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Peter Nyquist: Hi, and good morning, everyone, and welcome to this second quarter Investor and Analyst Call. My name is Peter Nyquist. I'm heading up Investor Relations at Elekta. With me here, I have, for the first time, our new President and CEO, Jakob Just-Bomholt, and welcome Jakob for the first call, and hopefully, many to follow. Together with Jakob, we have our CFO, Tobias Hagglov. Jakob and Tobias will present the results for the second quarter and in the fiscal year of '25-'26. So we'll start off with Jakob giving some initial reflections on his first quarter as CEO, followed by a summary of the Q2 financials, including the order view announced today. Then, Tobias will go into the more details around the financials and Elekta's outlook. Jakob will then present the change in operating model and the organizational structure, leading to the cost reductions that we announced today as well. And after presentation, we will, as usual, be available for a Q&A session. But before I start, I want to remind you that some of the information discussed in this call contains forward-looking statements. These can include projections regarding revenues, operating results, cash flow as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. With that said, I will hand over the word to you, Jakob. Jakob Just-Bomholt: Yes. Thank you very much. Yes. So let me start by talking a bit about some of the initial reflections and then give highlights on Q2. Then, Tobias, you will go into Q2 financials in greater details. And then, importantly, we'll get back to Elekta Reset if you will, our new operating model. But on initial reflections, before I go into the details here on that slide, I would just say, fundamentally I like what I see. I'm now 4 months into the position. Obviously, prospectus will modify somewhat, but I do think directionally, what we will outline here in terms of strength and challenges and opportunities, we'll set the direction for the company ahead of us. We have been very open. Elekta is not performing at full potential. As incoming CEO, I think that's great, give us a lot to do. It also gives us an opportunity to do better. When we look at the company, we don't feel, and I don't feel that there are structural headwind. Of course, we have competition like for any company. But the challenges are really within our control to face. And that's what we're about to do. Today, we disclosed our must-win battle 1, we call simplify and power speed, but I'll get back to it. But let me go a little bit in details with some of the reflections. And if I start on the positive side, it's not positive, cancer burden is increasing. You all know that. Cancer incidence is on the rise, but fortunately, due to aging population and growing population, we see more and more that cancer is a chronic disease, so you get treated, you're cured, you come back, and then, you're using Elekta equipment again. Then, the second mega trend is that there is a shortage of professionals. I've heard numbers up to shortage of 80 million. So that really speaks for us as a vendor into the industry to innovate, to support the professionals with speed and better treatment and more precision. At Elekta, if I turn to the right, we're well positioned. We are #2. We are not #1. That's in many ways attractive position to be in, but we are clearly #2. Radiation therapy is an attractive and growing MedTech segment. We look at the segment likely to grow faster than the average MedTech segment. Then, we have many strongholds built up over many years in key markets outside U.S., strong in Europe, strong in many Middle East Africa markets, strong, very strong in China, strong in a number of Asia Pacific regions. But clearly, what we also imply here is that we are not strong enough in the U.S., and I'll get back to that on some of the challenges and opportunities. We are the only dedicated -- 100% dedicated company focused on radiotherapy. I think it's such a strength because when you're dedicated, you have to have product passion, you have to focus on your customers, you have to execute fast. We have a well-recognized brand. And what I truly cherish coming from a company with more indirect sales force, we have a direct sales force. So we are really in control of our commercial execution. When we look at R&D spend, we have been willing to spend on innovation. I think that's right because when you look at the graphic, again, to the left, there is a need for us to innovate. We need more precision, we need more speed. We are not mature or end of the road in terms of innovation. When you look at gross spend, we spent roughly 12%. So it's very high for a MedTech company. So it's certainly sufficient to realize what I would call future best-in-class solutions because that is the future of Elekta that we have best-in-class products, highly innovative, and the current spending run rate supports that. And then, we have, if you will, a razor blade model. So we sell our solutions, but then we supplement that revenue generation by more predictable, profitable software upgrades, but also service markets. And as you see, our service business continues to grow. So it's -- there are a lot of strength. We are fairly asset-light. We have, as you will outline, Tobias, good net working capital. Our physical CapEx requirements are relatively low. So there are many things to like about Elekta. And if we go on the next page, then importantly, also, we have a strong portfolio logic. If I just speak a little bit to it, then perhaps many of you know. But the products are complementary, both from a brand commercial, but also workflow perspective. So if I start from the right, we are building software that really connect the different modalities because that's a customer need. And often when we tender, it's not only a Linac, it's bundled with other products as well. But our Gamma Knife, what started Elekta, that is the gold standard for stereotactic radiosurgery of the brain, and we are uniquely positioned with -- and clear market leader. Same for brachytherapy actually. It's highly targeted, internally delivered dose for specific cancers. It's not for all. It's cost effective. So it's also attractive for emerging markets. And very often, it complements the Linac's treatment so you can get a boost, and then, you get your Linac treatments or the other way around. And then, we have our Linacs. And we are the only one with both MR-guided and CT-guided Linacs. So the CT-guided Linac is really the workhorse for high volume, broad cancer treatment, and MR-guided is top of the line with the ultimate precision. So I want to take away -- my takeaway is, and hopefully, yours as well, the portfolio logic is good. That's not where we have a challenge. We don't need to slice off or do big portfolio changes. It really makes sense. But then, of course, if we get into improvement areas, and we also believe in the statement that we are not at full potential and the industry attractive, then what do we need to look at? If we look at gross margin, it's too low. We used to be in the 40s, better up actually in 40s. We did see a dip post-pandemic or during the pandemic. And we never really recovered. And if we look at it now, we have too much single source, too much supplier dependencies. Some of them take advantage, and we will double down on continuous engineering to make sure that we have a relentless COGS reduction focus in the years ahead. It's not -- there's not a quick fix, but it's going to happen, and it's certainly viable. Then, we -- when we look at our 12% gross spend on innovation, I do think we need to become more focused, more commercially driven. Elekta comes with very strong scientific routes, strong within academia. I would certainly push us to be a little bit more commercially focused when we take innovation bets in the future. And then, of course, over time, we need to grow at or above the market. When we look at our growth rate, we have to accept that we have been growing over the last really half a decade, even a bit longer, a bit slower, somewhat slower actually than main competitors. We don't like that. Specifically, we need a turnaround in our U.S. business. We'll get back on the FDA, I'm sure. And then, we want to preserve our China position, where Elekta very cleverly have been early in the market, have localized our supply chain. And then, overall, when I look at the commercial organization, and as you know, I've taken the regions in direct report, we need stronger commercial execution. We will have to apply cost focus across all spend categories, standardizing our processes. And then, I'll get back to organization, but we're looking at simplification. But it really starts with a new operating model, that's a starting point that then leads into a simplified organizational structure to target faster speed, faster speed on product development, operational execution, commercial execution, really with the goal of focusing on our customers and patients. And then, on quality of earnings, we will work hard to make the link between EBIT and cash strength. So these are some of the reflections I initially want to share with you. As we'll disclose in the end, we'll give a strategy update with further details during January. If we then look at Q2 specifically, and I'll do it fairly fast, a decent quarter, I would say. We did 1% organic growth, 2% on orders, strongest in Europe, 11%. So we continue to see momentum of our product launches. That's good. APAC saw revenue growth outside China, but it couldn't compensate for the double-digit decline in China. But on China, it's quite positive that we are now seeing growth in orders. They had a depleted backlog. We knew that. We now saw in Q2 order growth, and when we look at the momentum, it looks quite positive for second half skewed towards Q4. Then, negative growth of 8% in U.S. despite actually quite good order intake, but clearly, we need a commercial turnaround. I'll say the commercial organization needs Elekta Evo, but we need a turnaround in the U.S. We did have growth in LatAm. Then, one of my first actions as CEO was to change the reporting lines of the regional heads reporting to me. And then we initiated an action to review, to make a comprehensive review of the order backlog. And that's what I want to update you on today. Compared to the order review presented in June, we have implemented, I would say, a little bit firmer interpretation of order criteria in areas such as delivery times, end customer side, down payment price indexation, et cetera. There will always be a judgmental call, is a license there, is a site ready, and now, we apply a firmer interpretation. It's predominantly old orders that we are now canceling. But this action, I would say, we should have better forecasting accuracy, both in terms of sales development and profitability. The cancellation is SEK 2.2 billion. I would say this is it. We don't expect further structural revision of the order backlog. That's for me important to communicate. I've been in it at great detail. I would also like to stress that it has no revenue impact for this year or next year as such. And there's no cash flow impact. So we are not going to pay back any customer deposits. So that's where we stand. I would like to end by saying it's quite important to take away that we have an order backlog that I consider at a healthy level, 2x annual sales give and take, based on last year's sale. So we have a lot of business to look forward to, if you will. So if I close on Q2, book-to-bill of 1, all right. Rolling 12 months, importantly, 1.09. We continue to see good momentum in Europe. Of course, I like to see over time higher net sales growth than 1%. That's clear. Good margin uptake, close to 38%. On EBIT, 10.1% versus last year, 9.8%. But if you adjust for lower capitalization and higher amortization, it's actually quite a significant improvement in, if you will, cash-based EBIT margin. And then, you will outline to be as -- but if we look at year-to-date cash generation significantly better than same period last year and good to see that net debt versus a year ago has been reduced by almost SEK 700 million. So that concludes, and then, I look forward to coming back to the operating model. Tobias Hagglov: Okay. Yes. Thank you, Jakob, and good to have you on board here. So I will then move into the quarter here a little bit more in detail. You mentioned that, Jakob, that we grew here in the quarter by 1%. This is then in constant exchange rates. We had a decline in our solutions operations by 4%, while our service grew by 7%. And also, I would like to mention here that the product launches of Elekta ONE and Elekta Evo had a continued positive contribution in the quarter. Then, looking at the profitability, we land here in the second quarter a gross margin of 37.9%, which then means 220 basis points improvement year-over-year. We see that our new products continued to contribute positively. We also have a higher share of our service business in the quarter. Our Brachy and Neuro business, strong development, strong growth in the quarter. Price continues to be positive. And then, here, as we had in the previous quarter, we have a negative impact then from tariffs and FX, and this negative impact is then 70 and 50 basis points, respectively, corresponding to a total of SEK 163 million in the quarter. The operating margin, adjusted EBIT margin, amounted to 10.1%, a 30 basis points improvement, and you are fully correct Jakob that we have a reduction in our gross R&D. When you see the impact in net R&D, it's increasing in the quarter, driven then by both lower capitalizations and higher amortizations. Selling and admin expenses increased somewhat in the quarter, and this was selective investments in marketing and IT and a bit of the phasing of the ASTRO cost here compared to last year as well as then some transition-related costs. But we will come back, as you were pointing out Jakob here to the program that we are on here. Net income amounted to SEK 229 million, and adjusted earnings per share amounted to SEK 0.65. So let's move into next slide. And FX, I think that we have a similar view here of the FX movements as we had in the previous quarter. So how does FX then impact our operations? The first point being is that, as you know, our reporting currency is the