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Operator: Welcome to the Trelleborg Q3 2025 report presentation. [Operator Instructions] Now I will hand the conference over to CEO, Peter Nilsson; and CFO, Fredrik Nilsson. Please go ahead. Peter Nilsson: Hello, everybody. Peter Nilsson speaking. Welcome all of you to this Q3 of 2025 results. What we're going to give you some of our, let's say, input on how the quarter developed. Joining me on this call is also Fredrik Nilsson, our Group CFO; and also Christofer Sjögren, who is heading our Investor Relations. So as usual, we're going to refer to a slide deck from our web page. And then on that, turning to Page 2 on that section, the agenda slide and a normal starting with some general highlights, some comments on the business areas, and then Fredrik's going to guide us through the financials and then finishing off with a summary and some comments on the outlook for the running quarter. And then finally, ending our call with a Q&A session. So that's the agenda for this call this morning. Turning then to Page 3. Heading of our report, organic growth with higher margin. So a solid quarter in more or less all aspects, the development in the right direction in more or less all aspects, sales ending up relatively flat compared to last year in Swedish krona, an increase of 1%. But behind this, a very solid organic growth, plus 4%, which is something we have not seen for quite some time. M&A also benefiting. We have done several acquisitions, several smaller bolt-on acquisitions here in the last 12 months. And that is, of course, also bringing in some sales. So that is adding 3%. And then we have a currency headwind, well known by everybody, which is 6% in the quarter, which is then once again ending up with a 1% on the total sales. EBITDA also up and also with an improved margin, which is an all-time high margin and results for the third quarter. We are, let's say, a notch above 18% EBITDA margin in the quarter. And this is, as I already said, it's a stronger third quarter to date for us, both in terms of profit and margins. So solid. And I mean, the great thing, you're going to see later also is coming from all business areas. We have a substantial negative FX on EBITDA, almost SEK 100 million or SEK 90 million, bringing us in the wrong direction, if you may say. Items affecting comparability running as planned, relatively high level this year, but also coming from this rather high number of acquisitions, which is then kind of creating opportunities to improve the structure and then make sure we get all the benefits from these acquisitions as we move forward. Cash flow, very strong. I mean, we have to admit, surprisingly strong ending of the quarter on the cash flow, which, of course, is going to bounce back a little bit here in Q4. But nevertheless, we are happy to have the money in our pockets instead of sitting somewhere else. So very solid cash flow, which is, of course, yes, creating a stronger balance sheet and overall, a better business. We've done a smaller acquisition, small but important acquisition in Singapore called Masterseals, which is an acquisition which is strengthening a little bit, oil and gas markets and generally more in the kind of aftermarket-related segments of Sealing Solutions, which is an area which we are developing at the moment, an area we're growing into kind of a global business for us. Also note, continued share buyback on a level slightly north of SEK 500 million being spent on share buybacks in the quarter. So this is the quarter. This is what it is. And I mean, overall, once again, a solid quarter. So turning then to the next page, Page 4, where you see new slide for us, which I hope you will give some more input on the sales split per geography, which I don't going to comment that much on. But we also, more importantly, we see organic growth in all 3 major geographical areas, with Europe for us being the softest, slightly better in Americas, 5% organic growth in Americas, which is kind of on a high level, driven a little bit by project deliveries, but that's the way it is. But nevertheless, good solid quarter and a very solid quarter also for Asia, then particularly strong in China for us. But overall, strong in Asia and kind of a little bit bounce back in Americas and then Europe a little bit softer. So this is the -- and in all areas or levels, which, I mean, we have not seen for some time, especially if you talk both Americas and Europe while Asia continues on a good level, as you've seen throughout the year for Trelleborg. Turning to Page 5, the agenda slide, business areas and then quickly turning to Page 6 with some more detailed comments on Industrial Solutions, organic growth and we say stable margin, a slight uptick in margin. Organic sales 2%; M&A, adding 4%. And then, of course, also, as others here, a negative exchange rate of some 6%. Also behind these figures, we see oil and gas project declined in the quarter, sales declined in the quarter, but that is mainly due to a rather tough year-on-year comparison. Overall market still developing well and a very solid cash flow. But some of these sales is rather project heavy. It is that it sometimes goes a little up a little bit and sometimes it will be down and this quarter was a little bit down in the sales, but it's not -- once again, it's not a reflection of overall lower activity in this part of the business. Construction industry is still muted but we noted satisfaction that is getting slightly better if you look sequentially, although still, let's say, quite strong decline if we compare year-on-year. But once again, some light in the tunnel and some improvements kicking in. Automotive sales increased in the quarter. I mean it's been a little bit -- how should I say a little bit strange quarter, if I may say, for automotive. Those of you following automotive, you see that it's still relatively tough sales in Europe and North America, while China was extraordinary in the quarter, which as I said, 10% plus organic growth. And I mean, the business that we have in Industrial Solutions has a very good market share in China. And that is where we benefit from this. So we have actually a strong development in automotive within Industrial Solutions in this quarter. And then EBITDA and margin improved slightly. I mean Industrial Solutions is a fairly diverse business, and there are some ups and downs always. But overall, we continue to move in the right direction. We continue to improve. It's not major steps. It's a hard work coming from kind of operational focus and also some of the structural investment, structural improvements kicking in. Overall, a good quarter, well managed in more or less all aspects. And then we also should note that when we look at the margin here, this acquisitions that we've been doing is on a lower margin than the overall, and we have some tens of a percent negative kicking in for that. It could be -- I don't know, looking at Fredrik, 0.3%, 0.5% on the margin actually coming from kind of this acquisition kicking in and it will take us a year or so before we can get them back to the overall margin of Industrial Solutions. But that is also something that you need to note when you look at the margin development within Industrial Solutions. Turning to Page 7. Trelleborg Medical Solutions, strong organic sales growth. Organic sales is up by 13%. M&A, not doing any changes, so 0 impact from that. But we have to note here as well that we have some project deliveries related to one of our major customers, which is, let's say, boosting the sales dramatically -- in the sales. I mean, if you look underlying and try to kind of neglect these organic sales, I mean the more correct probably underlying organic sales is more in the kind of mid-single-digit territory. Medtech sales, we see also medtech sales in Europe developing well. North America, where we still -- struggle is the wrong word, but we still see some negative development where we still have some inventory issues. We don't see the overall activity going down, but we still see our sales is a little bit below where it should be. So we are pretty certain that we're still impacted by inventory reductions especially in North America, which we have been for some time, and we honestly, we believe that it's going to turn the corner, but we see it continuous. It is difficult to really see through exactly when it will turn, but we continue to gain business. We continue to gain orders, and we are overall satisfied with the development, even though the sales, we would like to sell more, of course, in Americas as well going forward. Life Science, which is kind of the smaller segment of medical, is developing, if I may say, very nice, and we are growing that. And we are starting -- we have been investing in that segment with new factories, both in North America and in Europe, and with satisfaction, we see that these investments is slowly, let's say, benefiting us, and that is an area also where we see continued growth going forward. EBIT margin up and also, let's say, in absolute terms, we have EBITDA up. I mean there's higher volumes, as you expect, but also continuous structure improvements, especially starting to benefit from -- continuing to benefit from this acquisition of Baron that was made, let's say, a year ago now. Turning then to Page 8, Sealing Solutions. If I may say, very solid organic growth in the quarter coming from several areas. But I mean, if I should highlight something, it's really that we have underlying kind of industrials, the big kind of industrial segment of TSS is starting to do better. We see now growth in Europe kicking in. Asia continued on a good level, which has been good for us for quite some time. We continue to see some weakness in North America. But overall, these core segments of Sealing Solutions improved in the quarter. Both in sales and also kind of a higher activity level. Automotive for TSS is still below last year, particularly still impacted by, let's say, very soft development, very soft development in the aftermarket business. And we cannot -- I mean, it's not like the aftermarket in itself is down. It's more that we see very, let's say, uncertainty, especially in the North American market, this is -- we see that they are downsizing. In stock, inventories is down, and we do expect it to kick back. But also here, we don't know exactly when, but it is kind of we are supplying substantially below the market demand for a few quarters here, and we do expect that to bounce back eventually. We note in automotive here as well as we also commented on TSS, a very good development in China. We have a good market share for some of the products, in TSS, especially that's our shim business, our brake business has a solid market share in China. And of course, we are benefiting from that as the Chinese market has been developing very, very good in the quarter. Aerospace, very strong all over. We continue to, let's say, get more orders than we sell. So let's say, order book is growing and the activity level is growing. Of course, we note, as a trusted -- the ones of you was following aerospace that's about Airbus and Boeing is very ambitious in the growth plans going forward, and we, of course, do our best to follow that. So good development in aerospace. And overall, this means that EBITDA and margin is improving, higher production volumes kicking in. We have been underproducing for some time. And we see also the benefits from the operational improvements, but we also have to note also here we have a negative impact from acquisitions being made, which is kind of the same dimension as we see in Industrial Solutions, some 0.3%, 0.5% negative impact on the margin if we were trying to kind of adjust for the acquisitions. But we're doing the acquisitions, of course, because we believe they are good for us and they are improving the business overall, but it will take some time to get all business improvements into the margin. Already commented on the Masterseals acquisition in Singapore that is part of small acquisition, but it's part of an overall game plan to strengthen our activity within, let's say, aftermarket for seals and especially related to oil and gas and mining and other segments, which is more kind of project-related where you need, to say, local presence in order to get this business into our books. So that's -- we're happy to be that, and we think it's a good strategic add-on, although once again on a very minor level compared to the overall sales of Trelleborg. Turning to Page 9, some comments on sustainability, continue to improve substantially. I mean, we say here, we are not getting to the end of the game, but we are getting down to levels of CO2 emissions from our Scope 1 and Scope 2, which is kind of becoming very low. We're, of course, going to continue to improve. We continue to do better also in this aspect. But I mean, do not expect these kind of improvements steps going forward. Next page, Page 10 and it's basically the same here, where we have a substantial tick up in share of renewable and fossil-free electricity. We are now up to 92%. And I mean the remainder here is very difficult because in some geographies, you actually cannot get it, and we are getting also here to a situation where we cannot improve that much anymore to you on this because we are, let's say, stopped either but by very major investments to turn it around or that is simply not available in a few geographies. So very good development, very happy to show this. There was continued good development in sustainability, and we are doing good in these aspects. And I mean, once again, the focus -- we cannot improve on this criteria. So the focus going forward will be more smaller steps and more kind of what we call say, energy excellence programs. We'll be working hard with all the factories in order to improve and to do better in more minor aspects. So these big steps, you will not see these big steps going forward, but we're getting to a situation. I don't say it being perfect, but we're getting to a level where we cannot justify the final steps to get it even better. Turning then to agenda slide again, Page 11, financials on Page 12. I'll leave it over to Fredrik to guide us through this section. Fredrik Nilsson: Thank you, Peter. Let's then start on Page 12, looking at the sales development. Reported net sales increased by 1% from SEK 8.442 billion to EUR 8.532 billion. We have organic sales growth in all 3 business areas in total 4%. Structural changes added 3% growth in the quarter. And then as Peter mentioned, we have negative translation effects that reduced growth by 6% during the quarter. If we then move to Page 13, showing historical sales growth. In the third quarter, we were close to our sales growth targets, achieving 7% sales growth at constant FX. Looking at Page 14, showing the quarterly sales and rolling 12 for continuing operations. The sales in the quarter, as I said, reached SEK 8.5 billion at net rolling 12 months, it's reached SEK 34.7 billion. Moving on to Page 15, looking at the EBITA and the EBITA margin, that continued to improve further. EBITA excluding items affecting comparability, increased by 5% to SEK 1.541 billion in the third quarter. We saw profit growth in all 3 business areas. And looking at -- we start with Industrial Solutions, which was up 1% in EBITA due to operational structure improvements, which was partly offset by negative translation effects. And then Medical Solutions, up 10% in the quarter. And then finally, Sealing Solutions was up 6% in the quarter due to higher production volumes and operational improvements. And margin-wise, we rose from 17.3% up to 18.1%, supported by the organic volume growth and the operational improvements. Looking at then the EBITA and EBITA margin on a rolling 12 months basis. EBITA amounted to SEK 6.331 billion with a margin of 18.2% and EBITA has been growing with 6% during the last 12 months. Moving on to profit and loss statement. Looking into some more details in the income statements, items that are affecting comparability, SEK 72 million in the quarter, which was entirely related to restructuring costs for adjusting our cost base and due to the recent acquisition. Financial net I would say, on par compared to last year, SEK 126 million compared to SEK 128 million. This is actually despite that the debt level is higher this year. So that is also a good achievement. Tax rate for the quarter, excluding items affecting comparability, amounted to 26%, a slight increase due to timing. Page 18, earnings per share, excluding items affecting comparability, amounted to SEK 4.20 in the quarter and increased by 11%, and that was due to the higher profitability and the effect of the ongoing share buyback program. And for the group, including items affecting comparability, earnings per share were up SEK 3.94, also 11% up. Moving on to Page 19. As Peter mentioned, we have a very strong cash flow in the quarter, which reached SEK 1.741 billion. On a high level, half of the improvement came from the higher EBITDA and the rest from efficient management of the working capital. CapEx is well aligned with the communicated guidelines for the full year but marginally higher than Q3 last year. Moving on to Page 20, the cash flow conversion. The cash flow conversion was 92%. So we continue to deliver a high cash conversion ratio. Moving on Page 21, the gearing and the leverage development. Net debt at the end of the quarter at SEK 8.280 billion. Share buyback during the quarter was SEK 554 million, ended the quarter with a debt-to-equity ratio at 22%. So small improvement compared to Q2. And then net debt in relation to EBITDA, 1.1, which was slightly higher than year-end. But of course, we have also paid out a dividend during the second quarter, and we have continued the share buyback program. In other words, our balance sheet remains strong. Moving on to Page 22, return on capital employed reached 12% for the quarter, and our capital employed has increased compared to last year mainly due to the acquisitions, but I think also I would like to note that our return on capital employed has sequentially increased for Q2 to Q3. And then finally, the financial guidelines for 2025, unchanged compared to what we communicated after our second quarter CapEx, SEK 1.650 billion for the full year, restructuring costs around SEK 500 million for the full year as well. Amortization of intangibles, SEK 650 million and underlying tax rate for the full year around 25%. And by that, I would like to hand back the microphone to Peter. Peter Nilsson: Thank you. Agenda slide, summary and outlook. Quickly turning to Page 25. Looking at the quarter, organic growth with higher margins, good quarter overall, but it picked out a few highlights. We see in the quarter in improved -- generally an improved demand, higher activity levels or continued high activity level in some areas. We see an improvement in that. And we also note with satisfaction, of course, that all our 3 business areas recorded organic growth in the quarter, which has been quite some time since we saw that the last time. So overall, better activity, although not kind of a big jump upwards. But nevertheless, improvements in most areas. We also note that these higher sales is also improving our margins. We have a fairly sizable uptick in the margin year-on-year. And it then boils down to the strongest quarter -- strongest third quarter to date, both in terms of profit and margin. We also note that we continue to do value -- what we call value-adding M&A, although impact, this is our 10th bolt-on acquisitions since Q3 last year. And of course, this is a high activity level in [indiscernible] we said before, is impacting our margin negatively in Sealing Solutions and Industrial Solutions, but we are, at the same time, improving our overall positions, and we are very certain that this -- when that's fully integrated, there will not be a drain on the margin or rather the opposite, but it takes some time to get there. And we also note that continue buybacks, we continue to have a solid balance sheet, which is, let's say, allowing us both to continue on high CapEx level, continue to do M&A, continue to absorb the growth, which is in the quarter in terms of working capital, but also on top of that, we also continue to do share buybacks. So that was the summary and then turning to -- for the last quarter and then turning to Page 26 and some outlook. We expect the demand to remain on this level. For those of you who have read the reports see that we have this extraordinary sales or project sales within medical, we were not going to kick in. So with this outlook, you should read it that the continued overall demand, we might be -- we don't know exactly, as we otherwise were sitting exactly where we end up. But of course, we believe that this is probably not going to be of north of 4% in the next quarter, but we could be a 1 percentage point or some lower than 4%, but we believe it's going to be on a similar level. And I mean if this continued higher activity level, remain, then we will look with more positivism on the future. But with this comment, of course, also, we all know there is a big year -- still a big, what we call political situation or geopolitical challenges out there and things might happen, which could impact the demand short term. So that is, of course, with this comment on the continued good market, it comes with this kind of comment. And then turning to Page 27 agenda and into the final agenda point and turning to Page 28 and opening up for questions. Operator: [Operator Instructions] The next question comes from Alexander Jones from BofA. Alexander Jones: If I can have two please. The first on Sealing Solutions and specifically the Industrial business within that, you talked about higher growth this quarter. Could you help us understand was that broad-based or the particular end markets within Industrial driving that? And to what extent was that the end market improving or more market share gains and innovation success that you've had as Trelleborg? And then the second question, if I can, just on the Medical business. Can I clarify on the one-off project sales this quarter. Is there any element there have pulled forward that will be reversed in future quarters? Or is that just sort of one-off extra sales that we should not extrapolate in our future numbers? Peter Nilsson: Alexander, talking -- starting with the medical one, I mean that is really a startup of a new program for one of our customers, which is a one-off delivery. So it's not really about impacting the future. So it's not kind of a pull from any future sales. It's simply sales in the quarter due to the [indiscernible] starting new programs. So that is kind of the way it is sometimes, but it's not kind of any forward buying or something, it's simply a one-off sales. So nothing really that we need -- we don't expect it to -- yes, to impact the sales going forward. So that's it. And then if you talk about Industrial, I mean, one thing is also on the industrial sales of Sealing, which you've seen in the quarter, I mean we have been, for quite a few quarters, talking about destocking in these activities. So one of the impacts in the quarter is no more destocking, and we are kind of supplying in line with underlying demand. I mean, so that is one of the impacts. But we don't see still as an inventory buildup, but we still believe that there is supplying. But we are not kind of oversupplying in the way that they are building stock. And I mean -- and the core driver for this is kind of the biggest subsegment, if I say in Sealing, which is more hydraulics, machinery and this kind of core industrial business. That is where we see the improvements. So we're not surprised, I shouldn't say we're surprised because it's been undersupplying for a few quarters. And now we feel that we're supplying in line with the overall demand. So I don't know whether that is enough for you. Alexander Jones: Yes, that's very helpful. . Operator: The next question comes from Agnieszka Vilela from Nordea. Agnieszka Vilela: So I have a few questions, maybe starting with the first one on the growth trajectory in the quarter, if you could share any flavor of how was development in September? And then also, how is it progressing in October? And then also, Peter, I think before you used to refer to your order intake. So how is that developing right now for you? Peter Nilsson: I mean there was an improvement throughout the quarter, but also the trick on Q3 September is always important. Since the other 2 months is a little bit impacted by vacation period. So it was kind of an acceleration in the quarter, so a stronger ending than beginning in the quarter, but we don't, let's say, put too much emphasis on that one. But it is kind of an improvement in the quarter, if I may say. And October, I mean, we don't see any kind of differences and we don't really want to comment on it. So it's really overall guidance remains that we believe is going to be same growth in Q4 with, let's say, some adjustments coming from this extraordinary sales in Medical. So my read this, I mean it might be 4, it might be 3. But I mean, we don't really know. We have an overall good order intake. We have overall good activity level. I mean, we should say book-to-bill in the quarter is positive. We have booked more orders in Q3 than we have been selling. So we are growing the order book. But we also remain a little bit cautious on this because we know there is inventory focus, cash flow focus on some customers. So we don't really want to read too much into it. But if we simply did the Excel sheet calculation, then of course, we will, let's say, be more positive than negative in that one. I don't know whether that is enough, Agnieszka. Agnieszka Vilela: Yes, yes, absolutely. But then maybe if you could give us some color on the regional development as well. Obviously, you have -- you have had very strong development in Asia, now followed by Americas, Europe also now slightly positive. In the next few quarters, do you expect any changes to this order like any other -- any region taking over? Peter Nilsson: No. I mean I think Asia, little bit, has been a little bit extraordinary strong, especially in automotive since we have this big boost. I can't remember exactly, but I think production levels in China for automotive was up by some 12%, 13%. So that's, of course, since we have a high -- good position with a few of our automotive segment, that is benefiting us, but also the overall industrial development in Asia, especially in China has been good for us, somewhat difficult to fully understand, to be honest, but it's been ongoing for quite a few quarters, and we do not expect that to be -- of course, comps getting more difficult going forward. But nevertheless, a good development in there. Europe is probably more tricky in a way to read. But we see -- I mean, in the core, as I commented before, the core Industrial segments of TSS is improving. And that is more -- part of it is a reflection that no more destocking and more of kind of delivery in line with underlying demand. We do not see any kind of inventory buildup at the moment, and that is, of course, if it turns more positive, we will see that as well. So we've been undersupplying for a few quarters. We do expect as the market -- if the markets turn more positive that we will be oversupplying. But we don't really see that happening short term. But if you go into early next year and this development continues, we're probably going to have some of that. U.S. is probably, for us, a little bit more positive than it should be because we have a few project deliveries in U.S., which is kind of impacting the sales there. But nevertheless, let's say, for us, a good positive territory also coming there from kind of hydraulics and the pneumatic segments, which is also a part of our core business in North America for Sealing. I guess that is -- I don't know, Fredrik, if you want to elaborate. I think that is kind of just to be a little bit more color for that development. Agnieszka Vilela: That's very helpful. And then the last one from me. I noticed that you didn't really mention the tariff impact in your report or in your presentation. Was there any kind of growth tariffs now affecting you in the quarter and how are you mitigating those? Peter Nilsson: We have a few individual businesses where we need to kind of redo the supply chain and working with that. But I mean, overall, this kind of minor activity. So that is why we don't see that as a kind of impacting us. We have a very regional setup. We have as I said, manufacturing in Asia, we have manufacturing in Europe, we have manufacturing in the U.S., and we don't really have a lot of these flows going across. I mean, the challenge here is more the metal content where we need to find out. We have a few products, but we have metal content, and that is something where we need to work. And that is also our question going forward on these tariffs in Europe because some of the export business from Europe into other territories might be impacted by that. But it kind of remains an action point and that is something we're working on. But overall, on a group level, we don't see this at any topic in a way, to be honest. Underlying demand could be impacted, I mean to say. But I mean for our trading and margins, it's not really something that we discuss too much. Operator: The next question comes from Forbes Goldman from Pareto Securities. Forbes Goldman: Yes. One question on the TSS margin, which was quite strong here in the quarter. Is this the start of a sustained recovery there? And how are you thinking about the 23% target from here? What do you sort of need to reach it? Peter Nilsson: No. I mean it is a solid, let's say, step in the right direction. Looking at the margin, of course, once again, you need to remind yourself as well that we have also a negative impact from the acquisitions. Of course, it is a step up compared to last year. And we have always said that we're going to get this back to our levels and is kind of step in that direction. And then I don't want to guide exactly what kind of quarter, but it is coming as expected, as planned, if I may say, this margin expansion coming from a little bit bounce back in our core segments of TSS. I mean that is what we've been waiting for. Once again, we refer to this kind of fluid power, hydraulics, pneumatics, that segment, which is the major part of Sealing Solutions, and that is the area which is going to drive this improvement by extra volumes. And also in that extra volumes in the right areas, if I may say, because it's also driving kind of a positive mix within Sealing Solutions. So this is a step in the right direction, and we still have the kind of overall objective to get back to this, say, '22, '23, '24. I mean that is where we want it to be. And we are fairly certain that we are moving in that direction. Forbes Goldman: Great. I have a follow-up on that. TSS margins are typically seasonally weaker during the second half of the year. So could you maybe just say anything directionally about Q4? Peter Nilsson: No, we don't want to do. I mean, we are moving in the right direction, and we are -- of course. I mean TSS is more, should I say, consumable where we supply into the supply chains of a large number of industrial customers. And I mean there is always Christmas breaks and all of that. So it's always a bit softer by the end of the year depending on the activity level that they're planning for after the holidays. And that is the same seasonality as we always have. So it's -- I don't know if we can comment any more on that. I don't think so. I mean that is the way it is. Forbes Goldman: Final follow-up. On the restructuring cost, it looks like quite a big step-up here into Q4. Anything in particular happening there? Fredrik Nilsson: No, nothing really. It's more a timing. So there are some projects that we have worked with for a while, and that will be booked as restructuring costs during the fourth quarter. Operator: The next question comes from Hampus Engellau from Handelsbanken. Hampus Engellau: Could we discuss organic growth on the group level and I guess also in Sealing Solutions, if you would remove Automotive, just to get a sense on how the underlying ex autos is moving, given that we have an opinion on autos going forward? Peter Nilsson: Automotive in Sealing Solutions was not positive. So that is something where we -- because they are severely hit, but they are hit by specialist aftermarket dropped for our brake business. So that is kind of negative. So I mean, if you neglect for Automotive, in Sealing Solutions, is actually going to be even better. So that is the one. We are benefiting from the China OE sales, but that is in no way compensating for the drop in the aftermarket business. But for TSS, I mean it's not a major impact, to be honest, but there is a slight positive in Industrial Solutions in this -- what we call our boots business, where we have a very strong market share in China as well. So that is where we are benefiting. But I mean it's neglectable in a way if you look at Industrial because it's not a major business of Industrial Solutions, but it is positive. So that's one. So the underlying kind of non-automotive organic growth in Sealing Solutions is actually slightly better. Hampus Engellau: Excellent. And do you bear giving some indications on how you see autos -- autos part in Sealing maybe for Q4. I guess you presume you're looking at the S&P numbers and also have an opinion on aftermarket? Peter Nilsson: On the aftermarket -- sorry, your... Hampus Engellau: Yes. I guess on fetching for if you're expecting some contribution in Q4. Peter Nilsson: To be honest on that, we are a little bit surprised that it continued on this low level. It's not that people are kind of changing less brakes. And the only thing we can read into this that there is where we have some carriers, we have some metal content in those and some of our aftermarket customers are kind of reluctant to build. Also, when they order from us in Europe, and we are sending to U.S., it takes 6 to 8 weeks. And it seems like they are not buying, they're not speculating. But of course, the stock is going down and eventually, they need to fill it up. So that is -- I mean, where we are a little bit surprised, to be honest, about this rather dramatic drop in aftermarket, which is not -- I mean, it's not that either that they can buy from anybody else. They need to buy from us and because we are specified and we are kind of regional equipment suppliers, and so that is kind of a strange, which we have now seen for 2, 3 quarters -- 2, 3 quarters. So that is something where we don't fully understand. I mean sometimes you try to understand, but sometimes you cannot get the right answers, but it cannot continue on that. I mean, let's put it, you cannot continue on that level, unless people are neglecting, not changing brakes anymore. Operator: The next question comes from Timothy Lee from Barclays. Timothy Lee: I have a follow-up question on margin. So for Sealing Solutions, there's definitely a very good margin development in the quarter. Can I also say that it is implying some synergies that you get finally from the previous acquisition of MRP. Is it something that kicking in the quarter. And also in terms of the -- your previous target of the 20% run rate EBITDA -- EBITA margin by the end of this fiscal year. Is that still something you are looking for? Peter Nilsson: To talk about synergies, of course. I mean we have always said on MRP that I mean some of the major impact is coming from the hydraulics fluid power segment. And as that now we see finally some improvements in that. Of course, we're getting some benefits from that into the figures. But I mean it's -- MRP is getting more into normal business for us. So it's not really synergies as such. It's more that the market segments, which was strengthened by the MRP has been very soft. And now we see these markets getting back. And then, of course, we get the benefit into the figure. But we are not at the end of that one because it still has to go up. It should still -- I don't know exactly the figures, but we are probably still some 15% or something below kind of the levels where we believe it should be in that particular segment. So that is still at a low activity and especially you're talking about the farming in U.S., you look at little bit construction equipment, which is still, especially the agriculture looks still very soft. And that, of course, we're starting -- if you talk to the new administration in the U.S., I don't know -- it's difficult to kind of guess where they're heading. But one of the areas which I have not been kind of supporting yet and which have been suffering is, of course, the farmers in U.S. So if something comes into that area, we should see even better improvements, especially in that segment. About 20% is still within reach, but I mean it's going to be tough to get there, I mean, to be very open to get to that level here already in Q4, but we are moving in the right direction. And we still see that with the reach in a not-too-distant future. But I mean I shouldn't sit here and say that we can get to 20% in Q4, because that has been -- there has been some market development. We know the tariff situation. We know the geopolitical areas and we know this kind of softness still in the construction and, let's say, still -- yes, quite some distance to go before we are back to normal, especially in this fluid power, which is once again the major segment of Sealing Solutions. Timothy Lee: Understood. Very helpful. And my another question would be on your M&A potential. So Continental actually previously mentioned, they could probably look for the divestments of the ContiTech business. I'm not sure whether you can comment on this or whether it is something that you may see interest or if it's in your M&A portfolio? Peter Nilsson: Yes. I mean the overall ContiTech is definitely a lot of interest for us because the majority of the ContiTech business has no -- I would say, we are in the same overall segment. But if you look at their conveyer belts or timing belts or also this what I call surface solutions. I mean it's nothing to do with that. We have some overlap in terms of nonautomotive anti-vibration and some fluid or [indiscernible], which, of course, we will be interested if we could cherry-pick, but I don't think there will be any kind of cherry-pick possibilities. So I mean, we're watching it. We're looking at it. But overall, ContiTech is a not of interest for us. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Peter Nilsson: Thank you. And thanks for listening in our quarterly call. And summary of a good quarter for us, a good organic growth, good margin development and an improved demand throughout the quarter. We still note that there is still a lot of uncertainty in the, let's say, the global arena. And that is, of course, something we're watching, but we feel confident that we're going to continue to improve Trelleborg, and continue to build a better Trelleborg with ambition, of course, to deliver even better figures going forward. So thanks to all of you, and I am happy to support you in individual calls. Christofer is always available and so are Fredrik and myself, if you want any follow-up discussions or get some clarity on other issues not covered in the call. So thanks again, and see you soon and do take care.
Operator: Hello, everyone, and thank you for joining the Financial Institutions, Inc. Third Quarter 2025 Earnings Call. My name is Lucy, and I'll be coordinating your call today. [Operator Instructions] It is now my pleasure to hand over to your host, Kate Croft, Director of Investor Relations, to begin. Please go ahead. Kate Croft: Thank you for joining us for today's call. Providing prepared comments will be President and CEO, Martin Birmingham and CFO, Jack Plants. They will be joined by additional members of the company's leadership team during the question-and-answer session. Today's prepared comments and Q&A will include forward-looking statements. Actual results may differ materially from forward-looking statements due to a variety of risks, uncertainties and other factors. We refer you to yesterday's earnings release and investor presentation as well as historical SEC filings, which are available on our Investor Relations website for a safe harbor description and a detailed discussion of the risk factors relating to forward-looking statements. We will also discuss certain non-GAAP financial measures intended to supplement and not substitute for comparable GAAP measures. Reconciliations of these measures to GAAP financial measures were provided in the earnings release filed as an exhibit to Form 8-K or in our latest investor presentation, available on our IR website, www.fisi-nvestors.com. Please note that this call includes information that may only be accurate as of today's date, October 24, 2025. I will now turn the call over to President and CEO, Marty Birmingham. Martin Birmingham: Thank you, Kate. Good morning, everyone, and thank you for joining us today. Our company reported strong third quarter 2025 financial results marked by balance sheet growth, robust revenue generation, improved profitability metrics and meaningful build of tangible and regulatory capital. Our teams delivered growth on both sides of the balance sheet, including loan growth of 1.2%, driven by commercial lending in our Upstate New York market and a 3.9% increase in total deposits as seasonal increases of public deposits were supported by growth of core nonpublic deposits in our commercial and consumer business lines. Record quarterly net interest income and increased noninterest income led to net income available to common shareholders of $20.1 million or $0.99 per diluted share for the third quarter. These earnings translated to return on average assets and equity of 132 basis points and 13.31%, respectively, both up notably from the linked and year ago periods. Based on our strong year-to-date performance, we are making several upward revisions to our full year 2025 guidance and tightening some ranges previously provided. Among these changes are updates to profitability metrics, including return on average assets and return on average equity. We now expect ROAA for the year to exceed 115 basis points, up from our previous guide of 110 basis points and an ROAE of greater than 12%, up from 11.25%. Given our team's continued execution, along with the opportunities we see in our markets across business lines, we would expect to raise the bar for profitability again next year as we target incremental improvement in returns through 2026. We laid out loan growth of between 1% and 3% at the start of the year amid an uncertain economic environment. Given the strength of our performance year-to-date, we expect to achieve the high end of this range. As a reminder, our loan growth guide also reflects our expectations for consumer indirect loan balances to remain relatively flat year-over-year. with growth being driven by our commercial franchise. To that end, total commercial loans of about $3 billion reflect an increase of 1.6% from June 30, 2025, and 8.3% from September 30, 2024. Commercial business loans increased 2% during the third quarter of 2025, reflecting both new originations and increased line utilization which may come down in the fourth quarter. Commercial mortgage loans were up 1.5% from the end of the linked quarter and up 8% year-over-year. Third quarter commercial growth was driven by our upstate New York markets, including C&I activity in the Syracuse region and CRE in Rochester. In the Syracuse market, we continue to see expanding opportunities fueled by Micron Technologies' $100 billion investment in our region. For example, our Syracuse team recently closed a notable deal supporting the expansion of medical office space within close proximity to Micron's Central New York semiconductor site. Our pipelines remain strong across upstate New York markets, and we believe that we'll be able to maintain momentum heading into 2026 and as pent-up demand for credit is likely to be released with future rate cuts. Turning to consumer lending. Our indirect portfolio rebounded nicely in the third quarter on the heels of softer second quarter originations. Consumer indirect balances of $838.7 million at September 30 increased 0.6% from June 30 and were down 4.1% year-over-year. As a reminder, we are a prime lending operation with more than 350 reputable new auto dealers across New York State. Credit extension is for individual vehicle purchases, not floor planned financing, and we stay within a well-defined credit box, resulting in a portfolio with a weighted average FICO store exceeding 700. This portfolio's small average loan size of about 20,000 provides natural risk dispersion. Residential lending was up modestly from the end of the linked quarter and flat to the year ago period. The housing market remains tight in the Rochester and Buffalo regions and home prices have continued to increase, particularly in Rochester. That said, new listings and inventory are up on a year-over-year basis in both regions, which is promising. Our pipelines also look healthy heading into the fourth quarter and mortgage and home equity applications are up 12% and 11% year-over-year, respectively. Turning to credit quality. Annualized net charge-offs to average loans for the quarter of 18 basis points were half the level we reported in the linked quarter and relatively in line with the 15 basis points recorded in the third quarter of 2024. In the third quarter, we recovered approximately $400,000 related to a previously charged off construction loan associated with a historic property in our Rochester market. Our consumer indirect charge-off ratio was 91 basis points in the most recent quarter, up seasonally from the linked period but down from the third quarter of last year. This remains comfortably within our historic range, reflecting the prime lending nature of our indirect business. While we experienced 2 basis point increase in our ratio of nonperforming loans to total loans to 74 basis points at September 30, 2025. This is down notably from 94 basis points 1 year ago. We continue to work through the 2 commercial relationships that have made up the majority of nonperformers for the past several quarters. The $1.5 million increase in total nonperforming loans during the third quarter relates to 4 smaller commercial loan downgrades, each in different industries and geographies facing unique issues. Accordingly, this is not indicative of a downward trend in our overall commercial loan asset quality. The overall health of both our consumer and commercial portfolios remained solid and reflects enhanced diversification over the years. Indirect auto balances and residential lending make up 18% and 16% of total loans, respectively. Our commercial portfolio is well diversified by loan type, client type and geography and does not include any lending to nondepository financial institutions. We have consistently employed strong fundamental underwriting processes and have experienced credit professionals working in separate credit delivery and relationship-based functions. That credit discipline is reflected in our low credit costs. We remain comfortable with our guided full year net charge-off ratio range of between 25 and 35 basis points and our current loan loss reserve ratio of 103 basis points. Period end, total deposits were $5.36 billion, up 3.9% from June 30, driven by seasonal increases in our public deposit portfolio and also reflective of growth in core nonpublic deposits. As a reminder, public deposits are sourced through long-standing relationships with more than 320 local municipalities and the balances peak in the first and third quarters. Total deposits were up a modest 1% from a year ago, reflecting an increase in broker deposits to help offset the BaaS platform wind down we initiated in September 2024. BaaS deposits were a modest $7 million at the end of the third quarter, and we now expect those to flow off the balance sheet in early 2026. We continue to expect total deposits at year-end 2025 to be generally flat with the prior year-end. It's now my pleasure to turn the call over to Jack for additional details on our performance and outlook. Jack Plants: Thank you, Marty. Good morning, everyone. Net interest margin expanded 16 basis points on a linked-quarter basis, reflective of improved yields on average earning assets alongside deposit repricing that supported reduced funding costs. Our active balance sheet management contributed to 11 basis points of improvement to investment securities yields largely related to the modest portfolio repositioning that occurred in June. Activity continued during the third quarter when we sold $22.3 million of 30-year fixed rate mortgage-backed securities with higher expected prepayment speeds, the proceeds of which were reinvested into investment-grade corporate bonds. As this small restructuring was completed in September 2025, we expect to see further benefit to investment security yields in the fourth quarter. Average loan yields increased 3 basis points as compared to the second quarter of 2025. As a reminder, approximately 40% of our loan portfolio is tied to floating rates with a repricing frequency of 1 month or less. We expect loan yields to decline slightly in the fourth quarter given the recent rate cut. Cost of funds decreased 11 basis points from the linked quarter as higher rate CDs matured alongside overall downward deposit repricing. Given our year-to-date results, we're tightening our expected range for full year net interest margin to between 350 and 355 basis points. This guidance includes the expectation for modest margin pressure in the fourth quarter, given recent FOMC activity, as deposit repricing lags loan repricing, given the adjustable percentage of the loan portfolio previously mentioned. That compression is expected to be temporary based upon deposit repricing assumptions. Looking ahead to 2026, we anticipate incremental margin improvement to be driven by changes in earning asset mix through loan growth, coupled with active management of our funding costs. Third quarter double-digit margin expansion supported strong net interest income of $51.8 million, up $2.7 million or 5.4% from the second quarter. Noninterest income was $12.1 million, up $1.4 million or 13.6% from the linked quarter, reflecting increases from several revenue streams. Investment advisory revenue topped $3 million, up 4.8% on a linked quarter basis. Courier Capital experienced positive net flows as new business and market-driven gains offset outflows pushing AUMs to $3.56 billion at quarter end, up $173.6 million or 5.1% from June 30. During the third quarter, we announced the opening of a satellite office in Sarasota, Florida. The office allows our wealth management firm to better serve existing clients who spend time in Florida, while also opening the door to new relationships in one of the nation's most dynamic retirement markets. Third quarter company-owned life insurance income was $2.8 million, down from $3 million last quarter. As a reminder, in the first quarter, we initiated a COLI restructuring and the redemption of the surrender policy proceeds from the carrier did not occur until June, contributing to higher levels of COLI revenue in the first half of the year. Swap fee income was up 150% to $847,000 as a result of increased commercial back-to-back swap activity during the quarter. We also recorded a net gain on investment securities of $703,000, primarily related to the modest restructuring we completed in September. We expect noninterest income, excluding gains or losses on investment securities, impairment of investment tax credits and other categories that are difficult to predict, such as limited partnership income to exceed our original guidance of up to $42 million for the year. Noninterest expense was $35.9 million in the third quarter compared to $35.7 million in the linked quarter. This remains somewhat elevated, largely due to higher claims activity in our self-funded medical plan that resulted in a $452,000 increase in salaries and benefits expenses. While we do have stop-loss insurance, given the level of claim activity that we've experienced to date, we expect this expense category to remain somewhat elevated in the fourth quarter. As a result, we now expect full year expenses to come in closer to $141 million, approximately 1% higher than our original guide of $140 million. Professional services expenses of $1.7 million were up $237,000 from the second quarter, driven in part by outsourced compliance review expense and third-party commissions on swap transactions. These increases were partially offset by lower occupancy and equipment expenses due to a change in facilities maintenance service vendors and timing of costs associated with an ongoing ATM conversion as well as lower FDIC assessments. The ATM conversion project is substantially complete, resulting in an upgraded customer experience and the associated expense is now substantially reflected in our run rate. The strength of our balance sheet and growth of our relationship-based business lines supported robust revenue expansion that has more than surpassed expense growth during the year. The year-to-date efficiency ratio of about 58% puts us solidly below the 60% threshold we were targeting this year. We remain intently focused on expense management as we finish 2025 and move into 2026 in order to maintain positive operating leverage and a favorable efficiency ratio. Considering the strength of earnings from the first 9 months of the year, we are narrowing the range for our expected effective tax rate to between 18% to 19% for 2025, including the impact of the amortization of tax credit investments placed in service in recent years. We've been keenly focused on our capital stack as evidenced by the refreshment of our share repurchase plan during the quarter. We are also carefully considering our options relative to the outstanding sub debt given the repricing of both tranches that occurred in 2025. We are comfortable with our capital position, especially given the improvement in both our TCE and regulatory ratios in the third quarter. TCE improved to 8.74% and common equity Tier 1 increased to 11.15%, given organic increases in common equity through strong earnings, coupled with active management of our balance sheet and risk-weighted assets. Overall, our prudent balance sheet management, credit disciplined loan growth and resilient noninterest income has supported strong revenue generation and positive operating leverage. I am proud of our team's execution, strength of our operating results and the corresponding growth across tangible equity and regulatory capital ratios. That concludes my prepared remarks, and I'll now turn the call back to Marty. Martin Birmingham: Thanks, Jack. Our third quarter results demonstrate our capabilities and reinforce our excitement and optimism about the opportunities ahead. Profitable organic growth remains a top priority, and we believe that our year-to-date momentum will support a strong finish to 2025 and drive incremental performance in 2026. I would like to thank you for your attention this morning. Operator, this concludes our prepared remarks. Please open the call for questions. Operator: [Operator Instructions] The first question comes from Damon DelMonte of KBW. Damon Del Monte: First question, just regarding the margin and the outlook. Jack got the commentary here in the fourth quarter kind of being down modestly. Can you just kind of give us a little perspective if we have a couple of rate cuts this quarter, kind of when you would expect the margin to bounce back in '26? I mean is it kind of a step down this quarter and then a catch-up going into '26 with some kind of a grind higher? Or how do you think about the margin? Martin Birmingham: Yes. We've been fairly aggressive with some of our deposit repricing. We demonstrated that in the fourth quarter of last year. We made some changes right at the end of September. And with the expectation that there's going to be a cut this month in October, we're preplanning for adjustments there. So our guided range that we provided for full year margin, just given that there's -- it's late in the year would have -- a rate cut would have a modest impact to the full year guide. We'd still hold on that guidance potentially at the bottom end of the range. But I would expect that going into 2026, our jumping off point would probably be somewhere around 3.60%. Damon Del Monte: Got it. Okay. And then from there, you think it can kind of grind higher as you continue to benefit from new loan production and repricing of other fixed rate loans and continued management on the cost of fund side? Martin Birmingham: That's correct. Damon Del Monte: Okay. Great. And then just second question here on the buyback. Kind of good to see capital levels growing valuation still remains right around tangible book value. What are your thoughts on getting a little bit more active in the buyback and supporting the shares a little bit? Martin Birmingham: Well, we're pleased that our Board approved the buyback. It's another option that we have to support the shares and invest in ourselves, and we look forward to updating the market, Damon, when activity occurs. Damon Del Monte: Okay. Great. And if I could just sneak one more in on the loan growth. It sounds like you seem a little bit more optimistic today than you did maybe a quarter or 2 quarters ago. How do you look at maybe coming out of '25 and into '26, do you think you can kind of get back to that mid-single-digit rate of net growth? Jack Plants: This is Jack. I can take that one. So we're in the stages of building out our financial plan for 2026. Certainly, our experience we've had lately at the tail end of 2025 has been encouraging. I think that high -- or mid-single-digit growth, as you can is appropriate for modeling purposes. Operator: We currently have no further questions. So I'd like to hand the call back to Marty for any final and closing remarks. Martin Birmingham: Thanks to everyone who called in this morning. We look forward to continuing the conversation next quarter. Have a wonderful weekend. Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
