that is not the case for each and every transaction, and we would not enter into low-margin new business only because it's a new and fancy asset class. Operator: This was the last question. I would like to turn the conference back over to Mr. Junginger for any closing remarks. Jürgen Junginger: Thank you a lot for joining this morning. As always, the IR team is happy to take up follow-up calls if you have further questions. So have a good day, and thank you again for listening. Operator: Ladies and gentlemen, the conference is now over. 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Operator: Good afternoon, everyone, and welcome to Equatorial Group's earnings conference call for the third quarter 2025. Joining us today are the company's CEO, Mr. Augusto Miranda; Vice President, Mr. Leonardo Lucas; Regulations Director; Mr. Cristiano Logrado; Financial Strategy and Investor Relations Director, Ms. Tatiana Vasques; and Mr. Liu Aquino, President of Echoenergia, all of which will be available at the end of the presentation. Please note that a simultaneous translation too is available on the platform. To access it simply click on the interpretation button and choose your preferred language. This conference is being recorded and will be available at the company's Investor Relations website, ri.equatorialenergia.com.br along with the presentation shown today. [Operator Instructions] Before we begin, please be advised that any forward-looking statements made during this conference are based on the beliefs and assumptions of Equatorial Group's management and on information currently available. Such statements involve risks and uncertainties as they refer to future events that may or may not occur. Investors, analysts and members of the press should be aware that changes in the macroeconomic environment, industry conditions and other factors could cause actual results to differ materially from those expressions of such forward-looking statements. We will give the floor to Mr. Augusto Miranda, who will begin the presentation. You may proceed. Augusto da Paz Júnior: Well, good afternoon, everyone, and thank you for joining our earnings call. We had a very successful quarter on both the operational and financial fronts. In addition to important recognition that reflects the team's seriousness and commitments to our customers, employees and investors, Equatorial Pará was recognized as the best distributor in economic and financial management in Abradee award. Equatorial with the group appeared for the first time in The Great Place to Work ranking among the best 20 companies in the country. And we were once again elected by extel as the Most Honorable Company in the Utility segment in Latin America, ranking 7 of the 8 categories. On the operational front, we delivered strong results and energy distribution, which grew 2.6% in build and compensated market volume, maintaining a solid loss performance trend in the recent quarter. We achieved a contractual DEC target or CEEE-D which will be detailed later in the presentation. On the financial front, we delivered solid results with EBITDA of BRL 3.4 billion. We invested BRL 3 billion and still close the quarter with BRL 16 billion in cash, which means our short-term debt is 2.1x. Now the cash for the period was strengthened by an intense funding window, which totaled BRL 9.4 billion, extending average debt maturity from 5.5 to 5.8 years. It is important to highlight that part of the funding raised is intended for debt repayment approximately BRL 800 million. And during October and November, we also prepaid 2 additional BRL 2 additional billion. With this financial position, we ended the quarter with a net debt-to-EBITDA covenant of 3.3x. Regarding the group's value creation highlights, we closed the sale of the transmission segment. And as a result, announced one of the uses of the proceeds, the distribution of BRL 1.8 billion in interest on equity, equivalent to BRL 1.45 per share, which will be paid next Monday, November 17. The Federal Court of Accounts approved the renewal of the Equatorial Maranhão concession. We are now in the final stage of the process and pending ratification from the approval of the Ministry of Mines and Energy. I will now give the floor to Leo to speak about our economic and financial performance. Leonardo da Silva Lucas Tavares de Lima: Thank you, Augusto, and good afternoon, everyone. I will briefly discuss the group's economic and financial performance from a consolidated and adjusted perspective. In this quarter, we delivered margin growth of 4.5%, driven mainly by the solid performance of distribution segment, while EBITDA reflected the impact of consolidating SABESP equity method results. The quarterly outcome was achieved with a strong cost discipline with PMSO increasing only 0.7% quarter-on-quarter. Adjusted net income for the period increased 4.9% year-over-year reaching BRL 830 million. If we look at the group's debt position, the net debt-to-EBITDA ratio came in at 3.3x, impacted by the one-off reversal recorded at SABESP relating to the accounting in the third quarter '24 of the concession financial asset. It is worth noting that this quarter, we were very active in the debt capital markets, focusing on improving the debt profile, which extended the average maturity from 5.5 to 5.8 years in addition to reducing spreads. Finally, we highlight the investments made during the quarter, totaling BRL 3 billion, an increase of approximately BRL 600 million vis-a-vis the same period last year. This growth was driven by investments in Pará to [BRL 129 million] and CEEE-D with BRL 161 million both of which have tariff reviews scheduled in the near term. This quarter, we recorded a 206% increase in maintenance and renovation work. Let's go to Slide #7. On the slide, we present the consolidated performance of our electricity distributor, where we highlight the reduction during the quarter. To the left, very briefly, we present the consolidated performance of our energy distributors where we highlight the reduction of losses during the quarter, making the eighth consecutive quarter in which we consolidated losses below the regulatory benchmark. We highlight the consolidated growth in energy volumes across our concession. In this quarter, we recorded a collection rate of 99.2% and PECLD over ROB of only 1.02%, driven by the renegotiations carried out during the period and the new low-income tarif. In addition to the improvement in CEEEs indicators, which were still affected by distortions linked to the weather events in the second quarter '24. As Augusto highlighted, we achieved the contractual debt target for CEEE-D. And on a consolidated basis, we ended the quarter with all of the group's distributors within the regulatory limit for FEC. 4 of the 7 distributors meet the regulatory DEC limit. If we consider the contractual DEC thresholds, 5 of the 7 distributors would be below the DEC limit. We recorded gross margin growth of 5.7% in the distributors during the quarter, reflecting a higher POB tariff and a larger market volume in the period. If we adjust the distributed generation liability, recorded in the third quarter '24, the margin would have grown almost 8%. If we look at the adjusted PMSO for the distributors in the quarter, we had an increase of 4.6% slightly below inflation and a smaller variation of PMSO per consumer, which is only 1.8%. These dynamics resulted in a 8.1% increase in adjusted EBITDA for the Distribution segment. If we exclude the distributed generation liability in the third quarter '24, the increase would be 11.5%. We now go on to Slide #8. In this slide, we present an overview of the challenges that we've faced in Rio Grande do Sul and their impact on investment and service quality. When we acquired the concession, the historical record of weather events indicated an incidence of 2 to 3 events per year, but we were faced with the beginning of the concession with a significantly more challenging scenario. Due to the severity or high frequency of emergency situations, we have to postpone certain necessary investments for the distributor. We can clearly see on the chart that once we were able to operate in a concession fully, the results appeared quickly. When comparing the third quarter '25 with the third quarter '24, which was the first quarter after the state of calamity in Rio Grande do Sul, we show an impressive 9.1 hour reduction in the 12 months DEC during which we invested BRL 1.3 billion in that concession. In the third quarter '25, we reached the contractual debt target established for year-end. This outcome reinforces some of the pillars we have in the distribution segment. Among them are relentless pursuit and commitment to quality and our operations, besides our dedication to delivering improvements in operational performance and service quality that is truly lasting. We thank all of the teams for their herculean and tireless efforts over the past quarter in the search for these results, and we reaffirm our commitment to continue to improve across multiple fronts, energy with increasing higher quality for our customers every day. Very well. Let's go to Slide 10 to look at the other segments of the group. In the transmission segment, we completed the closing of the asset divestment transaction on October 31, concluding one of the most successful capital allocation cycles in the transmission sector in Brazil. We sold 8 transmission companies with a MOIC of 8.3x and an internal rate of return of more than 37% per year. The deal closed with an equity value BRL 6.4 billion, including the capital reduction carried out a few days before closing. The proceeds for the sale will be used for shareholder remuneration, debt reduction of the holding company and partial redemption of preferred shares at Equatorial D therefore contributing to lower CDI linked-financing costs. Moving to water and sanitation. The segment's results continue to reflect progress in hydrometer installation. This quarter, we reported EBITDA of BRL 2.2 million, up 68% vis-a-vis the same period last year. In the Renewables segment, we reported EBITDA of BRL 226 million, 8.1% lower, reflecting the effect of curtailment this quarter as a subsequent event. We highlight the approval of provisional measure of 1304, which still requires presidential sanction and establish important advances in this sector regarding the impacts of curtailment. I will now hand the call back to the operator for the question-and-answer session. Operator: [Operator Instructions] Our first question is from Luiza Candiota from Itaú BBA. Luiza Candiota: I have 2 questions. The first is more specific. If you could give us more color on the nonrecurring effects of this quarter, the amount draw attention, especially in the line item, other expenses and revenues, we have received several questions about this. So which were the main impacts here? The second question refers to the partial exercise of preferred shares. This raised a significant amount. I would like to understand the motivation underlying that decision and how does the company look upon this type of structure in preferred share going forward. If we consider the tax reform that is about to be approved. Augusto da Paz Júnior: Leo? Leonardo da Silva Lucas Tavares de Lima: Thank you, Luiza, for the question. Regarding the operational effects, it's important to underscore the following. This line item is connected to the investment dynamic and it has terrible volatility. I think it's also representative of our cash. If we look at the comparison with the second quarter '25. There were revenues in that line item. If compared with the third quarter '24, the expenses were close to 0, showing you that incredible volatility we have in that line item. Regarding the variation in other expenses for the period, this results mainly from nonrecurring events of the third quarter '24 that added up to BRL 130 million, BRL 95 million referring to the reversion of provision of our stock, especially in Goiás, Pará and Rio Grande do Sul. And the receivable of an indemnization that completes the difference. We also had a significant increase, as we mentioned in the presentation of 200% in work for maintenance and renovation this quarter, especially in Pará, Rio Grande do Sul and Goiás. All of the impacts, the deactivation of the residual value of assets with a growth of BRL 32 million in the quarter and the cost for the withdrawal of these obsolete assets. And finally, we had a nonrecurring effect in Pará of approximately BRL 50 million for the elimination of services worked from the past. This explains the variation. It truly is a line item with a great deal of volatility that concentrated on this quarter. Now as an interesting instrument, we have what you mentioned, we made a very interesting use of it. It is an instrument that doesn't allow you to use the market pool, especially at the moment of expansion. In the recent past, we went through several acquisitions, and it became very important during that period. At moment when we foster the sale or recycling of assets, we carry out this movement to disarm to do away with the support that we used in that period of acquisition. It's a tactical movement for that moment. We understand that we're making an appropriate use of this instrument. And it is a very interesting tool that might make more sense in the future in different circumstances. Operator: Our next question comes from Mr. Daniel Travitzky from Safra. Daniel Travitzky: You mentioned the sale of the transmission assets that could be used to remunerate shareholders. And yesterday, you announced a new program for share buyback I would like to better understand the company's mindset when it comes to dividends and shareholder remuneration going forward? That is the first question. The second question, if you could comment on the strategy that you're thinking of to participate in sanitation auctions in the coming year. If this continues to be a segment that is a focus for the company? And how do you foresee the opportunities that arise in 2026? Augusto da Paz Júnior: Thank you, Daniel, for your question. In fact, we carried out a very broad destination of the resources from our sales we kept a part to remunerate shareholders. Our buyback plan was coming to an end. And this is a very interesting instrument to have actively at any moment in time because we need to have shares in treasury to face the long-term incentive but also to have that option as we did in the past to carry out acquisitions or purchases of our shares and sell them or limit the shares we have, depending on the moment. We are going to have a year of a great deal of volatility, and it is at those moments that this option makes ever more tense. For that reason, when we saw that the plan was coming to an end, we start out the approval for a renewal exactly for the purposes that I mentioned for the options that I mentioned. Now regarding the sanitation auctions, penetration continues to be an important avenue of growth, a very broad avenue. We have always been very active looking at this seeking a certain angle to make important moves here. We intend to continue to be active in our search. And if we find attractive opportunities, competitive opportunities, we will move forward. Operator: Our next question comes from Mr. João Pedro Herrero from Santander. Joao Pedro Herrero: We saw that in Ministry the -- in September, I'm sorry, the Ministry opened up a consultation now to see the mindset of the company. Do you deem this to be a relevant opportunity? Second question, refers to the tariff in the North and Northeastern regions that the parcel has a higher amount vis-a-vis other regions. In other regions, is there space to implement this tariff and which is the cost benefit of doing this? Cristiano de Lima Logrado: This is Cristiano. Our view is the following the process of digitization has to be done very cautiously. And I think the minister was assertive at gauging this at 4% a year, and then we will think of a plan to do this. Why does it demand caution? It's not only about changing the meters we can put in smart meters and not change anything else. The possible benefits may be lost. There is a process of learning regarding the benefits that this will bring about. And we have to think about the regulation and the obligation of delivering bills. If we're carrying out remote reading, of course this will have a benefit. In that context, it represents a significant opportunity, but it will depend on additional elements that we have to work with alongside the ministry. Regarding the tariffs in the North and Northeast, most of the population in those states has a strong benefit full exemption in terms of kilowatt per month. So they're exempt from the tariffs basically if you look at the provisional measure 1304 that is about to be sanctioned. There are some elements that will increase the cost. They will increase the pro rata of CEEE-D and broaden the market. So we could accommodate an eventual growth therefore. So there are several elements present, and we cannot -- I analyze this in isolation when it comes to the provisional measure. Operator: Our next question comes from Mr. Raul Cavendish from XP. Raul Cavendish: My doubt is that debate on the 1304. We have debated the unfolding of this, especially from the viewpoint of curtailment. Now what is your view on these prices and the technical note on reclassifying consumers according to the white tariff? Now with these changes proposed, which would be your projection? Augusto da Paz Júnior: Leo will answer this question for Raul. Please, Leo. Leonardo da Silva Lucas Tavares de Lima: A very good question. The impacts of the 1304 are linked to the structural changes we observed in the system. We have less flexibility in the system. And of course, this demands a price signaling that is compatible with oversupply and over demand. This includes that white tariff we are attempting to show a more adequate price and more adequate incentive for the system so that it can self-regulate. In that sense, I think it is doing well. There is that issue of curtailment which does not fully resolve the curtailment problem in the provisional measure. But the idea is to deconcentrate the risk of curtailment that is very focused on centralized generation. So we think that there have been strides made in this direction. If you could further explore that idea of the white tariff, can this increase the addressable market for service rendering for wholesale retail market provision? Could this be a business segment that will gain relevance over time if that proposal is approved? Yes. Doubtlessly, the market trend is that the energy market will become a more flexible market, and the white tariff is simply a first step. Our expectation is that we will see evolution potentially in terms of prices. And in the model, the pricing model. When we look towards the future, this is the path that we expect. Operator: [Operator Instructions] The question-and-answer session ends here. We would like to return the floor to the executives for the company's closing remarks. Augusto da Paz Júnior: Well, thank you very much. Now to conclude, I would like to once again reinforce our commitment with a continuous value creation agenda we pursue for our investors. Through the delivery of consistent results across all segments in which we operate always guided by disciplined, financial management made possible by Equatorial's culture. I would like to congratulate the IR team for the results once again in the extel ranking and remind everybody, they are available to assist you with any questions after this call. Thank you for your interest in the company and for joining us. Operator: The conference ends here. We would like to thank all of you for your attendance. Have a very good afternoon.
Operator: Good morning, and welcome to TWFG's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call may include forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially. For more information, please review our filings with the SEC. And now I like to turn the call over to Gordy Bunch, Chief Executive Officer. Please go ahead. Richard Bunch: Thank you, operator. And good morning, everyone. TWFG delivered another strong quarter of performance, reflecting both the resilience of our distribution platform and continued scalability of our operating model. Total revenues increased 21% quarter-over-quarter to $64.1 million, supported by 10.2% organic revenue growth and M&A revenues, while adjusted EBITDA grew 45% to $17 million, expanding margins by 430 basis points to 26.5%. That margin expansion underscores the earnings power of our distribution platform and execution on accretive M&A as we leverage scale and financial discipline. We continue to see encouraging signs of personal lines normalization. Carrier appetite has returned, rate increases have moderated, and underwriting discipline remains strong, all of which are helping to normalize retention and new business growth across our platform. Our diversified model spanning retail, MGA, and affiliated agencies, positions us to capitalize on both hard and soft market cycles. Our third quarter recruiting and M&A activities were productive with the addition of 8 new retail locations, one new corporate location, and 370 independent agents to our MGA platform. Following the quarter, we completed the acquisition of Alabama Insurance Agency, adding 23 additional retail locations and marking Alabama as our newest state expansion. These additions strengthen our foundation heading into the fourth quarter and enhance our ability to serve clients across a broader national footprint. Strategically, our priorities remain unchanged: Investing in our technology initiatives, executing our accretive M&A goals, expanding our retail and MGA distribution channels, and executing disciplined capital deployment to support these priorities. I'll now turn the call over to Janice Zwinggi, our CFO, to discuss some of the financial highlights. Janice Zwinggi: Good morning, and thank you, Gordy. Starting with our top KPI, written premium increased by $67.6 million or 16.9% over the prior year period to $467.7 million. We saw strong double-digit growth within both of our primary offerings, insurance services grew $56 million or 16.5%, and the MGA had a spike in growth of $11.7 million or 19.2%. This increase was a result of healthy growth in both renewals of $51 million or 16.4% and new business of $16.6 million or 18.7%. Our consolidated written premium retention remains strong at 91%. While a softening rate environment typically translates to increased customer shopping, our retention performance underscores the stability and engagement of our client base. Our total revenues increased $11 million or 21.3% over the prior year period to $64.1 million. This increase was driven primarily by commission income growth of $10 million or 20.8% to $58.3 million as a result of continued expansion in both of our product offerings and supported by strong renewal and new business activity. Higher contingent income and increased fee-based revenues from one of our MGA programs also contributed to the revenue growth. Organic revenues increased $5 million, reaching $54.2 million compared to $49.2 million in the prior year period for an organic growth rate of 10.2%, demonstrating solid momentum across both our agency and MGA platforms and positioning us well to meet our full year growth targets. From a profitability standpoint, adjusted EBITDA of $17 million, grew 44.7%, translating to a margin of 26.5%, which was up more than 400 basis points from the prior year quarter. This expansion reflects operating leverage, expense discipline, and an increasing mix of higher-margin corporate branch locations. On the expense side, commission expense increased $3.9 million or 13% over the prior year period to $34.6 million, tracking with commission income growth, taking into account the impact of corporate store acquisitions and programs with no related commission expense. Salaries and benefits increased $1.6 million or 19.2% over the prior year period to $9.9 million, driven by investments in new corporate branch acquisitions, headcount growth, and public company infrastructure. Other administrative expenses increased 8% to $5.2 million, reflecting technology upgrades and compliance initiatives. Net income was $9.6 million, up 40% over the prior year period, with a net margin of 15%. Adjusted net income rose 55% to $13 million, equating to an adjusted net income margin of 20%. We also delivered operating cash flow of $15 million and ended the quarter with $151 million in cash and no draws on our revolver, leaving us well positioned to fund both organic initiatives and potential tuck-in M&A. For the full year 2025, we've tightened the ranges on our guidance to reflect our year-to-date performance, recent expansion activity and current market conditions. We expect total revenues between $240 million and $245 million, and organic revenue growth rate in the range of 11% to 13% and adjusted EBITDA margins between 24% and 25%. As the personal lines market continues to soften and carrier availability expands, our current recruiting and acquisition initiatives, including the addition of new retail locations, independent agents, and the Alabama Insurance Agency provide further momentum and earnings visibility heading into year-end. Together with our balanced capital allocation and disciplined execution, these factors reinforce our confidence in achieving our full year 2025 targets. I'll now hand the call back to Gordy for closing remarks. Richard Bunch: Thank you, Janice. As we close out the third quarter, I'm proud of how our teams continue to execute. We've proven that investing for growth and focusing on margin expansion can coexist and that our TWFG family culture remains one of our greatest advantages. TWFG is squarely aligned with that playbook, focused on profitable growth, accretive M&A, deepening carrier and agency relationships, and expanding our retail and MGA footprint to sustain our long-term growth objectives. We enter the final quarter of the year with momentum, a fortress balance sheet, and a clear view toward our long-term objective: to build one of the best, high-growth, independent, agent-centric, data-driven, distribution platforms in the country. I want to thank our employees, agents, carriers, and shareholders for their continued trust and commitment to TWFG. With that, operator, let's open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Tommy McJoynt of KBW. Thomas Mcjoynt-Griffith: The first one, I think, is going to be related to the M&A front, but I just want to check on that. If I look at the statement of cash flows, there is a $10 million line that's attributed to other investments. Could you clarify what that is? Is that related to M&A? Richard Bunch: Sure. So we've long had our own premium finance operations, and we have been outsourcing operations for years and also using credit facilities to fund those premium finance notes. With so much capital in our coffers, we deployed our own capital into the premium finance operations, giving us a higher yield on that operating business. Thomas Mcjoynt-Griffith: So is that an accretive transaction? I guess, is that needle moving? Richard Bunch: I'd say it's highly accretive, yes, highly accretive for us. You're getting 4% plus interest in most interest-bearing instruments and the yield of swapping out our capital for the credit facility that was funding the premium finance notes put us well above 7% on the same deposits. Thomas Mcjoynt-Griffith: And then staying on the M&A front, you obviously are constantly looking at a pipeline of potential acquisitions. As we think about the 2026 pipeline, would your expectations right now that you guys put more capital to work on the M&A front, do more deals or how do you think about it relative to the pace that we're seeing this year? Richard Bunch: I think we'll be executing a little bit earlier in the cycle in '26 than we did in '25. And depending on how we view M&A throughout the calendar year, we should exceed '26. Operator: Our next question comes from the line of Paul Newsome of Piper Sandler. Jon Paul Newsome: Maybe a little bit of additional color on the market environment would be helpful. And I was wondering if you could kind of walk through maybe in addition to some of the pieces of rate plus -- true organic growth plus M&A, just to kind of give us a better sense of as we go into '26, what are the moving pieces that will get you to that double-digit organic growth? And what are the things that we should be sensitive to if things change? Like one of the things I struggle with is hard market turned out to be kind of bad for organic growth because of the availability issues, but now we have more availability, but soft market. So maybe some thoughts there would be helpful, at least for me. Richard Bunch: Yes. First, on the market transitioning from hard to soft, that has an impact on renewal rate and premium retention as those policies that were enforced last year come in at lower rates. As the market also then opens up, customers have more access to different carrier options than they had in prior periods, which could lead to even rewriting the account into an even lower rate than what the renewing expiring carrier offered. That cycle plays through the full calendar year. So we should see the impact of that abating once we get into the second quarter of '26. That would give us a full 12-month run of the softening of the market, which really began early in the second quarter of '25. The availability of additional capacity allows for more clients to be onboarded. The trade-off is lower average premium for the same accounts. We are seeing growth in exposure that is offsetting some of that reduced premiums. When we look at our organic going into '26, it's a combination of our same-store sales growth velocity, sales velocity as well as new program initiatives that we've launched from the MGA, existing program expansion, which then allows for more exposures to be brought in through those channels that are creating additional commission income above the base year. So it's really not one area. It's a multitude, all of the different parts of our platform executing against their growth initiatives. Jon Paul Newsome: And maybe a kind of sort of similar question. You've made a lot of additions of new agents over the last year or so. I think you've said in the past, most of them won't have an impact anytime super soon. How is that sort of waterfall of impact from those newly acquainted agents coming? And is there a point where we see some sort of inflection point where that -- those new agents you've accumulated over the last year or so start to have a measurable impact on the growth rate? Richard Bunch: Yes, their impact is baked into our forecasting. And I think as we've talked about over time, the immediate year they come in, there's not much of an immediate contribution as they grow their agency over a multiyear process, they start becoming more meaningfully contributed. Now as, like I say, we added a lot of stores in '24. So in '24 and early '25, they're not contributing a lot to the organic story. As they start getting their portfolios larger, they do become organic contributors, but at a percentage of the larger base now. So they're all part of the organic base. And so they're going to be part of the organic forecast based on our trend lines. So when we look at Agency-in-a-Box, all those recruited locations are in the AIB bucket. And so they get baked into there. We don't do cohort analysis around those, because of the vast diversity of locations, average premiums, and some of them doing their own tuck-in producer acquisitions that then skew the data points. Anyways, they're going to start being contributors, they're part of the base assumption going into the double-digit 2026 projection. Operator: Our next question comes from the line of Pablo Singzon of JPMorgan. Pablo Singzon: First, on the MGA channel. So good premium growth this quarter. I think you said 19%, but commission income actually grew much faster. I think it was about 56% and then commission expense only grew 27%. As a result, the MGA was highly margin accretive this quarter. I think net commissions over gross commissions are about 52% against, I think, mid-30s historically. Anyway, can you just talk about what happened there, business trends wise, and what drove the strong results this quarter? Richard Bunch: Yes, sure. So we launched a program in Florida at the end of the second quarter. Part of that program -- there's 2 components to it. We are an exclusive TPA, MGA for Florida Property Program. They had a takeout that materialized in June. That creates a TPA revenue stream for underwriting claims, marketing, and on the earn-out of the takeout, there's not a commission expense. So we get a commission revenue without the corresponding commission expense. As those policies renew, they do end up having a commission expense, and you'll see a normalization of that ratio between commission income and commission expense. And then separate and aside from that, there is a voluntary organic program that's writing new business, albeit in the reported quarter, not really a large contributor, should become a contributor at the end of fourth quarter and more going into 2026. Pablo Singzon: And then second question, I guess, this one is a bit bigger picture, right? So many of the public brokers have recently announced significant cost reduction or investment programs, which may be good longer term for them, but good near-term cash flow. So I guess the question is, do you anticipate something similar for your company? And if not, how would you respond to the objection that you might be underinvesting in the business compared to everyone else? Richard Bunch: Yes, we haven't announced our full year 2026 estimates. We plan to do so as we come out of the [ K ]. We're in the midst of our 2026 planning process, looking at those investments. Some of the investments we make, as you recall, our technology operation, our evolution management systems company is outside the public company. Those capital investments are made within that tech environment, which then doesn't burden the public entity with that capital spend. We will have investments similar to our peers, probably not at the scale of what they're spending. And part of that is just how we're organized, given the ability we can invest in technology outside of the public company operations and benefits of those tech investments then inure to the public company operating business units. So that's just totally different. We will have expansion of management team. You'll see an announcement later on this afternoon some roles and title changes that we put out. And then as we finish up our '26 planning, we'll be putting out the full year estimates alongside our K. Operator: [Operator Instructions] Our next question comes from the line of Brian Meredith of UBS. Brian Meredith: Gordy, first question, back on the MGA. So as capacity becomes more available, particularly in the Texas market, and I'm assuming business kind of goes back to the admitted market from the, call it, wholesale ENS market. Will that create some pressures maybe on growth in the MGA? Richard Bunch: Well, fortunately, for us, our MGA programs are currently all admitted. So if anything, the capacity that's shifting back from ENS into the admitted space inures to our benefit. So both Texas and Florida are admitted products. Brian Meredith: And then second question, I'm just curious, when we think about EBITDA margins for your corporate versus Agency-in-a-Box business, what's the difference there? And is there a difference in kind of where your Agency-in-a-Box kind of EBITDA margins can go versus the corporate margins, you think? Richard Bunch: So we've talked about Agency-in-a-Box and the passing through of 80% of the revenue and renewal kind of puts a cap on what that margin can produce. Because we are at scale as business operations, we do have a healthy net revenue margin on that business unit. On the corporate locations, our margin is going to be greater than 2x of what we achieve in Agency-in-a-Box, because we're retaining 100% of the renewal and have more control and constructive receipt of the profitability of the operations. Brian Meredith: Makes sense, thank you. Richard Bunch: And I want to circle back, Brian, while I got you, so I partially misspoke. Our programs that we originate and operate are all admitted. The Dover Bay program is indeed an ENS program. And I just wanted to clear that up. Operator: Our next question comes from the line of Charlie Lederer of BMO. Charles Lederer: Sorry, I joined late, so I apologize if I'm repeating someone else's question or if you touched on in prepared remarks. You made the comment in the press release about the product environment improving significantly. Just curious if you could break that out geographically a little bit and if you're seeing that in both the new business and renewal side? And I guess, how to think about what's flowing in the P&L near term? Richard Bunch: Sure. So we did touch on it earlier, but I don't mind repeating the hard market for personal lines started moving soft in really the beginning of the second quarter of '25, that changes carrier fostering. So think about the hard market '23, '24 and the early parts of '25, carriers are taking significant rate, carriers are restricting capacity. By restricting capacity, that means they're not writing the right new business. They're not wanting to add new production appointments, and that becomes a challenge. So as the market started to soften, carriers start reducing rates, they start opening up geographically for new business growth, they start putting out incentives to get agents to reengage in the sales process, and it becomes a highly competitive environment. Geographically, I would say that's present everywhere except California. California remains to be a hard market. You're still seeing property shifting between California FAIR Plan, surplus lines. There is fewer carriers right now operating in the California marketplace. You had Safeco make the decision to essentially exit the state by transferring its portfolio to Liberty Mutual. And so capacity is shifting from left pocket to right pocket. We are in both of those carriers' distribution. And so California is still hard on the personal lines side, it's relatively soft on the commercial lines. And then you have spotty geographical hardness where you have significant wildfire exposure regardless of state. And then I'd say largely the cat-exposed, hurricane-driven, PML geographies are relatively soft given the reduction in cat pricing and the significant availability of cat out in the market today. Charles Lederer: Maybe on the M&A pipeline that you talked about, can you give us a sense of, if it's a commercial or personal tilt toward that in terms of how your business mix might evolve in the next year or so? Richard Bunch: So when we're looking at M&A, the first thing we're looking at is the cultural fit of the organization. Secondarily, the quality of the portfolio, is it accretive, meaning, does the portfolio have similar loss ratio qualitative characteristics as our core portfolio? Is there some geographical expansion benefit of the acquisition? So does it possess unique carrier contracts and programs that benefit the large organization, so there's an immediate accretion, the EBITDA margin of the operating business and is there some internal scale lift of that post closing. We don't really focus on, is it personal, is it commercial, is it retail, is it MGA, is it network? we really look at the qualitative accretiveness of the totality of everything. And so we have in our pipe, and we have in our near term a little flavor of everything. So if I look in the rear, the last 2 acquisitions that we closed were, I would say, majority commercial lines, retail organizations. And part of that was geography. We picked up some scale in New York with the Angers & Litz acquisition that we announced in August. And then we had a larger operation in Louisiana that was also more commercially focused in the [ McGuinness ] operation we acquired in June. As I look at the first quarter '26 pipeline, I would say it's a little bit of everything. So we have one entirely commercial organization that's in the pipe, we have several that are a mix, so more of a multiline agency flavor where you have probably 40% to 50% personal, 60% to 50% commercial. And then we have some that are entirely personal lines. So I think that's a good question to ask, and I'll probably use your question as an opportunity to talk about premium projections. When we look at our acquisitions and we put together our base analyst model, I think, we use the assumption that the majority of our acquisitions and deployed capital we're going to be buying retail-oriented businesses that generate a lower, average commission but would project a higher premium. Our internal view is we're less sensitive to premium because we're not a carrier. We're more focused on the acquired revenue and the EBITDA output of the acquiring business. So when we acquire program-oriented type businesses, it's going to bring in less premium than you may have projected, but it's going to bring in a higher average commission than you projected. So when we hear or we see that there is a miss on premium, we're not a carrier. We just use premium as a barometer of how you can project future revenues and maybe we got to be a little bit more strategic about how we communicate that, because to the extent that we expand programs, and we will, because they present a higher-margin for us, it's going to be a lower premium, but a higher revenue and a higher EBITDA margin off of what we put in our base M&A assumptions. So I think when we come around and provide '26 guidance, you're going to see us trying to update those assumptions, because I think when you look at our actual results from an M&A basis, we're achieving on the acquired revenue, we're achieving on or maybe overachieving on the EBITDA margin. And then where we see various questions is what the premium number didn't come in. I think for me as an investor and owner of the business, I'm more focused on the revenue, and the net income, and the earnings and the ability to reinvest those earnings into the growth of the business long-term than the top line premium that I don't get to retain because we're not a carrier balance sheet organization. Is that fair? Charles Lederer: Very fair. Thank you. Just one last one on the contingent line of [indiscernible] and what contingents might look like in 4Q? Richard Bunch: So we do. One of the reasons we were very confident in our full year guidance as we made it through the 9-month treadmill and obstacle course known as insurance. We've got those third quarter lock-in opportunities so we can lock in some of those contingencies that are in our base level projections. So we have a high confidence in achieving what we've got in our current pro forma through the full calendar year. Operator: I would now like to turn the conference back to Gordy Bunch for closing remarks. Richard Bunch: Well, we again appreciate all of our shareholders, our staff, even the analysts, investors that are working with us. We think we have a great opportunity going into 2026 with our strong balance sheet, our very healthy M&A pipeline, our organic strategies for existing operations, the expansion of our programs. We look to execute on all the different levers that we have to ensure consistent growth and profitability across the organization. I look forward to further feedback and appreciate everybody again. And thank you for attending our call. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings, ladies and gentlemen. Thank you for standing by. Welcome to the Global Water Resources, Inc. 2025 Third Quarter Conference Call. [Operator Instructions] I would like to remind everyone that this call is being recorded on November 13, 2025 at 1:00 p.m. Eastern Time. I would now like to turn the conference over to Kyle Upchurch, Controller. Please go ahead. Kyle Upchurch: Thank you, operator, and welcome, everyone. Thank you for joining us on today's call. Yesterday, we issued our 2025, third quarter financial results by press release, a copy of which is available on our website at gwresources.com. Speaking today, is Ron Fleming, President and Chief Executive Officer; Mike Liebman, Chief Financial Officer; and Chris Krygier, Chief Operating Officer. Ron will summarize the key operational events of the quarter Mike will review financial results for the third quarter, and Chris will review strategic initiatives in Arizona Corporation Commission activity. Ron, Mike and Chris will be available for questions at the end of the call. Before we begin, I would like to remind you that certain information presented today may include forward-looking statements. Such statements reflect the company's current expectations, estimates, projections and assumptions regarding future events. These forward-looking statements involve a number of assumptions, risks, uncertainties, estimates and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management's views as of the date hereof and are not guarantees of future performance. For additional information regarding factors that may affect future results, please read the Risk Factors and MD&A sections of our periodic SEC filings. Additionally, certain non-GAAP measures may be included within today's call. For a reconciliation of those measures to the comparable GAAP measures, please see the tables included in yesterday's earnings release, which is available on our website. I'll now turn the call over to Ron. Ron Fleming: Thank you, Kyle. Good morning, everyone, and thank you for joining us today. We are very pleased to report the results for the third quarter of 2025. First, before jumping to normal operating highlights, I'd like to start by attempting to capture the significance of numerous recent announcements that underpin our goal of long-term value creation and our ability to deliver strong total returns to our shareholders in the years and decades to come. In July, we closed the Tucson acquisition, which consisted of 7 separate public water systems, adding approximately 2,200 connections and approximately $7.7 million in rate base. At a multiple of only 1.05x that rate base. This is beyond an attractive price that is immediately accretive from a share price perspective, considering our peer group trades by our estimates between 1.5x to 2x rate base. We expect the systems to generate around $1.5 million in annual revenue until such time we can consolidate these systems into the rest of our Saguaro rate division and ensure all of our utilities in Pima County are captured in a regional rate plan, earning their full authorized rate of return. Second, we recently announced that the Arizona Governor has signed meaningful water legislation known as Ag-to-Urban, which became law in the quarter. And we believe will result in many benefits that will be applicable for Global Water in our service areas, improving offer for sustainability, while creating a new ground water supply to support additional growth. Based on Global Water's established service areas, created through buying and building utilities on the path of growth. Our regional areas coincide with land that has considerable historic farming operations, just outside densely populated metro Phoenix. Thus, we believe the new law will drive even more growth to our service areas. Third, as announced in the quarter, full funding of the Highway 347 expansion connecting Interstate 10 and Metro Phoenix to the City of Maricopa was approved. As the stakeholders had already begun engineering on certain long-term elements of the 13-mile road widening project, it is estimated that the construction will begin as soon as fiscal year 2026. This project will go a long way to ensure the City of Maricopa will continue to be one of the fastest-growing communities in the country and meet its population projections of growing nearly 90% by 2040. As evidence to this potential of the population projection on July 1, the U.S. Census Bureau released its population projections from 2024. In the city of Maricopa was once again in the top 10 of the fastest-growing large municipalities in the country coming in at #6. Even more telling was that population growth in 2024 was stronger than 2023. As the city realized 7.4% growth compared to 7.1% growth in the year prior. Below, I will discuss connection growth rates and permit growth rates that have begun to slow. But it is important to keep population growth in mind as this more closely correlates with consumption and revenue growth based on the amount of multifamily housing and commercial growth that is occurring. Beyond these long-term wins, we are also executing our capital investment and rate case strategies to drive near-term earnings growth. Obviously, the initial staff report was unexpected and thus, we issued the related 8-K informing our shareholders as such, but the case has a long way to go, and we still expect a fair outcome in mid-2026. Chris will provide more details on the rate case later on the call. And finally, if you think about everything just mentioned from rate base accumulation to new rates to water and transportation that are 2 fundamental elements of economic development, you can see even more than ever, we have the foundation of sustainable growth for years and decades to come. Now I'll provide a few operational highlights. Total active service connections increased 6.6% to 68,130 as of September 30, 2025, from the 12 months prior. In Q3, we achieved an annualized 3.3% total active service connection growth rate, excluding the recent acquisition of the 7 Tucson Water Systems. Year-to-date, we've invested $49.6 million into infrastructure improvements in existing utilities to provide safe and reliable service. The majority of our planned investments in 2025 relate to the post-test year projects in the Santa Cruz Water Company and Palo Verde Utility Company. Our 2 largest utilities located in Pinal County, for inclusion in our already followed 2024 test year rate application. Now I want to discuss organic customer growth and what is going on in our core utilities further. The single-family drawing unit market ended 2024 with approximately 27,156 building permits issued in the Phoenix greater metropolitan statistical area. For Q3 2025, this market realized 4,724 building permits, representing a 29% decrease from Q3 of the prior year. For Q3 2025 in the Maricopa market, it realized 164 building permits, representing a 20% decrease from the same period in 2024. So the 2025 permit continues to show a bit of a pullback from prior year, which is not surprising considering the uncertainty around tariffs and other macroeconomic drivers. We believe this is temporary and as these things continue to cool, there were very strong drivers for our normal growth rate to continue or even pick up. As I mentioned in our last earnings release, yes, by inflation and other cost drivers have caught up with us and are impacting our earnings growth. However, it's important to recognize that 2024 was a test year for our largest utilities, whose last test year was 5 years ago in 2019. We need new rates to address the cost increases over that time period and the significant investments we have made. Based on adjustments made to our current rate case application and rebuttal testimony, we now have an additional $4.3 million annual rate increase proposed under consideration at the ACC. I will now turn the call over to Mike for financial highlights. Michael Liebman: Thanks, Ron. Hello, everyone. Total revenue for the third quarter of 2025 was $15.5 million, which was up $1.2 million or 8.4% compared to Q3 2024. Total revenue for the year-to-date period increased $2.8 million or 7% to $42.2 million. The increase in revenue for both periods was primarily attributable to the acquisition of 7 water systems from the city of Tucson in July 2025, organic growth in active water and wastewater connections and higher rates and our GW Farmers and GW Saguaro utilities compared to the same period last year. Operating expenses for Q3 2025 were $12.6 million compared to $10.3 million in Q3 of 2024. This is an increase of approximately $2.3 million or 21.9%. Operating expenses for the year-to-date period increased approximately $4 million or 12.8% to $35.4 million compared to the same period in 2024. Notable changes in operating expenses included personnel costs increased by approximately $707,000 for Q3 and $971,000 for the year-to-date period. Both increases were primarily attributable to hiring additional employees for the newly acquired water systems, filling previously vacant positions and increased medical costs. Other O&M and G&A costs increased by approximately $711,000 for Q3 and $1.2 million for the year-to-date period. Both increases were primarily due to a storm event with heavy short duration precipitation as well as higher professional fees and increased costs with various service providers. In addition, year-to-date costs were higher related to municipality licensing type agreements. Depreciation and amortization increased $622,000 for Q3 and $1.3 million for the year-to-date period. Both increases were substantially attributable to the additional depreciable fixed assets placed in service this year as a result of our increased capital investments and the commissioning of related projects. Now to discuss other income and expense. Other expense for Q3 2025 was $0.6 million compared to an immaterial other income in Q3 2024. Other expense for the year-to-date period was $1.4 million compared to $0.8 million for the same period in 2024. The increase in expense for both periods is primarily attributable to a decrease in interest income and lower income associated with Buckeye growth premiums. Net income for Q3 2025 was $1.7 million or $0.06 per diluted share as compared to $2.9 million or $0.12 per diluted share in Q3 2024. Net income for the year-to-date period was $3.9 million or $0.15 per diluted share as compared to $5.3 million or $0.22 per diluted share for the same period in 2024. Lastly, I'll discuss adjusted EBITDA, which adjusts for nonrecurring and noncash items such as onetime storm-related expenses and restricted stock expense. Adjusted EBITDA was $7.8 million in Q3 2025 compared to $8.2 million in Q3 2024. This is a decrease of $0.4 million or 5%. Year-to-date, adjusted EBITDA remained consistent at approximately $20.4 million. This concludes our update on the third quarter 2025 financial results. I'll now pass the call to Chris to review our regulatory activity and strategic initiatives for the quarter. Christopher Krygier: Thank you, Mike, and hello, everyone. First, as you heard earlier, in the quarter, we closed the Tucson acquisition. This deal has been years in the making and is finally across the finish line. We are now focused on the full integration activities. Moving on to the rate case front. As you have seen in our earnings release, 10-Q and other filings, we continue progressing on the Global Water Santa Cruz and Global Water Palo Verde rate cases. To provide some context, if this were a baseball game, I would describe us as in the middle innings of the process. Steps to come over the next few months include 2 more rounds of formal [ rebuttal ] testimony, a hearing before an administrative law drudge, legal briefs and then awaiting the judge's recommendations. Once the judge issues the recommendations after hearing the case, the commissioners consider that recommendation at an open meeting. We still expect to finish the rate case in mid-2026. As a refresher on our filing, our current rates are based on a 2019 test year and this rate case is a 2024 test year, meaning this is the first rate case for these utilities that captures the historic inflation we experienced. And this is the first rate case that reflects the significant capital program the utilities undertook in the last 5 years. Even with those challenges, we are currently supporting a reasonable proposed net revenue increase of $4.3 million, which results in a median bill increase of less than 10% to the typical residential water and wastewater customer. We believe the facts of the case will result in a fair outcome, and we will continue to provide updates on future calls. This concludes the update on acquisitions and regulatory activity for the quarter. I'll now pass the call back to Ron. Ron Fleming: Thank you, Chris. To close today, I just wanted to express how proud I am of our team. We took on a lot this year, and there is still more to come. Despite many headwinds, we will continue to execute our growth plan, and we intend to remain at the forefront of the water management industry and advance our mission of achieving efficiency and consolidation. We truly believe that expanding our Total Water Management platform and applying our expertise throughout our regional service areas and to new utilities will be beneficial to all stakeholders involved. We appreciate your investment in us and support of the company as we grow Global Water to address support utility, water resource and economic development matters along the Arizona Sun corridor, allowing our communities to thrive. These highlights conclude our prepared remarks. Thank you. We are now available to answer any questions. Operator: [Operator Instructions] The first question comes from Gerry Sweeney with ROTH Capital. Gerard Sweeney: Ron, Mike and Chris. I'm going to start with a quick question on the rate case. You say you -- I think you anticipate still being completed by mid-2026. If memory serves correct, I think we were looking at completed and maybe some of the rates going into effect July 1. Is that still potentially the case as when you say that the case completed by July 1 or mid-2026? Michael Liebman: Gerry, this is Mike. Yes. We -- that timing puts us to where we expect the rates to change by the middle of the year. So July 1 in the back half of the year with the new rates in place. Gerard Sweeney: Got it. I just want to make sure on that front. And then moving over to ag-to-urban. That's interesting. Obviously, there's a lot of water issues outside of your operating area. I know you have some really good aquifer and sourcing of water. But how would this whole program worked for you of some of that land around your operating areas from the farmland. Would you purchase those rights? Or would they lease the rights? Or is this more about driving economic development because there is additional water in the region. Ron Fleming: Yes. Absolutely, Gerry. This is Ron. I will take that one. And you're right, there's a lot going on and always -- really always has been with water in Arizona. The 7 basin states in Mexico continue to reward for the federal government to determine what the new plan on the Colorado River will look like. But as you mentioned, the good news for us is we don't really rely upon that. In these new emerging areas that we serve, which is kind of the basis of the business plan all the way back over 20 years ago. These are kind of those new areas outside the densely populated metro Phoenix region. And historically, there has been a lot of agricultural activity in these areas. So we really are converting farms to rooftops. And the good news is that rooftops use about 1/4 or even less of the amount of water to build the kind of master planned communities that they do in this area, as compared to farms. And then in our model, our total water management model, we even stretched that water supply further. So the way that it practically works is it's kind of good news to your question. We don't have to buy it. We don't lease it. The land owner has the right to pump water under certain Arizona regulations historic groundwater pumping to pump those rights for farming activities. So the reason we were able to work with a lot of stakeholders and get the law put in place, as you see it as a net offer for benefit. So it's kind of a win-win-win because the farming goes away and then we just convert a portion of those historic groundwater pumping rights to a new municipal water supply. So it's basically they're pumping 5-acre foot per acre for farming we're going to convert in Pinal County, 1 acre foot to that new water supply or 1.5 acre feet in Maricopa County. So it's good for everybody, but it's also very economical -- the most economical water supply because we're just converting, but already exists there at really no cost. And then it underpins your ability to use that supply for more houses and businesses. So just based on the strength of that law, but where we are specifically as a company, it's very beneficial to us. Gerard Sweeney: Got it. And the 347 corridor expansion, that's a pretty big deal because I think doesn't that reduce commute times improve transportation and just potentially drive more people towards Maricopa with, generally speaking, is probably more housing affordability. Is that what we should be thinking about on that front? Ron Fleming: Yes, absolutely. I would say more than generally speaking, it's -- it is what is going to happen. So you've got to think about it this way. When we bought those utilities just over 20 years ago, there was 2,000 people in the city. And we're talking about some of the census data earlier on this call, but we all know the census data lags. And so right now, the city's own metrics have the city at 85,000 people. So that has happened off of this kind of 2 lane each direction highway, but it definitely resulted in a lot more traffic congestion and that's ultimately why those stakeholders were able to get the federal government, the local stakeholders, state government to fund this project through like 12 different funding mechanisms. They were able to bring it all together because the need is real and there. So just to add up a full another lane in each direction, most importantly, at overpasses to some of the complicated intersections that currently just have 4-way lights that keeps the traffic moving. And it really is going to create a freeway of like access into the City of Maricopa. It's going to allow us to keep booming. So we're pretty excited about it. Operator: [Operator Instructions] The next question comes from Matvey Tayts with Freedom Finance. Matvey Tayts: So my question is also about this regulations. So like the proposal by ACC, like 50% below what you proposed. Are there any kind of -- where this huge difference comes from? Why it's so big. So can you just elaborate a little bit on this? Christopher Krygier: Yes, this is Chris. So part of it is what I'll call we're kind of still in the process. So we have a lot of, what's called, post-test year plant. And the way the commission works with that is they don't include it in their calculations until they see the projects completed, the invoices in and they've had a chance to review the invoices. So that's part of it. And then obviously, they're still back and forth asking for additional information related to other investments of our Southwest area and other projects. And so that's why when we say we're in the middle innings, we're kind of still in the middle of the process working with the parties on it. Matvey Tayts: Okay. And just an additional question. So in previous reports, you mentioned this number like $212.5 million for the expected rate base. And I couldn't find it in the new quarterly report. So is it correct that I missed this number or it's mentioned somewhere or you decided to be a little bit less strict in your numbers expectations? Michael Liebman: Yes. This is Mike. That number that we gave you, it's -- and you can find it in the investor presentation on our website. And so it's there and it talks about our 2024 number plus an expected post-test year plan number that we have. And so that number has actually -- it's come down a little bit from that $212 million, but materially -- that's still correct. And that's a number -- we just don't report that stuff in our quarterly financials. Matvey Tayts: So let me just check 1 thing. So in your recent quarterly report, there is no -- this number, right? Michael Liebman: That's right. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ron Fleming for any closing remarks. Ron Fleming: All right. Thank you, operator. I just want to thank everybody for participating on the call and for your ongoing interest in Global Water. I appreciate it and look forward to speaking with you again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the KBC Group's Earnings Release Third Quarter 2025. [Operator Instructions] I would now like to turn the floor over to Kurt De Baenst, Head of Investor Relations. Please go ahead. Kurt De Baenst: Thank you, operator. A very good morning to all of you from the headquarters of KBC in Brussels, and welcome to the third quarter conference call. Today is Thursday, November 13, 2025, and we are hosting the conference call on the third quarter results of KBC. As usual, we have the group CEO, Johan Thijs as well as group CFO, Bartel Puelinckx with us, and they will both elaborate on the results and add some additional insight. As such, it's my pleasure to give the floor to our CEO, Johan Thijs, who will quickly run you through the presentation. Johan Thijs: Thank you very much, Kurt. And also from my side, a warm welcome to the announcement of the third quarter results 2025. And as always, we start with the net results, which stands at a very excellent EUR 1.02 billion. So once again, the KBC bancassurance machine has been firing on all its cylinders, which also means that all entities in our group have been contributing positively to this result. As a matter of fact, it's once again perfectly balanced income, 50-50 split over net interest income versus the non-interest income bearing results, which once again shows that we keep up the pace with our, let's call it, ancillary business in compensating the growth on the net interest income side. If you look at the different lines, well, then it's very straightforward. Once again, strong performance on the net interest income side, which has been growing despite the fact that there was a significantly lower net interest income on inflation-linked bonds. Consequently, we also increased our guidance from what it was at least EUR 5.85 billion to now at least EUR 5.95 billion. This income growth on the net interest income side has been triggered, amongst others, by a strong loan growth, but also again on a strong performance on the transformation results, so our replicating portfolio. Coming back to the diversification, well, both the fee business, which is generated through the asset management and bank services have been growing significantly as did the insurance business, the bit latter was also driven by good quality with a combined ratio of -- not of 8.7%, that would be ridiculously lower, but at 87%, which is indeed still excellent. If you take all those income lines in consideration, you come to the conclusion that indeed we can further increase our guidance of our income side as well we now stayed at least 7.5%. And if you then know that we stick to our guidance for the cost side, which means at least -- sorry, maximum 2.5%, we know can also conclude that the jaws will be superior to 5%, which is indeed a very strong number. Coming back to that cost side, they are perfectly under control and perfectly within our guidance. And on the credit quality side, we posted a very excellent credit cost ratio of 12 basis points, which is significantly lower than the long-term average and also consequently lower than the guidance which we provided. No big surprise that our solvency position stands solid at 14.9%. And then on the liquidity side, as usual, we are performing very well with numbers 158%, respectively, 134% for NSFR -- for the LCR and the NSFR. And then also, last but not least, we also issued the interim dividend of EUR 1 per share, which is paid on the 7th of November. And we also announced that do things. First of all, the acquisition of Business Lease in Slovakia and Czech Republic, but also our inaugural SRT, which is freeing up 23 basis points of capital, hereby fulfilling the promise which we made a more active management of our risk-weighted assets. When we go to the more digital side of our story, we go to Page 4, you can clearly see that Kate continues to grow. As a matter of fact, 5.8 million customers of ours in the meanwhile clicked on Kate and continue to use her in the further business, which we are doing with KBC. We also see clearly that the number of interactions with our customers continue to increase, and not only the number of transactions increase, but also the fact that Kate can autonomously, which means without any help of a human being that Kate can deal with those questions and provide the customer solutions in an autonomous way, 7 out of 10 times. In that perspective, it's also important to understand that since October, we start launching Kate 2.0, which is actually a fully enabled LLM, so large language model Kate, which allows us 2 things. First of all, to better anticipate the questions in the context by which they are asked, so therefore, allowing us to provide more and better answers to our customers, which intrinsically means that more customers can be helped. And secondly, that the autonomy, which now stands at 70% will further increase. So both will have a positive effect on the 2 sides of the cost-to-income ratio. First of all, it allows us to sell more via Kate, Kate 1.0, so the old version generated actually sales, which allows us to do 400,000 sales over the period of 12 months. And then on the cost side, as I already said, the autonomy actually creates solutions without human being interfering, which means that Kate today is -- Kate 1.0 today is doing the work of roughly 360 FTEs, which is already a quite a significant number, which is going to improve going forward. Let me go into the different P&L lines because there were no exceptional items this quarter, which means that on the net interest income side, we do see overall an increase of 1% on the quarter and 10% on the year. But what is far more important that is actually, if you look at the underlying building blocks, then actually the net interest income on the banking side increases with 2%. Why? Because there is a very negative impact of -- I mean, it has a positive impact on other things, but inflation was coming down. And therefore, the income, which is generated through inflation-linked bonds, was significantly down as well, EUR 20 million difference on the quarter, and that obviously has some impact on the growth. Big chunk of that is booked on the insurance side. And therefore, if you purely look at the banking side, a 2% increase. Now that is triggered by, in essence, 2 things. First of all, a further increase of our transformation results, which went significantly up due to the way how we replicate our portfolios. And the second one is a very strong performance on the lending side. As you know, there is still some competition on margins in the markets where we are present, but this is more than compensated by the loan growth. The loan growth, which stands at 1.6% in the quarter, 8% on the year, and that is indeed a very strong number. Also, when you compare that with the guidance, which we previously gave, then we also came to the conclusion that we increased our guidance to approximately 7% going forward. Year-to-date -- so after 9 months, of 2025, the loan growth stands at 6.3%. If you would include the FX effect, even at 7.3%, which is indeed a very strong number. All the other elements are mentioned on the slides, have far less impact. We are talking about better income on the dealing room side, cash management, the number of days, but let me not go into that detail. Let me go back to the margin, which now stands at 205 basis points, which is slightly down compared to previous quarter, but I have to make a caveat here. First of all, the impact here is quite clear of the inflation-linked bonds. If you -- that itself already explains a big chunk of that difference, but also the strong loan growth, which is done at margins, which is slightly below the back book. It depends a little bit on the country. And last but not least, also on the fact that we do generate net interest income by investing liquidities in bonds, so using the higher spreads. This generates normally net interest income, but at margins which are obviously lower than the 208 basis points of previous quarter. And that has a positive effect on one side, but a slightly negative impact on the margin. Just to give you some insight how it worked. What about the other drivers of that net interest income, volume on the lending side already dwelled upon. What about the deposit side? Once again, we do see an increase of our core monies with our customers of EUR 1.1 billion in the quarter. That is a bit -- that is an obvious effect that we start to see the first moves of the monies which came in, in Belgium as a recuperation of the state monies invested in 2023. Well, that money is coming to maturity, as you know, partially in the first part of this year, and the big chunk is going to mature in quarter 4. But you clearly also can see that you see some effects already in the third quarter by the savings certificates, which were entirely freed up and not reinvested again in those savings certificates. In essence, it comes down to the story that what we do see in practice is one moneys, which were recuperated on the state mature that the vast majority returns in either current accounts, saving accounts or in mutual funds, only roughly 25% is reinvested back in term deposits. And that has translated in this slide. The evolution of the current accounts here is very specific seasonal effect in corporate deposits in Belgium. This is temporary, and this will be corrected in -- by the natural flows in quarter 4 of this year. If you look at the total picture, that is even more substantial, EUR 8.5 billion of monies flowing in into our different pockets for our core customer monies. And this is translated in a fundamental increase on the current account, savings account side and the fundamental decrease on the term deposit side, which in translation of margin is good news. Last but not least, but I'll come back to that in one second, that is the inflow of those monies, which are maturing into the fee business generated through asset management and life insurance, while that has clearly also happened in quarter 3, which brings me immediately to that fee and commission business. Here, once again, a very strong result, up 6% on the quarter. Let's face it, after already high quarter 1, 2, we now have a very strong quarter 3. And also if you look at the different contributor parts here, the asset management services or the banking services, both are up significantly, 7% up on the Asset Management Services and 5% up on the banking services. Starting with the former, well, that is driven by 2 things. First of all, the fact that obviously, the management services had the fees or the management services has a positive impact on the performance of the financial markets. But also clearly, there was a strong net inflow again on the asset management product side. As a matter of fact, we have seen a growth of net inflow of EUR 1.8 billion in the quarter, which is for the third quarter, a very strong number, and it tops up the first half of the year to a total of EUR 5.3 billion of net sales. That is an all-time high after 9 months. In terms of the buildup of those monies, we were also able to do it at a stronger management fee, but also at a stronger entry fee. In terms of the split up of responsible investments, be aware that our book now -- our total book stands at roughly 50% under the umbrella of Responsible Investments, whereas the inflow on the new monies is roughly 58% Responsible Investments. The other -- so perhaps something on the assets under management, the consequence of all of what I said, obviously, are positive for those assets under management. We now stand at EUR 292 billion of assets under management, which is a strong EUR 12 billion on 1 quarter up. If you compare it with previous year, it is an increase of 8%, which is perfectly split 50-50 between inflows and so -- fees -- sorry, and performance also 50% being 4% in this case. Let me then go to the insurance side. Well, also here, very good results to use an understatement, once again, up 8% on the quarter. On the non-life side, this is due to strong performance in Belgium and our Central European countries, split up there is Belgium a bit more on the lower side, so 5%, 6%, whereas Central Europe in essence is growing more than 10%, depending on the country. The quality of that book is -- stands at 87% combined ratio, which means excellent results again and also a bit better than the period of 9 months of last year. On the life side, the story holds as well. Again, the strong performance on the total life insurance book. We went up 29% on the quarter. And if you would make the comparison with the same period last year, 7% up significantly. Now in both quarters, '24, '25, quarter 3, we did commercial campaigns. So the commercial campaigns this year was even more successful than it was last year, and this is amongst others due to the fact that we have monies maturing on the previous state note. Split up between unit-linked and interest guaranteed is roughly 50% versus 43%. Small detail, if you compare the number after 9 months with the same period last year, it's 15% up and that is indeed something which is quite remarkable after the record of last year. Going into smaller P&L impact lines, you have the more volatile financial instruments at fair value. Well, they are EUR 28 million lower than previous quarter. I can be very brief about this. This is mainly driven by the evolution of the mark-to-market derivatives in essence. And on the net other income side, we are perfectly in line with the run rate being roughly EUR 50 million. We now stand at EUR 47 million. But if you look at the underlying building blocks, when they are perfectly spot on compared to what it was before. So the leasing and the assistance company have the same outcome as what it was last year and more or less the same outcome of this year. What about the more serious stuff that is the OpEx evolution? Well, let me bring it to its essence. The costs are under control. As you remember on previous call, we always highlighted the difference, if you make the comparison of, for instance, 2025 with '24, which was the trigger for the guidance, that you need to be careful that the distribution of the costs in over the quarters is completely different comparison '24, '25. But it was more back loaded in '24, it was more equally spread in '25. In that perspective, you now start to see the effect of what we always highlighted on previous quarter announcement, that is costs evolution over the quarter 3 with quarter 3 of last year is now coming -- if you exclude bank tax, it is below 1%. And that makes it quite clear that if you look at the number over 9 months, that we're coming close to our range, our guidance. That is we are now standing at -- if you exclude bank tax at EUR 315 million, which is more or less 50 basis points higher than what it was previous quarter, but it starts to come into that range. Actually, as a matter of fact, if you look at our costs compared to the budget, which we had internally, we are better than our budget foreseen for 9 months of 2025. So we are perfectly online to make our guidance -- perfectly on track, sorry, to make our guidance less than 2.5% cost increase true. Cost-to-income ratio is obviously translated, if your income is growing more than roughly 8% and your costs are only growing 3%, then your jaws are significantly up. We are talking about 5% jaw translated in a cost-income ratio, which goes down for 43% in '24 to 41% now, which I think is indeed an excellent performance. There are always uncertainties in life, and that is bank taxes, which are always reviewed -- most of them reviewed for the upward. We do expect on the full year to pay EUR 668 million of bank taxes. Currently, we stand at EUR 615 million. In the third quarter, the back taxes were pushed up because of additional national bank taxes and deposit guarantee scheme contributions mainly in Hungary. That has translated to more detail on what is that Page 13, where you can see the split up over the different business units, but I suggest that we further continue with the credit cost ratio, where other strong performance can be mentioned. We now stand at EUR 51 million, all things combined, which is built up, in essence, about in 3 parts. The first one is the loan book with an impairment of EUR 55 million. But be aware that we deliberately took EUR 26 million to cut down the shortfall, the backstop shortfall, the tool, which is imposed upon us by the ECB. So we lowered that with EUR 26 million, which actually generates a positive capital impact on the CET1 ratio of 2 basis points. If you take that into account, then the impairments on our loan book are very, very low. If you look also at the evolution of the macro parameters, which are used in our model to calculate the geopolitical and macroeconomic buffer, well, then we came to the conclusion that there is a release to be booked for EUR 9 million, which makes the buffer now stand at EUR 103 million. There were some EUR 5 million in asset software impairments. And if you bring that all into account, then you see that our credit cost ratio now stands at 12 basis points if you include the ECL buffer. If you would exclude that, we are at 13 basis points, which is significantly lower than the long-term average, which is perfectly in line with the guidance where we said it would be indeed better than that. In terms of quality, well, it's very simple, 1.8% NPL ratio, which is substantially lower than, for instance, the European average. If we would look at the EBA definition, it would even come to 140 bps, which is 40 bps lower than the European average. For good understanding, if you look at the migration metrics of our PD classes, then we do see a positive shift towards an improvement of the portfolio overall, and that is some reassuring news given the circumstances we're all in. What about capital? Well, also there, a strong performance. We now stand at 14.9% at the end of the third quarter. This is mainly triggered by an increase of our risk-weighted assets, EUR 1.6 billion. I mean, in essence, due to the growth of our lending book, EUR 1.4 billion is entirely due to that growth. And it's also triggered by, obviously, the booking of our net interest -- sorry, not net interest income, but net result and, of course, the accrual of our dividend. Now going forward, what do we expect for the fourth quarter? So we do still see some positive effect due to the liquidation of KBC Bank Ireland. You remember that we booked deferred tax assets. Those deferred tax assets contributed positively to the quarter 3 capital position. In total, EUR 166 million, bringing it to 13 basis points. We do expect the further balance to come mainly in quarter 4, a little bit in '26, depends on the profitability in the quarter. And that brings the positive impact. We do expect further upstream of our Belgian GAAP insurance profit in -- to KBC Group. And then obviously, we do also still hope that we do get the approval in our 365 Bank that is in its process and that will generate roughly max 50 basis points on the capital side. Also, in that perspective, it has nothing to do with the fourth quarter because we think that will be cleared by the first quarter next year, that the leasing side, it has only an immaterial impact on our CET1 ratio next year of roughly 4 basis points. Now if you bring all those numbers into account, also taking into account the SREP, which was issued a couple of weeks ago, well, the MDA now stands at the same level as the OCR ratio, both at 10.85%, and that generates a buffer of 4.1%., which is indeed quite solid. In the meanwhile, also the National Bank Belgium has made statements about the review, which they are going to put into motion as of what is it the 1st of July next year. That is, I mean, some of 2 parts, the countercyclical buffer and the systemic buffer that play around a little bit with those numbers, which has for us, given the composition of our book and given the way how it is supplied, a negative impact of 2 basis points on our CET1 ratio, starting with the current number of risk-weighted assets. So to be remembered, strong performance and strong MDA buffer going forward. So that is then also translated into the solvency of the insurance side, which has increased to 216%, and then the leverage ratio, which is also 5.8% over the quarter. In terms of liquidity ratio, already mentioned that it is managed, as you know, in a very specific way. And therefore, we do see the same solid performance on the liquidity side with -- around the numbers, 160% and 130%, respectively, on the short term and on the long term. Going forward, we do expect that the economy is going to slightly pick up a little bit in 2026. That is definitely true for the Western European markets, for the Central European markets where we are present, we do see a more fundamental growth, at least double of the amount of Western Europe. Western Europe is estimated at roughly 1%. In terms of inflation, the European inflation hovering around 2% in certain Central European countries like Hungary. It can be a little bit higher, but it is at least in such a way that ECB, we do not expect further rate cuts to happen in 2025, neither in 2026. And in the Central European side, we expected Hungarian National Bank to further bring down their 6.5% policy rate. But in essence, we do expect a slightly positive view on the economic side, which also gives us the certainty to adapt our guidances for 2025 upward. I already mentioned the 7.5% at least for total income and the at least EUR 5.95 billion for the net interest income side. As you remember from previous call, as always, KBC includes a certain margin of conservatism to -- I mean, eliminates the uncertainty in certain parameters given that, that uncertainty has gone away, we have actually translated to that conservatism into a more stricter guidance, but we will -- let me say it, as follows, be sure that we will make that number happen. I would not say fingers in the nose, but with a certain margin. The insurance revenues are solid, and I already dwelled upon the 2.5% cost side. No changes on the forward looking for '27. This is something which we're going to provide to as always on the back of the fourth quarter results, which are published in February. I will wrap it up here, and I will give back the floor to Kurt, who will guide us through the questions. Kurt De Baenst: Thank you, Johan. The floor is open for questions now. [Operator Instructions]. Thank you. Operator: [Operator Instructions] We'll now take our first question from Tarik El Mejjad of Bank of America. Tarik El Mejjad: I'll stick to 2. The first one on net interest income. If we take the Q4 implied exit rates and then we adjust for all the inflation-linked bonds and so on, clearly, the run rate is quite attractive versus consensus. Could you give us some indication in terms of '26? I know you updated with the full year, but given where you see consensus and I think I see quite a lot of upside there, if you can help on seeing the upside, it would be very helpful, indication for '25, but '26 is important. And then the second question is on M&A, specifically on Ethias. This is clearly very important for your investment case and you've been always helpful giving us the latest on what government thinks and so on. Can you maybe refresh us on where we are in the process? And what do you think are your odds to run successfully that bid? Johan Thijs: Thank you very much, Tarik, for your questions. And let me provide you answers to both. So first of all, obviously, I mean, what you asked in your question and where you were making reference to the interest rate evolution, the yield curve evolution, you're 100% spot on. They are indeed better than what it was, for instance, a year ago. We do also see that translated for sure in our results of 2025. And that is also something which is indeed true for 2026 as well. Obviously, taking into account that -- I mean, there are a couple of drivers in the economic environment, which are crucial. For instance, the situation of the war in Ukraine, if that would escalate that we have completely different picture. But all those parameters taken into account being stable, then you're right in your analysis that certain of those drivers of the net interest income are evolving positively compared to a year ago. So indeed, you can expect that on the net interest income side, there is a positive effect and I can only confirm. To provide you already the detail of what 2026 is going to be, well, we are going to do this on the back of our quarter 4 results. As a matter of fact, we will have discussions on the budget. We had a preliminary discussion on the budget of '26, '27 and '28 earlier this week, but the fundamental discussions and also the approval by the Board is going to happen in the next week and the week to come. So it would be a bit preliminary to already elaborate that in an analyst call. But the first part of your question, I can only confirm as having a positive impact on the evolution of our net interest income, which, as I said, for 2025 is at least EUR 5.95 billion with a certain degree of conservatism. You could say easily EUR 6 billion that you can start to add up. Regarding your second question, the M&A, more specifically about Ethias, well, today, and that is something which I already indicated in, I think, previous call or 2 calls ago, my expectation was that Ethias would not come to the table in 2025, but it would be prepared by the government in 2026 because the urgency, Belgium is not having a favorable budget situation nor the debt GDP situation that, that is not imminently on the table for pushing 1, 2 assets out of the portfolio of the Belgian state. And I can only confirm that today. So my guess is that Ethias -- as far as Ethias is concerned that the preparation will be done by the government in the course of 2026 and then bringing it to the market by the end of the year potentially even early '27, we'll see. It depends a little bit on where the budget discussions end. On other assets, for instance, Belgium, it might be going a little bit faster, at least for a small part of it. Where are we? So we are indeed fully prepared for the file. We have a clear business case for that. And when you were asking about the ops, what we will do our utmost without doing stupid things on pricing. As always, for us, it needs to tick a couple of boxes on the strategic side. It makes a lot of sense for KBC to go for an acquisition of Ethias. It is a core market for sure. And it is delivering added values, I think, for both sides. And then last but not least, it obviously needs also to tick the boxes on the return on investment, return on equity. That is something which triggers me to say we will not pay stupid prices. I recommend everybody not to pay stupid prices. But for sure, we will not do so. So we are prepared and will be further continued. Tarik El Mejjad: So just to understand on the timing for TS from the government perspective. So you think there will not be any decision to sell it before the next budget discussions, basically, right? So with the conclusion in the second part of the year. Is that what you said? Johan Thijs: That is indeed my reading of what is happening today. Operator: Our next question comes from Giulia Miotto of Morgan Stanley. . Giulia Miotto: I'm afraid I will follow up on NII and ask about Q4 and the exit rate. So the guidance of EUR 5.95 billion is extremely conservative in my view because it would imply NII to go down in Q4, whereas I think it should increase quarter-on-quarter given the tailwind. And from that into next year, can you help us understand or quantify at least the benefit you see from the hedges? Some of your peers give a slide with some quite clear disclosure on benefit from hedges over the next couple of years, and also how you expect loan growth to evolve? Because it's very strong. And from here, perhaps it could only accelerate, I guess, with the German fiscal stimulus, hopefully helping see countries indirectly. So yes, I would love your thoughts on these moving parts. And then secondly, Kate 2.0, historically, you said that Kate helps with 1% of efficiency each year. So essentially, you managed to grow costs less than revenues. Do you already have an estimate of how much efficiency will Kate 2.0 help you with? I would expect a higher efficiency. Bartel Puelinckx: Thank you, and good morning to you all. I will tackle the NII question and Q4. So the -- indeed, the guidance that we've given is EUR 5.95 billion at least. So this is a floor. So it will be most likely higher. Also, as Johan was indicating, I mean, the difference indeed, if you just simply add the third quarter, once again to the fourth quarter, you more or less come to your -- the analyst consensus level. So there is indeed still some conservatism included in that guidance. Now as far as your question is concerned related to the hedges. So as you know, we are not fully disclosing the -- how we hedge that portfolio. Part of it is, of course, considered as being noncore money and noncore money is being replicated overnight whilst the core money is replicated, obviously, at longer terms. These are cyclical reinvestments. The average duration, as indicated before, on the current accounts is 4 to 4.5 years. On the saving accounts, it's 2.5 years. And then, of course, on the excess equity, it's about 5 years. Now basically, that is, if you have then a kind of sensitivity, what you can indicate is that we can use is that for a parallel shift of 25 basis points, you can take into account roughly EUR 50 million. Now coming back also to the recent developments with respect to the repayment or the maturity of the term deposits that were issued back at the maturity of the state bond, you remember that we lost EUR 5.7 billion with the state bonds, we recovered actually EUR 6.5 billion. Out of that EUR 6.5 billion, EUR 6 billion was reinvested in term deposits. At that time, as you will recall, negative margins. Now we issued at that time, 2 types of term deposits. There was a term deposit at 6 months and a term deposit at 12, 13 months. And so that means that the 6-month term deposit came to maturity in March. And there, what we have seen, we have seen a shift back into term deposits of only 38%. 