Swedish krona. And when you have a strengthening of the Swedish krona versus the main currencies, U.S. and euro, this means that the sales in dollars and euro actually becomes less worth in Swedish krona, which then leads to in nominating terms lower revenues and earnings in SEK everything else equal, the translation effect as such. Then, secondly here, we also have more revenues and cost in dollars. And when you actually then have a depreciation of the U.S. dollar versus our main cost currencies, euro and pounds, we also have then an unfavorable currency transactional impact in the quarter. And as you see in this table then, FX then had a negative impact of 50 basis points on the adjusted gross margin and 60 basis points on the adjusted EBIT margin. Then, coming back here to Jakob's point here, we have a reduction of the net debt of SEK 700 million year-over-year, and it's obviously then driven by the cash flow generation. If you look now year-to-date, we have -- in the seasonal weak start since we're building working capital in the first 2 quarters to larger quarters later in the year, we normally have a weak start of our cash flow generation. But if you compare this to last year, we are about SEK 900 million better when you look at the cash flow after continuous investments. When you look at the quarter, we improved our cash flow year-over-year by SEK 389 million. And this is then driven here, to your point, Jakob, to lower R&D spend as well as more favorable development of working capital here with more customer advances as well as a reduction of accounts receivables. And our net working capital as a percentage of net sales is now a negative of 7%. If we then look at the cash conversion here, it amounts to 91% compared to 65% a year ago. And if you then look at some more long-term trends and key financial metrics and look into the net sales, gross margin, EBIT margin and operating cash flows, which obviously are all key metrics here for driving profitable growth and return to our shareholders is that we have seen net sales on a rolling 12-month basis, which is relatively flat year-over-year. However, we see a positive trend for the -- both the gross margin and the EBIT margin. And then, here, what we just were talking about is that we have seen -- also seen a positive development for the operating cash flow, where we had delivered a significant improvement year-over-year. If we then focus a bit on the outlook for the second half of the current fiscal year '25-'26 and the full fiscal year, we reiterate our full-year '25-'26 outlook, where we expect net sales in constant currency to grow year-over-year. We expect sales in China to start recovering during the second half of '25-'26. And furthermore, we expect a continued negative impact from tariffs and FX at current exchange rates. So with that, I hand over to you, Jakob. Jakob Just-Bomholt: Yes. Yes. So if we move on in terms of driving improvements, then we commenced really 3 months ago, forensic, if you will, of Elekta data 360 review as a leadership team and together with the Board to assess the situation. And with the outset in that analysis, we then defined 4 must-win battles, of which we are today disclosing the first one. We call it simplify, empower, speed. And it's really about a new operating model. I've seen certain comments saying, "Oh, it's a cost-saving exercise". It's not. It's a new operating model. Then, there are consequences of that new operating model that I'll come back to in terms of cost saving. But the aim was really to increase velocity for our product development organization, our commercial execution and our operational execution. The secret sauce of a company like Elekta when we compete with the even larger enterprise has to be speed, agility, customer intimacy, product passion. So what we are trying to do with this exercise, and we will do it is to simplify how we are organized. We will eliminate complexity and certainly become a bit more assertive and insist on accountability. But with accountability also comes the ability to empower teams, so we move decision-making closer to our customers. And then, in doing so, we approached the organizational review, zero-based. We say, okay, this is -- these are the focus areas, this is how we want the operating model to work, what organizational size do we then need to support those priorities? And we have then moved it into a much more decentralized model with regional-based P&L. So we will take our regions P&L that will add up give and take to Elekta's P&L, again, to increase ownership mindset, make sure we drive decisions closer to where we meet customers, increase speed, agility, make people work as owners of their own business, if you will. If we then look at this slide, there has been changes to the executive committee. It's not all of these boxes that are part of the executive committee, but they do report to me with the exception of Neuro that reports to Brachy. But let me highlight some key functions here. We have made changes in the executive committee. We communicated that almost 3 months ago. We feel good about these changes. We have now hired new CFO, but thank you so much to you, Tobias, for still being here in the interim. We have hired a new Head of HR, soon to be disclosed. We have a search ongoing for COO. We have strong regional managers. But what we did do when we looked at how we are organized is to say how can we increase the span of control, and some of the consequence, I will outline on the following page really stems from that we have increased the so-called span of control from 6 to 8.5. And we have reduced organizational layers from 9 to 6. And you can say, "Ah, is that a big thing?" It's a big thing because it reduces the chains in the chain of command. It makes us more agile. And obviously, it has significant consequences, not least on management positions. So if we go on the next one, then I'll outline some of the consequences. So based on the new operating model, and based on the supporting org structure and a zero-based approach, we have then defined that we need to do a net reduction in our workforce, roughly 10%. We are 4,500 today. And we have identified 450. It will happen pretty quick. It has major impact on material positions. The targeted cost reduction is no less than SEK 500 million. It's a net reduction. It will have full impact our Q1 '26-'27, but you're going to start to see impact really from our Q4 this year. If we give a split because some of the resources are part of COGS today, 30%, we estimate, our COGS goes into gross margin and 70% OpEx. Those numbers may change, but directionally, they are right. And then, we are going to communicate with Q3 latest the restructuring charts. But I'll just reiterate what it is, what is stated to the right. We are doing this to get speed and agility. We are doing this to firm up accountability, so we can empower our teams. Yes, absolutely, we need cost discipline across the organization. And then, we are doing this to increase velocity across the board at Elekta. So it's a big day. I would also say it's a tough day because we have to disappoint a lot of colleagues that they will no longer be part of the journey. But our job is to continue to be successful, financially successful, so we can invest in life-saving technology, and that's what we are committed to. And then, we look forward to giving you further strategy update during January '26. We are deliberating the date. We'll get back to you in due course. We will have our interim report early March. And then, we will invite for our Capital Markets Day in June here in Stockholm and very much look forward to that with the leadership team standing behind the updated financials. Thank you. So let me conclude here by saying good performance, strong performance in Europe. Yes. Elekta Evo is making an impact. It's also a great product, I have to say. Gross margin, improving. Cash flow, as you outlined, Tobias, continues to be better than last year. We have now disclosed our first must-win battle leading to a simplified organization, but as I said, really with a view of accelerating execution. And then, we have done a comprehensive order review. And based on firmer interpretation of criteria, we canceled SEK 2.2 billion, but no cash flow effect, no revenue impact. Peter Nyquist: Great. Thanks, Jakob and Tobias, for a little bit longer presentation, but it was very much needed in where we stand right now. So we have still 30 minutes for Q&A. I think Jakob went through the calendar. There's nothing to add to that. So try to keep the questions 2 at each time, so if you have further questions you can line up later in the queue so everybody has a chance to ask question. So by that, operator, we are now open for a Q&A session. Operator: [Operator Instructions] The first question comes from the line of Deshpande, Kavya from UBS. Kavya Deshpande: Two for me, please. First was just around the order review. So I understand your reasoning was just applying stricter criteria on the back of the June review. I don't know if you could provide any more color on sort of the regional exposure of the orders that were canceled. And then the second was just on the Evo in Europe. So would you be able to compare how it's been doing this quarter versus last quarter? I appreciate you called it out on the call, but it wasn't called out in the press release, hence, the question. And whether the strength was mostly upgrades or whole device sales? I don't know if you could provide color on that. Jakob Just-Bomholt: Sure, I can do that. Yes. So we did the order review. And as I said, we applied the same criteria, but in a firmer context. If we look at regions, it was predominantly our Middle East, Africa region. That's where we saw the biggest impact. There were -- it was old orders. So some of them up to 5 years. And there will always be a degree of subjectiveness, do we think the ride is going to be ready, is there funding in this or that location? And as I said now, we apply the firmer interpretation. On Evo, up from last quarter in terms of units marginally, and outlook, good second half. Operator: The next question comes from the line of Vadsten, Mattias from SEB. Mattias Vadsten: I'll keep myself to 2 questions. After some commentary on sales growth going forward, perhaps after 2025-'26, so if we look at recent 5, 10 years, Elekta has grown, let's say, around 3% per annum. Order momentum has not been there recently in some areas. It's understandable, for instance, China. With the cost savings also now ahead and the operational improvements, you talked about the third program, I think, so what kind of growth rate do you see doable for the company more structurally, let's say, midterm? Yes, it sounds maybe difficult to outpace the growth we've seen in the recent 5 years. Or am I missing something there? That's the first one. And then, I have another one. Jakob Just-Bomholt: So we don't provide more guidance than what we have for this year, and that's a positive organic growth rate. On mid- to long-term, we will come back to that at Capital Markets Day. On cost savings, I'll just like you to come back to what I said. We are adjusting the operating model to accelerate commercial execution. As a consequence of operating model, there are cost savings. And over time, we clearly need to grow at or above the market. That's our ambition, and we'll come back with the detailed plan latest Capital Market Day next year. Peter Nyquist: You had a second question. Mattias Vadsten: Yes. You disclosed book-to-bill for China, which is appreciated, and it looks like the order momentum picks up. Could you also remind sort of how book-to-bill for China looked, let's say, last 12 months or now fiscal 2024-'25 just to get a sense of where we are on China right now? That is my second one. Jakob Just-Bomholt: Yes. So, yes, we had a book-to-bill roughly 1.3 this quarter, roughly 1.3 last quarter. I think rolling 12 months, as I recall, 1.14. Then, I think they're important to say, well, we recognize at Elekta, we are bullish than most MedTechs on China, but we have the visibility we have. So Elekta got in early. We have localized our supply chain, then the market was strong. Then, we had the anticorruption campaign. It became much weaker. But if we look at our first half, we have seen the RT market up by a very strong amount. And we are now seeing positive year-on-year order growth. And when we look at our sales funnel, it looks like a strong both revenue order growth, double digit, high double-digit second half. So we -- that's the visibility we have, and we believe in it. Tobias Hagglov: Absolutely. Absolutely. And just to add to that, Mattias, when you look at the book-to-bill here for China, it has actually been a steady increase, and you saw a reported number, but if you would look at the rolling 12, it has actually been a steady improvement here over the quarters here, and it has been ongoing for a while. Peter Nyquist: We'll move to the next question. Operator: The next question comes from the line of Liljeberg, Kristofer from Carnegie. Kristofer Liljeberg-Svensson: Also 2 questions. First, coming back to the implied cost savings from the new operating model, it seems all else equal that would add some 3 percentage points to the EBIT margin. But I think you talked about this being a net effect, but are there some negative factors that might offset this? For example, you mentioned that you want to improve quality of earnings. One way of doing that is, of course, to stop capitalized R&D, and if you were to do that, I guess that would, at least from an accounting perspective, remove part of the, otherwise, positive effect, if you could comment on that. Jakob Just-Bomholt: Yes, we absolutely can. So yes, you should think that way that we say no less than SEK 500 million, and there will be a full impact on the margins with the split I outlined COGS and OpEx, but, of course, come into EBIT. I think let's keep accounting separate. I'd just say that, in general, we like to build a closer link between the EBIT and cash generation. We have heard that from a number of you also that you would like to see that, I agree. I'm not a big fan of too much capitalization, some you have to do, but we are certainly deliberating on what is the right approach going forward, but that's accounting. So I think we need to keep that separate. Kristofer