Linda Palsson: Good morning, everyone, and warm welcome to our presentation of Afry's Q3 results. I will begin with some of the highlights from the quarter, and then our CFO, Bo Sandstrom, will provide a more detailed overview of the financials. So in the third quarter, we delivered stable results and improved our EBITA margin to 6.4%. We also saw a positive development of the order backlog, which increased 3.6% compared to the same period last year, or 5.3% when adjusted for currency effects. We achieved this despite a decline in net sales with a total year-over-year growth of minus 5.1%. Similar to what we saw in the second quarter, currency effect had a significant negative impact on sales. For Q3, it amounted to minus SEK 118 million. Sales volumes were also impacted by a challenging market we experienced in parts of our business, mainly in our global division Industry. The third quarter was also the first within our new group structure and our three global divisions. Under the new group structure, we have intensified our efforts to improve utilization and to structurally address the cost base. As part of this, we have continued executing on the restructuring agenda that we initiated during the second quarter. And for the third quarter, we report restructuring costs of SEK 31 million related to this, and they are classified as item affecting comparability. So to summarize, I can conclude that we have been able to deliver stable results despite a decline in net sales, and we continue our efforts to pave the way for profitable growth. Moving on then to the market, and let's start with Energy. We see a continued strong long-term demand across segments and on a global scale. Market activity is particularly high in areas such as transmission and distribution, hydro, and nuclear. At the same time, we are seeing some short-term regional variations. This is evident in areas such as thermal, solar, and wind power, where, for example, demand in the Nordics is currently somewhat slower. With that said, this kind of variations are expected over time for a growing and dynamic sector like the energy sector. For Global Division Industry, the demand remains mixed. We see that persistent global uncertainty continues to impact the overall investment sentiment in several segments. For example, in the Pulp and Paper, where the demand for new large-scale projects remains at low level. The slowdown in the Nordic industrial market is also impacted in the automotive segment. At the same time, we see strong market opportunities in areas such as defense and also within mining and metals, which is encouraging to see. And finally, in Transportation and Places, public investments in transport infrastructure and water remains at good levels across the regions. The investments are driven by large-scale infrastructure programs and increasing focus on climate and defense-related projects. At the same time, we see that demand in the Nordic real estate market remains at low level and is mainly driven by refurbishments and public investments. So now let's dive a bit into our new global divisions and their performance in the quarter, starting with Energy. We continue to see high project activity in several of our segments, which reflects the overall market that we experience in Energy. We report negative total sales growth in the quarter, which is impacted by significant currency effects of minus SEK 45 million as well as short-term regional variations in some segments. We keep profitability at a solid level of 9.8%, which is slightly lower than last year. Moving on to our Global Division Industry, a challenging market reflects the net sales development in some of our segments. Despite this, profitability improved year-over-year, and this is due to the ongoing capacity adjustments and the improved utilization in the quarter. In the second quarter, we announced the acquisition of Reta Engineering, a Brazilian company specializing in project and construction management services with a strong foothold in the mining and metal sectors. And in the third quarter, we completed the acquisition, and the numbers are consolidated into the Industry division as of September 1st. And finally, Transportation and Places. Here, we saw some sales growth in the quarter, which was driven by high activity in projects as well as improved attendance rates. Also on the EBITDA side, we continue to see positive development, driven by the continuous efficiency measures that we do in the division. I would also like to highlight some of our key project wins in this quarter. In the Mining and Metals segments, we were selected by the British mining company, Anglo American, to lead the pre-feasibility study for the Sakatti mining project in Finland. The mine is planned as a highly automated underground operation with low carbon footprint. And once operational, the mine will supply critical minerals that are essential for Europe's green transition. And Afry's strong expertise in sustainable engineering makes this a great fit. On the Energy side, we have signed a strategic framework agreement with Svenska Kraftnät, Sweden's national grid operator. This is the second of two recently announced agreements and covers technical consultancy and design planning services within transmission and distribution, which will strengthen Sweden's energy system. Svenska Kraftnät is one of our key clients in the Swedish energy market, and we are pleased to strengthen our partnership with them through these agreements. In Denmark, we have won a contract in the Road and Rail segment, covering comprehensive advisory services in intelligent traffic systems, traffic management, and emergency preparedness. With Afry's extensive experience in traffic engineering, this project is a great opportunity to deliver innovative and effective solutions that improve road user safety and mobility. And with these great projects, I would like to hand over to you Bo. Bo Sandstrom: Thank you, Linda. So I will cover the financials for Q3 2025. Quarter three showed net sales of SEK 5.7 billion and EBITDA, excluding IAC of SEK 362 million. On rolling 12 months, we are now at SEK 26.2 billion on net sales and remain right below SEK 1.9 billion on EBITDA. On the rolling 12 months development compared to 12 months ago, we carry significant negative currency and calendar effects, explaining approximately SEK 600 million on net sales and SEK 240 million on EBITDA. In Q3, with a net sales of SEK 5.7 billion, adjusted organic growth came in at negative 3.7%, where volume continued to be pressured by capacity adjustments during the last quarters. As previously, the decline in volume was partially compensated by positive pricing. For Q3, we continue to see higher average fees, although at a somewhat lower level than the last number of quarters. Total growth is reported at minus 5.1%, affected also by FX movement from a strengthened SEK compared to last year. The negative adjusted organic growth in Q3 was sequentially lower, and global divisions, Energy and Industry, both saw lower growth levels. In particular, Industry experienced a challenging market and continued capacity adjustments pressure growth rates. In Q3, Industry also saw show lower sales of material than last year, affecting the quarterly growth. Transportation & Places showed sequential improvement, mainly driven from the Road and Rail segment. The order backlog continued to develop favorably and is reported at SEK 20.4 billion, improving to last year, but somewhat lower sequentially. Currency adjusted, the backlog has improved 5.3% to last year with improvements primarily from Global Division Industry. The Energy division maintained the largest order backlog in relation to net sales at a level in line with last year, but improving 3.7% adjusted for currency effects. EBITDA excluding IAC is reported at SEK 362 million, and the EBITA margin was at 6.4%. Calendar affects EBITA with plus SEK 15 million and the EBITA margin with plus 0.2% to last year, so that calendar adjusted margin was marginally better than last year. Currency movements have marginal impact on the EBITA margin, but on absolute terms, we estimate a negative currency impact of SEK 13 million on EBITA compared to last year. Global Divisions Industry and Transportation & Places support the calendar-adjusted margin development of the group, while Energy reports the highest margin of the global divisions, but somewhat lower than last year in this quarter. We reported utilization of 72% for Q3 in line with the rolling 12-month level. Looking at the year-over-year development by quarter, we see that Q3 '25 is again behind last year, but with a decline at a lower rate than seen last two years. Utilization is a clear focus for Afry, and we are determined to turn the negative trend. We report SEK 31 million restructuring costs as items affecting comparability in the quarter. The restructuring costs again primarily relate to redundancies across the group. In the new group structure, we will continue to address our cost base as well as making portfolio optimization in quarters to come. And we reiterate our estimate of restructuring cost of SEK 200 million to SEK 300 million in the quarters from Q3 '25 to Q2 '26. We have not guided on phasing, but given that the cost levels were slightly lower in Q3, it is fair to assume that they will, on average, be higher for the upcoming quarters. Cash flow from operating activities in Q3 was stronger than last year. Available liquidity remained at SEK 3.8 billion. Net debt remained at SEK 5.1 billion, where the positive operating cash flow compensates completion of the acquisition of Reta Engineering that was completed during the quarter. On net debt to EBITDA, we remain at 2.9x. Normal seasonality would provide significant deleveraging in the last quarter of the year and take us to around or below our financial target of 2.5x. With that, I leave back to you, Linda. Linda Palsson: Thank you for that, Bo. So I would also like to say a few words on our next chapter and what we've achieved in the third quarter. So as I mentioned in the start of today's session, we launched a new group structure in the third quarter. We now operate through three global divisions, representing 14 core segments, which all will drive global sales and delivery. This has been a key milestone, simplifying our operating model and paving the way for profitable growth. During the quarter, we also intensified our efforts to improve utilization and to structurally address our cost base. As a part of this, we continue to execute on our restructuring agenda, which remains on track and will proceed as planned through the second quarter of 2026. We have also reviewed our existing incentive structure, and we took action to align and harmonize them. This will reduce complexity and suboptimization and ultimately drive group performance. And finally, strategies for each global division and segment are now in place, which provides a strong foundation to deliver on our strategic ambitions going forward. And even if we are still in the initial stage of our strategy execution journey, it's encouraging to see the progress we are making. As we finalize our group strategy and have the organizational foundation in place, we are ready to fully move on to strategy execution. We will share more details about this at our upcoming Capital Markets Day. In parallel, we are progressing according to plan with the implementation of the fit-for-purpose operating model while continuously working to address operational efficiency and our cost base. And as mentioned, we are looking forward to welcoming you to our Capital Markets Day on November 4, where we will be presenting our new strategic direction and our plans ahead. I'm excited to meet many of you there and to good discussions and insights. And with that, let's open up for the Q&A session. Linda Palsson: [Operator Instructions] And let's start with Raymond Ke from Nordea. Raymond Ke: A couple of questions from me. I'll take them one by one. The short-term regional differences in energy, could you elaborate a bit in terms of whether it's due to market, certain customers being hesitant, or where you are in these projects? Any color to help us understand sort of how long this might persist would be helpful. Linda Palsson: They are related to wind, solar, and partly to thermal, and it's mostly related to the Nordic region. We don't expect it to be that long-term. We see it more as a temporary bump, but there are delays in some investment decisions from clients in the Nordic market. On the other hand, on the same segments, we see a strong growth in Asia in the same segment. Raymond Ke: And regarding your restructuring plans ahead then, which, of course, may impact personnel. How many FTEs or how should we think about this when we compare sort of consultants against back-office employees? What's the sort of share of headcount reduction distribution there? Bo Sandstrom: Well, I'll provide some light on it, and then hopefully, you get even more light when we come to CMD. We haven't provided guidance on that split. But like we elaborated last time, Raymond, you will have a split between different kind of redundancy costs coming out from this restructuring. There will be a part that is more on a managerial level. There will be a part that is more based on the support structure of the company, and then there will be an operational part as we move ahead into the restructuring efforts. We experienced that in Q2. We see it again in Q3, and we'll elaborate a bit further when we come to CMD. Raymond Ke: Looking forward to that. And just one final one. On the new incentive structure that you talked about there briefly, could you maybe just clarify how was it before and why you expect it maybe to make a major difference or where you expect it to make a difference this time around? Linda Palsson: As we talked about before, now when we have deep dived into our organization and the setup and our ambition to simplify, we actually saw that we had a lot of different incentive structure programs that were somewhat contradictory to each other. So, by harmonizing this, this will drive our efficiency, it will drive internal mobility. And ultimately, it will support the development of Afry. Then we'll open up for Johan Dahl from Danske Bank. Johan Dahl: Just on this -- interesting to hear that you finalized the plan for the new divisions here to sort of improve the margins. I presume that's some sort of multiyear progression to achieve financial targets. And the question is, you have been quite clear on cost-out actions in the near term, the coming 12 months. But what other buckets do you identify in this plan to sort of drive towards financial targets? If you could just broadly outline those. Linda Palsson: I can start. Yes, of course, we have the cost side, but we also have the revenue side. And here, I mean, our sales effort is paving the way for that. As you have heard over the last quarters, we have been quite successful in securing important contracts going forward, and we are building our order backlog. And this will continue. So we've continued to put a lot of efforts into our sales force and also to our structured key account approach. And this is evident that this is a way forward for us. So that's related, I would say, to the revenue side and our structure going forward. And then maybe you should comment, Bo, on the other initiatives. Bo Sandstrom: No, I can just add to it. I mean, ever since we started the work with the next chapter of Afry that we will present in just a couple of weeks, it has been clear that it's a multi-component effort that we're working on, kind of starting in sense with the clients and the commercial aspect of the business that we're doing, but also looking at what is actually the portfolio and how do we structure that and then leading into the operating model and the cost-out actions that you are referring to. So it is a multifaceted, and we'll do our best to explain that in better detail also on CMD. Johan Dahl: Do you see currently -- you talked about positive pricing in the operations. But can you see currently in the order book proof of concept that the sort of intense -- you start talking about improving the order book quality quite some time ago. Can you see that for a fact now that's having an effect? Or is that still something you expect going forward? Bo Sandstrom: Yes, I'll elaborate a bit. It is tricky. I mean the order book is, of course, a very long-term -- it's a very long-term order book, particularly given what we do and the length of many of our large projects. At the same time, the market is developing and the market is developing fairly short-term in that sense. So it's that combination. But of course, we're happy with the order book and the profitability margin in it, and the steps that we're taking towards a better profitability through the order book. But it's really difficult to see, in a sense, quarter-by-quarter, the development. But over time, we're happy with where we are also compared to 1 or 2 years ago when we started talking about these things. Johan Dahl: Final question. Just the increase, 5%, 6% FX adjusted on the order book, when will that translate to revenues, do you think? Or when would you see that inflection point on reported revenues? Linda Palsson: I start, yes. Yes. And that is exactly the tricky ones, as the order book contains of large projects over many years, and it's also very short-term. So of course, we see that continuously, we will improve, but it's difficult to say exactly what kind of revenue is converted from the order book in Q4, for instance. So -- but we see a slight improvement quarter-by-quarter. Next question is from Fredrik Lithell from Handelsbanken. Fredrik Lithell: Maybe a follow-up on Johan's question there. The order book, is it broad-based the development? Or is it sort of very narrow in certain pockets of exceptionally good demand? Or how does that look? Linda Palsson: No, I would say it's broad. We present the differences between our new 3 global divisions here. But you can see that there are some differences. And of course, that Energy, for instance, had relatively stronger order book than the others. But I would say with -- it is a broad base that we have in our order book. So it's no segment that is without orders. Fredrik Lithell: Another question is on sort of your support platforms. You have earlier, and we have talked at length many times before about your upgrades of CRM, HR, ERP, maybe billing systems, maybe something else. Where are you on that route? And how big of an impact have you had so far in better being able to follow your trends, offboarding, onboarding, billing rates, and what have you. So it would be interesting to hear you elaborate. Bo Sandstrom: Yes. It is a broad question, Fredrik. But we come quite a bit on that journey. It is a long-term journey because, like you said, it involves kind of several parts of the company. It's not just a one system, and then you can measure how far you are progressing. It's a combination of different things. I would say that we're more than halfway in that sense, but we still have a bit to go kind of to get to fully there. And successively, we're getting -- I would say that in the phase where we are right now, we're getting better and better transparency. We're shifting into the part where we can also translate the transparency to efficiency and improvements. But that is also kind of a gradual shift, if that is elaborating a bit on your wide question. Fredrik Lithell: Yes, yes, it's very helpful. And on that, just a follow-up, do you have any sort of heavy lifting? Are there any specific big steps in this project in any way? Or is it really just a gradual work every day? Bo Sandstrom: It is, to a large extent, from an overall perspective, it is a gradual work. Then, of course, we have internal milestones that we are kind of kicking off as we go. But from kind of from an investment and cost perspective, we're not expecting any significant effects kind of shifting upwards that will be material for the group as such. Linda Palsson: Thank you, Fredrik. Then we welcome Johan Sundén from DNB, Carnegie. Johan Sundén: A few questions from my side as well. I think, firstly, a little bit curious to hear some kind of high-level comments on the kind of sentiment within the organization. How has voluntary employee turnover developed over the summer? How is commitment among employees? Just curious to hear those kind of feedbacks. Linda Palsson: Thank you. That's a good question. I would start by saying it was a big shift for us of what we are doing. With that said, I think it's quite logical and well understood why we're doing it. So there's a lot of commitment within the organization towards our new strategic direction. But of course, when you are impacted directly, there will be some additional question marks. So it's not all sort of 18,000 super happy. But I would say the overall direction is good, and we have our employees with us on this journey. The second one was related to the employee turnover. Was that right? Yes. Actually, we haven't seen any sort of negative development on that. So it's in line with what we have seen the last quarters. So no change there. Healthy level. Johan Sundén: And also on the kind of more of an HR place, maybe the leadership within Transportation places, where are we in the process there? Linda Palsson: Yes. So Robert Larsson will do his last day here at AFRY, the 31st of October. And then from 1st of November, we have an acting solution in place, Tuukka Sormunen, who will take on the division as acting. And we are in the final stages of the recruitment process for the successor. Johan Sundén: And then maybe a little bit of a nitty-gritty question for Bo. Firstly, on the order backlog, and there's been pretty negative news flow regarding the forestry sector in the Nordics recently. Should we be worried for cancellation or those kind of things that could impact the order backlog going into Q4? Bo Sandstrom: No, I wouldn't be particularly concerned, Johan. I mean you're right. We're not floating a lot of positive news now, but we haven't really had that positive news flow over the last couple of years. So we're not necessarily looking at a large order backlog that is particularly exposed. So I don't see a big kind of downside risk on that from where we are right now. Johan Sundén: That's encouraging. And then 2 small nitty-gritty questions. Firstly, on working capital. If it's just possible, been a busy reporting day, I haven't had time to go into all the details, but can you please go through the dynamics between the kind of how you come with such good working capital release in this quarter? Bo Sandstrom: Yes. I mean you're right. We had a healthy working capital flow on an overall perspective, particularly if you look at a normal Q3 for us, it was a bit stronger this year than it was in a normal year. We don't have a big reason for it to present in that sense. You should expect that, that would be more seasonal swings also, then looking at how Q3 is normally then composed, then this could very well kind of have a contradicting effect in Q4. That's how it's normally played out. But it's nothing out of the ordinary in that sense, more referring to seasonal swings that we saw in a positive way, of course, in Q3. Johan Sundén: And on overhead cost, which has trended a little bit higher first quarter this year, I think you mentioned in Q1 that there was some intra-year phasing that pushed that up a little bit in Q1. Should we expect very low overhead cost in Q4 then? Or how should we think there? Bo Sandstrom: I mean we're clearly -- I mean, now we closed Q3, so we're pretty far into the year. So as been seen throughout the year, we will expect -- I mean, you should expect a higher full year than last year. That's pretty evident where we are kind of 3 quarters out. Looking at Q3 specifically, then the main rationale for the year-over-year is we have -- we carry a very high activity level currently, or particularly during this year. That's one side of it. And then we have some currency-related effects that sneak into the net group cost that we report as well. But in general, I would more look at the activity level that we are carrying at this moment. Johan Sundén: And when should we kind of be ramping down to more normal levels? Is it '26? Bo Sandstrom: Yes. No, I don't necessarily see that. I mean, over the next few quarters, we will be looking at more normalized levels. That is to be expected. Then whether it will happen in Q4 or going into '26, too early to say. But this is not -- it's not a permanent level, I would envision. Linda Palsson: Next question is from Dan Johansson from SEB. Dan Johansson: Two additional ones. Linda, I think you spoke briefly on the billing ratio declined slightly versus the quarter last year, but perhaps less so than previously. And connecting this to the restructuring program, how do you think it's progressing versus the initial plan you had when you introduced it? I know it's a short period. And I assume you did not see much now in Q3, it's a summer quarter. But you have taken out SEK 120 million of restructuring costs now. So for Q4, if we look into that, do you expect to see some first positive signs in terms of utilization? Or will it take a bit longer to see the effect from that? Just so I get it right from a run rate level here going forward. Linda Palsson: I start? Yes. Our important topic of utilization rate. And actually, as you saw on both slides, this was actually the -- it was still lower compared to Q3 last year, but not as much lower as we have seen before. So that's why we say we see some early positive signs within the quarter, and we also see the end of the quarter going better. So we will keep our focus on this question during Q4 for sure and during next year. In terms of the capacity adjustments, that is ongoing at the moment. And as Bo said, we can also expect relatively more in Q4 from that adaptation, our capacity towards our current workload, and see that we get that right, and by that, also improving our utilization rates going forward. Bo Sandstrom: Just to add a bit on it. I mean we are progressing according to our plan, and we're seeing the effects that we expect in a sense so far. But still, also with the guiding of the restructuring program that we launched right before the summer, I mean, you're completely right. We just passed a summer quarter. And then looking at the SEK 200 million to SEK 300 million that we guided, we have just stepped into that bucket, so to say, in terms of restructuring efforts. So where we are right now, a bit early days still, but we are seeing the effects that we anticipate, but more to come. Dan Johansson: And maybe a final one, if I may. In the industry, I'm still a little bit stuck in the past on your old segment structure here. So just to improve my understanding, the industry margin uptick, is that mainly an effect of your Process Industry business, the Pulp and Paper part, I guess? Or is it more like a -- the local broader industry part you have in Sweden that's a little bit better than last year, i.e., the Industrial Digital Solutions, we look at your previous segment structure. What sort of the improvement here in the quarter? Bo Sandstrom: If you're talking about the order backlog, it's more related to the Process Industries part. If you're looking at the net sales development and the negative growth, it's more related to the historical the IDS part. Linda Palsson: Thank you, Dan. And those are the questions we had today. Super. So then we say thank you for today, and we look forward to talking to you again at the Capital Markets Day. Have a nice weekend.
Operator: Welcome to the Trelleborg Q3 2025 report presentation. [Operator Instructions] Now I will hand the conference over to CEO, Peter Nilsson; and CFO, Fredrik Nilsson. Please go ahead. Peter Nilsson: Hello, everybody. Peter Nilsson speaking. Welcome all of you to this Q3 of 2025 results. What we're going to give you some of our, let's say, input on how the quarter developed. Joining me on this call is also Fredrik Nilsson, our Group CFO; and also Christofer Sjögren, who is heading our Investor Relations. So as usual, we're going to refer to a slide deck from our web page. And then on that, turning to Page 2 on that section, the agenda slide and a normal starting with some general highlights, some comments on the business areas, and then Fredrik's going to guide us through the financials and then finishing off with a summary and some comments on the outlook for the running quarter. And then finally, ending our call with a Q&A session. So that's the agenda for this call this morning. Turning then to Page 3. Heading of our report, organic growth with higher margin. So a solid quarter in more or less all aspects, the development in the right direction in more or less all aspects, sales ending up relatively flat compared to last year in Swedish krona, an increase of 1%. But behind this, a very solid organic growth, plus 4%, which is something we have not seen for quite some time. M&A also benefiting. We have done several acquisitions, several smaller bolt-on acquisitions here in the last 12 months. And that is, of course, also bringing in some sales. So that is adding 3%. And then we have a currency headwind, well known by everybody, which is 6% in the quarter, which is then once again ending up with a 1% on the total sales. EBITDA also up and also with an improved margin, which is an all-time high margin and results for the third quarter. We are, let's say, a notch above 18% EBITDA margin in the quarter. And this is, as I already said, it's a stronger third quarter to date for us, both in terms of profit and margins. So solid. And I mean, the great thing, you're going to see later also is coming from all business areas. We have a substantial negative FX on EBITDA, almost SEK 100 million or SEK 90 million, bringing us in the wrong direction, if you may say. Items affecting comparability running as planned, relatively high level this year, but also coming from this rather high number of acquisitions, which is then kind of creating opportunities to improve the structure and then make sure we get all the benefits from these acquisitions as we move forward. Cash flow, very strong. I mean, we have to admit, surprisingly strong ending of the quarter on the cash flow, which, of course, is going to bounce back a little bit here in Q4. But nevertheless, we are happy to have the money in our pockets instead of sitting somewhere else. So very solid cash flow, which is, of course, yes, creating a stronger balance sheet and overall, a better business. We've done a smaller acquisition, small but important acquisition in Singapore called Masterseals, which is an acquisition which is strengthening a little bit, oil and gas markets and generally more in the kind of aftermarket-related segments of Sealing Solutions, which is an area which we are developing at the moment, an area we're growing into kind of a global business for us. Also note, continued share buyback on a level slightly north of SEK 500 million being spent on share buybacks in the quarter. So this is the quarter. This is what it is. And I mean, overall, once again, a solid quarter. So turning then to the next page, Page 4, where you see new slide for us, which I hope you will give some more input on the sales split per geography, which I don't going to comment that much on. But we also, more importantly, we see organic growth in all 3 major geographical areas, with Europe for us being the softest, slightly better in Americas, 5% organic growth in Americas, which is kind of on a high level, driven a little bit by project deliveries, but that's the way it is. But nevertheless, good solid quarter and a very solid quarter also for Asia, then particularly strong in China for us. But overall, strong in Asia and kind of a little bit bounce back in Americas and then Europe a little bit softer. So this is the -- and in all areas or levels, which, I mean, we have not seen for some time, especially if you talk both Americas and Europe while Asia continues on a good level, as you've seen throughout the year for Trelleborg. Turning to Page 5, the agenda slide, business areas and then quickly turning to Page 6 with some more detailed comments on Industrial Solutions, organic growth and we say stable margin, a slight uptick in margin. Organic sales 2%; M&A, adding 4%. And then, of course, also, as others here, a negative exchange rate of some 6%. Also behind these figures, we see oil and gas project declined in the quarter, sales declined in the quarter, but that is mainly due to a rather tough year-on-year comparison. Overall market still developing well and a very solid cash flow. But some of these sales is rather project heavy. It is that it sometimes goes a little up a little bit and sometimes it will be down and this quarter was a little bit down in the sales, but it's not -- once again, it's not a reflection of overall lower activity in this part of the business. Construction industry is still muted but we noted satisfaction that is getting slightly better if you look sequentially, although still, let's say, quite strong decline if we compare year-on-year. But once again, some light in the tunnel and some improvements kicking in. Automotive sales increased in the quarter. I mean it's been a little bit -- how should I say a little bit strange quarter, if I may say, for automotive. Those of you following automotive, you see that it's still relatively tough sales in Europe and North America, while China was extraordinary in the quarter, which as I said, 10% plus organic growth. And I mean, the business that we have in Industrial Solutions has a very good market share in China. And that is where we benefit from this. So we have actually a strong development in automotive within Industrial Solutions in this quarter. And then EBITDA and margin improved slightly. I mean Industrial Solutions is a fairly diverse business, and there are some ups and downs always. But overall, we continue to move in the right direction. We continue to improve. It's not major steps. It's a hard work coming from kind of operational focus and also some of the structural investment, structural improvements kicking in. Overall, a good quarter, well managed in more or less all aspects. And then we also should note that when we look at the margin here, this acquisitions that we've been doing is on a lower margin than the overall, and we have some tens of a percent negative kicking in for that. It could be -- I don't know, looking at Fredrik, 0.3%, 0.5% on the margin actually coming from kind of this acquisition kicking in and it will take us a year or so before we can get them back to the overall margin of Industrial Solutions. But that is also something that you need to note when you look at the margin development within Industrial Solutions. Turning to Page 7. Trelleborg Medical Solutions, strong organic sales growth. Organic sales is up by 13%. M&A, not doing any changes, so 0 impact from that. But we have to note here as well that we have some project deliveries related to one of our major customers, which is, let's say, boosting the sales dramatically -- in the sales. I mean, if you look underlying and try to kind of neglect these organic sales, I mean the more correct probably underlying organic sales is more in the kind of mid-single-digit territory. Medtech sales, we see also medtech sales in Europe developing well. North America, where we still -- struggle is the wrong word, but we still see some negative development where we still have some inventory issues. We don't see the overall activity going down, but we still see our sales is a little bit below where it should be. So we are pretty certain that we're still impacted by inventory reductions especially in North America, which we have been for some time, and we honestly, we believe that it's going to turn the corner, but we see it continuous. It is difficult to really see through exactly when it will turn, but we continue to gain business. We continue to gain orders, and we are overall satisfied with the development, even though the sales, we would like to sell more, of course, in Americas as well going forward. Life Science, which is kind of the smaller segment of medical, is developing, if I may say, very nice, and we are growing that. And we are starting -- we have been investing in that segment with new factories, both in North America and in Europe, and with satisfaction, we see that these investments is slowly, let's say, benefiting us, and that is an area also where we see continued growth going forward. EBIT margin up and also, let's say, in absolute terms, we have EBITDA up. I mean there's higher volumes, as you expect, but also continuous structure improvements, especially starting to benefit from -- continuing to benefit from this acquisition of Baron that was made, let's say, a year ago now. Turning then to Page 8, Sealing Solutions. If I may say, very solid organic growth in the quarter coming from several areas. But I mean, if I should highlight something, it's really that we have underlying kind of industrials, the big kind of industrial segment of TSS is starting to do better. We see now growth in Europe kicking in. Asia continued on a good level, which has been good for us for quite some time. We continue to see some weakness in North America. But overall, these core segments of Sealing Solutions improved in the quarter. Both in sales and also kind of a higher activity level. Automotive for TSS is still below last year, particularly still impacted by, let's say, very soft development, very soft development in the aftermarket business. And we cannot -- I mean, it's not like the aftermarket in itself is down. It's more that we see very, let's say, uncertainty, especially in the North American market, this is -- we see that they are downsizing. In stock, inventories is down, and we do expect it to kick back. But also here, we don't know exactly when, but it is kind of we are supplying substantially below the market demand for a few quarters here, and we do expect that to bounce back eventually. We note in automotive here as well as we also commented on TSS, a very good development in China. We have a good market share for some of the products, in TSS, especially that's our shim business, our brake business has a solid market share in China. And of course, we are benefiting from that as the Chinese market has been developing very, very good in the quarter. Aerospace, very strong all over. We continue to, let's say, get more orders than we sell. So let's say, order book is growing and the activity level is growing. Of course, we note, as a trusted -- the ones of you was following aerospace that's about Airbus and Boeing is very ambitious in the growth plans going forward, and we, of course, do our best to follow that. So good development in aerospace. And overall, this means that EBITDA and margin is improving, higher production volumes kicking in. We have been underproducing for some time. And we see also the benefits from the operational improvements, but we also have to note also here we have a negative impact from acquisitions being made, which is kind of the same dimension as we see in Industrial Solutions, some 0.3%, 0.5% negative impact on the margin if we were trying to kind of adjust for the acquisitions. But we're doing the acquisitions, of course, because we believe they are good for us and they are improving the business overall, but it will take some time to get all business improvements into the margin. Already commented on the Masterseals acquisition in Singapore that is part of small acquisition, but it's part of an overall game plan to strengthen our activity within, let's say, aftermarket for seals and especially related to oil and gas and mining and other segments, which is more kind of project-related where you need, to say, local presence in order to get this business into our books. So that's -- we're happy to be that, and we think it's a good strategic add-on, although once again on a very minor level compared to the overall sales of Trelleborg. Turning to Page 9, some comments on sustainability, continue to improve substantially. I mean, we say here, we are not getting to the end of the game, but we are getting down to levels of CO2 emissions from our Scope 1 and Scope 2, which is kind of becoming very low. We're, of course, going to continue to improve. We continue to do better also in this aspect. But I mean, do not expect these kind of improvements steps going forward. Next page, Page 10 and it's basically the same here, where we have a substantial tick up in share of renewable and fossil-free electricity. We are now up to 92%. And I mean the remainder here is very difficult because in some geographies, you actually cannot get it, and we are getting also here to a situation where we cannot improve that much anymore to you on this because we are, let's say, stopped either but by very major investments to turn it around or that is simply not available in a few geographies. So very good development, very happy to show this. There was continued good development in sustainability, and we are doing good in these aspects. And I mean, once again, the focus -- we cannot improve on this criteria. So the focus going forward will be more smaller steps and more kind of what we call say, energy excellence programs. We'll be working hard with all the factories in order to improve and to do better in more minor aspects. So these big steps, you will not see these big steps going forward, but we're getting to a situation. I don't say it being perfect, but we're getting to a level where we cannot justify the final steps to get it even better. Turning then to agenda slide again, Page 11, financials on Page 12. I'll leave it over to Fredrik to guide us through this section. Fredrik Nilsson: Thank you, Peter. Let's then start on Page 12, looking at the sales development. Reported net sales increased by 1% from SEK 8.442 billion to EUR 8.532 billion. We have organic sales growth in all 3 business areas in total 4%. Structural changes added 3% growth in the quarter. And then as Peter mentioned, we have negative translation effects that reduced growth by 6% during the quarter. If we then move to Page 13, showing historical sales growth. In the third quarter, we were close to our sales growth targets, achieving 7% sales growth at constant FX. Looking at Page 14, showing the quarterly sales and rolling 12 for continuing operations. The sales in the quarter, as I said, reached SEK 8.5 billion at net rolling 12 months, it's reached SEK 34.7 billion. Moving on to Page 15, looking at the EBITA and the EBITA margin, that continued to improve further. EBITA excluding items affecting comparability, increased by 5% to SEK 1.541 billion in the third quarter. We saw profit growth in all 3 business areas. And looking at -- we start with Industrial Solutions, which was up 1% in EBITA due to operational structure improvements, which was partly offset by negative translation effects. And then Medical Solutions, up 10% in the quarter. And then finally, Sealing Solutions was up 6% in the quarter due to higher production volumes and operational improvements. And margin-wise, we rose from 17.3% up to 18.1%, supported by the organic volume growth and the operational improvements. Looking at then the EBITA and EBITA margin on a rolling 12 months basis. EBITA amounted to SEK 6.331 billion with a margin of 18.2% and EBITA has been growing with 6% during the last 12 months. Moving on to profit and loss statement. Looking into some more details in the income statements, items that are affecting comparability, SEK 72 million in the quarter, which was entirely related to restructuring costs for adjusting our cost base and due to the recent acquisition. Financial net I would say, on par compared to last year, SEK 126 million compared to SEK 128 million. This is actually despite that the debt level is higher this year. So that is also a good achievement. Tax rate for the quarter, excluding items affecting comparability, amounted to 26%, a slight increase due to timing. Page 18, earnings per share, excluding items affecting comparability, amounted to SEK 4.20 in the quarter and increased by 11%, and that was due to the higher profitability and the effect of the ongoing share buyback program. And for the group, including items affecting comparability, earnings per share were up SEK 3.94, also 11% up. Moving on to Page 19. As Peter mentioned, we have a very strong cash flow in the quarter, which reached SEK 1.741 billion. On a high level, half of the improvement came from the higher EBITDA and the rest from efficient management of the working capital. CapEx is well aligned with the communicated guidelines for the full year but marginally higher than Q3 last year. Moving on to Page 20, the cash flow conversion. The cash flow conversion was 92%. So we continue to deliver a high cash conversion ratio. Moving on Page 21, the gearing and the leverage development. Net debt at the end of the quarter at SEK 8.280 billion. Share buyback during the quarter was SEK 554 million, ended the quarter with a debt-to-equity ratio at 22%. So small improvement compared to Q2. And then net debt in relation to EBITDA, 1.1, which was slightly higher than year-end. But of course, we have also paid out a dividend during the second quarter, and we have continued the share buyback program. In other words, our balance sheet remains strong. Moving on to Page 22, return on capital employed reached 12% for the quarter, and our capital employed has increased compared to last year mainly due to the acquisitions, but I think also I would like to note that our return on capital employed has sequentially increased for Q2 to Q3. And then finally, the financial guidelines for 2025, unchanged compared to what we communicated after our second quarter CapEx, SEK 1.650 billion for the full year, restructuring costs around SEK 500 million for the full year as well. Amortization of intangibles, SEK 650 million and underlying tax rate for the full year around 25%. And by that, I would like to hand back the microphone to Peter. Peter Nilsson: Thank you. Agenda slide, summary and outlook. Quickly turning to Page 25. Looking at the quarter, organic growth with higher margins, good quarter overall, but it picked out a few highlights. We see in the quarter in improved -- generally an improved demand, higher activity levels or continued high activity level in some areas. We see an improvement in that. And we also note with satisfaction, of course, that all our 3 business areas recorded organic growth in the quarter, which has been quite some time since we saw that the last time. So overall, better activity, although not kind of a big jump upwards. But nevertheless, improvements in most areas. We also note that these higher sales is also improving our margins. We have a fairly sizable uptick in the margin year-on-year. And it then boils down to the strongest quarter -- strongest third quarter to date, both in terms of profit and margin. We also note that we continue to do value -- what we call value-adding M&A, although impact, this is our 10th bolt-on acquisitions since Q3 last year. And of course, this is a high activity level in [indiscernible] we said before, is impacting our margin negatively in Sealing Solutions and Industrial Solutions, but we are, at the same time, improving our overall positions, and we are very certain that this -- when that's fully integrated, there will not be a drain on the margin or rather the opposite, but it takes some time to get there. And we also note that continue buybacks, we continue to have a solid balance sheet, which is, let's say, allowing us both to continue on high CapEx level, continue to do M&A, continue to absorb the growth, which is in the quarter in terms of working capital, but also on top of that, we also continue to do share buybacks. So that was the summary and then turning to -- for the last quarter and then turning to Page 26 and some outlook. We expect the demand to remain on this level. For those of you who have read the reports see that we have this extraordinary sales or project sales within medical, we were not going to kick in. So with this outlook, you should read it that the continued overall demand, we might be -- we don't know exactly, as we otherwise were sitting exactly where we end up. But of course, we believe that this is probably not going to be of north of 4% in the next quarter, but we could be a 1 percentage point or some lower than 4%, but we believe it's going to be on a similar level. And I mean if this continued higher activity level, remain, then we will look with more positivism on the future. But with this comment, of course, also, we all know there is a big year -- still a big, what we call political situation or geopolitical challenges out there and things might happen, which could impact the demand short term. So that is, of course, with this comment on the continued good market, it comes with this kind of comment. And then turning to Page 27 agenda and into the final agenda point and turning to Page 28 and opening up for questions. Operator: [Operator Instructions] The next question comes from Alexander Jones from BofA. Alexander Jones: If I can have two please. The first on Sealing Solutions and specifically the Industrial business within that, you talked about higher growth this quarter. Could you help us understand was that broad-based or the particular end markets within Industrial driving that? And to what extent was that the end market improving or more market share gains and innovation success that you've had as Trelleborg? And then the second question, if I can, just on the Medical business. Can I clarify on the one-off project sales this quarter. Is there any element there have pulled forward that will be reversed in future quarters? Or is that just sort of one-off extra sales that we should not extrapolate in our future numbers? Peter Nilsson: Alexander, talking -- starting with the medical one, I mean that is really a startup of a new program for one of our customers, which is a one-off delivery. So it's not really about impacting the future. So it's not kind of a pull from any future sales. It's simply sales in the quarter due to the [indiscernible] starting new programs. So that is kind of the way it is sometimes, but it's not kind of any forward buying or something, it's simply a one-off sales. So nothing really that we need -- we don't expect it to -- yes, to impact the sales going forward. So that's it. And then if you talk about Industrial, I mean, one thing is also on the industrial sales of Sealing, which you've seen in the quarter, I mean we have been, for quite a few quarters, talking about destocking in these activities. So one of the impacts in the quarter is no more destocking, and we are kind of supplying in line with underlying demand. I mean, so that is one of the impacts. But we don't see still as an inventory buildup, but we still believe that there is supplying. But we are not kind of oversupplying in the way that they are building stock. And I mean -- and the core driver for this is kind of the biggest subsegment, if I say in Sealing, which is more hydraulics, machinery and this kind of core industrial business. That is where we see the improvements. So we're not surprised, I shouldn't say we're surprised because it's been undersupplying for a few quarters. And now we feel that we're supplying in line with the overall demand. So I don't know whether that is enough for you. Alexander Jones: Yes, that's very helpful. . Operator: The next question comes from Agnieszka Vilela from Nordea. Agnieszka Vilela: So I have a few questions, maybe starting with the first one on the growth trajectory in the quarter, if you could share any flavor of how was development in September? And then also, how is it progressing in October? And then also, Peter, I think before you used to refer to your order intake. So how is that developing right now for you? Peter Nilsson: I mean there was an improvement throughout the quarter, but also the trick on Q3 September is always important. Since the other 2 months is a little bit impacted by vacation period. So it was kind of an acceleration in the quarter, so a stronger ending than beginning in the quarter, but we don't, let's say, put too much emphasis on that one. But it is kind of an improvement in the quarter, if I may say. And October, I mean, we don't see any kind of differences and we don't really want to comment on it. So it's really overall guidance remains that we believe is going to be same growth in Q4 with, let's say, some adjustments coming from this extraordinary sales in Medical. So my read this, I mean it might be 4, it might be 3. But I mean, we don't really know. We have an overall good order intake. We have overall good activity level. I mean, we should say book-to-bill in the quarter is positive. We have booked more orders in Q3 than we have been selling. So we are growing the order book. But we also remain a little bit cautious on this because we know there is inventory focus, cash flow focus on some customers. So we don't really want to read too much into it. But if we simply did the Excel sheet calculation, then of course, we will, let's say, be more positive than negative in that one. I don't know whether that is enough, Agnieszka. Agnieszka Vilela: Yes, yes, absolutely. But then maybe if you could give us some color on the regional development as well. Obviously, you have -- you have had very strong development in Asia, now followed by Americas, Europe also now slightly positive. In the next few quarters, do you expect any changes to this order like any other -- any region taking over? Peter Nilsson: No. I mean I think Asia, little bit, has been a little bit extraordinary strong, especially in automotive since we have this big boost. I can't remember exactly, but I think production levels in China for automotive was up by some 12%, 13%. So that's, of course, since we have a high -- good position with a few of our automotive segment, that is benefiting us, but also the overall industrial development in Asia, especially in China has been good for us, somewhat difficult to fully understand, to be honest, but it's been ongoing for quite a few quarters, and we do not expect that to be -- of course, comps getting more difficult going forward. But nevertheless, a good development in there. Europe is probably more tricky in a way to read. But we see -- I mean, in the core, as I commented before, the core Industrial segments of TSS is improving. And that is more -- part of it is a reflection that no more destocking and more of kind of delivery in line with underlying demand. We do not see any kind of inventory buildup at the moment, and that is, of course, if it turns more positive, we will see that as well. So we've been undersupplying for a few quarters. We do expect as the market -- if the markets turn more positive that we will be oversupplying. But we don't really see that happening short term. But if you go into early next year and this development continues, we're probably going to have some of that. U.S. is probably, for us, a little bit more positive than it should be because we have a few project deliveries in U.S., which is kind of impacting the sales there. But nevertheless, let's say, for us, a good positive territory also coming there from kind of hydraulics and the pneumatic segments, which is also a part of our core business in North America for Sealing. I guess that is -- I don't know, Fredrik, if you want to elaborate. I think that is kind of just to be a little bit more color for that development. Agnieszka Vilela: That's very helpful. And then the last one from me. I noticed that you didn't really mention the tariff impact in your report or in your presentation. Was there any kind of growth tariffs now affecting you in the quarter and how are you mitigating those? Peter Nilsson: We have a few individual businesses where we need to kind of redo the supply chain and working with that. But I mean, overall, this kind of minor activity. So that is why we don't see that as a kind of impacting us. We have a very regional setup. We have as I said, manufacturing in Asia, we have manufacturing in Europe, we have manufacturing in the U.S., and we don't really have a lot of these flows going across. I mean, the challenge here is more the metal content where we need to find out. We have a few products, but we have metal content, and that is something where we need to work. And that is also our question going forward on these tariffs in Europe because some of the export business from Europe into other territories might be impacted by that. But it kind of remains an action point and that is something we're working on. But overall, on a group level, we don't see this at any topic in a way, to be honest. Underlying demand could be impacted, I mean to say. But I mean for our trading and margins, it's not really something that we discuss too much. Operator: The next question comes from Forbes Goldman from Pareto Securities. Forbes Goldman: Yes. One question on the TSS margin, which was quite strong here in the quarter. Is this the start of a sustained recovery there? And how are you thinking about the 23% target from here? What do you sort of need to reach it? Peter Nilsson: No. I mean it is a solid, let's say, step in the right direction. Looking at the margin, of course, once again, you need to remind yourself as well that we have also a negative impact from the acquisitions. Of course, it is a step up compared to last year. And we have always said that we're going to get this back to our levels and is kind of step in that direction. And then I don't want to guide exactly what kind of quarter, but it is coming as expected, as planned, if I may say, this margin expansion coming from a little bit bounce back in our core segments of TSS. I mean that is what we've been waiting for. Once again, we refer to this kind of fluid power, hydraulics, pneumatics, that segment, which is the major part of Sealing Solutions, and that is the area which is going to drive this improvement by extra volumes. And also in that extra volumes in the right areas, if I may say, because it's also driving kind of a positive mix within Sealing Solutions. So this is a step in the right direction, and we still have the kind of overall objective to get back to this, say, '22, '23, '24. I mean that is where we want it to be. And we are fairly certain that we are moving in that direction. Forbes Goldman: Great. I have a follow-up on that. TSS margins are typically seasonally weaker during the second half of the year. So could you maybe just say anything directionally about Q4? Peter Nilsson: No, we don't want to do. I mean, we are moving in the right direction, and we are -- of course. I mean TSS is more, should I say, consumable where we supply into the supply chains of a large number of industrial customers. And I mean there is always Christmas breaks and all of that. So it's always a bit softer by the end of the year depending on the activity level that they're planning for after the holidays. And that is the same seasonality as we always have. So it's -- I don't know if we can comment any more on that. I don't think so. I mean that is the way it is. Forbes Goldman: Final follow-up. On the restructuring cost, it looks like quite a big step-up here into Q4. Anything in particular happening there? Fredrik Nilsson: No, nothing really. It's more a timing. So there are some projects that we have worked with for a while, and that will be booked as restructuring costs during the fourth quarter. Operator: The next question comes from Hampus Engellau from Handelsbanken. Hampus Engellau: Could we discuss organic growth on the group level and I guess also in Sealing Solutions, if you would remove Automotive, just to get a sense on how the underlying ex autos is moving, given that we have an opinion on autos going forward? Peter Nilsson: Automotive in Sealing Solutions was not positive. So that is something where we -- because they are severely hit, but they are hit by specialist aftermarket dropped for our brake business. So that is kind of negative. So I mean, if you neglect for Automotive, in Sealing Solutions, is actually going to be even better. So that is the one. We are benefiting from the China OE sales, but that is in no way compensating for the drop in the aftermarket business. But for TSS, I mean it's not a major impact, to be honest, but there is a slight positive in Industrial Solutions in this -- what we call our boots business, where we have a very strong market share in China as well. So that is where we are benefiting. But I mean it's neglectable in a way if you look at Industrial because it's not a major business of Industrial Solutions, but it is positive. So that's one. So the underlying kind of non-automotive organic growth in Sealing Solutions is actually slightly better. Hampus Engellau: Excellent. And do you bear giving some indications on how you see autos -- autos part in Sealing maybe for Q4. I guess you presume you're looking at the S&P numbers and also have an opinion on aftermarket? Peter Nilsson: On the aftermarket -- sorry, your... Hampus Engellau: Yes. I guess on fetching for if you're expecting some contribution in Q4. Peter Nilsson: To be honest on that, we are a little bit surprised that it continued on this low level. It's not that people are kind of changing less brakes. And the only thing we can read into this that there is where we have some carriers, we have some metal content in those and some of our aftermarket customers are kind of reluctant to build. Also, when they order from us in Europe, and we are sending to U.S., it takes 6 to 8 weeks. And it seems like they are not buying, they're not speculating. But of course, the stock is going down and eventually, they need to fill it up. So that is -- I mean, where we are a little bit surprised, to be honest, about this rather dramatic drop in aftermarket, which is not -- I mean, it's not that either that they can buy from anybody else. They need to buy from us and because we are specified and we are kind of regional equipment suppliers, and so that is kind of a strange, which we have now seen for 2, 3 quarters -- 2, 3 quarters. So that is something where we don't fully understand. I mean sometimes you try to understand, but sometimes you cannot get the right answers, but it cannot continue on that. I mean, let's put it, you cannot continue on that level, unless people are neglecting, not changing brakes anymore. Operator: The next question comes from Timothy Lee from Barclays. Timothy Lee: I have a follow-up question on margin. So for Sealing Solutions, there's definitely a very good margin development in the quarter. Can I also say that it is implying some synergies that you get finally from the previous acquisition of MRP. Is it something that kicking in the quarter. And also in terms of the -- your previous target of the 20% run rate EBITDA -- EBITA margin by the end of this fiscal year. Is that still something you are looking for? Peter Nilsson: To talk about synergies, of course. I mean we have always said on MRP that I mean some of the major impact is coming from the hydraulics fluid power segment. And as that now we see finally some improvements in that. Of course, we're getting some benefits from that into the figures. But I mean it's -- MRP is getting more into normal business for us. So it's not really synergies as such. It's more that the market segments, which was strengthened by the MRP has been very soft. And now we see these markets getting back. And then, of course, we get the benefit into the figure. But we are not at the end of that one because it still has to go up. It should still -- I don't know exactly the figures, but we are probably still some 15% or something below kind of the levels where we believe it should be in that particular segment. So that is still at a low activity and especially you're talking about the farming in U.S., you look at little bit construction equipment, which is still, especially the agriculture looks still very soft. And that, of course, we're starting -- if you talk to the new administration in the U.S., I don't know -- it's difficult to kind of guess where they're heading. But one of the areas which I have not been kind of supporting yet and which have been suffering is, of course, the farmers in U.S. So if something comes into that area, we should see even better improvements, especially in that segment. About 20% is still within reach, but I mean it's going to be tough to get there, I mean, to be very open to get to that level here already in Q4, but we are moving in the right direction. And we still see that with the reach in a not-too-distant future. But I mean I shouldn't sit here and say that we can get to 20% in Q4, because that has been -- there has been some market development. We know the tariff situation. We know the geopolitical areas and we know this kind of softness still in the construction and, let's say, still -- yes, quite some distance to go before we are back to normal, especially in this fluid power, which is once again the major segment of Sealing Solutions. Timothy Lee: Understood. Very helpful. And my another question would be on your M&A potential. So Continental actually previously mentioned, they could probably look for the divestments of the ContiTech business. I'm not sure whether you can comment on this or whether it is something that you may see interest or if it's in your M&A portfolio? Peter Nilsson: Yes. I mean the overall ContiTech is definitely a lot of interest for us because the majority of the ContiTech business has no -- I would say, we are in the same overall segment. But if you look at their conveyer belts or timing belts or also this what I call surface solutions. I mean it's nothing to do with that. We have some overlap in terms of nonautomotive anti-vibration and some fluid or [indiscernible], which, of course, we will be interested if we could cherry-pick, but I don't think there will be any kind of cherry-pick possibilities. So I mean, we're watching it. We're looking at it. But overall, ContiTech is a not of interest for us. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Peter Nilsson: Thank you. And thanks for listening in our quarterly call. And summary of a good quarter for us, a good organic growth, good margin development and an improved demand throughout the quarter. We still note that there is still a lot of uncertainty in the, let's say, the global arena. And that is, of course, something we're watching, but we feel confident that we're going to continue to improve Trelleborg, and continue to build a better Trelleborg with ambition, of course, to deliver even better figures going forward. So thanks to all of you, and I am happy to support you in individual calls. Christofer is always available and so are Fredrik and myself, if you want any follow-up discussions or get some clarity on other issues not covered in the call. So thanks again, and see you soon and do take care.