40% went into CASA and the remainder went to in mutual funds and some outflow. Now in October this year, so a couple of weeks ago, we had the maturity of the most substantial part of the term deposits of 13 months. And there, we have some positive news in the sense that it clearly demonstrated that the market has become rational again, as we expected in the sense that out of the maturing deposits 50%, 5-0, went into CASA. Only 25% went into term deposits and then in term deposits, obviously at positive margins and 25% went either into maturity -- mutual funds or some part, small part exit. So that's a bit what you can take into account for next year for the head start that we will see next year. Johan Thijs: Giulia, I will answer your second question. So Kate 2.0 is indeed giving us productivity gain. As you rightfully pointed out in the past, Kate 1.0, I mean, generated roughly between 1% and 1.5% of productivity gains. We launched Kate 2.0 actually in October. So it's in very early days to make already conclusions what it will be and definitely make those conclusions public in an analyst call. What I can say -- so it's too early to judge. But what I can say is that given the fact that Kate 2.0, which is actually Kate 1.0 retrained in a full LLM environment. So previously, Kate was already using some LLM, but not extensively. That is -- that we do see in the trials, which we have been running over the first 5, 6 months that we had indeed an increase of our autonomy of roughly 15%, which is quite strong. If that will be translated in full of -- for a productivity gain, that needs to be further fine-tuned. But what is also important to see and that is the second element, which we tend to forget that is the fact that customers are using Kate more and more because they find solutions via Kate and don't have to queue anymore in branches or whatever, don't have to take the car anymore looking for parking places, makes them use Kate more and more, which actually means also that they are not only using it more for -- and therefore, generating cost side, but also allow us to address the more specifically, more tailor-made solutions on the back of the traces, which they leave with us, so the data analysis. And that is obviously triggering us more sales, which is the combined effect. So when we speak about productivity gain, ultimately, it is translated in the cost-income ratio. So the outlook is positive, and the outlook is if I use the floor to play at least what we guided before. Operator: And we'll now take our next question from Namita Samtani of Barclays. Namita Samtani: My first question, you flagged in your forward-looking guidance that you include no speculation on potential measures of any government. Could you please give some color on anything you're watching there that might positively or negatively impact earnings next year? And secondly, just on Ethias, if it's not coming to the market until 2027, would you consider to pay back some of the excess capital that you have as a special dividend in 2026? Otherwise, I just struggle to see how this isn't trapped capital. Bartel Puelinckx: Okay. Thank you, Namita. So as far as the potential measures of the government are concerned, it might have an impact on the earnings going forward. You're mainly referring obviously to the banking taxes and how we see the evolution of the banking taxes. First of all, as far as Belgium is concerned, we still do not see and do not expect any significant increase in banking taxes. They are already had a quite high level. Of course, also the question is going to be and remains still because there's still no clarity what the government is going to announce because basically, normally, the banking taxes to somehow drop as a result of the fact that, of course, the deposit guarantee fund in Belgium has now been replenished and actually only contribution should be limited to the increase, of course, in eligible deposits. Were it not for that one sentence, of course, in the government agreement that indicates that banking sector should at least remain at the same level. But due to the political situation currently in Belgium and the fact that the budget discussions have been postponed, there is no clarity yet on this side. Where there is some more clarity is the decision of the European Court of Justice compared with respect to the loyalty premium and, of course, also the tax benefit that you get for the first part of the savings and the saving accounts, which have been considered as indeed discriminatory. We will see what the impact of that is going to be. And we are looking now at what the impact is going to be on the loyalty premium. Most likely an alternative version of the loyalty premium will be foreseen, but we do not expect any major impact of that for the very simple reason that actually, first of all, the loyalty premium with KBC is already low, 20 basis points. But next to that, also already 95% of our deposits are eligible for loyalty premium. So the impact of that is going to be very small. Last for Belgium then at least is also the added value tax that is under discussion, but also that has been postponed as a result of the postponement of the budget discussions because it still requires, of course, the adoption of a former loan law to actually charge the taxes. And as long as you don't have that law, you cannot charge taxes. We already as KBC, so we will implement that, but it will depend, of course, at the initiatives that are being taken by the government. Then as far as Belgium is concerned, for the Czech Republic, we have some good news in the sense that basically we do not expect, and it's not part of the government agreement of the new established government under Babiš. So Basically, there is no sign of a further increase of banking taxes in the Czech Republic. And as you know, for the banking industry, the windfall tax in the Czech Republic is actually having no impact. So that's good news. Also in Bulgaria, as you know, the government for the time being is not considering implementing any banking taxes whatsoever, apart from the fact that they have established an alternative version, which is more a kind of a prefinancing of the taxes going forward. Slovakia, there basically also, there is no sign of a further increase of the banking taxes. There, the government sticks to the agreement that they made with the banking sector in the sense that it will be gradually decreasing to '27. There are also some alternative measures that are being taken, such as also having a tax-free benefit on the state bonds because they're also issuing some state bonds in Slovakia, but the impact of that is also limited. And then, of course, we come to cherry on the cake, which is Hungary, where indeed there -- that they already -- the bank -- the windfall tax that was supposed to be temporary is far from temporary that has been extended and the indication of -- is that basically they consider windfall as long as the policy rate is above 3%. And as they are today at 6.5%, this is still likely to last for a while. There are, however, some rumors, and there was indeed an announcement or at least some indication by the Minister of Finance, Mr. Nudge, that there might be going forward, again, an increase in the banking tax -- in the windfall tax and also a limitation of the mitigating measures, but that so far has not yet been confirmed, but there is a risk that, that would have a negative impact going forward on Hungary. Johan Thijs: Good morning, Namita, and also, I will take the second question. So regarding the capital position and your reference to potential trapped capital beyond 2027, well, I would use the dividend policy, which probably as good as I know is quite explicit in that perspective. So first of all, we have a couple of priorities now and that is straightforward. First, we want to grow our book in an autonomous way. And it sounds perhaps fluffy, but it is definitely not. Just look at our track record. Over the last 5 years, we have grown a company like Czech Republic, Chairs of Bay, in terms of the loan and in terms of the deposit side, autonomously, so organically. And if you then look very specifically of what we're doing this year, which is not included in those 5 years I was referring to, it's even better. So the guidance now, we're approximately 7.5%, let's round the number, 8% growth on the year. Well, that is something which we will continue to strive for going forward. The other element is, of course, that next to that organic growth, which consumes risk-weighted assets, as we all know, we will have a further eye on the market in terms of M&A. So Ethias is the one we are focusing on because that is the bigger one, which we can do, by the way, by a Danish compromise solution by our insurance company. But let's not forget that we recently also and that this approval still happening as we speak, as we did an acquisition of a bank in Slovakia and a smaller leasing company in Czech Republic and in Slovakia. Well, these are things which were officially not on the radar, but it doesn't mean that they were not becoming available. And that is something which we are going to look into going forward. So capital is used for those 2 priorities, growth autonomously and growth by M&A going forward. Let's not forget that given the strong profitability, dividend will have a very strong position given our payout ratios, which has the range between 50% and 65% without preempting now already on what the final dividend over 2025 is going to be, I mean, look at our track record over the last years, well, it is more towards the higher end of that range. So all in all, given what I should have said, there are 3 components and then the fact that we want to be amongst the better capitalized financial banks, financial institutions in Europe, we have a very solid position and not necessarily will have what you call trapped capital. And in the event, you know that our minimum is 13%. And in the event that it becomes clear that, for instance, an acquisition we have in our mind is not going to happen. Well, then the policy is quite straightforward. The Board will take that decision then as a definition of capital, which we no longer need because the availability of M&A is not there. The position is solid. So let's bring that capital back to shareholders because we cannot make it work within KBC. That's straightforward. So the risk of having trapped capital in our company is nonexistent given our policy and given how the way we are executing our business as we speak. Operator: I will now take our next question from Benoit Petrarque of Kepler Cheuvreux. Benoit Petrarque: So the first question is on the Belgium deposit market. We see a lot of discipline also in September, by the way. So it's a very attractive market currently. Looking at previous cycles where we have a bit of steepening and the curve is quite attractive. And also, yes, there's a ramp-up of the transformation results expected for next year. In such a market, would you expect discipline to be maintained? Or what is your kind of view on the deposit market into '26? Do you expect discipline to be retained like this? That's number one. And number two is on the lending NII in Belgium. It's clearly turning around, let's say, more positive in the latest quarter, especially driven by a very strong loan growth, 6% year-on-year. And I was wondering what -- where it comes from, basically. We've seen actually the competition not at that level, and you seem to be gaining market share. So I wanted to get a bit more underlying reason for that very strong performance. And just maybe also thinking about NII on '26, you have been very conservative on your guidance. You have been too conservative in '25. And I just hope that there will be a bit less conservatism in a way and more accuracy in the guidance, but that's just on a separate note. Bartel Puelinckx: So as far as your question is concerned on the Belgium deposit market, which indeed, I concur is -- remains very attractive. Also the steepening of the curve is indeed going to ramp up the deposits. Now in terms of potential further developments going forward, it looks like we are quite confident that we will be able to continue to move into that part and to, of course, raise additional deposits going forward. The only thing that is popping up somewhat more. You know that we've been reducing and all markets has been reducing the external rates on the saving accounts. We moved them from 90 basis points at the beginning of the year, 45 basis points -- loyalty program and 45 basis points base rate dropped now to 60 basis points being 40 basis points base rate and 20 basis points loyalty premium. All others -- all banks have been following on this side, apart from some smaller banks. And this has raised some attention also from the government. So the Ministry of Finance has indicated and has publicly stated that he will be looking into the further development of the external rates on the saving accounts. So we might see some drawback from that going forward. But for the time being, there is nothing specific. Johan Thijs: And then perhaps on the guidance, the side note which you made, I obviously understand where you come from. You said too conservative, make it a bit sharper going forward. But I would like to comment in 2 ways on this. First of all, to a certain degree, you're just purely looking -- I agree with what you say. On the other hand, I would like to add that given also the question about the discipline in as we speak, the biggest markets for us in terms of deposits is Belgium. The 2 combined actually triggered us to put the guidance where it was. So there was a big, big, big amount of money being freed up, as you know, EUR 6 billion. And if things would repeat what happened in 2023 or in 2024, then obviously, you would have completely different picture. We had those term deposits at a negative margin. Unfortunately, this did not materialize. And I think the main trigger for that is to be found in the results of our peers, which have been involved in that deposit war in 2024. That is quite straightforward that, that discipline is there. So it allows us indeed now to take that uncertainty out of our guidance. And as of the moment, that uncertainty is gone, you can make more accurate predictions. I would actually say, in that perspective, we will continue to make our guidances because KBC has a track record of underpromising and overdelivering. It's better than the other way around. But we take your side note or your side remark for granted. Thank you. Sorry, sorry -- in my excitement -- Sorry, I forgot about the margins on lending. Well, yes, in that perspective, so there are 2 reasons. So first of all, I think there's a bit more discipline in the market. So let's also not forget that all the banks being pushed by the ECB on risk-weighted assets. You remember what happened to KBC 2 years ago. But this is also happening to other banks, which you can clearly see in the announcements which they all make either via the mother ship, either via the local entities. So if you want to keep your capital ratios intact, then you need to achieve a return on risk or a risk-adjusted return on capital, and therefore, your margins cannot be lowered anymore. That is something which we see next to that and that is what we are striving for. KBC obviously has had a very strong loan growth in the first 9 months of the year, which allows us also to be more -- to be a bit more selective in terms of the margins. You can clearly see in the detail, which is provided in Belgium that is on Page 25. I do not make a mistake that indeed, we are pushing now for several quarters already to bring that margin to a more sound level given the capital consumption. And that is something which is also possible, given the fact of the strong performance of the loan volumes, which we have year-to-date. So yes, we are working on the margins. Yes, there is more discipline. And yes, we are comfortable giving the loan growth, which we have already realized in the first 9 months and the pipeline, which we have for the quarters to come. Operator: And we will now take our next question from Sharath Kumar of Deutsche Bank. Sharath Ramanathan: A couple of follow-ups. Most of my questions have been answered. Firstly, on loan growth, can you comment on the sustainability of the double-digit levels in most international markets? Also, is it a fair conclusion to say that the level of loan growth in 2026, 2025 level would be the floor? And if you can comment on the type of areas that you're getting this loan growth from, so it will be useful. Secondly, on M&A, can you confirm that there are any other active files rather than Ethias? Also if you could confirm there is no interest to get back into Ireland? Bartel Puelinckx: So I will take the first question on the double-digit growth. And I presume that what you're mainly referring to is the double-digit growth that we see basically in Central Europe. And there, of course, you have a particularly strong growth in -- first off, to start with in Bulgaria, where we see a year-on-year growth of 18%, which is mainly driven by the very strong growth on the mortgage side. And the mortgage side is actually due to the fact that you have the euro adoption, as you know, in Central Europe in Bulgaria and people are more or less concerned about the potential inflation after the euro adoption. So from that perspective, that explains why we see significant growth currently. We, however, expect that to continue, however, at a somewhat lower pace after the euro because, obviously, in Bulgaria, the disposable income has increased quite significantly and also the quality of housing in Bulgaria is not at the same level, of course, as the level that we see in Western Europe. So that is as far as Bulgaria is concerned. The Czech Republic there, obviously, we also continue to see a very strong year-on-year growth on -- of the loans of 11%. There, what we see is that also the mortgage business is doing and continues to do very well. There is somewhat a small impact on the margins, but the margins are well above the back book. So that continues to generate quite some nice growth. So year-on-year growth on the model portfolio is almost 7%, but also in the Czech Republic, we continue to expect some further loan growth due to the fact that also GDP growth continues to be quite significant. They recently increased actually their projections for GDP growth from 2.5% to 2.7%. And typically, as a rule of thumb, what we use within KBC is that you can see a loan growth, which is equal at the GDP growth plus inflation. Also in Slovakia, and Slovakia continues to perform quite nicely, particularly on the mortgage side, also there at quite stable margins and nice margins. On the corporate side, they have been performing quite well as well, and we expect that to continue. You know that they are in the market. The growth today in Slovakia is somewhat subdued at 0.5%, but this is expected to pick up again in the next year, particularly also because Slovakia being an open economy with also more benefit from the German initiatives in spending. And then last is Hungary. Hungary also, despite the fact that Hungarian economy is not growing significantly either, we continue to see quite some strong growth, particularly in the mortgage business. And also the recently announced new government initiative with the Home Start program, increasing the services should help further also the mortgage growth, together with also at quite attractive margins. On the corporate side, there is somewhat more competition, somewhat more pressure going forward. So basically, that as far as the expected loan growth is concerned going forward. Johan Thijs: I will take your question regarding the M&A. So first of all, we are constantly monitoring the markets. Otherwise, we would never ever have detected 365, nor the leasing activity acquisitions. But do we have interest in other files? Well, I cannot answer those questions concretely because then it would make very obvious what we are looking into and what competition perhaps should be finding interesting as well. But to be very concrete, your question on Ireland, we are not going to go back to Ireland, no. Operator: Any further questions? We now will take the line of Chris Hallam from Goldman Sachs. Chris Hallam: I just have 2, one on SRTs and then one on capital. So regarding the inaugural SRT on the corporate loans, I guess that comes back to the EUR 8.2 billion RWA add-on that was imposed on KBC back in 2023. Is that the right way to think about it, that the risk weights on those corporate and SME loans was artificially high? And then if so, how much more is there to go on those high-risk weight loans, either in terms of the amount of relevant loans you could still SRT or the amount of that EUR 8.2 billion add-on you might look to recover via future SRTs? And then secondly, on capital. You said earlier that the risk of there being trapped capital in KBC is nonexistent. Should we interpret that as a commitment that the CET1 capital ratio at the end of 2026 will be as close as possible to the target for a 13% pro forma for any announced acquisitions or distributions? Bartel Puelinckx: Thank you for your questions. I will take your first question related to the SRTs. As indeed, we announced this morning the -- our inaugural issuance of EUR 4.2 billion SRT leading to EUR 2 billion of risk-weighted assets relief and having a 23 basis points impact on our positive impact of scores on the common equity Tier 1. Your assessment is indeed correct. Basically, the higher risk-weighted asset density created is due to the add-on of 2 years ago, indeed, is impacting that. Now we always stated that we consider SRTs as a means to an end and not as a strategic development. So basically, that means it is one of the tools that we will use to further optimize the portfolio management. So if your question is, are we going to continue to do SRTs? Yes, we are continuing to launch SRTs, but this is -- we do not want to become dependent on the SRT market as some of our peers are. So from that perspective, there is going to be further SRTs. These SRTs will remain focused indeed on those portfolios that have the highest risk-weighted asset density in view of the efficiency of those SRTs. And -- but it is not going to be a major significant increase for the years to come. Johan Thijs: Thank you, Chris, for your questions. And let me come back to the very concrete topic if that by the end of, let me say, 2027, it should be somewhere in the neighborhood of 13%. Well, the -- what I said on the previous question, the previous -- and I don't remember who asked it. Actually, the dividend policy is pretty straightforward. And the dividend policy in that perspective allows us to distribute capital. There is one constraint you need to take into account as well, and that is the constraint of to be amongst the better capitalized financial institutions in Europe. We have more freedom there to decide are we -- yes or no than we did previously because previously, it was mechanically so there is more possibility to have in that perspective, a discretionary decision by our Board, but that's a trigger. So if the entire sector would go to 13%, 12.5%, whatever, and there are no M&A opportunities, there is clearly a possibility to finance our economic growth, which -- autonomous growth, which is quite significant in terms of percentages, which you know, but then the Board will take a decision in all discretion. All those elements into account, can I make a hard commitment on the execution of the policy? Yes. Can I take a hard commitment that it's going to be 13%? For obvious reasons, I can't. Operator: And we'll now take our next question from Shrey of Citi. Shrey Srivastava: Just changing tack a little bit. On fee development, you've actually managed to keep margins sort of broadly stable. And I know the very strong inflows and higher margin direct client money. Looking forward, how do you see net inflows in sort of this component versus the others? And I suppose in turn, what do you see as the outlook for margins in the asset management business specifically? Bartel Puelinckx: Thank you, Shrey, for your question. Indeed, we've seen a 3.4% growth on our direct client money. And basically, this is, on the one hand, of course, driven by the very strong net sales that we see of EUR 1.8 billion for this quarter, bringing it already to EUR 5.3 billion for the 9 months. And what is important here is that this is true for more than 1/3 driven actually by what we call our RIPs. This has nothing to do with rest in peace, but these are the regular investment plans, whereby households continue to regularly invest on a monthly basis, a relatively small amount, but this is a sustainable amount. And we actually see the number of those RIPs increasing continuously. Today, we have 2.3 million of those RIPs with an average contribution in Belgium of roughly EUR 120 per month; in the Czech Republic, roughly EUR 40 million per month; and in the other countries, slightly higher than the EUR 40 million -- EUR 40, of course, a month. So that gives you an insight into the relatively sustainable growth of that portfolio going forward. The remainder, obviously, is going to depend on the market performance. And as you know, we are not guiding on that part of the portfolio. Operator: There are no further questions in queue. I will now hand it back to Kurt De Baenst for closing remarks. Kurt De Baenst: Thank you, operator. This sums it up for this call then. Thank you very much for your attendance, and enjoy the rest of the day. Bye-bye. Operator: This concludes today's call. Thank you for your participation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the GrainCorp Limited FY '25 results. [Operator Instructions] I would now like to hand the conference over to Mr. Robert Spurway, Managing Director and CEO. Please go ahead. Robert Spurway: Good morning, everyone, and again, welcome to the GrainCorp Results Call. This morning, we're presenting from Sydney, and I start today by acknowledging the Gadigal people of the Eora Nation and paying our respects to elders past and present. If I refer you to Slide 4 of the pack for today's agenda, I'll provide some updates to start with, including our financial year '25 highlights, strategy and growth, financial performance will be covered by Ian Morrison. We'll update you on the balance sheet and capital management and provide some comments on the outlook ahead. For those following online, I will share with you the page numbers as we go through the presentation. So starting on Slide 5. Our financial year '25 underlying EBITDA of $308 million was a lift on the prior year. We saw total grain handled of 31.6 million tonnes and recorded a record, again, in oilseed crush volumes. We've seen improved contribution from our Animal Nutrition and bulk materials sectors. And it really demonstrates we are controlling what we can in the business. That's especially so given the financial year '25 operating context, which as we updated at the half year has shown strong global production from all supply regions around the globe, meaning that Australian grain has had to compete for its place in the world. What that means is customers have been subdued in their purchasing behavior and growers who are experiencing relatively weak grain prices haven't been that willing to sell. It demonstrates again that GrainCorp given the strength of our result is responding really well to that global environment. We're finding opportunities and delivering on them where they exist. What that's created for GrainCorp is a really strong balance sheet. We have $321 million in core cash and including the $0.24 interim dividend that brings total dividends fully franked for financial year '25 to $0.48 per share. We've also completed $38 million of the $75 million share buyback. Let me turn now to Page 6. This is the numbers slide, and you can all read it more quickly than I can share it with you. It does highlight though what I've covered in that introduction. Pretty much across the board and financial metrics, we've seen an uplift on the prior year with that underlying EBITDA up to $308 million, the underlying net profit up to $87 million, and the strong core cash position of $321 million. Ian will talk you through the drivers behind that and the segment performance shortly. But before doing so, I just want to touch on some other highlights across other areas of the business and provide you with an update on our strategic progress. Moving to Slide 7 on health and safety. We always strive for zero-harm at GrainCorp as a large and operational business that's at the center of our values and what we do internally. We've, over the last 12 months, strengthened our critical risk frameworks, which has seen reduced critical incidents in areas like confined spaces, mobile plant and bunker management. And I think that highlights the sort of operations that we have across the board. So while it's disappointing to see a slight increase in incidents recorded through the year, our overall trend is in the right direction, and we are focused on delivering that zero-harm goal in everything we do. On Page 8 of the presentation, I share with you both the challenges and the opportunity of the climate transition and sustainability. I'd describe it as a real opportunity for the agriculture sector and GrainCorp sits at the center of that opportunity, and we're leading in the sector, connecting growers and customers. Over the last 12 months, we've had our near-term targets approved and set through the Science-Based Targets Initiative. That results in a 42% reduction in absolute Scope 1 and 2 emissions by 2030 with a road map in place to deliver that. We've also had Scope 3 forest land and agriculture emissions approved out to 2034. So to some extent, that defines the challenge. We're demonstrating the opportunity through initiatives like GrainCorp Next. For those of you that follow us, I've spoken about that before, it really is an initiative that connects growers with customers around the world and demonstrates our ability to deliver on a low-carbon supply chain, principally in our canola end-to-end value chain. It's allowed us to measure on-farm emissions and support growers in that respect. We have demonstrated best technology and practice and operational emissions reduction across our processing assets and logistics and that's allowed us to engage with end global customers to deliver that opportunity, both for growers and GrainCorp into the future. At the same time, we're making progress in areas like improving our energy efficiency by over 2.5% over the last 12 months, reducing dust and damaged grain to landfill. We've reached a milestone of 1 million kilograms of tarps recycled, and we've got formalized commitments in the sustainable packaging area. All of those areas and many more are covered in our sustainability report for 2025, which has also been released today. And I do commend that report to you to cover, as I said, all of those areas and many more. Moving to Page 10. Our GrainCorp vision and strategy is about delivering sustainable growth through the cycle. We described that in 3 key areas around enhance, expand, and evolve in terms of the way we look at growing our business. Perhaps Page 11 is a really important way to start looking at that, where we talk about the macro trends that we're exposed to and the macro trends that, quite frankly, provide the opportunity and the positive outlook we have for GrainCorp into the future. We're continuing to see growing demand in population across our key markets across Asia and our export capability and infrastructure is set up to meet that demand. We're also seeing quite strongly increasing supply on the East Coast of Australia as farmers employ technology and innovation to improve their practices over time. The 10-year rolling average for East Coast production improvement is at least 2.8% on a compound annual basis. So that increased production also supports the utilization of our assets as we meet that growing demand. GrainCorp is also really well set up and well protected through the diversification of the markets that we operate in. And I think that's demonstrated really well in the top right-hand side of Page 11. And another trend we're seeing across Asia, in particular, in the emerging economies is that real growth and demand for nutrition and protein and our animal feed business is exposed and aligned to the benefits that, that trend is delivering. I'm going to cover Page 12 fairly quickly because over the next few slides, I'll go into some details and some examples on how we're delivering on enhance, expand and evolve. We have invested in our country network and our business more generally. We're seeing growth from the investment we've made in Animal Nutrition and across our Nutrition and Energy business more generally. And we continue to progress our business transformation and deliver benefits from that, and I look forward to sharing those with you shortly. Moving to Page 13 to look at that enhance area, and the investments and improvements we're making in our up-country network across our Agribusiness. At the half year, we spoke about the rail upgrades at Condobolin and the benefits that brings in terms of the efficiency of sites like that. It's one of several examples across the network. Over the second half and ahead of the harvest that's now underway, we've completed a $5 million upgrade at our Burren Junction site. I was in Northern New South Wales last week, and it was great to see those bunkers in operation and the opportunity that provides to receive more grain from growers in that region. It improves our segregation and storage capacity and improves the service and value that we can provide to growers and then pass through our network. We've also improved turnaround times and capabilities ahead of this harvest with $8 million invested in new grain stackers. Just for those that aren't familiar with the operation of our business, the grain stacker allows us to more efficiently unload growers trucks and put it on our bunker storages. The ones we've got improve efficiency, improve the truck turnaround time and provide greater mobility of assets across our East Coast network. As the harvest rolls South, we'll be moving that equipment around so that many growers across our network benefit from that investment and improvement. Again, when I was in Northern New South Wales last week, it was great to talk to growers and hear the positive feedback on their experience in response to those new investments. On Page 14, at the last year's annual results for the first time, we shared with you and disclosed the contribution margin from our bulk materials business, demonstrating the diversification and utilization of our extraordinarily valuable port assets. I'm delighted to share with you today that, that progress has continued with contribution margin increasing to $41 million through 2025. We shared with you that our focus in the future continues to be on disciplined investment in that infrastructure to further increase efficiencies and free up capacity to expand our customer relationships and pursue opportunities that improve the mix and margin of the non-grain products we handle through our ports. Throughout 2025, we've been undertaking a strategic review of our GrainsConnect joint venture in Canada. The update on that is shared on Page 15. And as a result of that ongoing review, we have taken an impairment of $26 million in the carrying value of that asset. We do expect to provide a further update in the first half of '26 on our strategic review, but we would comment that over the last several years, Canada as a market has experienced some difficult and challenging trading conditions. Domestic capacity and expansion alongside the global margin environment has impacted end-to-end margins in that market. And whilst we're pleased on an ongoing basis with the operational performance and quality of our assets, and the fact that the current season shows signs of improvement, we are keen to ensure that we operate that business and set it up for success in the best interest of GrainCorp shareholders into the future. As I said, we'll provide an update over the first half of '26. Moving across to Page 16. This really is about expand, and it highlights the investment and the growth in our Nutrition and Energy portfolio. Not only are we seeing the growth there at -- in the results already, we're setting ourselves up for future growth through investment in our integrated value chain. We're undertaking improvements in our oil -- edible oil refining capability, our West Footscray foods plant. That will lower operating costs and improve product quality for customers. It will also reduce greenhouse gas emissions and represents an investment of between $25 million and $30 million, phased over financial year '26 and '27. We've spoken several times over recent result periods about our focus on the Animal Nutrition area, and I'm pleased to report that sales have increased between '21 and financial year '25 by 83% from 390,000 tonnes up to 713,000 tonnes. So not only are we seeing the bottom line impact of that flow through earnings, but it is underpinned by really strong fundamentals and growth in volume, including our acquisition of the XFA business, which continues to outperform its business case. And the expansion of that and our existing liquid feed and dry-lick business provides opportunities for the future. In Agri-Energy, as you all know, we are in an MOU with Ampol and IFM, and we've been working closely with our partners on developing the end-to-end value chain for the development of feedstocks into biofuels in Australia. The recent federal government commitment of $1.1 billion for the Cleaner Fuels Program and $250 million to the Made in Australia Program demonstrates the improving environment and the confidence we have in our strategy in that area into the future. Moving to our business transformation program. Much of which is initially focused around our Nutrition and Energy business. I'm pleased to share with you today some further detail on the benefits that we see from that program but I just want to recap on the rationale for the program first. It is a business-wide transformation designed to unlock efficiencies and drive value across our integrated value chain. It includes an opportunity to address an end-of-life version of SAP and delivers a stronger business for the future. Where we're at in the program is about 90% of the build of the technical aspects are complete, which means we're moving into the testing and deployment phase. The progress has been slowed and had some challenges, but remains on track to complete now in the second half of '26 rather than the initial planned first half of '26. What that means is a slight increase over our previous estimate of $15 million and the cost for the program going forward. So although it's being derisked that slightly extra time is adding to the cost, but we're confident in our progress in the year ahead and the derisking we've been able to achieve. In parallel, we've been working on the benefits that the program will achieve. And I'm pleased to share with you today the targeted run rates for the end of financial year '26 and the benefits beyond that. The early-stage benefits we're seeing starting to flow are estimated to be $5 million to $10 million by the end of '26 and are focused on areas like labor productivity and procurement savings initially. What we're seeing is the benefit of the overall end-to-end program, identifying opportunities and those flowing through to that commitment of $20 million to $30 million in uplift as a program complete. At this point, I'm going to hand across to our CFO, Ian Morrison, who will talk you through the financial updates and performance. Thanks, Ian. Ian Morrison: Thanks, Robert, and good morning, everyone. I'll start on Slide 19 and summarize financial performance for FY '25. At a headline level, our Agribusiness segment, is up from $162 million last year to $218 million this year. And that's largely off the back of improvements in East Coast Australia crop production, which I'll touch on more shortly. . Nutrition and Energy segment, that's slightly down year-on-year, and that's mainly as a result of lower crush margins. Other headlines, as Robert noted before, and we have recorded a noncash impairment of $26 million relating to the investment in GrainsConnect Canada. And last item, I'll just touch on briefly on this slide is net interest costs. So they are up year-on-year, and that largely reflects higher commodity values on our -- and volumes off the back of our commodity inventory funding. Now I'll move on to Slide 20 to provide further detail on the Agribusiness segment and in particular, starting off with East Coast Australia business. So as I touched on, we did see total ECA crop production of 34.7 million tonnes in FY '25, increasing from the 26.1 million tonnes in the prior year. And a feature of that crop production was stronger production in the north in Queensland and Northern New South Wales, in particular, partly offset by lower production in Victoria. In terms of total grain handled that led to a result of 31.6 million, up from 28 million in the prior year. Carry-in into FY '25 of 2.5 million supported that, but that was lower than the carry-in coming into FY '24 of 3.9 million. A feature of the results that we talked to back at the half year was the opportunity the business took to really capitalize on better margins across commodities, including chickpeas and canola seed in particular. So that was really good opportunities captured by the business. A key element I just wanted to touch on in the results as well as the impact of the Crop Production Contract, so the total impact to the P&L is $41 million in the results, and that's including the $6 million annual and premium payment. And the overall cash impact was a payment of $58 million under that contract. But the key highlight to call out, though, is that, that payment in FY '25 means that we have reached the total half on the contract. And so that means for the remaining 4 years of the Crop Production Contract, there will be no net payments by GrainCorp. And we still of course, to retain the opportunity under the contract in the downside protection in the event of drought. And so from an overall perspective, that leaves us in a strong position with the protection of that contract. And lastly, as Robert touched on earlier, really pleasing performance in our bulk materials business with our continued trajectory of improving contribution margins. I'll now move on to Slide 21 and touch on our International business. So starting off with Western Australia, we did see a strong increase in crop production in WA this year with a 55% increase on the prior year and well above the 5-year average also but the global conditions we've seen did negatively impact margins out of that market. That's with the strong competition from many other regions. So we did see a decrease in earnings out of our international business and in particular, WA this year. And as Robert touched on earlier, we've continued to see those challenging conditions experienced out of Canada, partly off the back of those strong global production conditions, limiting opportunities but also some of the specific factors within Canada also. I'll now move over on to Slide 22 and our Nutrition and Energy segment. Our crush volumes reached another record in FY '25 with total volumes of 557,000 tonnes, up 3% on the prior year. And that reflects a good focus on operational efficiencies. And a key feature this year was really good restart time from the annual maintenance shutdown we have at Numurkah -- at our Numurkah plant. In terms of crush margins, as we touched on earlier in the year, they have been below what we've seen in recent years, and that's been impacted from a few factors, partly the smaller Victorian canola crop with the weaker crop conditions in Southern regions and but also strong global supply from a large soybean crop we've seen in a number of regions. And then the last item to touch on here is we did ceased processing of edible oils at East Tamaki plant this year following the strategic review in FY '24 and have consolidated manufacturing into our West Footscray plant in Melbourne. Over to page on 23, Animal Nutrition has been a real highlight in the results with strong growth in volumes, as you can see in the chart on the right. That, of course, is benefiting from a full 12-month run rate of the XFA acquisition we completed last year compared to 6 months in FY '24, but underlying sales volumes also grew across our preexisting business, which is pleasing to see. And then from an XFA business point of view that delivered a 12-month run rate EBITDA of $14 million, and that continues to outperform the business case and continues to support investment we continue to make in that segment overall. And then just touching on Agri-Energy. Volumes remain strong and similar to prior year with good volumes across both tallow and used cooking oil. But renewable fuel feedstock demand has continued to be impacted by some of the uncertainty around U.S. biofuel policy and that has had a modest impact on margins year-on-year. I'll now just move on to Slide 24 on corporate costs. Underlying corporate costs are in line with the prior year, and we continue to stay focused on disciplined cost management. And then in terms of spend on growth projects, that continues to mainly represent our ongoing work on the oilseed crush feasibility. And the business transformation costs noted on this slide are the OpEx costs of $30 million and that increase year-on-year is, of course, as we've moved from the design phase during the course of FY '24 into implementation this year. I'll now move to balance sheet and capital management and starting off with Slide 26. So we finished this year with a strong core cash position of $321 million. That's up from $296 million at the half year and slightly down from the $337 million at last year-end. Also just touching on the slide, we took the opportunity recently to extend the maturity of our term debt from March '27 out to November 2028. And that's on the principal of $150 million, which remains unchanged. Overall, our balance sheet is in a very strong position, which allows us to continue investing for growth while also providing strong returns to shareholders. Now moving on to CapEx on Slide 27. The total capital expenditure of $77 million in FY '25, includes sustaining CapEx of $59 million that sustaining CapEx is slightly above the target range of $40 million to $50 million, and that just reflects higher spending in an above-average crop year, partially on investments across our up-country assets that Robert touched on earlier, but also in areas like tarpaulins with those higher volumes we saw in FY '25. We are also anticipating to see CapEx higher in FY '26, and that's partially as a result of the upgrade we're undertaking at our West Footscray plant in relation to edible oil refining capability. On the right-hand side, D&A is broadly in line with FY '24 and continues to stay steady. Now moving on to shareholder returns on Slide 8 -- Slide 28. As Robert noted earlier, the Board has declared a final dividend of $0.24 per share, fully franked, made up of an ordinary dividend of $0.14 per share and a special dividend of $0.10 per share. This takes total dividends in FY '25 to $0.48 per share, and that's in line with the previous year. Also during the year, we completed a $38 million of the previously announced $75 million share buyback. And overall, this year continues our strong record of capital management and positive returns to shareholders. We'll continue to assess capital management against growth opportunities across the business in line with our capital management framework. On that note, I'll now hand back to Robert. Robert Spurway: Thanks, Ian. Towards the end of the presentation, now at Page 30, I'll provide some comments on the outlook. As many of you will be aware that ABARES in the September update forecast an East Coast crop for the harvest that's now underway of 30 million metric tonnes with conditions demonstrating to be more favorable in Queensland and Northern New South Wales. And we're certainly seeing that coming through in strong yields from that area in the early harvest performance, which I'll touch on in a moment. Given a dry finish in Victoria, the -- and changes in grower planting profiles, they were forecasting an 11% reduction in the East Coast canola crop. And I would add that ABARES will again update the current crop in early December. With harvest now well underway across the country, we've seen strong receivables to date of 4.2 million tonnes across our network. And pleasingly, exports are also underway with 0.5 million tonnes exported already in the financial year. We do see global grain and oilseed supply remaining relatively strong. And that means the outlook for margins is broadly similar to what we've seen through financial year '25. Like last year, that creates the opportunity for GrainCorp to continue to find and deliver on the opportunities that are there. And as we've done so in recent years, we'll be providing earnings guidance at our AGM in February. Just to recap and in conclusion on Page 31. We've delivered improved underlying EBITDA of $308 million in financial year 2025. We've completed and delivered several initiatives to increase volume and efficiency across our network, and we continue to invest and deliver on growth across our business more generally. We've got a very strong balance sheet with core cash of $321 million. And as Ian has just recently touched on full year dividend, fully franked, of $0.48 per share on top of the $38 million returned via share buyback. We are continuing to deliver on our promises of investing in the business, providing strong returns to shareholders managing what we can and setting the business up for future growth. Thank you for your support and interest. I'll now hand back to the moderator for any questions. Operator: [Operator Instructions] Your first question comes from Owen Birrell with RBC. Owen Birrell: Just in the interest of time, just my 1 question, really around that comment that you've stated that you see the outlook for margins to be broadly similar in '26 to '25. I just want to align that with the comment around the East Coast canola crop being 11% down into this current harvest. Just wanted to get a sense as to what you think the canola crush spreads are going to look like next year if the Victorian supply is 11% down on essentially where we were this time last year. Robert Spurway: Thanks, Owen and I'll hand to Ian, who will answer that question for you. Ian Morrison: Yes. Thanks, Owen, for the question. In terms of that 11% estimate from ABARES in terms of the canola crop, although it is a bit down year-on-year, that still generates an exportable surplus overall of canola seed. So at that level, it's a relatively modest impact overall on crush margins and the broader factors that have -- of course, it's one of the legs that has an impact, but meal demand and then vegetable oil values in general also have an impact. So it's a combination of those factors. And although it is early in the year, we would expect crush margins to stay at similar levels to FY '25 at this stage. Robert Spurway: The other important factor, Owen, that I touched on is the record crush volumes that we're doing. So we would expect that to continue as well. So although the margin environment over the last couple of years, has been down on what we saw in years prior to that. We are offsetting that to some extent through the improvement in volume through the plants. . Operator: Your next question comes from James Ferrier with Canaccord Genuity. James Ferrier: What's the setup in FY '26 in relation to export opportunities around chickpeas in particular and maybe also canola seed given they both were tailwinds to varying degrees to your earnings in FY '25. Robert Spurway: Thanks, James, there are still opportunities, and we are exporting both canola and chickpeas in the early part of the program this year. As we said at the half year, the opportunities on commodities vary from year to year. And I think we called out canola and chickpeas as 2 specific examples of where we've seen opportunities in the market, we've been able to capture those opportunities and execute on them at a time in the year that made most sense in terms of extracting the maximum margin. As we look at this year, as I said, there are still opportunities on those commodities. But I think the broader picture is important that we'll be looking at where opportunities may emerge on whether that's wheat, barley, feed wheat versus milling wheat, canola and chickpeas. So all the time, we're looking at where those opportunities are, which markets make more sense. And I think the quality and the scale of our infrastructure allows us to respond to those opportunities very quickly and deliver that margin. So that's the way I think we'd look at it broadly going forward, really not much more to add than that at this point in time, James. Operator: Your next question comes from Ben Wedd with Macquarie. Ben Wedd: Just turning to sort of that receivables comment there, where you've noted 4.2 million tonnes of receivables. I think sort of looking back to last year, we were sitting at about just over 5 million tonnes. So I'd just be interested in many comments