Liljeberg-Svensson: Okay. Yes, to be clear, so the way you report EBIT, it might not improve the full SEK 500 million? Jakob Just-Bomholt: I would more say it differently that the 3% you should expect with full run rate for Q1 next fiscal. And whether we will do adjustment in how we do to capitalize is a separate topic. And frankly, we haven't decided on anything except what I'm saying that I would like to see a stronger link between EBIT and cash flow. Tobias Hagglov: Absolutely. Kristofer Liljeberg-Svensson: Okay. And then my second question, of course, the importance here of getting Evo approved in the U.S. I saw you comment or said to one of the Swedish news agencies that you expect to have an approval within the 180 days review period. So maybe if you could talk about your confidence? And how this process is ongoing with the FDA? Jakob Just-Bomholt: Yes. Yes. So we have been confident along the way. It's just taking a really long time. So we submitted over the summer. And as you outlined here, you have a 180-day window. There are periods in the submission process where the clock has stopped. But you should say, 180 to 200 days. And we do expect to get approval within. Of course, it's not fully in our control, there is a regulatory body. But based on indications, we are positive. We have been positive all along the way. We are even more positive now than we were 3 months ago. Operator: The next question comes from the line of Germunder, Ludwig from Handelsbanken. Ludwig Germunder: Ludwig Germunder from Handelsbanken. I have 2, please, and I'll take them one by one. So the first one is around the regional restructuring of the P&L. As a consequence of this, do you have any -- or could you say anything about how incentive systems will change to drive the more local P&L ownership? Jakob Just-Bomholt: Yes, I could. And I probably will, in due course, but first, I would like to discuss it with the regional management team. Today, we are announcing the change in structure. But clearly, clearly, we want incentives to match the value creation of Elekta. It's very clear. And I would, in general, like to see a stronger ownership mindset in the company. Ludwig Germunder: Okay. And my second question is on the cost savings as well. You gave us the figure of SEK 500 million annually in cost savings. Would you be willing to give us some more flavor on the different parts? And how they will move in, let's say, next year? So, I mean, if you share up the OpEx and -- or should we expect different parts to move given the SEK 500 million? Or should we expect a decrease? Or in the parts expected to increase? Jakob Just-Bomholt: Yes. Yes, it's a good question. I think the guidance we gave here is no less than SEK 500 million. So the approach has been to start by saying what is the right structure, and then, we are down to now individuals. In general, we have been doing it to increase commercial execution and operational execution, and very importantly, avoid duplicate work, which we have identified, delayering become more agile. I will not go into the specific details in terms of where are we removing the 450. We -- as you can imagine, we have a town hall this afternoon. We will -- I think our staff deserves to be told first in greater detail. But I think what you should take away is that we do this for enhancing the execution, and then, as a consequence, savings no less than SEK 500 million, and we are fully committed to. You will see the full run rate effect Q1 next year, and that's not too far away. Tobias Hagglov: And you also had allocation there, what's in the gross margin and what's below the gross margin. Jakob Just-Bomholt: Yes. Good point. Peter Nyquist: We'll move to the next question. I think it's from Erik Cassel at Danske Bank. Erik Cassel: First, I want to talk a bit about the software backlog and deliveries in Europe. I mean, we're naturally seeing EMEA margins come up quite significantly. And I just want to get some sort of understanding on how much of that is driven by software? And if possible, I'd like to know if the software book-to-bill is still positive in EMEA? Tobias Hagglov: Yes. Well -- I mean, I think we stated here. I think, as you alluded to here, we have seen a very strong contribution from -- I mean, both in terms of the Elekta Evo per se as well as the upgrades here in -- on the existing Linacs, what we call them, Iris. And when it comes to -- we see a continued strong development here. And you heard Jakob talk about in the second half. So that remains, and that is what we -- still, we view it very positively. Jakob Just-Bomholt: Yes. So I can say -- yes, sequentially, Erik, we had double-digit growth sequentially on Iris and Elekta planning. Erik Cassel: Is that on orders or on deliveries? Jakob Just-Bomholt: Both. Erik Cassel: And is the book-to-bill still positive? Jakob Just-Bomholt: We don't go in -- it is actually, but we don't go in further details. In general, we keep our book-to-bill at a fairly aggregate level for competitive reasons. Tobias Hagglov: Yes. Erik Cassel: Okay. Perfect. Then just last question. Solutions seems to be down some 20% organically in Americas. I was just wondering, how much more is it down in the U.S. since that's a key driver? LatAm seemed pretty strong. And how many more quarters of negative organic growth in the U.S. do you expect to see? Jakob Just-Bomholt: Yes. So we actually had a good order quarter in the U.S. in Q2. But we do expect that solutions will bounce back, obviously, when we get Evo FDA approved. So we look forward to our Q4 this year. Then, we need to get reference sites upgraded. We need to sell into our installed base, make the market recognize the Evo platform, which is versatile and precise. And then, it's going to be the grind of selling and competing. Tobias Hagglov: And I can also add a little bit flavor without giving numbers that both the orders as well as the revenues are better in the U.S. than on average for Americas. Peter Nyquist: Thanks, Erik. [Audio Gap] Veronika Dubajova: I'm going to keep it to 2, please. The first one is just how you're thinking about the competitive landscape? Obviously, Varian or Healthineer has announced the plan to launch a new next-generation Linac platform sometime in 2026. I'm just curious kind of how you think either will stack up against that as sort of you as fast forward into '26 and '27 and whether this is a concern for you? And then my second question is a bigger question, obviously, the ambition to return to market growth. I know you guys don't want to guide, but I'm just curious if you might be willing to at least give a little bit of a time line on when you think that is achievable? Is this already a project for '26-'27? Is there more R&D work that's going to take a bit more time and we need to wait a little bit longer? So that -- any color you can give around that, that would be great. Jakob Just-Bomholt: Yes, I can take those. In general, I prefer not to comment on competitive -- competitors' product portfolio. We focus on us. And, of course, in our engine room, we benchmark, and we are taking note of the same data points that you highlight. We look at our competitive situation here now and we think we stack up. Of course, we have certain improvement in areas. We have certain strength. I'm not going to disclose them all. It would not be a smart move. And then, as I started out by saying we invest 12% of revenue in R&D. So we have a number of pipeline projects ourselves, some exciting, some need tweak. So -- and then let's see how we stack up. But I personally would say, and I live that in other companies as well, being dedicated to RT and being willing to fund investment. And being passionate about what you do from a product development perspective can take you very far, and it should be the secret sauce of a company like Elekta. Then, when we come to growth, yes, clearly, our ambition is over time to grow at, I would dare to say, above market. No MedTech company would want to lose market share as we have been doing for some years. I've been very clear to the organization, very clear to the commercial part, but also to the product development guys that now is time to shape up. In terms of when, I think let's come back when we have Capital Market Days. I think that's appropriate. So it's not hip shooting, but it's really anchored in a financial plan. Peter Nyquist: Thanks, Veronika. We'll move to the next question, Jon Unwin at Barclays. Jonathon Unwin: I just had a question on the R&D expense. You've commented that 12% of revenues, but also that you need to sort of focus on more commercially viable projects. Is there scope for that 12% of percentage of sales to come down over time as you focus the R&D intensity on the commercial projects? And then, my second question is on the midterm targets and sort of taking over the CEO role, and how confident you are in the ability to increase gross margin to pre-pandemic levels and EBIT margin above 14%? And any color you can give on a time line for those targets would be helpful. Jakob Just-Bomholt: On R&D expense, what I can say is 12% is in general high. It's, in many ways, good because it's funded today in our cash flow at least. What I stated was that when we look at both existing portfolio and future portfolio initiatives, we will have a strong commercial lens as well as scientific and feature lens to really understand what are we solving for. I think, if you take, for instance, our MR-guided Linac, Unity, wonderful product, truly making impact in the market. Commercially, we haven't achieved what we hoped for when we started out that project. And we want to make sure that we learn from that when we move forward. Is there scope for further reduction? We'll see. I think it starts by saying, do we have the right projects in the pipeline? If we do, we'll keep at 12%. If we don't, we'll reduce. In terms of midterm targets, I'll restate, we'll get back to that in our Capital Market Day. I would say, though, I think there are opportunities to increase the gross margin. But I'm not going to say whether that's at or above our midterm guidance. We'll come back to that. Peter Nyquist: And next question will come from Sten Gustafsson at ABG. Sten Gustafsson: So 2 questions on Evo, please. Firstly, regarding going back to the FDA approval process, have they communicated with you that there is a delay related to the government shutdown? Do you think that has had any impact on the timeline for your approval process? And my second question would be if you could remind me about the -- how you plan to roll out the launch globally of Evo in China, Japan and other key markets? Jakob Just-Bomholt: Yes. To take your first question, no. No impact from shutdown. We have a good dialogue with the FDA, actually very good. Secondly, rollout, yes, we got the Evo domestic approved in China. So that's good. Focus is on ensuring market access. It's coming in. It's actually proceeding quite nicely. The sore spot is in U.S., but I think we discussed that already. Sten Gustafsson: So it's already approved in China? Jakob Just-Bomholt: Yes. Sten Gustafsson: Excellent. Jakob Just-Bomholt: Yes. We think so also. Peter Nyquist: Thanks, Sten. Now, we'll move to the next question from David Adlington at JPMorgan. David Adlington: First one, just a sort of bigger picture one on the 450 roles being cut. Just wondered how you think about eliminating that level of workforce -- tentative workforce without having an impact on R&D, quality of services, manufacturing capacity? Just how you're thinking about that? And then secondly, as you look into next year, Street has got mid-single-digit top line growth. How comfortable are you with that with -- given the fact that the order book has been tracking some way below that? Jakob Just-Bomholt: So if I take the first one, keep in mind, we solve for something different than reducing headcount by 10%. We solve for speed, execution, accountability, delivering products faster to the market. And in doing so, we have delayered the organization, increased span of control. So as such, if you do the math, then it has a very significant impact on managerial positions. We are not reducing frontline field service engineers, so it is an office-based managerial reduction. And we do it because we believe we can, frankly. And we believe that we -- it will enable us to move faster with firmer accountability. We have had too many functions with duplicate roles, duplicate managers, and that's what we are resetting. And then, we also take the liberty to be a little bit less corporate, a little bit more business savvy. So we are streamlining central functions across the board under with due consideration to guardrails and controls. So we feel good about that, and it's confirmed throughout that we should be able to move, I will have to say, faster than we are today from a commercial and product development perspective. In terms of longer-term guidance, I'll stay at what we said, we guide this year, positive organic growth rate, and then, we'll come back at the Capital Market Day, and we very much look forward to that. Peter Nyquist: Thanks, David. And now, we'll come up to the last question for this session, and that is a question from Ludvig Lundgren at Nordea. Ludvig Lundgren: Yes. So 2 for me. And first one on gross margin. I wonder if you had any effect from tariff mitigation actions here in the quarter and whether you have some further pricing potential here moving ahead? Tobias Hagglov: Yes, we have some. But I think in -- on average here, that the -- what we see as a net impact from the tariffs is actually that it drags down the gross margin in the quarter. But, obviously, here, to your point, and I think also what we alluded to in general, more broad terms that we will continue to work here on the passing through this cost through the value chain and also here addressing in terms of productivity as such. Ludvig Lundgren: Okay. Great. And then final one on the order cancellations here. I guess, these were mainly orders that had a very small or no prepayments connected to them. So I wonder, like looking at the remaining part of the order backlog, have all of the remaining orders, some prepayment attached to them? Or how does it look for the main part? Jakob Just-Bomholt: A very significant part. Typically, if it's public tender, we don't get prepayment. Then, we