Operator: Welcome to the conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Anand Srivatsa: Okay. Thank you, and welcome again, everyone. This is Anand Srivatsa. I'm the CEO of Tobii. Joining me today is Asa Wiren, who is our Interim CFO, along with Rasmus, who heads our Investor Relations. I want to remind you that I have announced my decision to resign from Tobii in August of this year. My intention is to move back to the United States for family reasons, and my family has already relocated. I will remain with Tobii in my current role until the end of January 2026, and the Board is in the process of looking for a new CEO. And at this point, we do not have any additional information to share on the process. Now let's move on to the quarterly results. Q3 was a weak result for Tobii on both the net sales basis as well as on overall results. The net sales reduction is related to the end of acquisition-related revenue as well as lower-than-expected revenue in all 3 segments. In the Products & Solutions segment, we saw a year-on-year decline in revenue because of weakness in the U.S. market, while other regions demonstrated growth. In the Integration segment, we saw weakness in our XR NRE project pipeline, but we do expect to see some improvement in Q4 as customers shift their focus to new smart glasses type of solutions. On the Autosense side, we had a reduction in year-on-year revenue, but this is related largely to revenue recognition timing based on NRE projects. We expect that the Autosense business will show robust growth on a full year basis, and we expect that quarterly revenue levels will become more stable as we transition from NRE to license revenue over the next couple of years. The overall lower levels of revenue resulted in lower overall result, but we have still taken steps to move towards profitability with one clear example of our -- being our cash-related OpEx being 30% lower than the comparable quarter last year. Beyond the financials for the quarter, this was a milestone quarter for our Autosense business with our single camera DMS and OMS offering launching at IAA Munich. I will speak more about the significance of where we are with Autosense at the end of this presentation. Finally, we continue to be extremely focused on addressing our financing needs for the company. This has been an explicit focus over the last 1.5 years. Evaluating where we stand at the end of Q3 2025, we assess that we need additional cash to ensure that we are adequately financed for the next year. We intend to take the following steps to address this. We're taking a new cost savings target to reduce cash-related OpEx by SEK 100 million versus our Q2 2025 baseline for the 12 months that follow that timeline starting in Q3 2025. We're also continuing our strategic review process, including the divestment of assets, and this effort has made progress over the quarter, and we expect that a successful outcome will substantially strengthen our cash reserves. The Board has also selected an external adviser to evaluate capital market options as a backup for these strategic initiatives if needed. With the combinations of these tools, we believe that we can address our financing need for 2026. Before we discuss our financial results in detail, let's take a quick overview of our 3 business segments. Tobii is organized into 3 business segments with each of them at different stages of maturity and scale. Our expectations are that the Products and Solutions and Integration business segment will be profitable in the near-term, while Autosense is still in an investment phase. The Products & Solutions business delivers vertical solutions to thousands of customers every year, ranging from university research labs to enterprises and PC gamers. In Q3 of 2025, the Products & Solutions business represented 53% of Tobii's net sales. The EBIT result of Q3 of negative SEK 22 million is a slight improvement versus our last year results despite revenue decline because of our lower OpEx level. The Integration business segment engages customers who integrate Tobii's technologies into their offerings. This segment also includes some revenue from acquisition-related revenue. The onetime effects of that have ended in Q2 2025. In Q3 2025, this business represented 43% of Tobii's net sales, and this business was profitable for the sixth straight quarter. The result for the quarter does reflect temporary effects of the Dynavox contract that we signed in Q2 2025. The Autosense business segment sells driver monitoring and occupancy monitoring software solutions to automotive OEMs and Tier 1s. In Q3 2025, this business represented 4% of Tobii's overall net sales and delivered overall net sales. The business delivered minus SEK 42 million EBIT, a slight improvement versus last year despite a lower revenue level, lower capitalization and higher levels of depreciation. We expect the Autosense business to show solid revenue and profitability improvement on a full year basis. Now over to Asa for the detailed financials. Asa Wiren: Thanks, Anand, and good morning, everyone. Needless to say, Q3 was a weak quarter. Product & Solutions has its market challenges, for example, in the U.S., integrations, where the last part of the Dynavox deal did not fully compensate for the acquisition-related revenue that ended in Q2. For Autosense, we see a timing matter. Operating result and margin have decreased compared to last year, even if our cost levels is significantly lower. On that note, I will already now put some more flavor to our new savings target that Anand mentioned. When we presented our Q2 results, we emphasize that our cost reduction and efficiency focus still remains. Our target is to lower cost by at least another SEK 100 million for the 4 quarters starting Q3 2025 compared to Q2 2025. This is the same methodology we used for our previous initiative for which we reached savings of SEK 263 million, SEK 63 million above the target. This demonstrates that we have the ability to deliver. The savings will further rightsize the company for us being able to continue our product development and meet customer demands. That being said, let's move to Page 6 and look at some group details. I've already commented on the figures as such, but what this illustrates is the impact of the work that has been done. We see overall EBIT and EBIT margins lower than the comparable quarters last year. This is, of course, driven by lower revenue levels, but also by lower levels of capitalization and higher level of depreciation in this quarter. If we normalize for effects of capitalization and depreciation, we would have an improved level of profitability in this quarter. This improvement is due to the significant progress we have made on cost reductions. We are on the right track, but more work needs to be done. Turn to Page 7 for some Product and Solutions comments. The negative sales trend continues with a decline of 5% in organic growth and is mainly related to the Americas. Cost level is lower than previously. And to remind ourselves, in Q2 this year, write-downs of SEK 33 million impacted EBIT. Turn to Page 8 for some integrations comments. The last part of the Dynavax prepurchase deal did not fully compensate for the acquired imaging-related revenue that ended in Q2. As mentioned in Q2, from Q3 and onwards, there is a quarterly minimum guarantee in the Dynavax deal until 2029. We also saw fewer nonrecurring revenue projects during the third quarter. Turn to Page 9 for the Autosense segment. This segment is still in a phase with lumpy timeline dependent revenue as well as with nonrecurring revenue. These elements impact both how revenue is recognized and cost, such as capitalization and depreciation, as mentioned before. In Q3, revenue was pushed forward, capitalization decreased and depreciation increased. Let's continue to Page 12 for comments on our balance sheet and cash flow. During Q3, Tobii repaid SEK 91 million of its COVID-related tax release. This remaining -- the remaining debt has been reclassified to short-term and long-term interest-bearing debt previously reported as current liabilities. In Q4, we received the last SEK 45 million from Dynavox prepurchase deal. Where we are right now, there is a risk of insufficient financing for the coming 12 months. Having said that, with the measures taken and in progress, I repeat that we believe we can address the financing needs for 2026. With that said, thank you for your time, and over to you again, Anand. Anand Srivatsa: Thank you, Asa. Now I'm going to spend a few minutes talking a little bit more about Autosense. Q3 2025 was a milestone quarter for this business, and I want to share with you where we stand in our journey to become a leader in automotive interior sensing. First, let's take a look back at what has happened since our acquisition of the FotoNation business in February 2024. Since making the acquisition, we have built a comprehensive and combined road map that enables us to offer a leading in-cabin sensing product portfolio. This was capped off with the successful launch and final release acceptance of our SCDO product in Q3. We have continued to demonstrate our credibility in bringing our solutions to vehicles on the road over the last 1.5 years. We've increased the number of OEMs who are choosing Tobii solutions from 9 to 12, and our solutions are being deployed in volume from 300,000 vehicles on the road at the time of the acquisition to more than 800,000 vehicles currently. We are working hard on ensuring that our solutions meet the demanding requirements of the automotive industry in terms of quality and process. Notably, we have achieved ASPICE Level 2 for our SCDO program operating as a software Tier 1 to a leading European OEM. Our solutions have also achieved regulatory approval with EU homologation for both our DMS and SCDO offering. Finally, we have built an efficient and empowered team where Autosense engineering has been consolidated into Romania, and the organization has more centralized responsibility to deliver on our ambition by having functions from engineering to sales reporting into the same leader. We have realized the investment synergies as part of getting this efficiency by reducing our investment levels by more than 40% versus our 2024 peak. Looking back, I would say that we have substantially realized the rationale for the acquisition, including the synergies we expected. We have done this by reducing our overall investment, building a leading product portfolio and increasing our credibility in the automotive industry. A critical aspect of building automotive credibility is showing that your technology can get through the rigorous testing and validation of OEMs and start shipping in vehicles on the road. Tobii's Autosense Interior solutions have been shipping in vehicles on the road in 2019, and we continue to see significant growth in this footprint. As of the end of Q3 2025, we have more than 875,000 vehicles on the road with Tobii solutions, and we expect that this number will continue to accelerate as our high-volume passenger car wins get into production in 2026. Now I want to talk a little bit more about building a leading product portfolio for in-cabin sensing. The rationale for making the acquisition of FotoNation was the realization that for success in this space, Tobii required a full offering, not just driver monitoring systems. We could already see in 2023 that RFQs were looking for offerings that could support both driver and occupancy monitoring. Our belief was that the market would see increased adoption of DMS and OMS to the point that they would both become required capabilities. We are already seeing the early stages of this play out as we expected. Camera-based DMS is already a requirement in the EU starting in 2026. And we now see that Euro NCAP requirements for 5-star safety require more occupancy monitoring capabilities over the next few years. We believe that for new platform shipping in 2028, OMS will be required to get a 5-star rating. Tobii has been shipping DMS and OMS systems into vehicles in the road since 2019 and 2021, respectively. We recognize that while in DMS, we are not the market leader, our bet has been to move -- that move into a leading position in the space is based on our leadership in single camera DMS OMS and that this method will be the preferred deployment for in-cabin sensing systems in the future. Over the last 3 years, Autosense has pitched single-camera DMS OMS, but this approach has been met with skepticism as companies were unsure whether DMS from a rearview mirror location would get regulatory approval. This concern from the industry reflects the fact that DMS methodology from a rearview mirror position is quite different than the typical DMS systems that are deployed today, which have a much clearer and closer view of the driver's face. Given this context, our achievement this quarter is extremely meaningful in both getting EU homologation for our support regulatory approval and getting acceptance for our final release for our premium European OEMs launch in the second half of this year. We expect that our SCDO system will start shipping with our OEM in the second half of 2025 and be in end customers' hands in early 2026. Now we have expected over the last year -- last 3 years that a single camera DMS and OMS solutions mature, that the industry as a whole will also validate our view that this approach is not only feasible, but the most cost-effective approach for in-cabin sensing. The question, of course, is when would the industry take notice of SCDO and share their view on this approach? I am thrilled that we have seen significant industry momentum already this month with the keynotes and presentations at in-cabin Barcelona 2 weeks ago. At the event, Volkswagen, Magna and Gentex, leading OEMs and Tier 1s in the industry, shared their view of the suitability of doing DMS and OMS from the rearview mirror position. Volkswagen was even more specific, as you can see the slide that's shared on the screen about the benefits that this approach offers over traditional DMS and OMS systems that require 2 cameras. They shared that the single camera approach from a rearview mirror position saved over 30% of BOM cost, implementation cost, design complexity, et cetera. This is a stunning number that validates our view that SCDO will likely be the volume deployment for in-cabin sensing in the future. The outcome from this event is certainly surprising to us, but surprising for industry analysts as well. To quote Colin Barnden, principal analyst from Semicast Research from his post on LinkedIn following this event, he says, "What came over me in Barcelona is the sudden shift in industry awareness of the viability of both driver and occupant monitoring from the mirror. For several years, it has been clear there was a campaign of misinformation from some parties saying that the mirror is unsuitable for driver cabin monitoring. Those voices magically have become advocates of this idea already. He declares in his post that after the event, the question is, why wouldn't an OEM do DMS and OMS from the mirror? We at Tobii could not agree more. With a proven and mature offering that has gone through grueling acceptance test at one of the most demanding OEMs in the world, Tobii is well positioned to win as more OEMs come to the conclusion that DMS and OMS from the mirror is the most cost-effective and scalable approach for in-cabin sensing. Okay. Let's wrap up. Q3 2025 was a mixed quarter where we saw significant milestones achieved in Autosense, but where we saw weak revenue in the quarter that resulted in lower profitability. Our ambition in the long-term is clear that we intend to be leaders in all of our business segments and execute in a profitable and financially self-sustainable way going forward. We are already leaders in our Integrations and Products and Solutions business segments. And the progress that we have made so far in the Autosense business segment and industry validation of our approach puts us in a great position to build a leadership position as SCDO scales in the market. In the near-term, we have a key focus on addressing our financing needs. We will address this with 3 major approaches. The first is our new cost reduction target, which will reduce our cash need in 2026. We're also executing on a strategic review, which includes potential divestments, and our belief is a successful outcome in this area will substantially strengthen our cash reserves. Finally, the Board has engaged an external adviser to evaluate capital markets options as a back for these strategic initiatives. We are confident that with these tools, we will be able to resolve our near-term financial needs and allow us to focus on our objective to achieve sustained profitability, which we remain fully committed to. With that, thank you, and over to Q&A. Operator: We have received several questions about our combined DMS and OMS solution, how our offering compares to our competitors, what Tobii's position in the market is relative to our competitors and how we view the time line regarding ramp-up of SCDO. Can you please provide a comment on these questions? Anand Srivatsa: Absolutely. As I shared in my deeper dive on Autosense, we believe that we have been the clearest voice around the fact that the most scalable and most cost-effective approach for in-cabin sensing is a single camera DMS and OMS offering from the rearview mirror position. There are other players who have launched hardware solutions. And from our proprietary research, we believe that at the time of our launch, we have the most complete offering as well as an offering that delivers both DMS and OMS. We believe that our position in this space is that we have the leading offering here as well as an offering that has both proven itself and has matured as we have had to go through acceptance as a software Tier 1 for one of the most demanding OEMs in this space. We acknowledge that, of course, in this in-cabin sensing arena, we are not the -- driver monitoring systems, but our bet for getting to a long-term leadership position is that as SCDO sales, our leading position will put us in a great place to go and win future RFQs. We recognize again that over the last couple of years, there has been industry skepticism about whether a single camera approach will work, especially because the position of the sensors are farther away from the driver. We believe that a lot of these concerns are being addressed now with the successful launch that we have enabled, and we believe that RFQs will increasingly request this type of approach, and we are well positioned to win in the space. Operator: Is Tobii provider for eye tracking to Samsung Moohan? Anand Srivatsa: Samsung announced a new high-end VR headset. We are not the eye-tracking provider for that headset. Operator: Did you receive the SEK 30 million out of the SEK 100 million in Dynavox revenue in cash this quarter? And did you also receive the SEK 45 million in royalty from Dynavox from previous quarter this quarter? Anand Srivatsa: And I'll let Asa take that and clarify that question. Asa Wiren: We received the SEK 30 million in Q3 and the SEK 45 million in Q4. Operator: What types of assets are you planning to divest? Would you consider divesting one of the business units? Anand Srivatsa: Again, as you can imagine, these strategic reviews are extremely sensitive. We're not going to go into details of exactly what assets we are planning on divesting except for the fact that we believe that a successful outcome here will substantially strengthen our cash reserves. We will share more details as possible as these activities progress into maturity. Operator: Thank you for this presentation. On Autosense, in materials from Qualcomm, Tobii is a pre-integrated partner. What does this mean? Also, this seem to be a much wider opportunity than with EU regulatory requirements. What is your look on this? Anand Srivatsa: One of the big advantages of the engagement that we have had is that our solution is shipping on Qualcomm's Snapdragon Ride platform with our premium OEM. This has meant that we have done substantial work to go and pre-integrate the solution. Qualcomm's expectation is that they want to sell a pre-integrated solution that delivers their domain controller type architecture along with their ADAS functionality. The ADAS functionality does depend on capabilities that are enabled by in-cabin sensing technologies that we have -- like we have. We believe this is a big asset for Tobii, not only that we've gone and delivered a mature and proven platform, but that partners like Qualcomm see our solution as pre-integrated and an easy way for them to scale their offerings into the automotive industry as well. Operator: What is the total cost in absolute numbers for OMS and DMS for the car manufacturer? Please elaborate on the topic. Anand Srivatsa: We cannot, of course, share algorithm pricing levels. And in terms of overall system cost, you will have to go and speak to the Tier 1s who typically provide the hardware. Again, what I think is super meaningful as we look at the in-cabin sensing opportunity as a whole is that DMS and OMS are increasingly becoming requirements in this market. And therefore, from a regulatory perspective, these are required systems. And again, there's high interest from the OEMs to offer these in the most cost-effective and scalable way possible. The fact that Volkswagen has been clear that there is a substantial cost savings by offering DMS and OMS from a rearview mirror position in a single camera offering validates our view that this will be the way that in-cabin sensing is typically delivered to go and ensure that you can meet your regulatory needs. Operator: Is it correct to assume that you are involved in Samsung XR through your collaboration with Qualcomm? Anand Srivatsa: So you should assume that we are talking to lots of different companies in the XR space. We're talking to most of their leaders. We understand that people make decisions on their choices of algorithms for a variety of reasons. As I've mentioned before, on the specific Samsung Moohan VR headset, we are not the eye tracking provider in that system. Operator: Is the total Dynavox royalty SEK 52 million or SEK 45 million from Dynavox? In that case, when are the remaining SEK 7 million received in cash? Asa Wiren: The total is SEK 52 million, and the cash was delivered in Q4. Operator: Congratulations to fast acting. Is Tobii eye tracking integrated in Sony Siemens XR headset? Anand Srivatsa: I don't think we have made any announcement there. We will -- again, we will not comment on that particular headset. Okay. Thank you very much. That's the end of the Q&A section. Thank you all very much for participating, and we look forward to sharing our next set of results with you in 2026. Thank you. Operator: Thank you.
Krister Magnusson: Good morning, everybody, and welcome to the Nilörn Q3 interim report presentation. I know that today there's lot of presentations, a lot of companies. So I really appreciate that you take your time to join our presentation here. Myself, I am in Portugal at our factory here. As you probably know, we're doing quite the big adjustments in the factory, uplift in the factory, so here to follow that. So it's an interesting project going on. So I think that will be really good for Nilörn in the future. But I'm sitting here on a small laptop and I think it will work out well. So I will start sharing my screen and put that on presentation mode here. Yes. Now we start. The Q3, we are quite pleased with the Q3. The order intake here was negative 13%. But if we take into consideration that we had a big packaging order in Q3 last year on SEK 18 million, and that will come now in Q4 instead, that is around 7% of the explanation. We also have another currency effect explaining another 6%. So adjusted for the currency effect and this packaging order, it's quite flat. In general, it's a difference between the segments. Luxury segment is still quite weak, though the Outdoor and the other segments are quite strong. So still weakness in the luxury segment, no big improvement there. Sales up 10%, and adjusted for the currency effect, it's actually up 18%. I think it's partly -- we had a quite weak Q2, so it is spillover from the Q2. Looking at the different months, so it was quite strong both in July, August and September. So we're quite even throughout the quarter. And here, we see also in the Outdoor segment and the other segments, but still a bit weaker in the luxury segment. Operating profit, SEK 26.3 million versus SEK 15 million last year, and that gives an operating margin of 11.4% in the quarter. And as you probably know, the goal has been or should be between 10% to 12%. That is the goal we have set. So we in quarter, we target that. Looking at the P&L here. Also, we have a quite strong currency impact on the whole P&L and not only the top line. As you know, most of our business is handling outside Sweden. In Sweden it's mainly sales companies, but we don't do any invoicing from Sweden at all. And then we have the headquarter costs. So we have some costs in Swedish krona, but the majority and all the invoicing is outside Sweden. Yes. And what I want to say more here is also looking at the tax rate, tax rate for the quarter is 24.6%, and that is in line also with the accumulated number. We'll see what happens with the tax rate in the fourth quarter. It's always adjustments and everyone is doing proper calculation, really the calculation of the tax. But we think it will be in line with this 24.6% also for the full year. Personnel cost has quite been stabilized now on this level, I would say, also currency impact on this level and other external costs, but coming back to that a little bit later. Split by product group, not so big difference compared to last year. It's mainly in packaging. That has gone down and it's contradictory to what we do now. We're putting quite a lot of effort into the packaging. And the reason why packaging was down here is due to the luxury segment as we still have quite big packaging delivery to the luxury segment. But they are overstocked so it will take some time. So I think it will take like in mid-2026 until we are back into normal deliveries for the luxury segment in packaging. Looking at the quarterly income statement and the gross margin. Normally, the Q3 has a quite strong gross margin and also this quarter, as you can see here, if you're looking at the historical level. The reason for that is we have less packaging, packaging has a lower gross margin, and less packaging in Q3 normally and also this quarter. Operating cost is also lower normally in Q3 and also this quarter, and that is due to the holiday. Most countries take holiday in July, especially in Europe. So that's why that has a big impact on the quarter 3. Operating profit. As you see, it was a strong operating profit this quarter. And as I explained, it was not only one single month. I think it was strong all the July, August and September. And of course, you who have learned Nilörn now, it's very much volume driven. Once we get good volumes in a quarter or in a year, we also get a good profit. It goes a long way down. So we're very much depending on getting volumes. And then if you look at the similar but in a graph. And also that is to say that in the past, it was always Q2 and Q4 that was sticking out as the best quarter. Nowadays, we see it's very much flat. So it's the change of purchasing pattern from our customers. So they even out much more, buying much more into season and much more shorter lead times. And that makes our pattern different than it used to be. And here, it's also following the profitability, just in a graph. And you can see here now Q3, that was quite strong. Balance sheet. We have a strong balance sheet, an equity level of almost SEK 350 million. And that is good because we're now taking more and more time to search and see for acquisitions and so on. I will come back on that. And also we're doing at the moment both a big investment in Bangladesh and also in Portugal. Also coming back to that later in the presentation. Just want to raise here. As we are an international company, relatively our size, we are in 19 countries and with only the headquarters in Sweden, and therefore, we have a big part of our equity abroad. And that also had a big -- currency has a big impact when we translate the equity in the different countries into the Swedish krona. And this now in 2025, that's had a negative impact on the equity of SEK 32 million. And of course, in the past, we also have had positive impacts. But now due to the relatively strong Swedish krona, that has an impact. Financial indicators, I will not go through them so much. But I just want to mention here, we are almost 700 employees. And as you can see here over these years, we have increased that quite much. That is mainly in the production companies, mainly in Bangladesh, I would say. But also we have invested in other specialist areas, where we employ people to be in forefront with the competitors. And we also invested in countries like U.S. Also coming back to that later on. In U.S., now we have 4 people. This one, this is to explain the movement we have done between year 2020 and today. We, by heritage, has been really strong in design and we continue to be work on that. So design is a strong unique selling competence for Nilörn. We have in packaging started and done much more here effort. We have a really good collection. We have a Category Manager working with that. And so we're really taking a big step forward in packaging. Packaging, as I mentioned, we're also delivering into the luxury segment. But we're also packaging for sports and for Outdoor segment. We're talking here about underwear packaging, sock rider and so on. So it's not packaging for corrugated, standard brown packaging. It's more for the garments and for luxury segment. Financial strengths. We have had a strong balance sheet for many years, but we even now has even stronger. Sustainability, CSR and compliance is an area where we have put a lot of effort and employed people all around the world to build up that, which gives us also -- in the past, we were talking about design. But I would say now sustainability is another core competence that is unique -- I would not say unique, but a selling point for Nilörn, what we push for and where the clients appreciate our offer. Digital solutions and Nilörn:CONNECT, this one is something we didn't have. We had digital solutions like RFID in the past and so on, but now we're taking even more steps into this. I will explain, coming back to Nilörn:CONNECT, what that is all about a little bit later. Global deliveries. What I mean by that is that we're setting up distribution companies in new countries like in Vietnam end of last year and also now in Sri Lanka, but also we are setting up a company in U.S. So we're getting more and more international. Yes. Big currency impact both on the top line and in the balance sheet. And I used to say that we are quite well hedged. We match the cost with the income. So we take a country like Hong Kong, we have big income there. And then we have all the costs matching that. And then in the end, we have a net profit. So in different countries, we are matching quite well. But in the end, we have a profit that will be converted back to Swedish krona. And in my example then, the Hong Kong dollar will have an impact, as you saw earlier on the equity. As I mentioned, still volatility in the luxury market. And we see now less uncertainty due to the tariffs. We'd learned to live and also, I would say, it doesn't affect us directly. It's more indirect effect. It's our client that export to U.S. that has been affected. And I think the uncertainty is most -- I mean, as long as you have the uncertainty, you don't dare to move. But now the uncertainty moves away so it's more movement in the market. Operating profit, we mentioned already. Portugal factory where I am at the moment. We have been here in Portugal like in 40 years. So the factory needs an uplift. We looked at moving the whole factory but we decided to stay. We think there is less risk in that. And we moved out to warehouse to get more space in the factory. And at the moment, we are changing the complete layout inside the factory and to get a much more flow into the factory and also implementing LEAN. So that is good. I think Nilörn Portugal had tough times 10, 15 years ago, but that is now one also a competitive edge for Nilörn, to have a good factory in Europe. Building for the future, that was where we now employed or built up these specialists we have within the group, where we have compliances, our packaging materials. And that is supporting sales. So I would say being a salesperson in Nilörn today versus 5, 10 years ago is a totally different story. In the past, we were out selling labels. Now it's all about selling a concept. And the client is much more demanding now as it has been in the past. Yes, here is the specialist here in different in areas. And then we increased in production capacity. Here, we also have Bangladesh. We are currently -- I mean, we've got the land now and we're doing soil test and we are working on that. But it will take some time. And we said earlier that it probably most likely will be ready by end of 2026. Now we say it will be ready in first half year 2027. We've done geographical expansion, as I mentioned. We see a consolidation in the market. We've seen [ TIMCO ], we've seen SML. We see Avery and all the companies are taking part of that. And we also see companies now that are for sale and actively selling, looking at the label market as such. There are a few big players. It's a mid-segment and there's quite a long tail of small niche players that is working in one market or with a few products. And for Nilörn, we come to the stage now that we're putting much more effort into this, and we have a team dedicated to search for this. And what are we looking for? I think here, we will search for companies that can contribute either geographical expansion in areas and countries where we are not strong in. It could be like France. It could be Holland. It could be Spain. It could be U.S., where we can take more geographical expansion. Or it can be vertical integrations in areas where we are not strong like in heat transfer or in RFID or in packaging. So we're not sure that we will succeed, but we now definitely take this seriously and put much more effort into that. I presented this earlier. There are some new slides. I will just add them quite quick here. What Nilörn:CONNECT is about. Nilörn:CONNECT is the QR code, like you can see on a jacket here, where we have a system -- it is a system behind. That is the Nilörn:CONNECT. And it's a QR code and it's an NFC or RFID. And why Nilörn:CONNECT? We see three reasons why people want to go into buying Nilörn:CONNECT. One is the legal compliance. The legislation, Digital Product Passport, that is here to come. They will come, I would also present that, soon here. So this will be a must for our clients. So this is a headache that we, through our Nilörn:CONNECT, can be part of solving their problems. Then there are more nice to have for them. We can be part of the trend. Now we see repair, resell, recycle, where you have this QR code and the information carrier. And consumer engagement. They, through the QR code, can have consumer engagement and communicate with the end consumers. And that will drive sales, create loyalty and acquire new customers. Just the timeline regarding the DPP. It has been going on for some years with a lot of discussions, a lot of preparation. Some clients are in this already, not in the DPP but into the Nilörn:CONNECT, and have this providing information to the end consumers about their garment and their sustainability. And in 2026, [indiscernible] expected for the first product groups, and the first is apparel and accessories. And in 2027, batteries we go full live with DPP. And the mid of '27, we expect that the DPP will be a fulfillment for textiles. And through this QR code, when you scan it, you can have carbon footprint, you can have the different certificates they have on the garment, production history and the country where it's produced and so on, recycle instruction. All that is within the DPP fulfillment. To the brand owners, we provide them with information so they can see what countries they have been logged in. They can see how many scans they have had, what garments they are scanning. They can also see if they have a QR code outside the jacket and inside the jacket, and they see the difference how that is scanned. So we also provide information to the brand owners. And like this, they can see on the map here where it is scanned. And also what we have been working on is an AI tool, talking to the product. And when you're scanning the QR code, you get to the page where you can write and communicate with them through an AI tool and ask questions. I got this spot on my jacket here, how should I remove that and so on. And that we also do in cooperation with brand owners. So we make sure that we provide the information that they want. We can go out widely in the Internet or we can just provide their database and provide information that they have in their database. And this you have seen in the past, the financial target and so on for Nilörn. We have, yes, achieved 7% growth with an operating margin above 10%. Yes. Good. I will stop sharing this, and coming back to you and see here -- and Maria is also with me, I forgot to mention at the beginning, Maria, the CFO for Nilörn. And Maria, do we have any questions for us? Maria Fogelstrom: Yes. Actually we have only received one question. And that is the question about the sales split between outdoor and luxury, the percentage for each segment. Krister Magnusson: Yes. Outdoor is still the biggest, absolutely biggest. Luxury segment, we started off with a few years ago, and we see that the luxury segment is coming and we think we can do much more there. And the split here, I don't have the exact numbers, but I would guess that the Outdoor is between 25%, 30% and luxury is between 5% to 10%. But what's interesting with luxury is that we can do much more. Luxury, in the country, it's France. It's in Italy. Outdoor is mainly in -- and Outdoor, I would say outdoor sports, it's mainly in Scandinavian countries, in Germany and in the U.K. Maria Fogelstrom: Thank you for that. Now we received some more, so I will continue here. We also got a question about the EBIT. Could you elaborate on how much of the EBIT that comes from operating leverage and how much that is due to recent efficiencies? Krister Magnusson: I think most is -- I mean, as I mentioned, the volume matters a lot. I talked also last time that we intend to do cost savings. We have a program here. We have not launched all of that yet. And cost is -- but we're also taking on cost here, moving into new countries and so on. So for me, this quarter is volume driven, I would say. Maria Fogelstrom: And continuing on the cost savings because actually we got the question about that as well. And the question is, you previously commented on reducing your cost base in Turkey and doing a similar analysis on other parts of the group. Do you have any updates on that front? Krister Magnusson: Absolutely. We have done that in Turkey. So that is being implemented and fully -- and we are now working on other countries. This is partly, but also that we are moving now volumes from a country like Hong Kong, China into Vietnam and Sri Lanka. So that's moving our cost and, at the same time, doing cost savings. And so that is mainly in the Asian area but partially also in Europe. But at the same time, we're also taking on more and more employees in new assets. They are expensive and so on. But my goal is that we can be more clear on that once we have done the restructuring that we are in the middle of. Maria Fogelstrom: Thank you. And now we got a question about the outlook for 2026. Has anything happened during the quarter that changes your view of the market outlook for 2026, specifically regarding different product groups? Krister Magnusson: I cannot say. I think there's nothing new regarding the product group. I hope and think that luxury segment will be back in swing again but I think it will take until mid-2026. For other product group, I don't see any major change, not as it is at the moment, at least. We had, as you know, the Outdoor obviously peaking during the pandemic and then really bounced back. But that is back to normal now. Maria Fogelstrom: Thank you. And the last question that we have received is, are there any ongoing discussions to include segment reporting in the quarterly reports? Krister Magnusson: Segment. Maybe qualify what -- because we do segment reporting in the interim report with country-wise. But I assume here, it's more on product group levels, isn't it, I assume they want to know. Maria Fogelstrom: Yes. I would say. Krister Magnusson: Yes. And absolutely, that's a good point. I think that is something that we should consider maybe and see what we can do there. We have not done it in the past, but it's a good point. Maria Fogelstrom: Thank you. And that was all of the questions we have received. Krister Magnusson: Super good. Thank you very much for participating today. I know it's a super hectic day with a lot of companies presenting. And thank you very much, and have a great weekend. Thank you. Maria Fogelstrom: Thank you.
Operator: Ladies and gentlemen, welcome to the Schindler Conference Call and Live Webcast on Q3 Results 2025. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Lars Brorson, Head of Investor Relations. Please go ahead. Lars Wauvert Brorson: Thank you, Valentina, and good morning, ladies and gentlemen. Welcome to our Q3 2025 results conference call. My name is Lars Brorson. I'm Head of Investor Relations at Schindler. I am here together with Paolo Compagna, our CEO; and Carla De Geyseleer, our CFO. As usual, Paolo will discuss the highlights of our quarterly results and our market outlook, and Carla will take us through the financials. After the presentation, we're happy to take your questions. We plan to close the call at 11:00 in an hour's time. With that, I hand over to Paolo. Paolo, please go ahead. Paolo Compagna: Good morning, everyone. I am pleased to be back to report on our performance in Q3. And as Lars said, let me start by giving you some highlights on Slide #3. Firstly, let me say that we continue to face some growth headwinds in major new installation markets around the world, particularly in China. I will share our order trends in more detail shortly. But before, let me remind what we discussed back in February. A key pillar to our strategy of profitable growth is the pricing discipline. And we demonstrated it again this quarter on a few major projects where the economics were just not consistent with our return expectations. That said, we see good growth momentum in many parts of our organization and particularly in modernization. Here, orders were up over 16% in the quarter despite the strong growth we had in Q3 last year, allowing us to show another quarter of order growth for the group. Second, revenue slowed in the quarter, down 0.5%, whilst our year-to-date revenue is up 0.8%. Also here, the headwind from China intensified in the quarter. But our backlog is growing, up 1.5 percentage points year-on-year in local currency, driven by our modernization business, and we are confident that continuing to expand our capacities, we will execute successfully on this backlog. So I expect us to deliver our full year '25 revenue guidance of a low single-digit growth. Although this is likely to be a very low single digit, similar to what we delivered in '24, as Carla will discuss. Third, we delivered another strong operating margin in Q3 at 13%, up 130 basis points from Q3 last year. And we are now able to revise our full year '25 margin guidance, which we see coming in at around 12.5%. That compares to 12% previously. Carla will provide the detail on that, but I'm very pleased to see that the efficiency initiatives launched over the last couple of years are yielding their results. Now beyond our financial performance, let me touch on some of the other highlights of the quarter. First, we are making very good progress on the rollout of our new U.S. mid-rise product. This product was launched in '24, and we have now successfully delivered and handed over the first units. And our order intake so far in '25 is exceeding our plans. You will remember that this product launch was about leveraging our standardized modular platform and enhancing our mid-rise offering in the commercial and high-end residential segment, a key pillar to our strategy in the U.S. market. Now we are starting to see the results in terms of share gain in the U.S. mid-rise market, which is really encouraging. On to modernization, where we continue to industrialize our operations and standardize our product portfolio. We are seeing very good traction with our standardized packages, which now make up close to 17% of our modernization business. And that is not only driving growth, but also enhancing our competitiveness and supporting our journey towards higher profitability in modernization going forward. Then on the topic of sustainability, I'm very pleased to announce that we are installing the industry's first ever low carbon emission steel elevator. The steel used in this elevator reduces carbon emissions up to 75% compared to conventional production and marks an important step towards our 2040 net zero target. And finally, I'm also proud that we have been recognized by Forbes again this year as being among the world's best employer. In the engineering and manufacturing sector, Schindler was ranked third globally. We have close to 70,000 employees and attracting and retaining talent is absolutely essential to our competitiveness and overall health of the company. Well, so you can imagine this recognition is important for us. Moving to our market outlook for '25 on Slide 4. We expect the service markets to continue to expand across all regions, with the lowest growth rate in the Americas and the highest in Asia Pacific, driven by India. The modernization markets continue to offer a clear growth opportunity across the world with mid- to high single-digit growth outside of China and growth well into double digits in China, with around 100,000 aging elevators approved this year for an upgrade within the government's equipment renewal program. To put the scale of this initiative in the perspective, just imagine replacing all elevators in Australia in a single year. In installation, we continue to expect the global market to decline by high single digits, mainly due to a low teens contraction in China, where home starts by floor area continue to fall by close to 20% year-on-year in the January to September period, following a 3 years of 20-plus percent declines. Home sales have dropped 5% overall with only the 4 Tier 1 cities showing a slight increase with all other cities facing steep declines. Across the EMEA region, in addition to good growth in countries such as Spain, now also the important German market appears to have found a bottom and is expected to gradually recover going forward. The so-called Bau-Turbo initiative to fast-track housing project recently approved by the German government should be seen as a positive development overall as it aims to simplify planning, shorten approval times to 3 months and allowing flexibility in building rules to tackle the housing shortage in the coming quarters and years. Asia Pacific, excluding China, is projected to grow by mid-single digits, led by India and Southeast Asia with conditions improving in Australia and the U.S. new installation market has shown remarkable strength, further increasing from a tough Q3 '24 comparison point. In addition, we saw better data coming from Brazil in Q3 '25. And we have, therefore, decided to revise our Americas new installation market outlook to stable from slight down previously. So how did we perform in this market environment in the third quarter of the year. Turning now to Slide 5. Starting with service. Our portfolio units continue to expand, showing the strongest growth in Asia Pacific, excluding China. In Americas, we saw a slight decrease as a result of our increased selectivity when it comes to recaptures that we decide to pursue as well as from softer conversions. As a reminder, we saw a decline in our NI orders in '23, and this still has an impact given to the normally longer lead times, especially in North America. On modernization, we have maintained the strong momentum seen in the previous quarters and saw a double-digit growth across all regions, except for Asia Pacific, excluding China, with fewer large projects booked in this particular quarter, Year-to-date, our MOD growth in the region remains in double digits. Finally, on new installation, our global order volumes decreased by double digits due to China, where, as mentioned back in July, we are responding to the prolonged weakness in the NI market by resetting and repositioning our China business towards future growth opportunities. Outside of China, our NI orders grew mid-single digit, driven by an upswing in orders in our Europe, South and South America zone. And it is worth flagging the comparison from quarter 3 last year, which was the best quarter in '24 for NI, particularly due to our strong performance in the Americas. But the U.S. continues to develop well. And as mentioned, we are pleased with the customer reception of our new mid-rise product. With that, let me turn over to Carla to walk us through our financial results in more details. Carla Geyseleer: Thank you very much, Paolo. Good morning, everybody. Pleased to take you through our financials related to quarter 3. So let me start with Slide 7. And as a simple summary of the quarter, we continue to see headwinds to our top line, but we are executing very well on the bottom line. So starting with the headwinds at the top line. So they are particularly severe in China, and we remain committed to our strategy of pricing discipline, as Paolo just mentioned. Now it's also important to note that FX headwinds are definitely not declining. We had a hit of over CHF 100 million this quarter to both the order intake and the revenue. I will elaborate on the top line trends shortly. Now before doing so, let me point 3 highlights for this quarter. Firstly, we had another very strong quarter in terms of operating margins, up 130 basis points for both reported and adjusted EBIT margin. So we continue to make very good progress operationally, and that is obviously translating into a margin expansion, which is coming in slightly better than expected, which is also why we are revising our full year margin guidance. Secondly, our operating cash flow improved both sequentially and compared to last year. And now looking at the operating cash flow year-to-date, we are also up versus '24. So just shy of CHF 1 billion for the first 3 quarters and setting us up for another strong year for cash conversion. Finally, our net profit continues to increase versus last year in both absolute and margin terms, despite the decline in financial income as well as FX headwinds and higher restructuring costs. Now moving to Slide 8 and taking a look at our top line development. Let me first say that we don't see any material shift in order trends overall, even though growth in Q3 came in somewhat lower than in our first half. Now large projects are lumpy, and we had fewer of them this quarter compared to the prior 2 quarters. And if you look at the underlying trends by region and segments, there are 2 things that stand out. First, the continued steep decline in China; second, the strength in modernization. So on China, here, our new installation orders declined by over 30% in value in quarter 3, driving the group new installation orders down mid-single digits in the quarter and more than offsetting the growth we saw in new installation orders outside of China. So even as China becomes or became a smaller part of the overall group orders, it continues to materially impact our growth profile, notably in new installations. However, organic growth was still positive in the quarter due to the growth in service and modernization. So in modernization, order intake was up 16.4% in quarter 3 and this on a tough comparison versus quarter 3 last year when we grew at 20%. And growth was broad-based with strong double-digit growth in Europe and Americas, whilst China had a standout quarter, up well over 50%. Year-to-date, China is up close to 40%. Now this strong order growth in modernization also presents some operational challenges for us in terms of scaling up our delivery capabilities. So the execution of our MOD backlog was not as efficient in quarter 3 as it could have been. So we recognize that, which meant that revenue growth came in at mid-single digits in the quarter, albeit on a tough comparison from last year when MOD revenue grew over 12%. I should say that the slightly longer backlog rotation times are also a reflection of the project mix in the backlog. That said, we expect MOD revenue growth to accelerate in the coming quarters from the level that we have seen now in quarter 3. But it is still the new installation, which is actually burdening our revenue growth, down 10% in Q3, driven by the steep decline in China, which was down over 20%. And with MOD and Service, both growing mid-single digits, that left the total group revenue down 0.5 percentage point in the quarter, but up 0.8% year-to-date. Now as of the quarter end, our backlog was up 1.5% in local currencies, driven by MOD, driven by Service, which had backlogs up mid-teens and mid-single digit, respectively. So our backlog in new installations declined by low single digit. Now in terms of backlog margin, this quarter was slightly down sequentially, but still clearly up year-on-year. And the weaker sequential development was entirely due to the tariffs being reflected in our U.S. backlog. So as our backlog gets repriced over time, you will see the offset to backlog margins. And importantly, excluding the tariff impact, backlog margins continue to improve also sequentially. Now moving on to Slide 9 and looking at our EBIT performance. As I shared already, it's a really strong development now to 13% reported margin in quarter 3 and 13.9% on an adjusted basis. Now the operational improvement of CHF 35 million this quarter primarily reflects the good progress in SG&A savings, but also next to that, the procurement savings continue to deliver. Price and mix were contributors, but less so than the efficiency savings this quarter. Our reported EBIT was burdened by CHF 25 million of adjustments in quarter 3, of which CHF 21 million of restructuring costs, translating to minus CHF 2 million in our Q3 EBIT bridge compared to last year and minus CHF 13 million in our year-to-date bridge compared to last year. Now taking a look at the net profit on Slide 10. Net profit grew to CHF 265 million in quarter 3 reflecting a 9.9% margin and to CHF 796 million year-to-date with a margin of 9.8% despite lower interest income, despite higher restructuring costs and despite onetime financial gains in last year. So we are very pleased with this result. Moving to the operating cash flow on the next slide. So our operating cash flow grew in the quarter as well as on a year-to-date basis. So operating cash flow reached now CHF 967 million for the first 3 quarters of the year, and that sets us on the path to deliver another strong performance in '25, even if we might not hit the exceptional level of last year. The improvement of the operational cash flow is coming from our operating earnings, supported by higher noncash impacts, offsetting a minor headwind of net working capital after the strong improvement in '24 and the missing positive net cash flow from financing income. So that brings me to the guidance for the remainder of the year. And as Paolo mentioned already, we are now specifying our full year EBIT reported margin guidance at 12.5%. So this compares to the previous 12%. And as Paolo and I have discussed, this revision comes primarily on the back of the efficiency initiatives that we have been executing and which are yielding savings slightly ahead of our expectations. We also now have an increased visibility on the impact of the tariffs this year, while the measures also taken to restructure our Chinese operations are partly offsetting the end market headwinds that we are facing here. Finally, the mix headwinds associated with growth in modernization in H2 are somewhat less than we expected in July at the time of our H1 results. And on mix, it is also important to recognize that we are benefiting from the continued outgrowth in our service business. And this revision to our full year '25 guidance also implies that we expect to see continued strong margin improvement year-on-year in the final quarter of the year. Now a small word on tariffs, which I think we have managed well so far in '25. So the U.S. tariff cost now reflected in our backlog. So I just mentioned, we will continue to work on this hard in the coming period to mitigate the impact, including making price adjustments to offset the impact. Now it's fair to say that the U.S. tariff environment remains very dynamic. So let me give 3 additional comments as we see the impact today. First of all, you will recall that with our H1 results in July, we provided you with an estimated annual gross tariff impact of approximately CHF 30 million. What happened since then? Since then, we have had the changes to the reciprocal tariffs, which has taken U.S. tariff levels on Switzerland to 39%. That takes our estimated impact to CHF 35 million from the initially CHF 30 million. So we also had the expansion of the Section 232 tariff list in mid-August, but that had no material impact on our estimate. Finally, we had the recent escalations by the U.S., including a possible 100% tariff on Chinese imports starting 1st of November. If this were to be implemented, that would take the annual gross tariff impact to CHF 72 million. Now we will come back in February with our full year '25 results and update you then on the '26 impact. But I expect us to make good progress on continuing to offset the tariff impact with our mitigating actions. Now with regards to the '25 revenue outlook, I confirm that we expect to deliver on our full year '25 revenue guidance of low single-digit growth, albeit this is likely to be very low single digit, so similar to '24. So in conclusion, let me take the opportunity to thank all our colleagues around the world for their efforts so far in '25, not at least our colleagues in the field who are operating in some exceptionally challenging circumstances in many places around the world. And it's a clear testimony of their contribution to our strong results in the third quarter of this year. And so with that, I hand back to Lars. Lars Wauvert Brorson: Thank you, Carla. With that, Paolo and Carla are now happy to take your questions. Can I ask you please to limit yourself to 2 questions only, given the limited time we have available. With that, operator, please. Operator: [Operator Instructions] The first question comes from Daniela Costa from Goldman Sachs. Daniela Costa: I will have 2, but I'll ask them one at a time. The first one is regarding sort of your organic order growth rate today, quite a bit lower, I guess, than one of your peers yesterday. I understand from what you said sort of a much bigger drop in China from you. Can you talk to what extent that is just the regional or the product mix? Or it was more an intended effort to try to control your backlog margin or something else? I'll start there. Paolo Compagna: Daniela, Paolo here. Very clear, China order intake in the quarter is driven by 2 factors. One is obviously our clear dedication in pricing discipline that we watch out what we take into the books as part of our China program we discussed with you back in February. And the second one is also a quarter in which we still see a decline in the market, and we just follow here the trend. So this has impacted our Q3 numbers for the China order intake. Daniela Costa: And then just in terms of sort of the Americas service trend, which seems sort of weak and down. Can you elaborate a little bit? From one side, you're upgrading on the original equipment, but the delivery on the service side seems a little bit on the weak side. What's going on, on the service? Paolo Compagna: Yes. So let me elaborate on the topics. And our upgrade is on new installation going forward, we were not conservative. We were back in July looking at the market trends, and we saw some signs of cooling down in North and South America, which now for the reasons discussed, we say, well, market might stay stable, especially as in North America, we don't see yet a significant negative trend, which would require this adjustment downwards on new installation. But your question was about service, and let me elaborate on this one. Here, there is a mix of 2 factors and also a bit different between North and South America. What we see in Q3 in this quarter is a combination of 2 things. Number one, in the recaptures, we call it recoveries, these are the new service contracts we take on board. We moved to a more diligent way of assessing their economics. This led now in a comparison quarter-on-quarter, quarter to the quarter to a slightly negative trend. And the second one is that you might remember in '23, we were facing a couple of quarters with a slower NI new installation order intake. What we see now is the combination of the slower conversions, which means the contracts, right, which come into service after new installation is finished. And due to the lead time of the NI order backlog from '23, and it's the combination of these 2 factors leads to this mathematical slow Q3 in Service Americas. Operator: The next question comes from Andre Kukhnin from UBS. Andre Kukhnin: I've got 2 and one of them actually dovetails nicely with what Daniela asked about just now. So I'll start with that. I wanted to also ask about the dynamics between modernization and service growth in North America, but also in Europe, where you're seeing such a substantial divergence. And I presume at some point, this strong growth in modernization in all those projects that you execute on in MOD will help converting into service. Is that the case? And could you give us some idea on the kind of lead time on that? And maybe -- sorry to pile them on, but while we're on service, could you give us an idea of what the unit growth was for you globally in the quarter? Paolo Compagna: Thank you, Andre. Let me elaborate on both. Number one was about modernization, how it works into service. So here, obviously, yes, modernization captures as long as they are outside of our portfolio would obviously lead to portfolio gains. So here, the answer is yes, there will be a certain positive contribution to the portfolio, and that's clear one of our targets. This being said, the second part of the first question was about lead times. Here, I must say, a bit different geography by geography, but actually, overall trend is that the lead times on modernization are also going up. So it means the time to convert this modernization, I repeat outside of portfolio. So it's not that entire modernization would add portfolio, but the portion which adds portfolio might start to contribute between end of '26 and going forward. So there is a positive momentum. Yes, there is a time in between, yes, and we expect to contribute from Q4 next year going forward. The second question was about the growth in the portfolio, which we can share on a good low single-digit number. Andre Kukhnin: Great. And I appreciate it more than one question already. So I'll just ask a short one. On the tariffs and the backlog repricing, could you confirm that this is just purely mechanical that's kind of triggering the escalation clauses are already in contracts and it's just a matter of working through that? Or are there new renegotiations to be had with customers? Paolo Compagna: Yes, Andre. We have done, as we shared in July back a little program on it, which is showing good effect. But Carla, you might elaborate on that. Carla Geyseleer: Yes, yes. No, you're absolutely right. Andre, thanks for the question. Yes, I confirm it's rather a mechanical exercise that you need to work through. So because, of course, there is a pricing towards the customer, and there is also a piece in our supplier management side. Operator: The next question comes from Vivek Midha from Citi. Vivek Midha: I have 2 questions. My first is a follow-up around your comment around the margin drag from modernization growth not being as large as you thought. Is that because of that slower conversion of modernization growth that you highlighted, which potentially might then have more of an impact in 2026? Or is it also because of the improved modernization profitability as you've grown? Paolo Compagna: Well, it's a bit of a combination between margin and the rollout of the backlog, and I will leave Carla to come through the details. But actually, the margin within modernization are not deteriorating. The opposite is the case. So your observation, we are improving on modernization margins is right. And is this one of the reasons for having a slower conversion into operating revenue. It's not the case. But Carla, please, would you like to elaborate on this? Carla Geyseleer: Yes, I want to be clear. I mean -- so we have the strong growth in the order intake and a slower realization of the projects itself, but we don't have pressure on the MOD margin. So just to be very clear there. Vivek Midha: Totally understood. My next question is just looking at the headcount, the number of employees. It looks like it's gone down by over 1,000 relative to the second quarter. Is that the effect of your efforts to reposition in China? Or is there something else driving that reduction in the headcount? Paolo Compagna: That's a very good observation. Yes, we announced back in July that we are repositioning our -- especially new installation business in China. And what you see in the overall numbers is mostly that. That's true. Carla Geyseleer: Yes. But this comes on the combination. If you look at the year-on-year versus December, it comes on top of the initiative that we took to reduce our cost levels in the -- mainly in the back office in the indirect part of the headcount, and that is actually what you see coming through. So we are just executing on this. So it's a combination of the 2. Operator: The next question comes from James Moore from Rothschild & Co Redburn. James Moore: Could I ask one on service? I mean if we're talking about a sort of 5% constant currency growth for service, would it be possible to split that between maintenance and repair? Are they at a similar pace? And tied to that, if they're at a similar pace and we're at 5% maintenance growth, is that to say with your good low single-digit comment? 2.5% unit growth and 2.5% price. And I ask because I'd like to unpack that to another level, if I could. And behind the price piece, would it be possible to say how much of that is kind of a wage escalator pass-through versus any other form of premium over and above that, whether digital or other initiatives? And behind the unit growth, is that basically just the past orders coming through? Or have you got any conversion topics like is conversion getting better or worse? Or have you got any win-loss retention topics? And how do you think about maintenance growth going forward for the next couple of years? Paolo Compagna: Good question with some components into it. Let me combine them. So on the first part of your question, service, repair without going to the details of both as we never do. But it's obviously that both are growing together. So as repair, you can only execute on the portfolio you have and with the customers we are happy to serve. So there is obviously a certain correlation between the repair business expansion and the portfolio growth itself. So this is very fair to be assumed. Second part of the first question, are there components of digitalization, monetization of the digital business? Surely, yes. As we announced also previously, we continue our efforts in digitalizing for our customers our services. So we don't only digitalize for ourselves for the beauty of technology. We also have an increased and steadily increasing offering on digital services for our customers, which obviously, yes, starts to get some traction and contribute to this overall picture. So that's absolutely right. And your second question, how we expect this whole service/repair/digitalization business to move. Here, we expect, as mentioned before, that we see at least a steady continuation of this growth in which we absolutely intend to participate. James Moore: And can I just follow up on the NI margin, new equipment? My sense was you were doing better than others in China, and you had some topics in the West, which you're addressing with your standardization program. And we've seen some procurement savings, and I'm sure next year is more about efficiency savings and we're doing amazing things there. But are you seeing a scenario in which is the NI margin down year-on-year? And is it that the Chinese revenue decline is more than offsetting some of the organic actions on the other side or vice versa? Paolo Compagna: Your first assumption, I don't like to comment, as I don't have it. But in terms of margins in new installation, let me share in all clarity that our efforts in improving efficiency in the field, and we have talked about now the last couple of years and intensified last year and this year as now we see -- we start to see really traction in the field, this improvement of margins in new installation in the execution we see everywhere. So now to distinguish between China specific and rest of the world, I would say the improvement in the execution, I would say, is everywhere the same. And to assume that the picture has reverted between rest of the world and China, well, I would say China is more under pressure in terms of margins than the rest of the world. Operator: The next question comes from Rizk Maidi from Jefferies. Rizk Maidi: Just maybe start with a clarification on the full year guidance when it comes to revenues. I think now you're talking about very low single digit, which also means very low single digit for the Q4. How should we think about this? Is still these bottlenecks when it comes to modernization is still going to be there? And how should we also think about the service growth in Americas? You talked about recapture weak NI back in 2023. Does that still means that it's going to be a drag again in Q4 and potentially even 2026? Paolo Compagna: Let me start maybe with the second part on the service in the Americas. Obviously, right to observe that we are now on a level which we also compare to previous year growth rates, right? So is it expected to stay at that level? Maybe we will see not now in the next quarter, but we expect in the quarters to come to see growth again also -- more growth again also in service in Americas. When we get our backlog executed and as I was sharing before, we see certain delays in delivering on the project, which then it's a question of time, we will come back on that. So therefore, if you ask specific on Q4, we expect to be on that level. But going forward, we would also expect to see growth rates again also in Americas. Talking now the order -- revenue for the full year, we expect Q4 to be in line with our plans. So hence, if we see the year-to-date numbers in the Q3, we like to be super transparent in what would be the full year expectation. So we don't worsen it, but we also don't see room to get euphoric on additional revenues. To your observation, is it a timing issue? Is it projects and kind of delays? Yes. So why we still are quite confident for the future to come is that the backlog is promising. We are building up resources to execute on modernization. So your observation is absolutely spot on with the time, and we will see also this OR then picking up. Carla, anything you'd like to add? Carla Geyseleer: No, I think I confirm perfectly. I think we are complete. Rizk Maidi: And then the second one is really just to understand your cost efficiency. We're now getting towards year-end. Maybe if you could just please correct me if I'm missing anything. But my understanding is you're running with different programs. One of them is procurement. The other one is SG&A. There's an FTE sort of reduction or repositioning of your China business. Maybe can we talk about what has been achieved year-to-date? And what should -- how should we think about these -- each component heading into 2026? Carla Geyseleer: Yes. Thank you very much for the question. I will take it. So first of all, the plan has not changed. So we are still working on the same 4 building blocks that we have always been super transparent on. So first of all, starting with the procurement and the supply chain savings, that is the more mature one, and this is now the second year that it continues to fully deliver, and that is also the one with the biggest impact. Now what clearly scaled up during the first 3 quarters, that is the second initiative, the reduction of the SG&A cost. And of course, driving efficiency in the back office, that's what you see also coming through in the headcount reduction. So we started with that in quarter 4 last year, and that is now really delivering. And that will also, yes, I would say, continue to deliver, obviously, not with the same incremental savings, but we have not completely come to an end of that initiative. What is rather new, I would say, in the quarter 3, that is we have also been focusing on driving efficiency in the NI and the MOD business. And that is the third initiative where we see now in quarter 3, the first benefits coming through. So that is, in a nutshell, what you -- what is also flowing through to the bottom line. Now immediately making the step a bit to the period to come. So we definitely still have potential for these building blocks. And there will still be significant amounts coming through. However, the composition will change because, as I said, the procurement savings become more mature. So their relative weight will decline. And of course, also going forward with the SG&A. But then if we execute according to plan, the incremental savings coming from the efficiency in the NI and the MOD will further increase. And also on top of that, efficiency in our service business. So that is, in a nutshell, what is happening and what will -- or what is expected to happen going forward. What is also interesting to see is that we came now to a situation where the efficiencies are actually really offsetting the inflationary effects and becoming even more important than some of the pricing elements in some of the areas. And that was the whole initial target, why we have set up these 4 building plans. And that's why you see the nice uptick in the margins and in the profit. Does that answer your question? Rizk Maidi: Yes. Lars Wauvert Brorson: Thank you, Rizk. The next question, please, operator? Operator: The next question comes from Vlad Sergievskii from Barclays. Vladimir Sergievskiy: I'll ask 2 and start with modernization. You disclosed standardized MOD solution was 17% of total modernization orders now. Do you think there is a natural limit of how big standard solutions could be in the future compared to the total MOD market? And are those standardized solutions opening new market niches for you in any way? Are they addressing customers that would have perhaps otherwise not ordered at all or ordered it a bit late? Paolo Compagna: Yes. Vlad, to the first part, is there a limitation in the creation of standard solutions? Well, there will be a logical limitation one day as if you recognize that the installed base is a kind of 160 years of elevator technologies built many, many times in many countries by very local companies. So you've got 10,000s of different elevators to be modernized. So let's talk that. With that, you can imagine you cannot have a standard solution for 10,000s of different elevators around the globe. So you're going to fix it by group of similar technologies you can address. So to the first part of your question, is there a limitation? Yes. Are we already there? No. To the second part, -- does it open new opportunities? I personally believe, yes. Then when you get to a standard solution, which could offer to a customer to improve safety, quality and also maybe user experience by having affordable costs, I think there might be a group of customers who today can only go for a full replacement of the elevator, which comes with certain cost and also civil works around it. Now having this opportunity. So to the second question, I personally believe there might be a segment, is it incredibly big? I think it depends from country to country, coming back to my first part of the answer. Then in some countries, we have a bigger number of local products, as we call them, and we have some countries with less number of local products. So in those countries, this opportunity might be bigger. Vladimir Sergievskiy: Excellent. That's very clear. Second one is on the sales mix. Sales mix has been a tailwind to profitability for quite some years. Is there a chance that this tailwind eases or completely stops in '26 when MOD growth accelerates when perhaps new equipment decline slows and maybe grows outside of China and service keep growing as it does. Carla Geyseleer: Well, for sure, I mean, this mix will change. Will it go as fast as you point out? I don't think so. But we definitely -- yes, we definitely have that in our -- calculated that in our plans. So yes. Operator: The next question comes from Martin Flueckiger from Kepler Cheuvreux. Martin Flueckiger: I've got 2, and I'll take one at a time. First one is for Carla. Just coming back to your general comments regarding incremental cost savings from restructuring and operational efficiency going forward. I was wondering whether you'd quantify those for '25 and '26 to -- basically to understand whether there's been any changes? That's my first question. I'll come back to the second one. Carla Geyseleer: Well, as I said, there are no changes in the components that are driving this cost savings, but the relative weight of the components, that, of course, changes because, as I said, if you talk about procurement and supply chain, it's a very mature initiative. So your incremental obviously decreases. This year, we put a lot of focus on the SG&A savings. And together with that, we start up more and more the efficiency -- driving the efficiency in the new installation and in the MOD. But for -- going forward, we still have a significant incremental amount of potential sitting there, and we will work through that as we did over the last 2 years. Martin Flueckiger: Okay. And my second question is regarding the press reports with respect to TK Elevator being either up for sale or going for an IPO possibly. I was just wondering, thinking back, if I remember correctly, to 2020, I seem to remember press reports regarding Schindler's Board making statements about potentially suing KONE at the time if the deal had gone through, which, of course, it didn't. But I was just wondering if a major competitor were to take over TK Elevator, and I suppose Schindler is also interested. But just thinking if a major competitor were to get the bid, would Schindler's Board again consider legal actions? Paolo Compagna: Martin, let me take this one. Well, first of all, we don't intend to comment on competitors' decision about what they do in M&A. And in the same, as you know, we never disclose our M&As and what we do there. I must say what the reaction will be in the market, no one can predict. What will happen may be also difficult to predict. And with that, I must say, let's see what happens. With regard to ourselves, I mean, we always look at acquisitions which happens, and we look at our own opportunities in smaller and midsized and large acquisitions. So I would say there's no answer to your question in the form what will be a reaction. The market will show what happens. Operator: The next question comes from Walter Bamert from Zürcher Kantonalbank. Walter Bamert: Could you please comment which part of the 130 basis point margin improvement stems from the positive mix effect? Carla Geyseleer: Well, it is not the major part. So we will -- yes, we don't give the exact breakdown. But if you just -- I would say, yes, approximately, yes, up to 1/3, approximately is there [indiscernible] effect, yes. But we are very clear on that, and it's also part of our plans going forward if the mix effect changes. Walter Bamert: Perfect. And then nevertheless, coming back to the M&A question and that just generic, what's your assessment of the Asian market, which is still somewhat more fragmented? Do you think there is still room for globalization of those players? Or do you expect that the markets will remain fragmented somewhat? Paolo Compagna: Well, no one of us, Walter, has a glass sphere to look at for the future. If we would have then we would have to stop the call, go and make some decisions. But this being said, obviously, when you look into fragmented but interesting market, which you say -- if you say AP is it and it is, then one could assume things could happen in the next years to come. So this would be maybe my careful assumption. Then we talk about a still promising market, promising market for the future. And yes, as you rightly assess, there's a high fragmentation in that specific part of the world still. So therefore, one could assume there will be some movements, whatever type, difficult to say. When it happens, difficult to say. Could it happen? I would not exclude it, but it's a very personal assumption away from any detailed study. Operator: The next question comes from John Kim from Deutsche Bank. John-B Kim: I'm wondering if we could go back to the order backlog and the revenue delivery in Q3. If I remember correctly, there was going to be a bit of legacy overhang on Q3 and Q4 deliveries and negative mix from Chinese exposure. Did Q3 progress as planned? Or were there delays to that mix or margin dilutive delivery set, I suppose? Paolo Compagna: To Q3 specifically, the revenue development might have been partially impacted by some projects which see a bit of a delayed execution. And obviously, when it comes to installation and larger modernization jobs, right? If you got a job which then is not completed for whatever reason and often, you know how it goes on construction side, then you might even see it in the books. This has, for sure, an impact in Q3. So therefore, I was mentioning before, in going forward, this will be flattening out by itself as the jobs will be completed, will be then built and then it moves on. So your assumption is right, I think, in saying in Q3, there is a certain impact by larger projects not completed. Yes. John-B Kim: Okay. And just as a quick follow-up to a comment you made about modular. In terms of supply chain, OpEx and perhaps CapEx, do you have what you need to deliver your backlog and modernization? Or is further investment needed from here you think? Paolo Compagna: So for now, we shared in February, you remember when we were sharing our dedication now to move on the modernization business with some of you, we were even discussing in detail what is behind. And one part was the development, production and rollout of those standardized, we call it packages, we call it kits, right? And here, the investment in supply chain, supplier base have been done. So is there any major investment, not specifically, but I like also in all transparency to share that we continue to invest and develop on our supply chain as obviously with the modernization piece growing and the new installation piece being where it is, it's a kind of logical consequence that you keep developing, we call it upgrading internally, the supply chain. And we work now with the internal program in upgrading our supply chain. We don't talk much about, but this takes place. Does it come with major investments? No. Is it partially in the one or the other supply chain. We have different in different continents. There will be some adjustments, but no major investments. And yes, what we deliver now, we are ready to deliver, and this work has been done. It was part of our program in the last 12 months backwards. Operator: The next question comes from Kulwinder Rajpal from AlphaValue. Kulwinder Rajpal: So just wanted to come back on MOD orders in China. So if I heard Carla correctly, she said 50% growth in Q3 and 40% year-to-date. So would it be fair to assume that this business faces tough comps as we go into 2026? So any commentary on growth in the MOD market in China in 2026 will be helpful. And just tied to it, is the share of standardized MOD higher in China compared to other geographies? Paolo Compagna: Let me take your question. So China MOD '26, well, modernization business in China is growing nicely, as shared before, and we don't see any change in trend at all. As I mentioned before, there are even some governmental programs, which are supposed to give some support, and we will also participate there. Allow me also here a very personal note. We have seen in the past also massive supportive programs in new installation in China, which afterwards came with a limited real impact. So now the modernization ones are out, but we are still to see what is the impact. This said, I must say that beside of this stimulus, the modernization business in China is going well and is supposed to continue going well. On the second part of your question, which is the percentage of the packages in China, here, we must say we have to see the market. So if I would say percentage-wise, in that specific market, you could say yes. However, it's logical that in more mature markets in which for longer decades, more products were installed, one could assume that the number of kits, so standard solution kits is higher than in a country in which growth for MOD, you can say more of a homogenic market in terms of technology, right, in terms of installed base. So therefore, is it strategically different? No, in number of pieces of solutions, yes. I hope this answers your question. It's a bit technical, but unfortunately, in that case, it's a technical background. Kulwinder Rajpal: Yes, absolutely. And then just to come back on wage inflation. So I wanted to understand the assumptions for your wage inflation in 2025 and 2026. Paolo Compagna: So it was a bit of disturbed connection here. I think it was about wage inflation. Kulwinder Rajpal: Yes, wage inflation, the assumptions in 2025? And how should we think about it in 2026? Carla Geyseleer: Well, I will say that. So thank you for the question. Wage inflation in '26, I think it will be on a level that is comparable with '25. So that is how we currently see it. Lars Wauvert Brorson: Thank you, Kulwinder. We'll take one last question, please. Operator: We now have a follow-up question from Rizk Maidi from Jefferies. Rizk Maidi: I'll be very brief. Just clarifying some of the points just on China new installations. Am I correct in thinking that the orders here are down 30%, where I think in the P&L, you talked about 20% decline. So perhaps a little bit more drag here going forward? And then more generally, we're now 4 years into this downturn, we thought pricing is not going to be as bad because local players, competitors, including yourself, are doing much lower margins in this downturn than in previous ones, but it feels like it's not getting any better. I'm just wondering who is actually taking on these badly priced sort of projects? And number two, how should we think about -- and also pricing pressure, how do you see it by geography? And how do you think -- how are you thinking about 2026 here? Paolo Compagna: Let me take this one, which is a complex follow-up question. So let me start with this decline in order intake, which I always have to remind might be different between units and value. Then in units, the market is down, as you assume, close to 30% and in value even above that. So for us. So therefore, your assumption is right. There's a bit of a mismatch between units and value, but in value, it has declined a lot. So part of your second question, who is taking on all these bad jobs? I cannot talk about who is taking bad big jobs. However, as we see it also in our numbers, the pricing in China was very tough in the last years, you are fully right. And by now, well, to be very optimistic about pricing in China is not us. So if you ask me how do we look going forward, we would hope to see a stabilization of the pricing. And if we get there, it's already an improvement then till now, pricing has shown to be very tough. So therefore, as soon as we get to stabilization of the pricing, one could say, well, from that point, we can start all to work on it. So -- and this is what we see for '26, right? So we don't expect any special magic. And Carla was referring to our plans for '26. And when we meet in February, you will look -- you know us, we are always very -- we try to be and are very down to earth in our plans. So on China, there's no euphoric assumption for what will happen in '26. I hope this answers your question. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Lars Brorson for any closing remarks. Lars Wauvert Brorson: Thank you, operator, and thank you all very much for attending the call today. Please feel free to reach out to me for any follow-ups you might have. The next scheduled event is the presentation of our full year results on the 11th of February 2026. You'll also find our reporting calendar for '26 at the back of our presentation today. With that, thank you all, and goodbye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the Schindler Conference Call and Live Webcast on Q3 Results 2025. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Lars Brorson, Head of Investor Relations. Please go ahead. Lars Wauvert Brorson: Thank you, Valentina, and good morning, ladies and gentlemen. Welcome to our Q3 2025 results conference call. My name is Lars Brorson. I'm Head of Investor Relations at Schindler. I am here together with Paolo Compagna, our CEO; and Carla De Geyseleer, our CFO. As usual, Paolo will discuss the highlights of our quarterly results and our market outlook, and Carla will take us through the financials. After the presentation, we're happy to take your questions. We plan to close the call at 11:00 in an hour's time. With that, I hand over to Paolo. Paolo, please go ahead. Paolo Compagna: Good morning, everyone. I am pleased to be back to report on our performance in Q3. And as Lars said, let me start by giving you some highlights on Slide #3. Firstly, let me say that we continue to face some growth headwinds in major new installation markets around the world, particularly in China. I will share our order trends in more detail shortly. But before, let me remind what we discussed back in February. A key pillar to our strategy of profitable growth is the pricing discipline. And we demonstrated it again this quarter on a few major projects where the economics were just not consistent with our return expectations. That said, we see good growth momentum in many parts of our organization and particularly in modernization. Here, orders were up over 16% in the quarter despite the strong growth we had in Q3 last year, allowing us to show another quarter of order growth for the group. Second, revenue slowed in the quarter, down 0.5%, whilst our year-to-date revenue is up 0.8%. Also here, the headwind from China intensified in the quarter. But our backlog is growing, up 1.5 percentage points year-on-year in local currency, driven by our modernization business, and we are confident that continuing to expand our capacities, we will execute successfully on this backlog. So I expect us to deliver our full year '25 revenue guidance of a low single-digit growth. Although this is likely to be a very low single digit, similar to what we delivered in '24, as Carla will discuss. Third, we delivered another strong operating margin in Q3 at 13%, up 130 basis points from Q3 last year. And we are now able to revise our full year '25 margin guidance, which we see coming in at around 12.5%. That compares to 12% previously. Carla will provide the detail on that, but I'm very pleased to see that the efficiency initiatives launched over the last couple of years are yielding their results. Now beyond our financial performance, let me touch on some of the other highlights of the quarter. First, we are making very good progress on the rollout of our new U.S. mid-rise product. This product was launched in '24, and we have now successfully delivered and handed over the first units. And our order intake so far in '25 is exceeding our plans. You will remember that this product launch was about leveraging our standardized modular platform and enhancing our mid-rise offering in the commercial and high-end residential segment, a key pillar to our strategy in the U.S. market. Now we are starting to see the results in terms of share gain in the U.S. mid-rise market, which is really encouraging. On to modernization, where we continue to industrialize our operations and standardize our product portfolio. We are seeing very good traction with our standardized packages, which now make up close to 17% of our modernization business. And that is not only driving growth, but also enhancing our competitiveness and supporting our journey towards higher profitability in modernization going forward. Then on the topic of sustainability, I'm very pleased to announce that we are installing the industry's first ever low carbon emission steel elevator. The steel used in this elevator reduces carbon emissions up to 75% compared to conventional production and marks an important step towards our 2040 net zero target. And finally, I'm also proud that we have been recognized by Forbes again this year as being among the world's best employer. In the engineering and manufacturing sector, Schindler was ranked third globally. We have close to 70,000 employees and attracting and retaining talent is absolutely essential to our competitiveness and overall health of the company. Well, so you can imagine this recognition is important for us. Moving to our market outlook for '25 on Slide 4. We expect the service markets to continue to expand across all regions, with the lowest growth rate in the Americas and the highest in Asia Pacific, driven by India. The modernization markets continue to offer a clear growth opportunity across the world with mid- to high single-digit growth outside of China and growth well into double digits in China, with around 100,000 aging elevators approved this year for an upgrade within the government's equipment renewal program. To put the scale of this initiative in the perspective, just imagine replacing all elevators in Australia in a single year. In installation, we continue to expect the global market to decline by high single digits, mainly due to a low teens contraction in China, where home starts by floor area continue to fall by close to 20% year-on-year in the January to September period, following a 3 years of 20-plus percent declines. Home sales have dropped 5% overall with only the 4 Tier 1 cities showing a slight increase with all other cities facing steep declines. Across the EMEA region, in addition to good growth in countries such as Spain, now also the important German market appears to have found a bottom and is expected to gradually recover going forward. The so-called Bau-Turbo initiative to fast-track housing project recently approved by the German government should be seen as a positive development overall as it aims to simplify planning, shorten approval times to 3 months and allowing flexibility in building rules to tackle the housing shortage in the coming quarters and years. Asia Pacific, excluding China, is projected to grow by mid-single digits, led by India and Southeast Asia with conditions improving in Australia and the U.S. new installation market has shown remarkable strength, further increasing from a tough Q3 '24 comparison point. In addition, we saw better data coming from Brazil in Q3 '25. And we have, therefore, decided to revise our Americas new installation market outlook to stable from slight down previously. So how did we perform in this market environment in the third quarter of the year. Turning now to Slide 5. Starting with service. Our portfolio units continue to expand, showing the strongest growth in Asia Pacific, excluding China. In Americas, we saw a slight decrease as a result of our increased selectivity when it comes to recaptures that we decide to pursue as well as from softer conversions. As a reminder, we saw a decline in our NI orders in '23, and this still has an impact given to the normally longer lead times, especially in North America. On modernization, we have maintained the strong momentum seen in the previous quarters and saw a double-digit growth across all regions, except for Asia Pacific, excluding China, with fewer large projects booked in this particular quarter, Year-to-date, our MOD growth in the region remains in double digits. Finally, on new installation, our global order volumes decreased by double digits due to China, where, as mentioned back in July, we are responding to the prolonged weakness in the NI market by resetting and repositioning our China business towards future growth opportunities. Outside of China, our NI orders grew mid-single digit, driven by an upswing in orders in our Europe, South and South America zone. And it is worth flagging the comparison from quarter 3 last year, which was the best quarter in '24 for NI, particularly due to our strong performance in the Americas. But the U.S. continues to develop well. And as mentioned, we are pleased with the customer reception of our new mid-rise product. With that, let me turn over to Carla to walk us through our financial results in more details. Carla Geyseleer: Thank you very much, Paolo. Good morning, everybody. Pleased to take you through our financials related to quarter 3. So let me start with Slide 7. And as a simple summary of the quarter, we continue to see headwinds to our top line, but we are executing very well on the bottom line. So starting with the headwinds at the top line. So they are particularly severe in China, and we remain committed to our strategy of pricing discipline, as Paolo just mentioned. Now it's also important to note that FX headwinds are definitely not declining. We had a hit of over CHF 100 million this quarter to both the order intake and the revenue. I will elaborate on the top line trends shortly. Now before doing so, let me point 3 highlights for this quarter. Firstly, we had another very strong quarter in terms of operating margins, up 130 basis points for both reported and adjusted EBIT margin. So we continue to make very good progress operationally, and that is obviously translating into a margin expansion, which is coming in slightly better than expected, which is also why we are revising our full year margin guidance. Secondly, our operating cash flow improved both sequentially and compared to last year. And now looking at the operating cash flow year-to-date, we are also up versus '24. So just shy of CHF 1 billion for the first 3 quarters and setting us up for another strong year for cash conversion. Finally, our net profit continues to increase versus last year in both absolute and margin terms, despite the decline in financial income as well as FX headwinds and higher restructuring costs. Now moving to Slide 8 and taking a look at our top line development. Let me first say that we don't see any material shift in order trends overall, even though growth in Q3 came in somewhat lower than in our first half. Now large projects are lumpy, and we had fewer of them this quarter compared to the prior 2 quarters. And if you look at the underlying trends by region and segments, there are 2 things that stand out. First, the continued steep decline in China; second, the strength in modernization. So on China, here, our new installation orders declined by over 30% in value in quarter 3, driving the group new installation orders down mid-single digits in the quarter and more than offsetting the growth we saw in new installation orders outside of China. So even as China becomes or became a smaller part of the overall group orders, it continues to materially impact our growth profile, notably in new installations. However, organic growth was still positive in the quarter due to the growth in service and modernization. So in modernization, order intake was up 16.4% in quarter 3 and this on a tough comparison versus quarter 3 last year when we grew at 20%. And growth was broad-based with strong double-digit growth in Europe and Americas, whilst China had a standout quarter, up well over 50%. Year-to-date, China is up close to 40%. Now this strong order growth in modernization also presents some operational challenges for us in terms of scaling up our delivery capabilities. So the execution of our MOD backlog was not as efficient in quarter 3 as it could have been. So we recognize that, which meant that revenue growth came in at mid-single digits in the quarter, albeit on a tough comparison from last year when MOD revenue grew over 12%. I should say that the slightly longer backlog rotation times are also a reflection of the project mix in the backlog. That said, we expect MOD revenue growth to accelerate in the coming quarters from the level that we have seen now in quarter 3. But it is still the new installation, which is actually burdening our revenue growth, down 10% in Q3, driven by the steep decline in China, which was down over 20%. And with MOD and Service, both growing mid-single digits, that left the total group revenue down 0.5 percentage point in the quarter, but up 0.8% year-to-date. Now as of the quarter end, our backlog was up 1.5% in local currencies, driven by MOD, driven by Service, which had backlogs up mid-teens and mid-single digit, respectively. So our backlog in new installations declined by low single digit. Now in terms of backlog margin, this quarter was slightly down sequentially, but still clearly up year-on-year. And the weaker sequential development was entirely due to the tariffs being reflected in our U.S. backlog. So as our backlog gets repriced over time, you will see the offset to backlog margins. And importantly, excluding the tariff impact, backlog margins continue to improve also sequentially. Now moving on to Slide 9 and looking at our EBIT performance. As I shared already, it's a really strong development now to 13% reported margin in quarter 3 and 13.9% on an adjusted basis. Now the operational improvement of CHF 35 million this quarter primarily reflects the good progress in SG&A savings, but also next to that, the procurement savings continue to deliver. Price and mix were contributors, but less so than the efficiency savings this quarter. Our reported EBIT was burdened by CHF 25 million of adjustments in quarter 3, of which CHF 21 million of restructuring costs, translating to minus CHF 2 million in our Q3 EBIT bridge compared to last year and minus CHF 13 million in our year-to-date bridge compared to last year. Now taking a look at the net profit on Slide 10. Net profit grew to CHF 265 million in quarter 3 reflecting a 9.9% margin and to CHF 796 million year-to-date with a margin of 9.8% despite lower interest income, despite higher restructuring costs and despite onetime financial gains in last year. So we are very pleased with this result. Moving to the operating cash flow on the next slide. So our operating cash flow grew in the quarter as well as on a year-to-date basis. So operating cash flow reached now CHF 967 million for the first 3 quarters of the year, and that sets us on the path to deliver another strong performance in '25, even if we might not hit the exceptional level of last year. The improvement of the operational cash flow is coming from our operating earnings, supported by higher noncash impacts, offsetting a minor headwind of net working capital after the strong improvement in '24 and the missing positive net cash flow from financing income. So that brings me to the guidance for the remainder of the year. And as Paolo mentioned already, we are now specifying our full year EBIT reported margin guidance at 12.5%. So this compares to the previous 12%. And as Paolo and I have discussed, this revision comes primarily on the back of the efficiency initiatives that we have been executing and which are yielding savings slightly ahead of our expectations. We also now have an increased visibility on the impact of the tariffs this year, while the measures also taken to restructure our Chinese operations are partly offsetting the end market headwinds that we are facing here. Finally, the mix headwinds associated with growth in modernization in H2 are somewhat less than we expected in July at the time of our H1 results. And on mix, it is also important to recognize that we are benefiting from the continued outgrowth in our service business. And this revision to our full year '25 guidance also implies that we expect to see continued strong margin improvement year-on-year in the final quarter of the year. Now a small word on tariffs, which I think we have managed well so far in '25. So the U.S. tariff cost now reflected in our backlog. So I just mentioned, we will continue to work on this hard in the coming period to mitigate the impact, including making price adjustments to offset the impact. Now it's fair to say that the U.S. tariff environment remains very dynamic. So let me give 3 additional comments as we see the impact today. First of all, you will recall that with our H1 results in July, we provided you with an estimated annual gross tariff impact of approximately CHF 30 million. What happened since then? Since then, we have had the changes to the reciprocal tariffs, which has taken U.S. tariff levels on Switzerland to 39%. That takes our estimated impact to CHF 35 million from the initially CHF 30 million. So we also had the expansion of the Section 232 tariff list in mid-August, but that had no material impact on our estimate. Finally, we had the recent escalations by the U.S., including a possible 100% tariff on Chinese imports starting 1st of November. If this were to be implemented, that would take the annual gross tariff impact to CHF 72 million. Now we will come back in February with our full year '25 results and update you then on the '26 impact. But I expect us to make good progress on continuing to offset the tariff impact with our mitigating actions. Now with regards to the '25 revenue outlook, I confirm that we expect to deliver on our full year '25 revenue guidance of low single-digit growth, albeit this is likely to be very low single digit, so similar to '24. So in conclusion, let me take the opportunity to thank all our colleagues around the world for their efforts so far in '25, not at least our colleagues in the field who are operating in some exceptionally challenging circumstances in many places around the world. And it's a clear testimony of their contribution to our strong results in the third quarter of this year. And so with that, I hand back to Lars. Lars Wauvert Brorson: Thank you, Carla. With that, Paolo and Carla are now happy to take your questions. Can I ask you please to limit yourself to 2 questions only, given the limited time we have available. With that, operator, please. Operator: [Operator Instructions] The first question comes from Daniela Costa from Goldman Sachs. Daniela Costa: I will have 2, but I'll ask them one at a time. The first one is regarding sort of your organic order growth rate today, quite a bit lower, I guess, than one of your peers yesterday. I understand from what you said sort of a much bigger drop in China from you. Can you talk to what extent that is just the regional or the product mix? Or it was more an intended effort to try to control your backlog margin or something else? I'll start there. Paolo Compagna: Daniela, Paolo here. Very clear, China order intake in the quarter is driven by 2 factors. One is obviously our clear dedication in pricing discipline that we watch out what we take into the books as part of our China program we discussed with you back in February. And the second one is also a quarter in which we still see a decline in the market, and we just follow here the trend. So this has impacted our Q3 numbers for the China order intake. Daniela Costa: And then just in terms of sort of the Americas service trend, which seems sort of weak and down. Can you elaborate a little bit? From one side, you're upgrading on the original equipment, but the delivery on the service side seems a little bit on the weak side. What's going on, on the service? Paolo Compagna: Yes. So let me elaborate on the topics. And our upgrade is on new installation going forward, we were not conservative. We were back in July looking at the market trends, and we saw some signs of cooling down in North and South America, which now for the reasons discussed, we say, well, market might stay stable, especially as in North America, we don't see yet a significant negative trend, which would require this adjustment downwards on new installation. But your question was about service, and let me elaborate on this one. Here, there is a mix of 2 factors and also a bit different between North and South America. What we see in Q3 in this quarter is a combination of 2 things. Number one, in the recaptures, we call it recoveries, these are the new service contracts we take on board. We moved to a more diligent way of assessing their economics. This led now in a comparison quarter-on-quarter, quarter to the quarter to a slightly negative trend. And the second one is that you might remember in '23, we were facing a couple of quarters with a slower NI new installation order intake. What we see now is the combination of the slower conversions, which means the contracts, right, which come into service after new installation is finished. And due to the lead time of the NI order backlog from '23, and it's the combination of these 2 factors leads to this mathematical slow Q3 in Service Americas. Operator: The next question comes from Andre Kukhnin from UBS. Andre Kukhnin: I've got 2 and one of them actually dovetails nicely with what Daniela asked about just now. So I'll start with that. I wanted to also ask about the dynamics between modernization and service growth in North America, but also in Europe, where you're seeing such a substantial divergence. And I presume at some point, this strong growth in modernization in all those projects that you execute on in MOD will help converting into service. Is that the case? And could you give us some idea on the kind of lead time on that? And maybe -- sorry to pile them on, but while we're on service, could you give us an idea of what the unit growth was for you globally in the quarter? Paolo Compagna: Thank you, Andre. Let me elaborate on both. Number one was about modernization, how it works into service. So here, obviously, yes, modernization captures as long as they are outside of our portfolio would obviously lead to portfolio gains. So here, the answer is yes, there will be a certain positive contribution to the portfolio, and that's clear one of our targets. This being said, the second part of the first question was about lead times. Here, I must say, a bit different geography by geography, but actually, overall trend is that the lead times on modernization are also going up. So it means the time to convert this modernization, I repeat outside of portfolio. So it's not that entire modernization would add portfolio, but the portion which adds portfolio might start to contribute between end of '26 and going forward. So there is a positive momentum. Yes, there is a time in between, yes, and we expect to contribute from Q4 next year going forward. The second question was about the growth in the portfolio, which we can share on a good low single-digit number. Andre Kukhnin: Great. And I appreciate it more than one question already. So I'll just ask a short one. On the tariffs and the backlog repricing, could you confirm that this is just purely mechanical that's kind of triggering the escalation clauses are already in contracts and it's just a matter of working through that? Or are there new renegotiations to be had with customers? Paolo Compagna: Yes, Andre. We have done, as we shared in July back a little program on it, which is showing good effect. But Carla, you might elaborate on that. Carla Geyseleer: Yes, yes. No, you're absolutely right. Andre, thanks for the question. Yes, I confirm it's rather a mechanical exercise that you need to work through. So because, of course, there is a pricing towards the customer, and there is also a piece in our supplier management side. Operator: The next question comes from Vivek Midha from Citi. Vivek Midha: I have 2 questions. My first is a follow-up around your comment around the margin drag from modernization growth not being as large as you thought. Is that because of that slower conversion of modernization growth that you highlighted, which potentially might then have more of an impact in 2026? Or is it also because of the improved modernization profitability as you've grown? Paolo Compagna: Well, it's a bit of a combination between margin and the rollout of the backlog, and I will leave Carla to come through the details. But actually, the margin within modernization are not deteriorating. The opposite is the case. So your observation, we are improving on modernization margins is right. And is this one of the reasons for having a slower conversion into operating revenue. It's not the case. But Carla, please, would you like to elaborate on this? Carla Geyseleer: Yes, I want to be clear. I mean -- so we have the strong growth in the order intake and a slower realization of the projects itself, but we don't have pressure on the MOD margin. So just to be very clear there. Vivek Midha: Totally understood. My next question is just looking at the headcount, the number of employees. It looks like it's gone down by over 1,000 relative to the second quarter. Is that the effect of your efforts to reposition in China? Or is there something else driving that reduction in the headcount? Paolo Compagna: That's a very good observation. Yes, we announced back in July that we are repositioning our -- especially new installation business in China. And what you see in the overall numbers is mostly that. That's true. Carla Geyseleer: Yes. But this comes on the combination. If you look at the year-on-year versus December, it comes on top of the initiative that we took to reduce our cost levels in the -- mainly in the back office in the indirect part of the headcount, and that is actually what you see coming through. So we are just executing on this. So it's a combination of the 2. Operator: The next question comes from James Moore from Rothschild & Co Redburn. James Moore: Could I ask one on service? I mean if we're talking about a sort of 5% constant currency growth for service, would it be possible to split that between maintenance and repair? Are they at a similar pace? And tied to that, if they're at a similar pace and we're at 5% maintenance growth, is that to say with your good low single-digit comment? 2.5% unit growth and 2.5% price. And I ask because I'd like to unpack that to another level, if I could. And behind the price piece, would it be possible to say how much of that is kind of a wage escalator pass-through versus any other form of premium over and above that, whether digital or other initiatives? And behind the unit growth, is that basically just the past orders coming through? Or have you got any conversion topics like is conversion getting better or worse? Or have you got any win-loss retention topics? And how do you think about maintenance growth going forward for the next couple of years? Paolo Compagna: Good question with some components into it. Let me combine them. So on the first part of your question, service, repair without going to the details of both as we never do. But it's obviously that both are growing together. So as repair, you can only execute on the portfolio you have and with the customers we are happy to serve. So there is obviously a certain correlation between the repair business expansion and the portfolio growth itself. So this is very fair to be assumed. Second part of the first question, are there components of digitalization, monetization of the digital business? Surely, yes. As we announced also previously, we continue our efforts in digitalizing for our customers our services. So we don't only digitalize for ourselves for the beauty of technology. We also have an increased and steadily increasing offering on digital services for our customers, which obviously, yes, starts to get some traction and contribute to this overall picture. So that's absolutely right. And your second question, how we expect this whole service/repair/digitalization business to move. Here, we expect, as mentioned before, that we see at least a steady continuation of this growth in which we absolutely intend to participate. James Moore: And can I just follow up on the NI margin, new equipment? My sense was you were doing better than others in China, and you had some topics in the West, which you're addressing with your standardization program. And we've seen some procurement savings, and I'm sure next year is more about efficiency savings and we're doing amazing things there. But are you seeing a scenario in which is the NI margin down year-on-year? And is it that the Chinese revenue decline is more than offsetting some of the organic actions on the other side or vice versa? Paolo Compagna: Your first assumption, I don't like to comment, as I don't have it. But in terms of margins in new installation, let me share in all clarity that our efforts in improving efficiency in the field, and we have talked about now the last couple of years and intensified last year and this year as now we see -- we start to see really traction in the field, this improvement of margins in new installation in the execution we see everywhere. So now to distinguish between China specific and rest of the world, I would say the improvement in the execution, I would say, is everywhere the same. And to assume that the picture has reverted between rest of the world and China, well, I would say China is more under pressure in terms of margins than the rest of the world. Operator: The next question comes from Rizk Maidi from Jefferies. Rizk Maidi: Just maybe start with a clarification on the full year guidance when it comes to revenues. I think now you're talking about very low single digit, which also means very low single digit for the Q4. How should we think about this? Is still these bottlenecks when it comes to modernization is still going to be there? And how should we also think about the service growth in Americas? You talked about recapture weak NI back in 2023. Does that still means that it's going to be a drag again in Q4 and potentially even 2026? Paolo Compagna: Let me start maybe with the second part on the service in the Americas. Obviously, right to observe that we are now on a level which we also compare to previous year growth rates, right? So is it expected to stay at that level? Maybe we will see not now in the next quarter, but we expect in the quarters to come to see growth again also -- more growth again also in service in Americas. When we get our backlog executed and as I was sharing before, we see certain delays in delivering on the project, which then it's a question of time, we will come back on that. So therefore, if you ask specific on Q4, we expect to be on that level. But going forward, we would also expect to see growth rates again also in Americas. Talking now the order -- revenue for the full year, we expect Q4 to be in line with our plans. So hence, if we see the year-to-date numbers in the Q3, we like to be super transparent in what would be the full year expectation. So we don't worsen it, but we also don't see room to get euphoric on additional revenues. To your observation, is it a timing issue? Is it projects and kind of delays? Yes. So why we still are quite confident for the future to come is that the backlog is promising. We are building up resources to execute on modernization. So your observation is absolutely spot on with the time, and we will see also this OR then picking up. Carla, anything you'd like to add? Carla Geyseleer: No, I think I confirm perfectly. I think we are complete. Rizk Maidi: And then the second one is really just to understand your cost efficiency. We're now getting towards year-end. Maybe if you could just please correct me if I'm missing anything. But my understanding is you're running with different programs. One of them is procurement. The other one is SG&A. There's an FTE sort of reduction or repositioning of your China business. Maybe can we talk about what has been achieved year-to-date? And what should -- how should we think about these -- each component heading into 2026? Carla Geyseleer: Yes. Thank you very much for the question. I will take it. So first of all, the plan has not changed. So we are still working on the same 4 building blocks that we have always been super transparent on. So first of all, starting with the procurement and the supply chain savings, that is the more mature one, and this is now the second year that it continues to fully deliver, and that is also the one with the biggest impact. Now what clearly scaled up during the first 3 quarters, that is the second initiative, the reduction of the SG&A cost. And of course, driving efficiency in the back office, that's what you see also coming through in the headcount reduction. So we started with that in quarter 4 last year, and that is now really delivering. And that will also, yes, I would say, continue to deliver, obviously, not with the same incremental savings, but we have not completely come to an end of that initiative. What is rather new, I would say, in the quarter 3, that is we have also been focusing on driving efficiency in the NI and the MOD business. And that is the third initiative where we see now in quarter 3, the first benefits coming through. So that is, in a nutshell, what you -- what is also flowing through to the bottom line. Now immediately making the step a bit to the period to come. So we definitely still have potential for these building blocks. And there will still be significant amounts coming through. However, the composition will change because, as I said, the procurement savings become more mature. So their relative weight will decline. And of course, also going forward with the SG&A. But then if we execute according to plan, the incremental savings coming from the efficiency in the NI and the MOD will further increase. And also on top of that, efficiency in our service business. So that is, in a nutshell, what is happening and what will -- or what is expected to happen going forward. What is also interesting to see is that we came now to a situation where the efficiencies are actually really offsetting the inflationary effects and becoming even more important than some of the pricing elements in some of the areas. And that was the whole initial target, why we have set up these 4 building plans. And that's why you see the nice uptick in the margins and in the profit. Does that answer your question? Rizk Maidi: Yes. Lars Wauvert Brorson: Thank you, Rizk. The next question, please, operator? Operator: The next question comes from Vlad Sergievskii from Barclays. Vladimir Sergievskiy: I'll ask 2 and start with modernization. You disclosed standardized MOD solution was 17% of total modernization orders now. Do you think there is a natural limit of how big standard solutions could be in the future compared to the total MOD market? And are those standardized solutions opening new market niches for you in any way? Are they addressing customers that would have perhaps otherwise not ordered at all or ordered it a bit late? Paolo Compagna: Yes. Vlad, to the first part, is there a limitation in the creation of standard solutions? Well, there will be a logical limitation one day as if you recognize that the installed base is a kind of 160 years of elevator technologies built many, many times in many countries by very local companies. So you've got 10,000s of different elevators to be modernized. So let's talk that. With that, you can imagine you cannot have a standard solution for 10,000s of different elevators around the globe. So you're going to fix it by group of similar technologies you can address. So to the first part of your question, is there a limitation? Yes. Are we already there? No. To the second part, -- does it open new opportunities? I personally believe, yes. Then when you get to a standard solution, which could offer to a customer to improve safety, quality and also maybe user experience by having affordable costs, I think there might be a group of customers who today can only go for a full replacement of the elevator, which comes with certain cost and also civil works around it. Now having this opportunity. So to the second question, I personally believe there might be a segment, is it incredibly big? I think it depends from country to country, coming back to my first part of the answer. Then in some countries, we have a bigger number of local products, as we call them, and we have some countries with less number of local products. So in those countries, this opportunity might be bigger. Vladimir Sergievskiy: Excellent. That's very clear. Second one is on the sales mix. Sales mix has been a tailwind to profitability for quite some years. Is there a chance that this tailwind eases or completely stops in '26 when MOD growth accelerates when perhaps new equipment decline slows and maybe grows outside of China and service keep growing as it does. Carla Geyseleer: Well, for sure, I mean, this mix will change. Will it go as fast as you point out? I don't think so. But we definitely -- yes, we definitely have that in our -- calculated that in our plans. So yes. Operator: The next question comes from Martin Flueckiger from Kepler Cheuvreux. Martin Flueckiger: I've got 2, and I'll take one at a time. First one is for Carla. Just coming back to your general comments regarding incremental cost savings from restructuring and operational efficiency going forward. I was wondering whether you'd quantify those for '25 and '26 to -- basically to understand whether there's been any changes? That's my first question. I'll come back to the second one. Carla Geyseleer: Well, as I said, there are no changes in the components that are driving this cost savings, but the relative weight of the components, that, of course, changes because, as I said, if you talk about procurement and supply chain, it's a very mature initiative. So your incremental obviously decreases. This year, we put a lot of focus on the SG&A savings. And together with that, we start up more and more the efficiency -- driving the efficiency in the new installation and in the MOD. But for -- going forward, we still have a significant incremental amount of potential sitting there, and we will work through that as we did over the last 2 years. Martin Flueckiger: Okay. And my second question is regarding the press reports with respect to TK Elevator being either up for sale or going for an IPO possibly. I was just wondering, thinking back, if I remember correctly, to 2020, I seem to remember press reports regarding Schindler's Board making statements about potentially suing KONE at the time if the deal had gone through, which, of course, it didn't. But I was just wondering if a major competitor were to take over TK Elevator, and I suppose Schindler is also interested. But just thinking if a major competitor were to get the bid, would Schindler's Board again consider legal actions? Paolo Compagna: Martin, let me take this one. Well, first of all, we don't intend to comment on competitors' decision about what they do in M&A. And in the same, as you know, we never disclose our M&As and what we do there. I must say what the reaction will be in the market, no one can predict. What will happen may be also difficult to predict. And with that, I must say, let's see what happens. With regard to ourselves, I mean, we always look at acquisitions which happens, and we look at our own opportunities in smaller and midsized and large acquisitions. So I would say there's no answer to your question in the form what will be a reaction. The market will show what happens. Operator: The next question comes from Walter Bamert from Zürcher Kantonalbank. Walter Bamert: Could you please comment which part of the 130 basis point margin improvement stems from the positive mix effect? Carla Geyseleer: Well, it is not the major part. So we will -- yes, we don't give the exact breakdown. But if you just -- I would say, yes, approximately, yes, up to 1/3, approximately is there [indiscernible] effect, yes. But we are very clear on that, and it's also part of our plans going forward if the mix effect changes. Walter Bamert: Perfect. And then nevertheless, coming back to the M&A question and that just generic, what's your assessment of the Asian market, which is still somewhat more fragmented? Do you think there is still room for globalization of those players? Or do you expect that the markets will remain fragmented somewhat? Paolo Compagna: Well, no one of us, Walter, has a glass sphere to look at for the future. If we would have then we would have to stop the call, go and make some decisions. But this being said, obviously, when you look into fragmented but interesting market, which you say -- if you say AP is it and it is, then one could assume things could happen in the next years to come. So this would be maybe my careful assumption. Then we talk about a still promising market, promising market for the future. And yes, as you rightly assess, there's a high fragmentation in that specific part of the world still. So therefore, one could assume there will be some movements, whatever type, difficult to say. When it happens, difficult to say. Could it happen? I would not exclude it, but it's a very personal assumption away from any detailed study. Operator: The next question comes from John Kim from Deutsche Bank. John-B Kim: I'm wondering if we could go back to the order backlog and the revenue delivery in Q3. If I remember correctly, there was going to be a bit of legacy overhang on Q3 and Q4 deliveries and negative mix from Chinese exposure. Did Q3 progress as planned? Or were there delays to that mix or margin dilutive delivery set, I suppose? Paolo Compagna: To Q3 specifically, the revenue development might have been partially impacted by some projects which see a bit of a delayed execution. And obviously, when it comes to installation and larger modernization jobs, right? If you got a job which then is not completed for whatever reason and often, you know how it goes on construction side, then you might even see it in the books. This has, for sure, an impact in Q3. So therefore, I was mentioning before, in going forward, this will be flattening out by itself as the jobs will be completed, will be then built and then it moves on. So your assumption is right, I think, in saying in Q3, there is a certain impact by larger projects not completed. Yes. John-B Kim: Okay. And just as a quick follow-up to a comment you made about modular. In terms of supply chain, OpEx and perhaps CapEx, do you have what you need to deliver your backlog and modernization? Or is further investment needed from here you think? Paolo Compagna: So for now, we shared in February, you remember when we were sharing our dedication now to move on the modernization business with some of you, we were even discussing in detail what is behind. And one part was the development, production and rollout of those standardized, we call it packages, we call it kits, right? And here, the investment in supply chain, supplier base have been done. So is there any major investment, not specifically, but I like also in all transparency to share that we continue to invest and develop on our supply chain as obviously with the modernization piece growing and the new installation piece being where it is, it's a kind of logical consequence that you keep developing, we call it upgrading internally, the supply chain. And we work now with the internal program in upgrading our supply chain. We don't talk much about, but this takes place. Does it come with major investments? No. Is it partially in the one or the other supply chain. We have different in different continents. There will be some adjustments, but no major investments. And yes, what we deliver now, we are ready to deliver, and this work has been done. It was part of our program in the last 12 months backwards. Operator: The next question comes from Kulwinder Rajpal from AlphaValue. Kulwinder Rajpal: So just wanted to come back on MOD orders in China. So if I heard Carla correctly, she said 50% growth in Q3 and 40% year-to-date. So would it be fair to assume that this business faces tough comps as we go into 2026? So any commentary on growth in the MOD market in China in 2026 will be helpful. And just tied to it, is the share of standardized MOD higher in China compared to other geographies? Paolo Compagna: Let me take your question. So China MOD '26, well, modernization business in China is growing nicely, as shared before, and we don't see any change in trend at all. As I mentioned before, there are even some governmental programs, which are supposed to give some support, and we will also participate there. Allow me also here a very personal note. We have seen in the past also massive supportive programs in new installation in China, which afterwards came with a limited real impact. So now the modernization ones are out, but we are still to see what is the impact. This said, I must say that beside of this stimulus, the modernization business in China is going well and is supposed to continue going well. On the second part of your question, which is the percentage of the packages in China, here, we must say we have to see the market. So if I would say percentage-wise, in that specific market, you could say yes. However, it's logical that in more mature markets in which for longer decades, more products were installed, one could assume that the number of kits, so standard solution kits is higher than in a country in which growth for MOD, you can say more of a homogenic market in terms of technology, right, in terms of installed base. So therefore, is it strategically different? No, in number of pieces of solutions, yes. I hope this answers your question. It's a bit technical, but unfortunately, in that case, it's a technical background. Kulwinder Rajpal: Yes, absolutely. And then just to come back on wage inflation. So I wanted to understand the assumptions for your wage inflation in 2025 and 2026. Paolo Compagna: So it was a bit of disturbed connection here. I think it was about wage inflation. Kulwinder Rajpal: Yes, wage inflation, the assumptions in 2025? And how should we think about it in 2026? Carla Geyseleer: Well, I will say that. So thank you for the question. Wage inflation in '26, I think it will be on a level that is comparable with '25. So that is how we currently see it. Lars Wauvert Brorson: Thank you, Kulwinder. We'll take one last question, please. Operator: We now have a follow-up question from Rizk Maidi from Jefferies. Rizk Maidi: I'll be very brief. Just clarifying some of the points just on China new installations. Am I correct in thinking that the orders here are down 30%, where I think in the P&L, you talked about 20% decline. So perhaps a little bit more drag here going forward? And then more generally, we're now 4 years into this downturn, we thought pricing is not going to be as bad because local players, competitors, including yourself, are doing much lower margins in this downturn than in previous ones, but it feels like it's not getting any better. I'm just wondering who is actually taking on these badly priced sort of projects? And number two, how should we think about -- and also pricing pressure, how do you see it by geography? And how do you think -- how are you thinking about 2026 here? Paolo Compagna: Let me take this one, which is a complex follow-up question. So let me start with this decline in order intake, which I always have to remind might be different between units and value. Then in units, the market is down, as you assume, close to 30% and in value even above that. So for us. So therefore, your assumption is right. There's a bit of a mismatch between units and value, but in value, it has declined a lot. So part of your second question, who is taking on all these bad jobs? I cannot talk about who is taking bad big jobs. However, as we see it also in our numbers, the pricing in China was very tough in the last years, you are fully right. And by now, well, to be very optimistic about pricing in China is not us. So if you ask me how do we look going forward, we would hope to see a stabilization of the pricing. And if we get there, it's already an improvement then till now, pricing has shown to be very tough. So therefore, as soon as we get to stabilization of the pricing, one could say, well, from that point, we can start all to work on it. So -- and this is what we see for '26, right? So we don't expect any special magic. And Carla was referring to our plans for '26. And when we meet in February, you will look -- you know us, we are always very -- we try to be and are very down to earth in our plans. So on China, there's no euphoric assumption for what will happen in '26. I hope this answers your question. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Lars Brorson for any closing remarks. Lars Wauvert Brorson: Thank you, operator, and thank you all very much for attending the call today. Please feel free to reach out to me for any follow-ups you might have. The next scheduled event is the presentation of our full year results on the 11th of February 2026. You'll also find our reporting calendar for '26 at the back of our presentation today. With that, thank you all, and goodbye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Krister Magnusson: Good morning, everybody, and welcome to the Nilörn Q3 interim report presentation. I know that today there's lot of presentations, a lot of companies. So I really appreciate that you take your time to join our presentation here. Myself, I am in Portugal at our factory here. As you probably know, we're doing quite the big adjustments in the factory, uplift in the factory, so here to follow that. So it's an interesting project going on. So I think that will be really good for Nilörn in the future. But I'm sitting here on a small laptop and I think it will work out well. So I will start sharing my screen and put that on presentation mode here. Yes. Now we start. The Q3, we are quite pleased with the Q3. The order intake here was negative 13%. But if we take into consideration that we had a big packaging order in Q3 last year on SEK 18 million, and that will come now in Q4 instead, that is around 7% of the explanation. We also have another currency effect explaining another 6%. So adjusted for the currency effect and this packaging order, it's quite flat. In general, it's a difference between the segments. Luxury segment is still quite weak, though the Outdoor and the other segments are quite strong. So still weakness in the luxury segment, no big improvement there. Sales up 10%, and adjusted for the currency effect, it's actually up 18%. I think it's partly -- we had a quite weak Q2, so it is spillover from the Q2. Looking at the different months, so it was quite strong both in July, August and September. So we're quite even throughout the quarter. And here, we see also in the Outdoor segment and the other segments, but still a bit weaker in the luxury segment. Operating profit, SEK 26.3 million versus SEK 15 million last year, and that gives an operating margin of 11.4% in the quarter. And as you probably know, the goal has been or should be between 10% to 12%. That is the goal we have set. So we in quarter, we target that. Looking at the P&L here. Also, we have a quite strong currency impact on the whole P&L and not only the top line. As you know, most of our business is handling outside Sweden. In Sweden it's mainly sales companies, but we don't do any invoicing from Sweden at all. And then we have the headquarter costs. So we have some costs in Swedish krona, but the majority and all the invoicing is outside Sweden. Yes. And what I want to say more here is also looking at the tax rate, tax rate for the quarter is 24.6%, and that is in line also with the accumulated number. We'll see what happens with the tax rate in the fourth quarter. It's always adjustments and everyone is doing proper calculation, really the calculation of the tax. But we think it will be in line with this 24.6% also for the full year. Personnel cost has quite been stabilized now on this level, I would say, also currency impact on this level and other external costs, but coming back to that a little bit later. Split by product group, not so big difference compared to last year. It's mainly in packaging. That has gone down and it's contradictory to what we do now. We're putting quite a lot of effort into the packaging. And the reason why packaging was down here is due to the luxury segment as we still have quite big packaging delivery to the luxury segment. But they are overstocked so it will take some time. So I think it will take like in mid-2026 until we are back into normal deliveries for the luxury segment in packaging. Looking at the quarterly income statement and the gross margin. Normally, the Q3 has a quite strong gross margin and also this quarter, as you can see here, if you're looking at the historical level. The reason for that is we have less packaging, packaging has a lower gross margin, and less packaging in Q3 normally and also this quarter. Operating cost is also lower normally in Q3 and also this quarter, and that is due to the holiday. Most countries take holiday in July, especially in Europe. So that's why that has a big impact on the quarter 3. Operating profit. As you see, it was a strong operating profit this quarter. And as I explained, it was not only one single month. I think it was strong all the July, August and September. And of course, you who have learned Nilörn now, it's very much volume driven. Once we get good volumes in a quarter or in a year, we also get a good profit. It goes a long way down. So we're very much depending on getting volumes. And then if you look at the similar but in a graph. And also that is to say that in the past, it was always Q2 and Q4 that was sticking out as the best quarter. Nowadays, we see it's very much flat. So it's the change of purchasing pattern from our customers. So they even out much more, buying much more into season and much more shorter lead times. And that makes our pattern different than it used to be. And here, it's also following the profitability, just in a graph. And you can see here now Q3, that was quite strong. Balance sheet. We have a strong balance sheet, an equity level of almost SEK 350 million. And that is good because we're now taking more and more time to search and see for acquisitions and so on. I will come back on that. And also we're doing at the moment both a big investment in Bangladesh and also in Portugal. Also coming back to that later in the presentation. Just want to raise here. As we are an international company, relatively our size, we are in 19 countries and with only the headquarters in Sweden, and therefore, we have a big part of our equity abroad. And that also had a big -- currency has a big impact when we translate the equity in the different countries into the Swedish krona. And this now in 2025, that's had a negative impact on the equity of SEK 32 million. And of course, in the past, we also have had positive impacts. But now due to the relatively strong Swedish krona, that has an impact. Financial indicators, I will not go through them so much. But I just want to mention here, we are almost 700 employees. And as you can see here over these years, we have increased that quite much. That is mainly in the production companies, mainly in Bangladesh, I would say. But also we have invested in other specialist areas, where we employ people to be in forefront with the competitors. And we also invested in countries like U.S. Also coming back to that later on. In U.S., now we have 4 people. This one, this is to explain the movement we have done between year 2020 and today. We, by heritage, has been really strong in design and we continue to be work on that. So design is a strong unique selling competence for Nilörn. We have in packaging started and done much more here effort. We have a really good collection. We have a Category Manager working with that. And so we're really taking a big step forward in packaging. Packaging, as I mentioned, we're also delivering into the luxury segment. But we're also packaging for sports and for Outdoor segment. We're talking here about underwear packaging, sock rider and so on. So it's not packaging for corrugated, standard brown packaging. It's more for the garments and for luxury segment. Financial strengths. We have had a strong balance sheet for many years, but we even now has even stronger. Sustainability, CSR and compliance is an area where we have put a lot of effort and employed people all around the world to build up that, which gives us also -- in the past, we were talking about design. But I would say now sustainability is another core competence that is unique -- I would not say unique, but a selling point for Nilörn, what we push for and where the clients appreciate our offer. Digital solutions and Nilörn:CONNECT, this one is something we didn't have. We had digital solutions like RFID in the past and so on, but now we're taking even more steps into this. I will explain, coming back to Nilörn:CONNECT, what that is all about a little bit later. Global deliveries. What I mean by that is that we're setting up distribution companies in new countries like in Vietnam end of last year and also now in Sri Lanka, but also we are setting up a company in U.S. So we're getting more and more international. Yes. Big currency impact both on the top line and in the balance sheet. And I used to say that we are quite well hedged. We match the cost with the income. So we take a country like Hong Kong, we have big income there. And then we have all the costs matching that. And then in the end, we have a net profit. So in different countries, we are matching quite well. But in the end, we have a profit that will be converted back to Swedish krona. And in my example then, the Hong Kong dollar will have an impact, as you saw earlier on the equity. As I mentioned, still volatility in the luxury market. And we see now less uncertainty due to the tariffs. We'd learned to live and also, I would say, it doesn't affect us directly. It's more indirect effect. It's our client that export to U.S. that has been affected. And I think the uncertainty is most -- I mean, as long as you have the uncertainty, you don't dare to move. But now the uncertainty moves away so it's more movement in the market. Operating profit, we mentioned already. Portugal factory where I am at the moment. We have been here in Portugal like in 40 years. So the factory needs an uplift. We looked at moving the whole factory but we decided to stay. We think there is less risk in that. And we moved out to warehouse to get more space in the factory. And at the moment, we are changing the complete layout inside the factory and to get a much more flow into the factory and also implementing LEAN. So that is good. I think Nilörn Portugal had tough times 10, 15 years ago, but that is now one also a competitive edge for Nilörn, to have a good factory in Europe. Building for the future, that was where we now employed or built up these specialists we have within the group, where we have compliances, our packaging materials. And that is supporting sales. So I would say being a salesperson in Nilörn today versus 5, 10 years ago is a totally different story. In the past, we were out selling labels. Now it's all about selling a concept. And the client is much more demanding now as it has been in the past. Yes, here is the specialist here in different in areas. And then we increased in production capacity. Here, we also have Bangladesh. We are currently -- I mean, we've got the land now and we're doing soil test and we are working on that. But it will take some time. And we said earlier that it probably most likely will be ready by end of 2026. Now we say it will be ready in first half year 2027. We've done geographical expansion, as I mentioned. We see a consolidation in the market. We've seen [ TIMCO ], we've seen SML. We see Avery and all the companies are taking part of that. And we also see companies now that are for sale and actively selling, looking at the label market as such. There are a few big players. It's a mid-segment and there's quite a long tail of small niche players that is working in one market or with a few products. And for Nilörn, we come to the stage now that we're putting much more effort into this, and we have a team dedicated to search for this. And what are we looking for? I think here, we will search for companies that can contribute either geographical expansion in areas and countries where we are not strong in. It could be like France. It could be Holland. It could be Spain. It could be U.S., where we can take more geographical expansion. Or it can be vertical integrations in areas where we are not strong like in heat transfer or in RFID or in packaging. So we're not sure that we will succeed, but we now definitely take this seriously and put much more effort into that. I presented this earlier. There are some new slides. I will just add them quite quick here. What Nilörn:CONNECT is about. Nilörn:CONNECT is the QR code, like you can see on a jacket here, where we have a system -- it is a system behind. That is the Nilörn:CONNECT. And it's a QR code and it's an NFC or RFID. And why Nilörn:CONNECT? We see three reasons why people want to go into buying Nilörn:CONNECT. One is the legal compliance. The legislation, Digital Product Passport, that is here to come. They will come, I would also present that, soon here. So this will be a must for our clients. So this is a headache that we, through our Nilörn:CONNECT, can be part of solving their problems. Then there are more nice to have for them. We can be part of the trend. Now we see repair, resell, recycle, where you have this QR code and the information carrier. And consumer engagement. They, through the QR code, can have consumer engagement and communicate with the end consumers. And that will drive sales, create loyalty and acquire new customers. Just the timeline regarding the DPP. It has been going on for some years with a lot of discussions, a lot of preparation. Some clients are in this already, not in the DPP but into the Nilörn:CONNECT, and have this providing information to the end consumers about their garment and their sustainability. And in 2026, [indiscernible] expected for the first product groups, and the first is apparel and accessories. And in 2027, batteries we go full live with DPP. And the mid of '27, we expect that the DPP will be a fulfillment for textiles. And through this QR code, when you scan it, you can have carbon footprint, you can have the different certificates they have on the garment, production history and the country where it's produced and so on, recycle instruction. All that is within the DPP fulfillment. To the brand owners, we provide them with information so they can see what countries they have been logged in. They can see how many scans they have had, what garments they are scanning. They can also see if they have a QR code outside the jacket and inside the jacket, and they see the difference how that is scanned. So we also provide information to the brand owners. And like this, they can see on the map here where it is scanned. And also what we have been working on is an AI tool, talking to the product. And when you're scanning the QR code, you get to the page where you can write and communicate with them through an AI tool and ask questions. I got this spot on my jacket here, how should I remove that and so on. And that we also do in cooperation with brand owners. So we make sure that we provide the information that they want. We can go out widely in the Internet or we can just provide their database and provide information that they have in their database. And this you have seen in the past, the financial target and so on for Nilörn. We have, yes, achieved 7% growth with an operating margin above 10%. Yes. Good. I will stop sharing this, and coming back to you and see here -- and Maria is also with me, I forgot to mention at the beginning, Maria, the CFO for Nilörn. And Maria, do we have any questions for us? Maria Fogelstrom: Yes. Actually we have only received one question. And that is the question about the sales split between outdoor and luxury, the percentage for each segment. Krister Magnusson: Yes. Outdoor is still the biggest, absolutely biggest. Luxury segment, we started off with a few years ago, and we see that the luxury segment is coming and we think we can do much more there. And the split here, I don't have the exact numbers, but I would guess that the Outdoor is between 25%, 30% and luxury is between 5% to 10%. But what's interesting with luxury is that we can do much more. Luxury, in the country, it's France. It's in Italy. Outdoor is mainly in -- and Outdoor, I would say outdoor sports, it's mainly in Scandinavian countries, in Germany and in the U.K. Maria Fogelstrom: Thank you for that. Now we received some more, so I will continue here. We also got a question about the EBIT. Could you elaborate on how much of the EBIT that comes from operating leverage and how much that is due to recent efficiencies? Krister Magnusson: I think most is -- I mean, as I mentioned, the volume matters a lot. I talked also last time that we intend to do cost savings. We have a program here. We have not launched all of that yet. And cost is -- but we're also taking on cost here, moving into new countries and so on. So for me, this quarter is volume driven, I would say. Maria Fogelstrom: And continuing on the cost savings because actually we got the question about that as well. And the question is, you previously commented on reducing your cost base in Turkey and doing a similar analysis on other parts of the group. Do you have any updates on that front? Krister Magnusson: Absolutely. We have done that in Turkey. So that is being implemented and fully -- and we are now working on other countries. This is partly, but also that we are moving now volumes from a country like Hong Kong, China into Vietnam and Sri Lanka. So that's moving our cost and, at the same time, doing cost savings. And so that is mainly in the Asian area but partially also in Europe. But at the same time, we're also taking on more and more employees in new assets. They are expensive and so on. But my goal is that we can be more clear on that once we have done the restructuring that we are in the middle of. Maria Fogelstrom: Thank you. And now we got a question about the outlook for 2026. Has anything happened during the quarter that changes your view of the market outlook for 2026, specifically regarding different product groups? Krister Magnusson: I cannot say. I think there's nothing new regarding the product group. I hope and think that luxury segment will be back in swing again but I think it will take until mid-2026. For other product group, I don't see any major change, not as it is at the moment, at least. We had, as you know, the Outdoor obviously peaking during the pandemic and then really bounced back. But that is back to normal now. Maria Fogelstrom: Thank you. And the last question that we have received is, are there any ongoing discussions to include segment reporting in the quarterly reports? Krister Magnusson: Segment. Maybe qualify what -- because we do segment reporting in the interim report with country-wise. But I assume here, it's more on product group levels, isn't it, I assume they want to know. Maria Fogelstrom: Yes. I would say. Krister Magnusson: Yes. And absolutely, that's a good point. I think that is something that we should consider maybe and see what we can do there. We have not done it in the past, but it's a good point. Maria Fogelstrom: Thank you. And that was all of the questions we have received. Krister Magnusson: Super good. Thank you very much for participating today. I know it's a super hectic day with a lot of companies presenting. And thank you very much, and have a great weekend. Thank you. Maria Fogelstrom: Thank you.