around sort of the change in pace of those receivables and how you're sort of seeing that moving forward over the rest of harvest? Robert Spurway: Yes. Really, no 2 harvests are the same, Ben. So I'd strongly urge all of you not to consider that too much. If you look at the shape of the curve, it's very similar, give or take, what we've seen on average over the last number of years. And typically, the pace of early harvest depends on the prevailing weather conditions this year, to the extent there is anything normal, it's probably what we'd see as a more normal curve in terms of uplift versus last year. . If I recall, there was a very dry finish in the north and harvest started to come in earlier in Northern New South Wales and Queensland than it has this year. Where we're at right at the moment is we're fairly well advanced in Queensland and including Southern Queensland. I'd say we're well underway in Northern New South Wales, but really getting into Southern New South Wales and Victoria harvest is yet to commence across many of those regions. So long answer to a pretty simple question. There really is just no relevance in the comparison. The commentary I'd provide, though, is that there are no 2 years the same. The harvest is progressing almost exactly as we would have forecast it based on the conditions we've been seeing over the last number of months. . Operator: Our next question comes from Richard Barwick with CLSA. Richard Barwick: Can you just talk about GrainsConnect. So obviously, another disappointing results for earnings down or down by more in FY '24, obviously you've taken the impairment. So the -- I guess 2 questions part of the impairment. What does that actually deliver? What does the impairment mean? So for example, could we see a reduction in the D&A that got flowed through. So do we get an earnings benefit from this impairment? And is there a risk of further impairment given that the strategic review is yet to be completed? Robert Spurway: Ian, I'll get you to talk to that. Ian Morrison: Thanks, Richard. In terms of the D&A part, because it's equity accounted, we pick up results from that perspective. But with this impairment, that brings down to effectively a 0 cutting value. So we wouldn't be booking the -- any ongoing gains or losses effectively. While it's impaired to that amount, we'll still, of course, track that closely, but that's how it would affect the P&L initially at least. . And in terms of further risks, it will really depend on how conditions continue to perform in Canada and what we see as the outlook. And that is a level of better optimism for the season ahead just with a better crop. So that will hopefully see a bit of an uptick in performance. And then in terms of any further exposure, it will partly depend on the cash performance ultimately of the business. . Operator: Your next question comes from John Campbell with Jefferies. John Campbell: Just with your comments and excuse me if this question has been asked because I came in a little bit late. But just your confidence around the margin environment for FY '26, given global supply seems to be continuing to make records. Yes, I mean, how much sort of risk, I guess, around that part of your outlook commentary. Robert Spurway: Yes, we have made some comments on that already, John, but I'll expand on those a little. Broadly, what we're saying is we expect that the margin environment is going to be similar in the year ahead to the year previously. I think in terms of your question, therefore, by definition, there's not a whole lot of risk to that. Ultimately, the underlying demand is there. So the fundamentals for our business remain strong. We're seeing good demand, particularly across Asia, but across global markets correlated to population and the need for food, but also increasingly a correlation to a growing demand for fuel feedstocks, particularly in the oilseed space. So what we'll be looking to do is access those margin opportunities at the times of the year that make most sense on the commodities that we handle. I think that's where our assets come into their own in terms of the agility and responsiveness we're able to make to those margin opportunities. And if you listen to the global commentary, what we're saying is very consistent with what you're hearing coming out of global markets and other major grain operators. So summing up the question, not a lot of downside risk. We'll be continuing to look for opportunities. And we'll be watching as the year proceeds the development of the next Northern Hemisphere season crop. That's likely to be the next major catalyst for potential for disruption and a reset to the margin environment. Operator: Your next question comes from Jonathan Snape with Bell Potter. Jonathan Snape: Just 2 questions, if I can. One around all the moving parts because obviously, you've got the CPC not coming through next year. You've written down the Canadian business. So I'm assuming you are not going to take $15 million in losses, that's kind of a 0 number. So all things being equal, if it was an identical season, you should be, what, $50 million, $55 million better off, I assume you're not going to be paying the annual fee anymore? And then just secondly, following on from that, with the through the cycle number, the $320 million, if memory serves me, there was a contribution in there assumed from Canada somewhere around the kind of $10 million mark, if memory serves me correctly. With that now carrying at 0, is it the cost out is kind of mitigating that contribution? Or is that still in the TTC, i.e., you might write it back up again. Robert Spurway: Look, thanks for the questions. We'll count that as one question, Jonathan, so you're not accused of getting 2 answers by your peers across the industry. Jonathan Snape: 2 subsections. Robert Spurway: And also cognizant of the fact that we're not providing guidance at this point. So we can provide some directional comments around the way you should think of the business. Of course, although we're relying on the ABARES forecast, there is some time to go before our volumes are fully known for this year. I've touched on the fact that we're seeing fairly favorable conditions come through in Northern New South Wales and Queensland. We're less certain about what Victoria, looks like at this point because the harvest there is yet to start. But all things being equal, volumes down a little bit. Margins are similar. And as you indicated, there's a number of changes we've made in the business that will provide for some upside opportunity, including the benefit of the CPC. There's probably not a lot more we can say from a quantitative point of view. And I'm not going to comment on the math you were doing in your head there, other than to say, qualitatively, that's not a bad way to look at the business. But Ian, you might be at a bit of color, particularly around Canada and those sorts of more detailed aspects. Ian Morrison: Yes. Just 1 point to add, Jon, is the annual premium under the crop production contract will continue to be paid. So that's $6 million. So from a P&L impact this year of $41 million, is a $35 million excluding the premium and $6 million with the premium. So that was one item to call out. And as Robert touched on in terms of looking at it year-on-year and East Coast volumes based on ABARES would be a bit lower, obviously, still quite a strong crop but a bit lower than last year's overall crop. So those are kind of the moving parts relative to the CPC and GrainsConnect Canada. And probably the last item to touch on that is international was a bit of a drag on earnings this year more broadly, partly off the back of the margin environment, too early to predict exactly where that goes. But the overall conditions remain relatively similar. So that's one of the key factors we'll be watching closely as well in the overall mix. And then last item to touch on from your question around through the cycle. So our Canadian joint venture was included in our through the cycle at just under a bit under $10 million, not quite at $10 million, but not far off it. But in terms of overall through the cycle, what we have been seeing is outperformance in a few areas now that are likely mitigating that. So 2 items I've touched on particularly would be bulk materials and the continued improvement there. And then also Animal Nutrition, we did add $10 million to our through the cycle from the purchase of XFA. But as you'll have seen in today's update, it's delivered $14 million, and we do continue to invest in growth of capacity in our overall Animal Nutrition business. So we are seeing some positives as well, which we'd expect to largely offset some of those headwinds we touched on. Robert Spurway: In the appendices of our pack on Page 40, we spelled out the historical performance of the business and highlighted that without the impact of the crop insurance costs over the last few years. We restated the numbers to demonstrate that we're delivering well above through the cycle in each year and on average, significantly above that at $423 million. So we can certainly talk about that in meetings over the course of the next number of days. But Slide 40 in the appendix is perhaps a good one to look at through the cycle followed by Slide 41, where we've highlighted the breakdown and the way we look at through the cycle. . Operator: Your next question comes from Scott Ryall with Rimor Equity Research. Scott Ryall: Robert, just a quick question on Agri-Energy and looking forward. You talked about progressing your MOU targeting a FEED phase in 2026, which obviously is a more costly phase than pre FEED than what you're doing at the moment. Could you just comment -- you made a comment on the cleaner fuels program and the commitment of government. Is that enough -- in your mind, is that enough to actually activate the industry in Australia or what else needs to be done? And maybe you could just give some color around your view there? Robert Spurway: Yes. Sure, Scott. Really great question. We've been delighted to have a seat on the Jet Zero Council, which has kept us very close to the whole value chain in our work with government. So that's allowed us both to be involved in the formation of policy, but also to advocate for the policy positions that will be required. We're doing that in conjunction with our MOU partners because we recognize that for this value chain to work, all parts of the sector need to ultimately see a way towards a profitable and sustainable business cases for investment. I think in answer to your question, the financial commitments by the government go a long way towards confidence in the sector and the commitment the government has. Of course, it remains to be seen how that commitment will flow through to support for individual projects. What we [ say ] more broadly is I think everyone sees the benefit of this and the economics of it in the medium to long term, particularly as carbon pricing goes up and particular in sustainable aviation fuel where airlines have no other way to decarbonize. You might have seen news in the headlines this week around Singapore moving forward on its mandate for any aircraft flying out of Singapore to be using a portion of SAF. And the fact, that there'll be a very small our ticket price burden on passengers to fund that. We think those sorts of mandates may well make sense to help bridge the gap over the near term of where Australia is versus the long-term profitability and sustainability of the sort of investment that we're proposing to make to provide feedstock to the likes of Ampol and IFM who will service the end customers, especially in the sustainable aviation fuel sector. Operator: Your next question comes from Owen Birrell with RBC. Owen Birrell: Sorry, just a quick follow-up question. Just looking at the margin environment, again, you called out, I guess, in the Agri Business, lower end-to-end margin compression. Are you able to give us a sense as to where in the value chain you're seeing all of that margin compression. Are you seeing it in the, I guess, the purchasing side from your growers? Is it in the export margins? Is it in the storage margins? Or is it purely in the marketing international? Just wondering to get a sense of where is the highest competition that's creating that margin compression across the margin chain. Robert Spurway: Yes. So the endpoint in Global Markets, but I'll let Ian talk to that. Ian Morrison: Yes. Owen, it's largely export margins from the way we would think about it because what's driving that, though, is partly behavior on the selling side does have an impact, of course, because that's one aspect overall that impacts level of purchasing you can get. And then on the demand side, from our customers when you've got generally lower prices and plentiful supply. The demand is more hand to mouth. So it's almost at both ends of the value chain is what's having an impact if you're the owner of assets and the commodity owner of the grain in between, and that does result in that margin pressure compared to what we've seen in recent years. And one other factor that, that leads to is more of a caddy market where grain prices are worth more in the future than they are today. So that leads to some of those behaviors and ultimately, has that impact on constraining margins. So pretty typical of what you can see in this type of environment and somewhat related to the overall conditions of global supply really. . Owen Birrell: So can I ask just in terms of the competition for I guess those export volumes out of Australia, are you seeing more competition by traders here? Robert Spurway: Short answer is no. Owen, it's really is somewhat -- to some extent, constrained by the production of grain in Australia. The competition we talk about is from other global supply market. So the market is behaving, I guess, it's in a rational way, exactly the way you'd expect it to behave with plantable supply growers globally, being less than, super excited about the prevailing prices. So they're not inclined to engage, and that creates fairly benign conditions in the market. What I would say, and it's important to remember that the fundamentals are still there. Demand remains. In all likelihood, there will be a supply shock at some point because historically, we've seen that occur around the globe, particularly in a globe with more volatile weather. Stocks-to-use ratios globally remain at historically low levels. So the opportunity for margins to grow quite quickly exist in the event of a disruption to global supply. So that sort of volatility and the kind of things that we'll be looking for to access margins right throughout the year, just as we did last year on chickpeas and canola and other commodities as well. We'll be doing the same again this year. Operator: Your next question comes from Ben Wedd with Macquarie. Ben Wedd: Yes. Just one for you there, on the net working capital side on Slide 45. It looks like a fairly large dip into the full year there. So just wondering any comments you can sort of make around that and sort of what that sort of implies for the year ahead? Ian Morrison: Yes. No, happy to comment on that. Good question, Ben. So dip off is really normalizing of working capital. We did see -- and I touched on it at the half year, a bit of a higher peak and also last year in to be fair, it was slightly higher. And so with the slightly lower commodity values and typically, we do see that dip off at the balance date or closer to the balance date. But we'd expect where we finished this year to be a more typical level of working capital relative to what we've seen in recent years. Operator: Your next question comes from Richard Barwick with CLSA. Richard Barwick: Can I just clarify, I think just trying to get my head around the international piece. I think you said, Ian, that what's your wording, that was a drag on earnings this year. So we know it went backwards, obviously, but does that actually in terms of relative to year before, but does that mean it actually had a negative contribution so it was loss-making this year, you can just confirm that? Ian Morrison: Yes, very modestly. This is a quick answer, Richard. Operator: Your next question comes from John Campbell with Jefferies. John Campbell: My question has already been asked. Thanks very much. Operator: There are no further questions at this time. I'll now hand back to Mr. Spurway for closing remarks. Robert Spurway: Look, again, thank you, everyone, for your interest in the company. We look forward to meeting with many of you over the course of today and the next few days. To recap, GrainCorp's in an extraordinarily strong position with core cash balance of $321 million. We're continuing to deliver what we said we would in terms of growing the business, investing in the business and providing significant returns to shareholders through the dividend and the buyback. And year-on-year, we've increased our earnings at an underlying level to $308 million. Thanks again for your time. We look forward to catching up with you through the next few days. . Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to JD Logistics Third Quarter 2025 Results Conference Call. [Operator Instructions] I'd like to turn the call to Mr. Sean, Head of IR team at JD Logistics. Sean Shibiao Zhang: Thank you, operator. Good day, ladies and gentlemen. Welcome to our third quarter 2025 results conference call. Joining us today are our Executive Director and CEO as well as the CFO. Before we start, we'd like to remind you that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and in this discussion. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will discuss certain non-IFRS financial measures for comparison purposes only. For a definition of the non-IFRS financial measures and the reconciliation of IFRS to non-IFRS financial results, please refer to the announcement of financial information and business highlights for the third months ended September 30, 2025, issued earlier today. For today's call, management will read the prepared remarks in Chinese and will only be accepting questions in Chinese during the question-and-answer session. A third-party interpreter will provide simultaneous interpretation in English on a separate line for the duration of the call. Please note that English translation is for convenience purposes only. In the case of any discrepancy, management statements in the original language will prepare. I would like to turn the call over to Mr. Hu Wei. Please go ahead, sir. Wei Hu: Thank you, Mr. I'm so happy to meet you here. This is the third quarter of the 2025 earnings call meeting. In the third quarter, with the effect of proactive macro policies, China's economy maintained a steady and progressive trend as a critical enabler of the national economic circle, modern Logistics continued to facilitate the efficient flow of production factors, strengthening the economy's resilience. During the quarter, JD Logistics continued to strengthen its capacities in service experience and delivery partners, consistently expanding product portfolio and solidify the service competitiveness, improving customer experience and satisfaction and achieving high-quality related revenue growth. In the third quarter of 2025, JDL achieved a total revenue of RMB 55.1 billion, an increase of 24.1% year-over-year in terms of profit. Our non-IFRS net profit was RMB 2.02 billion with a profit margin of 3.4%. We are committed to building our long-term capacity and competitiveness, making targeted investments in areas such as international business expansion and timeless capacity improvement to enhance our operational strength and lay the foundation for long-term business growth. Revenue from integrated supply chain ISC customers reached RMB 13.1 billion in the third quarter increased by 45.8% year-over-year with both internal and external ISC customers sustaining solid double-digit growth. This included RMB 8.9 billion in the revenue from external ISC customers. Leveraging our extensive network coverage, extensive warehousing operations and management experience and accumulated ISC capacities, we continued to strengthen our leading position in China supply chain market, achieving growth in both the number and average revenue per customer APR of our external ISC customers. We provide industry-specific ISC solutions and service products for customers in fast-moving consumer goods, home appliances, home furniture, safety, apparel, automotive and fresh products and other industries. In the face of the ever-changing business environment and market landscape, we remain focused on experience, cost and efficiency, enhancing our industry-specific service capacities. We delivered products and solutions tailored to customer-specific industry logistics and operational pain points, helping them improve operational efficiency, reduce operating costs and optimize customer experience. In home appliance industry, we continued to expand our ISC solutions end-to-end process coverage. By leveraging digital capacities to integrate end-to-end information flow, we enabled efficient coordination in all aspects of operations, helping brand customers reduce cost and enhance efficiency. For instance, in the third quarter of 2025, a cooperation with a well-known home appliance brand customer extended upstream to the process from the customers' factory to their warehouse. Through our consolidated distribution model, we optimized the transportation routes and efficiently reduced the transit frequency during inbound to warehouse transportation, helping the customer to reduce logistic costs. Meanwhile, we leveraged our digital supply chain system to provide destination warehouse with real-time visibility of in-transit information. This enables them to range uploading zones and allocate manpower in advance, significantly improving inbound efficiency and shortening order fulfillment time. Going forward, we will continue to deepen our presence in the ISC space, capitalizing on our advantages in digital technology, network coverage and operational management. We will replicate and scale the successful experience with this brand to more customers, committed to build the most efficient ISC solution through the entire process. The steady development of our ISC business is underpinned by our continuously improving network infrastructure. As of the end of September 2025, our warehouse network covered nearly all countries and districts in China, consisting of over 1,600 self-operated warehouses and over 2,000 third-party warehouse owner-operated cloud warehouses under our open warehouse platform. Our warehouse network has an aggregate gross floor area of more than 34 million square meters, including warehouse space managed through the open warehouse platform. We have enhanced the breadth of our coverage and enriched our service offerings through further expansion into lower-tier regions and continued optimization of our warehouse network. During this quarter, guided by our cooperational philosophy of placing products as close as possible to customers, reducing handling frequency and minimizing fulfillment distance, we accelerated warehouse network development and verification of the service capacities in lower-tier cities since official commencement of JDL's Kafka warehouse in April 2025, both local customer experiences and local efficiency have improved significantly in the third quarter. The warehouse contributions to our operational efficiencies continue to grow, supported by our ongoing enhancements in warehousing operating efficiency and regional distribution capacities. Core areas now enjoying a 2-1-1 time delivery service, while surrounding remote areas have achieved steady next-day delivery. This quickly improved local customers' shopping experience, widespread positive feedback meanwhile, we strengthened our capacities in bulking item logistics building, JDL, delivery installation, assembly return, while steadily strengthening our leadership in China's ISC market while also expanding our overseas footprint, leveraging years of accumulated warehousing operation expertise and world-leading ISC capacities. As we replicate and scale these capacities in overseas market, we are providing more Chinese brands, overseas customers and for e-commerce platforms with high-quality efficient and comprehensive ISC services. Based on long-term in-depth cooperation with auto customers in China's auto spare parts supply chain sectors and the strategic advantages of our overseas warehouse in the Middle East. In the third quarter, a leading new NGB brand chose to further strategic partners with us to jointly expand into the Eastern market. we planned and now operated a spare parts warehouse in Dubai's Jebel Ali Free Zone, providing end-to-end logistics services from container acceptance, customer clearance, quality inspection and other processing to packaging and outbound logistics. This shortened customer spare parts distribution circle, improved inventory turnover efficiency and strengthened the aftersale network across Middle East, South Africa. At present, JDL has established multiple overseas warehouses in the Middle East and continue to enhance its automation and digital operation capacities, delivering global ISC solutions for several other companies and enabling them to achieve a more efficient and sustainable growth in international markets. As part of our overseas warehouse expansion, we accelerated our global smart supply chain network. and actively expand our overseas warehouse footprint bycelerating progress towards our goal of doubling the gross area of our overseas warehouse by the end of 2025, a target we're fully confident in achieving. In Q3, our revenue from other customers, including express and freight delivery services reached RMB 24.9 billion with a 5.1% year-over-year growth, we have consistently adhered to the high core development strategy, focus on expansion of the high-value businesses while enhancing timeless service capacity and product diversity, laying a solid foundation for the long-term sustainable growth of our business. In our express delivery sector, we continue to enhance our delivery timeless capacity and product competitiveness with a focus on expanding our high-turn, high-value, services. For instance, we expanded our high-tensile delivery capacity, which previously centered on categories such as lychee and hairy crab into high-value scenarios into production zones. This expansion has effectively improved the service quality and delivery efficiency, driving the growth of high timeliest delivery business. Additionally, we continue to strengthen our cooperation and penetration with leading brand merchants on mainstream platforms. For instance, in the third quarter, we started multiple channel cooperation with several well-known sportswear brands, achieving a notable increase in business share, while driving revenue growth in our high delivery services, we also helped the brand customers gain greater platform traffic through high-quality logistics services, creating value for our customers. In the last mile fulfillment process, we continue to optimize our service models and strengthen operational capacities. Recently, we acquired wholly owned subsidiaries of JD Group specializing in local on-demand delivery, which has already established a mature operating system in the sector and demonstrated the strong commercial potential and growth prospects. Looking ahead, we expect the integration of this business to further enrich JDL's product portfolio, complement our last-mile delivery network and enhance fulfillment graphic operational efficiency and overall user experience. Through our business development process, we have adhered to our core value first. JDL remains dedicated to offering premium services such as delivery, on-demand pickup and delivery and return exchange continuously enhancing the quality of our express delivery services. With such professional and reliable services, we have earned a trust and preference of our customers and consumers as well as recognition from national authorities. In August 2025, in the Logistics 2025 report released by the globally authority brand valuation consultancy, Brand Finance, JDL was rated as the strongest Logistics brand 2025 worldwide. Our ranking in the most valuable logistics brands listed in year-over-year, demonstrating our strong international competitiveness and brand influence. Regarding the freight delivery business, with the consolidation with Teton Logistics and [ King Freight, ] we ranked among the top tier in China in terms of cargo volume and revenue share of freight delivery services. We've now established a freight delivery product portfolio covering various timeliest levels and diversified service scenarios, allowing us to precisely match our customers' differentiated needs regarding timeliest requirements, service standards and other aspects. In terms of air freight, we continue to expand our international cargo route network. In the third quarter, we launched a new all type of fly route direct in Shenzhen Bao International Airport to Singapore, Chongqing Airport, further strengthening our air transportation connectivity with the Asia Pacific region. We constantly prioritize technical innovation through ongoing investment in automation equipment, AI and other applications. We have deeply integrated digital intelligent technologies into every stage of the logistics value chain, driving the comprehensive application of AI plus robots across end-to-end logistics chain, including warehousing, storing transportation and delivery. We recently self-developed series robots of [ W pack, ] which are highly suited to our operational scenarios. For example, in the warehouse operations, we are accelerating the deployment of the [ 2 line intelligent ] warehouse solution with both the number of deployed devices and the cities covered increasing further this quarter. And in addition, we have deployed [indiscernible] shadow for bulky item storage and boost to person scenarios, the [indiscernible] intelligent robotic arm and automatic towards for order picking, storing and packaging as well as f drone and dual unmanned vehicle for collections between industrial parks and delivery stations by continuously expanding automation coverage across both processes and logistic value chain we will enhance operational efficiency and provide customers with reliable high-performance supply chain support. Going forward, we will continue to promote the adoption of automation equipment and AI test driving efficiency upgrades across our end-to-end logistics value chain that will support middle and long-term profitability. Meanwhile, we will remain committed to promoting the tech upgrading of the industry, bringing efficient supply chain services to more regions worldwide, and we will improving the social value. Thank you. And we have just announced a new announcement. For my personal reasons, I will take new positions under JD Group. I will no longer be the CEO for the next session. Over the last few years, I collaborated and grow together with JDL, making contribution to customers and consumers. I worked with JDL team for years. I feel so happy and I'm so moved. I want to express my gratitude to the stakeholders and all the Board members. And next, Mr. Wang Zhenhui will take the role as the CEO. Mr. Wang has been working with different companies as well as public companies for years, and he has the business insight as well as the business vision. Mr. Wang has a very solid foundation experiences in the logistics sector. I believe that with his guidance and with his wisdom, JDL will further make contributions to stakeholders and Board members. I'm going to welcome Mr. Wang to say a few words. Zhenhui Wang: Thank you, Mr. Hu Wei, Dear investors, dear analysts, good to see you. My name is Wang Zhenhui. I'm so happy and honored to take this chance, and I will soon take the job as the CEO of JDL. I want to thank Mr. Hu Wei for your contribution. In the upcoming days and months and years, I will lead the team centrally on the cost efficiency and the core competitiveness, making new progress, not only for the company, but also for the but also for the entire side. Now let's welcome Mr. Wu Hao to give you the overview of the financial performance. Hao Wu: Thank you, Mr. Hu. Thank you, Mr. Wang. Hello, this is Wu Hao, the CFO of JDL. I'm pleased to present JDL's financial performance of the third quarter 2025. In the third quarter of 2025, China's macro economy remained stable with continued improvement, demonstrating strong resilience and vitality. Supported by our ever strengthening products and service capacities, JDL achieved accelerated revenue growth by continuously improving timeless and customer experience and further enriching our solution and product portfolio. In the third quarter of 2025, our revenue reached RMB 55.08 billion with a year-over-year of 24.1%. In terms of the profitability, IFRS profit was RMB 1.96 billion, non-IFRS profit with a margin of 3.2%. Non-IFRS profit was RMB 2.02 billion with a margin of 3.7%. Since the beginning, this year, we continue to make strategic investments to strengthen our long-term industrial competitiveness and actively expand business growth opportunities, further solidify our market competitiveness strength. Current investment phase remains consistent with our operational plan. Looking ahead, as business volume increases entering the peak season, we expect economies of scale and improved resource utilization to support profitability improvement. Let's look at the segmented business lines. Our revenue from ISC customers totaled RMB 13.13 billion in the third quarter with year-over-year increase of 45.8% among them. ISC revenue from JD Group amounted to RMB 21.20 billion, up 65.8% year-over-year, mainly due to the incremental revenue generated by our full-time riders participating in JD Food delivery as well as from the growth in the JD Retail. Revenue from external ISC customers was RMB 8.93 billion, up 13.5% year-over-year. The number of external ISC customers amounted to around 67,000, up 12.7% year-over-year, continuing the trend of double-digit growth over several consecutive quarters. While serving more customers, we also deepened and broadened our engagement with existing customers. In the third quarter, our average revenue per customer for external ISC reached RMB 134,000, up 0.7% year-over-year, extending the year-over-year growth from the previous quarter. This growth was primarily driven by our extensive comprehensive warehouse network and mature operational capacity. By continuously upgrading our supply chain products and services, including extending the service supply chain, broadening geographic coverage and deepening omnichannel integration online and offline, we strengthened partnerships with leading customers industries such as apparel, FMCG and auto, helping them improve market competitiveness while optimizing operational costs and efficiency. In the third quarter of 2025, our revenue from other customers, primarily including express and freight delivery services was RMB 24.95 billion, up by 21% year-over-year. For express delivery services, we continue to alleviate customer experience satisfaction focused on the expansion of high-value segments. In the freight sector, we ranked among the top tier in China in terms of cargo volume and revenue scale, supported by our diverse freight delivery services that cover multiple timeliest levels and service scenarios. Moving on to cost and profitability. In the third quarter, our gross profit margin was 9.1%. We continue strengthening our capacities in key strategic areas, including enhancing delivery, improving customer experiences and expanding our international business to drive JDL's long-term high [indiscernible] growth. Next, let's turn to the major parts of the cost and revenue. First, employee benefit expenses were RMB 21.82 billion in the third quarter, up 49.8% year-over-year. This was primarily due to the addition of full-time food delivery riders compared with the same period of last year as well as the year-over-year increase in the number of operational employees in the delivery and warehouse operations. The number of operational employees grew from approximately 640,000 at the end of the third quarter last year to 440,000 at the end of the third quarter of last year. while remaining relatively stable quarter-over-quarter since the beginning of this year, we've added our own employees to key operational processes such as last-mile delivery and warehousing aimed at upgrading our product and services and alleviating customer experience. The key indicators such as on-time delivery rate and customer satisfaction improved. In the third quarter, employee benefit expenses accounted for 39.6% of total revenue, up 6.8%. Second, our outsourcing cost was RMB 16.97 billion in the third quarter, up 13% year-over-year. Our outsourcing costs accounted for 13.8% of total revenue. With a year-over-year decrease of 3.0 percentage points, we optimized outsourcing costs, which are primarily transportation related by applying algorithm-based transportation deployment systems and optimizing the structure of transportation resources, such as increasing the proportion of the self-owned vehicles. Third, our total rental cost was RMB 3.20 billion in the third quarter, up 2.5% year-over-year. We continue to promote site integration and optimize network structure, improving the utilization efficiency in our sites. Our total rental cost accounted for 5.8% of total revenue in the third quarter, down by 1.2 percentage points. Apart from the major costs mentioned above, our ongoing business expansion has resulted in improved economies of scale, driving down our depreciation and amortization costs as a percentage of total revenue by 0.2%. Meanwhile, due to the growth of services such as nation and maintenance, other costs as a percentage of total revenue increased by 0.3 percentage points. In terms of expenses, our operating expenses in the quarter were RMB 3.70 billion, up 15.9% year-over-year, accounting for 6.7% of total revenue with a year-over-year decrease of 0.4 percentage points. This improvement was driven by our consistent enhancement in refined management and cost control capacity. Among them, sales and marketing expenses increased by 13.5% year-over-year to RMB 1.58 billion, accounting for 2.9% of total revenue, down 0.3 percentage points year-over-year. Sales and marketing expenses accounted for 4.7% of revenue for external customers, up 0.3 percentage points. We maintained monetary investments in sales and marketing personnel to drive business growth. In the third quarter, our R&D expenses were RMB 1.06 billion, up 15.9% year-over-year and accounting for 1.9% of total revenue, down 0.1 percentage points. We have allocated our R&D resources to strengthen our end-to-end automation, digital and intelligent capacities. including ongoing operation of AI algorithms and automated equipment in diverse logistics process. For example, we consistently upgrading our large language model, power digital intelligent solutions, improving the coverage of warehouse equipment and scaling up the regular operation of online delivery vehicles to drive further cost savings and efficiency improvements in diverse logistics scenarios, including planning, warehousing, storing, transportation, delivery and customer service. Our general and administrative expenses were RMB 1.02 billion, up 23.6% year-over-year, accounting for 19% of total revenue, remaining largely flat year-over-year. In terms of profit, please also consider our non-IFRS measures, which we believe may better reflect our core operations. Both non-IFRS profit and non-IFRS EBITDA excludes items that we believe are not indicative of our core operating performance to help investors and other users of financial information better understand and evaluate our core operating results. In the third quarter of 2025, our non-IFRS profit was RMB 2.02 billion, down 21.5% year-over-year. Non-IFRS profit margin was 3.7%. Non-IFRS EBITDA for the third quarter was RMB 5.32 billion, a decrease of 7.1% year-over-year with a non-IFRS EBITDA margin of 9.7%. We also continue to monitor our cash reserves and cash flow to maintain a healthy capital position to support business development and meet our operational needs. In the third quarter, excluding lease related payments, we recorded a free cash flow of RMB 0.59 billion, consisting of operating cash flow of RMB 4.71 billion and capital expenditure of RMB 1.95 billion, primarily for investment in automation equipment and self-owned vehicles. We continue to improve operational efficiency and capacity through efficient resource allocation. Before we wrap up, I would like to express my heartfelt thanks to our shareholders for their enduring support and the trust in the JD Logistics. Looking ahead, we remain committed to balance improvement with stable profitability and high-quality growth. We will continue to cultivate our ISC solutions, enrich our product portfolio, optimize customer experience and further strengthen core competitive barriers to promote healthy and sustainable business growth. Meanwhile, we will sustain our investment in automation as well as digital and intelligence technologies optimized network structure, innovate operational models and deepen refined management. We aim to improve the efficiency of the entire logistics process, achieve long-term and sustainable structural cost reductions and create greater value for our shareholders. Thank you. That concludes my prepared remarks. Now let's begin the Q&A session. Sean Shibiao Zhang: Thank you, Mr. Wu Hao. This concludes our prepared remarks. We'd like now to open the call to your questions. Operator, we are going to start the Q&A session, and we are going to receive the questions only in Mandarin. Now let's get into the Q&A session. Operator: [Operator Instructions] [indiscernible] please raise your question. Unknown Analyst: I have 2 questions. In view of the automation, the 5-year automation plan, I want to listen to your comments on the capital investment efficiency and the cost. This is the first question. The next is a full-time rider. We have the full-time riders, and we have outsourced the riders. I want to check with you about the orders. How many orders are you accepting per day? You are not the largest operator. How could you use up the network to make innovation to be the top operator of the food delivery? Unknown Executive: Thank you, [indiscernible], for the question. Over the last few years, JDL has accumulated a lot of the automation technologies and experiences. Most of the automation equipment are well used at a large scale and they are easy to use, they are user-friendly ever since 2025 in more than 20 provinces and cities, and we have already prepared our auto robots. In terms of the unmanned vehicles, we began applications in Guangdong, Jiangsu, Beijing, around 20 cities and provinces, thousands of the unmanned vehicles were put into place for the purpose of docking, collection and pickup. In the future, for the AI Super Brain together with launch robots, they will be deeply integrated to ensure the full chain of sorting, transportation and delivery. In terms of investments, automation and robots. And the outcomes will be collected. According to outcomes, we will promote the large-scale application of the robot in the long run. We will manage the cost, and we will find a balance between investment and return because that is the basis for the long-term optimization. So have some confidence in us by investing into automation sector, we are going to further improve our long-term and middle-term revenue. For specific investment pace, I will follow different industry, different category. We will check the real-life data. We will update our investments and our CapEx plan will be updated as well. It will be very close to our drop that we will go and check what happens, and we will gradually upgrade our investment year-by-year. With more technologies being invested, I believe that it will cut down the logistic cost for the entire society, driving the primary growth for the company. Question 2 is about the full-time riders. Around June, JDL made the announcement to hire full-time delivery. In Q3, we saw a very positive growing momentum. the revenue was boosted. The full-time driver team was quite stable, very consistent with us. This is a big advantage. We have a standardized training system. We have a refined operations, and we're improving the promised delivery. We are improving the timeless as well as the user experience. We made the announcement and we are going to integrate our driving forces. We are going to cover the full-time scenarios, especially for the last-mile delivery services. We're improving and boosting the capacity dramatically. In terms of utilizing the resources, in the long term, I believe there's a lot of robust complementary movements. During the e-commerce festival, the Photon riders could help us to make up the logistics gap. On the other way around, the man could also work together with the delivery man to meet up the requirements from the food delivery. Now the 2 teams are highly complementary, and we could have them work together in 10 of the core cities, the mutual supplementary efforts were made to boost up orders. I want to make a quick notice, the introduction of the Photon riders could improve our service delivery capacities to our customers, we are not only providing food services, but for other products, we are providing services to some luxury brands and 3C products. For instance, we could help them to deliver the luxury goods or 3C products as quickly as possible. That is how we are going to enrich our matrix of the delivery, and that is one of the core capacities for us in the future. By providing or improving the services to ensure timely delivery, we can get into the intra-city faster delivery services. Operator: Next question from Citibank, [indiscernible]. Unknown Analyst: I have a question about the overseas market. You're expanding your footprint. I want to listen to your opinion about your plans and about the implementations of the overseas market. Unknown Executive: Thank you for the question. For the overseas market, the international business is about capacity building. We want to have an entire global network by the end of 2025. The growth area will be doubled by the end. the floor areas for one site, and we want to improve the terminal to terminal capacities, such as the routes, such as cross-border timeliness as well as the speed to clear the customs. We want to make the entire journey more smooth. A, we want to reduce the cost of compliance for our customers, the automation capacities, the efficiency will be boosted all for the purpose of reducing the cost, and we want to expand the network of delivery. Those are the progresses. Still, I believe international market, overseas market are on capacity building because capacity will drive for long-term growth, we will meet up the requirements of the customers. carry out the accurate investment, optimizing our network operation and the localized delivery capacities. In the long term, we do more we scale it up the mature supply chain will be duplicated in overseas market while staying different, such as the health product integrated service, we will also build up the network in overseas market. All in all, we want to offer long-term sustainable value. Operator: Next one. [indiscernible] from Jefferies. Unknown Analyst: My question is about the number of ISC customers and ARPA. Can you share with us more about which segment is your core sector because you want to dive into the value creation and you also focus on numbers of the customers. And I'd like to invite you to share with us the capacity and human resource. Unknown Executive: Thank you, Jefferies -- thank you, Thomas from Jeffrey, the question. Over the last few years, in the ISC customer number and ARPA, we have our -- we have the room for improvement, of course. The numbers and ARPA are 2 important topics. For one thing, we have to improve the numbers and we have to offer them the best products. We can cover more clients. Some of the customers are not using the ISC services. So that is one direction. We will hedge for that in terms of ARPA. We have some key accounts. We also have some small accounts to store the improvement. For the key accounts, we have the PM, the project manager, the account manager to go deeper to find more opportunities. Generally speaking, I believe I can -- we can continue the existing path to further improve the profits, the numbers and the ARPA. Yes, of course, you are going to see fluctuations in the ARPA due to the seasonal reasons or due to the natural transition from a single client to ISC client. But in the long run, I believe the numbers will be further optimized. In 2026, still I'm not in the right time to make the forecast. I believe that in 2026, the revenue will further be optimized. I also wish that starting from Q4 of last year, the investment has begun to yield results. And in the long run, more results can be seen. Thank you. Operator: Due to time constraint, that concludes today's Q&A session. At this time, I will now turn the conference back to Madam Sean Zhang for additional or closing remarks. Sean Shibiao Zhang: Thank you again once again for joining us today. If you have more questions or further questions, please contact our IR team directly. Thank you.