have some older orders that we have deemed very high likelihood will lead to revenue generation that are without prepayment. But in general, you should think that all orders coming in now from private sector will have prepayment or they have to be validated by me and CFO. Peter Nyquist: Thanks, Ludvig. And that was the end of this call. But maybe before closing, a final remark from your side, Jakob. Jakob Just-Bomholt: Yes. So we are on it. This is a quarter of execution. As you may also sense, we have focused on what happens this quarter, next quarter, the next 18 months. We know that we are not at full potential. It's a lot of hard work. I take a lot of comfort in that everyone from Board of Directors to management team to Elekta employees are committed that we know we need to change. We know we can do better. And we don't do it just for our shareholders, we also do, but we also do it so we can continue to drive our purpose of building hope, invest in technology, as I started out by saying there's a huge unmet need for radiation therapy. And there is a strong need for us to innovate and be a strong competitive alternative to the major player. So look forward to meeting all of you in future engagements. Peter Nyquist: Thanks. Tobias Hagglov: Thank you. Jakob Just-Bomholt: Thank you very much, everyone. Peter Nyquist: Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to Grupo Financiero Galicia Third Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at gfgsa.com. [Operator Instructions] Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provision of the U.S. federal securities law and are subject to risks, uncertainties that could actual results would differ materially from those expressed. Investors should be aware of events related to the macroeconomic scenario, the financial industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Now I will turn the conference over to Mr. Pablo Firvida, Head of Investor Relations; and Gonzalo Fernandez Covaro, CFO. Please Mr. Firvida, you may begin your conference. Pablo Firvida: Thank you. Good morning, and welcome to this conference call. According to the monthly indicator for economic activity, MI, the Argentine economy recorded a 5% year-over-year increase during September. In year-to-date terms, the economic expansion reached 5.2%. During the third quarter of 2025, the primary surplus reached 0.5% of GDP and an overall surplus of 0.1% of GDP was reported. This result was explained by revenues increasing by 32.8% year-over-year, whereas primary spending rose 30.6%. During the first 10 months of 2025, the primary balance stood at 1.4%, while the financial balance amounted to 0.5% of GDP. The national consumer price index accumulated a 6% increase during the third quarter of 2025 and 24.8% year-to-date increase as of October. After 4 consecutive months below the 2% mark, headline inflation was 2.1% in September and 2.3% in October, accumulating 31.3% in the last 12 months, the lowest level since July 2018. The third quarter was marked by high volatility in the months leading up to the midterm elections. The exchange rate came under pressure at times nearing the upper limit of the floating band which prompted the Central Bank to step in with foreign exchange sales. Nonetheless, the exchange rate averaged ARS 1,400 per dollar in September 2025, a 15.6% devaluation compared to June 2025. Meanwhile, peso-denominated interest rates saw sharp swings, reflecting increased uncertainty and liquidity shift. In fact, the average rate on peso-denominated private sector time deposits for up to 59 days, averaged 48.7% in September 2025, up 16.5 percentage points from June 2025 levels. Private sector deposits in pesos averaged ARS 94.1 trillion in September, increasing by 5.6% during the quarter and 53% in the last 12 months. Time deposits in pesos rose 13.1% during the quarter and 76.3% in the year. Peso-denominated transactional deposits decreased 2.4% during the third quarter, but increased 31.5% in year-over-year terms. Private sector dollar-denominated deposits amounted to $32.6 billion in September 2025, increasing 7.2% during the quarter and rising 38.9% in the last 12 months. Peso-denominated loans to the private sector averaged ARS 79.3 trillion in September, showing a 9.7% quarterly increase and a 105.4% year-over-year. Private sector dollar-denominated loans amounted to $18.3 billion, recording a 15.8% quarterly growth and 153.4% annual increase. Turning now to Grupo Financiero Galicia. Net loss for the quarter amounted to ARS 87.7 billion, due to losses from Banco Galicia for ARS 104 billion, from Naranja X for ARS 6 billion and from Galicia Seguros for ARS 12 billion, partially offset by the profits from Galicia Asset Management for ARS 25 billion. This loss represented a minus 0.8% annualized return on average assets and a minus 4.7% return on average shareholders' equity, while accumulated annualized figures for the fiscal year reached 0.9% and 4.7%, respectively. The quarter includes extraordinary restructuring expenses associated with the merger with HSBC for ARS 105.3 billion net of income tax. The quarter ROE without the extraordinary expenses would have been 1%, and the 9 months ROE 6.9%. The result from Banco Galicia included ARS 101.1 billion of extraordinary expenses, and in addition, were negatively affected by the increase in the cost of risk associated with the growth of the loan book and the increase in the nonperforming loans in the retail segment, particularly in personal loans and credit card financing. Together with a decrease of financial margin associated to an environment of high interest rates and regulatory increase of reserve requirements. It is also worth noting that most of the comparisons will be made against the second quarter of this fiscal year as figures for the third quarter of 2024 do not include information about the acquired business of the former HSBC Argentina. Net operating income decreased 23% and net interest income decreased 10%. Net results from financial instruments were down 89%, and loan loss provisions increased 26%, which were partially offset by a 9% growth of net fee income and a 12% increase profit from gold and FX quotation differences. Average interest earning assets reached ARS 22.7 trillion, 8% higher than in the previous quarter, primarily due to the increase of the average portfolio of loans in, 5% in pesos and 27% in dollars. In the same period, its yield decreased 259 basis points, reaching 30.1%. Interest-bearing liabilities increased 27% from June 2025, amounting to ARS 19.9 trillion, primarily due to the increase of time deposits in pesos and of saving accounts in foreign currency. During this period, its cost increased 88 basis points to 16.5%. Net interest income decreased 10% when compared to the second quarter because of a 35% increase in interest expenses due to a 36% higher interest rate on time deposits, partially offset by a 7% increase of interest income, mainly due to a 12% higher interest on loans and other financing to the private sector. Net fee income increased 9% from the previous quarter due to a 6% higher income from credit card fees and up 19% from fees on deposits. Net income from financial instruments decreased 89% due to an 88% lower result from government securities. Gains from FX quotation differences were 12% higher from the year ago quarter, including the results from foreign currency trading following the lifting of exchange restrictions. Other operating income increased 11% in the quarter, mainly due to the 45% increase in other income, primarily corresponding to credits recovered. Provision for loan losses increased 26% due to the growth of the financing portfolio and to an increase in delinquency that is limited to personal loans and credit card financing to individuals in pesos. Personnel expenses were 83% higher than in the second quarter due to the voluntary retirement program recorded in connection with the restructuring plan following the acquisition of HSBC's business in Argentina. Administrative expenses were 11% lower than in the previous quarter due to a 32% decrease of expenses for maintenance and repairment of goods and IT, and to 14% decrease of higher administrative services. Other operating expenses increased 5% due to a 7% higher turnover tax. Results from the net monetary position decreased 9% from the second quarter following the declining evolution of inflation. The income tax charge was positive as the pretax net income was a loss. Demand financing to the private sector reached ARS 20.4 trillion at the end of the quarter, up 14% in the last 3 months, with peso financing increasing by 5% and dollar-denominated financing growing 35%. Net exposure to the public sector was 3% down in the previous -- comparing with the previous quarter, primarily due to a 38% decrease in government securities in pesos measured at fair value through OCI, offset by an increase in government securities in pesos at amortized cost. Deposits reached ARS 22.9 trillion, 8% higher than the quarter before, mainly due to a 26% increase in dollar-denominated deposits, mainly time deposits that were up 72%. The bank's estimated market share of loans to the private sector was 14.8%, 30 basis points higher than at the end of the previous quarter and the market share of deposits from the private sector was 16.4%, 40 basis points higher than in the second quarter of 2025. The bank's liquid assets represented 94.5% transactional deposits and 59.2% of total deposits compared to 94.3% and 65.2%, respectively, from a quarter before. As regards to asset quality, the ratio of nonperforming loans to total financing ended the quarter at 5.8%, recording a 140 basis points deterioration as compared to the 4.4% of the second quarter. And as I mentioned before, the deterioration is limited to the personal loans and credit card financing portfolios. At the same time, the coverage with allowances reached 105%, down 16.4 percentage points from the 117.9% recorded a quarter ago. As of September 2025, the bank's total regulatory capital ratio reached 22.1%, decreasing 160 basis points from the end of the second quarter, while the Tier 1 ratio was 21.8%, down 140 basis points during the same period. In summary, the third quarter was marked by high political effects and monetary volatility and negatively affected margins and asset quality. And in addition, the results were affected by very high onetime expense due to the restructuring of the merged banks. Despite this, Grupo Financiero Galicia was saving to keep liquidity and solvency metrics healthy levels, and we expect an improvement in profitability during the fourth quarter and next year. And now Gonzalo Fernandez Covaro will make some additional remarks. Gonzalo Covaro: Hi, everyone. Well, continue with what we see for the future. I mean regarding how we see the rest of the year, October continued with low margins due to the high interest rate that we saw in the third quarter. But we are already seeing a vast improvement in margins in November. We are already really seeing margins at the same level than second quarter and the first half of the year in August -- in November, and we expect the same for December. Portfolio performance still needs some time to get back on track, so we still see a deterioration in the fourth quarter at a lower trend than before, but still some. So overall, bank will be better, will improve returns, mainly due to the margin improvement. But Naranja X, we have some headwinds in terms of portfolio performance up. With this mix, we are seeing the ROE for the full year 2025, around 4%, the reported one. And if we exclude the nonrecurring integration costs that we mainly booked in the third quarter we should be around 6%. Talking about 2026, we're expecting an ROE in the low teens range, I would say, between 11% and 12%. Of course, a lot of moving targets for next year. We will be updating this guidance in further quarters. But this is our best case scenario to be around 11% to 12%. Margins, we'll see improving them in the first months of the year, together, what we are seeing in November, December, then some kind of light reduction as a consequence of the rate reduction, but not really high, the reduction. So we'll still see healthy margins next year, I would say, in the levels of the second quarter. NPLs, we expect a peak on NPLs in March of next year, but then improving as a good portfolio that we are originating is gaining weight in our mix and that we will end the year with NPLs better than the run rate that we are having now. And regarding costs, we are also seeing a reduction in year-over-year in cost because of all the restructuring we have done. And you saw the restructuring costs we booked in the third quarter and that generated 1,000 heads reduction in the group quarter-over-quarter. And that's -- if we add up all the year, we have a headcount reduction of 2,000 heads for the year. So that is, of course, generating reductions -- cost reduction for next year. We are seeing already fourth quarter of next year, our projection shows, our fourth quarter of next year ROE run rate already at 15% level. So that put us with a solid base to start '27 and deliver ROEs above 15% is the target ROE that we are aiming for the longer future. So with that, I mean, we are also open for any questions you may have. Operator: [Operator Instructions] Our first question comes from Daniel Vaz from Safra. Daniel Vaz: I'm looking at your capital ratio of '21 at the group level, and it was down 120 bps from the second quarter. I'm just wondering if you said that your cohorts -- new cohorts of origination are getting better, so you expect a peak in NPL in March. So -- but still your ROE is super low compared to your targets, right? So how do you expect that capital would be ranging in this scenario, what's your bottom of capital that you would like to work as a risk-taking level for the group or for the controller, which is this bottom that you would like to limit your capital? And if you need at some point to reduce your origination and how you're dealing with the new originations compared to your beginning of the year? Because at the beginning of the year, the longer duration, I think it hurt your margins, mainly your cost of risk. But when we compare to other players, other fintechs, their duration is faster to adjust. So both these 2 questions here blend into