Baard Erik Haugen: Good morning, and welcome to Hydro's Third Quarter 2025 Presentation and Q&A. We will begin shortly with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. And as usual, we will finish off with a Q&A session. [Operator Instructions] When we get to the Q&A, I will then read your questions on your behalf to Eivind and Trond Olaf. And with that, I turn the microphone over to you, Eivind. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. Safety, as always, is our key priority. It's the most important metric in our quarterly reporting. The health and well-being of our employees is fundamental to the success of the company. And we have had positive development and lowered the number of injuries and incidents for a long period of time. The downward trend continued also over the last few years has continued also this quarter. And I'm pleased to report that both the total number of recordable injuries and the number of high-risk incidents are lower compared to the last quarter. However, we're also well aware that good results and safety cannot be taken for granted. This situation can change rapidly. Maintaining these low numbers demands continuous attention and commitment from all employees across all our locations. Our strong safety culture is rooted in genuine care for our people, ensuring everyone remains healthy and safe while working for Hydro. The commitment to safety is also essential for keeping our operations stable and efficient 365 days a year. By fostering a safe work environment, we are able to achieve our strategic targets and to increase our long-term value creation. Now let's have a look at the key highlights this quarter. We will get back and dig deeper into this also later on in today's presentation. Challenging markets are affecting the results this quarter, leading to an adjusted EBITDA coming in at NOK 5.996 billion. Now despite this, I'm also happy to report a solid free cash flow generation at NOK 2.2 billion, yielding an adjusted RoaCE of 11%, which is above our target of 10% over the cycle. Measures have been taken to meet the uncertainty in the market, and many initiatives are being executed to further increase robustness. And we can already now report progress on our strategic workforce adjustment and the cost reduction initiative announced back in June. On the energy side, we are pleased to have added another long-term power contract to our sourcing portfolio. Alouette has signed an agreement in principle for continued long-term power supply. This quarter, we also received a final judgment in the Dutch court dismissing all claims against Hydro filed by Brazilian Cainquiama and 9 individuals back in 2021, based on both legal as well as factual grounds. And lastly, we can report concrete results coming from our targeted strategic approach to partnerships. We continue to advance our low carbon and circular solutions through close customer collaborations. Executing on strategic workforce and cost reductions as a response to market uncertainty, we did launch a new cost-cutting measure in addition to strategic workforce adjustment measures back in June. The workforce adjustment project aims to reduce white collar manning by 600 people in 2025 and another 150 people for 2026. In addition, we introduced the hiring freeze and limitation on travel and consultancy expenditures. The estimated gross redundancy cost is estimated to be around NOK 400 million this year and estimated cost savings are NOK 250 million. This gives us a net cost of around NOK 150 million in 2025. As we can see from the graph, annual net run rate savings included travel and consulting cost reductions are estimated to be NOK 1 billion from 2026. This gives an adjusted EBITDA improvement altogether for the improvement programs for 2030 of NOK 7.5 billion. Processes like these are always challenging, and we are doing our best to be considerate and to be transparent towards all our employees. And to ensure a professional process, we work in close collaboration with employee representatives. I do want to emphasize that this project is done in parallel with other ongoing performance and capital discipline measures. We still conduct our improvement program with undiminished strength. There is also a parallel restructuring process in Extrusions with large reductions in employees already taking place. And lastly, we have reduced our CapEx guidance announced last quarter. These initiatives aim to strengthen Hydro's ability to navigate global uncertainty. We're not pulling the brakes on our strategy, but we are ensuring that when we grow, we do it with the right structure and with the right priorities. Moving on to some good news on Alouette, where Hydro holds a 20% ownership stake. This quarter, Alouette has signed an agreement in principle to secure supply of power from 2030 to 2045. The agreement is signed with the government of Quebec as well as Hydro-Quebec. This will ensure long-term competitive prices in a market where the energy balance is tightening. As you can see from the graph, our total power consumption in the years to come requires us to constantly explore alternatives for renewable power sources in order to maintain our energy resilience. And this agreement is an important step to ensure stability for Alouette and to further strengthen Hydro's global portfolio of long-term renewable power. Now let's move to another strategic priority. It's been almost a year since we announced the phaseout of Hydro Batteries, a decision driven by persistent market challenges. And I am pleased to report that we have made progress on the phase-out process. We have recently done 2 battery portfolio transactions in line with Hydro's strategic ambitions for 2030. Earlier this month, Hydro Energy Invest entered a transaction to exchange its minority stake in Lithium de France for a minority shareholding in the listed company, Arverne Group. In addition, Hydro signed an agreement to divest its entire ownership stake in a maritime battery company, Corvus Energy, and the closing is expected to happen early November. Hydro continues to remain engaged in the energy transition, but these transactions help us concentrate on core business within energy and step up our ambitions within renewable power generation in line with the 2030 strategy. Another important event this quarter was the final judgment issued by the Rotterdam court in the case for against Norsk Hydro ASA and its Dutch subsidiaries on September 24. The court fully dismissed all claims, including claims of pollution caused by Alunorte following the heavy rainfalls in the region in February of 2018. The court's dismissal was based on both legal and factual grounds. During the proceedings, Hydro presented extensive evidence, including expert analysis as well as empirical data. On this basis, the court confirmed an established fact that there was no overflow from the bauxite residue deposits back in 2018. And consequently, no harm was caused to the environment. And this is an important confirmation supporting our position throughout the years since the lawsuit was filed. Lastly, I will round off my part of the presentation with 2 customer cases from the past quarter. A key priority in our 2030 strategy is to shape the market for greener aluminum in partnership with customers. We are pleased to see the results of our increased efforts in this area. Our strategic partnership with Mercedes-Benz has continued to accelerate over the years, aiming to decarbonize their value chain. This picture is from the last month where the new electric CLA cars produced with Hydro REDUXA 3.0 aluminum from Årdal, drove from Oslo to Årdal. Hydro can provide Mercedes-Benz low-carbon aluminum, ensuring a traceable and transparent value chain. And this is important for Mercedes to be able to deliver on their ambitious sustainability targets. Another exciting collaborative initiative this quarter and in fact, a large milestone for us is a new bridge in Trondheim called Hangarbrua. This is the first aluminum bridge built in Norway since 1995. The pedestrian bridge is made entirely from recycled aluminum sourced from the decommissioned Gyda oil platform from the Norwegian continental shelf. It is built by Leirvik in collaboration with COWI, partnered with Hydro, Aker Solutions and Stena. This project demonstrates that aluminum can be used in producing bridges of tomorrow, contributing to innovative solutions for the infrastructure sector. And it shows how end-of-life aluminum can be transformed into durable and valuable building materials. Although this project is relatively small, it's a tangible example of the significant potential for aluminum in public infrastructure development, a sector where demand is expected to grow substantially in the years ahead. So for me, these 2 partnerships illustrate the growing demand and potential for low-carbon aluminum and our success in expanding the market for circular and sustainable solutions. With that said, let me give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Eivind, and good morning from me as well. So I'll start my part with the market side and starting with the bauxite and alumina markets. After an eventful 2024 dominated by refinery disruptions and bauxite supply challenges, the global alumina market balance has been normalizing since the start of 2025. Around 10 million tonnes of new alumina capacity is expected to come online from India, Indonesia and China this year with full impact expected in 2026. After the drop in alumina prices we saw in Q2 this year, alumina traded around USD 360 per tonne for most of Q3. With more capacity ramp-up, especially in Indonesian refineries, we saw alumina prices falling to around USD 320 per tonne at the end of the quarter. The excess supply is putting pressure on global refiners. If prices stay at the current level, we could see curtailments for high-cost refineries, especially in China. We would then expect a future tightening of the alumina market, pushing back prices to a more normalized level. According to CRU, a small surplus of around 500,000 tonnes is expected in '25, down to a 300,000 tonne surplus in '26 in the 58 million tonne world ex-China market. Consequently, the market would remain sensitive to any production disruptions. Moving to the primary aluminum market. Despite the rate increase to 50% of U.S. Section 232 tariffs on aluminum coming into effect in Q2, the LME and premiums continued to digest its consequences in Q3. Looking at the global primary aluminum balance, external estimates suggest that the market will remain roughly balanced in '25. The 3-month LME aluminum price rose during the quarter, starting at USD 2,599 per tonne and ending at USD 2,681 per tonne. The U.S. Midwest premium continued to surge in Q3, starting at USD 1,432 per tonne and ending the quarter at USD 1,631 per tonne, driven by 232 tariffs, the structural aluminum deficit and the need to attract metal into the U.S. In Europe, the quarter opened with a duty paid standard ingot premium of USD 185 per tonne, increasing to USD 258 per tonne at the end of Q3. As in previous quarters, Hydro's main concern remains the broader risk of a global economic slowdown from tariffs, which would weaken demand and challenge current price levels as a consequence. Then moving downstream. Extrusion demand stabilized at moderate levels in both Europe and North America during Q3 compared to the same quarter last year with light uptick in order intakes. In Europe, extrusion demand is estimated to have remained flat in Q3 '25 compared to the same period last year, but decreased by 20% from Q2 due to seasonality. Demand for building and construction and industrial segments has stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production, partly offset by increased production of electrical vehicles. For Q4 '25, CRU estimates that European demand for extruded products will increase by 1% year-over-year. Overall, extrusion demand is estimated to be flat in '25 compared to '24. In North America, extrusion demand is estimated to have increased 2% in Q3 '25 compared to the same quarter last year, but decreased 2% compared to Q2. Extrusion demand has continued to be very weak in the Commercial Transport segment, driven by lower trailer builds. Automotive demand has also been weak. Demand has been positive in the Building and Construction and Industrial segments, while the ongoing impact from the introduction of tariffs are still uncertain, order bookings have developed better for domestic producers due to lower imports so far this year. In Q4 '25, North American extrusion demand is expected to increase by 5% year-over-year. Overall, extrusion demand is estimated to decrease 1% in '25 compared to '24. Looking at our own numbers, Hydro Extrusions sales volumes increased by 1% year-over-year in Q3 '25. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the U.S. transport market were down 5% in Q3 compared to minus 11% in Q2. Automotive sales in Q3 were still negative in Extrusions Europe, driven by continued moderate production at some car manufacturers. Automotive sales in North America increased 5% in Q3 from a low base than the same quarter last year, as negative overall market development was offset by increasing volume to key customers. Sales volume growth in the Industrial segment was stable in Q3, while sales in the Distribution segment increased by 8% in Q3, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q3 '25, mainly caused by tighter consumer spending and an inventory offloading at customers. For Q4, total sales volumes in Hydro Extrusions for EU and the U.S. are expected to be in line with underlying market growth expectations. Then moving to the financials. When looking at the results Q3 versus Q2, adjusted EBITDA decreased from NOK 1.8 billion -- from -- sorry, NOK 7.8 billion to NOK 6 billion. The main driver was normalization of eliminations. Realized all-in aluminum and alumina prices contributed negatively with around NOK 300 million. Upstream volumes had a net neutral impact where somewhat higher volumes in aluminum metal were offset by somewhat lower volumes in bauxite and alumina. Raw material costs contributed positively by approximately NOK 700 million, mainly driven by lower alumina costs in aluminum metal. This was partly offset by higher energy costs and a slight increase in other raw material costs. Extrusions and recycling margins and volumes had a negative impact of around NOK 300 million. 85% of the effect came from Extrusions and the remaining 15% from recycling in metal markets. The negative development in Extrusions was largely driven by lower sales, partly offset by positive impact from the metal effect through the higher Midwest premium. In Energy, lower production and lower prices impacted results for the quarter with a net negative impact of around NOK 100 million. Furthermore, fixed costs were around NOK 200 million lower compared to Q2 with positive Extrusions. Currency effects negatively impacted the results by around NOK 400 million with 70% of the effect related to aluminum metal and 30% to bauxite and alumina. This was mainly due to a stronger NOK compared to U.S. dollar. The largest negative effect this quarter was normalization of eliminations, which amounted to NOK 1.4 billion. In the second quarter, realization of previously eliminated internal profit had a positive contribution of the same size. Finally, net other elements had a net negative impact of around NOK 100 million. And this concludes the adjusted EBITDA development from NOK 7.8 billion in Q2 to NOK 6 billion in Q3. If we then move to the key financials for the quarter. Comparing year-over-year, revenue increased by around 1% to NOK 51 billion for Q3. Compared with Q2, revenue decreased by around 5%. For Q3, around NOK 200 million positive effects were adjusted out of EBITDA, mainly related to NOK 206 million unrealized derivative loss, mainly on LME-related contracts and a net foreign exchange gain on risk management instruments of NOK 66 million. The result also included NOK 116 million in rationalization charges and compensation for termination of a power contract, of which NOK 251 million is related to future periods. This results in an adjusted EBITDA of NOK 6 billion. Depreciations were around NOK 2.5 billion in Q3, resulting in adjusted EBIT of NOK 3.5 billion. Net financial income for Q3 was around negative NOK 450 million. This was largely driven by net interest and other finance expenses of around negative NOK 730 million. This was partly offset by an unrealized currency gain on around NOK 380 million, mainly reflecting a stronger NOK versus euro affecting embedded euro currency exposures in energy contracts and other euro liabilities. Furthermore, we have an income tax expense of around NOK 900 million for Q3, and the quarter was mainly impacted by high power surtax. Overall, this provides a positive net income of around NOK 2.1 billion and foreign exchange gains of approximately NOK 380 million are adjusted out together with the EBITDA adjustments mentioned earlier and partly offset by income taxes of around NOK 120 million. And this results in adjusted net income of NOK 1.9 billion in Q3. Adjusted net income is down from NOK 3.5 billion in the same quarter last year and down from NOK 3.6 billion in Q2. Consequently, adjusted EPS was NOK 1.02 per share. And let's then go to the business areas and give an overview of each of the business areas, starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 3.4 billion in Q3 '24 to NOK 1.3 billion in Q3 '25. This was mainly driven by lower alumina prices, higher fixed costs from a low level in Q3 '24 and negative currency effects caused by a weaker U.S. dollar against the NOK. This was partly offset by higher sales volumes and positive year-on-year effects from the full implementation of the fuel switch to natural gas. Compared to Q2 '25, the adjusted EBITDA decreased from NOK 1.5 billion to NOK 1.3 billion in Q3 '25, mainly driven by negative currency effects caused by a stronger BRL versus the U.S. dollar and lower sales volumes. Alumina realized prices decreased but maintained above market prices indications due to intra-group pricing mechanisms. Raw material costs were slightly higher Q3 versus Q2 and fixed costs remained stable. For Q4, we expect the production volume at nameplate capacity. And compared to Q3, we expect stable fixed costs and raw material costs are also expected to remain relatively stable. Moving then to Aluminum Metal. Adjusted EBITDA decreased from NOK 3.2 billion in Q3 '24 to NOK 2.7 billion this quarter. The main drivers year-on-year were negative currency effects caused by a stronger NOK against the U.S. dollar, partly offset by higher sales volumes and lower alumina costs. Compared to Q2 '25, adjusted EBITDA for aluminum metal decreased from NOK 2.4 billion, and this was driven by lower alumina costs, partly offset by higher energy costs, currency effects caused by stronger NOK against U.S. dollar and lower all-in metal prices, mainly caused by a sales mix pushing premiums to the lower end of the guiding. The raw material cost release was around NOK 700 million, which was lower than we guided for in the Q2 reporting. The reduction was lower than expected, mainly due to intercompany alumina pricing mechanisms, where the opposite positive effect is realized in higher B&A alumina price and result. These effects cancel each other out on the group level. Decrease in fixed cost was above guidance at around NOK 200 million caused by currency translation effects. And this brings me then over to the guiding for the next quarter. For Q4, AM has booked 72% of its primary production at USD 2,597 per tonne, and this includes the effect from our strategic hedging program. We have booked 40% [indiscernible] USD 423 per tonne, and we expect realized premiums to be in the range of USD 310 to USD 360 per tonne. On the cost side, we expect stable total raw material costs and increased fixed costs in the range of NOK 100 million to NOK 200 million, and sales volumes are expected to remain stable. Moving to Metal Markets. Adjusted EBITDA for Metal Markets decreased in Q3 from NOK 277 million in Q3 '24 to NOK 154 million due to lower results from sourcing and trading activities. And those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the results for Q3 was NOK 174 million, down from NOK 375 million in Q3 '24. And compared to Q2, adjusted EBITDA for Metal Markets decreased from NOK 276 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 93 million, down from NOK 136 million last quarter. The decrease was mainly due to seasonally lower volumes, partly offset by positive premium development. For Q4, we expect lower recycling results following continued margin pressure. In our Commercial segment, we also anticipate a lower contribution from sourcing and trading activities in Q4. As always, we emphasize the inherent volatility of trading and currency fluctuations. And given the realized results year-to-date, we have adjusted down the guidance for the commercial area adjusted EBITDA, excluding currency and inventory valuation effects to NOK 200 million to NOK 400 million for the full 2025. Moving to Extrusions. The adjusted EBITDA increased year-over-year from NOK 880 million to NOK 1.1 billion, driven by positive metal effects from increasing Midwest premiums, partly offset by pressure on sales margins. We saw 1% higher sales volumes as well as somewhat weakened sales margin primarily in Europe. Furthermore, lower recycling production negatively impacted the results with around NOK 100 million. And compared to Q2 '25, adjusted EBITDA for the Extrusions decreased from NOK 1.2 billion due to seasonally lower sales volumes, partly offset by positive metal effects and lower costs. Looking into Q4, we should always look towards the same quarter last year to capture the seasonal developments in Extrusions. External market estimates suggest a positive volume development year-over-year of 1% for Europe and 5% for North America. However, we foresee increasing pressure in both Extrusions margins and Recycling margins. We expect further metal effects year-over-year of NOK 50 million to NOK 150 million based on current spot Midwest premiums, reminding that metal effects are strongly dependent on the movements in the Midwest premium. And then moving to the final business area, Energy. The adjusted EBITDA for Q3 increased to NOK 828 million compared to NOK 626 million in Q3 '24. The increase was mainly driven by higher gain on price area differences, partly offset by lower production. Compared to Q2, adjusted EBITDA decreased from NOK 1.1 billion, mainly due to lower production and lower commercial results. The price area gain was NOK 330 million in Q3 at a similar level as in Q2. Looking into Q4, as always, we should be aware of the inherent price and volume uncertainty in energy. For the next quarter, production volumes and prices are expected to increase mainly due to seasonality. Furthermore, price area gains are expected to be lower following seasonal convergence between area prices. And then let's move to the final financial slide this quarter. Net debt decreased by NOK 1.9 billion since Q2. Based on the starting point of NOK 15.5 billion in net debt from Q2, we had a positive contribution in adjusted EBITDA of NOK 6 billion. During Q3, we saw a net operating capital build of NOK 1.4 billion, mainly driven by increasing inventories and receivables related to indirect CO2 compensation, partly offset by a release in net accounts receivables and accounts payables. Under other operating cash flow, we have a negative NOK 200 million impact, mainly driven by net interest payments, settlement of taxes and reversal of net income from equity accounted investments, partly offset by positive mark-to-market reversals and adjustments for noncash effective bonus accruals. On the investment side, we have net cash effective investments of NOK 2.2 billion. As a result, we had a positive free cash flow of NOK 2.2 billion in Q3. And finally, we also had negative other effects of NOK 300 million, and this was mainly driven by payments of new leases, partly offset by positive net currency effects on cash debt. As we move to the adjustments related to adjusted net debt, hedging collateral has increased by NOK 400 million since the end of Q2. And furthermore, during Q3, the net negative pension position decreased by NOK 700 million, turning into a net asset position of NOK 600 million positive. And finally, we had no changes in other liabilities during Q3. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q3 of NOK 21.1 billion. And with that, I end the financial update and give the word back to Eivind. Eivind Kallevik: Thank you, Trond Olaf. Now as we conclude today's session, I'd like to summarize our continued priorities going forward. As always, health and safety remain our top priority, and we are fully committed to safeguarding the well-being of our employees. While we recognize that strong performance metrics can shift in just a moment of inattention, the ongoing positive trend in this area stands as a clear evidence of our dedication. We are navigating an increasingly volatile geopolitical situation that continues to affect our markets, but in response to these uncertainties, we are proactively refining our operational structure to target our most critical strategic priorities. This quarter, we have taken steps to execute on the phaseout of our battery operations in accordance with our strategy. We have several performance and capital discipline programs ongoing to help us better navigate global uncertainty and keep up the attention on profitability. We are seeing positive outcomes in our power sourcing portfolio highlighted by the Alouette recent long-term contract, which strengthens our energy resilience. Continuing to identify and pursue new opportunities in power sourcing remains essential to secure our future energy needs. Achieving tangible results on our 2030 strategy remains critical, and we are proud to see that we are taking steps in the low-carbon aluminum transition. Our market for recycled low-carbon products continues to advance, exemplified by the partnership with Mercedes-Benz and the infrastructure project in [ Tonya ]. We create growing markets through partnerships while we execute on our decarbonization and technology road map. And these concentrated efforts on growth and profitability ensure that Hydro continues to stay relevant. And we are committed to our decarbonization strategy, and we will continue to pursue our 2030 ambitions with unwavering determination. Thank you so much for your attention. And with that, I hand it over to you, Erik. Baard Erik Haugen: Thank you, Eivind, and thank you, Trond Olaf. We will then move into the Q&A session. [Operator Instructions] And we have a few already, so let's get started. First one is from Liam. Can you please give your latest thoughts on CBAM? Do you expect implementation from early 2026 or potential delays? Eivind Kallevik: Thanks, Liam. The way we look at this today, we do expect CBAM to be implemented from 2026. What we are, I would say, excitingly awaiting is any changes or adjustments to CBAM, for instance, around the scrap loophole. That remains to be seen as we get towards the tail end of this year. Baard Erik Haugen: And then there's a second question from Liam. Is it possible or likely that you will underspend versus the NOK 13.5 billion CapEx guidance for 2025? Eivind Kallevik: We are keeping the CapEx guidance at NOK 13.5 billion. Remember that Q4 is typically the quarter with highest maintenance and sustaining capital. Now if we have any updates to that, we will certainly be sure to give it at the Investor Day that we have in late November. Baard Erik Haugen: Then there's a question from Amos. Can you discuss the state of play with the Tomago's energy contract? Is it reasonable to assume that the smelter shuts in 2029? Eivind Kallevik: So Tomago is, of course, placed in an area where renewable power is hard to get in Australia and the power situation is pretty tight, leading to high energy cost. Currently, today, energy costs is roughly 40% of operational costs for the Tomago smelter. We continue to work with the stakeholders to see if there are any opportunities to get renewable power post the end of '28, but it is a challenging situation. And we will make sure that we update the market if and when there are news in this context. Baard Erik Haugen: And another one from Amos. Is there any change to guidance for Metal Markets trading and commercial EBITDA contribution for '25? I think that one was covered already. Trond Christophersen: Yes. So as I said, we have reduced the guiding to NOK 200 million to NOK 400 million, down from NOK 300 million to NOK 500 million, as we said in the Q2 report. So that is the reduction in the guiding. Baard Erik Haugen: And then a question from Matt. Considering the recent volatility in alumina prices and the increase in refinery capacity from Indonesia with potential developments in Guinea, how is Hydro approaching the balance between LME linked and PAX-based pricing for future alumina contracts? Also, could you please provide some more color on the Alba supply agreement in Q3? Eivind Kallevik: Yes. So when it comes to pricing of alumina, PAX remains the predominant pricing parameter and that I suspect you should also expect going forward for the new contracts that we enter into. When it comes to the Alba contract, it's a contract that we are very happy to enter into. It's a long-term partner in the Gulf. Other than that, I really cannot comment on specific commercial details of any contract. Baard Erik Haugen: And then there's a question from Hans Erik. Any news regarding potential tariffs on scrap exports from Europe? Trond Christophersen: Yes. So the commission in the EU had planned for an announcement late in Q3. That has now been postponed until late Q4. So that is the latest information we have. So then again, we expect the news at the end of Q4. Baard Erik Haugen: Question from Magnus. There seems to be a miss versus guidance of NOK 300 million on raw material costs, looking at the group combined. Can you explain the drivers here? Trond Christophersen: Yes. So Magnus, on the raw material costs, I think you need to look at bauxite and alumina and aluminum metal together. And we guided on NOK 1 billion to NOK 1.2 billion. We realized NOK 700 million. But if you add roughly NOK 200 million plus from B&A to that guiding due to the internal pricing mechanism, we are closer to the NOK 1 billion. And then with some slight increases in energy costs and less reduction of carbon costs, both below NOK 100 million. But if you add all that together, you are within the guiding. So that is basically the difference. Baard Erik Haugen: Then we have a question from Bengt. Looking at actual price changes for premiums during the quarter and your expected range of USD 310 to USD 350 per tonne, the midpoint implies lower realized premiums quarter-on-quarter, whereas premiums are up quarter-on-quarter. Are there a temporary change in sales mix that explains this? Eivind Kallevik: So thanks, Bengt. And you are correct. When we've looked to the value-added products market, both in Q3 and when we look into Q4, we do expect to produce somewhat more standard ingots compared to what our normal product mix would be. And that, of course, drags the average premium somewhat down. Baard Erik Haugen: Then there's a question from Ioannis. Market expectations were for a meaningful increase in extrusion volumes in 2026 from through levels. Q1 '26 outlook suggests just 2% to 4% improvement year-on-year. Can you provide some color on end markets and whether you are seeing any uptick in Automotive and HVAC going into next year? Trond Christophersen: So I would say that the overall extrusion market is the market where we see a lot of uncertainty. It is difficult to give sort of additional flavor on the expected volumes going into next year. We use the external CRU as a reference. And as we said this quarter, we roughly followed the development for CRU, which we also expect for the coming quarter. We have been expecting a recovery in extrusion market for quite some time now. But again, as always, it's very difficult to tell when we will see the market turn. Baard Erik Haugen: Then we have a follow-up from Bengt. Follow-up on the standard ingot. Is that normal seasonality or changes in end-user demand? Eivind Kallevik: So I think you need to look at this 2 ways. One is that demand in Europe has been relatively weak, as Trond Olaf has been through. That's part of it. Second part of it is that customers -- our customers is then also drawing down their inventories quite significantly, both in the U.S. and in Europe towards the year-end. And as such, we produce somewhat more standard ingots to get our operating capital also out the door. Baard Erik Haugen: Then there's a question from Magnus. Are we done seeing significant positive eliminations? Our impression was that there was more to come as the Q2 release was smaller than the buildup in the year before. Trond Christophersen: Well, eliminations are unfortunately difficult to predict also for us internally. But if you look at the total accumulation of negative eliminations through the price increase for alumina, we accumulated roughly NOK 2 billion. And now we have released, I think, yes, around NOK 1.76 billion in total. But the remaining level we keep in the balance will fully depend on the development of the alumina price. And I think sort of the positive twist on this is that since we now are generating much better cash flows in bauxite alumina compared to the situation before the alumina price surge we saw last year, we then will have a higher eliminations in the balance if the current market prices stay. Baard Erik Haugen: Then there's a question from Amos. What is your guidance for Q4 working capital movements? Trond Christophersen: Yes. So we maintain our guiding that we gave at the Capital Markets Day last year that we will deliver the NOK 30 billion at year-end. Baard Erik Haugen: Okay. Then there seem to be no further questions, in which case we will round it off here. Thank you all for joining us here today. Please don't hesitate to reach out to Investor Relations if you have further questions. And we wish you all a great day. Thank you.