Peter Dietz: I'm happy to lead you through today's call in which we will be presenting our financial results for the third quarter and the first 9 months of '25. After the presentation, we invite you to submit your questions via the Zoom Q&A function. Joining me on the call today are our CEO, Tobias Wann; and for the first time, our new CFO, Hansjorg Muller. As usual, Tobias will begin with an update on strategic highlights and relevant business developments. Afterwards, Hansjorg will guide you through the financial results in more detail. And of course, we'll also provide an outlook and look forward to answering your questions at the end. And with that, over to our CEO, Tobias, who will give you an update on the world of tonies. Tobias Wann: Thank you, Peter, and a warm welcome also from my side. Thank you for joining our earnings call. Today, we are looking back on a quarter that was eventful and even historical for tonies because we opened a new chapter by launching Toniebox 2, our biggest innovation since introducing Toniebox 1 back in 2016. We've done so very successfully and by staying true to our mission. Across the world, we have strengthened our position as the largest audio platform for kids. With Toniebox 2, we are not only redefining how children grow through listening, touch and play, we're also unlocking additional growth potential for tonies with new audiences and use cases. We also reached another milestone in the third quarter documented on this slide. We sold our 10 million Toniebox. Fittingly, it was a Toniebox 2. Overall, Tonieboxes have been activated in more than 100 countries with over 134 million Tony sold. In the third quarter, we not only expanded our reach with 282 minutes, our average weekly play time also remained on a high level. This is an important KPI. It shows the positive impact our screen-free product has on families and it's highly relevant for our business as it underscores a deepened engagement with our platform. Let's now take a look at our Q3 in financial numbers. We had an exceptionally strong third quarter, and we are very satisfied with our performance in the first 9 months as well. Q3 was not only historical, but also highly successful. We increased revenues by more than 52%, growing our year-to-date performance by 33% or EUR 322 million on a group level. And I'm pleased that all markets contributed to this increase. In DACH, we recorded double-digit growth. After 9 months, revenue was up 16%. North America continued its strong momentum with 36% growth year-to-date. And in Rest of World, revenue surged 80% compared to the first 9 months in 2024. As I said, the launch of Toniebox 2 was a key driver behind this strong performance, also accelerating our annual performance. Our sequential growth from Q2 to Q3 was obviously supported by phase-in effects as the first Tonieboxes 2 hit the shelves in September. But our new core device has also hit the Spirits of the Times, generating significant momentum across markets. We have seen impact both from upgraders, so that's households already owning a Toniebox as well as first-time buyers of a Toniebox 2. So we are on a good trajectory to continue our long-term platform growth. And we are not only on track to reach our long-term, but also our midterm goals. With Toniebox 2 off to a good start and a strong Q3 business performance, we are pleased to confirm our full year guidance for financial year 2025. More on that later, but let me already state that this underscores our resilience in a challenging macro environment. In the next few minutes, I'll dive a little bit deeper into our business update for Q3. Our strong performance is the direct outcome of several major steps forward that we took over the past few months. Today, we look at some highlights. After a deep dive into the launch and early performance of Toniebox 2, we'll cover relevant developments in our major markets and exciting new partnership. And naturally, Hansjorg will introduce himself. And what I want to reiterate, not only have we worked to drive immediate results over the past month, we've also focused on preparing the road ahead. Therefore, we are well positioned to deliver another strong Q4. We'll be taking a look at that as well. But now let's dive in. Toniebox 2 is the champion, leading the next chapter of our platform and growth strategy. Most of you are very familiar with Toniebox 1. For over 9 years, it set the benchmark for creative screen-free play, earning the trust of families in over 100 countries. That has made us the global #1. And Toniebox 1 never became out of fashion. It was a huge success among different cohorts selling as well as or in most cases, even better than in the year before for nearly a decade. Toniebox 2 is built on this unique success story. It has everything that made Toniebox 1 highly popular. But with Toniebox 2, we are adding new use cases, enhanced features and even more immersive interactive experiences. At the same time, Toniebox 2 unlocks entirely new possibilities to shape and expand our business with new verticals in a broader age group. In a nutshell, we carry forward our legacy while setting the stage for a future with more imagination and more growth. Toniebox 2 is both continuing and enriching the experience millions of kids and families have fallen. At its heart, it's a screen-free audio-first experience. But with Toniebox 2, it's becoming even more engaging. tonies has always said right at the intersection of tech, toys and content. All of that still holds true, but now we are adding something new to the mix, gaming. Alongside Toniebox 2, we've introduced Tonieplay, a whole new expanding product category that brings interactive games and quizzes to our platform. This hands-on experience perfectly complements our successful audio offering. The combination of Toniebox 2 and Tonieplay will be a key driver of our growth going forward. Let me explain why. We are expanding our platform, driving growth across a much broader target group with entirely new growth vectors. We are reaching families earlier, engaging children for longer and creating more opportunities for cross-selling and ecosystem participation. This broader appeal increases our total addressable market and strengthens our long-term growth trajectory. Specifically, Toniebox 2 unlocks 3 key growth vectors. Growth vector #1 are younger children. For the first time, Toniebox 2 is certified for use by children 1 and up. We've developed new age-appropriate content like My First Tonies, allowing us to welcome families into the tonies ecosystem earlier and build more loyalty from the very start. Growth vector 2 is our core target. The 3 to 6 age group remains central. And with Toniebox 2, they benefit from enhanced features while the familiar tactile play experience is preserved. In established markets, this also creates a strong upgrade incentive for existing Toniebox families. Growth vector 3 are older kids. We are now offering formats and interactive games designed for children up to age 9 or even older. By activating these 3 growth vectors, Toniebox 2 enables us to attract users at an earlier age, engage with them more deeply and retain them for longer. This expands our installed base, increases customer lifetime value and opens new opportunities for licensing partnerships and recurring revenue. In summary, Toniebox 2 is a catalyst for the sustainable growth. While it's still early, we are already seeing some very encouraging signals from our global community that our strategy is resonating. Those who already love the Toniebox are embracing the next generation. Early data shows that around 40% of Toniebox 2 buyers at launch are upgraders from our current platform that is owners of Toniebox 1. As we approach the holiday season, we expect this share to shift with Toniebox 2 increasingly becoming the entry point for new families replacing Toniebox 1. It's also clear that parents recognize that Toniebox 2 is a great toy even for the very youngest children. If we only look at Toniebox 2 activators that did not own a Toniebox before, nearly 1 in 3 have 1-year-old kids at home. At the same time, we are seeing that Toniebox 2 is appealing to older children as well, thanks to Tonieplay. Let's look at the DACH market where our new device has been available since September, which provides us with a more solid database. There are 55% of all households with kids 5 years or older that activated the Toniebox 2 have played at least one of our new games. Yes, these are early indicators, but these figures show that the design of the platform is working as intended also because we made a concerted effort to showcase our innovation. To celebrate the launch of Toniebox 2, we hosted events in Berlin, London, New York, Paris and Sydney. Our aim was to connect directly with our communities, inspiring those who already love or who are just now discovering Tonies. Having witnessed the event in Berlin firsthand, I can tell you seeing the excitement of kids and parents interacting with Toniebox 2 is one of the best parts of my job. But that was not all because both in New York and Paris, Tonies was on full display on oversized billboards even after our launch events had ended. These billboards were part of our first truly global multimedia campaign to strengthen our global brand equity. Brand and mission visibility are essential to bring our story to more and more hearts and minds in households around. In addition to our own channel, we also saw global buzz across major news outlets, confirming we introduced the right product at the right time. In total, media coverage on the launch of Toniebox 2 generated over 1 billion impressions worldwide. We are building on this momentum and continue to see new levels of excitement and attention across the global media landscape and also in the broader tech community because less than 2 months after launch, Toniebox 2 already won an award. It's a great honor for us that our new core device was named as CES 2026 Best of Innovation Award winner by the Consumer Technology Association. Global buzz in the media and from peers is important to reach even more families. However, what matters most is that the product truly resonates with those who we created it. The feedback from our community is what drives me and the team every day. The numbers speak for themselves. We are seeing a strong 4.6 average rating, nearly 9 in 10 users would recommend Toniebox 2 to a friend. And the volume of online conversations about Tonies has surged dramatically. But it's not only the sheer number, the sentiment is also overwhelmingly favorable. Parents tell us their children are absolutely loving the TB2 experience from its foundational promise of screen-free time to particular new features such as Tonieplay or the sleep timer. In true Tonies fashion, we even listened to our community and in turn, we've delivered to quote one of our customers, a really well-designed product. For us, this is fascinating feedback, but first and foremost, a source for inspiration to do even better. The launch was about making a strong first impression. And we've done exactly that by ensuring that families everywhere know about Toniebox 2 by creating excitement and by earning our customers' trust. Now the holiday season is about activating our platform at scale and turning that strong first impression into growth. We are entering the holidays with strong foundations, high demand and a platform that's already -- that's ready to perform. And this is particularly true for North America, where our Toniebox has been available for not even 6 weeks now. North America is a key engine for our growth, and we are fully prepared to keep the momentum going. We've secured exceptional visibility. In over 1,500 American Target stores, we are prominently placed with 12 feet of shelf space. Quite literally, no shopper can miss us. Tonies will be front and center this year for families as they browse for gifts. The same is true at Walmart, where over the past year, we've moved from the electronic section to the toy section. Our presence at our retail partners even goes beyond the shelves. We are honored to be featured in Walmart's holiday season video and TV spot alongside household brands like Apple and Nespresso. And here, maybe we can roll the video real quick, Peter? [Presentation] Thanks, Peter. Let's be very clear, this is no paid partnership. Walmart chose us putting our brand in the spotlight during the most important time of the year. With these and more initiatives in place, we are set to drive continued awareness, engagement and sales in North America as we close out the year. Another key to our portfolio's success are local heroes. That's also true for the U.S. A prime example for our ability to secure the hottest licensing content is the Ms. Rachel Tonie. Here's an example. With its launch, our approach and instincts were clearly validated again. Ms. Rachel is a true social media superstar in the U.S. with over 13 billion views and more than 17 million subscribers on YouTube. The response to launching a Tonies with her has been overwhelming. Restock sold out within just 1 single day and almost 130,000 customers signed up for back-in-stock e-mail notifications. The Ms. Rachel Tonie has enabled us to expand into new customer segments, especially households with kids between 1 and 3 years old. This clearly demonstrates how much of an impact securing the most relevant and authentic licenses has for the North American market. And we're moving on to DACH, which is not only our home, but also our continued growth market for Tonies. This year, we are up 16% revenue year-to-date, which shows just how much trust and excitement there is for Tonies in Germany, Austria and Switzerland. Our brand is as hot as ever. 82% aided brand awareness is a fantastic achievement. In addition, we are seeing encouraging feedback from retailers who are eager to promote the Toniebox 2 and their point of sale prominently as shown by the photo in the bottom right. And one recent example for this are our Christmas Tonies. The hype was real before Santa could even think about settling up his rain deer. Our Christmas Tonies have been flying off the shelves with sales doubling compared to last year. And our advent calendar sold out again in just a few hours. And we are not standing still on the channel side either, whether people prefer buying Tonies on the street or on social media, we are there. Turning to a strategic lever that is relevant not only in DACH but globally, partnerships. With Toniebox 2, we set up our platform to be more open than ever to partnerships also now in gaming. One area where we see special potential is bringing globally recognized brands and characters into the world of Tonies. For our partners, this is attractive because in turn, we are introducing the Tonies community to these brands, creating a win-win-win situation for families, for our partners and for us. In the past few weeks, we've taken a major leap forward into our partnership strategy, expanding our collaboration with Hasbro to Tonieplay. In the second quarter of 2026, we'll introduce 3 iconic Hasbro board games, including Monopoly in brand and new audio-first Tonieplay formats that only our platform can deliver. It's a perfect match, 2 trusted brands coming together to unlock new worlds of discovery, connection and joy for families everywhere. With that, I'll now hand over to Hansjorg, who will take you through our financials. Hansjorg, I'm very happy to have you on the earnings call for the very first time today, take it away. Hansjorg Muller: Thank you, Tobias. Excited to be here. Let me take a moment and briefly introduce myself to the ones who haven't had the chance to connect with me yet. I joined tonies as CFO on September 1. Prior to that and for more than 25 years, I held leadership roles in finance, strategy and operations across various global markets. Most recently, I was CFO of Netflix's APAC business. My positions before included roles at Electronic Arts and Procter & Gamble. In other words, I think I both know entertainment and digital platforms and business models as well as what it takes to bring a physical product to the shelf and the homes of consumers and customers while driving profitable growth. tonies is a special company with fantastic global growth potential. My first 2 months have been super inspiring. I've already had the opportunity to meet many of you and engage in valuable dialogue about the company's strategy and outlook. The openness that I've encountered in our discussions so far have really impressed me. So I'm super excited about what lies ahead and look forward to working closely with you as we continue to deliver our growth ambitions. Please do know, my door is always open for direct conversations and closing exchange. So please don't hesitate to reach out to me at any time. But with that, let's move directly into our results. Looking at our year-to-date performance, we've delivered strong growth across all markets from 16% to 80%, depending on market, a stellar result. For this, together with pulling off the Toniebox 2 launch, a big congrats to our teams. Our growth momentum has picked up considerably in Q3. As Tobias said, this was partly due to phasing effects as we prepared retail partners for the Toniebox 2 launch, obviously, already way before we introduced it to the broader market. This affected the DACH market in particular. Our 9 months revenues came in at EUR 322 million in constant currency, an increase of 33%. In DACH, we're continuing our usual double-digit growth track as we showed in full year 2024. And both North America and Rest of World performed strongly, too. Two other things I'd like to highlight here. First, on top line growth. We anticipated the strong phase-in in Q3. And as a result, our full year guidance remains unchanged. And second, regarding our market split. For us, it's really important to grow globally. So an important KPI here is our share of international revenues, those outside of DACH. And we're pleased to see that we continue to gain momentum here with an increase of 6 percentage points year-over-year to 59%. This confirms our international expansion strategy works, where we grow significantly ahead of the still double-digit growing DACH market. Overall, we're seeing a very healthy balance of growth across all regions with international markets clearly making up the majority of our business. Looking at the category split year-to-date on this slide, you remember -- you might remember that we saw a somewhat skewed mix in half 1 of the year due to the anticipated launch of Toniebox 2 and Tonieplay. The share of Tonieboxes sold at the time reduced a bit year-on-year simply because the launch created that temporary shift in sales patterns, which we already explained in August. In Q3, we've now seen that normalization as expected. And for year-to-date, we're back to our usual seasonality pattern. I'd also like to point out the performance of the Tonies category here, where we have seen a 36% year-over-year growth in revenues in constant currency, resulting a slight increase in overall share of the business. That is now developing exactly as we expected and how we want it to be. This disproportionate growth is the result of the successful extension of our portfolio. So particularly fueled by new products such as Tonieplay, Book Tonies, My First Tonies as well as the milestone launches like Tobias mentioned, Ms. Rachel or the Christmas Tonies. So in short, after some temporary shifts earlier in the year, our year-to-date overview shows that Q3 brought us back to our usual healthy balance with continued momentum coming from our growing content portfolio. So, picking up from what I just shared regarding our 9 months figures, let's zoom in on Q3 because this quarter really stands out. Looking at these growth numbers, you can clearly see how much momentum we had in the third quarter. Q3 was exceptionally strong across every region, every new product category helped us reach a new level of growth. And while it's fantastic to present such a performance in my first earnings call, it is an exceptional benchmark. It was partly driven by phasing effects, as mentioned earlier. But for now, it's great to see such a strong performance driven by our latest innovations and the excitement that they have created in the market. Now let's come back to something we've spent a lot of time on in our last call, how we're handling unpredictable macro effects, especially around U.S. tariffs. But today, we can say with confidence, we've got clarity for 2025. But more so, we've done our part to become more resilient. We have now sourcing flexibility across both figurines and box manufacturing, the latter of which we bolstered this year by opening a new production site in Vietnam already in April. Also in regards to foreign currency, we're in a good place, even with our international business growing because we are naturally hedged via our supply chain and other expenses. When it comes to consumer sentiment, our business model continues to prove resilient. We're seeing healthy demand, strong pricing power and support from our partners as we head into Q4. So I'm glad that resilience is something that's showing up in the numbers and how we're able to move forward largely unaffected by what's happening around us. Let me hand back to Tobias now, who will present our outlook for the full year. Tobias Wann: Thanks, Hansjorg. Building on the resilience we just talked about, you won't be surprised that this closing section in which we present our guidance is without surprises. And I say this with confidence also for us, the most important time is now. Traditionally, Q4 makes up close to half of our annual revenues with the holiday season and special commercial moments such as Black Friday and Cyber Monday being key to our performance. This year is no different despite some intra-year phasing effects that are quite natural when you have such a big launch as ours. Something that also hasn't changed is the fact that we are approaching high season, well prepared. Over the past years, we have learned to deliver at scale consistently recording more than 45% of our full year revenues between October and December. With 53% of our revenue target already in the books after 9 months, we are well on track to achieve our guidance and finish the year on a high note again. And as a result, we are reiterating our full year guidance for 2025. Profitable growth continues to be at the core of our story. We expect group revenue to grow by more than 25% this year in constant currency, taking us above EUR 600 million, with North America set to deliver over 30% growth in constant currency. For our adjusted EBITDA margin, we are guiding in a range of 6.5% to 8.5%. 2025 is shaping up to be another great year for Tonies. We are confident in our momentum and are well positioned to deliver strong profitable growth yet again. And with that being said, we are now happy and ready to take your questions. Peter Dietz: Thank you, Tobias. Let us now begin with the Q&A session. As a reminder, if you have any questions, please post in via the Zoom Q&A function and as I've seen, some of you already did. So, let's jump into the first question which we already received. Could you calibrate the Q3 growth rate versus the full year guidance? Does this mean that you will increase your guidance in the weeks to come? Tobias Wann: Happy to take this one. So, I hope it became also clear throughout the presentation. We have no plans to change our existing guidance for the year. And as communicated before, all impacts from TB2 tariffs and everything are already included in our guidance. I want to reiterate, Q3 was exceptionally good due to phasing effects from the TB2 launch and substantial retail preorders, especially in September. Q4 will be, for sure, again, our best quarter of the year with almost 50% of revenue share. We have always delivered on our promises since the IPO in 2021, and we are confident that this is going to be another successful year for tonies. Let me put it this way. Peter Dietz: Thanks, Tobias. The next question is an interesting one. Can you please give us a first indication regarding your expectations for '26? Will the growth dynamics be comparable to '25? Tobias Wann: Yes, it's a great question. But let's be clear, at this very moment, it's too early to provide you with any details regarding expectations for 2026. But I would like to frame this a bit because I'm getting this question a lot, and I can understand it. We have a very large and growing sticky installed base. And we have a resilient, highly scalable business model. So, we are absolutely confident that next year will be another year with substantial growth and higher profitability. So, we are not changing anything to our business. And that said, I think you and I, we wouldn't expect anything different there. So, I think what I want you to take home, we have all ingredients for a successful and exciting year ahead. We have an exciting innovation pipeline. Some of the elements we have already announced today, others will be announced later and next year, and I am personally very excited about that. We have a continued strong momentum in all our geographies. And as I said, we have a really, really, really good business model. So, we will give a detailed outlook for 2026 for sure, when we do our financial year 2025 review on April 14. And then I think also something you should put in your calendars at least pencil it in for Q2 next year, we are planning a Capital Markets Day. And during that Capital Markets Day, we will provide more details about the growth potentials, not only for '26 then, but also for all the years to come. Peter Dietz: Okay. Thanks. I hope that covers everything. I think we have the first question for Hansjorg now, and we can split it in 3 parts. So, how was your profitability in the first 9 months? That's the first part. And how do you think about EBITDA margin guidance now the tariff impacts are clear. And there's already a follow-up question in there. What will free cash flow be? So, Hansjorg, the floor is yours. Hansjorg Muller: Thanks, Peter. That's 3 questions for me. Thank you. Happy to take them. So, profitability year-to-date, I think you're aware, we don't provide information regarding profitability in our Q1 and Q3 announcements. But you have seen that we've been profitable for half of -- first half of 2025 on a comparable level to the prior year. And we are happy how this is developing further in Q3. We have -- also need to add, we do have a special year with the launch of Toniebox 2 and equally tariffs. But despite this tariff uncertainty at the beginning of the year, we have shown that we've managed the business with foresight. So, I mentioned previously, Vietnam production. And we have a toolkit at hand that now allows us to navigate this macro environment. And now thanks to the, call it, calmer environment with regards to tariffs, we believe we have sufficient clarity on our profitability for the remainder of the year, and that's why we are confirming our guidance, as I said before. So, coming out of these 9 months with strong confidence to achieve the guided adjusted EBITDA margin between 6.5% and 8.5% in fiscal 2025. And you had a question about cash flow. We don't guide or comment on free cash flow. But what I can say, positive free cash flow is inherent in our business model. And but then also second, given we operate this year in a broader inventory environment due to the launch, right? We're launching a new box. We're expanding the portfolio, and we're growing strongly plus the volatile macro environment, we've decided for more safety in terms of a higher inventory. So this will affect our free cash flow in this period. But we are confident for structurally strong cash flow generation in the years to come. And again, this year's decision, growth -- weighing growth decisions are of strategic nature to support our content and product expansion. I hope that clarifies? Peter Dietz: Thanks, Hansjorg. A different topic regarding the partnerships. Can you quantify your expectations for the extended partnership with Hasbro? When can we see the first impacts? Tobias Wann: I can't and I don't want to quantify them. I can share again my excitement, but I hope you understand that we cannot provide detailed figures for individual partnerships. But it's -- let me take this question as an opportunity to explain again how important partnerships like this one with Hasbro are for us. They are part of a multiyear portfolio and product planning strategy that we clearly have, but they are also clearly fueling our growth and our relevance as a brand in the next coming months and years. And this is because we are building a very -- continue to building a very diverse and engaging content with very interactive formats, both, by the way, in licensed and owned and now for children aged from 1 to 9 and even older. And I think I said this a couple of times, the partnership with Hasbro is a great example, and it's also one I personally find very, very exciting because I do like the games that we are going to tonify in 2026. We see a lot of economic potential clearly. But another thing that is important to me and also for my team is the fact that we are now also moving on the family table with the Toniebox and families, friends sitting around the Toniebox, playing with the Toniebox, multiplayer mode, single player mode, this is a complete new thing for us, and this is exciting, and I can't wait for this to happen. Peter Dietz: Okay. Thanks. One regarding the TB2 feedback. How do you assess customer feedback on TB2 so far? What do you say about the negative feedback related to TB2 launch one can find on the social media at some places? Tobias Wann: So, I mean, I've shared the numbers with you. The feedback on TB2 and Tonieplay has been overwhelmingly positive. It's nothing we are making up here. These are pure true numbers. So both, by the way, from consumers as well, importantly for us as well, from retailers, and you saw media as well. So the reviews that we are seeing are very promising. The sentiment that we are measuring is clearly on our side, by the way, both from upgraders as well as new joiners into the Tonies ecosystem. So, the first learnings we take from that is that we have, I think, done an excellent job to launch a flagship product that takes everything that's been great about our previous Toniebox 1 and improves it in many ways. Also very important, the play extension and with it, obviously, with Tonieplay and all the technical improvements we have done, sound quality, design, haptics, that's something I'm really, really proud about and also what the team has done here over the last couple of years. There's an important technical feature that excites me a lot, and I think, I guess, also a lot of you, we are going to take over-the-air updates in the future to continuously make the product better. So, this is already a fantastic product, has a lot of positive consumer sentiment and reception, but we are continuously working on new features, new exciting things that we are then going to launch over the next couple of weeks, months, even years to increase the interactivity of Toniebox 2. And yes, there is here and there also feedback that we are taking close to our heart that we want to continue and want to improve the box in its experience. There's one thing I want to take this opportunity because I've heard it so many times, the cable that is included with TB 2 and it's actually also the #1 critics, if you read it online, is very, very short. But no, we are not saving money on cable length. This is a regulatory requirement for the box to be 1 plus certified. And if we would have actually had a longer cable, we would have not gotten this 1 plus certification. We have probably -- we can improve the communication about this and explain to our consumers why the cable link is as it is, but it is certainly nothing we have done to save money or, yes, create frustration. So, for almost all of the feedback points, we are very confident that we will have solutions or that we are communicating better on it. The overall sentiment, the overall reception of Toniebox 2 and Tonieplay was absolutely overwhelmingly positive. Peter Dietz: Okay. One regarding consumer sentiment. How sustainable is the current demand trend into Q4? Are you seeing any changes in consumer sentiment in your core markets? Tobias Wann: So, I think I said it in the presentation, our business model proves continuously to be very, very resilient. And that also obviously speaks to the way we look at consumer sentiment. We are seeing very healthy demand. But then there's a second data point that you all know that we have that is important to us and that we measure very, very closely that is activation data. So, the number of Tonies and boxes that are being activated. And year-to-date, we are seeing very encouraging patterns. So, that is a good signal and a continued forward-looking signal also for us about consumer sentiment. And apart from that, as you've seen this year, again, we have very strong pricing power, and we have support from our partners, retailers and also our marketplace partners as we head into Q4. So, I'm personally really glad that this resilience is something that is showing up in the numbers that I've just presented today and Hansjorg have presented today. And we are currently unaffected by consumer sentiment, and we are walking into Q4 with a high level of confidence. Peter Dietz: We received 2 more questions for Hansjorg, I think. One is, you're talking about phasing for Q3, but this should only be true for the boxes. Why you think the figurines and accessors are so strong? Hansjorg Muller: Yes. Thanks for the question. I think the way to think about this is the fact with the launch of Toniebox 2, we launched into a whole new category, right? Toniebox 2 comes with play, which is the attach to Toniebox 2. And with that, there is a significant phasing, namely all the games that come in the Tonies category. So, that's the phasing part. But of course, we also have organic growth, so to say, in that category from the products that I mentioned earlier that contribute to that 36% year-over-year growth in the Tonies category. Peter Dietz: And another typical CFO question, I guess, can you break down the content licensing costs for figurines in Q3? And are there new licensing agreements that could materially increase costs in '25 or for the rest of '25, I suppose? Hansjorg Muller: Yes. Breaking it down would probably go into a lot of detail. But at a high level, there is typically 2 licenses, one is for the figurine, one is for the audio for the content. And for the new formats, that is very similar for Tonieplay. But you can assume that we negotiate with our partners for new or rates for new products that will match or come in at similar levels versus where we're coming from. So, I wouldn't expect any distortions or significant volatility. Now having said that, licensing cost ratio always depends a bit on our product mix as we've seen historically, but it's hovering around a very stable ratio. Peter Dietz: Okay. How sustainable is the Q3 growth run rate? What would be a sustainable growth rate in the coming quarters, indication on current trading would be helpful. Tobias Wann: I'm happy to take that. I think Hansjorg has spoken to it, and we have touched this in the presentation a couple of times. If you look at Q3 in isolation, clearly, the growth rate is influenced by the seasonal shifts we have seen due to the TB2 launch. And then that makes it clear, therefore, it is unique. We have guided a full year growth rate, and this should give you an indication for Q3. Peter Dietz: Another one for Tobias, which product categories do you still want to penetrate? And what R&D costs are expected in Q4 and in '26? Tobias Wann: I hope you understand I'm not going to explain our product road map to the public. There are many things that we are working on that creates a lot of excitement. And I think those of you who know me, they also -- you also can confirm that I personally stand for acceleration of our innovation speed. There's a lot more and sooner than obviously waiting another 9 years that I want to achieve with the team. I'm personally extremely excited. I can tell you that for what it's coming in '26, in '27 and '28, and I think probably the best way to look at this is and building some excitement, hopefully, with you is the Capital Markets Day because that is a good opportunity for us to also look into a bit of a broader strategy that holds for a couple more years. Peter Dietz: Okay. As I can see, we have 3 more questions at the moment. One is regarding the Rest of World development. In Rest of World, we saw significant growth in Q3. You mentioned better product accessibility as the main driver. How do you achieve better product accessibility in those regions? Tobias Wann: Product accessibility. So, I think if you look at the growth in Rest of World in every market, it's sustained by scaling our operations and the installed base, right? So, what we are doing is we are expanding the channel. We have more retailers, more doors, more shelf space and then all results in more velocity at the point of sales. And we have product expansion, right? So, we have above-the-box product expansion that continuous innovation, and we presented a few over the last couple of earnings calls. So, I mentioned pocket Tonies before. So that's Clever Tonies and Book Tonies, I mentioned My First Tonies. There's a lot happening and continues to happen on above-the-box innovation as we call it. And now obviously, with Toniebox 2, there is also innovation that is happening at the box level. And as I said, there is clearly also our desire to continue working on innovation like that. And if you combine all these things in this recipe, there is continued accessibility in all region, not only in rest of world. Peter Dietz: Okay. Thanks. We have a question from an investor who also seems to be a customer of us. As a parent, I'm excited about Toniebox 2 and plan to upgrade. From an investor perspective, could you clarify whether Toniebox 2 includes any design or manufacturing changes that are expected to reduce unit production or maintenance costs and thereby improve gross margin or operating profit? Tobias Wann: Hansjorg, do you want to take that one? Hansjorg Muller: Happy to take that, and thank you for considering to upgrade. I'm also a parent and I have upgraded. I think we have talked to this to an extent at the TB2 call. We currently do not plan with improvement in margins for this year. We rather plan with directionally similar levels as with TB1. Of course, we're working on initiatives to continuously improve our bottom line through product levers, design-to-value levers as we've shown in the past years, and we're good at it. But right now, we're not able to comment further details on that. Peter Dietz: Okay. Here's the one related to the revenue share of TB1 and TB 2. How does it compare between the 2 Tonieboxes? How does the share of each Toniebox looks like? And what could be the rough steady-state estimate for '26? Hansjorg Muller: Yes, happy to take that one, too. But a simple answer, please understand we're not breaking out this detail at the highest level or simply said TB2 replaces TB1. Peter Dietz: That was quick. Another follow-up to the free cash flow question we already received. Can you explain what free cash flow you think tonies can achieve in Q4? Tobias Wann: Hansjorg? Hansjorg Muller: We're not providing a free cash flow guidance, as you know, as mentioned before. And then, yes, I can add 2025 is marked by high investments, right, associated with the market launch of TB2 and Tonieplay. We're expanding our portfolio. So, the strong figure that we showed in 2024 is maybe not the exact or the right comparison. But as I mentioned before, we are confident to deliver sustainable positive cash flow in the years to come as we are able to deliver on our substantial growth potentials our business model has. So free positive cash flow is inherent in the business model, but now we manage growth and product and category expansion first. Peter Dietz: Okay. And I think we're coming to the last question we received, and this could be a question I have sent in because I'm most interested in this one. How likely is [ SDAX ] inclusion in '26? Tobias Wann: Happy to take this one. And I'm interested in this one as well. I'm following this personally. But I have to tell you, it's difficult to answer. All of you know how it works. There are clear criteria for companies to be included in SDAX. We do qualify from -- clearly qualify from a market cap perspective. Turnover rate is the other important criteria. And based on the trading in the past few months, I would say it's increasingly likely. But I cannot predict this. And so, I would probably recommend you do your own calculation and your own estimations and follow it, and then we'll look at it again early 2026. Peter Dietz: Okay. Since there is no other follow-up question, this concludes and wraps up our Q&A session. And as far as I have the microphone already, I continue a bit. And this is maybe also helpful for the inclusion into the SDAX in the weeks and months to come. So, it shows you a bit what we plan to do in the weeks and in the next quarter. The first glance on our financial calendar for '26 and the next official announcement date will be, as in the last years, we already did this the same way. We have scheduled the communication of Tonies preliminary results for beginning of February. And before that, we will be on the road with roadshows and conferences. We provide the presentation anyway on our web page or it's already on our web page, so you can check yourself. And if you are available around in the cities mentioned here, we would be happy to meet you personally. So, please ask the accompanying bank or the [ Ion ] Capital Forum will be a big one end of November to show up yourself. And we will continue this with the auto conference in Lyon and another big conference in Frankfurt. So, we're happy to meet you there and continue the conversation and whenever feel free to contact us for any additional questions you have following this conference call. And now we come to the end, as usual, with the key takeaways of Tobias, and over to you. Tobias Wann: Thank you, Peter. Maybe before I get to the wrap-up, I just want to -- thank you again for the great questions we got from you today. I also realize we didn't get to all the questions. We actually received quite a lot, which I appreciate. But maybe that's also a great connection to what you just said, Peter. If you are in one of the conferences, please make sure that you ask the question again, and we are very, very happy to answer them. Of course, you can always also reach out to Peter and our Investor Relation team, and we'll make sure that we follow up after the call. Okay. Let me briefly state the 5 key takeaways that have defined our performance so far this year and obviously also set the stage for Q4 and beyond. First, looking at our results year-to-date, we delivered strong growth across all markets with a truly exceptional Q3. The launch of Toniebox 2 drove growth and our footprint continues to expand. Our strategy is working, and we can deliver growth even under uncertain macroeconomic circumstances. This is important. Second, Toniebox 2 is a fantastic launch success. Let me be very, very clear here. It was important to land our biggest innovation to date, and we did. We are already seeing the first traction along our planned growth vectors that I explained and the product resonates with families, the momentum is real. Third, we are heading into the most important time of the year, well prepared and with confidence. Our team is ready to deliver powered by the strong feedback Toniebox 2 has received. Fourth, just like Tonies, our leadership team is stronger than ever. With Ginny, Christoph, Hansjorg on board, we have a group anchored in both Germany and the U.S., combining global experience, deep functional expertise and a shared commitment to driving Tonies next chapter. And finally, we are well positioned for '26 and beyond. Our new platform around the Toniebox 2 ecosystem sets us up for continued profitable growth and long-term success. I'm proud of what the team has achieved, and I'm excited for the crucial final stretch of the year, as well as for everything that lies ahead for Tonies next year, this year, even today because today is going to be an amazing day. Peter? [Presentation] Thank you, Snoop. A fantastic partnership we are really, really enjoying. So, I sincerely hope that you all have an amazing day, and I thank you for your continued interest, your trust and for joining us today. Take care. Bye-bye.