each other. So first, capital and how is your origination compared to your duration in the beginning of the year going right now? Gonzalo Covaro: Regarding capital, our capital also was impacted by the reserve in OCI, the other comprehensive income with the bonds that are valuated at hold to collect and sale that you have a reserve in equity that moves between the accrued income in the bonds and the market -- mark-to-market. But as you know, in the third quarter, there was a big reduction in bond prices. So that we had a ARS 160 billion negative reserve in equity due to those bonds that affects, of course, the equity ratio. On October, we -- our Tier 1 ratio in October is already at 24.5% in the -- talking about the bank. And that's, of course, because now this OCI reserve is slightly positive. So it has an improvement of ARS 160 billion in 1 month because as you know, after the elections, the rally that all the bonds have. So really, with these levels of capital, we are comfortable. We -- I would say that our minimum appetite to operate is 13.5%, 13%, 13.5%, but we don't expect to get close to that in the near future. We believe that with the projection we have, we have enough capital until the -- at least until the end of 2027. So -- and without any limitation for growth. So I would say that's -- of course, that's something that we monitor and we will be updating regularly. But with this -- now that the reserves of the bonds are stabilized, we don't see really the need for capital or any restriction in the growth of our loan book, at least the whole next year and 2027. Regarding the second question, I think I didn't get it very well. Pablo Firvida: Origination of loans and maturity of the loans. Gonzalo Covaro: I mean, we continue to originate, I mean, both commercial and consumer lending. We have put some slowdown in the consumer lending due to the portfolio quality, as you have seen. First mortgages will reduce significantly the origination of mortgages. In that case, not because of quality, but because of -- there is not any securitization market. And as you know, we cannot be putting 30-year lending without any securitization market where we can offload those loans. But we continue -- in the consumer sector, we continue lending personal loans that may have a duration of 2 years, 2.5 years. And now we are also increasing car loans or auto loans that same duration. Talking about commercial financing, we are still originating a very short duration. Slightly, we start to increase duration because the demand was not there. Now with after elections, with Argentina stabilizing and with a lot of growth potential in the country, we are expecting to see more projects for our clients to finance longer terms, but that's not yet happening, but we are expecting that next year, the duration in the commercial lending should be getting longer than what we have today. Operator: Our next question comes from Ernesto Gabilondo from Bank of America. Ernesto María Gabilondo Márquez: My first one is on your loan growth expectations. What should we think for next year? If you can give us some color on the expectations per segment? And also, I believe there have been some announcements on private investments in Argentina. Have you quantified an amount? Or can you give us like some direction or color in which regions and sectors are you perceiving these new private investments? And how would you be willing to participate through corporate loans, as you mentioned, SME loans? That will be very helpful. Then my second question is on asset quality. I believe -- I'm just double checking, you mentioned NPL ratio could be peaking by March next year. And if that is correct, if you can provide any potential range? And if you are seeing the same trend on the cost of risk, if you're expecting cost of risk also to peak by March next year? And how should we think overall for the cost of risk next year? Gonzalo Covaro: Thank you for the question. I mean talking about, yes, the color of next year, we see -- I mean, growing lending in 25%, more or less in real terms. I mean we want to continue gaining market share. So of course, this number will be adjusting according how the market grow. We see market growing around 20%, 22% in real terms, of course. We -- in terms of sectors, yes, we are growing -- I mean, I think that the commercial lending will be capturing a lot of attention. I mean, as you said, there are a lot of projects and investments in the country that we have a lot of customers already starting to talk about it. We also want to continue growing the consumer lending with, of course, the new origination tools and the models adjusted in order to book better credits. But we will start a bit slower in the first month, start continue a bit slower as we are having this month and then restart the full growth as we see that the quality is improving. Talking about commercial lending, yes, we are seeing a lot of the investment mainly in the oil and gas sector. As you know, Vaca Muerta continues with a lot of attention in the mining segment -- I mean, sector, sorry, copper, lithium, a lot of focus there also. We are very -- also very present in the agri business. And this year, the agri business is going to have a very good harvest. And we are anticipating good investments for next year also in this sector that we will be also joining there. And we are also starting to see M&A starting to move, local M&A, companies, some privatizations that may come close that we don't have yet the names, but we're starting to hear rumors that some may not be huge privatization, but yes, smaller companies that can come to the market. And of course, the idea for us is to be close to our customers there. Some of those projects are going to be too big for the local financial market to finance because when we talk about oil and gas, the amounts are huge. But we will always be there to participate with smaller tickets or to be there in transactions that local balance sheets can afford. So again, we are very close to our commercial customers. And really, we see a sentiment on appetite for Argentina, on appetite for investing. And that's where we are seeing that our next year, we are going to be growing faster than the market, and that will help also to improve the returns year-over-year. Talking about NPLs, yes, we are expecting our peak on NPLs around March next year. We are seeing that the peak would be around 7%, 6%, 7% -- and the cost of risk, yes, again, same thing. We are seeing also peaking next year in March for the bank, I'm talking, and we'll see more or less cost of risk between 9% and 10% the peak. Then going down those -- both ratios to end the year at lower numbers that is what we -- that we expect. I mean we are already seeing the new harvest of consumer lending at much better behavior than the old ones. We still need the time to digest the older portfolio and see the results that will come after, I would say, second, third and fourth quarter of next year. Ernesto María Gabilondo Márquez: Super helpful, Gonzalo. Just another question in terms of this potential growth that you can see for the loan book next year. Another competitor just mentioned the possibility to tap the markets next year. Is this something that you are also exploring? Pablo Firvida: Bonds or equity? Ernesto María Gabilondo Márquez: In bonds. Gonzalo Covaro: Equity. I mean, the financing or equity? Ernesto María Gabilondo Márquez: Yes, debt financing. Gonzalo Covaro: I mean, yes, of course, it's something that we have always in our alternatives need to see how -- the windows are starting to open. Really, we don't -- we are not seeing now the need. But of course, that's something that we are always evaluating. And we need to see, of course, the equation, the profitability equation of the cost that the market could offer at some point. But yes, mainly considering larger tickets or the projects that they may come, yes, definitely, it's an alternative that we consider very seriously. Operator: Our next question comes from Brian Flores from Citi. Brian Flores: I just wanted the first question to be a clarification on the ROE trend because you mentioned the peaks of NPLs and asset quality, as you mentioned, cost of risk by March, right, of 2026. So you mentioned 11% to 12% in terms of real ROE for 2026 with reaching the 15% in the fourth quarter. So would that mean we should see a mid- to high single digit in the first half? Just thinking about the speed of the recovery, right? Apparently, it seems to be a very gradual recovery. Just wanted to check on that trend, Gonzalo. And then my second question is perhaps a follow-up on Ernesto because I think we're all thinking about external funding, right? But you have perhaps one of the best franchises in Argentina. meaning that deposits are very, very relevant. So I just wanted to understand if the visible funding cost advantage that you have demonstrated in previous quarters should continue? Or do you think the -- I would say, the funding cost war should, I would say, increase or deepen in 2026? Gonzalo Covaro: No, thank you. So first question about ROE trend. I mean, yes, I mean, we see first quarter slower. I mean, I would say that the numbers you mentioned could be right. I mean, we see a recovery first quarter will still be -- I mean, margins, we are going to be already in the first quarter at good levels, but we will still have some kind of heavy burden of NPLs still the last month of that and then starting to recap in the third quarter. So I would say that, yes, lower ROE in the fourth quarter and then recapping the trend until the 15 in the fourth quarter and continue with that in 2027. But yes, your assumption is right in terms of ROE evolution. Remember that the group has also Naranja and the bank and Naranja also needs to improve that portfolio performance. That's why also we need a couple of months from next year in order to be able just to go above 2 digits in ROE. Talking about the funding, what's the other one? -- funding. I would say that, yes, that's why my question was -- I mean, our idea is -- my answer before to Ernesto was, yes, we are analyzing potential debt in the market, but we always look first at our deposit base. We see some possibilities for next year. In deposits, we see that we -- the market liquidity is coming back. With interest rate reduction, the market will be also more liquid. We see that there may be some changes in regulations for mutual funds that put some limitations for the banks to go to the market to place funds in the market. So they -- that liquidity should come back to banks. As you know, the money markets are a huge holders of funds from deposits from customers in Argentina. And they put part of their deposits in banks, but also they go to the market and place those funds in the market in Cauciones. And next -- according to next year, they should be able to put more money of those in the bank, and that should also provide more liquidity to banks to lend. That will be another source of liquidity for banks. So -- we are aiming to increase our deposits to gain market share in deposits. All our business lines have that mandate because we consider it the more stable funding and the cheaper one or the more the cost-efficient one. But of course, depending on the speed of the credit growth, we may need to go to the market. And we need to do it, we'll do it. But our first priority is deposit, and we really believe that deposit next year should start to grow better than this year. I wouldn't say same pace than lending, but better than this year. Brian Flores: Perfect, Gonzalo. I think the last guidance you mentioned in the second quarter on deposit growth was around 35% in real terms. So I just wanted to check if you are revising this number. And also, I understand, as you mentioned, the deposit growth for 2026 is going to be lower than the portfolio. Gonzalo Covaro: Yes. For this year, I mean, we are keeping, yes, those guidance for growth. For next year, we are seeing more like 20% in real terms deposits, 25% lending. But again, that's something -- I mean, a lot of moving targets for next year. So we will be updating those guidance because we'll see how -- we need to see how the country is changing. 