Aki Vesikallio: Welcome to Hiab's Third Quarter 2025 Results Call. My name is Aki Vesikallio. I'm from the Investor Relations. Today's results will be presented by CEO, Scott Philips; and CFO, Mikko Puolakka. And as a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements. Hiab's Q3 profitability was affected by lower sales in the U.S. Our orders decreased slightly. Comparable operating profit margin decreased to 11.4% due to lower sales in the U.S., which was caused by elevated market uncertainty due to increased trade tensions. However, our services business continued to grow. Sale of MacGregor was closed on 31st of July, and the business is now separated from the company. Let's then view today's agenda. First, Scott will present the group level topics. Mikko will go through reporting segments, financials in more detail and the outlook. After Mikko, Scott will join the stage for key takeaways before the Q&A session. With that, over to you, Scott. Scott Phillips: Thank you, Aki. And greetings, everyone, from my side. I will start with a few highlights looking towards executing on our strategy of profitable growth for the future. First, I'm pleased to share with you that we announced a partnership with Forterra to further develop automated solutions for our lOad Handling Systems business. So really exciting development there. Next, we launched a new 3.5 ton truck-mounted forklift for the EU, which will enable our MOFFETT forklift -- our MOFFETT branded solutions to be the clear industry leader in this size class of delivery solutions. And I would also like to highlight that we announced the launch of the smartest cable hoist solution in the U.S. market under our GALFAB brand. So really proud of the work the teams have done on both sides of the Atlantic there. And finally, we are pleased to announce the revised long-range climate targets, aiming to be net zero by 2050. Now getting into the financials for the quarter. I'll start first with order intake. Our orders received in the quarter declined by 3% to EUR 351 million versus last year comparison period of EUR 361 million. And then as a consequence, as you see on the left-hand side of the slide, we've gone from EUR 900 million order book to roughly EUR 636 million at this time last year and now stabilizing out around EUR 557 million following this quarter. Now for the period year-to-date, our order intake is up 1 percentage point to EUR 1.1 billion versus last year. And as you think about the last 12 months order intake, we're somewhere around the EUR 1.5 billion level, which has been the case for approximately the last 2 years. Now the decrease in orders received was driven primarily by the delayed customer decision-making in the U.S. Of course, that was partially offset by Defense Logistics, and we won a nice Wind segment order that we announced previously in the quarter. Currencies had a 2 percentage point negative impact on orders received in Q3, which we had highlighted would be the case with last quarter's results call. Now looking further into the geographic distribution of the order intake. Our EMEA market was represented 56% of the orders for the quarter or EUR 195 million versus last year at EUR 155 million. So that's up 26%. Year-to-date, we're at EUR 587 million versus EUR 518 million last year. That's a change of 13% year-over-year, year-to-date. In the Americas, however, a bit different picture. In the quarter, we were EUR 132 million versus last year at EUR 185 million. So that's a 29% reduction. Therefore, year-to-date, we're down 14% versus last year at EUR 435 million versus EUR 504 million the prior year. And in APAC, we were up nicely in the quarter by 11% from EUR 24 million versus EUR 22 million last year. Year-to-date, we're at EUR 84 million versus last year's year-to-date figure of EUR 72 million or up 16%. In terms of the operating environment, we do continue to have positive momentum in our Defense Logistics and Energy segment opportunities. So that's good. We have also a big robust replacement demand that's driving the majority of our business. Of course, on the negative side, we still have the uncertainty of the trade tensions. And this, of course, has impacted the demand curve, in particular, in the Americas and in particular, drilling further in the U.S. market, which, of course, means our U.S. customers have remained quite cautious. Then moving into the sales development. Sales in the quarter were down 11%, so EUR 346 million versus last year's comparison period of EUR 388 million. And year-to-date, we're at EUR 1.16 billion, which is 6% below last year's level at this time, which is EUR 1.235 billion. And then on an organic basis or in constant currencies, we're down 8% in the quarter versus last year and 5% year-to-date. Of course, our services percent of sales grew in the quarter to 34% versus last year's comparison period at 29% year-to-date. Services represent 30% of sales versus last year's year-to-date figure of 28%. So sales have leveled out at the -- approximately the level that we would expect given our prior 11, 12 quarters' worth of order intake adjusted for the seasonality effect. But of course, the big story was the negative impact that we had in the U.S. market, which I'll cover in the next slide. So looking into the geographic distribution of the sales. EMEA represented 51% of our sales in the quarter, down slightly from last year, 5%. Year-to-date, EMEA is at EUR 573 million versus last year at this time at EUR 599 million. So that's a 4% decline. In the Americas, however, is where we had the biggest decline. Americas in the quarter was EUR 140 million versus EUR 177 million last year, a 21% drop year-to-date. We're at 9% down versus last year, EUR 508 million versus EUR 556 million. And in APAC, much like the order intake, we were up slightly EUR 29 million in sales versus last year's Q3 of EUR 24 million in sales, representing an 18% positive variance. Then year-to-date in APAC, we're down 1% or EUR 1 million, EUR 79 million versus last year at EUR 80 million. Our ECO Portfolio sales continues on a positive development. We're at EUR 140 million in the quarter of ECO portfolio sales versus last year comparison period of EUR 114 million, so that's up 23% year-to-date, EUR 437 million versus last year, year-to-date at EUR 354 million, up 23%. So as indicated earlier, our sales decline was most prominent in the Americas. EMEA sales declined slightly, of course, linked quite closely to the order intake development in the region. APAC sales increased slightly, which, of course, is also linked to the order intake development in APAC. And on the positive note, our ECO portfolio sales increased, in particular, in our circular solutions from our service business as well as our Climate Solutions and our Lifting Solutions equipment business. Then looking into the profitability. For the quarter, our comparable operating profit was EUR 40 million versus last year, EUR 52 million. That's a 24% drop on the EUR 42 million drop in sales quarter-over-quarter. That puts our year-to-date comparable operating profit at EUR 166 million versus last year's EUR 176 million, representing a 6% drop. which, of course, all occurred within the quarter. On a percentage basis, our comparable operating profit percentage was 11.4% versus 13.4% last year. And year-to-date, we're at 14.3%, which is on the same level as last year due to our good performance in the first half of this year. We were primarily impacted by the EUR 20 million negative impact from our lower sales in the U.S. as I highlighted on previous slides. Our gross profit margin also decreased slightly by 80 basis points, primarily due to the change in the revenue curve, which we weren't able to fully offset with cost out in line with sales development or the revenue development. However, our SG&A costs were lower in the quarter by approximately EUR 5 million. EUR 1 million lower in sales and marketing, EUR 4 million lower in administrative costs, so well in line with our EUR 20 million cost reduction program that we announced last year. And then as a consequence, our operative return on capital employed improved driven by the nice development of managing the working capital within the team, especially as it relates to the days sales outstanding. So really strong execution in that regard. Then as we've done each of the past few quarters, we want to highlight where we are relative to our long-term targets. So just to remind you, our long-term target was to was to be on a level of 7% CAGR over the cycle, 16% comparable operating profit and above 25% return on capital employed. Our progress as of through Q3 of this year, our rolling 10-year average is down slightly to 6%. Our long-term -- last 12 months comparable operating profit is at 13.1%. This compares to 12.7% where we were at this time last year. And our last 12 months return on capital employed is at 29.8%. So with that, I'll hand it over to Mikko. Mikko Puolakka: Good morning also from my side. Let's first have a look on the Equipment segment's performance in the third quarter. Equipment segment had a slightly positive book-to-bill in quarter 3 with EUR 239 million order intake. Gifting equipment quarter 3 orders were actually flat, while the delivery equipment orders declined. This delivery equipment orders decline came from the U.S., as mentioned already earlier by Scott, and this is very much caused by the trade tensions driven slowness in our customers' investment decisions. Equipment sales was EUR 230 million. This is a 17% decline from prior year. Lifting equipment sales was flat year-on-year. So the decline came solely from the delivery equipment and in particular, from the U.S. market. The Equipment comparable operating profit declined to EUR 20 million, which represents an 8.8% margin. This decline in margin is solely again, attributable to the delivery equipment sales decline and very much attributable to the U.S. market. You can see clearly in the bridge on the right-hand side there, what kind of impact the EUR 46 million decline in Delivery Equipment volumes had in our profitability in quarter 3. The gross profit margin was negatively impacted by lower volumes. So all in all, the Equipment as well as the whole Hiab quarter 3 profitability was impacted by the lower delivery equipment sales in the U.S. Services grew nicely in quarter 3. We continue to increase the number of connected units, and there has been also really good intake for maintenance contracts as well. The growth both in orders and sales came from recurring services like spare parts and maintenance. Services grew even in Americas as there is an installed base, which needs to be up and running every day. Services profitability was on a good level, 23.5%, especially thanks to the higher sales as well as commercial and sourcing actions. When we look at the services profitability bridge, profitability improved by EUR 5 million in quarter 3. The main drivers for better profitability were EUR 4 million higher sales as well as the previously mentioned commercial and sourcing actions, which improved the gross profit margin in services. Also, the services fixed costs were slightly lower compared to the previous year. The foreign exchange or the translation impact had roughly 3% units negative impact in Services quarter 3 orders, sales as well as profitability. Let's have a look then at the total Hiab financials, and I'll focus here more on the right-hand side, the profitability bridge. The comparable operating profit declined EUR 12 million from the comparison period. Here, the EUR 42 million decline in sales is the main factor behind the lower profitability. As described earlier in the call, lower sales impacted also our gross profit margin, as mentioned by Scott earlier, it was 0.8% units lower. It's good to remember that some of the costs above the gross profit margin like factory overheads, those are not fully scalable within a few quarters. So when we have lower revenues like we had in quarter 3 that has a slight negative impact on the gross profit margin. We got some tailwind from the lower SG&A, which were roughly EUR 5 million lower than last year and then EUR 8 million year-to-date September. The currencies, as you can see from the picture, had a minor roughly EUR 1 million negative impact on our profitability in quarter 3. On a positive note, our cash conversion, i.e., the cash flow versus comparable operating profit was 173% for third quarter. Net working capital decline was the biggest contributor to the over 100% cash conversion and the net working capital declined mainly in accounts receivables. The reported cash flow still includes July cash flow from MacGregor, but as can be seen on the chart, the contribution to the overall cash flow was relatively small. When we look at our balance sheet, McGregor has now fully been removed from Hiab's balance sheet at the end of July 2025. Hiab is now EUR 308 million net cash position, and this converts to a minus 32% gearing at the end of September. As you have noted, we have also paid an additional dividend of roughly EUR 100 million in October. This is not yet visible in this September balance sheet numbers. If the dividend payment would have taken place in September, our gearing would have been minus 21% in September. Still a very, very strong balance sheet. On the right-hand side, you can see that we have a couple of outstanding interest-bearing debts, one EUR 25 million maturing this year and another bond EUR 150 million in September '26.. About our outlook, we reiterate our outlook for 2025. Our estimation is that the comparable operating profit margin for 2025 is above 13.5%. And please note that this is the floor for our profitability. This outlook is based on the year-to-date September comparable operating profit margin of 14.3%, as well as the order book that we have in hand at the moment and then also the current situation related to ongoing trade tensions. And then I would like to hand the presentation back to Scott for the quarter 3 summary. Scott Phillips: Thank you, Mikko. All right. Summarizing the quarter, a few key takeaways. Market uncertainty has continued to negatively impact our business. And keep in mind, we're a relatively short-cycled business. So we see these impacts in a relatively short period of time. But despite the market situation, we have been able to improve on our last 12 months comparable operating profit margin, so strong execution on delivering what we've committed to deliver. However, as a consequence in the uncertainty level that continues to be the case, we will start planning for a program which would target approximately EUR 20 million lower cost level in 2026, compared to current levels to give ourselves a bit more resilience and flexibility in dealing with the ongoing levels of uncertainty. However, we continue to execute on our strategy and focus on activating growth opportunities where they exist. And I would reiterate that we have an incredibly strong balance sheet, generating strong cash flow and that continues year-to-date, and that will continue to be our primary focus, moving forward. So I think we're well-positioned to deal with the levels of uncertainties that we face in the future and I feel really positive about our ability to deal with the changes in the demand curve, whether they would be up or down. So with that, I'll hand back over to Aki. Aki Vesikallio: Thank you, Scott, and thank you, Mikko. Now we are ready for the Q&A. Operator? Operator: [Operator Instructions] The next question comes from Panu Laitinmaki from Danske Bank. Panu Laitinmaki: I would have 3. Firstly, starting on the margins. I was a bit surprised to see such a big change in Q3 given that sales has been declining for 2 years already. So basically, the question is that what caused this? Is this mainly under absorption of fixed costs? Or is there an element that the lost U.S. sales had like really good gross margin compared to the rest of the business? Scott Phillips: Do you want to take it? Mikko Puolakka: I can take that. Yes. As we mentioned, basically, this profitability decline is fully attributable to the U.S. market and -- this is stemming actually from the fact that we started to see already in the beginning of the year, basically from February onwards, weaker order intake caused by these trade tensions. And as we have a fairly short lead time from the order to the delivery, we started to see that sales weakness already now in quarter 3. And this is stemming very much from the delivery equipment, truck-mounted forklifts, tail lifts in the U.S. market. This is the reason for the lower margins. As you can see, yes, our SG&A costs went down, but those are not enough to volume impact, which is then in addition to the U.S. market decline then also connected with the low seasonal volumes. Scott Phillips: Yes. Just to add a bit more color there. I think just to reiterate for you, Panu, it was a combination, as you pointed out, of sales decline which primarily happen in the U.S., but also it was more impactful than we would have anticipated from a mix perspective. So both of the 2 businesses that were primarily impacted there, normally have margins that are quite accretive to the overall higher margins. Panu Laitinmaki: Okay. Then secondly, on Q4, so what are you seeing in the -- during the rest of this year in terms of orders, like -- are the trends similar? Or should we expect sequential worsening? And also maybe if you can comment on the margins. So should we expect that the seasonality Q3 was maybe the lowest point of the year and how should we think about Q4 as in the comparison period, you had this restructuring costs last year? Scott Phillips: Yes. As you point out, we certainly tend to have a seasonality impact in Q3, which we've called out previously, anywhere in the 10% to 15% range, which we did see that materialize overall primarily due to the lower working days, both in Europe as well as in the U.S. So similarly, we would expect to see Q4 top line to be -- from a sales perspective, more in line with our trailing last month order intake and similarly follow the pattern of seasonality, whether it's negative or positive. So we expect Q4 to be quite in line with what you typically see in Q4. Panu Laitinmaki: Okay. And then thirdly, could you talk about Europe? So we saw pretty good orders in there. What is driving this? You mentioned defense and the wind order, but is this like an overall market recovery or some single orders? And do you have any kind of improvement in the Construction segment yet? Scott Phillips: Sure. I'd say 4 points that I'd highlight here. One, as we alluded to in the presentation material, primarily the demand is replacement cycle driven, which should follow along the lines of pattern that we would expect to see given the life cycle of our products. Two, we certainly are seeing an uptick in activity on the quote side on the lead generation side. We have seen a mixed picture in terms of lead conversion throughout the period, which has been interesting. Then the third point I'd highlight, as I alluded to earlier in the discussion, the Defense Logistics was a positive within the quarter. But then if you add the Defense Logistics from Q2, Q3, we were roughly flattish with an increasing pipeline of opportunity. And then the last point, we have seen a number of lumpy large key account deals. And in this case, in our Wind Energy segment that converted. So that was primarily the drivers for the increased level of order intake in Europe. Operator: The next question comes from Andreas Koski from BNP Pariba Exane. Andreas Koski: So firstly, I want to try to get your thoughts about 2026. When I listen to truck manufacturers, it sounds like the truck market is not going to improve at least substantially in 2026 or 2025. And now you are planning for restructuring program aiming to lower your cost base by EUR 20 million. So should I read that as a signal that you share the truck manufacturer's view that 2026 is most likely not going to be much stronger than 2025? Scott Phillips: Yes, I can start this one. Yes. Thanks for the question, Andreas. The way we think about 2026 is twofold. One is that we will adjust our cost base on the basis of what our trailing order intake levels are. And on that basis as well as the change in the mix that we've seen now reflected in the sales result, it's obvious that we need to adjust the cost base just to make sure that we're covered relative to the changes we've seen both in terms of the trailing order intake as well as then how that's affected from a mix perspective. And then in terms of the top line development for next year, we haven't typically provided forward-looking comments on the top line development. But of course, we want to plan for a scenario that would allow us flexibility to deliver if the demand curve were to pick up. And similarly, we want to manage our cost base so that we're well covered in the event that the demand curve goes in the negative direction. Andreas Koski: Understood. And then I understand that the tariffs might have impacted the demand for your products, but did it in any meaningful way also impact your your cost levels and in combination with that, what kind of price increases did you see in this quarter? And what should we expect for the coming quarters? Scott Phillips: Yes, sure. I can start with this one and Mikko, you can pick up if I miss a point here. Yes. Thanks for the question, Andreas. So what our policy has been our practice, so year-to-date relative to the tariff responses that we're trying to implement surcharges that we transparently share with our customers. So that we could stay neutral from a cost perspective, and that still remains our view today. So I would -- I couldn't say that we got either a positive or a negative impact relative to the tariffs. And if we did, it'd be just a matter of timing. I think Mikko alluded to in his presentation, though, the impact relative to order intake and to the sales level and perhaps maybe you can reiterate the impacts there. Mikko Puolakka: Yes. In our quarter 3 order intake, we had less than EUR 10 million kind of let's say, price increase effect coming from the tariff surcharges in sales due to the lead times, one could say that the impact was almost plus/minus 0. And the main impact there, I would say, from tariffs is on the demand side. So it's -- like Scott said, we are basically moving the tariff cost to the customer prices. Andreas Koski: I might be mistaken, but if I remember correctly, when we discussed on the pre-close call, we talked about price increases of 10% to 20%, but maybe I'm mistaken there, but was that on the case? Mikko Puolakka: Depending on the product category, the surcharges have been around 10% to 20% depending on the product category. These changes all the time because there are also changes in the tariff regulations and what kind of components are included in the tariffs. We are also doing actively measures how to mitigate the tariffs changing our supply chain so that we could make this as, let's say, bearable to our customers as possible. Operator: The next question comes from Antti Kansanen from SEB. Antti Kansanen: It's Antti from SEB. I will start with the same topic on the U.S. orders and sales going forward, kind of reflecting back to the price increases and the tariff surcharges. I mean, I get to a number that on a volume basis, your orders contracted quite a lot on the third quarter compared to what they were on the first half of the year. So I just wanted to better understand that is -- will the volume impact on profitability be much more severe going into Q4 and perhaps Q1 next year as it seems that the volumes that you are getting into your factories are still on a decline. Mikko Puolakka: Yes. If I take this one, you can complement. So overall, you may remember that in quarter 2, we received a key account order Order in the Home Improvement area. Basically, if one calculates the kind of lead times from the order to the delivery, we would start basically the delivery of that order, let's say, in the beginning of quarter 4. So that would then support the top line development in the U.S. in the quarter 4. That would allow them better loading for our factories, both in Europe as well as in U.S., which are supplying that kind of product during quarter 4, and that should also then improve the U.S. profitability in quarter 4. Antti Kansanen: Okay. And then the second one was on clarification on the previous questions on the difference between the communicated surcharges, 10% to 20%, and they achieved kind of the price impact, which I calculate to be around 8% of the U.S. orders. I'm not exactly sure if I calculate it correctly, but is the delta kind of something that you have given up on pricing in order to secure volumes? Or is there something -- some other dynamic in play here? Mikko Puolakka: Now these are basically this 10% to 20%, these are the surcharges. And then, of course, our, let's say, order intake, it cannot be kind of just simply be calculated from our kind of year-on-year order intake development development. So basically, like Scott mentioned, if there is a tariff of EUR 100 that EUR 100 million is reflected in the tariff surcharge to our customer invoicing or in the order intake. Antti Kansanen: Okay. And then on the development outside of Americas, I guess, mainly in Europe where you are flagging Defense Logistics and Energy Wind orders. Is there something regarding delivery times that we should be taking into account? Are there kind of a bigger deals or, let's say, frame contracts in the Q3 orders that would have a longer delivery times? Or should we just assume that it's a normal kind of a backlog to sales rotation? Scott Phillips: Yes, I can start this here and Mikko please jump in if this isn't reflecting an accurate picture. But we reflected in Q3 Antti, relative to the wind order is a consequence of a frame agreement that will be reflected as order intake over a number of quarters. So it's not a case where the entirety of the order was reflected in one quarter, and then it will be delivered sequentially from there over a period of time, but rather the order intake will also be reflected a bit more in line with the revenue recognition. Antti Kansanen: All right. Makes sense. And then the last one for me is the EUR 20 million cost savings program to be implemented next year. Will there be a one-off cost booked on Q4? And will that be included in the adjusted EBIT that you are guiding for? Or will that be a one-off? Mikko Puolakka: In case based on the initiative planning in case there would be one-off cost. We would report those in items affecting comparability -- so separately below the comparable operating profit depends on the planning and then we would be also opening how much that kind of cost we would have in quarter 4 or in 2026. Operator: The next question comes from Tom Skogman from DNB Carnegie. Tomas Skogman: This is Tom from DNB Carnegie. Did I understand correctly does that if you book an EU item, it is kind of above EBIT adjusted, like last year? Mikko Puolakka: So if we book for this EUR 20 million cost savings program, one-off costs, those would be reported as items affecting comparability below the comparable operating profit. So not included in the comparable operating profit. Tomas Skogman: Why will it be different from last year? Mikko Puolakka: This is very much related to the, of course, weakness in the U.S. market. But the EUR 20 million program would be company-wide. Previous programs have been more related to the kind of general optimization of the business, also in line with the order book. But this EUR 20 million is of course, in the first place, very much driven by the trade tensions. Tomas Skogman: Okay. And then I wonder about -- I mean this is perhaps more kind of a general big picture discussion. So last year, Americas was 45% of sales, and you have painted a picture where the Americas is quite an immature market. You have a lot of kind of white spots in distribution in the U.S. But still, I mean, it's been almost half of your business. So -- and I just remember 10, 15 years ago, Spain was the world's largest market. And that market basically never got back to all levels. It was so overheated. So could there be like just a risk that it will take many, many years before the U.S. market is back to where it has been in the last couple of years? Or do you really feel confident that it's just normal fast breaking, fast accelerating in the U.S. market? Or are there some kind of risk elements there that suggest that it could be that it takes many years to go back to all record levels? Scott Phillips: Yes. I'll start with this one. And thanks, Tom. I take this in pieces. So you mentioned our characterization of the U.S. market. And the way that we characterize it is threefold, if you will. So on the one hand, we were quite mature in our penetration of delivery solutions as it relates to serving primarily the building construction supply market. Two, we've had -- continue to have and did have quite a strong position also in delivery solutions relative to retail and last mile. So those were fairly mature markets, a long ways to go, especially on the retail last mile given the market share position relative to the #1 competitor that we face on a daily basis. Then the way we characterize it is we're underpenetrated both in our knuckle boom loader cranes as well as our hook lift and mountable solutions, primarily in waste and recycling, perhaps somewhat in terms of Defense Logistics that the market was definitely underpenetrated relative to knuckle boom loader cranes in the Construction segment as well. the way in which we wanted to attend to this is, is that we have a lot of geographic white spots because we weren't structurally set up similar to how we are structured in a European country, let alone Europe as a continent. And that was a weakness on our part. So the way that we've been attending to it and we continue to execute on the strategy is, is that we're turning on at scale distribution channel partners to cover the geographic white spots with a focus on shoring up those areas that we both were underpenetrated because of just lack of scale of sales and service excellence to support those products, but then also the geographic lack of coverage that we had as well. So that continues to be ongoing. Now in terms of the comparison relative to Spain, I'd say there's 2 things to keep in mind. Of course, let me start with the really obvious one is that just mirror scale, it's an order of 10x magnitude difference in terms of the GDP of comparing the U.S. versus Spain. But then more importantly, probably is the fact that the growth in Spain was primarily driven by one segment that was Construction. So at one time, it was one of the world's, if not the world's largest construction applied knuckle boom crane markets. And of course, that's the segment that had most been impacted following the global financial crisis. And to your point, hasn't quite recovered or hasn't recovered at all relative to the pre-global financial crisis levels. But definitely 2 different comparison cases and thinking through Spain versus the U.S. because the basket of of segments that we serve relative to our full portfolio, completely different opportunity set, if you will, in the U.S. versus, well, any country in Europe, but especially if you think about a country like Spain. Having said that, we've got a lot of opportunity to grow in Spain as we are underpenetrated there. Tomas Skogman: So what do you think then will be kind of -- what are you looking for in the U.S. is a trigger for customers to start ordering more again. What will be the trigger I mean the interest rate is quite high on the housing and the ABI index is not that strong. For instance, or just that you have this tariff situation with the loads of parts imported from Mexico that is just kind of cooling the entire market and we get the solution to that, then this will be normal again. What are you looking for? Scott Phillips: Yes. Yes. I'll sound like a broken record here, Tom, but I think it's still a factor of I can bifurcate it into 2 parts, right? One on the one hand, you're right, we need to see the macroeconomic costs come down a bit for our U.S. customers that we've talked about a lot, especially last year and a little bit in the first half of this year. in terms of overall inflation as well as the general level of interest expense. But I think then moving to the second piece now, of course, it's a matter of getting some stability in terms of being able to plan the business in the future on what your general cost level is going to be, I think that's a key factor as well. And then I would then add one more point to this scenario is that, once you see the level of stability achieved that no doubt will happen, it's just a matter of when. Then you'll start to see a pickup, I believe, from the stimulus bill that was enacted earlier in the year that I think is characterized as the one big beautiful bill. At the same time, we know that with the aging of our equipment in the installed base, there will be a robust replacement cycle coming as well. Tomas Skogman: Okay. And then finally, on the Defense side, I mean, it's just easy to say that it's a promising market generally. But I would like to understand a bit more. I mean we have seen orders from, for instance, the U.S. army and orders from Rheinmetall or bundle -- to Rheinmetall. But -- is it so that we should kind of perhaps also expect that just kind of national defense forces in different countries will be kind of major customers? Or will it be more like kind of defense companies that will order from you or how will it be? Scott Phillips: Yes, I can start here as well. Yes. Thanks for the question again, Tom. In Defense, we have a 40-plus year history of serving not only the U.S. Department of Defense, but then also the majority, if not all, of NATO countries as well as NATO partner countries, which will continue to do moving forward. And you're right, each of the defense organizations have made commitments to increasing spend unfortunately, due to the geopolitical changes that we've seen materialize over the last 3, 4, 5 years. And we expect that to continue moving forward. The challenge that we have is being able to forecast and model that business because the majority, if not all of these opportunities are typically larger tender opportunities that have quite a lot of variability in terms of time of opportunity to decision in terms of who that deal is going to be awarded to. And it's worked on both sides of the equation for us, if you think through the last year. On the one hand, we've seen more faster-moving emergent opportunities. And then on the other hand, we've also seen delays of opportunities that we knew were there prior to this period of increased geopolitical uncertainty that have pushed to the right. So difficult to model on our side in terms of the timing, both of booking the order as well as then how that will materialize and the change in revenue recognition. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Aki Vesikallio: Yes. We will have a couple of questions from from the iPad, from the webcast audience. So first question is about the service order trends. Is there any lagging impact from that? So what is the profitability trend in the services going forward? Scott Phillips: Yes. So on the Services side, the only real lag would be the nonrecurring revenue that we have. And if you think about the mix within the quarter, we were approximately 74%, 75% recurring revenue. So that's been on a nice trend relative to the overall Service, both order intake as well as revenue. Within the nonrecurring, of course, you have installations that are a factor of the equipment lead times. And so that tends to be the piece that lags behind. But otherwise, the rest of the services order intake, will follow and link quite nicely to the revenue recognition. Aki Vesikallio: Yes. Thanks. And then we have a couple of questions. I'll try to combine them. It's both are related to the tariffs. So we went through quite a lot of the parts of the question already but there was also a question, do we see permanent impact that could be caused by the tariffs. For example, could we lose some of the U.S. customers because of these tariffs permanently? And do we have any estimates how long the situation would last? Scott Phillips: Yes. So I'll start with the easy part first, the last part of that question. Hard to tell, right, how long this will last. One thing that's certain is, is that I myself have lived in 9 countries, and I've had a long career of this type of work and serving 100 to 200 different countries and most countries have some form of tariffs. So we can count on that. There will continue to be some form of tariff. I think really, the core of the issue and the question is then how long will this level of uncertainty last? And that's hard to call at this point. So our job is to be as resilient in our overall cost as well as our ability to deliver and execute as we possibly can. So we need to be prepared that this level of uncertainty may continue indefinitely. Aki Vesikallio: And could you please then still repeat what were the mitigating measures that we do? And do we individually negotiate with U.S. to get lower tariffs? Scott Phillips: Yes. So far, no, we haven't directly negotiated with the U.S. government on the tariffs. That one, we haven't had the opportunity to, and I'm not aware that any individual company has. But what we do, however, is that the way we sell our equipment is a function of market list price, and we sell on value. So therefore, from the tariff perspective, relative to our price positioning, this is more mechanical, if you will. So the contribution of the equipment that is under subject to a tariff, then we transparently share that information with our customers. We link that then to a surcharge that is simply a mathematical calculation and we try to work on other mitigating factors on the market list price to see if we can make this more attractive for our customers or not. But to reiterate, the biggest impact at this point from the change in the trade policies has been on the demand cycle because all businesses have a need to be able to forecast the forward-looking cost in order to then be able to take risk on deploying capital in order to catalyze or to run their business or to grow their business. Mikko Puolakka: Supply also to reduce the, let's say, tariff base as an example yes. And then it's good to remember that a significant part of our U.S. sales are assembled in the U.S., but of course, the ultimate tariff depends on where the components are coming from. Aki Vesikallio: Thank you, Mikko. Thank you, Scott. And that concludes our third quarter earnings call. So we published our financial calendar for next year yesterday. So we will be back in February 2026. Thank you for watching. Mikko Puolakka: Thank you. Scott Phillips: Thank you.
Kiira Fröberg: Good morning, everyone, and welcome to Kemira's Q3 Earnings Webcast. My name is Kiira Fröberg, and I'm the Head of Investor Relations at Kemira. We reported our Q3 interim report today and maintained good profitability in the weakened market environment. Here with me today, I have our President and CEO, Antti Salminen; and our CFO, Petri Castren. Antti will start by covering our group level performance and our progress on the strategy as well as the outlook. After that, Petri will discuss the business unit performance, and will also share some more details on the financials. In the end of the presentation, before the Q&A, Antti will also give a short introduction to our new CFO, Tuomas Mäkipeska. But now, Antti, please, the stage is yours. Antti Salminen: Thank you, Kiira, and good morning, and welcome on my behalf as well. So happy to report here on our strong profitability in the weakened market environment. And market indeed has been quite subdue for a long time already. We saw that first already in the beginning of the year or at the end of the previous year, hitting the performance of our Packaging & Hygiene Solutions business unit as that is the one that gets most directly the impact from the weakened market as the consumers are not consuming, trade is not flowing globally. So less packaging material is consumed, thus less Kemira chemicals go into the production of packaging material. Then in the Q2, we mentioned that we clearly see now the impact of the weaker economy trickling up the value chain to the pulp producers, our customers in that area. And now it's visible in the Q3 clearly. We have seen a lot of prolonged maintenance break and curtailments in that industry. So that is hitting the Fiber Essentials unit. And we've also now started to see the kind of a prolonged slow global economy impacting the overall industrial activity. Lower run rates at any industrial segment, especially here in Europe, which is then translated into less water consumption by industry, and thus, less consumption of our water treatment chemicals in the industrial side of our Water business. So all this has led to the situation where basically now the revenues declined 5% year-on-year, 3% in terms of organic development decline. So you see that there's quite a significant amount of foreign exchange rate impact there as we have significant business in U.S. And this decline, as mentioned now in Q3, was hitting all of three of our business units. Nevertheless, we keep the outlook unchanged as we changed the outlook in the Q2. But the good news is that profitability is good in Q3. So we maintained the 20% operative EBITDA performance, which I think kind of comparing to the chemical industry in Europe, comparing to the -- looking at the environment that we operate in and the decline -- top line is a good performance, and I'm really thankful for the whole organization for pulling it together. We maintained high profitability in the backbone of our business, i.e., Water Solutions unit, but we managed to improve also the profitability in the Packaging & Hygiene Solutions. Impact coming both from favorable product mix, but also from the cost management program or profitability improvement program that we launched in the springtime for the Packaging & Hygiene Solutions. Now even if the markets are soft, we continue to invest into our strategy execution. So we have a clear growth strategy, and the megatrends that are supporting the strategy stay intact. So longer-term viability and growth potential of the fiber economy and the need for clean water are there. So thus, we continue to invest into the execution of strategy. We also continue to have a strong balance sheet, which enables that. And I will talk later a little bit more about a couple of key steps in terms of continuing the strategy execution. But as mentioned, the revenues were weak in Q3. The U.S. dollar had a significant impact, but overall, the demand also was weaker. We retained our market position in all the business units. So basically, this is overall a decline in demand that is impacting the top line here. Year-on-year, we saw decline in volumes, as I mentioned, but prices remain stable. So that is the kind of good news and showing again our pricing power there. Sequentially, sales volumes actually increased from Q2. That is mainly driven by the Water Solutions unit, and Petri will talk more about it later. We saw some decline in sales prices from Q2 to Q3. Then looking at the profitability, which I mentioned, it is fair to say is on a good level. So the 20% operative EBITDA margin, we actually are very close to '24 EBITDA margin levels, which were the all-time high for Kemira. So really good performance in terms of profitability. Profitability remained strong in Water Solutions, especially the urban air side of the Water Solutions, which is the resilient, steady profitable backbone of our business. But we, as mentioned, managed to improve in Packaging & Hygiene Solutions quite significantly. The profitability of Fiber Essentials unit declined as a consequence of the clearly declining volumes from the market. This kind of a weakness of the market and the weaker demand, of course, puts a lot of pressure on us. So we need to continue to focus on profitability improvement, the operational excellence, cost containment so that we can continue to operate on this good healthy profitability level. Those actions we have defined. We have started as we communicated in spring from the Packaging & Hygiene Solutions. So we have a clear program there which aims to impact both the top line and bottom line items, and we are progressing really well with that program. And some of the impacts of it are visible in the good result of the Packaging & Hygiene Solutions, which also was helped by the favorable product mix in this quarter. Now we are stepping into next phase in that profitability improvement program. So we are starting to -- as of today to assess the operating model that we have in Packaging & Hygiene Solutions. And the aim there is to differentiate the service levels so that we can better serve the global and regional key customers that we have, introduce faster new innovations to the marketplace and provide better service for our key customers and at the same time, optimize the cost to serve levels for the more transactional customer base. So that program will start and the impacts of that will be visible in '27. So no impacts expected for the last quarter of this year. The earnings per share came out at EUR 0.38 per share. Now as I mentioned, we continue to invest into our strategy execution. The megatrends are there, and we are in a really good position to also maybe capitalize on a bit weaker market environment because a big part of our strategy is based on M&A-driven inorganic growth. There's a couple of key cornerstones for our strategy, and I will touch three of them here when I talk about the strategy execution. So first of all, our aim is to grow significantly in the Water business. And there are two subdomains which are really important for this. Micropollutant removal, PFAS, pharmaceutical residuals and so forth, microplastics. This is a fast-growing subsegment of the water market, which is just developing as we speak. And we have a clear strategy of how do we enter that part of the market. The other part which we have been relatively weak historically is the industrial water services, and that is also a subsegment of water market that is growing much faster than the base business. And we have taken now clear steps regarding entering both of these lucrative growth market areas. And then I will talk a little bit about our kind of progress with the renewable chemistry, which is another key area of our strategy execution. Now during Q3, we announced the investment into our site in Helsingborg, Sweden for reactivation facility for activated carbon. That is the first reactivation facility in Nordics, serving the whole Nordic market and helping us to enter via the activated carbon service into this micropollutant removal, because activated carbon is the kind of a well-tested predominant method for capturing micropollutants and PFAS from wastewaters, but especially from the raw waters for drinking water production. And that's kind of a key part of our entry to there. But we need to amend that with other more specific innovative technologies. So there, our partnership with CuspAI, Cambridge U.K.-based AI start-up is of a key importance. So we started in June, a joint development project, to develop new-to-the-world type of absorbent materials, and we are progressing very well with the project. The aim is to come up with completely new solutions, very specific targeted solutions for PFAS capture. So these both are on the kind of micropollutant removal area of the water strategy. Then before I go to the industrial water services, our earlier announced joint venture with IFF, the world leader in the area supporting us with development of -- via enzymatic route with development of new-to-the-world bio-based polymers. So we announced this JV. We are currently working on the project. Engineering phase is ongoing. We are looking at different engineering options regarding the manufacturing site itself. There is some delay anyhow to the project. So unlike we earlier informed that the production would be up and running by the end of '27, it's rather on the side of '28 that we now plan to be up and running. That said, we have industrial level volumes available from our toller in Finland, and we are currently running several industrial scale test trials with our customers, both in Water Solutions area and in Packaging & Hygiene Solutions. And many of these application tests actually look very promising at the moment. So we are confident that when we actually have the new joint venture manufacturing facility up and running, we have a good existing customer base already for those solutions. And then as mentioned, the second area within the Water Solutions, which is one of our key growth drivers is the entry to the industrial water services. And we announced this morning that we closed the transaction on acquiring Water Engineering in United States of America. That's our first significant step into that area. Water Engineering is a water service specialist with expertise in boiler and cooling tower water treatment as well as wastewater treatment in industrial facilities. They're mostly focusing on food and beverage, manufacturing and health care industries. They're based out of Nebraska, and they have built a really strong presence in the middle states in U.S. grown quite quickly during the past years. And this provides us a good platform for future growth, both organically but also inorganically because their growth method has largely been a kind of programmatic bolt-on M&A path. And I think we can capitalize and continue on that path and continue growing that business. Business itself, as I said, the rationale of entering that is that it is faster-growing market than the base water treatment market, plus it is asset-light in terms of business model. So there's not a consequent significant CapEx going into maintenance and improvement and expansion of the production facilities. We can largely utilize also our existing product portfolio to serve these customers. So there's good cross-selling opportunities with this acquisition. The expected pro forma revenue of the company is north of USD 60 million. And the purchase price, as we have communicated, was roughly USD 150 million. So I warmly welcome all the new colleagues from the Water Engineering to the big global Kemira family. I think we will have a great future together. Now then to close this off, we have introduced a new slide here, which should be providing a bit more transparency and trackability in terms of our long-term financial targets. Now it is very clear that we are disappointed with the performance in terms of organic growth. So the aim is long term on average to grow more than 4% organically a year. Now clearly, the markets have proven to be much softer than we anticipated when we set out this target and communicated in the CMD a year ago. So -- but I still believe and we are confident that the long term, this growth potential is there as the megatrends are supporting and as we are entering these faster-growing new domains within the Water. So it will provide us acceleration. But clearly, the start on that journey has been slower than we anticipated. In terms of operative EBITDA, we are operating comfortably within the 18% to 21% EBITDA performance range that we communicated as a target. And also in terms of return on capital employed, we are above the 16% target that we set. That said, of course, the kind of a declining trend on both of these is not satisfactory, and we are having diligent actions and programs in place in terms of improving the profitability and making sure that we hit these long-term targets as we progress with our strategy execution. Now then the outlook for the rest of the year remains unchanged. So no reason to comment that further. And with this, I will then hand it over to Petri, who will comment in more detail the business units specific performance and some other financial ratios. Petri, floor is yours. Petri Castrén: Thank you, Antti. So I'll do, as Antti said, and I think I'll usually start with the sort of key points. And I think really our ability to support and defend the profitability as well as the PHS business unit profitability improvement are indeed the key points in this report. And as Antti said, clearly, the Water Engineering acquisition is an important step. So let's start. Top line is almost an -- development is almost an exact repeat from Q2, EUR 40 million decline, half of which is driven by FX changes. And again, mostly, it's the U.S. dollar that has continued to weaken year-on-year. Organic growth also 3%, exactly as it was negative in Q2. We have been able to maintain prices well, again, considering the weak market environment. Indeed, prices and actually variable costs have pretty much been stable throughout the year. So the change is, in essence, a 0. Also, what I think is important from the profitability point of view that in essence, we have been able to kill inflation. So the fixed cost change is 0. And again, we all know that there is a salary inflation ongoing. There's an inflation in many other areas. So this is part of the way how we have been able to defend profitability, and this is very good. Obviously, we cannot be happy about the top line development or the absolute level of profit generated. The net impact from the variable cost is really flat. And as you can see, almost last 4 quarters, it has been pretty much, much flat. So now the focus is really much more driving the volume compared to period between '21 and '23 when really a lot of our profitability was at how can we defend against the inflation, how we are coping with inflation and how we are passing the inflatory raw material costs to our customers. But now it's really about volumes. Again, I'll start the business unit comments with Water Solutions. So excluding the FX impact, there was a 2% decline against a pretty strong last comparison period. You noticed that in the comparison period, we had 5% organic growth. So it was a stronger comparison period. And regarding the water treatment markets, Antti already mentioned that the urban market continues to be really strong. And even in this -- while the business unit is declining, urban market is stable and it continues to grow. So the growth in Europe, EMEA is more than offsetting the small decline in Americas urban market. Then the weakness was on the industrial side. And there, like Antti was talking about, it's both the general industrial activity, the weakness in it, but it's also the fact that we have this one large tolling customer and their volumes were reduced compared to a year ago. Sequentially, from Q2 to Q3, both volumes and revenues increased despite a modest FX impact. Again, operative EBITDA, very strong at 23.1%, very close to last year's level. On Packaging & Hygiene Solutions. So challenging market continued to impact the unit. Antti already covered the sort of underlying or behind the factors impacting the business unit, but I think the key point is it wasn't actually getting any worse in Q3. So year-on-year volumes, essence, flat. And sequentially, they even increased modestly, very modestly. The market looked a bit more positive in Americas, and there was positive development in APAC as well. However, weakness continued in Europe, in EMEA, and you may have seen some of our customers' reports yesterday, which were sort of indicating that. Year-on-year, we saw some price decline, but sequentially, prices were flat. Profitability improved to 13.6%, which is actually quite a sequential improvement from below 10% in Q2. This was driven by cost containment topics like Antti was talking about. We also had a very good mix of product in Q3. So that helped there as well. And also, I'd like to remind that we did have an extended maintenance break in one of our key facilities in China in Q2, which depressed the Q2 results even more. Regionally, both Americas and EMEA are at 15% EBITDA or above. So it is the APAC that is still diluting the overall business unit margin. And we'll continue those profitability improvements. Antti talked about the business unit -- business model change that we will be implementing now. And again, this implementation will take well through to the next year. On Fiber side, market was weak. And we already -- we updated our business assumptions in Q2, and then we highlighted that we are seeing some additional weakness in the pulp industry. And indeed, this is what happened. So the market -- the softness was really driven by the Nordics softness here. So a lot of market-related downtime by our customers. Volumes declined year-on-year and sequentially, whereas prices were up year-on-year. However, on this area, we did see some pressure on variable cost as well. So that did not help the margin either. We do have some base chemicals in our product portfolio, caustic soda, sulfuric acid and some of the global market prices of these products were also declining during the quarter, and that depressed profitability more. Now I move to balance sheet. Again, not a whole lot of change in our balance sheet. Net debt at exactly year-end level and approximately at the same level as in June of '25. During the quarter, which is noteworthy is that we implemented or started our share buyback program, and we were able to buy back almost EUR 40 million worth of our shares during the quarter. As a reminder, this program, when it was approved and initiated, it's at a maximum of 5 million shares that we will buy back or EUR 100 million. And at the current level, which is, of course, limited by our daily liquidity, we will be hitting the end of the program around the year-end. So maybe in December, maybe some early days in December. So that's sort of at the current level, what it looks like. And Antti already showed the trend reports on return on capital and regarding our financial targets. So yes, the lower EBIT, which is the impact -- with the result of the weaker market is impacting our capital efficiency. Cash flow from operations, EUR 132 million, improvement from the year ago. We did have a net working capital decline. I think I mentioned in Q2 that we had a little bit of a buildup in net working capital. And this, indeed, we've been able to address that to a large extent during Q3. I'd like to remind that typically, our cash flow is more weighted towards the second half of the year, particularly towards the Q4, as you can see from the previous 3 years, which we have here on the quarterly breakdown. So I hope to -- expect to see that sort of a seasonal pattern this year as well. No change to our CapEx guidance. We expect our CapEx to increase over last year. So again, you do the math, you'll see that the CapEx will increase significantly from the quarterly run rate during Q4. With that, I'll stop my comments, and we'll turn to Antti. Antti will be able to announce my successor. So Antti, there you go. I'll stay here for the Q&A. Antti Salminen: Okay. So yes, indeed, a happy day for both of us probably that we have now been able to announce Petri's successor. Tuomas Mäkipeska will start latest some day in May as our CFO. Tuomas has a strong background, both in terms of business unit leadership and of CFO position. Now last position with YIT, the Finnish construction company. And before that at Lassila & Tikanoja, so brings us plenty of experience and good positive energy as well. So I warmly welcome Tuomas to Kemira Groups and look forward to working with him in the future. Kiira Fröberg: Thank you, Antti, and thank you, Petri as well. And now I think it's time for the Q&A, and you can ask your questions either through the telco or then you can send them to us through the webcast formula or chat function. So maybe we can start then to take the questions. So operator, please go ahead. Operator: [Operator Instructions] The next question comes from Martin Roediger from Kepler Cheuvreux. Martin Roediger: Three questions, and I would like to ask them one by one to make it easier for you. Antti, the first question is for you, it's about the strategy. After the acquisition of Water Engineering, will you continue with acquisitions with a similar size in the next couple of months? Reason I'm asking is that you target midsized deals with an enterprise value of EUR 200 million to EUR 250 million, which enables you to finance the deals from your cash flow, but Water Engineering is clearly below that price tag. Antti Salminen: Well, first of all, what I have communicated when I've indicated the size kind of we target mostly small and midsized targets because that's the kind of, I think, the most credible way to build the growth in M&A. And as you mentioned, so I just indicatively given that they have to be below EUR 250 million to qualify for this. EUR 150 million is below EUR 250 million, so it's in that range. And we have a strong pipeline of different targets, which we are working on. And yes, we will, of course, tell about them when the time comes. Martin Roediger: Okay. The second question is for Petri, regarding the Packaging & Hygiene Solutions business. You mentioned the reasons for the strong earnings increase year-over-year, sales mix and cost savings. Can you provide more color on that? How big were the cost savings in that segment? And where did the mix effect come from? Petri Castrén: Well, we don't specifically give out product line and product line profitability. So I think I'll shy away from giving exact guidance on that one. And I think it's also sort of what you compare against. So please don't compare to Q2 because Q2 top -- bottom was sort of a, I would say, it was arbitrary too low because the maintenance break in China actually impacted it quite a fair amount. But if we sort of say that last quarters of average is somewhere between 11% and 12% EBITDA, so from that, it's probably equal split between the three areas. So mix and some market recovery, particularly in North America, and then also cost saving actions. Martin Roediger: Okay. And the final question is about Fiber Essentials, which was below market expectation. I wonder, did you have also cost savings here? And related to the comparison to last year, was there any -- did you overearn last year so that we should be aware that last year's high margin in Fiber Essentials, especially for Q4 is not a good proxy for Q4 this year? Petri Castrén: I don't think that there was any sort of overearning in '24 in Fiber. There was overearning in particularly in the high electricity cost years and high caustic price years, '21, '22 and '23 but really not throughout the year. Now memory serves me badly in terms of individual quarters, but there tends to be a little bit of a seasonal pattern that electricity costs are higher during the winter months. And as you can see that there is a link of -- we benefit of this higher electricity costs. So we tend to have some seasonal pattern of Q4 being stronger in terms of profitability for our pricing of our electricity-dependent products, mostly sodium chlorate. So I think, Martin, I encourage you to rather look at sort of a trend lines and through the year and not individual quarters because each quarter, there can be some minor -- some sort of one-off impacts, whether it's product mix or some cost item came through that may impact the cost of -- margin of a business unit point or this way or that way. So rather encourage you to look at the trends because that's -- our customers are also, they are the same customers, and particularly in Fiber. So it's a very solid track record of maintaining customers. And so I encourage you to look over the longer period of time, not individual quarters. Antti Salminen: And if I may build on that a bit, so you referred to the kind of a shortfall of Fiber Essentials compared to the expectations. So maybe we were not clear enough in Q2 when we communicated the expectations to be lower because we already saw then the announcements from our key customers, especially in Nordics about taking downtime at their pulp mills. So that translated now to weaker performance in our Fiber Essentials clearly in Q3 as we expected already in Q2. Kiira Fröberg: Yes. Martin Roediger: But the downtimes are now over? Antti Salminen: Well, you should not talk to us about that, but rather look at our customers and what they announced. So I'll leave it to that. Petri Castrén: Yes. And sometimes we know a little bit more than our customers openly communicate. So that's why we need to be mindful that we respect and talk about our position only. Kiira Fröberg: Thank you, Martin. Let's now take next question, please. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I continue on the Water Solutions segment. So seasonality there has changed a bit last year. So how should we think about it now going into the last quarter of the year? And also on Q4 last year as a comparison period, anything to highlight or worth of reminding there? Antti Salminen: Thank you. If I start from the seasonality. So I mean, if you look at the Water Solutions as such, I don't think there's any major change in the typical seasonality over the year. So basically, that remains. So fundamental phenomena that impact the demand of water chemicals is not changing. And thus, typically, the first and last quarter are the weakest and the mid-quarters are the strongest in that business. Now then if you remember what we have communicated, so now we have this one big tolling customer within the Water Solutions whose demand -- has quarter-to-quarter comparison quite significant impacts if they take less or more material than we have expected. And that can then distort the kind of reported typical seasonality pattern. But the underlying base water treatment business, the seasonality is as it is because even if the climate is changing, it has not changed that dramatically in that short period. Anssi Raussi: Okay. Got it. And maybe continuing on this Packaging & Hygiene segment and this change in product mix. So how would you describe the current mix in Q3, like you mentioned that it improved, but is it like normal now or maybe a bit too positive for your EBITDA? Or how should we think about that one? Antti Salminen: Yes. Well, again, and as Petri said earlier, so you should not really look at one individual quarter in isolation because there will always be fluctuation in terms of demand, but in terms of product mix as well. So certain product lines are more profitable than others for us, and there might be this fluctuation between the quarters. Now the third quarter happened to be very positive in terms of mix for us. And as order patterns kind of level out week by week, even if we would want to be, could not comment on what to expect for the Q4. Petri Castrén: Yes. So Anssi, maybe addressing your question a bit differently. So the profit improvement need is not over in PHS business unit at all. That's why we are doing the business model change there now. And this will actually take, like I said, well into next year as we are implementing it. So actually, it's a fairly fundamental change. So yes, we'll continue to drive that to get the business unit profitability sustainably to the level where it actually ought to be. So don't take that Q2 to Q3 improvement and put a linear stick on it and expect that to continue. Maybe that's another way of saying it bluntly. Kiira Fröberg: Thank you, Anssi. Let's now then take the next question, please. Operator: The next question comes from Andres Castanos-Mollor from Berenberg. Andres Castanos-Mollor: I was thinking, do you expect lower raw materials to have a positive effect in Q4 in your -- in the cost side for you? And I was wondering if you had seen already something in Q3, maybe potentially affecting being a positive factor in your Packaging & Hygiene Solutions result in Q3. Petri Castrén: Well, I showed the raw material development year-on-year, and it was sort of a boring flat line, so I didn't even talk about it all that much. So as a group, it looks pretty flat, but there are individual areas where we have cost pressures, and we have some cost pressures in some areas of our water services business, we have some areas in our fiber. I mentioned some -- and that was already visible in their sort of profit bridge as we talk about it. So consequently, there was perhaps a slight improvement on the variable cost environment in PHS. But again, these are fairly small changes. So I can't really -- I think really the focus is much more on what can we do and how can we drive more volume. Andres Castanos-Mollor: A follow-up, a different question, if I may. On Water Engineering, I wanted to ask about the rate of acquisitions they have been doing in the past. Can you comment on that? Can you kind of give us an idea of how much capital this platform could deploy going forward? Antti Salminen: We will not comment on how much capital, but just that you get the idea. So typically, they have done several a year of this kind of small acquisitions, and that's kind of what we plan to do. Of course, with our bigger muscle, we can also then look at bigger targets to add on to that platform, not only the small ones that they have been thus far doing. Petri Castrén: I think it's very logical to say when Antti described Water Engineering as a platform. So it is a platform to continue on this sort of smallish type of deals and maybe increase the size, which they have been really doing like EUR 10 million revenue type of deals or even smaller, some smaller. So maybe increase that a little bit so that for the same effort, you can get a bit more meaningful impact. But this platform wouldn't be something hugely bigger on top of this. That's not the idea. Kiira Fröberg: Thank you, Andres. Let's now take the next question, please. Operator: The next question comes from Joni Sandvall from Nordea. Joni Sandvall: A couple of questions also from my side. You mentioned the uncertainty in the industrial side of the solutions. So could you give any more color? Has this intensified during the Q3? Which sectors are most affected? And does this have any impact on your mix? Antti Salminen: Well, first of all, like if you look at the industrial side of the Water Solutions, so we are basically serving all the possible industries that you can think of that use water, which is basically all the industries. So in that sense, kind of pinpointing which industry is exactly more kind of in decline than some other, it's impossible. It's really, as I started my presentation with, it's the kind of overall kind of slowness of the global economy and then the less global trade that happens, which both are kind of not only now impacting then the Packaging & Hygiene Solutions, but really all the industries. Especially here in EMEA, we all see it all around us every day. And then when the industries run with lower utilization rates, they consume less water and that is impacted. And that impact typically is gradual because you have some industries doing a bit better than others, and they are offsetting each other. So typically, we don't see it in industrial water treatment if there's some short-term nods in the economy. But when it's this kind of a longer kind of degrade of the industrial activity, it then starts to be visible for the water treatment chemicals demand as well. And there's no particular step from Q2 to Q3. So you should really look at it kind of a longer-term continuum of what happens to the economy, especially here in Europe. Petri Castrén: Maybe it helps if I remind you that a lot of these industrial customers, we actually don't address direct, so we go through distributors. So these are, for us, smallish or the end customers would be so small for us that it don't make sense for us to cover them direct. We cover the urban customers, the municipal customers, we cover them all direct. But this is sort of an indirect channel. And like Antti said, that's why it gets a little bit diluted the impact of what happens at sort of in the economy. Joni Sandvall: Okay, that's clear. Maybe still digging into Packaging & Hygiene Solutions and the improvement, let's say, potential for '26. You mentioned that Americas and EMEA are in the -- at 15% or above level. So should we expect in '26 about to reach mid-teens levels on, let's say, run rate on profitability? Antti Salminen: Well, we are working as hard as we can to improve it as much as we can as quickly as we can. Petri Castrén: Yes. So clearly, we're not happy with and satisfied with the run rate of profitability in PHS through 2025. So yes, we want to improve that, and there are efforts ongoing towards that. So yes, I think it's going towards the mid-teens range. And when we will get there, let's -- we're not giving an exact quarterly guidance. It also depends what happens in the market, is there any recovery in '26? And if yes, when it will happen? Joni Sandvall: Yes. Okay. That's clear. Last question from me. Given the weak pulp and paper market that we are currently in, have you seen any increase on pressure on pricing from the companies? Antti Salminen: Well, it's obvious that this kind of a situation leads to more pressure. But our customers are quite really professional and well educated. And regardless of the cycle, they are tough negotiators. So we have all the time pressure on our prices. Of course, it is a bit more harsh in this kind of environment when you have seen all the savings programs of our customers. But as I mentioned, I think, in Q2 webcast as well, our approach has been to try to turn it around to kind of collaboration efforts where we look together how can we help them to save more so that it's not about the per tonne price of the chemicals, but our application and solution, which is helping them to consume less virgin raw materials, less energy and so forth. So it's also an opportunity, even if there is some more pressure on the pricing, but it's also an opportunity because we have some of these solutions. For instance, some of our digital services are exactly aimed for these kind of improvements in the customers' processes. And thus, I see it kind of both, of course, a pressure, but also a really good opportunity to help our customers. Kiira Fröberg: Thank you, Joni. Let's now then take the next question, please. Operator: The next question comes from Tomi Railo from DNB Carnegie. Tomi Railo: This is Tomi from DNB Carnegie. First question, Fiber. Do you expect or are you initiating any actions on the Fiber side now that you see the impacts of weaker demand there, something similar as in PH? Antti Salminen: We're, of course, all the time looking at the profitability of each of the business units. It's good to remember with the Fiber that it is slower turning both than for example, PHS, where basically we have relatively lean organization. It's not that easy to look at the kind of organizational model, and cost to serve is very low because we have this kind of a typically, tightly connected supply to our customers. So it's a slower turning ship, and you need to be more careful in analyzing what are the potential actions. And you need really kind of a prolonged downturn from the customer side in order to start some kind of a more radical actions on that business unit. But obviously, we are all the time looking at how can we manage in this environment with a good profitability. Tomi Railo: Just a follow-up. If it's slower, can it also be deeper? How do you see that kind of if it's slower, but does it kind of then also decline more relative to PH? Or how does it work if we were to assume longer, prolonged weakness? Antti Salminen: Yes, that's a really complex question. And of course, I mean, that you should, again, predominantly ask from our customers to understand kind of what is happening at the global pulp markets. But the global word is here actually very important. So the pulp markets are global and our customers are not only kind of playing on the geographies where they produce, but there's global trade flows. A lot depends on how China economy will develop and so forth. So it's kind of a complex question to answer and difficult to say whether it would be any deeper. Pulp and the packaging materials are in the same value chain ultimately. So basically, you can't really separate. The timing effect is different, but the value chain is the same. So really, I think it's an impossible question to answer as such. Tomi Railo: But in a sense, it's easier in PH side to do your self-help actions than it is at the Fiber side? Petri Castrén: Tomi, the cost structures are quite different, so because we have a few small number of customers on Fiber Essentials. So each customer buys a lot. So there's a very small sort of sales and application team, whereas in the Packaging & Hygiene Solutions, we have lot more customers. There's a lot more applications. There's a lot of application and salespeople. So the mix -- when you -- total fixed cost, sorry, the mix between manufacturing and what we call business overhead, where we lump both the sales and application and technical support people, it's totally different. So there's a fairly little of this business overhead in Fiber, whereas there's a lot more in PHS. And with that, of course, you can play with. And that's why we are implementing this business model change. So how we are supporting our customers with this team of not only the technical support people, the application people, the salespeople, but also the support organization that is managing the whole supply chain. Tomi Railo: Yes. Okay. Second question, just starting the fourth quarter, have you seen any kind of a change? Do we continue on a similar kind of situation as in the third quarter kind of up or down or any positives, any negatives, any further negatives or? Petri Castrén: Tomi, you know our practices. We never comment on the ongoing quarters, and you almost always try. Kiira Fröberg: Thank you, Tomi. Let's now then take the next question, please. Operator: The next question comes from Andrew Noël from chemicalESG. Andrew Noël: I've got two. I wanted to ask about PFAS and how you see that market developing. When I talk to some people, they seem to think that when it comes properly, it will come quickly and big, if you see what I mean. So I'm wondering about your investment plans. Say, Helsingborg is sort of EUR 10 million. Are you going to sort of invest heavily ahead of this? Or how do you see that PFAS market growing in terms of timing and whether you're going to sort of scale up, whether you can scale up? And what -- have you done a forecast on what perhaps you may need to invest to stay ahead of the market when it does sort of gather a bit more momentum? That's the first question. And just the second one on valuations in M&A. In some other -- not particularly in water perhaps, but some chemical distributors are talking about valuations coming down. And I just wondered, as owners are a bit worried about the outlook and so on, I just wondered what you are seeing in your particular sector. Antti Salminen: Thanks. So I will take the first question and let Petri comment on the second one. So the PFAS removal market indeed is a really interesting market, which is developing as we speak. And as it's a kind of a new market, there's a lot of unknowns. We have clearly stated that we will be playing in that market and are developing our approach there. It's also interesting from the perspective that there is not one dominant solution that will be used by our customers for removing of PFAS. So it will always be a combination of the good old warhorse, the activated carbon, which is not enough and which will not solve the problem. So other technologies are needed. Some of them are chemicals, some of them are nonchemical. And it's this combination within which we need to find our playing field, so which parts of that we play. And we have clearly started our approach by entering the activated carbon market. So we purchased a small facility in U.K. That's actually kind of we have filled it up very nicely, and it's working well as a first step. We have announced now the investment project in Helsingborg, Sweden for the reactivation. So those are all the small steps that we are taking into the market as it continues to develop. And we are also looking at bigger steps, but that all depends on how the market develops and what we can do there. But we are really kind of determined about that. But then also, as I said, I mean, this will not be enough. So we are working with different external partners and our own research and innovation area to develop new, more specific solutions, which will be complementing then the activated carbon on this fight. So we are serious about the market. Market will grow. And as you said, some are expecting it to explode, some are expecting it to have a kind of a more linear type of growth. Nobody knows today. We are taking our steps according to our strategy. We have, I think, a very clear plan, how do we enter it. And our benefit on that area will be that we are serving already all of these customers with our coagulant and polymer solutions. So basically, we have the supply chains ready and we are there with these customers. So whatever the new prevailing technologies will be, we are in a really good position to globalize them and capitalize on that market presence that we have. Petri Castrén: Andrew, that was a good question to ask Antti. And I think the valuation question is also a fair and good question. I think very few sellers would actually acknowledge that their expectations of multiples are coming down. But when you look at what's going on in the market, there is a number of private equity funds that own assets that they have -- they are holding towards their maturity. So clearly, there is still a discrepancy on valuations and maybe the seller expectations at times are still higher. I think in generally, at least I wouldn't say that they are going up anymore. So clearly, we've sort of maybe moderated from the zero cost financing that was available some couple of years ago in that sense. So perhaps you're right that there is an expectation and realization of some moderation on the valuations. And of course, this would be a development that we would welcome very much because some of the actions -- some of the things we've been sitting on the sidelines because we could not make the ends meet. Kiira Fröberg: Thank you. I think we start to actually run out of time here with our webcast. So we had a couple of questions through the webcast question formula. They were related to the Packaging & Hygiene Solutions profitability improvement program, and I think that they were covered in the other questions. So we don't need to take them now here. But I would like to thank all the participants for the active participation and good questions. And as a reminder, we will report our financial statements bulletin on February 12, and that's already next year, so '26. And I hope to see as many investors as possible on meetings during the next quarter. We will be actively on the road. And of course, have a great day, everyone, as well as a great weekend. Thank you so much. Petri Castrén: Thank you.