Operator: Ladies and gentlemen, welcome to the analyst and investor presentation quarterly statement January to September 2025. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Kaveh Rouhi, CFO. Please go ahead, sir. Kaveh Rouhi: Thank you, operator, and welcome, everyone. I very much appreciate that you are taking the time for this investor and analyst call on our 9 months 2025 results. This conference call is scheduled for up to 60 minutes and will be recorded. After my management presentation, I will be happy to answer your questions. Today's presentation is available on our Investor Relations website. The replay will also be available on this website shortly. Our agenda for today, first, I will give a review of our 9 months [indiscernible] our presence in the home segment in the U.S. is currently being evaluated. Excellent service will be our USP in the future, enabled by cost-efficient operations via our [ multi-shared ] service center in Poland. In general, it means that we will use our global footprint even stronger going forward while strategically focusing more on our core market -- on our core home market in Europe. In total, the program will mean a reduction of about 300 FTEs in Germany and another 50 in noncore markets, while building up about 200 FTEs, mainly in Poland and India. Now let's talk about large scale. Our large scale and project solutions continues to operate in a highly dynamic global market that is driven by a growing demand for grid stability solutions. SMA is a recognized expert and leader in this field, which puts us in an excellent position to seize this momentum. One example for the successful inauguration of the first utility-scale battery energy storage system with grid forming technology in continental Europe, in [indiscernible] Germany. We are proud to have delivered 7 medium voltage power stations with our Sunny Central Storage [ UP ] battery inverters and the SMA Power Plant Manager. Altenso also continues to grow and realize challenging projects, as you can see in our second example here. In September, Altenso commissioned a hydrogen plant conversion unit, Hydrogen Dune, a pioneering green hydrogen plant located on the coast of Namibia. The special feature here, this plant is the first ever to operate 100% off the grid and an intelligent energy management system coordinates the optimal time for hydrogen production. Large scale has delivered the first Sunny Central FLEX and a Power Plant Manager in the U.S. at the end of July, manifesting our position as a global player in this field. The Sunny Central FLEX is an innovative modular power plant solution that was just last year recognized by pv magazine with Top Innovation Award. The award recognizes the ability of the Sunny Central FLEX to facilitate the integration of PV, battery, and hydrogen applications into large-scale projects, making it possible to design, build, and adapt for new and exciting power plant use cases. Now let's turn to the last page, our guidance for 2025. As said several times, the market environment for HBS is still very difficult due to macroeconomic deterioration and the declining expansion rates in the residential and commercial sectors in most key markets. Thus 2025 sales are expected to be well below the previous year's level for this division. The large scale and project solutions division is planning sales slightly above the high level of the previous year. Group EBITDA and EBIT will be negatively impacted by lower sales and the resulting lower fixed cost integration in HBS as well as one-offs described earlier. Due to the significant further deterioration in Q3 of the anticipated sales performance for '25 and the following years in HBS, we had to lower our guidance range on September 1st to EUR 1.45 million to EUR 1.5 million for sales and minus EUR 80 million to minus EUR 30 million of EBITDA. Of the expected total one-offs of about EUR 250 million to EUR 265 million, EUR 45 million were recognized in Q2 and EUR 159 million in Q3. Please note that further provisions for restructuring measures will be added in Q4. Last but not least, a note on our upcoming events. Full year 2025 financial results will be published on March 26 next year, combined with an analyst and investor call. With this, I conclude the presentation. And of course, I'm happy to take your questions. Operator: [Operator Instructions] Our first question comes from Lasse Stueben from Berenberg. Lasse Stueben: Just a question on guidance for this year. In terms of revenues, it looks pretty conservative for the fourth quarter. So I'm just wondering how do we square that performance, particularly in large scale in what's usually a stronger Q4 than Q3? So I'm just wondering what the effects are there. And then the second question would be, you're profitable on EBIT in C&I in Q3. Is that something we should expect going forward as well? Or is there more one-offs that we should be expecting in Q4 and also maybe in 2026? Kaveh Rouhi: Thank you for the question, Lasse. Let's start with the Q4 revenue. So you're right, in the last 2 years, Q4 was always the strongest quarter in terms of revenues. This year, we don't expect that, to be honest. I think Q3 was very, very good. And hence, Q4 will be a bit lower. And that's why we were confident with the range that we kind of laid out, to answer that question. And it's depending on when the projects are commissioned, you always have the topic that if a large project at the end of December, is commissioned end of December, then it's in year, and if it floats to the next year, it can be a change of, let's say, EUR 20 million, EUR 30 million, EUR 40 million. That's why it's always a bit tricky to land, let's say, the large scale revenues exactly. But in general terms, Q4 will be a bit lower than Q3 and the numbers will add up. First question. Second question, I'm not sure I got it. I think you mentioned that C&I has a positive EBIT. I'm not so sure about that. Even including -- excluding one-offs, EBIT is negative of that division. So not sure if I got your question right. What if I've answered it? Lasse Stueben: Yes. I mean, if I look into the Q3 report this year and I go into EBIT, sort of in operating profit terms at least, you had, I think, EUR 10 million positive, unless I'm reading it wrong. Kaveh Rouhi: Yes. Let's double check. So we had -- I mean, as shown on Page 6 of the presentation, we had a minus EUR 322 million, thereof EUR 200 million one-offs and the other 100 -- minus EUR 112 million along the 9 months. So even operationally, they were loss-making. So maybe you have to check the report, how you read it. But no, they were not operationally profitable. Operator: The next question comes from Constantin Hesse from Jefferies. Constantin Hesse: All right. Just on my side, I'd like to start with order intake because clearly blowout quarter in Q4 in terms of large scale. What I -- I do apologize if you had commented on it because I was at a separate call because I have 2 results at the same time. So I would like to just understand, in terms of the momentum that you saw in large scale in Q3, how much of that was related to delays that you saw in Q2? And how should we think about this going forward? I mean, is this something that you think is sustainable? Or how should we think about the Q4 level of orders and into next year? Kaveh Rouhi: Thanks, Constantin, and glad you made it to the right call. On the Q3 order intakes, they were higher than what we expect in Q4, to start with that. We had a really good Q3. We had one spike in EMEA, but this will not -- which is a huge project. This will not come again in Q4. As I mentioned, U.S. is getting back to normal levels. I think that's important. And the rest will be good. So we think the order intake will be, yes, something -- at least more than EUR 300 million up to EUR 400 million, depending again on timing of the project. So hence, it will be lower than Q3, but it will be on a good level in Q4. Constantin Hesse: Is that group or is that large scale only? Kaveh Rouhi: Basically, that's the same these days, right? So that's -- because if you see at our order backlog of HBS, it's pretty much stable because what comes in, we basically convert to revenue. So how you want to read it, but this is mostly large scale. Constantin Hesse: So going into '26, this U.S. momentum, you expect that to continue. Yes. Kaveh Rouhi: Yes. Constantin Hesse: I mean, what -- I mean, just trying to figure out, what's the key driver here? Because if I look at the current outlook for U.S., it looks relatively -- I mean, it looks obviously less positive around permitting, there are some issues. In Europe, you clearly have a lot more competition. So what's driving this in both regions? Kaveh Rouhi: I think the market is there. Let's start with that. As you know, we are operating in batteries and in PV markets, right? It's nearly 50-50 in the regions. And we see that the market is there. We have the right products. We have a good market positioning. We have good sales. So I think we are not planning to gain market shares or strongly outperform competition. It's more around keeping the momentum. And with all the USPs we have, which is the grid forming capabilities, the lifetime of our products, the quality that we have out there, I think we can be proud of what the team is doing there. And so this is giving us confidence going forward. Constantin Hesse: You said something interesting. I think you said storage versus solar, it's 50-50 now. So is that the level of storage that you're getting in, in terms of order intake? Kaveh Rouhi: Yes. Yes, roughly. Constantin Hesse: Going into -- Kaveh, so one thing I'm going to ask again, same question that I asked in Q2. Around the building blocks, or should I rather say, how should we think about the development of the bottom line for HBS into next year? Because I think it's been relatively tough to get a clear cut view. I mean, if I add back the one-offs this year and I assume no growth, I'm assuming a loss of about EUR 100 million. But then you obviously have some savings initiatives in place. You said EUR 150 million to EUR 200 million into the end of '26. So if I look at a potential breakeven level for HBS, would that be below EUR 250 million or below EUR 300 million? How should we think about this potential new breakeven level? Kaveh Rouhi: Yes. Yes, that's a good one. I think we have -- we have lots of things in movement, right? And I talked about the value chain and all the adaptations that we make. And I think the breakeven that we need depends a bit, obviously, on the product mix and the margins of the product. So EUR 300 million sales can be very, very profitable. It can also be [indiscernible] with the same profitability of, let's say, EUR 350 million or EUR 360 million revenues, right? So depending on what you assume there in terms of product mix and profitability, the breakeven will never be below EUR 300 million. We will at least need a EUR 300 million to get to breakeven and also even higher depending on how much price deterioration and pressure remains in the market. So I would say, currently looking, and it's a wide range, I know that, forgive me for this, but it's between EUR 300 million to EUR 400 million actually. Constantin Hesse: Okay. EUR 300 million and EUR 400 million in order to -- okay, fine -- to get... Kaveh Rouhi: To get to breakeven. And we will not be breakeven next year, obviously not, because there's still much going on. Constantin Hesse: So -- and if I look at the profitability for large scale, you're probably going to close this year above 20%. Is that a level that you'd expect going forward? Or do you anticipate to start investing a bit more in R&D or whatever? And could there potentially be any headwinds on profitability there on the margin, right? Kaveh Rouhi: Yes, yes. I think there will be 2 trends that will impact the profitability going forward. The one trend is, as you just mentioned, we will need to invest a bit more into this business. We've been a bit prudent last year and also, let's say, until Q2 this year to basically keep the money together and to help with all the other topics. We will now spend more next year for large scale to increase our competitiveness, right? So this will impact profitability to a certain extent. And the other thing, and I know it's always a bit tricky, but it's the FX rates. So we see that expectations next year for the U.S. dollar and euro rate that they will impact our profitability as well. And as we produce in Germany mostly and export it to the U.S., we will get a hit. And then we will say, well, why don't you produce there? So if you do that there, we will have the tariffs and everything coming in. And then things are again more expensive and then you pass it on, so you have a similar effect. So we've done different scenarios. And overall, we will not be able to keep the 20%. Constantin Hesse: So we should be thinking about something right around high double digit, high-teens? Kaveh Rouhi: Yes. I mean, we're not talking about the EBIT margin for next year right now, right? So I think we will give the guidance for next year. It will be lower than 20%, but the group will be positive, so all good. Constantin Hesse: And then just lastly, just wondering if Florian said anything around large scale in the U.S. I mean, I think it's interesting to see what could potentially be a very bullish market for you, right? Because if we assume that FEOC comes out in a rather stringent way, that would, of course, potentially limit some gross business in the U.S. So are you seeing any increased interest, I guess, from U.S. developers for SMA? And then I'm not sure if you've seen that Nextracker, or now they're called Nextpower, they just launched a utility inverter as well. So just wondering if you had some feedback on that yet. Kaveh Rouhi: Yes. The last one just came in this morning. To be honest, I didn't have time to build an opinion myself, so I will not comment on that one. Sorry for that. When it comes to upsides due to the FEOC regulations in the U.S., I think it's fair to say that if you are in this regulated markets, you can have huge swings built on new incentives, tariffs in, tariffs out, protection here, new rules there. And then when you, let's say, build your business around that, you're very prone to be dependent on what actually happens in the end. And you can never be sure that the next guy or even the same guy changes the regulation again. And hence, we are kind of ignoring that. As long as it's not harming us, we are not planning with any upsides. But of course, we will welcome every customer that decides not to go ahead with Chinese and once a European and a premium German venture -- producer, and we will, of course, serve them, right? But for our planning, we are not considering that as a realistic case. It could be an upside, but that's not what we will put in our budget. Operator: The next question comes from Guido Hoymann from Metzler. Guido Hoymann: I've got 3 or 4 questions, and maybe we can go through them one by one. The first one would be, again, on large scale. Am I right, or maybe is that a reasonable assumption that the deadline for switching from the 5% safe harbor rule to the so-called physical work test, I think that was the 2nd of September? So that triggered a lot of prebuying there. So did you observe particularly high orders before that, early September? And how did the, yes, order development then -- yes, develop over the rest of the quarter in the U.S.? And do you think that given that there are other deadlines like July '26 for those projects, which passed this physical work test and then year-end '27 for those projects, which did not meet any deadlines. So do you expect all these deadlines to continue to trigger high demand in the U.S. until then in your large scale business? That would be the first one. Kaveh Rouhi: Okay. Let's do this one first. Hello, Guido. So the safe harbor rule. So no, we don't see an impact, to be honest, in our business. Neither has there been an increase or a decrease. As mentioned, our order intake was good, a little bit of catch-up because Q2 was very low. And we have lots of discussions with customers. And the question is how do they safe harbor. And they don't have to safe harbor buying inverters. They can also, as you said, do the safe harboring by the start of physical work. And hence, many of them are doing that, and we will -- we don't see a drop in our pipeline at a certain point going forward because they have now safe harbor and then there's nothing else after that. Plus, what's also important, let's not forget, these rules apply only for PV only, not for batteries, which is again half of the U.S. business. So it's basically a half of a half of our business that's impacted by those rules anyway. And hence, I think we are pretty prudent here with how we plan going forward. Guido Hoymann: And the second one would be on your status to increase the local content in the U.S. and to avoid or to reduce less tariffs. Can you maybe give me a brief update on the status there? Kaveh Rouhi: Sure. I think the short answer is we're on track. The longer answer would be that, as you know, the MVPS stations, which have the transformers included, they are going to be produced in the U.S. by end of this year, and the integration will start in January. And the whole integration and the ramp-up of the MVPS stations is scheduled for the second half. We do those 2 things with our partners, and they report they're well on track. Guido Hoymann: Then maybe also 2 quick ones. The restructuring costs you're planning for Q4, did you quantify them or can you do that, please? Kaveh Rouhi: Yes, sure. I think the biggest chunk of the still to be booked one-offs for Q4 is the amount of severance payments that we will need to put aside for the labor topics, and we estimate something between EUR 30 million and EUR 40 million. And that is roughly what we had put into the guidance. Guido Hoymann: And the last one, again, on HBS. Obviously, we're coming now a relatively small player. It is a highly price-sensitive segment. So do you see it to be viable or maybe to get an exit for this question? Do you want to focus on specific niches? EV charger, could be something else. Or do you still want to address? Or do you just want to, let's say, focus in a geographical perspective, but not in the range of products you're selling? Kaveh Rouhi: Yes. I think we do focus, but it doesn't mean that we will just sell one product. And I think I tried to lay it out, but let me recap a bit. So we will reduce the global footprint. And as I've learned, these -- the time since I'm with SMA that an inverter is not the same product depending on the countries that is operated due to grid regulations and all these kind of things, cable width, and whatnot. So the variety of our products will be lower because we will have less countries to serve. So here, we will reduce the amount of complexity, right? That's one topic. The second topic is that also the, let's say, the product variety in terms of how many different PV only we have, or hybrid inverters will also be reduced. But -- and this is very important for the core markets that we will target, we will make sure that we will deliver the full solution. And the full solution these days is in hybrid inverter together with batteries, together with energy management, and together with the right software. And so -- and an EV charger, of course, if you have a car. So what we make sure for the home market is we can give to these core markets a complete portfolio, but not having varieties of it in many regions, which will then [indiscernible] to serve. That's kind of making sense? Guido Hoymann: Yes. Okay. Very helpful. Operator: The next question comes from Jeff Osborne from TD Cowen. Jeffrey Osborne: Just a couple of questions on my side. I was wondering if you could articulate what the pricing changes were either sequentially or year-on-year. I think you had alluded to immense pricing pressure in your statement for the restructuring a few weeks ago. Kaveh Rouhi: Yes. I think that's a tough one, right, because it depends product by product. I know that's an easy answer. I think, if you just look at -- and we did the analysis just recently. When you look, what happened H1 '24 between this point of time and H1 '25 in the home market, especially, I think we see price declines between 5% to 15% on average. And of course, this hits your profitability if you can't be flexible with your production. So that's what we call immense in 1 year. Jeffrey Osborne: And I'm just curious, after the Chinese policy changed June 30, if things got worse in the third quarter as it relates to home and small commercial? Kaveh Rouhi: Not really, no. Jeffrey Osborne: Good to hear. And then I just wanted to understand the factory realignment with HBS. It sounds like the majority of the design work will be done in India and manufactured in Poland, if I heard you right. What was the trade-off of possibly using contract manufacturing in eastern Europe or other locations relative to leveraging your own facility, which I think historically made subassemblies and equipment for the utility scale product, if I'm not mistaken? Kaveh Rouhi: I think, for us, it's important that we own the product, that we own the development, and that the software where the heart of the product is compared to maybe 20 years ago where the hardware was a key differentiator. So we want to make sure that this is owned by us and owned by our own development. And we go to India where we have -- we already have established a hub, very good developers and a strong access to the local market, local universities. So that's, I think, the key driver here for the software part. And when it comes to assembly, obviously, there is -- yes, labor arbitrage is one topic. The flexibility is the second topic, and we have experience there. So I think, overall, the -- let's say, the Polish entity is used to do manufacturing, and hence, we will leverage that. Otherwise, it would be a waste of capabilities and good people. Jeffrey Osborne: Maybe just my last question is, if I heard you right, you're reevaluating the U.S. and Australia home market, but you have a sizable presence in the U.S. commercial market historically. I know you're working with Create Energy on the utility scale side. But what's your plans in defending market share as it relates to the commercial segment? It would seem you're poised to lose share given that Chint is likely booted out given FEOC. I think they're the market leader, you're #2 historically. Most of the commercial folks are going to want a U.S.-manufactured product. So do you have plans for manufacturing commercial inverters in America? Or are you willing to seed that market share? Kaveh Rouhi: I mean, currently, the setup is, as you said, we are for the commercial part, right? We produce in SMA in Kassel and we ship it over there. And we have no indications that this is going to deteriorate. When I talked about removing ourselves from potential U.S. and Australia, that's more the home part, not exactly the commercial. So no -- so yes, no concrete plans now to do a localization of that, but could come later. Operator: The next question comes from Peter Testa from One Investments. Peter Testa: I was wondering, on the large scale side, could you just give a sense as to whether the value-added margin is particularly different between battery and PV, whether you see a particular difference in value-add margin? I'll go one at a time. Stop there. Kaveh Rouhi: I mean, I'm not a technical guy, but to be honest, my understanding is in terms of production costs, they are pretty similar. And so I don't recall a big difference in the margins. Peter Testa: So margin mix isn't a factor. Okay. Fine. Kaveh Rouhi: Yes. Peter Testa: And then on the Chinese side in terms of competition, you said there had not been any particular difference in pricing at this stage, I guess, in the HBS part. Would you have any particular concerns about pricing in Europe and APAC, in particular, from the changes in Chinese market situation becoming exporter going forward? Or are you not seeing that? Kaveh Rouhi: No, I think, when we were at Intersolar, I heard a person from Sungrow saying that all the low-tier Chinese players are ruining the market with their pricing, right? And this was referring to China itself, which was, for me, an astonishing statement, to be honest, coming from Sungrow. So overall, I think the price pressure will mostly hit the Chinese market because it's big and they are cannibalizing themselves a lot. And I don't see an additional pressure on Europe due to that at this stage. Peter Testa: And you gave a number between EUR 300 million and EUR 400 million for breakeven on the HBS business revenue. Is that for 2026 or post all the restructuring? Kaveh Rouhi: No, that's post restructuring. That's post restructuring. So as I said, we will not be breakeven next year. Peter Testa: Yes. I'm just wondering what -- whether that sales level is after all the savings or midway? Kaveh Rouhi: No. Peter Testa: And then the last thing is just on -- with the write-offs that have happened in various different levels, both in projects, depreciation, also inventory. When you think about the impact of that on the 2026 profit, i.e., lower depreciation, lower amortization and maybe what happens to the written-off inventory, is there any sense on how that changes the, say, profit base just from the impact of all the write-offs? I don't mean by having no write-offs, I mean, the run rate. Kaveh Rouhi: Yes, yes. So no, it should not impact the run rate because the rules are we can only write off things that we're not going to use next year. So I can't plan now that we will have better margins because I'm going to use them again. So the write-offs are real write-offs. Obviously, we have still the material. We don't plan in the next years, so to say, to use it. However, we need to come up with a plan in terms of how to deal with this amount of materials. And then it might be that at one point, we find good solutions for that, and this could be an uplift, but it will be a onetime uplift and not a run rate [indiscernible]. Peter Testa: So you'd highlight that related to the inventory. But I guess you have lower depreciation, lower amortization because of the write-offs next year. Kaveh Rouhi: Yes, but it's not material in that sense. Peter Testa: Material? Fine. Okay. Operator: The next question comes from Constantin Hesse from Jefferies. Constantin Hesse: Kaveh, a quick follow-up. Just on cash, I mean, your balance sheet is looking quite good again. And I'm just wondering, is there any M&A potential here that you could be keen or focused on, be it a segment M&A, be it a regional M&A, anything interesting? Or is this even a focus potentially? Or will you just continue to focus on making sure that you continue building up the balance sheet? Kaveh Rouhi: No. I think, even if we had an M&A plan, we would not talk about it here, right, to be honest. Operator: [Operator Instructions] We have a follow-up question from Peter Testa from One Investments. Peter Testa: Just on the large scale side, could you talk a bit about 2 things on the backlog and the pipeline? On the backlog, if you look at phasing in terms of how that phases in time, the EUR 900 million -- EUR 902 million, how does that phase out in time by either quarter or years, just to give a sense? I'll ask about the pipeline. Kaveh Rouhi: Sure. So the -- it depends a bit where you have your backlog. So if you have projects in Europe, usually, they materialize up to 6 months -- around 6 months, I would say, 6 to 9 months, depending a bit. And if you have projects in the U.S., they can take up to 12 months because you have to produce here, bring it to Italy, ship it over, bring it then from the coast to the -- so it's usually the, let's say, transport times and it's the time that you need for supply for the MVPS station itself, the medium voltage part. So these are basically the 2 things that are hindering a faster turnaround. And hence, you have something between 6 to 12 months depending on the project. Peter Testa: And I guess, in Australia, it would be more like U.S.? Kaveh Rouhi: Exactly. Peter Testa: And then on the pipeline, can you give a sense, please, in terms of what you're seeing in project behavior -- tendering behavior, i.e., speed at which decisions are made, the speed at which permitting is granted? And just so we can kind of understand what you think about pipeline flow and what it means, therefore, for orders coming to delivery, arriving, and booking of revenue? Kaveh Rouhi: I think, in Q2, if you had asked me this, we were very -- yes, we were very cautiously looking at that because we saw that the turnaround times were a bit slower. I would say we have gone to normal levels. So when I remember our business discussions with the teams, nothing specific, to be honest. So it looks normal. Peter Testa: And the scale of the pipeline, any different geographic message? Kaveh Rouhi: No, all good. As I said, so I think we will end the year with a similar backlog as last year. That's at least what we expect now to happen in the next months. And we will go with a good backlog into next year. And the pipeline itself is on a similar level. So we are -- actually, I'm cautious here given the recent quarters, but I'm actually quite optimistic. So that looks good from our side. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Kaveh Rouhi for his closing remarks. Kaveh Rouhi: Yes. Thank you, everyone, again, for your interest. And of course, please do not hesitate to contact us in case you have any further questions. So goodbye, and have a great day. 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.
Rolly Bustos: All right. To respect everybody's time, I think we will get going right away. So again, greetings, and welcome to all the shareholders and stakeholders for joining us today for the Draganfly 2025 Q3 Earnings Call. My name is Rolly Bustos, and I am the Internal Investor Relations representative here at Draganfly. We appreciate you joining us. As always, we'll start with our CEO and President, Cameron Chell, recapping the third quarter earnings highlights. Next will be a more detailed financial review with our CFO, Paul Sun. We will conclude, as always, by addressing the pre-submitted questions we have received. You are welcome to reach out to me any time at investor.relations@Draganfly.com, if you have further questions. I remind everyone that this presentation may include forward-looking information and statements. These statements are not guarantees of future performance or financial results and undue reliance should not be placed on them. Any future events or financial results may differ from what might be discussed here. The company's results and statements are accurate as of today, November 12, 2025. We're under no obligation to update or renew these statements outside of material press release disclosure going forward. The full forward-looking disclaimer can be found on the screen right now. So Cam, if you're ready, please go ahead. Cameron Chell: Sounds great. Thanks, Rolly. Really appreciate that. And thank you, everybody, for taking the time to be with us today. We really deeply appreciate your time and consideration. So maybe just to hit the highlights out of the gate. So our revenue for Q3 2025 was $2.155 million, an increase of 14.4% year-over-year, that includes $1.6 million of product sales and about $530,000 of services. Our gross profit was $420,000, and our cash balance as of the September 30, 2025, was just underneath $70 million. So maybe just to run through a few of the highlights for the quarter. In particular, these are the ones that we felt were certainly material and meaningful to the shareholder and our future revenues. So first of all, we are unveiling the Outrider Southern Border drone, which is a Multi-Mission Drone in a Live Operation at Cochise County. So we -- basically, that whole operation is where we've got the Southern border sheriffs, basically commissioned by a heavy rider or what we call an Outrider drone, which is a drone that we designed with the Southern border sheriffs to be able to address the very specific mission sets that are required along the southern border. This very unique drone, which has a large addressable border opportunity globally, not just along the southern border, is actually a drone that really uniquely positions itself to be doing pretty much anything a fixed wing surveillance aircraft can do with the versatility of a Heavy Lift multi-rotor drone. And we'll talk a little bit more, and I know there's some Q&A that came in around that as well. So that was a very significant win for us. And in fact, on Monday of next week, we are actually doing the inaugural missions with that drone going live and operational, so we're really excited about the 100 or so different government and international representatives that will be there, witnessing and participating in those missions along the border in Arizona. So we also significantly bolstered our military and defense capabilities with the appointment of both Victor Meyers and Keith Kimmel, both are incredibly accomplished war fighters that bring very, very strong, both educational and operational backgrounds to the table. They are heading up our military Board of advisers. They're operational within the business and are supporting our sales teams as well as our operational teams. So we're super thrilled to have brought them on board, and they're very well-known certainly within the community. We were approached and very pleased to put a deal together with Paladin AI, and so we are actually collaborating on a specific opportunity that was brought to us from a military customer, but in addition to that, we are putting together and incorporating their AI into our drone fleet. We have several AIs that are being incorporated into our drone fleet. We treat our AI kind of similar to payloads. And what that means is that because our entire systems are modular, whether it's a particular type of camera, a particular type of payload, a particular type of sensor or even a particular type of AI, all of our system, right from hardware through the software, through design, is all managed in a way that can all be modular. So if we've got a customer that's coming to us that has a particular workflow requirement that requires a specific AI over another, we can incorporate that into it. Paladin has done some fantastic work in the industry, especially in forming. And so we're really, really excited about the opportunity that we've been able to put together, that they've been able to put together with us and vice versa. And so we expect big things out of this relationship, and it does start off with a specific customer that we are working with. We also announced that Drone Nerds, who is the largest reseller in the United States, has taken on the Draganfly line. In particular, for public safety, but also for military as well. So we spent probably a year working with them, really helping ensure that we are positioned well within the customer base that they're going to. They're a very discerning organization, and we really fit well within their NDAA-compliant strategy. And it should be noted, and I think I'm speaking with all accuracy here, is that in terms of a manufacturer, not just in North America, but a manufacturer anywhere in the world that has a comprehensive lineup of NDAA-compliant drones, I think we can point to Draganfly as the leader, if not really the only NDAA-compliant manufacturer out there that has 5-plus drone systems that are all NDAA compliant. And those range right from small FPV drones that we're selling into the military right through to the Outrider drone, which is a hybrid dual diesel engine, 7-hour, 100-pound capacity drone. So Drone Nerds has got this capability now to be able to offer that entire product line, in particular, down to their public safety. So we're really thrilled to be -- have been selected by them and get to work with them. We also had a fantastic show at AUSA. And this is really meaningful for us. So AUSA is the Army Association Show, basically the big military show in the United States. We were able to display there with our partner, which is the next highlight there, Global Ordinance. So Global Ordinance is one of the largest, what's known as DLA primes out there, one of the largest suppliers of munitions and equipment into Ukraine, as an example, amongst many other things, multibillion-dollar organization. And so they featured our drones along with them and have now brought us into multiple opportunities that we're working side-by-side on. So this show was really a coming out show for Draganfly in terms of our capabilities and capacities, and we had just an overwhelming response. Now this was also highlighted by the fact that we had a very significant announcement with the U.S. Army, which we'll talk about in just 1 second. We also announced that Autonomy Labs, which is a fantastic and strong U.K. company, basically decided to standardize on our platform being the Heavy Lift, which is not the hybrid version, but the actual electric version to be able to lay out their mine clearing, what they call, carpet. And so this is another great example, at least in my opinion, of payload companies who are looking to capitalize on the drone market, but are looking for the right manufacturer and the right solution provider to actually build their payloads around. So one of the key components of our modularity and our full product line is the fact that a payload is only going to be as successful as a drone platform as it can fly on. So our -- core strategy of ours is to be able to cater to those channel partners, those payload companies, again, whether they're things like LED signs that we've done before, or whether they're mine clearing carpets, or whether they're particular camera systems or AI systems, the more of those that we can integrate into our drones, the bigger channel that we have that those payload providers are actually selling into as well. And that is a -- it's a key component. So Draganfly having been in the business for 25-plus years now, we have that experience to be able to integrate all those other payloads into it. And it takes a long time to get enough integrations to build some critical mass around somebody -- an end user, a customer going, "Hey, wait a minute, I need to run this payload not just on a small ISR drone, but I also need to put it in conjunction with a medium lift logistics drone. And so for them to be able to make an investment once into a particular payload, but use it across multiple use cases because they've got different size of drones that those payloads can fit on to, we're finding that as a significant strategic differentiator or accommodator, if you will, for the customers that we're dealing with in the market and our payload providers. So again, thrilled to have done this project with Autonomy Labs. We displayed with them over at the DESI show in London, and they've really knocked it out of the park in terms of the amount of orders that they were lining up and the amount of testing that they've got going on with multiple militaries around the world. We also demonstrated both our Flex FPV and our Commander 3 XL platform at the invitation-only U.S. Army T-Rex experimental showcase. We were there actually, as I mentioned, by invite. We were demonstrating the 3XL and the FPV and how they can work in conjunction with each other. Again, if you think about that Commander 3 XL, which is above my left shoulder here, you really do notice that flat bottom on it because that gives a huge surface area for different payloads and multiple sensor capabilities. And so if you would also think about FPVs that are underneath that platform, and so you've got the 3XL, which can carry FPVs to a particular location, maybe a GPS denied location because the 3XL can handle the type of sophistication and radios required to be able to fly in those environments, and then be able to deploy FPVs from close range. The next notable one to bring up is that we have now -- we're well into working with standing up 7 new plants in the United States. through our contract manufacturing arrangement. We are in the midst of tooling those plants right now. That is going to more than quadruple our capacity. And for any of those that don't know that we currently in our own plants, we've got about $100 million of capacity that is now just kind of coming online. It took us until about Q3 to get that fully built out. We are now starting to produce on those particular lines, in particular, for the U.S. Army order that we announced about 4 weeks ago now. And so -- but these 7 new plants coming online, based on demand that we've got coming through, will give us somewhere in the range of about 4x that capacity by the end of next year. The company that we selected to go with, it was an arduous process, but the group that we selected to go with, their real speciality is -- I mean, they're great contract manufacturing. They were very accommodating about the tooling and the training that we need to provide, but they are very, very good on global logistics and supply chain management. And that's super key to us, in particular, because of the type of army orders that we're now entertaining. We're also, I believe, very uniquely positioned as an organization to support not just NATO, but in particular, the Canadian government. So Canada has now announced that 5% of their GDP is going to be moving towards defense spending. That's literally billions of dollars of new spending in this coming year. And there's upwards of $2 billion in the next couple of years spent just on drone technology. Now because of the unfortunate tariff war, which is working out fantastic for Draganfly between Canada and the United States, Canada has a very explicified Canadian policy right now. And given the fact that we have manufacturing plants and strong routes from Canada, we're very well positioned there, and have several initiatives ongoing in order to address that market and are likely -- there might be 2 companies in the whole country of Canada that can address that market for the Canadian D&D., and in fact, the other company right now only has one particular type of drone and it's more of a helicopter that would address that. So we think we're incredibly well positioned up there and thrilled to be able to be a service to that nation. Not only to the nation of Canada, but because of our Canadian manufacturing, our opportunities in the Arctic, both with U.S., NORAD, Canada and the Arctic states of Sweden, Denmark, et cetera, really seem to be also burgeoning quite well. So again, I would love to say that was part of our strategy. It wasn't. It's more luck than anything, but we're super proud to be in that position, and we look forward to servicing those organizations and customers over the coming years. And then we did have a Fortune 50 telecom company start to buy our Heavy Lift Drones. Now their Heavy Lift Drone in this particular case is being used for communication support on post-natural disaster. And we've been very, very hopeful with this particular Fortune 50 telecommunication company to actually expand the relationship. So this is part of 2 big initiatives that are happening. First of all, they're moving away from the Chinese manufacturing, and they were very explicit about needing a really solid long-term partner that had NDAA-compliant drones and had the capability to serve them at scale. So this was an initial order, but it was a really important order for us. And in the event that we see more orders from this particular company, we see it as a signal from them that they're standardizing on our fleet. And of course, those order sizes get well into the hundreds. And when I say hundreds, again, I'm not talking about a small ISR drone. I'm talking about a very sizable 9-foot drone that has incredible capabilities, is standing up cell towers, has tethered components to it and such. So -- and then, of course, a very notable subsequent event from Q3, which was incredible for us as a company and as shareholders was that we announced an order for our FPVs from the U.S. Army. Now this particular order, though we have to remain shy on some of the details of it, I can tell you that the reason that we won this order, I think, is -- I'd like to say it's because we have a terrific FPV platform that does have some incredibly unique features, designed from our experience being boots on the ground in the Ukraine since 2022, but I think the other reason that we frankly won this is that this particular order isn't just about providing drones, it's actually providing supply chain and logistical support. We're actually training this particular section of the Army to actually be assembling and manufacturing our drones so that they can do modifications on the fly. And then we're actually supporting that and providing the logistics for the resupply of all those drones into those locations. So it's actually Draganfly manufacturing on U.S. Army location and presumably, hopefully, locations. So really, really significant. It took about 1.5 years, maybe plus in order to actually put this order together. And it is one of the reasons that about 2 years ago, a little less than 2 years ago, I guess, about 18 months ago, excuse me, is why we still -- we started building out our capacity. So over the last 2 years, we basically had to cap our sales. We had to rebuild a bunch of our capacity in order to meet the demand of this and the other particular similar orders that we anticipate coming down from this. So just a quick review. This is our drone platform. This view here does not include the Outrider drone, which actually goes live next Monday on the Arizona border. And that drone itself would look very similar to the drone that's on the far right side, the Heavy Lift Drone, other than the fact that it has combustion engines on it as well. It can come with a variant of either 1 or 2 engines. It has the capability to fly up to 7 hours and carry 100 pounds of payload. That particular drone will be doing everything from communications, mesh networking, surveillance, reconnaissance, actual interdiction, logistical resupply, medical emergency support and many, many other things. I mean it is truly a drone that fits just an incredible array of use cases. So the event next Monday has over 100 people coming from multiple countries, all pretty border-focused. And the word that we're getting now is that we called this drone the outrider, but most people are calling it the border drone now because it's a purpose-built border drone. The TAM on border and border surveillance for drones is literally globally in the hundreds of millions of dollars per year for this particular product line. So we have some pretty high hopes and certainly, early indications are that this is going to be a leading driver of sales for us, even next year, even though we hadn't planned on it being a big driver of sales until 2027. You can see the other drone line up there, which I think I've explained pretty well in past calls. The key thing here is that they're all interoperable, all the payloads fit across it. If we've done an integration on one drone, whether it's with an AI and yes, our Flex, even the FPV drone there has AI incorporated into it, whether we do it with that drone or all the way up to the Heavy Lift Drone or the commander -- excuse me, the Outrider drone, you're working with the same common operating environment, the same connections, the same buttons in the same places, flight characteristics and so on and so forth. So it's also of note that the old DGI payloads that were supported by DGI, also fit into this modularity. So if somebody's got an investment into a payload, they got FLIR cameras, or they got whatever it is, and they're having to get rid of their DGI fleet, but they do not want to lose their investment into their FLIR cameras or their other payloads, those payloads actually integrate right into what we're doing as well. So again, it's just some experience there that's helped us think through how do we progress our customers into a new full product line. I won't spend much time here. But basically, the military impact for what's happening in the small UAV market is incredible. We recently saw in the last couple of weeks, the U.S. government talking about getting well over 1 million drones. And I know one of the questions that came in is, do we think we're going to get our piece of that. And certainly, that's what we've been planning on for years and working toward, and we are one of the few companies in North America that have that capability or capacity to be able to meet that demand. So we're pretty excited about what's happening there. We do have some validation around the Army orders that we previously sold in Special Forces and now into the Army as well as the many other initiatives that we've got going on across the whole Department of War. At this point, what I'd like to do is, I'd like to turn it over to Paul Sun, our CFO, to run through our financial highlights. Paul? Paul Sun: Yes. Thanks, Cam. Thanks, everyone, for joining. Appreciate it. Yes, just taking you through these tables here. Revenue for the third quarter was $2.16 million, up 14.4% from $1.89 million in the third quarter of 2024. Third quarter revenue did comprise of the $1.62 million from product sales with the balance coming from drone services that Cam mentioned at the outset. Gross profit, $421,000 this quarter compared to $441,000 in Q3 of last year. This quarter did have a onetime noncash write-down of inventory of $43,000. And otherwise, gross profit would have been $464,000 gross profit for Q3 of 2024 would have been $617,000 if we took away the onetime inventory write-down of $176,000 from the same period last year. So taking these noncash items into account, gross margin would have been 21.5% this quarter versus 32.7% year-over-year. Total comprehensive loss for the quarter was $5.4 million, compared to a loss of $364,000 in the same quarter last year. This quarter did include noncash changes comprised of a fair value of derivative liability loss of $1.8 million, that $43,000 inventory write-down that I mentioned and a gain on a notes receivable of $35,000. So otherwise, it would have been a comprehensive loss of $3.6 million. The same period last time had a onetime noncash change in derivative liability of $3.6 million. The $176,000 inventory write-down that I mentioned, and then a gain on an impairment note of $8,000. So the comprehensive loss from last year would have been $3.8 million. So the decrease in loss is due to primarily foreign exchange gain and lower professional fees, offset by higher office and miscellaneous costs, wage costs and share-based payments. If we move to the next slide, please. Yes, we just went through the year-over-year changes. So here, I'll do a quarter-over-quarter between Q3 of this year and Q2 of this year. Revenue for Q3 '25 increased $41,000 to $2.16 million, up from the $2.12 million in Q2 of '25, an increase of 2% due to higher product sales. The gross margin for Q3 '25, again, was 19.5% compared to 23.9% for Q2 '25. Again, if we back out that onetime inventory write-down mentioned before for Q3, and the $10,000 write-down from Q2 '25, gross margin, again, would have been 21.5% for Q3 and 24.3% for Q2, with the difference being product mix during the quarters. Total comprehensive loss for Q3, again, was $5.4 million compared to $4.7 million for Q2 of '25. And again, please recall, we had that loss in fair value of derivative liability of the $1.8 million, the write-down of inventory of $43,000, and the gain on the note of $35,000, so the comprehensive loss would have been $3.6 million. If we adjust for the noncash items in Q2, which included a noncash gain of a derivative liability of $180,000, a write-down of $10,000 of inventory, and a gain on a note of $8,000 that loss would have been $4.6 million. So the quarter-over-quarter decrease in loss is primarily due to the foreign exchange gain and lower professional fees, offset by wage costs and share-based payments. Going to the next slide, please. Yes, so just kind of looking at some high-level balance sheet items here. You can see total assets increased from the $10.2 million at the end of '24 to $77 million, which is largely due to the increase in cash over the year. Working capital as at the end of September was $69 million versus $3.8 million at the end of December. However, if we ex out the fair value of derivative liability of $3 million, working capital would have been a surplus of $73 million this quarter and $6 million at the end of December last year. Doing the same analysis for the shareholders' equity at this quarter end would be $73 million versus the $70 million shown and $6.8 million at the end of December versus the $4.6 million shown here. And as you can see, we continue to have minimal debt. And our company's cash balance, as Cam mentioned at the outset, was $69.9 million at the end of September, compared to $6.3 million at the end of December. And with that, I'll pass it back to you, Cam. Cameron Chell: Great. Thanks, Paul. So what I'll do now, if it's all right with everybody, is I'll jump into some of the questions. There's 9 questions that came in. I'll certainly do my best to be timely and answer them as thoroughly as is reasonably and regulatorily possible. So the first one that we've got here is it says you seem to have more cash on hand now than ever, what are the scenarios or use cases for any potential future raise? So we'll be opportunistic about potential future raises. We -- I think, we've raised less cash certainly than our comparables out there, and we're cognizant of cash being a strategic advantage. That said, we're highly, highly sensitive to dilution and shareholder value. So basically, we've got $70 million cash on hand. We're burning about $1.5 million a month. Things are scaling in a great way. Pipelines are -- literally, I can't even say the numbers because they're really truly unbelievable. So there's not an acute need to raise cash. And we certainly, as a company that's been around for 27 years, we're able to -- we think we have very good visibility to EBITDA positive and cash flow positive over some time here. That said, there are some key acquisitions that we're interested in. They are, to be clear, not necessarily acquisitions around technology or a particular product. Our acquisitions, which I think is a bit different than our comps out there are very focused on the people. So -- we have the -- we're in a fortunate position to be able to build what we sell and integrate what we sell. We're highly engineering-focused and customer integration organization. So what's most important to us is having the right team and people to be able to do that. So there are some pretty cool acquisitions out there that do have some great products and tech that fit with what we're doing, but they're probably not at the size or scale that maybe we see some of the comps out there doing because really what we're interested in is culture and how those people fit in, how we better serve our customers, how that can scale, how that can add to the scalability of what our customers are asking for us right now because the scalability that's being asked of us is truly astronomical. So us is not about layering in more acquisitions, which can sometimes be more problems. We're really about layering in the right personalities, people and leadership and technical capability in order to meet the demand that's at hand right now. And of course, those customers who are making those demands and they -- and that's kind of really where the market is at right now, we want them to be incredibly confident with the people that we're bringing on. So that tends to be a bit of our acquisition focus, which I think is probably another one of the questions in here. So in terms of raises, if we needed to do a raise for an acquisition, we would consider that. If it was opportunistic in the market, everybody says when the cash is there and you're in growth phase, you kind of really want to make sure that you do not take it. But we're going to be -- we're definitely going to be prudent about that to the best of our ability. So the second question that came in is, can you expand on the press release about manufacturing and overseas military facilities? How large is the potential here in terms of revenue? Are the financial metrics of this much different than manufacturing is done in North America, and then shipped as a final product? So I'll speak to the extent that I can about this. So the manufacturing in overseas facilities is very specifically in military facilities where they're manufacturing a Draganfly product. And it's a little bit more of assembly than manufacturing. The prime driver here is that those facilities need to be able to modify and have capabilities that they don't need to go back through a procurement cycle in order to order some new capability on a drone. They need to be able to do those modifications and such themselves. So they need to be trained in how to manufacture, how to modify, how to repair, how to change the product within the concept of operations that might be changing in their tactical situation at that time. And so that's really the driving premise. And then the other part of that is, is an Army base ever going to be able to do that on scale? If you think about what's happening in places like the Ukraine right now, you have individual brigades that are using hundreds of thousands of drones per month. And so you're not going to get that kind of scale on an army base. So you need a partner that can actually still provide that scale into your theater of operations while you still have the capability to actually make the modifications or drive your technology or tactics forward. And so that's more of the type of relationship that's here, which is why it is so strategic and such a big deal. In terms of scale, all I can say is that there's a lot of brigades in the U.S. Department of War and in all the NATO and the 5 I countries. And when I was at AUSA, one of the big announcements from the Army was that every soldier is going to be trained on a drone, every single soldier. And the reason is that if you think about those FPVs right now, which are not -- they're just the tip of the iceberg of what's coming, and they tend to be the focus right now. But basically, every soldier has a grenade that can go 10 kilometers. Now that's -- I mean that's what they choose to use it for. So the scale is absolutely enormous. But then when you also look at what's happening on the logistics side, on the resupply side and all the rest of it, and they need that embedded manufacturing capability, which is what we're calling it a hybrid embedded manufacturing, I really am not at liberty to say what the sizes are, but you can figure out pretty quick that it's numbers that are just completely astronomical. So the U.S. has stated that they intend to order millions of drones. Do you think we'll be able to get a meaningful piece of that? I do. And it doesn't have to be a big percentage of it for it to be meaningful. And the ethos that Draganfly is, we want to make sure that every one of our customers, whether they're military, industrial, commercial, whatever the case is, our job is to help ensure that our customer is unbeatable, absolutely uncompetable. And so again, whether that's a military or an industrial customer, what we like to do is add value. So will we eventually be the biggest drone manufacturer in the world or something? I don't know, and that's actually not our goal. We want to be the best partner to our customers that make them uncompetable. So we really want to continue to be that high-value, highly sought-after organization that brings a lot of experience and a lot of consciousness to the table in terms of the products and the services that we're able to enable our customers with. So the short answer is, yes, I think we can get a piece of it, and we'll just keep working to do so. Canada has said that they want to purchase Canadian-made drones. Can we expect meaningful orders from Canada and the Department of Defense at some point? I believe so. I can't give you predictability or any deeper insight, but I think we are as well positioned by far as anybody in the world to be able to provide that very big budget. We don't often think of Canada as a military force. That said, it's about the seventh-largest economy in the world, and now you get 5% of that economy going into rearming and reimagining what they're doing. And a very meaningful part of that is going into drone technologies as is all military budgets now because we've moved from into an entire new phase, where everything is actually becoming about -- not just about automation, but about autonomy. And the leading edge of autonomy is, quite frankly, drones, whether it's controlling autonomy, being autonomous, being in airspace, managing aerospace, all of it, drones are the leading edge of that. And so even small military budgets now are meaningful because so much of that budget is being focused into this particular area. So is border security still the main focus for the company? Yes. I mean, if Cochise County and the Southern Sheriffs is any indication of where we've been fortunate enough, very blessed to be able to be positioning ourselves as a border management specialist, not just with our drones, but with our tactical solutions team to be able to understand the ConOps and integrate the understanding of the ConOps into functional equipment, yes, border management, border security is a huge, huge piece of what we're doing. And I do find that we're pretty uniquely positioned there because it is a particular specialty that isn't just about ISR. When you've got folks coming over that border, you've got search and rescue situations, you've got human trafficking, you've got weapons, you've got armed militias, you've got drugs coming in. So the variance of what's happening is so incredible that you need to have a specialized team that really understands how to work with our -- with the law enforcement professionals and the super great people along the border that are holding our economy and our people safe in order to be able to provide that service. So again, those tactical solutions that we provide, the integrated services that we have at a tactical level are really our strategic differentiator for building great product. Do we see consolidation with the drone industry? For sure. Yes, there's -- I think we're going to continue to see a great expansion. A lot of small companies, they're talking about 1 million drones. They're talking about easing procurement. They're talking, what's going to -- like -- this is not an easy business. You're talking about putting aircraft in the air. And so any way you slice it, a lot of people can order parts off Amazon and think they can build a drone. But when you're talking about building drones at these levels, with these mission-critical requirements and/or flying them over people or vehicles or that type of stuff, I mean, you're just dealing in an environment that most people do not understand. Then on top of that, trying to scale production, that's a whole other set of problems out there. So we think there's going to be a big rush of folks. There is a big rush of folks into the industry. We've seen it 7 or 8 times before over the last 25-plus years. There's going to be fallout from it, and there's going to be great talent available out there, and we're hopeful to pick up some of that talent because there are super talented people in lots of organizations that are working on these problems, including our comps out there. I think our comps are probably obvious names, they're going to do great. There's kind of like the 4 or 5 companies out there that have kind of made it through some very lean times, have some capacity capability now, have some experience. And they've got enough scars like we all have enough scars where we're going to muddle our way through and be able to solve these solutions or solve these problems at scale. And so I think the industry in general is starting to shape up quite nicely. There's also a couple of privates that will do well. But yes, there's going to be consolidation for sure as there always is. So can you give us an update on what your production capacity is and if you had planned to increase in 2026? Yes. So our #1 focus is our organic capacity, which is -- can do up to about $100 million. And that's what we really want to make sure that we're streaming that in '26. And then -- but we are bringing on more capacity in '26, and so it will expand far beyond that, but our focus is on our organic capability. We -- part of the reason that we've got outsourcing capability that we're bringing on stream is for some of our supply chain management and being able to provide from different parts of the countries and different parts of the borders to ensure that we've got efficiency around tariffs, efficiency around manufacturing, delivery, supply chain, et cetera. So again, pretty unique positioning in terms of North American manufacturing and being able to suffice all parts of North American and European, in particular, manufacturing. So again, it wasn't part of the master plan, but it sure worked out well for us. And it was maybe a little part of the master plan, but not all that much. So can you tell us what percentage of revenues would be military versus commercial? Do you expect military to be a major part of your revenue going forward? Yes. Right now, it's -- I'm going to say we've had our revenue capped here for the last couple of years, and that's certainly now about to change very quickly or is changing very quickly. And I would say that military is, let's call it, 30-ish percent of that. But that will be -- next year, it will be 90% just one single order dwarfs the numbers that we've done for the last 3 years. And there's multiple types of those orders that are falling into place. So it could be 99%. We could see our commercial or our public safety market go up 200% this year. And military sales will still be 90% just because the individual order sizes, and then the resupply and everything else is just so absolutely mind-boggling. So what do you feel differentiates Draganfly? Our integrated practices, our integrated tactical services. That is a big differentiator for us. So when we worked on the Cochise product, we spent months on the border on horseback, on ATV. We understand the communication points where the holes were. We got to learn where the cartels were, how they think, what they operate, what are their techniques, like all of that stuff. And then we sat with the sheriffs of the southern border, and we spent the time designing what is the capabilities that they need to meet. So whether that was that instance, whether it's some of our industrial clients, whether it was the opportunity that we created over the last -- was provided to us, excuse me, over the last 2 years with this latest Army contract, it was that same process. It didn't start with the product. It started with understanding the concept of operations, the use cases, and then -- and really kind of figuring out, okay, what can make your situation such that we can help make you uncompetable. And I think that's our differentiator. Now further to that, we've got 25 years of experience that allows us to have a full product line. So we can actually leverage that and be able to provide those types of products out there and services. So at the end of the day, it's our people. And I hate saying that because it sounds like such a typical answer, but that is how we utilize the incredible talent that we've got in the company in order for us to be differentiated. I do think the fact that we've got manufacturing not just like on 2 -- across 2 borders is a big differentiator as well because that Canadian market has turned into a monster opportunity. And so that's pretty unique as well. So -- and I think ultimately, what will carve out a durable market share for us over the next 3 years, from a strategic standpoint, we're all about creating blue ocean opportunities. So there are a number of companies, and there's a whole bunch more coming that are going after that kind of Mavic 3 replacement, small ISR drone, which is a lucrative market right now. But ultimately, that market, in our opinion, what we've seen over the years is that's a market that's going to continue to get chipped away at. There's multiple players going after it. Right now, they're $30,000. A year from now, there'll be $20,000. 18 months from now, they're going to be $4,000 drones again. And maybe the comps out there aren't going to agree with me on that. And then the risk is actually -- there are -- everybody thinks that DGI came in and dominated the market. Well, we have to remember that the North American market was being dominated by multiple foreign manufacturers, primarily out of Asia. And if it wasn't DGI, it was going to be one of them that basically took the rest of us out in North America. It's just that DGI was so good. They were able to dominate those players as well. Well, a lot of those players were from countries that can produce NDAA-compliant products. So if I were to make a prediction, in a number of years from now, we're going to see the Eastern Europeans, we're going to see the Southeast Asians, we're going to see them in that kind of small competitive ISR prosumer space, again, with NDAA product. Now we got kind of like a 3- to 5-year kind of window here where that isn't going to be the case, but it's also not been a reason where we've really kind of focused on that particular product line. If you look at the rest of the other 5 products that we've got, they kind of skip over that piece. Now we've got some strategic alliances and such in that area so that we can address it with our customers, but that's just not a piece of the market that we've seen North American manufacturers be overly successful with. Now the market is very different, and I could be completely wrong on it. But notwithstanding, when we take on a market like the border, we're building a border solution, and we think that we've created a very unique scenario where we've got an addressable TAM where it's going to be very tough for other folks to compete in there because of the job that we do, making our customers so uncompetable. And so whether it's that particular product or the embedded hybrid manufacturing product or any number of the others that we either have and/or will be announcing, we like to create blue ocean opportunities. So we've got these pockets or hides of burgeoning high-margin business that are very attuned and custom and ideal for the products that we make. And that's a multibillion-dollar sales funnel, certainly over the coming years. And so we don't necessarily have to be, hey, let's go build a typical drone and have to be the #1 or the #2 player. We're -- even though we're a small company right now, we are the #1 or #2 player in the markets that we are addressing, and they are large total addressable markets. So on that note, I am going to wrap up the call. Rolly, thank you so much for all the work that you do. I know that I get so much feedback from shareholders about how candid you are, how hard you work, you're 24/7. And I encourage anybody that if you've got questions or anything that you need help with to reach out to Rolly. He also has the rest of the organization standing behind him in order to be of greatest service that we can be to our shareholders, all of which none of this would be possible. And then finally, just to our team members and to our employees, you're the most important thing that we have going out there. And that ethos of helping make our customers completely uncompetable is the ethos that keeps -- certainly keeps my passion going, and I see you guys executing that every single day with customers in ways just going deeper for them than I've seen across many, many organizations I've been lucky enough to be a part of over the last 35, 40 years of entrepreneurship. So I couldn't be more proud. Thank you so much, everybody, for being here and reach out if you have any questions. Paul Sun: Thanks, everybody.