1 month ago, we were with a lot of volatility. Now stabilizing interest rate reductions. So we need to see how everything comes together, but that's our -- so far, it's our assumption around 20% for next year. Operator: Our next question comes from Tito Labarta from Goldman Sachs. Daer Labarta: A couple of questions also. I guess, just on the Naranja, you mentioned Gonzalo that needs to recover as well. Do you think NPLs peaked there also in 1Q? Or how do you see the evolution of asset quality in Naranja and then also your ability to resume growth at Naranja? And then second question, just on margins, do you think we saw some pressure this quarter, I mean, just given all the liquidity issues in the quarter. Do you think this is the bottom? Should that already begin to recover in 4Q? Or will that take a little bit longer until you start to get the loan growth and asset quality under control, just to think about the evolution of margin in the short term and I guess, thinking about 2026 as well. Gonzalo Covaro: Yes. Talking about Naranja, I would say that we are seeing the same -- more or less same amount, same timing for the peaking. I mean, third March, April next year, same and they're also doing a lot of things. Their turnaround, I would say that the, but they have a shorter duration in lending. So they cure their portfolio faster than the bank. So yes, I would say March should be also the peak for them, and we are expecting also an improving on NPLs for Naranja for the rest of the year. Of course, as they go to lower segments, they have bigger swings on the bad, but then on the good at the same time. Talking about... Pablo Firvida: NIMs. Gonzalo Covaro: NIMs margins, yes. Margin, yes, we saw the bottom was October. I mean, I would say fourth quarter still has October, which is 1 month with a low margin. So in the quarter, you still -- in the next quarter, you still see 1/3 of the month, I would say, with a bad margin. I would say October was a bad margin because it was the worst month before the elections, the election month. But then November, really, we are seeing a quick, fast turnaround and fast improving in the margin. And December, I would say it will be 100% at the second quarter levels. So yes, to your question, the bottom was, I would say, October, third quarter and October. But November, December already recapping December already at the same or pre-volatility levels, I would say. So for next year, margins will be at good levels. Of course, then after the second half, slightly reduction because with the continued rate reduction. Today, what we are seeing is our cost of funding reducing significantly now and our lending start to reduce the interest rates at a slower pace because we have already booked longer-term lending at higher rates. So we will enjoy those higher margins first half of next year. And then we may see some slight reduction, but nothing significantly next year yet. So in a summary, yes, the bottom was third quarter and October. Daer Labarta: Okay. No, that's helpful, Gonzalo. And just on the reserve requirements, I mean, they've been reducing a little bit. Do you think it's enough now that liquidity is less of an issue? Do you think that they need to reduce the reserve requirements further from here? Or how do you think about that and the impact on your liquidity? Gonzalo Covaro: I would say so far, it's -- I mean, so far, in these months, it's okay. The Central Bank, as you know, made some changes in liquidity requirements like last week and that were better, mainly in the calculating the daily calculation, but also they reduced 3.5% the cash encashments that are 0 interest, so that will also give some improve EBITDA margins for banks going forward starting December. This is starting December 1. but they reduced -- so that's not significant for injecting liquidity to the market. But I would say that at some point next year, that may be revisited again by Central Bank because at some point next year, it could be needed. So it's something that I wouldn't say that is needed now or the next 3 months, the next quarter. But at some point, depending on how the market behaves, could be there is an opportunity for a revision on that side. Operator: Our next question comes from Camila Azevedo from UBS. Camila Villaça Azevedo: My question is a follow-up on Ernesto's question on asset quality. I would like to get a better view of the asset quality dynamics during this quarter, mainly between segments. And you said we should end the year with better NPLs than current levels. Could you please share more details on that? So it could be in general terms, what should we expect? And with this, with which coverage ratio would be comfortable going forward? Pablo Firvida: Sorry, Camila, there was a noise in the middle of the conversation. We couldn't get the first part. Yes, the part of ratio, not the other part. Camila Villaça Azevedo: Sorry. Sure. So I'll repeat the entire question. Like I would like to get a better view on the asset quality dynamics during this quarter and which levels should we expect for the end of the year? You said that we should expect better NPLs. So in general terms, at which levels? And did you get the coverage ratio part? Pablo Firvida: Yes. Camila Villaça Azevedo: Okay. So that's it. Gonzalo Covaro: I mean when we talk about NPL better than the end of next year, not this year, right? I mean this year, we still -- as we said, that the peak will be March next year. So what we are seeing, and this is for the end of 2026, NPLs, I would say, in a range of 4.3%, give or take, more or less 4%, 4.3%, 4.5%. I mean that could be the range of NPLs by the end of '26. Pablo Firvida: And the coverage? Gonzalo Covaro: I didn't get that. Pablo Firvida: And the coverage, the last number is 101.5%. Really, it comes from the model of expected losses, talking with the credit department, they say that the coverage is beginning to grow, and it's likely that at the end of next year would end up at 110%. But really it's... Gonzalo Covaro: When you create -- we grow your book, you create a lot of upfront reserves and that increase your coverage, then you start using those, and that's where we are now. And that when it comes, now we want to stabilize the portfolio and that should start growing again. But now we are in the process of using the upfront reserves that were booked when the portfolio grew a lot. And now we are also accelerated the growth, so you don't have a lot of upfront books because of new loans and you are using what you booked before. It's kind of a mathematical thing. But we are comfortable with the level we have. Operator: Our next question comes from Pedro Offenhenden from Latin Securities. Pedro Offenhenden: I wanted to ask if there are any remaining integration costs from the HSBC acquisition that could impact results in the coming quarters? Gonzalo Covaro: No. I mean, I would say the restructuring, nothing big. I mean we may have some small thing in the fourth quarter, but regarding systems that we are shutting down, but not restructuring cost, which is the big portion, we booked everything in the third quarter, not just the people that left in the quarter, but also what we plan that the ones start leaving until the end of the year. So everything is booked there. Something very small, not related to restructuring may happen in the fourth quarter related to system, but really small, nothing important. Operator: Our next question comes from Carlos Lopez from HSBC. Carlos Gomez-Lopez: First of all, congratulations on how brave you are because you are giving predictions for the ROE for the middle of the year and for the end of the year. And I hope that those forecasts are actually achieved. More concretely, I realize that we have gone through 3 conference calls, and I don't think anybody has told us what their economic assumptions are. What do you expect for inflation, interest rates and the currency for the end of next year? Maybe you have said it and I missed it, sorry for that. And second, in terms of liquidity, your LDR in pesos is around the 100% level and more partial it is because of Naranja. Is there an absolute level beyond which you would rather not go and therefore, you might be able to -- you might be willing to restrict your loan growth until deposits catch up? Pablo Firvida: In terms of macroeconomic assumptions, we have -- I will tell you the last estimates from our Chief Economist for this year and next year, GDP growth, 4% for this year, 3.7% for next year, inflation ending this year, 30% next year, inflation, 18% and FX 14.10 at the end of this year and 16.10 -- next year, end of next year. And LDR in pesos, loan-to-deposit ratio. Gonzalo Covaro: Yes. I mean we -- I mean, as you know, we're talking about first LDR, then we have our LPR, which is the liquidity coverage ratio that we have more than 180%, so very, very liquid there. In loan-to-deposit ratio, we are -- but we are at 99%, 100%, but we are comfort -- we are assuming that our deposits -- peso deposit will continue to grow. And what happened also in the third quarter and in October is a lot of high realization happening in the economy because of what was happening in the election, what was expected in the election. So we saw deposit in pesos to turn into dollars. Now we are starting to see some kind of reverse thing that some of the actors selling the dollars and going back to pesos because they need to operate and they are not expecting a devaluation in the near term at least. So we believe that we have other means to grow deposits or to go to the market. So really, we don't see that as -- even though we monitor that and we want to -- that's why we are putting a lot of focus in deposit growth, but we expect that could -- deposit growth could come with us, and that will help us to continue growing the peso lending. We don't see a constraint in the growth because of that so far. Carlos Gomez-Lopez: You don't see that as a constraint? Gonzalo Covaro: No. Carlos Gomez-Lopez: Okay. And in terms of the dollarization, you're completely right. There has been dollarization both of loans and deposits. You and the other banks are mentioning demand for dollar loans. Should we expect, therefore, further dollarization of the banks on the asset side? And have you started to see or not yet a reduction in demand for dollars? Have you seen actual dollar sales back to pesos? Gonzalo Covaro: I mean lending in dollars, yes. I mean, we see in the commercial lending high demand or higher, I would say, demand in dollar lending. So that is continuing, mainly what we are seeing these projects that we are talking about, we expect that to continue. So yes, we have grown a lot of our deposits in dollars starting the tax amnesty that [indiscernible]. And after that, we -- our share in deposits, dollar deposits is higher than our fair share. So we are taking advantage on that. And of course, with the limits, internal limits that we have to lend dollars, et cetera. And we can also go to the market and get dollar debt, which the market is there also. So yes, we expect to continue growing dollar lending, of course, at a moderate rate considering the liquidity limits that we have internally to our dollar deposits. Dollarization, of course, the demand for dollars, I mean, from our customer base talking about purchase of dollars after the election has gone down. But I mean, it was a very, very high level before the election, it has gone down to normal levels. In Argentina, you always have people buying dollars. But that -- it's something that can come back again if there is any noise or any political uncertainty. But so far, we expect this to be quiet in the next months and not really -- is now at, I would say, first month of the year levels, and we expect this to continue at this stage. Carlos Gomez-Lopez: Can you give us an idea about the levels of your dollar purchases that you are seeing from your customers? I mean other banks have told us they went from 1 million -- $5 million or $6 million to $30 million or so per week. Where are you and where are you relative to, let's say, the second quarter or the first quarter? Gonzalo Covaro: Yes. I mean we used to have like $50 million per day. We are now at, I would say, $15 million, something like that. So lower levels -- lower levels. I mean, it's daily levels, but same level at the beginning of the year, I would say. Carlos Gomez-Lopez: So that would be the level of the beginning of the year as well, the $50 million. Gonzalo Covaro: Yes, more or less, yes. Operator: Our next question comes from Yuri Fernandes from JPMorgan. Yuri Fernandes: A quick follow-up. Most of my questions have been already asked. But just on asset quality, and there were many questions about the peak and how you are seeing. But what makes you confident that first quarter will be the peak? Because we heard before, right? I think second quarter was supposed to be the peak than third quarter. Now we're talking about the first quarter 2026. And I know it's hard, but what is the leading indicators you are looking for? Like why you think it should improve? Is asset like lower yields on loans moving lower? Is the economy improving? Is, I don't know, any kind of underwriting lessons that you learned in this last year? Just trying to understand what drives the confidence for improved asset quality. And just a second one on this topic. How your expected loss model should work on this? Should we start to see lower provisions now because you are calling for improvement ahead? Like -- or no, you still need to do some kind of incurred losses provisions. Help us to understand the difference between incurred losses and expected losses here for you. Gonzalo Covaro: I mean, I would say that, of course, when you make an expectation for the future on NPLs, there are 2 things that plays. One thing is what you can control and the other thing that you cannot control, which is the market and how the economy is doing for families and for people. Of course, what that -- what we always talk is about what we are doing and what we expect that will create a change. Then in the middle, you may have elections, you may have interest rate going up that you couldn't expect before, many things living in a country, in a developing country that, I mean, 1 month ago was in the border of hyperinflation if the elections were with a different scenario. And now we are all again drafting that -- but with a lot of volatility in the middle that you have a lot of interest rate going now and families being affected. That's why it's not that easy to predict what's going to happen. It's our best estimate with considering what we can control. As you know, people do estimates. So what we are doing is, of course, we changed the score of the customers we are lending to. Our score now it's a better score. It's a higher score. We are -- we cut a lot of the lower scores that we used to have. We reduced limits in some of the lending. we, of course, monitor the roles and we see the roles by vintage and by harvest. And we are seeing that new origination is behaving before than the old one. Then of course, you have in the middle credit cards, which is just that it's not new origination, credit cards, I'm talking about personal loans, the first thing. Now we're going to go to credit cards, it's old customers that starts to behave bad that you didn't do anything, but it just started to behave different because of adjustments they had in the family economy, et cetera. So in that sense, we are also seeing some slight improving in personal loans. I mean we are talking about -- we see personal loans improving, credit cards still having a heavy lifting, and that's why we still see this going on, on the third quarter -- on March. If it's February or April or May, I mean, this is again, I think what Carlo was saying, well, you are predicting ROE, you are a magician. We are doing our estimate today, I mean, with what we have. Of course, that we cannot guarantee that the ROE will be 11% is an estimation with the forecast we have as all banks does in the world. This is the same. This is with the tools that we have, we made those changes that we expect that they are going to reduce changes, again, going to better scores, cutting limits and monitoring that roles of the new lending is coming better than the old ones. Then we -- if there is something in March or February that happens that affects families' incomes again, well, we cannot predict that. But with the assumptions and the economy as is today, we expect