Aki Vesikallio: Welcome to Hiab's Third Quarter 2025 Results Call. My name is Aki Vesikallio. I'm from the Investor Relations. Today's results will be presented by CEO, Scott Philips; and CFO, Mikko Puolakka. And as a reminder, please pay attention to the disclaimer in the presentation as we will be making forward-looking statements. Hiab's Q3 profitability was affected by lower sales in the U.S. Our orders decreased slightly. Comparable operating profit margin decreased to 11.4% due to lower sales in the U.S., which was caused by elevated market uncertainty due to increased trade tensions. However, our services business continued to grow. Sale of MacGregor was closed on 31st of July, and the business is now separated from the company. Let's then view today's agenda. First, Scott will present the group level topics. Mikko will go through reporting segments, financials in more detail and the outlook. After Mikko, Scott will join the stage for key takeaways before the Q&A session. With that, over to you, Scott. Scott Phillips: Thank you, Aki. And greetings, everyone, from my side. I will start with a few highlights looking towards executing on our strategy of profitable growth for the future. First, I'm pleased to share with you that we announced a partnership with Forterra to further develop automated solutions for our lOad Handling Systems business. So really exciting development there. Next, we launched a new 3.5 ton truck-mounted forklift for the EU, which will enable our MOFFETT forklift -- our MOFFETT branded solutions to be the clear industry leader in this size class of delivery solutions. And I would also like to highlight that we announced the launch of the smartest cable hoist solution in the U.S. market under our GALFAB brand. So really proud of the work the teams have done on both sides of the Atlantic there. And finally, we are pleased to announce the revised long-range climate targets, aiming to be net zero by 2050. Now getting into the financials for the quarter. I'll start first with order intake. Our orders received in the quarter declined by 3% to EUR 351 million versus last year comparison period of EUR 361 million. And then as a consequence, as you see on the left-hand side of the slide, we've gone from EUR 900 million order book to roughly EUR 636 million at this time last year and now stabilizing out around EUR 557 million following this quarter. Now for the period year-to-date, our order intake is up 1 percentage point to EUR 1.1 billion versus last year. And as you think about the last 12 months order intake, we're somewhere around the EUR 1.5 billion level, which has been the case for approximately the last 2 years. Now the decrease in orders received was driven primarily by the delayed customer decision-making in the U.S. Of course, that was partially offset by Defense Logistics, and we won a nice Wind segment order that we announced previously in the quarter. Currencies had a 2 percentage point negative impact on orders received in Q3, which we had highlighted would be the case with last quarter's results call. Now looking further into the geographic distribution of the order intake. Our EMEA market was represented 56% of the orders for the quarter or EUR 195 million versus last year at EUR 155 million. So that's up 26%. Year-to-date, we're at EUR 587 million versus EUR 518 million last year. That's a change of 13% year-over-year, year-to-date. In the Americas, however, a bit different picture. In the quarter, we were EUR 132 million versus last year at EUR 185 million. So that's a 29% reduction. Therefore, year-to-date, we're down 14% versus last year at EUR 435 million versus EUR 504 million the prior year. And in APAC, we were up nicely in the quarter by 11% from EUR 24 million versus EUR 22 million last year. Year-to-date, we're at EUR 84 million versus last year's year-to-date figure of EUR 72 million or up 16%. In terms of the operating environment, we do continue to have positive momentum in our Defense Logistics and Energy segment opportunities. So that's good. We have also a big robust replacement demand that's driving the majority of our business. Of course, on the negative side, we still have the uncertainty of the trade tensions. And this, of course, has impacted the demand curve, in particular, in the Americas and in particular, drilling further in the U.S. market, which, of course, means our U.S. customers have remained quite cautious. Then moving into the sales development. Sales in the quarter were down 11%, so EUR 346 million versus last year's comparison period of EUR 388 million. And year-to-date, we're at EUR 1.16 billion, which is 6% below last year's level at this time, which is EUR 1.235 billion. And then on an organic basis or in constant currencies, we're down 8% in the quarter versus last year and 5% year-to-date. Of course, our services percent of sales grew in the quarter to 34% versus last year's comparison period at 29% year-to-date. Services represent 30% of sales versus last year's year-to-date figure of 28%. So sales have leveled out at the -- approximately the level that we would expect given our prior 11, 12 quarters' worth of order intake adjusted for the seasonality effect. But of course, the big story was the negative impact that we had in the U.S. market, which I'll cover in the next slide. So looking into the geographic distribution of the sales. EMEA represented 51% of our sales in the quarter, down slightly from last year, 5%. Year-to-date, EMEA is at EUR 573 million versus last year at this time at EUR 599 million. So that's a 4% decline. In the Americas, however, is where we had the biggest decline. Americas in the quarter was EUR 140 million versus EUR 177 million last year, a 21% drop year-to-date. We're at 9% down versus last year, EUR 508 million versus EUR 556 million. And in APAC, much like the order intake, we were up slightly EUR 29 million in sales versus last year's Q3 of EUR 24 million in sales, representing an 18% positive variance. Then year-to-date in APAC, we're down 1% or EUR 1 million, EUR 79 million versus last year at EUR 80 million. Our ECO Portfolio sales continues on a positive development. We're at EUR 140 million in the quarter of ECO portfolio sales versus last year comparison period of EUR 114 million, so that's up 23% year-to-date, EUR 437 million versus last year, year-to-date at EUR 354 million, up 23%. So as indicated earlier, our sales decline was most prominent in the Americas. EMEA sales declined slightly, of course, linked quite closely to the order intake development in the region. APAC sales increased slightly, which, of course, is also linked to the order intake development in APAC. And on the positive note, our ECO portfolio sales increased, in particular, in our circular solutions from our service business as well as our Climate Solutions and our Lifting Solutions equipment business. Then looking into the profitability. For the quarter, our comparable operating profit was EUR 40 million versus last year, EUR 52 million. That's a 24% drop on the EUR 42 million drop in sales quarter-over-quarter. That puts our year-to-date comparable operating profit at EUR 166 million versus last year's EUR 176 million, representing a 6% drop. which, of course, all occurred within the quarter. On a percentage basis, our comparable operating profit percentage was 11.4% versus 13.4% last year. And year-to-date, we're at 14.3%, which is on the same level as last year due to our good performance in the first half of this year. We were primarily impacted by the EUR 20 million negative impact from our lower sales in the U.S. as I highlighted on previous slides. Our gross profit margin also decreased slightly by 80 basis points, primarily due to the change in the revenue curve, which we weren't able to fully offset with cost out in line with sales development or the revenue development. However, our SG&A costs were lower in the quarter by approximately EUR 5 million. EUR 1 million lower in sales and marketing, EUR 4 million lower in administrative costs, so well in line with our EUR 20 million cost reduction program that we announced last year. And then as a consequence, our operative return on capital employed improved driven by the nice development of managing the working capital within the team, especially as it relates to the days sales outstanding. So really strong execution in that regard. Then as we've done each of the past few quarters, we want to highlight where we are relative to our long-term targets. So just to remind you, our long-term target was to was to be on a level of 7% CAGR over the cycle, 16% comparable operating profit and above 25% return on capital employed. Our progress as of through Q3 of this year, our rolling 10-year average is down slightly to 6%. Our long-term -- last 12 months comparable operating profit is at 13.1%. This compares to 12.7% where we were at this time last year. And our last 12 months return on capital employed is at 29.8%. So with that, I'll hand it over to Mikko. Mikko Puolakka: Good morning also from my side. Let's first have a look on the Equipment segment's performance in the third quarter. Equipment segment had a slightly positive book-to-bill in quarter 3 with EUR 239 million order intake. Gifting equipment quarter 3 orders were actually flat, while the delivery equipment orders declined. This delivery equipment orders decline came from the U.S., as mentioned already earlier by Scott, and this is very much caused by the trade tensions driven slowness in our customers' investment decisions. Equipment sales was EUR 230 million. This is a 17% decline from prior year. Lifting equipment sales was flat year-on-year. So the decline came solely from the delivery equipment and in particular, from the U.S. market. The Equipment comparable operating profit declined to EUR 20 million, which represents an 8.8% margin. This decline in margin is solely again, attributable to the delivery equipment sales decline and very much attributable to the U.S. market. You can see clearly in the bridge on the right-hand side there, what kind of impact the EUR 46 million decline in Delivery Equipment volumes had in our profitability in quarter 3. The gross profit margin was negatively impacted by lower volumes. So all in all, the Equipment as well as the whole Hiab quarter 3 profitability was impacted by the lower delivery equipment sales in the U.S. Services grew nicely in quarter 3. We continue to increase the number of connected units, and there has been also really good intake for maintenance contracts as well. The growth both in orders and sales came from recurring services like spare parts and maintenance. Services grew even in Americas as there is an installed base, which needs to be up and running every day. Services profitability was on a good level, 23.5%, especially thanks to the higher sales as well as commercial and sourcing actions. When we look at the services profitability bridge, profitability improved by EUR 5 million in quarter 3. The main drivers for better profitability were EUR 4 million higher sales as well as the previously mentioned commercial and sourcing actions, which improved the gross profit margin in services. Also, the services fixed costs were slightly lower compared to the previous year. The foreign exchange or the translation impact had roughly 3% units negative impact in Services quarter 3 orders, sales as well as profitability. Let's have a look then at the total Hiab financials, and I'll focus here more on the right-hand side, the profitability bridge. The comparable operating profit declined EUR 12 million from the comparison period. Here, the EUR 42 million decline in sales is the main factor behind the lower profitability. As described earlier in the call, lower sales impacted also our gross profit margin, as mentioned by Scott earlier, it was 0.8% units lower. It's good to remember that some of the costs above the gross profit margin like factory overheads, those are not fully scalable within a few quarters. So when we have lower revenues like we had in quarter 3 that has a slight negative impact on the gross profit margin. We got some tailwind from the lower SG&A, which were roughly EUR 5 million lower than last year and then EUR 8 million year-to-date September. The currencies, as you can see from the picture, had a minor roughly EUR 1 million negative impact on our profitability in quarter 3. On a positive note, our cash conversion, i.e., the cash flow versus comparable operating profit was 173% for third quarter. Net working capital decline was the biggest contributor to the over 100% cash conversion and the net working capital declined mainly in accounts receivables. The reported cash flow still includes July cash flow from MacGregor, but as can be seen on the chart, the contribution to the overall cash flow was relatively small. When we look at our balance sheet, McGregor has now fully been removed from Hiab's balance sheet at the end of July 2025. Hiab is now EUR 308 million net cash position, and this converts to a minus 32% gearing at the end of September. As you have noted, we have also paid an additional dividend of roughly EUR 100 million in October. This is not yet visible in this September balance sheet numbers. If the dividend payment would have taken place in September, our gearing would have been minus 21% in September. Still a very, very strong balance sheet. On the right-hand side, you can see that we have a couple of outstanding interest-bearing debts, one EUR 25 million maturing this year and another bond EUR 150 million in September '26.. About our outlook, we reiterate our outlook for 2025. Our estimation is that the comparable operating profit margin for 2025 is above 13.5%. And please note that this is the floor for our profitability. This outlook is based on the year-to-date September comparable operating profit margin of 14.3%, as well as the order book that we have in hand at the moment and then also the current situation related to ongoing trade tensions. And then I would like to hand the presentation back to Scott for the quarter 3 summary. Scott Phillips: Thank you, Mikko. All right. Summarizing the quarter, a few key takeaways. Market uncertainty has continued to negatively impact our business. And keep in mind, we're a relatively short-cycled business. So we see these impacts in a relatively short period of time. But despite the market situation, we have been able to improve on our last 12 months comparable operating profit margin, so strong execution on delivering what we've committed to deliver. However, as a consequence in the uncertainty level that continues to be the case, we will start planning for a program which would target approximately EUR 20 million lower cost level in 2026, compared to current levels to give ourselves a bit more resilience and flexibility in dealing with the ongoing levels of uncertainty. However, we continue to execute on our strategy and focus on activating growth opportunities where they exist. And I would reiterate that we have an incredibly strong balance sheet, generating strong cash flow and that continues year-to-date, and that will continue to be our primary focus, moving forward. So I think we're well-positioned to deal with the levels of uncertainties that we face in the future and I feel really positive about our ability to deal with the changes in the demand curve, whether they would be up or down. So with that, I'll hand back over to Aki. Aki Vesikallio: Thank you, Scott, and thank you, Mikko. Now we are ready for the Q&A. Operator? Operator: [Operator Instructions] The next question comes from Panu Laitinmaki from Danske Bank. Panu Laitinmaki: I would have 3. Firstly, starting on the margins. I was a bit surprised to see such a big change in Q3 given that sales has been declining for 2 years already. So basically, the question is that what caused this? Is this mainly under absorption of fixed costs? Or is there an element that the lost U.S. sales had like really good gross margin compared to the rest of the business? Scott Phillips: Do you want to take it? Mikko Puolakka: I can take that. Yes. As we mentioned, basically, this profitability decline is fully attributable to the U.S. market and -- this is stemming actually from the fact that we started to see already in the beginning of the year, basically from February onwards, weaker order intake caused by these trade tensions. And as we have a fairly short lead time from the order to the delivery, we started to see that sales weakness already now in quarter 3. And this is stemming very much from the delivery equipment, truck-mounted forklifts, tail lifts in the U.S. market. This is the reason for the lower margins. As you can see, yes, our SG&A costs went down, but those are not enough to volume impact, which is then in addition to the U.S. market decline then also connected with the low seasonal volumes. Scott Phillips: Yes. Just to add a bit more color there. I think just to reiterate for you, Panu, it was a combination, as you pointed out, of sales decline which primarily happen in the U.S., but also it was more impactful than we would have anticipated from a mix perspective. So both of the 2 businesses that were primarily impacted there, normally have margins that are quite accretive to the overall higher margins. Panu Laitinmaki: Okay. Then secondly, on Q4, so what are you seeing in the -- during the rest of this year in terms of orders, like -- are the trends similar? Or should we expect sequential worsening? And also maybe if you can comment on the margins. So should we expect that the seasonality Q3 was maybe the lowest point of the year and how should we think about Q4 as in the comparison period, you had this restructuring costs last year? Scott Phillips: Yes. As you point out, we certainly tend to have a seasonality impact in Q3, which we've called out previously, anywhere in the 10% to 15% range, which we did see that materialize overall primarily due to the lower working days, both in Europe as well as in the U.S. So similarly, we would expect to see Q4 top line to be -- from a sales perspective, more in line with our trailing last month order intake and similarly follow the pattern of seasonality, whether it's negative or positive. So we expect Q4 to be quite in line with what you typically see in Q4. Panu Laitinmaki: Okay. And then thirdly, could you talk about Europe? So we saw pretty good orders in there. What is driving this? You mentioned defense and the wind order, but is this like an overall market recovery or some single orders? And do you have any kind of improvement in the Construction segment yet? Scott Phillips: Sure. I'd say 4 points that I'd highlight here. One, as we alluded to in the presentation material, primarily the demand is replacement cycle driven, which should follow along the lines of pattern that we would expect to see given the life cycle of our products. Two, we certainly are seeing an uptick in activity on the quote side on the lead generation side. We have seen a mixed picture in terms of lead conversion throughout the period, which has been interesting. Then the third point I'd highlight, as I alluded to earlier in the discussion, the Defense Logistics was a positive within the quarter. But then if you add the Defense Logistics from Q2, Q3, we were roughly flattish with an increasing pipeline of opportunity. And then the last point, we have seen a number of lumpy large key account deals. And in this case, in our Wind Energy segment that converted. So that was primarily the drivers for the increased level of order intake in Europe. Operator: The next question comes from Andreas Koski from BNP Pariba Exane. Andreas Koski: So firstly, I want to try to get your thoughts about 2026. When I listen to truck manufacturers, it sounds like the truck market is not going to improve at least substantially in 2026 or 2025. And now you are planning for restructuring program aiming to lower your cost base by EUR 20 million. So should I read that as a signal that you share the truck manufacturer's view that 2026 is most likely not going to be much stronger than 2025? Scott Phillips: Yes, I can start this one. Yes. Thanks for the question, Andreas. The way we think about 2026 is twofold. One is that we will adjust our cost base on the basis of what our trailing order intake levels are. And on that basis as well as the change in the mix that we've seen now reflected in the sales result, it's obvious that we need to adjust the cost base just to make sure that we're covered relative to the changes we've seen both in terms of the trailing order intake as well as then how that's affected from a mix perspective. And then in terms of the top line development for next year, we haven't typically provided forward-looking comments on the top line development. But of course, we want to plan for a scenario that would allow us flexibility to deliver if the demand curve were to pick up. And similarly, we want to manage our cost base so that we're well covered in the event that the demand curve goes in the negative direction. Andreas Koski: Understood. And then I understand that the tariffs might have impacted the demand for your products, but did it in any meaningful way also impact your your cost levels and in combination with that, what kind of price increases did you see in this quarter? And what should we expect for the coming quarters? Scott Phillips: Yes, sure. I can start with this one and Mikko, you can pick up if I miss a point here. Yes. Thanks for the question, Andreas. So what our policy has been our practice, so year-to-date relative to the tariff responses that we're trying to implement surcharges that we transparently share with our customers. So that we could stay neutral from a cost perspective, and that still remains our view today. So I would -- I couldn't say that we got either a positive or a negative impact relative to the tariffs. And if we did, it'd be just a matter of timing. I think Mikko alluded to in his presentation, though, the impact relative to order intake and to the sales level and perhaps maybe you can reiterate the impacts there. Mikko Puolakka: Yes. In our quarter 3 order intake, we had less than EUR 10 million kind of let's say, price increase effect coming from the tariff surcharges in sales due to the lead times, one could say that the impact was almost plus/minus 0. And the main impact there, I would say, from tariffs is on the demand side. So it's -- like Scott said, we are basically moving the tariff cost to the customer prices. Andreas Koski: I might be mistaken, but if I remember correctly, when we discussed on the pre-close call, we talked about price increases of 10% to 20%, but maybe I'm mistaken there, but was that on the case? Mikko Puolakka: Depending on the product category, the surcharges have been around 10% to 20% depending on the product category. These changes all the time because there are also changes in the tariff regulations and what kind of components are included in the tariffs. We are also doing actively measures how to mitigate the tariffs changing our supply chain so that we could make this as, let's say, bearable to our customers as possible. Operator: The next question comes from Antti Kansanen from SEB. Antti Kansanen: It's Antti from SEB. I will start with the same topic on the U.S. orders and sales going forward, kind of reflecting back to the price increases and the tariff surcharges. I mean, I get to a number that on a volume basis, your orders contracted quite a lot on the third quarter compared to what they were on the first half of the year. So I just wanted to better understand that is -- will the volume impact on profitability be much more severe going into Q4 and perhaps Q1 next year as it seems that the volumes that you are getting into your factories are still on a decline. Mikko Puolakka: Yes. If I take this one, you can complement. So overall, you may remember that in quarter 2, we received a key account order Order in the Home Improvement area. Basically, if one calculates the kind of lead times from the order to the delivery, we would start basically the delivery of that order, let's say, in the beginning of quarter 4. So that would then support the top line development in the U.S. in the quarter 4. That would allow them better loading for our factories, both in Europe as well as in U.S., which are supplying that kind of product during quarter 4, and that should also then improve the U.S. profitability in quarter 4. Antti Kansanen: Okay. And then the second one was on clarification on the previous questions on the difference between the communicated surcharges, 10% to 20%, and they achieved kind of the price impact, which I calculate to be around 8% of the U.S. orders. I'm not exactly sure if I calculate it correctly, but is the delta kind of something that you have given up on pricing in order to secure volumes? Or is there something -- some other dynamic in play here? Mikko Puolakka: Now these are basically this 10% to 20%, these are the surcharges. And then, of course, our, let's say, order intake, it cannot be kind of just simply be calculated from our kind of year-on-year order intake development development. So basically, like Scott mentioned, if there is a tariff of EUR 100 that EUR 100 million is reflected in the tariff surcharge to our customer invoicing or in the order intake. Antti Kansanen: Okay. And then on the development outside of Americas, I guess, mainly in Europe where you are flagging Defense Logistics and Energy Wind orders. Is there something regarding delivery times that we should be taking into account? Are there kind of a bigger deals or, let's say, frame contracts in the Q3 orders that would have a longer delivery times? Or should we just assume that it's a normal kind of a backlog to sales rotation? Scott Phillips: Yes, I can start this here and Mikko please jump in if this isn't reflecting an accurate picture. But we reflected in Q3 Antti, relative to the wind order is a consequence of a frame agreement that will be reflected as order intake over a number of quarters. So it's not a case where the entirety of the order was reflected in one quarter, and then it will be delivered sequentially from there over a period of time, but rather the order intake will also be reflected a bit more in line with the revenue recognition. Antti Kansanen: All right. Makes sense. And then the last one for me is the EUR 20 million cost savings program to be implemented next year. Will there be a one-off cost booked on Q4? And will that be included in the adjusted EBIT that you are guiding for? Or will that be a one-off? Mikko Puolakka: In case based on the initiative planning in case there would be one-off cost. We would report those in items affecting comparability -- so separately below the comparable operating profit depends on the planning and then we would be also opening how much that kind of cost we would have in quarter 4 or in 2026. Operator: The next question comes from Tom Skogman from DNB Carnegie. Tomas Skogman: This is Tom from DNB Carnegie. Did I understand correctly does that if you book an EU item, it is kind of above EBIT adjusted, like last year? Mikko Puolakka: So if we book for this EUR 20 million cost savings program, one-off costs, those would be reported as items affecting comparability below the comparable operating profit. So not included in the comparable operating profit. Tomas Skogman: Why will it be different from last year? Mikko Puolakka: This is very much related to the, of course, weakness in the U.S. market. But the EUR 20 million program would be company-wide. Previous programs have been more related to the kind of general optimization of the business, also in line with the order book. But this EUR 20 million is of course, in the first place, very much driven by the trade tensions. Tomas Skogman: Okay. And then I wonder about -- I mean this is perhaps more kind of a general big picture discussion. So last year, Americas was 45% of sales, and you have painted a picture where the Americas is quite an immature market. You have a lot of kind of white spots in distribution in the U.S. But still, I mean, it's been almost half of your business. So -- and I just remember 10, 15 years ago, Spain was the world's largest market. And that market basically never got back to all levels. It was so overheated. So could there be like just a risk that it will take many, many years before the U.S. market is back to where it has been in the last couple of years? Or do you really feel confident that it's just normal fast breaking, fast accelerating in the U.S. market? Or are there some kind of risk elements there that suggest that it could be that it takes many years to go back to all record levels? Scott Phillips: Yes. I'll start with this one. And thanks, Tom. I take this in pieces. So you mentioned our characterization of the U.S. market. And the way that we characterize it is threefold, if you will. So on the one hand, we were quite mature in our penetration of delivery solutions as it relates to serving primarily the building construction supply market. Two, we've had -- continue to have and did have quite a strong position also in delivery solutions relative to retail and last mile. So those were fairly mature markets, a long ways to go, especially on the retail last mile given the market share position relative to the #1 competitor that we face on a daily basis. Then the way we characterize it is we're underpenetrated both in our knuckle boom loader cranes as well as our hook lift and mountable solutions, primarily in waste and recycling, perhaps somewhat in terms of Defense Logistics that the market was definitely underpenetrated relative to knuckle boom loader cranes in the Construction segment as well. the way in which we wanted to attend to this is, is that we have a lot of geographic white spots because we weren't structurally set up similar to how we are structured in a European country, let alone Europe as a continent. And that was a weakness on our part. So the way that we've been attending to it and we continue to execute on the strategy is, is that we're turning on at scale distribution channel partners to cover the geographic white spots with a focus on shoring up those areas that we both were underpenetrated because of just lack of scale of sales and service excellence to support those products, but then also the geographic lack of coverage that we had as well. So that continues to be ongoing. Now in terms of the comparison relative to Spain, I'd say there's 2 things to keep in mind. Of course, let me start with the really obvious one is that just mirror scale, it's an order of 10x magnitude difference in terms of the GDP of comparing the U.S. versus Spain. But then more importantly, probably is the fact that the growth in Spain was primarily driven by one segment that was Construction. So at one time, it was one of the world's, if not the world's largest construction applied knuckle boom crane markets. And of course, that's the segment that had most been impacted following the global financial crisis. And to your point, hasn't quite recovered or hasn't recovered at all relative to the pre-global financial crisis levels. But definitely 2 different comparison cases and thinking through Spain versus the U.S. because the basket of of segments that we serve relative to our full portfolio, completely different opportunity set, if you will, in the U.S. versus, well, any country in Europe, but especially if you think about a country like Spain. Having said that, we've got a lot of opportunity to grow in Spain as we are underpenetrated there. Tomas Skogman: So what do you think then will be kind of -- what are you looking for in the U.S. is a trigger for customers to start ordering more again. What will be the trigger I mean the interest rate is quite high on the housing and the ABI index is not that strong. For instance, or just that you have this tariff situation with the loads of parts imported from Mexico that is just kind of cooling the entire market and we get the solution to that, then this will be normal again. What are you looking for? Scott Phillips: Yes. Yes. I'll sound like a broken record here, Tom, but I think it's still a factor of I can bifurcate it into 2 parts, right? One on the one hand, you're right, we need to see the macroeconomic costs come down a bit for our U.S. customers that we've talked about a lot, especially last year and a little bit in the first half of this year. in terms of overall inflation as well as the general level of interest expense. But I think then moving to the second piece now, of course, it's a matter of getting some stability in terms of being able to plan the business in the future on what your general cost level is going to be, I think that's a key factor as well. And then I would then add one more point to this scenario is that, once you see the level of stability achieved that no doubt will happen, it's just a matter of when. Then you'll start to see a pickup, I believe, from the stimulus bill that was enacted earlier in the year that I think is characterized as the one big beautiful bill. At the same time, we know that with the aging of our equipment in the installed base, there will be a robust replacement cycle coming as well. Tomas Skogman: Okay. And then finally, on the Defense side, I mean, it's just easy to say that it's a promising market generally. But I would like to understand a bit more. I mean we have seen orders from, for instance, the U.S. army and orders from Rheinmetall or bundle -- to Rheinmetall. But -- is it so that we should kind of perhaps also expect that just kind of national defense forces in different countries will be kind of major customers? Or will it be more like kind of defense companies that will order from you or how will it be? Scott Phillips: Yes, I can start here as well. Yes. Thanks for the question again, Tom. In Defense, we have a 40-plus year history of serving not only the U.S. Department of Defense, but then also the majority, if not all, of NATO countries as well as NATO partner countries, which will continue to do moving forward. And you're right, each of the defense organizations have made commitments to increasing spend unfortunately, due to the geopolitical changes that we've seen materialize over the last 3, 4, 5 years. And we expect that to continue moving forward. The challenge that we have is being able to forecast and model that business because the majority, if not all of these opportunities are typically larger tender opportunities that have quite a lot of variability in terms of time of opportunity to decision in terms of who that deal is going to be awarded to. And it's worked on both sides of the equation for us, if you think through the last year. On the one hand, we've seen more faster-moving emergent opportunities. And then on the other hand, we've also seen delays of opportunities that we knew were there prior to this period of increased geopolitical uncertainty that have pushed to the right. So difficult to model on our side in terms of the timing, both of booking the order as well as then how that will materialize and the change in revenue recognition. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Aki Vesikallio: Yes. We will have a couple of questions from from the iPad, from the webcast audience. So first question is about the service order trends. Is there any lagging impact from that? So what is the profitability trend in the services going forward? Scott Phillips: Yes. So on the Services side, the only real lag would be the nonrecurring revenue that we have. And if you think about the mix within the quarter, we were approximately 74%, 75% recurring revenue. So that's been on a nice trend relative to the overall Service, both order intake as well as revenue. Within the nonrecurring, of course, you have installations that are a factor of the equipment lead times. And so that tends to be the piece that lags behind. But otherwise, the rest of the services order intake, will follow and link quite nicely to the revenue recognition. Aki Vesikallio: Yes. Thanks. And then we have a couple of questions. I'll try to combine them. It's both are related to the tariffs. So we went through quite a lot of the parts of the question already but there was also a question, do we see permanent impact that could be caused by the tariffs. For example, could we lose some of the U.S. customers because of these tariffs permanently? And do we have any estimates how long the situation would last? Scott Phillips: Yes. So I'll start with the easy part first, the last part of that question. Hard to tell, right, how long this will last. One thing that's certain is, is that I myself have lived in 9 countries, and I've had a long career of this type of work and serving 100 to 200 different countries and most countries have some form of tariffs. So we can count on that. There will continue to be some form of tariff. I think really, the core of the issue and the question is then how long will this level of uncertainty last? And that's hard to call at this point. So our job is to be as resilient in our overall cost as well as our ability to deliver and execute as we possibly can. So we need to be prepared that this level of uncertainty may continue indefinitely. Aki Vesikallio: And could you please then still repeat what were the mitigating measures that we do? And do we individually negotiate with U.S. to get lower tariffs? Scott Phillips: Yes. So far, no, we haven't directly negotiated with the U.S. government on the tariffs. That one, we haven't had the opportunity to, and I'm not aware that any individual company has. But what we do, however, is that the way we sell our equipment is a function of market list price, and we sell on value. So therefore, from the tariff perspective, relative to our price positioning, this is more mechanical, if you will. So the contribution of the equipment that is under subject to a tariff, then we transparently share that information with our customers. We link that then to a surcharge that is simply a mathematical calculation and we try to work on other mitigating factors on the market list price to see if we can make this more attractive for our customers or not. But to reiterate, the biggest impact at this point from the change in the trade policies has been on the demand cycle because all businesses have a need to be able to forecast the forward-looking cost in order to then be able to take risk on deploying capital in order to catalyze or to run their business or to grow their business. Mikko Puolakka: Supply also to reduce the, let's say, tariff base as an example yes. And then it's good to remember that a significant part of our U.S. sales are assembled in the U.S., but of course, the ultimate tariff depends on where the components are coming from. Aki Vesikallio: Thank you, Mikko. Thank you, Scott. And that concludes our third quarter earnings call. So we published our financial calendar for next year yesterday. So we will be back in February 2026. Thank you for watching. Mikko Puolakka: Thank you. Scott Phillips: Thank you.