Per Plotnikof: Hello, and welcome to this presentation of ALK's Q3 results and full year outlook, and thank you all for joining us. Let's turn to Slide #2 with the agenda and speakers. My name is Per Plotnikof. I'm Head of Investor Relations. And with me today are CEO, Peter Halling; and CFO, Claus Steensen Solje. We'll first share a couple of quarterly highlights, followed by a closer look at markets, products and financials. We will detail some of our strategic focus areas before we cover the new full year outlook. As usual, we'll end the presentation with a Q&A session. And to get us started, I'll hand over to Peter and Slide #3. Please go ahead, Peter. Peter Halling: Thank you, Per, and thank you all for joining this call. Q3 was characterized by a strong focus on execution of our key strategic initiatives. The pediatric tablet launches, a new partnership for China and the commercialization of neffy. Market responses to the tablet launches for children are truly encouraging. The rollout of the house dust mite tablet, ACARIZAX for children progressed well and continue to contribute to the inflow of new patients in Q3. Moreover, ACARIZAX is attracting new prescribers, not at least amongst pediatricians, suggesting that the children indications have the potential to expand ALK 's addressable markets. We also saw encouraging early uptake of the tree tablet ITULAZAX children and adolescents. In China, we entered into a partnership with GenSci, a strong local Chinese partner, committed to accelerating the uptake of ALK's house dust mite allergy products. GenSci has already taken over sales and marketing of ALUTARD, our SCIT product and skin prick tests. The partnership is projected to become margin accretive to ALK's midterm, largely driven by cost savings in China, combined with the income from product supply as well as upfront and milestone payments of up to DKK 1.3 billion. A couple of weeks ago, we introduced EURneffy, the adrenaline spray in the U.K., Europe's and ALK's largest anaphylaxis market. Meanwhile, EURneffy is gaining traction in Germany, our first market entry. The product was launched in July. Other market introductions are imminent, while still very early days, market response so far confirms the product's long-term potential despite long-standing clinical practices favoring traditional anaphylaxis products, which we will need to work carefully with. Financial results in Q3 were strong with double-digit growth across sales regions and product groups. Revenue grew by 18% and was higher than expected, while earnings were up 41% in local currencies, yielding an EBIT margin of 28%. Based on the Q3 result and the outlook for Q4, especially in Europe, we have adjusted the full year outlook. Revenue is now expected to grow 13% to 15%, while the EBIT margin is expected to increase to approximately 26%. Now we'll detail all of this later. But first, I'll hand it over to you, Claus, and Slide 4. Claus Solje: Thank you, Peter. So let's take a closer look at our 3 sales regions performance. Our main region, Europe reported 18% growth. The revenue growth was driven by sales of tablets, anaphylaxis products and SLIT drops. Q3 growth was, to a minor extent, positively influenced by some phasing of sales between Q3 and Q4. Tablet sales was up 23% on a broad-based growth across brands and markets. Let me also point out that we did observe that wholesalers carry slightly higher inventories, potentially indicating slightly increasing trading patterns, which is natural in a launch situation like we are in with the children tablets right now. Growth of the tablet business in Europe was, first and foremost, linked to higher volumes, driven by more patients on treatment, whereas prices and rebate adjustments had a much less impact. Volume growth was powered by new patients with the highest contribution coming from our house dust mite, ACARIZAX and the tree pollen ITULAZAX patients. The children indications for ACARIZAX contributed positively across markets, while the recent launch of ITULAZAX now has started to contribute to the patient inflow, especially in the key German market. Combined sales of SCIT, SLIT drops were up 7% in Europe. SLIT drops sales continued to benefit from an expansion of patient and prescriber bases in France. SCIT sales picked up temporarily due to one-off changes to patient supply patterns, but the underlying growth was still hampered by fewer patients starting up on our legacy products. Sales of other products grew by 39% in Europe, led by 44% growth in the anaphylaxis portfolio. Sales of Jext auto-injectors were driven by strong commercial execution, including newly won tenders in Southern European markets as a consequence of recent supply issues at our competitor. Revenue also included a modest contribution from neffy. If we turn to North America, then revenue increased by 20%. The U.S. business continued to bounce back from last year stagnancy, while the Canadian business sustained its growth. Tablet sales in North America grew by 20%. The pediatric indication for ODACTRA continued to drive a higher uptake among allergists and to a minor extent, new pediatric prescribers in the U.S. Growth in Canada was higher, driven by continued demand and volume growth, combined with some destocking at wholesalers. North American sales of SCIT bulk increased by 1%, while sales of other products were up 41% on higher volumes and better pricing of our life science products. Revenue from other products also included, as planned, a modest cost reimbursement from ARS Pharma related to our co-promotion agreement for neffy in the U.S. Revenue in international markets was up 14% due to the increased SCIT shipment to China. We resumed shipments to China in Q2 after the renewal of ALK's import license, and these continued in Q3, so that SCIT revenue in this region increased by 43%. In-market sales in China continued to grow by double digits. Tablet revenue in international markets was down 4% after decreasing shipments to minor markets, while revenue from the primary market, Japan, was unchanged. In-market sales in Japan grew by double digits, although capacity constraints still prevented our partner, Torii from fully meeting demand for the CEDARCURE tablets. Torii's new API manufacturing facility is now becoming fully operational, but it will still take some time before the extra capacity flows through the manufacturing cycle. Now let's turn to a brief update on the product lines on Slide 5. Global tablet revenue was up 17% on solid growth in Europe and North America, predominantly driven by higher volumes. All brands grew by double digits, except for CEDARCURE, which saw modest growth, as I just touched on. Combined revenue from SCIT and SLIT drops increased by 11% after progress in all sales regions. The main growth driver were the resumption of SCIT shipments to China and a very solid growth in SLIT drops in our big market, France. Revenue from other products increased by 42% and the anaphylaxis portfolio was at the front with 68% growth. It did actually very well across markets, and neffy also contributed to growth at this early stage of the commercial rollout. In conclusion, strong growth in all product lines and in all sales regions in Q3. After these quarterly updates, let's move to the year-to-date results on Slide 6. Revenue for the first 9 months of 2025 exceeded DKK 4.5 billion after 14% growth in local currencies. Growth mainly echo higher sales of tablets and anaphylaxis products. A gross profit of DKK 3 billion yield a gross margin of 67%, a big increase of 3 percentage points. These improvements reflected higher volumes, changes to the sales mix where especially European tablet sales contributed to the positive development. We also saw good production efficiencies coming through. The gross margin was also indirectly helped by the muted growth in tablet sales in international markets, which holds lower margins as a consequence of the partnership with Torii. In addition, we currently only have a minor contribution from the neffy business, which also holds lower gross margins compared to our European tablets. Capacity costs increased by 5% to DKK 1.8 billion. At the Q2 earnings call in August, after we upgraded the full year outlook, we said that we plan to take advantage of the higher-than-expected revenue to further invest in various growth initiatives. We started doing so in Q3, where R&D expenses were up 16%, while sales and marketing costs increased 3%. Still, the cost increase was lower than planned, meaning that you should expect higher capacity cost in Q4. I'll come back to that later. The operating profit, EBIT improved by 44% in local currencies to almost DKK 1.3 billion, raising the EBIT margin from 22% to 28%. The EBIT margin progressed due to higher sales, gross margin improvements and modest increase in capacity cost. Moreover, no one-off costs to optimizations were recognized, opposite to last year, where one-offs amounted to DKK 49 million. Free cash flow almost doubled to DKK 836 million. Higher earnings offset investment to scale up tablet production, upgrade legacy production and expand the anaphylaxis operation. We continue to use some of the cash generated to repay our debt. Cash flow from financing was minus DKK 736 million. This means our net debt-to-EBITDA ratio right now is down to minus 0.1, i.e., we do not have any debt at this stage. So all in all, a solid set of results, which further solidified ALK's financial position and confirm that we are on track to deliver on our long-term financial targets. So with this, I would like to hand it back to you, Peter, and Slide 7 for a status on our key strategic initiatives. Peter Halling: Thank you, Claus. Let me start by providing some additional insight into the important launches of our respiratory tablets for children. In September, the house dust mite tablet, ACARIZAX was made available for children in 21 markets, including 14 markets served by ALK and 7 partner markets. The more recent rollout of the tree tablet, ITULAZAX for children and adolescents now covers 11 markets with 2 more launches scheduled for Q4. So far, key indicators continue to perform well across metrics, including new patient interactions with caregivers, doctor visits, sales, prescribers, et cetera. In September, around 3,000 unique prescribers in markets served directly by ALK were estimated to have prescribed at least one of the two tablets for children. The prescriber base includes new pediatricians, indicating that we are gradually expanding markets. While it is still early days, the market response is encouraging. And if we are capable of sustaining these trends, the pediatric indications will become a very important contributor to ALK's future growth for many years. Within respiratory allergy, things also progressed in China. In China, we initiated a bridging trial to facilitate the approval of ACARIZAX. Recruitment of around 300 subjects is progressing well, and the trial is set to complete around '26, '27 turn of the year, so around January '27. Subject to approval, ACARIZAX could be launched in Mainland China in '28, where the tablet will be added to the portfolio marketed by our new partner, GenSci. Also a brief update on Japan, where our partner, Torii has become a subsidiary of Shionogi. Shionogi has expressed its commitment to our tablet portfolio and sees it as a core business pillar going forward. The ongoing Phase III trial with GRAZAX in Japan continues as planned. Now let's move to anaphylaxis and the commercialization of neffy, the nasal spray for emergency treatment of acute allergic reactions, branded EURneffy in Europe. We launched EURneffy in Germany in June and the market -- or the market share has increased steadily since while it is encouraging for longer-term potential of the product, it is still early days. A couple of weeks ago, EURneffy was also introduced in the U.K. So we now cover two of three key markets. The third market is Canada, where the regulatory review is still pending, but progressing as planned. Additional introductions like in Denmark are imminent and further launches are lined up for '26. In all markets where pricing and reimbursements have been settled, EURneffy has secured a price premium relative to adrenaline auto-injectors. We now also have real-world evidence from the U.S. supporting that neffy's effectiveness is consistent with the one of adrenaline auto-injectors, but neffy has advantages over auto-injectors in the form of user-friendliness, longer shelf life and temperature stability. Despite these positive achievements, it is most likely or will most likely take some time to secure market access and change long-standing clinical practices, such as automated renewal of prescriptions for traditional anaphylaxis products. That said, we are encouraged by the first indications that we've seen in Germany and the positive feedback we are getting from the medical community to this new treatment. We will build on this positive feedback, work to change the habits and behaviors and furthermore, allocate resources to pursue opportunities in other channels, including airlines and schools to name a few. Moving to food allergy. The U.S. FDA has granted a Fast Track designation to our peanut development program. This allows ALK to benefit from more frequent interactions with the FDA, and it highlights that the agency acknowledges that food allergy represents a significant unmet medical need. We expect this to support the time line for the program. The ongoing Phase II trial with the peanut tablet in North America is on track to report top line data in the first half of '26, most likely towards Q2. At the same time, the planning for Phase III is ongoing. So to sum up, then we, in general, see good progress across all disease areas. And with this, I'll hand it back to you, Claus, on Slide 8. Claus Solje: Thank you, Peter. So let's end with the outlook for the year. As Peter said previously, we adjusted the full year outlook slightly. We are now looking at 13% to 15% revenue growth in local currencies versus the previous outlook of 12% to 14% growth. The new outlook is based on a few things: double-digit growth in tablet sales, driven by more patients and prescribers. Single-digit growth in combined SCIT and SLIT drops sales, double-digit growth in sales of other products, particularly anaphylaxis. During the spring, we indicated that the children indications and neffy launches would contribute with around 1 percentage point of the growth in 2025. Based on what we have seen over the past quarter, we now believe that these 2 items will contribute with 2 to 3 percentage points of the anticipated revenue growth. In parallel, we adjusted the EBIT margin outlook to around 26%, up from the 25% we expected before. This corresponds to an improvement of 6 percentage points, fueled by sales growth, gross margin improvements and the optimizations. Also, we don't expect any one-off this year, opposite to last year, where our one-offs cost totaled DKK 75 million. The new outlook implies that total revenue is projected to grow by around 13% to 18% in Q4. We expect the strong underlying momentum for tablets to continue into Q4 with a strong inflow of new patients during the ongoing initiation season in Europe. However, please notice that Q4 growth in tablet sales is expected at a slightly lower level than in the first 9 months due to phasing of product shipments to Japan and potentially inventory fluctuation at European wholesalers. The Q4 EBIT margin is expected to be lower than in the first 9 months, reflecting what I mentioned before. We are increasingly allocating funds to growth initiatives like the children launches, neffy and the Phase II peanut trial. This includes new hires, which will lead to increased capacity costs in Q4. We will obviously carry these costs into 2026, but we will do so without jeopardizing our financial ambitions. A 25% EBIT margin target for the next years is still our expectation. We believe the new outlook for 2025 adequately balances risk and upsides. Hence, we expect 2025 to mark the seventh consecutive year of revenue growth and improved earnings, fully in line with ALK's long-term financial ambitions. And with this, I would like to hand it back to Per and Slide 9. Per Plotnikof: Thank you, Claus, and thank you, Peter. And we will now turn to the Q&A session, and I kindly ask the operator to go ahead, please. Operator: [Operator Instructions] The first question today comes from Thomas Bowers with SEB. Thomas Bowers: I have 3 questions here. So firstly, just if we look at your new patient starting in '25. So you are stating that it's well above 10% the outlook of tablets in '25. So what if you exclude the impact from the pediatric indications, would you still say that you are still above that 10% of new adults starting for this initiation season? And then second question, just on gross margin. And of course, now we're looking at 2 percentage points year-over-year. So that's, of course, quite impressive. But how much is -- first of all, how much is structural improvements, so the scrapping -- less scrapping and yields and compared to what you see here from the product mix? And also, how should we think about gross margin improvements in '26? Will this then be flat also because we are facing maybe some headwinds on product mix with Japan, China and neffy here? So any color would be appreciated. And then my final question here for now. So just on the R&D spend. So first of all, what is driving this extreme back-end loaded R&D spend phasing into today -- well, implied for the Q4 in order to stick to that 10%? And maybe also in regards to your midterm guidance or targets. So going for that 10% in '26, is that still achievable with the quite strong top line performance you have here? Because I guess most additional investment you can plug in is related to sales and marketing. So any color on how you are trying to keep that 25% EBIT would be appreciated. Peter Halling: Thanks, Thomas. This is Peter. So let me just start out with your patient question. And Claus, maybe you can jump in on the gross margin, and we can -- one of us can take the R&D spend as well. So just on the patients on the adults, we expect approximately 10%. Do keep in mind that it's still initiation season. So we're still kind of seeing the intake of patients and obviously learning, but we expect it to be around the 10%. And then to your first part of the question, yes, we saw, as we also stated, a positive surprise in terms of the intake of children. I think it's important to say that part of the reason for why we have been a bit conservative around this has been we had obviously an assumption that there could be this famous catch-up effect where you see a big inflow with people on waiting. But so far, it has continued, especially with what we've seen on the house dust mite. So that has obviously been positive and driving it upwards. So that's the patient side. On the gross margin? Claus Solje: Yes, Claus here, let me take that one. Thomas, it's a good question. And you're completely right that we are seeing a better gross margin improvement than what we had expected. And that's also why we have been able to lifting the outlook for the EBIT. To your question about what is it actually that are driving it, most of those 2% are actually, if you look at it, coming from the volume mix of products here. So we are simply selling products with a higher margin. And then you can say, so what about the yield and the scrap and variance improvements and so on. They are also there, but it's important to understand that we also have the inflation increase on our production inputs into the manufacturing area. And actually, as it stands right now, then we expect for this year that the increase in inflation to our manufacturing input is being counterbalanced by the improvements in the variances and the scrap and so on. So these two are actually outweighing each other. And that means that the approximately 2% net that you then see is coming from the product mix, selling more tablets to a higher margin. If you look into '26 on that one, we are not guiding on '26 right now. That's a bit early. We will do that in February. But I can put a bit more flavor on it. You are right that when we come with improvements, as you can say here, around 2%. Then remember, we have normally said that we would like to increase the gross margin 0.5% to 1% year-on-year. That's how we try to improve the gross margin year-on-year. But of course, with such a significant increase in '25, then there could be some headwind next year. And you're also pointing actually to the right reasons, and that's respectively our partner markets. So next year, you will see an increase in shipments to Torii for lower-margin products. You will see now our partnership with GenSci that also has a lower margin. And you will also see increase in neffy sales also to a lower margin in '26. So these trees are actually, you can say, a drag on our gross margin. We will still have increased tablet sales. So don't worry. We will also work on lower scrap and improvements in the yield and variances. So we will also have that to counterbalance. But it is a good idea to take those partner markets and partners into consideration when trying to forecast on the gross margin next year. Peter Halling: And I think, again, just repeating our long term is obviously the 25% EBIT, but we are making active choices in investing in the business back to what we also stated during Capital Markets Day. But obviously, we are happy with both where the gross margin is and also the ability to deliver above the 25% on EBIT. Just to your last question on R&D spend, I can start and also on the sales and marketing and Claus can chip in and Per. But basically, you see the increase due to the trial activity. We just talked about China. We also talked about the continuation of peanut et cetera, and the investments into those, that is naturally increasing. We are preparing for the next phases of the study. So overall, that is part of driving the cost upwards. We've said long term that we will be between 10% and 15%, but we also said that the 15% is more on the extreme end, we should expect more the 10% to 12% overall. Do remember that with the Phase III trials coming in, then obviously, R&D spend will go up. They are naturally more expensive. So anything to add, Claus? Claus Solje: No, I think it's very right what you're saying. And just to maybe add, besides the Phase III trials that we are starting up next year, and we are already starting to prepare for those even actually before we know the results from the Phase II because we, of course, feel comfortable around that. So we have to start planning and that will then hit the 2026 numbers. And then you are right, we will also see an increase into the commercial space next year, like we will see in Q4, children launches, neffy and so on. So when you combine both the Phase II and Phase III next year and the extra investments into our 2 very important commercial launches and activities rest of this year and next year, then we feel quite comfortable about the long-term financial EBIT around the 25%. So that is still the plan. I hope that explains Thomas, for all your questions. Thomas Bowers: Very good. Maybe if I can just ask a follow-up in regards to -- maybe we spill over to the product mix comment. So I'm just curious on Japan. So some very upbeat comments from Shionogi recently. But of course, there's a standstill. So anything we should look into in regards to product mix? Because I guess probably we could see still some low numbers in Japan already from the beginning of the year. So any comments on when that standstill will potentially end? Peter Halling: No. So I think that the short answer there, Thomas, is that we do expect to see growth in Japan. And the facility that Torii is inaugurating is expected to come online. So we actually believe that next year is going to be a good growth year in Japan. But obviously, there is a timing element to it, and that is key for us going forward. When will the cedar pick up based on the pass-through of the manufacturing of the API. So that is coming. But we do see that things are coming online. Shionogi committed to both the partnership, but certainly also to the market. And hence, we are very positive around the future trajectory in Japan. Operator: The next question comes from Jesper Ingildsen with DNB Carnegie. Jesper Ingildsen: I also have 3 questions. Firstly, coming back to the pediatric launch. So you highlight now that you are expecting to see 1 to 2 percentage point contribution from that launch in this year, considering sort of like the momentum we're seeing here and continuous rollout, any flavor you could provide in terms of sort of like what we should expect going into next year? I guess, Thomas' question to some extent in terms of new patient starts alluded a bit to that as well, but just any more -- if you can give any more flavor on that? And then secondly, on neffy, I think ARS Pharma the other day mentioned that the launch in Germany is off to a strong start. I think they even said the market share capture was 3x higher than what they have seen in the U.S. just in the first few months. If you could give a bit more flavor on that launch and what's potentially driving that faster share gain compared to the U.S. in your view? And then lastly, on capital allocation, your balance sheet is obviously looking increasingly strong. Just any update on what we should expect there in terms of buybacks, dividends and then just M&A in general. So like what's your view at the moment? Peter Halling: Thanks, Jesper. Let me -- it's Peter. I'll start out with the first 2, and Claus, if you take the capital allocation, then and chip in any time. But just on the first, as you know, we cannot guide on next year. But obviously, we have upgraded what we saw this year on the [ P ] side. This is, as we also stated, driven mainly by ACARIZAX, and we saw the continued influx of patients, obviously, positive. Early on the ITULAZAX initiation season in terms of getting data, we are positive. We have seen a good influx, but I think it's premature to say a lot more on that one at this stage. But I'll just say, overall, we remain positive also due to the fact that we've seen these 3,000 unique or new prescribers coming in. So overall, positive. But I'll just caution that we still have data coming in, and we need to be a lot wise on that one. So that's as much as we can say. Then neffy and ARS' comment on Germany. It is correct that we've seen a good start in Germany. The game right now is very much around market access. It is very much around securing that we also have an inflow or we make a move into the automated renewals. That is where a lot of the existing market lies. So we need to continue to focus on that. But we are also encouraged not only by the uptake we've seen in Germany and the market share gain we've had so far, smaller volume market, though, but actually also in terms of the mix of the prescribers, both a strong growth with general practitioners, which is not where we send our people physically. So our online effort and digital effort has worked well, but also in other prescriber groups. So that is obviously a positive. But I'll just again, especially because it's early days and the volumes are a little more up and down in markets -- in smaller markets, I'll also caution that we'll see some swings, obviously. But that being said, ARS and we appreciate the positiveness on their side, then it's absolutely good to see so far. So I'll leave it there. Claus, on the capital allocation. Claus Solje: Yes. Thanks for the question, Jesper. Good question. There's no doubt, as we have also said, then this is a quite unique year for ALK on the cash situation. If you go a few years back, then that was not a big challenge for us related to cash because we didn't have that much. This year, we are guiding for more than DKK 1 billion in free cash flow related, of course, to the much higher sales, the gross margin and the EBIT coming in. So a strong year this time. Related to how we are going to spend it and how we are looking at it, then we have already communicated around our long-term financial targets and when we had the New Allergy Plus strategy back at our Capital Markets Day that first, we would like to invest into our commercial opportunities, the children, the neffy and so on and then the R&D. We will, of course, also invest into tablet manufacturing and make sure that we invest for the future there. Right now, we have capacity. We are producing 300 million to 400 million tablets every year. We can go up to 800 million, and we need to make sure that we can continue to deliver the millions and soon billions of tablets to the market. We also have, as we have communicated, activities on the BD, business development part. You saw the neffy collaborations, you saw the China one. There could be some activities there where we would like to invest into. And then when we have looked at all this, then we have also said very clear that we don't want to be a bank. We will not sit with cash on the balance sheet for a long time. So if we are in a situation where we cannot spend our own cash flow coming in, including what we have in the bank already on the things I just mentioned, then we are, of course, looking into dividends, share buybacks or what it will be. But this will be a discussion with the Board, of course, here around the Annual General Assembly, and then we will come back with an answer there. I hope that explains, Jesper. Operator: [Operator Instructions] The next question comes from Sushila Hernandez with Van Lanschot Kempen. Sushila Hernandez: Just 1 on neffy as well. So you mentioned in Germany that there is a long-standing clinical practice favoring traditional adrenaline products. So what is your strategy to move away from this? And also any color on how this is looking for the U.K. market? Peter Halling: Okay. So I can start on the neffy. Firstly, thanks for the question. Good question. So this is obviously a -- for classical, I'll try to just dial it back. What we are seeing is, obviously, you have a pattern with the prescribers where they are doing automated renewals. So as a patient, you will call down once a year and you'll get your renewal on your adrenaline pen. What we're seeing, obviously, now coming in with a new product is that not only the doctor, but the whole practice needs to be educated and you need to get in the system, including also ensuring that the patient, on the sense, have seen the product. That is part of changing the existing prescription patterns. Then there's the whole influx of new patients created through patient awareness, a lot of attention from doctors in terms of new products, et cetera. This is where we obviously have a big focus, that is ensuring that there's education, training of doctors, KOLs, et cetera, ensuring that we are present at conferences, et cetera, and also that there's a general awareness in the public. This is back to my comment around the digital effort where we are putting a lot of focus on this. And then obviously, with the nurses and the other practitioners, this is where our team have an ongoing dialogue with the clinics, and we ensure that both KOLs and others are participating in the training. That goes not only for Germany, that goes for any of the markets we are present in. So that's the answer on neffy. Yes, Per, please jump in. Per Plotnikof: Maybe add on U.K., which was also part of your question. And as you know, we have launched in U.K. We secured pricing. And now the next step is to make sure that it's also anchored in the local formulary listings. And that is going to be the key focus here over the coming months in the U.K. So before we get a sense of how it fares in the U.K., I mean, we are into next year in reality also now considering that we are moving into the low season, the classical low season for anaphylaxic product in Europe. But here, in the short term, the focus is really on making sure that it's anchored in the local integrated care trust and systems on the formularies. Peter Halling: Did that answer? Operator: This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks. Peter Halling: Thank you, operator, and thank you for your good questions. Before we end the call, I would just like to draw your attention to our Q3 road shows, which brings us to Copenhagen, to Canada, to London, Oslo, et cetera. And we hope certainly to see you around some of these events. As always, you're most welcome to contact either one of us if you have additional questions. And with this, we will end today's session, and we wish you all a good day. Thank you very much.