this to happen. Yuri Fernandes: No, no, super clear. I know it's hard. Good examples. I was just trying to understand the -- what has changed, right? Gonzalo Covaro: We are talking also about the dynamics. Sorry, I didn't answer that one. The dynamic of the models, I mean the point is that when the new lending, you are booking new losses or new reserves for the new lending considering the behavior of the past lending. So you still won't see a lot of reduction in the I would say, the cost of risk in the same in the first month because even though you're originating or we are originating better quality, you still need to book reserves considering the past performance of your portfolio. You cannot say, well, this is -- these guys are better, so I will book a lower -- a better performance because you didn't see that in your book. So that's why at the beginning, you will take some time in have a reduction in the cost of risk because the new lending is also booked considering the behavior of the past lending. Then when you start proving that those lendings are -- or those customers are behaving better than the old ones, then you start reducing your cost of risk. But that's something that is gradual. It's not that quick. That's why we will see first quarter of next year still with higher provision. Operator: Our next question comes from Santiago Petri from Franklin Templeton. Santiago Petri: I understand you mentioned you're expecting return on equity by the mid-teens by 2027. I would like to know what loans to GDP assumption you are assuming for this achievement. And if this return on equity is the sustainable steady state that you are aiming at or you are aiming at a higher return on equity? And what will be the steady state loan-to-GDP penetration in Argentina under this assumption? Gonzalo Covaro: Mean what we are seeing is, I mean, loan to GDP today is around 10%, 11%, more or less. I mean, we are expecting in our projections, if everything goes right, that this can improve 2% per year. We -- our aim is to be a sustainable ROE between 15% and 20%, I would say. That's the aim. We expect, I mean, with everything going right with our assumptions to be around 15% by the end of next year. So starting at 15%, we -- I consider that by 2027, we could be in that range. Still, we don't know what Argentina will find by that time. But if everything continues to improve, loans to GDP continue to grow at least 2% per year, we believe that, that could be the range in 2027 and onwards, maybe 2027 still at mid-teens and 2028 already at higher teens. But our aim for the longer term with a country that is already stabilized with our changes in our operating model, we are also working in changing our operating model or how to serve our customers to reduce cost and compete with the fintechs, with Mercado Pago that we know that they have a much lower cost to serve. So with that already everything implemented, we -- our aiming is to be between 15% and 20%, I would say. And that should be after 2027. Pablo Firvida: Okay. I think that was the last question right? Operator: Right, Pablo. Pablo Firvida: Okay. Well, so thank you, everybody, for attending this call. If you have any further questions, please do not hesitate to contact us. Good morning, good afternoon. Gonzalo Covaro: Bye-bye. Pablo Firvida: Bye-bye. Operator: Grupo Financiero Galicia is now closed. We thank you for your participation, and wish you a very good day.
Operator: Good day, and thank you for standing by. Welcome to Azrieli Group's Third Quarter 2025 Conference Call for Global Investors. [Operator Instructions]. With us today are Ms. Danna Azrieli, Chairwoman and Interim CEO; and Ariel Goldstein, CFO. [Operator Instructions]. This conference call will be accompanied by a slide presentation. It can be found on Azrieli's site, www.azrieligroup.com on the Investor Relations page and the media room presentations, and the financial reports can be found on the website as well. I would like to remind everyone that forward-looking statements for the respective company's business, financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Please note that today's conference call is being recorded. I would now like to hand the conference over to your speaker, Ms. Danna Azrieli, Interim CEO. Please go ahead. Danna Azrieli: Thank you. Good afternoon, and thank you for joining the Azrieli Group's earnings call for the third quarter of 2025. I am very happy to be here today leading this call as Chair of the Azrieli Group and Interim CEO. In the third quarter, we delivered strong results with another record NOI, presenting a double-digit increase of 12% year-over-year, mainly from our data center segment, where our new projects have been completed over the past year, so we are now generating full income. Our mall segment also contributed to our growth. This is driven primarily by a strong performance over the summer. The FFO has shown relative stability, but you will note a slight decrease of about 3%, excluding senior housing operations. This decrease is attributed to an increase in our financing expenses as well as expenses related to our data center operations, including onetime items. The FFO, funds from operations, included in the senior housing sector showed a decline of 7%, but this stems from a decrease in the inventory of apartments that we have available for sale, because we have a 99% occupancy in our existing senior homes. We anticipate a significant increase in our FFO from the senior housing segment upon the opening of our fifth senior home in Rishon LeZion expected this December in 2025. Ariel will, of course, discuss this in further detail and what has affected our FFO. It's important for me to note that we continue to invest and improve our asset portfolio at all times. We do this in order to maintain the high standards of our portfolio. In this last quarter, for example, we invested approximately NIS 650 million in the third quarter, and we invested NIS 2.5 billion in the first 9 months of 2025. And these investments were both in properties in Israel and in our data center segment in the U.K., in Germany and in Norway. All of our investments are made grounded in the belief that developing and preserving our assets is an essential part of our growth and our strategy that drives future growth. Our investments this year have included, among others, the purchase of land in Sde Dov for a senior housing project and investments made in development projects under construction, for example, our flagship project of the Spiral Tower, which I see from my window, where we're already at the 67th floor and which is rising every day until we'll reach the 91st floor, and the continued upgrade and development of our income-producing properties in all segments. In every investment and every project, we uphold the standard of design, construction and quality that defines one of the important principles of the Azrieli Group, the goal of ensuring that our properties remain top tier and that they are maintaining the highest standards and retain their long-term appeal. An example of this is where I'm sitting today, in the Azrieli Towers in Tel Aviv, where this strategy has proven successful since we are here for almost 3 decades after its inauguration, which was in 1998, and this complex continues to be one of the leading assets in the city operating with virtually 0 vacancy and continues to be in great condition. Now let's take a look for a moment at our key operating segments. In offices, the same-property NOI remained stable, and the results for the quarter were largely influenced by the departure of a large tenant. We're talking about Meta. When compared to the prior quarter, please note that these results included a onetime compensation payment related to the tenant's departure, which was recorded in the second quarter. But I want to stress that we have seen a resurgence of interest and a super strong demand over the past few months, mainly concentrated in Tel Aviv. To date, we have leased around 80% of the space vacated in Sarona at higher prices, mainly by leading high-tech companies and start-ups here in Tel Aviv. I was delighted to see that according to LinkedIn ranking, 4 of Israel's top 10 start-ups are our tenants in the Sarona Tower, where it's considered one of the best commercial addresses to be in, in the city. The balance of vacant space is currently under negotiation with several potential tenants, and we are quite confident that the favorable leasing trend will persist. Regarding SolarEdge, I am quite pleased to report that last week, as we reported, we reached an understanding with SolarEdge, where they will lease 60% of the area of the building, and we'll take back and lease to multi-tenants the remaining 40% in exchange for agreed-upon payments. This agreed-upon payment supplements the previous payment that we also received when the lease commencement date was postponed. Our expected NOI for this project will be approximately NIS 80 million, similar to our original estimations for this project. What I like about this deal is that I think it's more suited to the DNA of the Azrieli Group. We can now anticipate multi-tenants in the project, and we will be responsible for the management of the campus to ensure that it will be managed in the best and most professional manner. We do what we do best and SolarEdge can do what they do best. We view this as a positive development and a win-win outcome for both SolarEdge and for us in the Azrieli Group. The area in Ramat HaSharon, where the building is located, is going through an amazing transformation and development. The Ramat HaSharon municipality is highly committed to promoting its growth, and there's a lot of development and construction work in the area. New roads are being built, and we are continuing full speed ahead with our beautiful building, and we're very excited about the way this is developed for all involved. In our mall segment, occupancy rates have remained extremely high, currently at 99%, with an increase in same-property NOI this quarter. Following the disruption in the Israeli retail market that we experienced last quarter due to Operation Rising Lion and the closure of shopping centers in June, we're seeing an impressive recovery in store sales this quarter. Sales rose 4% in July through September compared to 2024, and 2024 was a very strong year for Israeli retail. As always, we continue to enhance our properties and to optimize our tenant mix. We're always thinking about ways to keep our malls current and interesting, so that when we renew our contracts and bring in new deals, we're creating new and fresh experiences for our customers. In our senior housing sector, where we're operating in Tel Aviv, in Ra'anana, in Lehavim, and in Modi'in, we're in a situation where our available inventory of new units is running low because of the success of our sales team. This is reflected in our FFO, since FFO figures are primarily a function of new resident intake or resident turnover. But of course, we have our new project in Rishon LeZion coming online at the end of this year in December, and we expect this to have a positive impact on our FFO next year. At the same time, we see an improvement in NOI in senior housing as a result of higher occupancy rates in our current projects with double-digit increase in same properties. I'm also happy to tell you that we've renovated our properties in Tel Aviv and in Ra'anana, the pool and the kitchen areas, and we're always working to create the best experiences for our clients. Our new project in East Rishon, which we call Rakafot, will include 274 apartments, a medical unit and 3,000 square meters of retail. Apartment sales are progressing at a good pace, and the opening of this home is expected to drive significant FFO growth in 2026. Data center. Similar to our last quarter, our data center operations comprised 17% of our operations in terms of NOI and have made a significant contribution to our results. We're seeing impressive year-over-year growth driven by the TikTok deal, which has been generating full income in recent quarters. You will also note that there is an almost 100% increase in the NOI from the previous quarter from last year. There is a slight decline quarter-over-quarter, which is attributable to foreign currency exchange rates. In August, we reported that our project in Germany, which we call KMW, and where we are equal partners with the German electricity company, engaged in a contract to build 36 megawatts of capacity for an international customer. Since our share in the venture is 50%, that's 18 megawatts for us. The customer has also been given the option to increase their capacity by an additional 18 megawatts for a total amount of 54 megawatts in the entire project. The project, as it currently stands, is expected to begin producing income within about a year from now during the fourth quarter of 2026, and upon reaching its full capacity, without the option, will generate around EUR 51 million in total with our share being around EUR 25.5 million. We're making very good progress in this development. In the data center segment in general, we have great confidence, and we see numerous opportunities that we're working tirelessly to pursue. A few updates on some other activities. For the Mount Zion Hotel in Jerusalem, we're very excited, because we recently signed a management agreement with the Kempinski chain. Kempinski is one of the world's leading luxury hotel chains and the hotel in Tel Aviv is, of course, one of the most successful in the country. The project is expected to be one of the most beautiful hotels in Israel in an incredible location, and it is a true honor to be able to build in Jerusalem. This is a very exciting development, and I believe it will be a big success and a magnet for both domestic and international tourism. Regarding our recent merger with ZMH Hammerman, we have recently successfully closed the very important transaction that we are working diligently to do to integrate the company into the Azrieli Group in the best possible way. I take the subject of this merger very seriously, and we have started a robust process of a post-merger integration, PMI, in order to integrate our 2 companies, which both have strong, high-caliber management teams and cultures, in the best possible way. I'm confident that combining our capabilities will create meaningful value for our shareholders and where we'll soon share more about our strategy in the residential area in the coming quarters. And now it is my pleasure to give the floor to Ariel Goldstein, the CFO of the Azrieli Group, who will review the financial parameters in more detail. Ariel Goldstein: Thank you, Danna. We will now review the key financial parameters of the financial statements. The results of the third quarter indicate continued growth in the group operating segment. NOI totaled NIS 657 million this quarter, up 12% from the same quarter last year. The increase in NOI totaled NIS 71 million. Of this figure, the data center segment contribution was NIS 55 million, resulting mainly from the inclusion of the entire income from the TikTok project. In the same quarter last year, partial income was included from 1 out of 3 of the project buildings. NIS 10 million derived from the increase in the retail segment. The increase results from a raise in rent and occupancy of the Check Post project in Haifa. NIS 1 million derived from the increase in the office segment, mainly resulting from the rise in rent, net of impact of Facebook or Meta vacating their offices in Sarona. As Danna noted, we have already marketed over 80% of the space vacated by Facebook/Meta, but the actual occupancy is being carried out gradually. Therefore, the full impact of the rent income has not yet been expressed in the report. Senior housing and rental housing each contributed NIS 3 million to this increase. Same-property NOI in the third quarter totaled NIS 588 million, up 2% year-over-year. Same-property NOI excludes a sum of around NIS 69 million, which includes the Check Post project in Haifa and the TikTok project. The increase in the company's same-property NOI results mainly from an NIS 8 million increase in NOI in the retail segment, an increase of NIS 1 million in the offices, and an increase in senior housing and rental housing of NIS 3 million each. The increase was offset by a decrease in the NOI in the data center segment, excluding TikTok in the sum of NIS 4 million, mainly due to a change in the exchange rate and decrease in utilized capacity of 1.8 megawatts, which was offset by the start of income generation in September from a customer totaled 4.8 megawatts. FFO, excluding senior housing, totaled NIS 395 million this quarter, down 3% year-over-year. FFO, including senior housing, totaled NIS 424 million, down 7%. The decrease in FFO in the quarter, including senior housing, derived from an increase of NIS 60 million in financing expenses, mostly due to an increase in interest expenses, a NIS 20 million increase in G&A expenses, deriving, among other things, from the expansion of the company's data center operations, and the onetime costs involved in the restructuring of GMG and related costs totaling some NIS 12 million. A decrease in the FFO of NIS 60 million from the senior housing, which was impacted by a decrease in the inventory of apartments available for sale, and an increase of around NIS 2 million in the other expenses, mainly taxes. The decrease in the FFO was offset by increase in the NOI of NIS 68 million. Moving to the balance sheet. Before we discuss the balance sheet figures, I wanted to remind you that on September 9 of this year, we closed the transaction for acquisition of ZMH Hammerman and converted it into a private company. The holding structure after the acquisition is 66.7%, is held by the Azrieli Group, while the minority of 33.3% is held by founding families. The full valuation of the company was set at a total of NIS 869 million after deducting transaction costs and dividend. The Azrieli Group investment is NIS 579 million. After the closing of the acquisition, ZMH Hammerman prepaid the 2 bond series in circulation totaled NIS 260 million. Accordingly, we included the balance sheet data of ZMH Hammerman as of the date of the report, including excess purchase price allocation to various assets in the Azrieli Group balance sheet. However, ZMH Hammerman results for the third quarter were not included since the acquisition was completed close to the end of the quarter. Starting from next quarter, the profit and loss reports of the Azrieli Group will also reflect the results of ZMH Hammerman. As of the end of the quarter, investment property and investment property under construction totaled NIS 51.4 billion, up nearly NIS 3.4 billion in the report period. This increase comes from investments, revaluations and exchange rate impact. On the investment side, we have invested this year to date, NIS 761 million in income-producing property under construction in Israel, mostly the Spiral Tower, SolarEdge Campus, Modi'in Lot 10, and the continuing construction of Palace Rakafot Senior Home in Rishon LeZion, which is expected to open this year. We have continued improving our existing income-producing property, investing NIS 290 million. We completed the purchase of a land in Tel Aviv Sde Dov for a total cost of around NIS 630 million designed for development of a senior home project to include around 350 apartments as well as retail space. In the data center segment, we invested NIS 793 million through Green Mountain Global, mostly in the continued expansion of Romford project in England, adding 14 megawatts to the 7 megawatts that are already producing income, and the continuing construction of some 7 megawatts in Norway, of which around 5 megawatts were completed in early September. The investment in the data center project in Frankfurt is structured as a joint venture. The company share is 50%, in which the investment is registered under the item of loans and receivables in the balance sheet and not under the item of investment property and under construction. During the report period, we invested around NIS 148 million in this project. In addition, we included ZMH Hammerman investment property totaled NIS 85 million, which includes the company's share mainly in [indiscernible] project in Tel Aviv, retail plus a car park, and a car park in West Tel Aviv. In the report period, we recorded a revaluation of NIS 805 million, resulting mostly from the change in the CPI and the decrease in the cap rate in the TikTok project in Norway in view of its completion and full operation. The weighted IRR of the retail and office income-producing property is 7%. The weighted IRR of the income-producing data center is about 7.3%. The gross financial debt is NIS 29.2 billion. The company's net financial debt is NIS 23.6 billion, comprising around NIS 37% of the total assets. The NIS 3.3 billion increase in the gross financial debt results from the closing of a nonrecourse loan in February of around EUR 371 million, which is around NIS 1.3 billion against the TikTok project in Norway. The receipt of NIS 280 million loan from development and expansion of data center campus in England, the expansion of Series I and raising of Series J bonds in the sum of NIS 2.5 billion, ZMH Hammerman loans total sum of NIS 773 million, and the impact of the increase in CPI linkage on the linked debt in the sum of NIS 687 million. This growth was offset mainly by repayment of bond, commercial paper and loans in the sum of NIS 2.2 billion in the period. The company's average effective interest rate in the report period is 2.8% with an average duration of 6 years. The average interest rate in debt in Israel in the period is 2.12% only. Note that we maintained a significant gap of more than 4% between company weighted cap rate and average cost of interest. To conclude, we will briefly review the financial statement results. Net profit in the quarter totaled NIS 396 million versus NIS 383 million year-over-year. The increase in the profit in the report period is mainly due to an increase in the company NOI, an increase in fair value adjustments and an increase in other revenues, net of the increase in G&A expenses and financing expenses. The increase in G&A expenses include onetime costs involved in restructuring of GMG and related costs totaled NIS 12 million. Comprehensive profit totaled NIS 361 million this quarter versus NIS 523 million in the same quarter last year. Comprehensive profit this quarter was impacted by profit net of tax deriving from the holding of Bank Leumi shares in a sum of NIS 73 million and a loss from translation of differences of NIS 101 million, resulting mostly from the appreciation of shekel against foreign currencies during the period between 1% to 2%. During the same quarter last year, we recorded a profit of NIS 146 million net of tax from the holding of Bank Leumi and NIS 4 million profit from translation differences. We will now hold a Q&A session. Operator: [Operator Instructions] And now we will take our first question. The question comes from the line of Charles Boissier from UBS. Charles Boissier: Congratulations on the lease-up at Sarona Tower. I have 2 questions on data centers and then one question on offices. So on data center, you mentioned that the customer in Germany had the option to increase the capacity by 18 megawatts. And I was wondering when would you know if the customer is taking that option or not? And then still on data center, you also mentioned that you're working on a number of opportunities. So I was just wondering if you could perhaps mention a few of those opportunities on which you're currently working in data center. And second on offices, so you clearly mentioned that there is very strong demand from the tech sector, especially for Sarona Tower, which is a very prime location. So my question was, to what extent is the demand strong also from the non-tech sector and the overall office market condition? And what's your view on the job displacement from AI, which is currently a big topic in the office market today? Danna Azrieli: Well, you covered so many topics in some questions, Charles. Nice to hear you. I'll try to answer if I remember all the questions. About KMW in Germany, when we have an update about it, I'll be very happy to update. And we're doing very well in that project. We're building the buildings, and we're looking forward to the first phase. And as soon as we hear something, we'll be very happy to update. With regard to the second question, which is future projects, we're checking all the time projects and opportunities that come across our desks. We have a team of people constantly looking into things. And I'm sorry, I can't be more specific. But once again, I definitely look forward to be able to giving an update as soon as we have one that we're able to share. And with regard to Sarona, I can tell you that we've been incredibly happy with the kind of demand that we're seeing. First of all, the rental rates are very good. And it's not only from the high-tech sector. I'd say that the building is around 40% in high-tech. Of course, it's a very strong demand, and it's a nice demand and the people are young and cool and it's nice to see them there. But there's also demand from other sectors as well. There's been a lot of investment in Israel in the last 2 quarters, although primarily interested in our high-tech and other industries having to do with Israel's technology sectors. There's all of the adjacent industries that are related to that, so other offices are also taking space. And with regard to AI, I mean, I'd be curious to hear your thoughts as well. There's a lot of talk, but as far as we can tell, there's still tremendous interest. And I think the world is still heading in that direction. AI is one of the hottest topics today. Maybe Ariel wants to add something about it. We're constantly looking into it. As far as we can tell, even if people are wondering where the money is going to be in the future, they're still very much investing, because this is really where most of the industries are going in all sectors. From the low-tech to the high-tech, everybody is using AI. And so I think it's very much here to stay. And those are my thoughts. I think I hit all of your questions, but maybe Ariel Goldstein wants to add? Charles Boissier: Yes. Yes. Perfect. Thank you. Danna Azrieli: It's okay. And nice to hear you. Charles Boissier: No, it would be nice to hear Ariel's views as well. Sorry, I didn't mean to interrupt. Ariel Goldstein: No, I think Danna covered -- AI is going to stay. We are heading the AI. Maybe the AI is getting very high pricing in the market, but at the end of the day, all of us will enjoy and enjoy AI today. We are enjoying from the AI development on the data center side, yes. We enjoy from the AI on the offices in Israel as well, because the industry and the high-tech companies are investing into this market. And we just saw this week figures from Bank of Israel of the numbers that were invested in the high-tech industry in the last few quarters as they are very high, yes, compared to the previous quarter. So it's very encouraging from our point of view that our economy is going back to the situation before the war. We feel it on the shopping centers, we feel it on the economy figures in Israel, and we are very optimistic in that respect. So the AI, yes, all of us are going to enjoy from this, and we will have to do some adjustments as well, yes, because probably companies, software companies will have to adjust the numbers of their employees to the fact that many of their operations will be done by AI. But it doesn't mean that at the end of the day, they will not grow very fast in other parts of their business, and they will require more office space. So we don't think this will impact over our business. Oppositely, we think that this will give us a push ahead into the economy and all of us will enjoy from this new era of AI. Operator: Dear speakers, there are no further questions for today. And I would like to hand the conference over to Ms. Danna Azrieli for any closing remarks. Danna Azrieli: Okay. First of all, thank you all for being here today. We had a solid third quarter, and the Azrieli Group is strong, diversified and is focused on ongoing development, which we'll continue to do so in a thoughtful and balanced manner. I remain optimistic about the future and the growth and prosperity of our dear country. And I thank you all for being here today, and I look forward to seeing you and hearing you at the earnings call for the fourth quarter and annual summary of 2025. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.