Operator: Good afternoon, everyone, and welcome to Equatorial Group's earnings conference call for the third quarter 2025. Joining us today are the company's CEO, Mr. Augusto Miranda; Vice President, Mr. Leonardo Lucas; Regulations Director; Mr. Cristiano Logrado; Financial Strategy and Investor Relations Director, Ms. Tatiana Vasques; and Mr. Liu Aquino, President of Echoenergia, all of which will be available at the end of the presentation. Please note that a simultaneous translation too is available on the platform. To access it simply click on the interpretation button and choose your preferred language. This conference is being recorded and will be available at the company's Investor Relations website, ri.equatorialenergia.com.br along with the presentation shown today. [Operator Instructions] Before we begin, please be advised that any forward-looking statements made during this conference are based on the beliefs and assumptions of Equatorial Group's management and on information currently available. Such statements involve risks and uncertainties as they refer to future events that may or may not occur. Investors, analysts and members of the press should be aware that changes in the macroeconomic environment, industry conditions and other factors could cause actual results to differ materially from those expressions of such forward-looking statements. We will give the floor to Mr. Augusto Miranda, who will begin the presentation. You may proceed. Augusto da Paz Júnior: Well, good afternoon, everyone, and thank you for joining our earnings call. We had a very successful quarter on both the operational and financial fronts. In addition to important recognition that reflects the team's seriousness and commitments to our customers, employees and investors, Equatorial Pará was recognized as the best distributor in economic and financial management in Abradee award. Equatorial with the group appeared for the first time in The Great Place to Work ranking among the best 20 companies in the country. And we were once again elected by extel as the Most Honorable Company in the Utility segment in Latin America, ranking 7 of the 8 categories. On the operational front, we delivered strong results and energy distribution, which grew 2.6% in build and compensated market volume, maintaining a solid loss performance trend in the recent quarter. We achieved a contractual DEC target or CEEE-D which will be detailed later in the presentation. On the financial front, we delivered solid results with EBITDA of BRL 3.4 billion. We invested BRL 3 billion and still close the quarter with BRL 16 billion in cash, which means our short-term debt is 2.1x. Now the cash for the period was strengthened by an intense funding window, which totaled BRL 9.4 billion, extending average debt maturity from 5.5 to 5.8 years. It is important to highlight that part of the funding raised is intended for debt repayment approximately BRL 800 million. And during October and November, we also prepaid 2 additional BRL 2 additional billion. With this financial position, we ended the quarter with a net debt-to-EBITDA covenant of 3.3x. Regarding the group's value creation highlights, we closed the sale of the transmission segment. And as a result, announced one of the uses of the proceeds, the distribution of BRL 1.8 billion in interest on equity, equivalent to BRL 1.45 per share, which will be paid next Monday, November 17. The Federal Court of Accounts approved the renewal of the Equatorial Maranhão concession. We are now in the final stage of the process and pending ratification from the approval of the Ministry of Mines and Energy. I will now give the floor to Leo to speak about our economic and financial performance. Leonardo da Silva Lucas Tavares de Lima: Thank you, Augusto, and good afternoon, everyone. I will briefly discuss the group's economic and financial performance from a consolidated and adjusted perspective. In this quarter, we delivered margin growth of 4.5%, driven mainly by the solid performance of distribution segment, while EBITDA reflected the impact of consolidating SABESP equity method results. The quarterly outcome was achieved with a strong cost discipline with PMSO increasing only 0.7% quarter-on-quarter. Adjusted net income for the period increased 4.9% year-over-year reaching BRL 830 million. If we look at the group's debt position, the net debt-to-EBITDA ratio came in at 3.3x, impacted by the one-off reversal recorded at SABESP relating to the accounting in the third quarter '24 of the concession financial asset. It is worth noting that this quarter, we were very active in the debt capital markets, focusing on improving the debt profile, which extended the average maturity from 5.5 to 5.8 years in addition to reducing spreads. Finally, we highlight the investments made during the quarter, totaling BRL 3 billion, an increase of approximately BRL 600 million vis-a-vis the same period last year. This growth was driven by investments in Pará to [BRL 129 million] and CEEE-D with BRL 161 million both of which have tariff reviews scheduled in the near term. This quarter, we recorded a 206% increase in maintenance and renovation work. Let's go to Slide #7. On the slide, we present the consolidated performance of our electricity distributor, where we highlight the reduction during the quarter. To the left, very briefly, we present the consolidated performance of our energy distributors where we highlight the reduction of losses during the quarter, making the eighth consecutive quarter in which we consolidated losses below the regulatory benchmark. We highlight the consolidated growth in energy volumes across our concession. In this quarter, we recorded a collection rate of 99.2% and PECLD over ROB of only 1.02%, driven by the renegotiations carried out during the period and the new low-income tarif. In addition to the improvement in CEEEs indicators, which were still affected by distortions linked to the weather events in the second quarter '24. As Augusto highlighted, we achieved the contractual debt target for CEEE-D. And on a consolidated basis, we ended the quarter with all of the group's distributors within the regulatory limit for FEC. 4 of the 7 distributors meet the regulatory DEC limit. If we consider the contractual DEC thresholds, 5 of the 7 distributors would be below the DEC limit. We recorded gross margin growth of 5.7% in the distributors during the quarter, reflecting a higher POB tariff and a larger market volume in the period. If we adjust the distributed generation liability, recorded in the third quarter '24, the margin would have grown almost 8%. If we look at the adjusted PMSO for the distributors in the quarter, we had an increase of 4.6% slightly below inflation and a smaller variation of PMSO per consumer, which is only 1.8%. These dynamics resulted in a 8.1% increase in adjusted EBITDA for the Distribution segment. If we exclude the distributed generation liability in the third quarter '24, the increase would be 11.5%. We now go on to Slide #8. In this slide, we present an overview of the challenges that we've faced in Rio Grande do Sul and their impact on investment and service quality. When we acquired the concession, the historical record of weather events indicated an incidence of 2 to 3 events per year, but we were faced with the beginning of the concession with a significantly more challenging scenario. Due to the severity or high frequency of emergency situations, we have to postpone certain necessary investments for the distributor. We can clearly see on the chart that once we were able to operate in a concession fully, the results appeared quickly. When comparing the third quarter '25 with the third quarter '24, which was the first quarter after the state of calamity in Rio Grande do Sul, we show an impressive 9.1 hour reduction in the 12 months DEC during which we invested BRL 1.3 billion in that concession. In the third quarter '25, we reached the contractual debt target established for year-end. This outcome reinforces some of the pillars we have in the distribution segment. Among them are relentless pursuit and commitment to quality and our operations, besides our dedication to delivering improvements in operational performance and service quality that is truly lasting. We thank all of the teams for their herculean and tireless efforts over the past quarter in the search for these results, and we reaffirm our commitment to continue to improve across multiple fronts, energy with increasing higher quality for our customers every day. Very well. Let's go to Slide 10 to look at the other segments of the group. In the transmission segment, we completed the closing of the asset divestment transaction on October 31, concluding one of the most successful capital allocation cycles in the transmission sector in Brazil. We sold 8 transmission companies with a MOIC of 8.3x and an internal rate of return of more than 37% per year. The deal closed with an equity value BRL 6.4 billion, including the capital reduction carried out a few days before closing. The proceeds for the sale will be used for shareholder remuneration, debt reduction of the holding company and partial redemption of preferred shares at Equatorial D therefore contributing to lower CDI linked-financing costs. Moving to water and sanitation. The segment's results continue to reflect progress in hydrometer installation. This quarter, we reported EBITDA of BRL 2.2 million, up 68% vis-a-vis the same period last year. In the Renewables segment, we reported EBITDA of BRL 226 million, 8.1% lower, reflecting the effect of curtailment this quarter as a subsequent event. We highlight the approval of provisional measure of 1304, which still requires presidential sanction and establish important advances in this sector regarding the impacts of curtailment. I will now hand the call back to the operator for the question-and-answer session. Operator: [Operator Instructions] Our first question is from Luiza Candiota from Itaú BBA. Luiza Candiota: I have 2 questions. The first is more specific. If you could give us more color on the nonrecurring effects of this quarter, the amount draw attention, especially in the line item, other expenses and revenues, we have received several questions about this. So which were the main impacts here? The second question refers to the partial exercise of preferred shares. This raised a significant amount. I would like to understand the motivation underlying that decision and how does the company look upon this type of structure in preferred share going forward. If we consider the tax reform that is about to be approved. Augusto da Paz Júnior: Leo? Leonardo da Silva Lucas Tavares de Lima: Thank you, Luiza, for the question. Regarding the operational effects, it's important to underscore the following. This line item is connected to the investment dynamic and it has terrible volatility. I think it's also representative of our cash. If we look at the comparison with the second quarter '25. There were revenues in that line item. If compared with the third quarter '24, the expenses were close to 0, showing you that incredible volatility we have in that line item. Regarding the variation in other expenses for the period, this results mainly from nonrecurring events of the third quarter '24 that added up to BRL 130 million, BRL 95 million referring to the reversion of provision of our stock, especially in Goiás, Pará and Rio Grande do Sul. And the receivable of an indemnization that completes the difference. We also had a significant increase, as we mentioned in the presentation of 200% in work for maintenance and renovation this quarter, especially in Pará, Rio Grande do Sul and Goiás. All of the impacts, the deactivation of the residual value of assets with a growth of BRL 32 million in the quarter and the cost for the withdrawal of these obsolete assets. And finally, we had a nonrecurring effect in Pará of approximately BRL 50 million for the elimination of services worked from the past. This explains the variation. It truly is a line item with a great deal of volatility that concentrated on this quarter. Now as an interesting instrument, we have what you mentioned, we made a very interesting use of it. It is an instrument that doesn't allow you to use the market pool, especially at the moment of expansion. In the recent past, we went through several acquisitions, and it became very important during that period. At moment when we foster the sale or recycling of assets, we carry out this movement to disarm to do away with the support that we used in that period of acquisition. It's a tactical movement for that moment. We understand that we're making an appropriate use of this instrument. And it is a very interesting tool that might make more sense in the future in different circumstances. Operator: Our next question comes from Mr. Daniel Travitzky from Safra. Daniel Travitzky: You mentioned the sale of the transmission assets that could be used to remunerate shareholders. And yesterday, you announced a new program for share buyback I would like to better understand the company's mindset when it comes to dividends and shareholder remuneration going forward? That is the first question. The second question, if you could comment on the strategy that you're thinking of to participate in sanitation auctions in the coming year. If this continues to be a segment that is a focus for the company? And how do you foresee the opportunities that arise in 2026? Augusto da Paz Júnior: Thank you, Daniel, for your question. In fact, we carried out a very broad destination of the resources from our sales we kept a part to remunerate shareholders. Our buyback plan was coming to an end. And this is a very interesting instrument to have actively at any moment in time because we need to have shares in treasury to face the long-term incentive but also to have that option as we did in the past to carry out acquisitions or purchases of our shares and sell them or limit the shares we have, depending on the moment. We are going to have a year of a great deal of volatility, and it is at those moments that this option makes ever more tense. For that reason, when we saw that the plan was coming to an end, we start out the approval for a renewal exactly for the purposes that I mentioned for the options that I mentioned. Now regarding the sanitation auctions, penetration continues to be an important avenue of growth, a very broad avenue. We have always been very active looking at this seeking a certain angle to make important moves here. We intend to continue to be active in our search. And if we find attractive opportunities, competitive opportunities, we will move forward. Operator: Our next question comes from Mr. João Pedro Herrero from Santander. Joao Pedro Herrero: We saw that in Ministry the -- in September, I'm sorry, the Ministry opened up a consultation now to see the mindset of the company. Do you deem this to be a relevant opportunity? Second question, refers to the tariff in the North and Northeastern regions that the parcel has a higher amount vis-a-vis other regions. In other regions, is there space to implement this tariff and which is the cost benefit of doing this? Cristiano de Lima Logrado: This is Cristiano. Our view is the following the process of digitization has to be done very cautiously. And I think the minister was assertive at gauging this at 4% a year, and then we will think of a plan to do this. Why does it demand caution? It's not only about changing the meters we can put in smart meters and not change anything else. The possible benefits may be lost. There is a process of learning regarding the benefits that this will bring about. And we have to think about the regulation and the obligation of delivering bills. If we're carrying out remote reading, of course this will have a benefit. In that context, it represents a significant opportunity, but it will depend on additional elements that we have to work with alongside the ministry. Regarding the tariffs in the North and Northeast, most of the population in those states has a strong benefit full exemption in terms of kilowatt per month. So they're exempt from the tariffs basically if you look at the provisional measure 1304 that is about to be sanctioned. There are some elements that will increase the cost. They will increase the pro rata of CEEE-D and broaden the market. So we could accommodate an eventual growth therefore. So there are several elements present, and we cannot -- I analyze this in isolation when it comes to the provisional measure. Operator: Our next question comes from Mr. Raul Cavendish from XP. Raul Cavendish: My doubt is that debate on the 1304. We have debated the unfolding of this, especially from the viewpoint of curtailment. Now what is your view on these prices and the technical note on reclassifying consumers according to the white tariff? Now with these changes proposed, which would be your projection? Augusto da Paz Júnior: Leo will answer this question for Raul. Please, Leo. Leonardo da Silva Lucas Tavares de Lima: A very good question. The impacts of the 1304 are linked to the structural changes we observed in the system. We have less flexibility in the system. And of course, this demands a price signaling that is compatible with oversupply and over demand. This includes that white tariff we are attempting to show a more adequate price and more adequate incentive for the system so that it can self-regulate. In that sense, I think it is doing well. There is that issue of curtailment which does not fully resolve the curtailment problem in the provisional measure. But the idea is to deconcentrate the risk of curtailment that is very focused on centralized generation. So we think that there have been strides made in this direction. If you could further explore that idea of the white tariff, can this increase the addressable market for service rendering for wholesale retail market provision? Could this be a business segment that will gain relevance over time if that proposal is approved? Yes. Doubtlessly, the market trend is that the energy market will become a more flexible market, and the white tariff is simply a first step. Our expectation is that we will see evolution potentially in terms of prices. And in the model, the pricing model. When we look towards the future, this is the path that we expect. Operator: [Operator Instructions] The question-and-answer session ends here. We would like to return the floor to the executives for the company's closing remarks. Augusto da Paz Júnior: Well, thank you very much. Now to conclude, I would like to once again reinforce our commitment with a continuous value creation agenda we pursue for our investors. Through the delivery of consistent results across all segments in which we operate always guided by disciplined, financial management made possible by Equatorial's culture. I would like to congratulate the IR team for the results once again in the extel ranking and remind everybody, they are available to assist you with any questions after this call. Thank you for your interest in the company and for joining us. Operator: The conference ends here. We would like to thank all of you for your attendance. Have a very good afternoon.
Christopher Laybutt: Okay. Good morning, everyone. It looks like we've got most people dialing in. So terrific. Thank you. Thank you very much, and good morning. Welcome to the United Utilities Fiscal '26 Interim Results Q&A session. My name is Chris Laybutt, as you all know, and I'm delighted to play the role of host for this session. Today, I'm joined by Louise Beardmore, CEO; Phil Aspin, CFO. We'll stick with the usual format. Christopher Laybutt: So if you'd like to ask a question, please raise your hand or shoot through an e-mail or a Bloomberg. And I think leading us off this morning is Julius. You were first off the rank. So please go ahead. Julius Nickelsen: I guess 2 for me. The first one is you mentioned in the presentation that like the emergence of new investment drivers that I think there's also PFAS mentioned on the slides. So just wondering, are you referring to this more like after AMP8, like into AMP9? Or is that something that we could already see now through the reopeners in AMP8? And if so, give you us any indication on how sizable that could be? And then secondly, I mean, given that I'm the first on the line, obviously, I have to ask on your expectations on Cunliffe and the white paper that comes out in December, just in terms of like which recommendation do you think we'll be taking? And what's the process? What's the time line? Any color would be appreciated. Louise Beardmore: Fantastic and nice to see you this morning, Julius. Thanks for the question. Let's take the reopeners and the growth first. I think as we went through AMP7, there were a number of opportunities for additional growth items. We saw that with green recovery. And we've been really clear both when we spoke to the capital markets and also in terms of interactions with regulators that we see lots of opportunities for growth drivers as we move forward, both in terms of additional housing, new legislation that's coming through, whether that be new drivers that we can see emerging data centers, additional areas of growth from the government. And we are engaging with regulators, as you'd expect us to in terms of those opportunities, and we expect them to play through just like they did in AMP7. You're absolutely right with AMP8, there were a series of reopeners that were actually stated in addition to those and they're particularly around asset health and the opportunities to drive asset health improvements. And so we are engaging with regulators with those conversations. In relation to Cunliffe and the white paper and the time line for the white paper, I think, look, in terms of when the recommendation of the report that came out in the summer, there were lots of recommendations, 88 in total, many of which very investor-friendly in terms of the things that Cunliffe was promoting and suggesting. And we're now obviously waiting for the government's response. We expect that to be in December. But what I think is probably useful is to just look at what am I seeing and feeling in relation to intent. And I think there's a couple of things I'd point to. The first is Emma Hardy, when she spoke at the Moody's conference, was very, very clear about her desire to drive those recommendations and also for the white paper to be out before Christmas. I met with Emma Reynolds last week as the new Secretary of State. And again, she is very, very clear. She's picking up the recommendations. She's driving those hard with the team in terms of coming out with both the white paper and the implementation plan. And also, you may not see, but she was also at the EFRA Committee this week. And again, on record was very clear about her intent in terms of driving those recommendations through. So I think what we can expect to see in December is that white paper and transition plan. And at the same time, I think what we're also expecting is that we will also see a strategic policy statement for both Ofwat and the EA. Christopher Laybutt: Okay. Thanks very much, Julius. Jenny, over to you. Jenny Ping: Two questions. One, just around politics. Obviously, we're getting more and more noise around the energy side in terms of government treasury want to do something deflationary on bills on the energy side. Are you thinking or hearing anything with regards to water, any noise there in terms of support on the affordability aspects? And then just coming back on the uncertainty mechanism, is there any firm time line in which you will be going to Ofwat to apply for the reopeners? And what should we be watching out for on sort of getting the clarity on the size of potential investments there? Louise Beardmore: So look, to pick those up in order. I think the first thing I'd say is from a bills perspective and a cash performance perspective, I've been really pleased actually with the way that cash performance is maintained with the increase that we've seen in bills. Team have worked exceptionally hard. We've doubled the number of customers who are on affordability schemes, et cetera. So we've not seen any degradation in cash performance. In fact, it's held extremely strong, and that's down to the way that, that's been managed. But one of -- Sir John's recommendations was very clearly the need for a national social tariff. And again, we expect that to come through as part of the white paper. You know that, that's something that United Utilities has long pushed for and is something that would be an extreme benefit, particularly in terms of here in the Northwest. So we continue to influence and discuss how that could look as we move forward. So I'd expect that we may well see some movement on that or clarity on implementation of that as the white paper comes out. In relation to the uncertainty mechanisms, the conversations are ongoing. You know as well as I do what our CapEx profile looks like. It goes up and then it comes down either side. It's in everybody's best interest to smooth that out. We've talked about AMP9 and AMP10 and what we can see coming with the Environment Act legislation, along with everything else that we can see. So it's in nobody's best interest to have a CapEx profile that looks like it does. And again, there were opportunities last time around, particularly in terms of things like transitional investment and the green recovery, and we expect those to play through. So conversations are ongoing. Christopher Laybutt: Okay. Thank you, Jenny. Sarah. Sarah Lester: Yes. Sorry, just to come back to the white paper. I think it's going to be a massive document, a lot of noise in there. So just to make it really simple for us, please. Three simple questions. What specifically should we be looking for? What will you be looking for? So if we can do a control find, is there something you can point to that if we see it, we can go, okay, this is good for you. Louise Beardmore: Sarah. I'm probably not expecting it to be hundreds and hundreds of pages long. So just to give you an indication, I think it will be thematic in terms of what comes forward and what they are proposing to set out. I think we're all clear that we want to understand what the regulatory regime looks like as we go forward, how that's going to be managed and how that's going to be coordinated, what supervisory regulation starts to look like and more importantly, essentially what the structures and the time lines look for as we move forward. So I think what we're all looking for is exactly the same thing, which is clarity around the time scales and what that transition plan looks like. So I think it is not going to be hundreds and hundreds and hundreds of pages long. I expect it to be thematic to set out the direction of travel, the things that they're taking forward and at pace. I also think it's important to point out, there's a number of things that can be done without legislation change. And again, I think I'd be looking to see how much of that, that they're making a commitment on and moving on ahead of any of those legislation windows as well. Christopher Laybutt: Terrific. Thank you very much, Sarah. Pavan. Pavan Mahbubani: I have 2, please. Firstly, I'd like to ask about the EPA and the 2-star rating from a few weeks ago. I can imagine you found that outcome, sorry, disappointing. And I wanted to just get a bit more color from your perspective on what drove that rating and whether you see there's anything in your underlying performance that you think you need to reprioritize? And on a related question, can you provide some color on the potential EPA reforms that we should be seeing in terms of those ratings in the coming years? That's my first question. And then secondly, I wanted to ask about funding and the balance sheet. Can you remind us if you see yourself as fully funded for AMP8? And does that change in a scenario where you have additional, whether it's reopeners or transition spend? And how should we think about your balance sheet and funding options, particularly as we look into AMP9 and beyond? Louise Beardmore: Thanks for those questions. I'll take EPA, and I'll hand over the balance sheet to Phil. So I think first things first in terms of EPA, yes, we're obviously disappointed. But we are the second highest company in terms of EPA performance. So 13 out of a possible 16 stars for this EPA period. The underlying performance remains on track. What we have seen is a change in methodology and particularly in relation to definitions on pollution. So things that were driven by both storms and power interruptions are now included in EPA. 1/3 of our pollutions are actually caused by issues with energy resilience that we're seeing up here in the Northwest. And there are 2 drivers to that. One is storms and the fact that we're on an overhead network, and that's particularly a challenge in some of our more rural areas of Cumbria and Cheshire. And secondly, the balance loading that we're seeing between renewables and the grid. So we've got some real specific challenges. And actually, Phil Duffy referenced that himself just recently at the EFRA committee, and it's something that we're focused -- very focused on both in terms of what could we do, but also working with the energy companies as well because I need to see better levels of resilience in terms of driving those improvements. We are extremely focused though on what it is we need to do. I'm really pleased to see the improvements that we're seeing in terms of combined overflow reductions, some of the areas of focus where what we're actually seeing is some of the early investment that's going in and more importantly, the improvements that we're seeing as a result. You're absolutely right. We now have a new methodology that is being consulted upon. That sees a series of changes again, most notably a change in categorization of pollutions. So currently, we have pollutions categorized 1 to 4. It's categories 1 to 3 that count for EPA. Going forward, there will be no category 4. That will all become category 3. So again, it's going to be another change. So I think we're going to continue to see the methodology change and evolve. That's out for consultation at the minute. And United Utilities, along with lots of others will be making obviously representation about its implementation. But I think what is -- there is some good stuff in the EPA too. It's going to, for example, include details about combined overflows. That's not included at this minute in time, and I think that's important. And I think what is important is anything that drives greater transparency is something that we all embrace, but we do need to understand when methodologies are changing because as a result of that, what's important is that we're tracking underlying performance, and we can see where that's improving and more importantly, if there's areas that we need to focus. So the results of the consultation are due to be published early next year, and then that will drive in terms of the implementation of the new methodology. I'll hand over to Phil in relation to balance sheet. Philip Aspin: Nice to see you. Yes, sort of as you know, we've got a very, very strong balance sheet. So today, we're reporting 60% for net debt to RCV gearing, benefiting slightly from a little bit of an inflationary tailwind at the moment. So that's sort of feeding into the numbers a little bit. And as you know, we're very comfortably within our 55% to 65% range as we look through this AMP in terms of the funding of the AMP8 program. And it's probably worth just reminding you that the headroom extends beyond that because the Moody's Baa1 threshold is 68%. So there's quite a lot of flexibility there. Clearly, in terms of any reopeners, there'll be a lot of discussion around the context, the scale, the size of that, how Ofwat may or may not fund that in period, in-period revenues. So there's quite a lot of moving parts to all of that. But I think we're approaching that from a really, really strong position. And then just longer term in terms of AMP9, clearly, we all expect a lot of funding, a lot of investment continuing into AMP9. But we also are very, very positive around the Cunliffe recommendations in the context of Cunliffe calling out the need for the sector risk profile to be looked at. And I think specifically, you cited the Moody's work that has been done where effectively, they progressively downgraded the quality of the regulatory framework over the last 2 price reviews. So if we have some reversal of that, that will extend that sort of capacity as well. So as a reminder, if we were to revert back to a Moody's position that was more in line with energy, then that 68% will become 75%. So that's worth bearing in mind. There's a lot of moving parts and understanding how that price review in the future lands is going to be a big part of that as well. Christopher Laybutt: Thank you, Pavan. Mr. Freshney. Mark Freshney: Myself, you hear me okay? Louise Beardmore: We can now. Mark Freshney: Can I ask on -- went to the hypothetical of the hypothetical when we're talking about the white paper next month. But I mean, it's clear that normally, I mean we're already starting to talk about AMP9 now. Normally, the next review should start next year, right? The regulator should -- once they're done, CMA should be moving across to the next review. Yes, the primary legislation is probably not going to be done next year for the Cunliffe implementations and then the regulator has to be set up. So it would seem that at some point, we may be looking at a rollover review or a 1- to 2-year, likely 2-year extension of this review. What are your thoughts on that? And the reason I would ask is because your returns have been fixed relative to what CMA and Ofgem are doing at fairly low levels. And this review doesn't appear -- we're yet to see outperformance. So I'm just wondering what you guys would like to see on any potential rollover review and what your thoughts are there? Louise Beardmore: Thanks, Mark. I think there's 2 things. I mean, obviously, we've guided to 100 basis points of outperformance. But just in terms of the 2 years versus 5 years in terms of the regulatory cycle, I mean, I think what matters for us is that any growth that we have to deliver is facilitated. So whether that be within a 2-year or a 5-year cycle. And we've got very strong relationships with our regulators. And I think what's important is that we get clarity over the funding mechanism. And I think it probably brings me back to one of the questions that Sarah asked me in terms of what am I most looking for in terms of the white paper is clarity around some of those time scales actually and how that evolves over time. And I think that's something that we're all looking for. CMA obviously, will publish its final outcomes in March. And I know there's already a lot of conversation going on with DEFRA, with the Cunliffe implementation team about both the regulatory cycle and some of the inputs in, particularly in terms of the long-term strategic plans for both water and wastewater. So I think we're all looking for that clarity on that time scale. But I think what's important, whether it's 2 years, 5 years, a rollover or whatever, is that the growth that is to be delivered is facilitated and recompensed accordingly. Christopher Laybutt: Terrific. Thank you, Mark. Mr. Nash. Unknown Analyst: A couple of questions from me, please. Firstly, can we go back to the CMA. They published in their initial findings what I thought was quite an interesting study on coming up with a new sort of frontier modeling sort of tool for your totex. And usually, at this point, I'm usually in front of you going, Louis, why did you not appeal the FD? And on returns, maybe clearly, you would have got higher, but the totex one was a bit of an eye opener for me because it looked to me that they seem to think that Ofwat had awarded you more totex than they would have given you if you had a CMA appeal. And so the question I've got for you on that one there is that how -- how much indication does that give to us or how much does it give to us potentially that you could be -- you should be coming in line more with the CMA number than the Ofwat number and that we could probably see a totex outperformance come through? Secondly, I like your term, I think, environmental super cycle that you have in your presentation. And you talk about PFAS. There's very little in PFAS in AMP as I understand it in spend. And I know we had a couple of questions earlier about your reopeners, but I'd be interested in what sort of scale -- what actually is the scale of the reopeners that we could potentially look and particularly with things that aren't in AMP at all like the PFAS one. I mean I've been reading some reports that the industry could be up to sort of GBP 10 billion a year of PFAS that's clearly across the whole country, but does have a reasonable PFAS exposure. So some color on that would be great. Louise Beardmore: Great. Thanks, Dom. So look, I think first things first in relation to CMA. The decision that we ultimately made was around the overall package rather than each individual item. And we've talked quite a bit about that. Obviously, it's remembering that going to the CMA opens up everything, not just the particular item that you may be appealing. And we felt that the FD for us was balanced. We saw significant movement between the interim and final position, particularly on totex allowances. And we were able to negotiate some company-specific targets on things that were important to us, both in terms of combined to overflow spills, internal flooding and also some changes to the economic models in relation to rainfall patterns. So those were things that were really important. You're absolutely right to say that when you look at some of the outcomes from the CMA, there is a number of companies where when you look at the models that they've run, they've suggested a different totex allowances. I think everybody always points to models and sort of says, well, they're very, very simplistic. And I'm sure that's what the economic regulation teams will be saying too, particularly in terms of some of those broader conditions that those models need to take into consideration. And I think what is important that is something that Cunliffe brought out in his review is that you need to understand the regionality in the context of which you're operating on. So I'm expecting there to be lots of representation on that, Dom, as part of the response that's gone back in from companies. In relation to your questions about low, should that give us some confidence about totex outperformance? I think there's 2 things. One is, look, we've got a number of transformation projects growing -- running where we are driving transformation in relation to totex delivery. And I talked at the Capital Markets Day, particularly around driving standard assets and standard deployment as a way of managing costs and managing costs within profile. I think long of the days have gone where you can deliver big totex outperformance and not continue to reinvest in your assets. There's always more that needs to be done. And so I think it's incumbent on us to continue to do the right thing. But rest assured, there is a huge focus on cost and cost delivery. In relation to the scale of the reopeners, look, PFAS is one that's talked about. And there's both obviously PFAS in water, and we've got 2 projects in there. You may have seen something on the BBC recently about well, what are these projects and one of these notices. That was the regulatory notice to enable us to access the funding to get those projects in and they're purely precautionary. But there's a couple of elements. One is PFAS in the actual water supply itself, but also in terms of biosolids. And that is an area that is continuing to emerge and evolve. We're also seeing quite significant increases in relation to housebuilding in terms of new housebuilding targets. My -- our previous Secretary State, who's now got the housing portfolio has just announced 10 cities, 2 of which in the Northwest region. So it's really an emerging and changing picture as we go through. In relation to scale, it's a bit hard to scale at this moment in time. And I think -- but rest assured, those conversations are ongoing with the regulator on those topics, driven by those areas that they're focusing on growth. We've had 35 applications, for example, for data centers. There is a huge volume of additional work that we're seeing in terms of demand, and we're now working through and prioritizing that. Christopher Laybutt: Thank you, Dom. And last but not least, James. Unknown Analyst: Very kind. A couple of questions. Firstly, on reopeners. There's been a couple of questions already on reopeners. But -- and I guess this has been touched upon a little bit. But I was wondering whether you had any visibility on how the split might look for reopeners between fast money and slow money. Obviously, the biggest theme in a way in Cunliffe was spending more on maintenance of assets. So maintenance CapEx is normally treated as OpEx. So maybe that points to a bit more kind of fast money bias, but maybe you could share some thoughts on that, if that's possible. And then the second question was just touched upon. I can't believe I'm at the end of the queue and has asked this already, but the topic of the moment data centers, which you just mentioned, you had a lot of applications. Obviously, data centers use a lot of water. Could you talk us through how we should be thinking about data centers in the context of United Utilities. Is this going to be a big driver of investment for you of demand? You mentioned the applications. Are they ones that are likely to be progressed in the near term? Or is this further out, that would be super useful. Louise Beardmore: Great. Thanks so much, James. Do you want to pick up the sort of fast and slow money and I'll pick up on data centers, Phil? Philip Aspin: Yes James. So I mean, as I alluded to with Pavan, the split of how Ofwat intend to fund any reopener is clearly one of the things that we'll have to consider in terms of how that impacts funding, et cetera. And clearly, a lot of the investment would go into CapEx and would typically be slow money. But clearly, we'll be pushing to make sure we've got the right balance between fast and slow in the context of what that means for financial ratios and the performance of the business. And as always, that Ofwat will be looking to balance that with the impact on customer bills in the near term as well. Louise Beardmore: And James, just in relation to your comments about data centers, look, they're all at various different stages of maturity. We've done 2 things. We've sort of identified areas in the region where we have spare water capacity. They're not necessarily always aligned with areas where people want data centers, but we've done a huge amount of work in that particular space. But in relation to the data centers that we're seeing, it also generates an opportunity for us as well. So how can we potentially use storm water in terms of those -- the cooling that is required. So if you think about combined sewer overflows and the challenge that I have and the fact that our sewers are never more than about 15% to 18% fall, the challenge we have is one of rainfall, and we have the highest combined rain network in the U.K., there's a significant opportunity here for how we potentially think about this slightly differently. So there's some really interesting engineering that's happening in this particular area as well. But they are all at different areas of maturity. There are certain areas where we're going to have to put in additional water resources to provide the capacity that is actually needed. But I also think it's a bit of an opportunity for the U.K. to think fundamentally differently. And we're working with a number of international organizations looking at how can we use -- there was an awful term in the sector called final affluent. But in other words, what's come out of your treatment works then gets returned into the environment, how could we use that? They don't necessarily need potable water. So just looking at this differently from an engineering perspective as well. So there's a huge opportunity in there for us to both innovate at the same time as growth infrastructure as well. Christopher Laybutt: Thank you, James. Back for another bite, Mr, Nash. Yes, we can't hear you, Dom. Unknown Analyst: I'm trying to make sure it overruns, Chris, as much as possible. Yes. One question from me, please. Supervisory regulation. Clearly, we are in some negotiations with the regulatory bodies and governments as to how that will work. What sort of options are you potentially looking at? And/or what would you like to see to come out of supervisory regulation? And do you see it as a potential sort of hindrance or a help in the way that you're actually going to perform your functions going forward? Louise Beardmore: Look, Dom, I see it very much as a help. There is a regionality about these businesses that we run, both in terms of the context of the infrastructure and even within region. You've heard me talk about the fact that we've restructured the business to be across 5 countries. Merseyside has got 84% of its wastewater system is a combined system. It's on the West Coast. Those storms hit it every single day. Even within region, it performs very, very differently. And I think regulation that understands the context of what's going on within a region, what those local priorities are, the ability to understand both the performance of the assets and the cost base is hugely important. Sir John talked a lot about moving away from notional models and the need to really understand those cost drivers, and we're hugely supportive of that. We saw the benefits some of that from the work that we did in AMP and particularly the allowances that we got in relation to some of the rainfall patterns we're seeing, CSO targets and things like that. But this moving away from this ability to just think of something being notional and really understand and both supervise and regulate accordingly, I think, is something that we would really, really encourage. Christopher Laybutt: Thank you very much. Next, Ajay. Ajay Patel: Look, I get the argument of like the scope and need for more CapEx and an improving return profile even for the sector. But the bit that always seems to be at [indiscernible] is the affordability and how this clashes with those aspirations in some respects. I'm trying to understand where -- what do you need to see happen in regulation to ensure that these are more aligned with each other? And not a series of a case of we move 5 years from now, we're asking for higher returns. We're asking for more investment, but there's a consequence of higher bills and the clash with that. And ultimately, it just adds to the risk to the sector. Louise Beardmore: Great question. And I think some of this comes back to what Jenny said a little bit at the beginning in terms of what needs to happen. We have seen a level of resilience as bills have increased, but bill increases are a challenge. And I think does a huge amount in relation to affordability support. We've doubled the number of customers that we're helping. But I think that is where a national social tariff can really play its part because I've been very, very clear that water is the only sector that doesn't have that level of universal support and that isn't right. From an energy perspective, we have warm homes discount. It isn't a postcode lottery according to where you live. And therefore, it won't surprise you that I continue to advocate for that because to some degree, that provides some additional capacity that's absolutely required. I think the other thing to remember is we all got really strong customer support in terms of the bill package that was put forward. So 3 and 4 customers supported the increase in bills and more importantly, the improvements that they would see as a result. And so I think it's also about making sure that you're spending customers' money wisely that we're driving efficiency, we're driving innovation. But at the same time, there is a cost and there is a cost for the infrastructure that's needed. And we are seeing the impact of climate change in a way that continues to evolve and to grow. And as water companies, it's essential that infrastructure is in place so we can enable a growth that we want to see, whether that be new housing targets or industrial growth targets. But at the same time, how do we make our assets more resilient. And just to give you an indication of some of the things that we're seeing, you may have heard on the news last week, there was a train that derailed up here in Cumbria, but I saw 8% of the annualized rainfall for the year fall in 1 day just in Cumbria. So the volume that is coming at us is very much changing. And the infrastructure is going to have to change and evolve to be able to cope with the climatic patterns. So I think that national social tariff is going to be key in terms of how do we maintain that balance. Christopher Laybutt: Terrific. Bartek. Bartlomiej Kubicki: I hope you can hear me well. Just to maybe talk a little bit about how you have started AMP8 in terms of the potential outperformance. Obviously, you have given a guidance on ODIs in year 1. But I just wonder, if we think about your latest debt issuance, where do you see the cost of debt versus the benchmark, meaning what kind of implied outperformance or underperformance we have here? And also similarly, if we think about your totex performance, are there any surprises to the upside or to the downside so far into AMP8 versus the allowances in terms of costs inflation or in terms of CapEx inflation? And maybe lastly, also on ODIs. Obviously, for FY '26, we know it will be negative. But shall we expect FY '27 to be already positive in ODIs? Or it's too early to say? Louise Beardmore: Bartek, do you want to pick up the first 2 and I can pick up on ODIs, Phil? Philip Aspin: Yes. So just picking up on the debt side. So your question was around how we're performing in terms of recent debt issues, Bartek. And I think probably the simplest thing is to refer you back to our Capital Markets Day slide that we sort of tabled where we showed how our performance was tracking against the Ofwat index. and that was a very, very positive position. And I'm pleased to say that existing debt issues that we've issued in this half have continued to perform in line with the expectations that we had at that time. So basically continuing to perform as we expect. On the totex side of things, I think Louis has already touched on this a little bit in the context of Dom's question around totex outperformance. And I think we are very focused on managing our cost position and living within the totex envelopes. We don't particularly see huge scope to outperform. So I think there, that's probably all I'll add to the totex position. Louise Beardmore: In relation to ODIs, Bartek, I mean, I think we've been really clear in terms of we put the 100 basis points on the table. We see that coming both from financing outperformance, ODIs and PCDs. There are some ODIs that are in penalty this year, some that are very much in reward. And we're very clear we're driving against very hard against targets. Obviously, as the infrastructure goes in the ground, you start to see the benefits of that and those ODIs continue to build. We've made a really great start. So for example, on leakage, we'll deliver a leakage benefit this year alone that was bigger than what we delivered last AMP. So there's some real great progress and work that is happening, but they continue to build as we go through the AMP period. Christopher Laybutt: Okay. Heading back to Julius with a... Julius Nickelsen: I'll try and go for a second. Maybe just on the last point on ODIs you've seen some improvement in the first half year, but could you maybe give us some indication how much of that is driven by weather? And then maybe also, I mean, the guidance hasn't changed overall on the net penalty. But has there been some change given that we had like some warmer weather this [ far ] that there will be maybe some improvements on the waste side? Just some color. Louise Beardmore: Yes. Thanks, Julius. I mean, look, we've been really clear that we expect that we will be in a penalty position for this year, but they build over the AMP, and we will be in a net reward position over the AMP period. The weather, although we have seen some dryness to the weather, we've seen some significant storms, too. So there are some areas we've made great progress and great delivery where we're seeing real improvements. We've made great strides in all of our customer service targets. We're in reward on all of those. We will deliver our targets this year in terms of CSOs, for example. And we've seen some other areas where we've got challenges driven by some of those storms. So it is a series of ups and downs. And as infrastructure goes in the ground, we continue to see that build and that delivery. But we are extremely focused on driving the benefits and that contribution to the overall 100 basis points. Christopher Laybutt: Okay. Thank you. Thank you very much, Louise, and thank you, everyone, for joining today. As always, if you have any follow-up questions, please feel free to reach out to the team and all of the materials that Phil mentioned are on the website in relation to the CMD. I'll hand back to Louise. Louise Beardmore: Brilliant. Thanks, Chris, and thanks very much to everybody for joining this morning. I suppose just to summarize really, we've made a really great start to the first year of the AMP, really strong operational and financial performance. The AMP program is going really well. I'm really pleased with the way that the organization and the supply chain have mobilized, our CapEx is all in line with expectations. And we feel that we're really well positioned to -- as we move forward in relation to the transformative period for the sector. So thank you so much for joining us this morning. No doubt, we will get the opportunity to speak in the coming days. But I know there's a lot going on and it's busy, but thank you so much, much appreciated. Philip Aspin: Thank you, everyone.