Kiira Fröberg: Good morning, everyone, and welcome to Kemira's Q3 Earnings Webcast. My name is Kiira Fröberg, and I'm the Head of Investor Relations at Kemira. We reported our Q3 interim report today and maintained good profitability in the weakened market environment. Here with me today, I have our President and CEO, Antti Salminen; and our CFO, Petri Castren. Antti will start by covering our group level performance and our progress on the strategy as well as the outlook. After that, Petri will discuss the business unit performance, and will also share some more details on the financials. In the end of the presentation, before the Q&A, Antti will also give a short introduction to our new CFO, Tuomas Mäkipeska. But now, Antti, please, the stage is yours. Antti Salminen: Thank you, Kiira, and good morning, and welcome on my behalf as well. So happy to report here on our strong profitability in the weakened market environment. And market indeed has been quite subdue for a long time already. We saw that first already in the beginning of the year or at the end of the previous year, hitting the performance of our Packaging & Hygiene Solutions business unit as that is the one that gets most directly the impact from the weakened market as the consumers are not consuming, trade is not flowing globally. So less packaging material is consumed, thus less Kemira chemicals go into the production of packaging material. Then in the Q2, we mentioned that we clearly see now the impact of the weaker economy trickling up the value chain to the pulp producers, our customers in that area. And now it's visible in the Q3 clearly. We have seen a lot of prolonged maintenance break and curtailments in that industry. So that is hitting the Fiber Essentials unit. And we've also now started to see the kind of a prolonged slow global economy impacting the overall industrial activity. Lower run rates at any industrial segment, especially here in Europe, which is then translated into less water consumption by industry, and thus, less consumption of our water treatment chemicals in the industrial side of our Water business. So all this has led to the situation where basically now the revenues declined 5% year-on-year, 3% in terms of organic development decline. So you see that there's quite a significant amount of foreign exchange rate impact there as we have significant business in U.S. And this decline, as mentioned now in Q3, was hitting all of three of our business units. Nevertheless, we keep the outlook unchanged as we changed the outlook in the Q2. But the good news is that profitability is good in Q3. So we maintained the 20% operative EBITDA performance, which I think kind of comparing to the chemical industry in Europe, comparing to the -- looking at the environment that we operate in and the decline -- top line is a good performance, and I'm really thankful for the whole organization for pulling it together. We maintained high profitability in the backbone of our business, i.e., Water Solutions unit, but we managed to improve also the profitability in the Packaging & Hygiene Solutions. Impact coming both from favorable product mix, but also from the cost management program or profitability improvement program that we launched in the springtime for the Packaging & Hygiene Solutions. Now even if the markets are soft, we continue to invest into our strategy execution. So we have a clear growth strategy, and the megatrends that are supporting the strategy stay intact. So longer-term viability and growth potential of the fiber economy and the need for clean water are there. So thus, we continue to invest into the execution of strategy. We also continue to have a strong balance sheet, which enables that. And I will talk later a little bit more about a couple of key steps in terms of continuing the strategy execution. But as mentioned, the revenues were weak in Q3. The U.S. dollar had a significant impact, but overall, the demand also was weaker. We retained our market position in all the business units. So basically, this is overall a decline in demand that is impacting the top line here. Year-on-year, we saw decline in volumes, as I mentioned, but prices remain stable. So that is the kind of good news and showing again our pricing power there. Sequentially, sales volumes actually increased from Q2. That is mainly driven by the Water Solutions unit, and Petri will talk more about it later. We saw some decline in sales prices from Q2 to Q3. Then looking at the profitability, which I mentioned, it is fair to say is on a good level. So the 20% operative EBITDA margin, we actually are very close to '24 EBITDA margin levels, which were the all-time high for Kemira. So really good performance in terms of profitability. Profitability remained strong in Water Solutions, especially the urban air side of the Water Solutions, which is the resilient, steady profitable backbone of our business. But we, as mentioned, managed to improve in Packaging & Hygiene Solutions quite significantly. The profitability of Fiber Essentials unit declined as a consequence of the clearly declining volumes from the market. This kind of a weakness of the market and the weaker demand, of course, puts a lot of pressure on us. So we need to continue to focus on profitability improvement, the operational excellence, cost containment so that we can continue to operate on this good healthy profitability level. Those actions we have defined. We have started as we communicated in spring from the Packaging & Hygiene Solutions. So we have a clear program there which aims to impact both the top line and bottom line items, and we are progressing really well with that program. And some of the impacts of it are visible in the good result of the Packaging & Hygiene Solutions, which also was helped by the favorable product mix in this quarter. Now we are stepping into next phase in that profitability improvement program. So we are starting to -- as of today to assess the operating model that we have in Packaging & Hygiene Solutions. And the aim there is to differentiate the service levels so that we can better serve the global and regional key customers that we have, introduce faster new innovations to the marketplace and provide better service for our key customers and at the same time, optimize the cost to serve levels for the more transactional customer base. So that program will start and the impacts of that will be visible in '27. So no impacts expected for the last quarter of this year. The earnings per share came out at EUR 0.38 per share. Now as I mentioned, we continue to invest into our strategy execution. The megatrends are there, and we are in a really good position to also maybe capitalize on a bit weaker market environment because a big part of our strategy is based on M&A-driven inorganic growth. There's a couple of key cornerstones for our strategy, and I will touch three of them here when I talk about the strategy execution. So first of all, our aim is to grow significantly in the Water business. And there are two subdomains which are really important for this. Micropollutant removal, PFAS, pharmaceutical residuals and so forth, microplastics. This is a fast-growing subsegment of the water market, which is just developing as we speak. And we have a clear strategy of how do we enter that part of the market. The other part which we have been relatively weak historically is the industrial water services, and that is also a subsegment of water market that is growing much faster than the base business. And we have taken now clear steps regarding entering both of these lucrative growth market areas. And then I will talk a little bit about our kind of progress with the renewable chemistry, which is another key area of our strategy execution. Now during Q3, we announced the investment into our site in Helsingborg, Sweden for reactivation facility for activated carbon. That is the first reactivation facility in Nordics, serving the whole Nordic market and helping us to enter via the activated carbon service into this micropollutant removal, because activated carbon is the kind of a well-tested predominant method for capturing micropollutants and PFAS from wastewaters, but especially from the raw waters for drinking water production. And that's kind of a key part of our entry to there. But we need to amend that with other more specific innovative technologies. So there, our partnership with CuspAI, Cambridge U.K.-based AI start-up is of a key importance. So we started in June, a joint development project, to develop new-to-the-world type of absorbent materials, and we are progressing very well with the project. The aim is to come up with completely new solutions, very specific targeted solutions for PFAS capture. So these both are on the kind of micropollutant removal area of the water strategy. Then before I go to the industrial water services, our earlier announced joint venture with IFF, the world leader in the area supporting us with development of -- via enzymatic route with development of new-to-the-world bio-based polymers. So we announced this JV. We are currently working on the project. Engineering phase is ongoing. We are looking at different engineering options regarding the manufacturing site itself. There is some delay anyhow to the project. So unlike we earlier informed that the production would be up and running by the end of '27, it's rather on the side of '28 that we now plan to be up and running. That said, we have industrial level volumes available from our toller in Finland, and we are currently running several industrial scale test trials with our customers, both in Water Solutions area and in Packaging & Hygiene Solutions. And many of these application tests actually look very promising at the moment. So we are confident that when we actually have the new joint venture manufacturing facility up and running, we have a good existing customer base already for those solutions. And then as mentioned, the second area within the Water Solutions, which is one of our key growth drivers is the entry to the industrial water services. And we announced this morning that we closed the transaction on acquiring Water Engineering in United States of America. That's our first significant step into that area. Water Engineering is a water service specialist with expertise in boiler and cooling tower water treatment as well as wastewater treatment in industrial facilities. They're mostly focusing on food and beverage, manufacturing and health care industries. They're based out of Nebraska, and they have built a really strong presence in the middle states in U.S. grown quite quickly during the past years. And this provides us a good platform for future growth, both organically but also inorganically because their growth method has largely been a kind of programmatic bolt-on M&A path. And I think we can capitalize and continue on that path and continue growing that business. Business itself, as I said, the rationale of entering that is that it is faster-growing market than the base water treatment market, plus it is asset-light in terms of business model. So there's not a consequent significant CapEx going into maintenance and improvement and expansion of the production facilities. We can largely utilize also our existing product portfolio to serve these customers. So there's good cross-selling opportunities with this acquisition. The expected pro forma revenue of the company is north of USD 60 million. And the purchase price, as we have communicated, was roughly USD 150 million. So I warmly welcome all the new colleagues from the Water Engineering to the big global Kemira family. I think we will have a great future together. Now then to close this off, we have introduced a new slide here, which should be providing a bit more transparency and trackability in terms of our long-term financial targets. Now it is very clear that we are disappointed with the performance in terms of organic growth. So the aim is long term on average to grow more than 4% organically a year. Now clearly, the markets have proven to be much softer than we anticipated when we set out this target and communicated in the CMD a year ago. So -- but I still believe and we are confident that the long term, this growth potential is there as the megatrends are supporting and as we are entering these faster-growing new domains within the Water. So it will provide us acceleration. But clearly, the start on that journey has been slower than we anticipated. In terms of operative EBITDA, we are operating comfortably within the 18% to 21% EBITDA performance range that we communicated as a target. And also in terms of return on capital employed, we are above the 16% target that we set. That said, of course, the kind of a declining trend on both of these is not satisfactory, and we are having diligent actions and programs in place in terms of improving the profitability and making sure that we hit these long-term targets as we progress with our strategy execution. Now then the outlook for the rest of the year remains unchanged. So no reason to comment that further. And with this, I will then hand it over to Petri, who will comment in more detail the business units specific performance and some other financial ratios. Petri, floor is yours. Petri Castrén: Thank you, Antti. So I'll do, as Antti said, and I think I'll usually start with the sort of key points. And I think really our ability to support and defend the profitability as well as the PHS business unit profitability improvement are indeed the key points in this report. And as Antti said, clearly, the Water Engineering acquisition is an important step. So let's start. Top line is almost an -- development is almost an exact repeat from Q2, EUR 40 million decline, half of which is driven by FX changes. And again, mostly, it's the U.S. dollar that has continued to weaken year-on-year. Organic growth also 3%, exactly as it was negative in Q2. We have been able to maintain prices well, again, considering the weak market environment. Indeed, prices and actually variable costs have pretty much been stable throughout the year. So the change is, in essence, a 0. Also, what I think is important from the profitability point of view that in essence, we have been able to kill inflation. So the fixed cost change is 0. And again, we all know that there is a salary inflation ongoing. There's an inflation in many other areas. So this is part of the way how we have been able to defend profitability, and this is very good. Obviously, we cannot be happy about the top line development or the absolute level of profit generated. The net impact from the variable cost is really flat. And as you can see, almost last 4 quarters, it has been pretty much, much flat. So now the focus is really much more driving the volume compared to period between '21 and '23 when really a lot of our profitability was at how can we defend against the inflation, how we are coping with inflation and how we are passing the inflatory raw material costs to our customers. But now it's really about volumes. Again, I'll start the business unit comments with Water Solutions. So excluding the FX impact, there was a 2% decline against a pretty strong last comparison period. You noticed that in the comparison period, we had 5% organic growth. So it was a stronger comparison period. And regarding the water treatment markets, Antti already mentioned that the urban market continues to be really strong. And even in this -- while the business unit is declining, urban market is stable and it continues to grow. So the growth in Europe, EMEA is more than offsetting the small decline in Americas urban market. Then the weakness was on the industrial side. And there, like Antti was talking about, it's both the general industrial activity, the weakness in it, but it's also the fact that we have this one large tolling customer and their volumes were reduced compared to a year ago. Sequentially, from Q2 to Q3, both volumes and revenues increased despite a modest FX impact. Again, operative EBITDA, very strong at 23.1%, very close to last year's level. On Packaging & Hygiene Solutions. So challenging market continued to impact the unit. Antti already covered the sort of underlying or behind the factors impacting the business unit, but I think the key point is it wasn't actually getting any worse in Q3. So year-on-year volumes, essence, flat. And sequentially, they even increased modestly, very modestly. The market looked a bit more positive in Americas, and there was positive development in APAC as well. However, weakness continued in Europe, in EMEA, and you may have seen some of our customers' reports yesterday, which were sort of indicating that. Year-on-year, we saw some price decline, but sequentially, prices were flat. Profitability improved to 13.6%, which is actually quite a sequential improvement from below 10% in Q2. This was driven by cost containment topics like Antti was talking about. We also had a very good mix of product in Q3. So that helped there as well. And also, I'd like to remind that we did have an extended maintenance break in one of our key facilities in China in Q2, which depressed the Q2 results even more. Regionally, both Americas and EMEA are at 15% EBITDA or above. So it is the APAC that is still diluting the overall business unit margin. And we'll continue those profitability improvements. Antti talked about the business unit -- business model change that we will be implementing now. And again, this implementation will take well through to the next year. On Fiber side, market was weak. And we already -- we updated our business assumptions in Q2, and then we highlighted that we are seeing some additional weakness in the pulp industry. And indeed, this is what happened. So the market -- the softness was really driven by the Nordics softness here. So a lot of market-related downtime by our customers. Volumes declined year-on-year and sequentially, whereas prices were up year-on-year. However, on this area, we did see some pressure on variable cost as well. So that did not help the margin either. We do have some base chemicals in our product portfolio, caustic soda, sulfuric acid and some of the global market prices of these products were also declining during the quarter, and that depressed profitability more. Now I move to balance sheet. Again, not a whole lot of change in our balance sheet. Net debt at exactly year-end level and approximately at the same level as in June of '25. During the quarter, which is noteworthy is that we implemented or started our share buyback program, and we were able to buy back almost EUR 40 million worth of our shares during the quarter. As a reminder, this program, when it was approved and initiated, it's at a maximum of 5 million shares that we will buy back or EUR 100 million. And at the current level, which is, of course, limited by our daily liquidity, we will be hitting the end of the program around the year-end. So maybe in December, maybe some early days in December. So that's sort of at the current level, what it looks like. And Antti already showed the trend reports on return on capital and regarding our financial targets. So yes, the lower EBIT, which is the impact -- with the result of the weaker market is impacting our capital efficiency. Cash flow from operations, EUR 132 million, improvement from the year ago. We did have a net working capital decline. I think I mentioned in Q2 that we had a little bit of a buildup in net working capital. And this, indeed, we've been able to address that to a large extent during Q3. I'd like to remind that typically, our cash flow is more weighted towards the second half of the year, particularly towards the Q4, as you can see from the previous 3 years, which we have here on the quarterly breakdown. So I hope to -- expect to see that sort of a seasonal pattern this year as well. No change to our CapEx guidance. We expect our CapEx to increase over last year. So again, you do the math, you'll see that the CapEx will increase significantly from the quarterly run rate during Q4. With that, I'll stop my comments, and we'll turn to Antti. Antti will be able to announce my successor. So Antti, there you go. I'll stay here for the Q&A. Antti Salminen: Okay. So yes, indeed, a happy day for both of us probably that we have now been able to announce Petri's successor. Tuomas Mäkipeska will start latest some day in May as our CFO. Tuomas has a strong background, both in terms of business unit leadership and of CFO position. Now last position with YIT, the Finnish construction company. And before that at Lassila & Tikanoja, so brings us plenty of experience and good positive energy as well. So I warmly welcome Tuomas to Kemira Groups and look forward to working with him in the future. Kiira Fröberg: Thank you, Antti, and thank you, Petri as well. And now I think it's time for the Q&A, and you can ask your questions either through the telco or then you can send them to us through the webcast formula or chat function. So maybe we can start then to take the questions. So operator, please go ahead. Operator: [Operator Instructions] The next question comes from Martin Roediger from Kepler Cheuvreux. Martin Roediger: Three questions, and I would like to ask them one by one to make it easier for you. Antti, the first question is for you, it's about the strategy. After the acquisition of Water Engineering, will you continue with acquisitions with a similar size in the next couple of months? Reason I'm asking is that you target midsized deals with an enterprise value of EUR 200 million to EUR 250 million, which enables you to finance the deals from your cash flow, but Water Engineering is clearly below that price tag. Antti Salminen: Well, first of all, what I have communicated when I've indicated the size kind of we target mostly small and midsized targets because that's the kind of, I think, the most credible way to build the growth in M&A. And as you mentioned, so I just indicatively given that they have to be below EUR 250 million to qualify for this. EUR 150 million is below EUR 250 million, so it's in that range. And we have a strong pipeline of different targets, which we are working on. And yes, we will, of course, tell about them when the time comes. Martin Roediger: Okay. The second question is for Petri, regarding the Packaging & Hygiene Solutions business. You mentioned the reasons for the strong earnings increase year-over-year, sales mix and cost savings. Can you provide more color on that? How big were the cost savings in that segment? And where did the mix effect come from? Petri Castrén: Well, we don't specifically give out product line and product line profitability. So I think I'll shy away from giving exact guidance on that one. And I think it's also sort of what you compare against. So please don't compare to Q2 because Q2 top -- bottom was sort of a, I would say, it was arbitrary too low because the maintenance break in China actually impacted it quite a fair amount. But if we sort of say that last quarters of average is somewhere between 11% and 12% EBITDA, so from that, it's probably equal split between the three areas. So mix and some market recovery, particularly in North America, and then also cost saving actions. Martin Roediger: Okay. And the final question is about Fiber Essentials, which was below market expectation. I wonder, did you have also cost savings here? And related to the comparison to last year, was there any -- did you overearn last year so that we should be aware that last year's high margin in Fiber Essentials, especially for Q4 is not a good proxy for Q4 this year? Petri Castrén: I don't think that there was any sort of overearning in '24 in Fiber. There was overearning in particularly in the high electricity cost years and high caustic price years, '21, '22 and '23 but really not throughout the year. Now memory serves me badly in terms of individual quarters, but there tends to be a little bit of a seasonal pattern that electricity costs are higher during the winter months. And as you can see that there is a link of -- we benefit of this higher electricity costs. So we tend to have some seasonal pattern of Q4 being stronger in terms of profitability for our pricing of our electricity-dependent products, mostly sodium chlorate. So I think, Martin, I encourage you to rather look at sort of a trend lines and through the year and not individual quarters because each quarter, there can be some minor -- some sort of one-off impacts, whether it's product mix or some cost item came through that may impact the cost of -- margin of a business unit point or this way or that way. So rather encourage you to look at the trends because that's -- our customers are also, they are the same customers, and particularly in Fiber. So it's a very solid track record of maintaining customers. And so I encourage you to look over the longer period of time, not individual quarters. Antti Salminen: And if I may build on that a bit, so you referred to the kind of a shortfall of Fiber Essentials compared to the expectations. So maybe we were not clear enough in Q2 when we communicated the expectations to be lower because we already saw then the announcements from our key customers, especially in Nordics about taking downtime at their pulp mills. So that translated now to weaker performance in our Fiber Essentials clearly in Q3 as we expected already in Q2. Kiira Fröberg: Yes. Martin Roediger: But the downtimes are now over? Antti Salminen: Well, you should not talk to us about that, but rather look at our customers and what they announced. So I'll leave it to that. Petri Castrén: Yes. And sometimes we know a little bit more than our customers openly communicate. So that's why we need to be mindful that we respect and talk about our position only. Kiira Fröberg: Thank you, Martin. Let's now take next question, please. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I continue on the Water Solutions segment. So seasonality there has changed a bit last year. So how should we think about it now going into the last quarter of the year? And also on Q4 last year as a comparison period, anything to highlight or worth of reminding there? Antti Salminen: Thank you. If I start from the seasonality. So I mean, if you look at the Water Solutions as such, I don't think there's any major change in the typical seasonality over the year. So basically, that remains. So fundamental phenomena that impact the demand of water chemicals is not changing. And thus, typically, the first and last quarter are the weakest and the mid-quarters are the strongest in that business. Now then if you remember what we have communicated, so now we have this one big tolling customer within the Water Solutions whose demand -- has quarter-to-quarter comparison quite significant impacts if they take less or more material than we have expected. And that can then distort the kind of reported typical seasonality pattern. But the underlying base water treatment business, the seasonality is as it is because even if the climate is changing, it has not changed that dramatically in that short period. Anssi Raussi: Okay. Got it. And maybe continuing on this Packaging & Hygiene segment and this change in product mix. So how would you describe the current mix in Q3, like you mentioned that it improved, but is it like normal now or maybe a bit too positive for your EBITDA? Or how should we think about that one? Antti Salminen: Yes. Well, again, and as Petri said earlier, so you should not really look at one individual quarter in isolation because there will always be fluctuation in terms of demand, but in terms of product mix as well. So certain product lines are more profitable than others for us, and there might be this fluctuation between the quarters. Now the third quarter happened to be very positive in terms of mix for us. And as order patterns kind of level out week by week, even if we would want to be, could not comment on what to expect for the Q4. Petri Castrén: Yes. So Anssi, maybe addressing your question a bit differently. So the profit improvement need is not over in PHS business unit at all. That's why we are doing the business model change there now. And this will actually take, like I said, well into next year as we are implementing it. So actually, it's a fairly fundamental change. So yes, we'll continue to drive that to get the business unit profitability sustainably to the level where it actually ought to be. So don't take that Q2 to Q3 improvement and put a linear stick on it and expect that to continue. Maybe that's another way of saying it bluntly. Kiira Fröberg: Thank you, Anssi. Let's now then take the next question, please. Operator: The next question comes from Andres Castanos-Mollor from Berenberg. Andres Castanos-Mollor: I was thinking, do you expect lower raw materials to have a positive effect in Q4 in your -- in the cost side for you? And I was wondering if you had seen already something in Q3, maybe potentially affecting being a positive factor in your Packaging & Hygiene Solutions result in Q3. Petri Castrén: Well, I showed the raw material development year-on-year, and it was sort of a boring flat line, so I didn't even talk about it all that much. So as a group, it looks pretty flat, but there are individual areas where we have cost pressures, and we have some cost pressures in some areas of our water services business, we have some areas in our fiber. I mentioned some -- and that was already visible in their sort of profit bridge as we talk about it. So consequently, there was perhaps a slight improvement on the variable cost environment in PHS. But again, these are fairly small changes. So I can't really -- I think really the focus is much more on what can we do and how can we drive more volume. Andres Castanos-Mollor: A follow-up, a different question, if I may. On Water Engineering, I wanted to ask about the rate of acquisitions they have been doing in the past. Can you comment on that? Can you kind of give us an idea of how much capital this platform could deploy going forward? Antti Salminen: We will not comment on how much capital, but just that you get the idea. So typically, they have done several a year of this kind of small acquisitions, and that's kind of what we plan to do. Of course, with our bigger muscle, we can also then look at bigger targets to add on to that platform, not only the small ones that they have been thus far doing. Petri Castrén: I think it's very logical to say when Antti described Water Engineering as a platform. So it is a platform to continue on this sort of smallish type of deals and maybe increase the size, which they have been really doing like EUR 10 million revenue type of deals or even smaller, some smaller. So maybe increase that a little bit so that for the same effort, you can get a bit more meaningful impact. But this platform wouldn't be something hugely bigger on top of this. That's not the idea. Kiira Fröberg: Thank you, Andres. Let's now take the next question, please. Operator: The next question comes from Joni Sandvall from Nordea. Joni Sandvall: A couple of questions also from my side. You mentioned the uncertainty in the industrial side of the solutions. So could you give any more color? Has this intensified during the Q3? Which sectors are most affected? And does this have any impact on your mix? Antti Salminen: Well, first of all, like if you look at the industrial side of the Water Solutions, so we are basically serving all the possible industries that you can think of that use water, which is basically all the industries. So in that sense, kind of pinpointing which industry is exactly more kind of in decline than some other, it's impossible. It's really, as I started my presentation with, it's the kind of overall kind of slowness of the global economy and then the less global trade that happens, which both are kind of not only now impacting then the Packaging & Hygiene Solutions, but really all the industries. Especially here in EMEA, we all see it all around us every day. And then when the industries run with lower utilization rates, they consume less water and that is impacted. And that impact typically is gradual because you have some industries doing a bit better than others, and they are offsetting each other. So typically, we don't see it in industrial water treatment if there's some short-term nods in the economy. But when it's this kind of a longer kind of degrade of the industrial activity, it then starts to be visible for the water treatment chemicals demand as well. And there's no particular step from Q2 to Q3. So you should really look at it kind of a longer-term continuum of what happens to the economy, especially here in Europe. Petri Castrén: Maybe it helps if I remind you that a lot of these industrial customers, we actually don't address direct, so we go through distributors. So these are, for us, smallish or the end customers would be so small for us that it don't make sense for us to cover them direct. We cover the urban customers, the municipal customers, we cover them all direct. But this is sort of an indirect channel. And like Antti said, that's why it gets a little bit diluted the impact of what happens at sort of in the economy. Joni Sandvall: Okay, that's clear. Maybe still digging into Packaging & Hygiene Solutions and the improvement, let's say, potential for '26. You mentioned that Americas and EMEA are in the -- at 15% or above level. So should we expect in '26 about to reach mid-teens levels on, let's say, run rate on profitability? Antti Salminen: Well, we are working as hard as we can to improve it as much as we can as quickly as we can. Petri Castrén: Yes. So clearly, we're not happy with and satisfied with the run rate of profitability in PHS through 2025. So yes, we want to improve that, and there are efforts ongoing towards that. So yes, I think it's going towards the mid-teens range. And when we will get there, let's -- we're not giving an exact quarterly guidance. It also depends what happens in the market, is there any recovery in '26? And if yes, when it will happen? Joni Sandvall: Yes. Okay. That's clear. Last question from me. Given the weak pulp and paper market that we are currently in, have you seen any increase on pressure on pricing from the companies? Antti Salminen: Well, it's obvious that this kind of a situation leads to more pressure. But our customers are quite really professional and well educated. And regardless of the cycle, they are tough negotiators. So we have all the time pressure on our prices. Of course, it is a bit more harsh in this kind of environment when you have seen all the savings programs of our customers. But as I mentioned, I think, in Q2 webcast as well, our approach has been to try to turn it around to kind of collaboration efforts where we look together how can we help them to save more so that it's not about the per tonne price of the chemicals, but our application and solution, which is helping them to consume less virgin raw materials, less energy and so forth. So it's also an opportunity, even if there is some more pressure on the pricing, but it's also an opportunity because we have some of these solutions. For instance, some of our digital services are exactly aimed for these kind of improvements in the customers' processes. And thus, I see it kind of both, of course, a pressure, but also a really good opportunity to help our customers. Kiira Fröberg: Thank you, Joni. Let's now then take the next question, please. Operator: The next question comes from Tomi Railo from DNB Carnegie. Tomi Railo: This is Tomi from DNB Carnegie. First question, Fiber. Do you expect or are you initiating any actions on the Fiber side now that you see the impacts of weaker demand there, something similar as in PH? Antti Salminen: We're, of course, all the time looking at the profitability of each of the business units. It's good to remember with the Fiber that it is slower turning both than for example, PHS, where basically we have relatively lean organization. It's not that easy to look at the kind of organizational model, and cost to serve is very low because we have this kind of a typically, tightly connected supply to our customers. So it's a slower turning ship, and you need to be more careful in analyzing what are the potential actions. And you need really kind of a prolonged downturn from the customer side in order to start some kind of a more radical actions on that business unit. But obviously, we are all the time looking at how can we manage in this environment with a good profitability. Tomi Railo: Just a follow-up. If it's slower, can it also be deeper? How do you see that kind of if it's slower, but does it kind of then also decline more relative to PH? Or how does it work if we were to assume longer, prolonged weakness? Antti Salminen: Yes, that's a really complex question. And of course, I mean, that you should, again, predominantly ask from our customers to understand kind of what is happening at the global pulp markets. But the global word is here actually very important. So the pulp markets are global and our customers are not only kind of playing on the geographies where they produce, but there's global trade flows. A lot depends on how China economy will develop and so forth. So it's kind of a complex question to answer and difficult to say whether it would be any deeper. Pulp and the packaging materials are in the same value chain ultimately. So basically, you can't really separate. The timing effect is different, but the value chain is the same. So really, I think it's an impossible question to answer as such. Tomi Railo: But in a sense, it's easier in PH side to do your self-help actions than it is at the Fiber side? Petri Castrén: Tomi, the cost structures are quite different, so because we have a few small number of customers on Fiber Essentials. So each customer buys a lot. So there's a very small sort of sales and application team, whereas in the Packaging & Hygiene Solutions, we have lot more customers. There's a lot more applications. There's a lot of application and salespeople. So the mix -- when you -- total fixed cost, sorry, the mix between manufacturing and what we call business overhead, where we lump both the sales and application and technical support people, it's totally different. So there's a fairly little of this business overhead in Fiber, whereas there's a lot more in PHS. And with that, of course, you can play with. And that's why we are implementing this business model change. So how we are supporting our customers with this team of not only the technical support people, the application people, the salespeople, but also the support organization that is managing the whole supply chain. Tomi Railo: Yes. Okay. Second question, just starting the fourth quarter, have you seen any kind of a change? Do we continue on a similar kind of situation as in the third quarter kind of up or down or any positives, any negatives, any further negatives or? Petri Castrén: Tomi, you know our practices. We never comment on the ongoing quarters, and you almost always try. Kiira Fröberg: Thank you, Tomi. Let's now then take the next question, please. Operator: The next question comes from Andrew Noël from chemicalESG. Andrew Noël: I've got two. I wanted to ask about PFAS and how you see that market developing. When I talk to some people, they seem to think that when it comes properly, it will come quickly and big, if you see what I mean. So I'm wondering about your investment plans. Say, Helsingborg is sort of EUR 10 million. Are you going to sort of invest heavily ahead of this? Or how do you see that PFAS market growing in terms of timing and whether you're going to sort of scale up, whether you can scale up? And what -- have you done a forecast on what perhaps you may need to invest to stay ahead of the market when it does sort of gather a bit more momentum? That's the first question. And just the second one on valuations in M&A. In some other -- not particularly in water perhaps, but some chemical distributors are talking about valuations coming down. And I just wondered, as owners are a bit worried about the outlook and so on, I just wondered what you are seeing in your particular sector. Antti Salminen: Thanks. So I will take the first question and let Petri comment on the second one. So the PFAS removal market indeed is a really interesting market, which is developing as we speak. And as it's a kind of a new market, there's a lot of unknowns. We have clearly stated that we will be playing in that market and are developing our approach there. It's also interesting from the perspective that there is not one dominant solution that will be used by our customers for removing of PFAS. So it will always be a combination of the good old warhorse, the activated carbon, which is not enough and which will not solve the problem. So other technologies are needed. Some of them are chemicals, some of them are nonchemical. And it's this combination within which we need to find our playing field, so which parts of that we play. And we have clearly started our approach by entering the activated carbon market. So we purchased a small facility in U.K. That's actually kind of we have filled it up very nicely, and it's working well as a first step. We have announced now the investment project in Helsingborg, Sweden for the reactivation. So those are all the small steps that we are taking into the market as it continues to develop. And we are also looking at bigger steps, but that all depends on how the market develops and what we can do there. But we are really kind of determined about that. But then also, as I said, I mean, this will not be enough. So we are working with different external partners and our own research and innovation area to develop new, more specific solutions, which will be complementing then the activated carbon on this fight. So we are serious about the market. Market will grow. And as you said, some are expecting it to explode, some are expecting it to have a kind of a more linear type of growth. Nobody knows today. We are taking our steps according to our strategy. We have, I think, a very clear plan, how do we enter it. And our benefit on that area will be that we are serving already all of these customers with our coagulant and polymer solutions. So basically, we have the supply chains ready and we are there with these customers. So whatever the new prevailing technologies will be, we are in a really good position to globalize them and capitalize on that market presence that we have. Petri Castrén: Andrew, that was a good question to ask Antti. And I think the valuation question is also a fair and good question. I think very few sellers would actually acknowledge that their expectations of multiples are coming down. But when you look at what's going on in the market, there is a number of private equity funds that own assets that they have -- they are holding towards their maturity. So clearly, there is still a discrepancy on valuations and maybe the seller expectations at times are still higher. I think in generally, at least I wouldn't say that they are going up anymore. So clearly, we've sort of maybe moderated from the zero cost financing that was available some couple of years ago in that sense. So perhaps you're right that there is an expectation and realization of some moderation on the valuations. And of course, this would be a development that we would welcome very much because some of the actions -- some of the things we've been sitting on the sidelines because we could not make the ends meet. Kiira Fröberg: Thank you. I think we start to actually run out of time here with our webcast. So we had a couple of questions through the webcast question formula. They were related to the Packaging & Hygiene Solutions profitability improvement program, and I think that they were covered in the other questions. So we don't need to take them now here. But I would like to thank all the participants for the active participation and good questions. And as a reminder, we will report our financial statements bulletin on February 12, and that's already next year, so '26. And I hope to see as many investors as possible on meetings during the next quarter. We will be actively on the road. And of course, have a great day, everyone, as well as a great weekend. Thank you so much. Petri Castrén: Thank you.
Anette Olsen: Good morning, everybody, and welcome to this third quarter 2025 presentation. My name is Anette Olsen. I am the CEO of Bonheur and Fred. Olsen & Co. As usual, today, Richard Olav Aa, our CFO, will start the presentation going through the main figures and then the different CEOs for the individual companies will present to you. And we will take questions and answers at the end. Today, we have Samantha Stimpson with us, the CEO for Fred. Olsen Cruise Lines. So she will also present to you. So welcome. Richard, I give the word to you. Richard Olav Aa: Yes. Thank you, Anette, and also a hearty welcome from me to this third quarter presentation. Before we go into the numbers, I would like to give some reflections on the report. I think the Bonheur Group of companies delivered a solid set of numbers this quarter. But we can also say that there are room for improvements in the numbers. We see cruise lines improving utilization, but still room to grow. We see Windcarrier, vessel at yard also this quarter, and we also see downtime in renewables. So yes, a good set of numbers, but definitely more room to grow the earnings on existing assets. So with that in mind, we can move over to the highlights. And my colleagues will go through the main strategic and operational highlights of the quarter within each company. So I will limit myself to comment on the more financial aspects of the highlights. But starting on renewable energy, reporting an EBITDA slightly below last year, some NOK 40 million plus NOK 40 million down on EBITDA, mainly related to reduced generation and reduced prices of REGO that Sofie will cover in more detail. Things to be aware on the financial side that there will be a grid outage on Midhill now this winter, Midhill being a significant wind farm. So that will impact earnings and EBITDA going forward. And then we'll be notified on another downtime next winter. And these downtimes don't have any automatic compensation and [indiscernible] works heavily on mitigating actions on this downtime, especially the second one, which will come -- Sofie will come back to. But no doubt, if they last as long as they are stated there, they will have impact on the earnings going forward. Wind Service, an EBITDA from -- up from NOK 435 million to NOK 577 million, which is coming off of a good operational quarter, both in FOWIC and also in GWS. I'll come a little bit back to the underlying improvement in Wind Service on the next slide because there are some special items both last year and this year. I'm also happy to see the backlog increasing and 2 new contracts signed, and it's the firm contract that is reflected in the backlog, while the reservation agreement is not reflected in the backlog. Haakon Magne will cover that more in detail. On Cruise, I will leave that to Samantha, but all in all, an improved quarter. EBITDA up with close to NOK 100 million coming off improved occupancy yield and good cost control. Then in the other investments, NHST continued to deliver healthy results and the margin levels are at higher levels than we have seen in this company before. Also under other investments, we had a refinancing of a NOK 700 million green bond this quarter. utilizing a healthy market and also utilizing the Bonheur Group of companies good standing in this market, we were able to place that bond at the lowest spread we have ever seen of 215 basis points above NIBOR. Fred. Olsen 1848 will present later by Per, continuing to progress technologies. And today, we will cover more detail on the floating solar. Moving on to the segment analysis per third quarter '25. We have showed you these graphs a few quarters now. We think they are very good to also focus on how the group develops in the longer term. Maybe not so much reflection on the revenue side this quarter, but on the EBITDA side, where this quarter is another quarter that builds on the momentum we have seen coming out of COVID where we have been able to lift the running EBITDA of the Bonheur Group of companies to a level actually on an average, somewhat north of NOK 3.5 billion on a 12-month rolling basis compared to pre-COVID of around NOK 1.5 billion plus. And we see all 3 segments have significantly better earnings than pre-COVID, especially the Wind Service segment. Yes. Briefly comment on revenue and EBITDA per segment. We have covered the EBITDA already, but there are a few items to note, especially on Wind Service, which I mentioned on the previous slides. We see on Wind Service that the revenues are down by NOK 281 million and that is really related to that in the third quarter last year, we had a big contract with the Shimizu vessel Blue Wind, which contributed by more than NOK 500 million to the revenue. So excluding that and excluding UWL being included in the third quarter '24 and not third quarter '25 as we successfully sold that last quarter. There is a strong underlying revenue improvement in Wind Service. And we can see that more on the EBITDA on Wind Service, which has an improvement of NOK 142 million. I think if you exclude the Shimizu contribution, the one-off we also now have related to the Ocean Wind termination fee and UWL, we see an underlying improvement in EBITDA in Wind Service of more than NOK 200 million year-on-year this quarter. So on back of that, we come out with an EBITDA of NOK 1.117 billion compared to NOK 938 million third quarter last year, which is an improvement of NOK 179 million. And remember that figure when we move now on to the consolidated summary, so we can start with the EBITDA line. And again, the same numbers there, an improvement of NOK 179 million, and I will briefly comment on other P&L items. Balance sheet, I'll cover on the next slide. Depreciation is down by NOK 36 million. That's really related to a one-off and reversal of an impairment in the media company. So the improvement there is a one-off. Net finance. Interest cost at a quite normal level on a net basis this quarter around NOK 70 million. And then we have these unrealized currency and interest rate effects, mainly related to the interest rate swaps in the U.K. that goes up and down each quarter, but I really point out that, that's unrealized. So -- but also an improvement there of NOK 28 million. So earnings before tax is at NOK 680 million, which is an improvement of NOK 242 million. Taxes are up mainly related to better results. So the net result is NOK 561 million, which is an improvement of NOK 210 million. What is worth noting is that a bigger share of this result flows to the shareholders of the parent, the shareholders of Bonheur because more of the results comes from 100% controlled entities. So the NOK 561, NOK 461 flows to the shareholders of the mother company. So actually, we're delivering earnings per share of more than NOK 10 per share this quarter, which is quite strong. Then final slide for me is the group capitalization per third quarter. First to the left, our financial policy that we obviously reiterate every quarter because it's very important to us. And it's also important to check that we are in line with the financial policy, and we can confirm that our numbers are fully in line with the financial policy. Then going through the numbers. And if we start with the table above with 100% owned entities, we see that we now sit with more than NOK 5.3 billion in cash and close to NOK 3.4 billion in debt, and then a net cash position slightly below NOK 2 billion. So a few things to note there is that Wind Service, we have dividended out the proceeds from the successful sale of UWL and also some dividend up from FOWIC up to Bonheur this quarter. So there is a big change in the cash position between Wind Service and Bonheur ASA in the quarter. And that you will also see in the mother company's results, which are attached in the report that the mother company delivered profit close to NOK 900 million this quarter due to the dividends up from Wind Service. Despite that dividend, Wind Service still sits with close to NOK 1 billion in cash and very little debt left on [indiscernible] around NOK 300 million and net cash position of NOK 675 million. Renewable Energy, that is the Scandinavian wind farms plus the development portfolio is debt-free and a small cash position there of NOK 338 million. Point to note, Cruise Lines paid down the final installment on the seller credit on the 2 new vessels this quarter. So Cruise Line have no -- 0 external debt. So a small milestone for Cruise Lines there. And Earnings are improving. So a cash position of NOK 605 million, also Cruise lines is paying down its debt to Bonheur that they took up during COVID. And then finally, Bonheur, with the refinancing of the bond and the dividends out of wind service sits with NOK 3.4 billion in cash and net debt around NOK 3.1 billion and a net cash position of slightly more than NOK 300 million. So a solid position of what we control 100%. If we look below what we don't control 100% on renewable energy, which is really the joint ventures. Debt of NOK 4.3 billion and NOK 767 million in cash on net NOK 554 million. But remember, this we consolidate 100%, so Bonheur is 51% of this net debt position. Wind Service, it's Blue Tern and also GWS, almost now debt-free in combination and other investments also close to debt free. So all in all, a strong balance sheet, fully in line with the financial policy. So with that, back to you, Anne. Anette Olsen: Thank you. First to present today is CEO of Fred Olsen Renewables, Sofie Olsen Jebsen. Sofie Olsen Jebsen: Thank you. This quarter, we saw production lower than the same quarter in '24. There are some reasons for that, the Crystal Rig 1 recovery project, which I've told you about earlier, that has early generation turbines. Also, we have some market reasons at our Swedish wind farm that is ancillary services, low prices and grid export limits in addition to blade issues. We've also seen lower revenues due to lower REGO prices this quarter and REGO's renewable energy guarantees of origin, those are certificates that are issued per megawatt hour produced that can be bought by consumers wanting to offset their carbon emissions. In the last years, we've seen quite high prices on this before they have been decreasing back to the current levels because more renewable energy is coming into the market with subdued demand. Then we also have construction work of our 2 wind farms progressing well this quarter. Our business model, as you have seen before in Fred. Olsen Renewables, outlined on this slide, and there are some changes this quarter that I'm happy to report. If you see under the consented column, we have some projects that have received consent, 2 solar projects, one in the U.K. and one in Italy. In addition, we have received consent for Wind Standard 1 Repower, which is our first repowering project receiving this. And we are advancing and maturing these projects through our normal development process to ensure long-term value creation. Taking a step back and looking at the market, the prices have been steady. We see that there is now lower gas storage levels in the EU, which is a change in regulation there. This means that changes in weather or colder weather for longer times could mean an increase in prices. But what we also do see is that the long-term trends are pointing towards softer prices as there is an expansion of LNG supply. Moving on then to talk about production. The generation was below estimates this quarter. I mentioned the Crystal Rig 1 recovery project with the early generation turbines. This is increasing availability steadily, which is good to see. We've also had the lower production on Högaliden and Fäbodliden in Sweden. That is mainly due to market then shutting down due to low prices and provision of ancillary services, grid export limit and blade issues. In terms of the ancillary services, we have recently entered that market and are offering to turn down production of our wind farms in order to help the system operator, which is [ Svenska Kraftnet ] in this instance to balance the grid. And we see that this provides revenues, and we are offering this service on an hourly and 15-minute basis together with our balancing system provider. The blade issues I commented on the last quarter. We have 3 turbines offline with suspected blade cracks and are working together with the manufacturer to assess and perform necessary repairs. We also see grid outages this quarter. And as mentioned by Richard, we have a planned grid maintenance work at Mid Hill. That has been going on from the 15th of September and will last until May '26. And then we have a further estimated outage of from November '26 to April '27. There is no automatic compensation from the grid owner here. We are working on mitigating actions, especially on shortening the -- trying to shorten the second outage with Technical Solutions there. And I think it is fair to note that this quarter, we actually had more production from Midhill Wind Farm than the previous same quarter the last year. That was because last year, Midhill was out due to a failure at the external Fetteresso substation. That was a highly unusual event. And it is although still quite unusual that we see this length of grid outage that we now are in with Mid Hill and that we also have in front of us. I would like to point out that grid outages are, in general, infrequent. And when they do occur, it's normally due to scheduled maintenance, and it's quite specific for each substation. This outage we are in the middle of now is because of an upgrade of the substation at Mid Hill, which is still quite unusual. And we are notified of all the outages in advance and also monitoring to keep overview ourselves. So moving on then to talk about our construction projects. Crystal Rig IV has good progress this quarter. We have 5 turbines installed, most likely 7 by the end of this week. There has been a delayed transport of components that has postponed the installation start, and that has been due to low capacity on police escort in Scotland. We are taking mitigating actions to this and currently operating with 2 cranes for installing to use all available weather windows. We also saw blade damaged by the storm Amy that was under -- or the blade was under the manufacturer's responsibility, and we are working together with the manufacturer to see how this will might affect us. Then moving on to our second construction project, Windy Standard III, more in the Southwest of Scotland. The project is progressing well as well. We have 2 wind turbines foundations successfully poured. These are gravity-based foundations where you need to pour the concrete and the civil works are progressing according to plan. So that was all for me this quarter. Thank you. Anette Olsen: Thank you, Sofie. Next is Lars Bender, CEO of Fred. Olsen Seawind. Lars Bender: Thank you, Anette. Yes, and I will take you through the highlights for Fred. Olsen Seawind this quarter. First of all, we remain confident in our projects. We have good projects in attractive markets with strong political support, both Codling in Ireland and Muir Mhòr in Scotland are in markets with political support and where offshore wind is a focus area in the energy transition. We still, as I have alluded to before, deploy very diligent development strategies on our projects, which basically means that we have focused on having lean spend profiles. We limit pre-FID commitments, and we focus on progressing the projects and creating incremental value quarter-on-quarter. Then this quarter, we have received a request for further information for Codling in Ireland. This will postpone the expected consent determination, and I'll come back later in the presentation to what this exactly means and also put it into the context of the consenting process in Ireland. Then the fourth bullet, we have secured a landfall area and onshore substation area for the Muir Mhòr floating project. This is naturally a good milestone and good progress for the project. I'll also come a bit back to that later. So as I mentioned before, we are in the consenting process in Ireland with Codling. We submitted our consent application last year, and we have now in this quarter, received a request for further information. That request for information will postpone the expected consent determination. The content of the request for further information is a range of surveys, including offshore surveys, which we have to conduct. Then we have to, on the back of that, analyze the data and then put it into a report, which needs to be submitted to the consenting authorities. It's important to note that other Phase 1 projects have received similar requests for information, and we very much see this request for information as a clear sign from the Irish planning body that they want a diligent and process and very robust consent determinations at the back of that. So we have already started this work and we will naturally continue this at pace. Just to maybe recap the process around consent in Ireland because I think it's important to put this RFI into context. First of all, the RFI was from our perspective, expected. It is quite usual in offshore wind to have a request for further information. And also in Ireland being a new offshore wind regime and a new planning body, it was also expected in that context. As I said before, we submitted our consent application last year. That was then sent into consultation. And now we have received this request for further information from the government. On the back of that, the planning body will make a consent determination, which is basically the planning body's decision on our application. There is no fixed time lines to that, as I've said before on the quarterly presentations. And when the consent determination is issued, there is in Ireland, a risk of judicial review, which basically means that any person or any company can challenge the government's decision. We will not be parties to such challenge, but it is a risk that's sitting on the back. So this process, as I've said before, has some time uncertainty attached to it. But it's important to note a couple of things in that connection. First of all, our development strategy, as I mentioned before, we have been expecting that we had to be flexible in relation to timing. So we have been geared for that. Secondly, on the financial side, we have 100% indexation of our CfD until FID. And then I think thirdly, and that's my third bullet, we are in an environment in Ireland with a government with strong support, which also very much are supporting the build-out of offshore wind and taking measures to support the industry, which, again, of course, gives us confidence in the project. That leads me to the fourth bullet. We are still pushing ahead with the project and preparing all procurement processes and engineering and so forth for the project. So we are ready on the back of the consent determination to move the project forward towards FID. If we then go to Scotland, as I said before, we have secured land for both landfall and onshore substation this quarter. This is something we've been working on for a while. The area where we are connecting in north of Peterhead is a very attractive area for connection, and therefore, it has been important for us to be one of the first projects to secure this area because it is, of course, a very important precondition to develop the project that we have access to land and grid. Secondly, consent is progressing as planned. I said before that we received the onshore consent and we're awaiting offshore consent. When we have the consent, we are basically in a position to bid into a CfD auction. So currently, I would say the pieces of the puzzle, consent, grid, land are falling into place, and that also very much supports the strategy that we have deployed of being one of the first mover projects on floating wind in Scotland, and that continues to be our direction and also what we aim towards. And with those comments, I'll give the word back to you, Anette. Anette Olsen: Thank you. Per Arvid Holth, CEO of Fred. Olsen 1848. Per Arvid Holth: Thank you, Anette. So as mentioned by Richard and not visible on the first slide there, we'll focus on floating solar. And the backdrop for this presentation is that earlier this month, the International Energy Agency updated their annual report on renewables. So we'll allow ourselves to zoom out a bit and go through some of the results. So on this slide, I think we'll jump to the graph on the right side. This is one of the main conclusions to me. This is showing the actual product, the electricity produced until today and expected to be produced from renewable energy sources until 2030. If we look at wind first, then this shows a good momentum both in offshore and onshore wind as well, but it's solar that is sticking out, having started a significant momentum today, and that is expected to continue until 2030. So if we compare the sources a bit here, then more terawatt hours of electricity will be produced from solar than from onshore wind this year already. combined onshore/offshore will be surpassed by solar next year. And in 2028, 1 year earlier than was projected last year, it is expected that more electricity will be produced from solar panels than from hydroelectric plants around the globe. So that is quite significant. I also added the capacity expectations of installed capacity until 2030. And it's a bit more complicated looking at that when it comes to electricity production. But it gives an indication of how much solar needs to be installed to produce the power that is visible to the right there. And it's a significant amount. It's around 3,600 gigawatts, which is expected to be installed until 2030. So in conclusion, by 2030, amongst renewables, solar is expected to become the largest source and it will require a significant amount of panels. So then the question is whether the supply chain can supply those panels. So that is the next slide. And there are 2 things here. One is that the short answer is really yes. The panels -- panel production capacity is there. Already, there has been a significant increase in growth, but the utilization of the production facilities in the supply chain is quite low. And this fierce competition that exists, that has also resulted in a significant drop in prices. So it is -- now the global spot price is down to $0.09 per watt peak, and that is quite affordable. So if you add then that -- when it comes to solar PV, it's usually quite easily installed and it's available and quite affordable, then that is why that growth is picking up as shown in the first slide. But it does require a lot of area. And if we go then to the next slide, where does that leave us, 1848 promoting our floating solar technology, BRIZO. We, of course, see this as very positive. Solar PV is area intensive, and we see that the market for utilizing water surfaces for installing solar PV is growing. So that is positive. But of course, with the amount of solar that is expected, we believe that it's important that there is a high flexibility in the application areas and our technology can facilitate that, either utility scale in hybrid setups with hydro or storage or indirect industrial applications as well. So all in all, these offer a stable and flexible and robust solution, which serve the application areas that we see for floating solar and has a potential for opening up new areas. So that is it. Thank you. Anette Olsen: Next in line is Samantha Stimpson, CEO of Fred. Olsen Cruise Lines. And Samantha, you're joining us on Teams this time. So please go ahead. Samantha Stimpson: Thank you. Good morning. So an update from Cruise Lines. We've seen growth in revenue and EBITDA. This is through improving our occupancy and our yield as well as putting some cost control measures in place. I'll also update you in a bit more detail from customers telling us that they are happier, and that's through measurements of customer surveys, focus groups and the introduction of Net Promoter Scoring. And I'm also pleased to announce that the future bookings performance is good as well. If we move on to the next slide, I'll be able to talk you through some details. So our passenger numbers are up 19% in quarter 3. This is predominantly due to us taking the decision to introduce more shorter duration sailings. This was a decision taken to encourage new to Fred. Olson cruise line customers, introduce them into the business as well as giving our loyal customers more choice to sail with us during the summer months. And I'm pleased to say this has worked. Our occupancy in quarter 3 was up to 81%. And it's easier to achieve that through the warmer months of quarter 2 and quarter 3. So it was a good decision. If we then look at our yield performance, yield has improved by 13%. And this is due to some product mix. Every year, our itineraries and destinations and durations across the fleet change. In addition, we've made some decisions around how we manage our revenue performance pre-cruise and during the cruise. And all of the above initiatives have supported the growth that you can see here with our EBITDA. If I then talk to you about Net Promoter Score, I'm pleased to say this has increased from 68 -- from 63, sorry, to 68. That's a 5-point improvement in Net Promoter Score. We are investing a lot of time to understand where we need to make improvements with our customer satisfaction. And this is to ensure that we are improving retention and satisfaction rates. We're making good progress, and this is something as an organization, we are committed to continue to improve. If we look at the forward sales, during quarter 3, we had our 2027 World Cruise on sale. We had the rest of 2025 to continue to sell, and we had the year of 2026. And I'm pleased to say that a big focus on 2026 has driven the improvement in the forward sales performance that you see here of plus 12%. We understand in the organization the importance of filling our ships, and we understand that one of the best ways of doing this is to ensure that we get guest commitment further in advance. And if we move to my final slide, you'll be able to see during quarter 3, the number of departures that we took for each of the vessels and some of the key destinations that we visited. And what I'd like to highlight is that Norway continues to be a positive performing destination as did the U.K. during the period of quarter 3, and that's predominantly supporting the shorter duration cruises that we've been able to see improvement in occupancy through. And that's it for me. Thank you. Anette Olsen: Thank you, Samantha. Haakon Magne is now standing here to talk about Fred. Olsen Wind here. Haakon Magne Ore: Thank you, and good morning. Very happy that I can start the summary, as I've done the last time by reporting about a very good performance also this quarter. The vessels that has operated has been above 99% utilization, and we are delivering one of the best financial performance in the history. Further on the positive side, we have, during the quarter, signed 2 new installation contracts for installation in '27 and '28, respectively. And on the market, I think we reiterate what we have said for the last year that there is an increasing volatility on demand side, which impacts visibility and some uncertainty towards the end of the decade. If we go down to what the vessel has done during the quarter, Bold Tern that commenced the work offshore under the Saipem drilling campaign. It took almost 5 months to make the vessel ready for operations with all the equipment and is now performing well offshore. Brave Tern went into yard to do the same work as we did on Bold Tern to prepare her for a generic 3 turbine sea fastening setup with 15-megawatt generator. So we can easily switch between the different models. We also had to do some carryover work from our stay in Navantia on the crane upgrade last year. Blue Tern, it completed its second major on campaign with Siemens this quarter and went straight in direct implementation over to a third campaign with Vestas early October. Blue Wind, there, we completed the Hai Long in the quarter. If we then go over to the financials, as I said, good performance and good results. We had one vessel in yard. That's why we only were able to sell 67% of the days. But of the 67 days we were able to sell, we got paid over 99% of it. And that is decent. On the revenue side, we had revenues of around NOK 60 million with an EBITDA of close to NOK 43 million. Just note, I think, as Richard also mentioned, that around 4 of those are related to some -- the last accounting effect of the termination fee of a contract that was terminated in 2024. If we look to the bottom right of the slide, you see the development of annual performance. And year-to-date, we are close to 2024, which was a record year for us. So that is good. If we then go over to the market and the backlog slide. Yes, that appears not to be included in the slide. But I can take it anyway. If you see, I think order intake for the general industry has, to a larger extent than normal been driven by delayed projects and major O&M campaigns that has been triggered by quality issues on some of the turbines. But I think we are then happy to report that this quarter, we actually signed 2 contracts. We signed one contract for installation in 2027, and we signed a preferred supplier agreement for execution on the Gennaker project in 2028. Both contracts are for more than 60 turbines. Our backlog for the quarter stands at NOK 360 million, slightly up from last quarter. But please note that, that does not include the reservation agreement as we do not report that in the backlog to the market. On the market, as I think, we are giving the same measures as we have done now for some time. You see in the medium term, there is very limited vessel availability of the high-spec vessels. So their impact on the demand side could have a quite strong impact on the outcome. The uncertainty and the issues that we see in the offshore wind value chain in general industry, again, that impacts the volatility of demand. And that we continue to see. But given the lead times in our industry, that doesn't impact the next year performance. So it's more impact the end of this decade. But I think this is the pick we have seen for some time. So the trend is the same in this quarter as we have seen before. So I think that concludes my comments. Then I give it back to Anette. Anette Olsen: Yes. Thank you. We will now open up for questions. So please. Operator: [Operator Instructions] We will now take the first question from the line of Daniel Haugland from ABG Sundal Collier. Daniel Vårdal Haugland: Congratulations on great results, even though it's been maybe a little bit difficult quarter for some of the businesses. I think it's still great results. I have 4 questions. I think I'll just do them by segment. So just kind of a simple question on renewable energy. So the grid outage at Midhill, why is that not compensated given that -- yes, it's a grid outage, which seems to be controlled by someone else? Sofie Olsen Jebsen: In general, grid outages are not -- or planned grid outages are not compensated in the industry. Those are due to maintenance. In this case, it's upgrades of the grid. And yes, that's how it is. Daniel Vårdal Haugland: Okay. And then one question on Sea Wind. So the Codling consent, if I heard correctly, that is -- it's postponed a little bit. So I don't know if are you able to give any comments on when a potential FID on that project could happen? Obviously, I'm asking for kind of guidance here, but kind of more like are we now into maybe a '26, '27 decision or maybe even later? Lars Bender: I can, of course, understand the question, but we cannot guide on the FID time line. As I said earlier in the presentation, the process does have uncertainty attached to it, and we are dependent on the government in relation to this. So we are currently awaiting the determination. We are handling this RFI now where we have extensive surveys we have to do. We have to analyze the data. We have to submit it back. They need to issue the determination, which then again has uncertainty around whether it will be subject to a judicial review or not. So for me, to give an indication of FID would be very arbitrary at this point. But it is important to say that we remain confident in the project and the diligent development strategy that we are deploying currently for the project. Daniel Vårdal Haugland: Okay. And then I have one question for Haakon Magne on Wind Service. So just on the demand picture right now, you touched a little bit in on it being volatile. But if I'm kind of just thinking a little bit loudly here, so Ørsted canceled Hornsea, Hornsea 4 earlier this year. We're seeing Vestas and Siemens Gamesa now pausing expansion at some offshore wind factories that they planned. And we also saw Maersk cancel and almost finished WTIB. So other than kind of just the very short to medium term here, how do you see kind of the outlook a little bit more out? Is it possible to give any kind of comments around this? Haakon Magne Ore: Yes, thanks for the question, but I think it's a very hard question to answer. But I think I would like to start, I think that the main drivers behind offshore wind is still there. We see that the government in the key areas that building offshore wind still is supportive for the industry. We still see new countries coming in with plans. But unfortunately I think every industry has a tendency to get some growth. So I think it's very hard for me again to explain when exactly this growth then will come back into the growth trajectory. So I think it's a good question, but I think it's very hard for us to answer. Daniel Vårdal Haugland: Okay. I appreciate you don't have the answer, but do you kind of agree that the, should I say, 2028 to early 2030 picture looks a little bit different now than it did, let's say, 1 year ago or you don't see it that way? Haakon Magne Ore: No, I think we have been quite consistent in our focus on this last year on the quarterly presentations. Daniel Vårdal Haugland: Okay. And then I have a last question, and then I'm going to hand on to the line. I think this maybe will be for Richard. So you now have a lot of cash, and I've been asking almost the same question for a couple of quarters. But given that the outlook for offshore wind might have deteriorated a little bit at least in kind of the period I mentioned. Have you kind of changed any view on, for example, ordering a new wind vessel? Are you kind of able to share any thoughts with shareholders on what to do with the cash? Richard Olav Aa: Thank you for the question, Daniel. I think I'll then just relate to our capital allocation policy that we spent quite a bit of time with the Board to develop during the winter and that we announced in connection with our annual report, where we obviously are very aware of our duties of maximizing shareholder values and balancing what we invest in to secure that they create good value up against distribution to shareholders. So that is our starting point. Having said that, a lot of cash is relative. If we look at the capital intensity of the industries we're in, one single investment can easily relate to several billions of kroner. Just an example as wind farms, not the biggest wind farms in the world, but still sizable wind farms, but NOK 3 billion approximately in gross CapEx just on those 2 wind farms. You also have to put the cash position relatively to the investment sizes we are facing. But again, I'd like to reiterate to all listening to this call to read our capital allocation policy because you'll find very valuable information there about the thinking of the governing bodies of the Bonheur Group of companies. Operator: We will now take the next question from the line of Ral Hardison from Clarksons Securities. Unknown Analyst: Congratulations on a very strong quarter. I want to touch a bit on the Cruise segment. So your occupancy there stood at 81% this quarter, as far as I can see, the strongest on this side of the pandemic, but still a little bit behind what you saw during the strongest quarter before the pandemic, which could reach into the high 80s. So with that in mind, do you think there's still room to lift occupancy further for the cruise segment as bookings seems strong? And do you believe that the high 80s figures that we occasionally saw prior to the pandemic still is attainable for the summer quarters going forward? Anette Olsen: I think Samantha is there, hopefully, to answer your question. Samantha Stimpson: Thanks for the question. Yes, occupancy and retaining the focus on filling the ships is a priority for us within the organization. Definitely continuing to improve the increase as high as we can to the top part of the 80s, as you referenced pre-pandemic is something that we are focused on. Just to also reiterate that part of our focus as well has been to introduce additional sailing volumes. So that's where the passenger growth has come from. We've increased the number of sailings as well as trying to fill the vessels. So sometimes it's not a like-for-like comparable, but it is something that we're focused on finding the balance for sure. Unknown Analyst: And then on, I guess, a continuation of the question that was asked previously, but you are making quite substantial upstream dividends this quarter, freeing up cash to the parent company level. And I'm not going to ask about the return of -- or potential return of capital to shareholders because I think that has already been addressed. But should we view this as a step to increase flexibility and potential reallocation of capital within the group? And of course, I appreciate that you can't give any details there, but any color here is welcome. Richard Olav Aa: I think.. Yes. I think the distribution of dividend up to the parent comes also fully in line with our financial policy. Excess cash should not sit on the balance sheet of the subsidiary. It should be upstreamed to the mother company as then the mother company will have full flexibility in future capital allocation and can also do a better treasury activity than having excess cash spread around in the system. So the upstreaming of the UWL proceeds and the dividends out of FOWIC is just a normal upstreaming according to the capital allocation -- sorry, the treasury and financial policy. So it's nothing more than that. Operator: [Operator Instructions] We will now take the next question from the line of Helene Brondbo from DNB. Helene Brondbo: I have 2 ones on FOWIC. I can just start with sort of -- I just want to understand or maybe if you just could address sort of how are you addressing the situation with the higher uncertainty in FOWIC? How do you approach that when going into tenders, contract negotiations, et cetera? Are you, for instance, doing any planning for maybe taking on longer-term O&M agreements to secure a baseline of utilization? How are you thinking around this? Richard Olav Aa: I think we all think a lot of what we are doing, not necessarily in this situation. But I think it's hard for us, I think also back to Bonheur's general, I think it's very hard for us to comment on what we going forward. Helene Brondbo: Okay. I fully appreciate that. And I also wonder what -- in light of this, what do you see as a general trend in day rates given this market volatility? Richard Olav Aa: I think the market is well functioning, but I think we do not never go into details or into specific day rates neither on what we have or what we are bidding. But in general, we see a healthy market. Helene Brondbo: So you would say that day rates in the market are keeping up with levels seen before? Richard Olav Aa: I'm not saying anything. I'm saying that I think we do not comment specifically on day rates. You are saying that, but I'm not saying that. Operator: Thank you. There are no further questions at this time. I would like to hand back over to the speakers for closing remarks. Anette Olsen: Okay. Thank you very much, everybody, for joining us today, and have a nice weekend.
Line Dovarn: Good morning, and welcome to Munters' Q3 presentation for 2025. My name is Line Dovarn, and I'm Head of Investor Relations, joined here with -- by Klas Forsstrom, our CEO; and Katharina Fischer, our CFO. We will begin with a presentation of today's results, and we will then kick off the Q&A session. So if you do have questions from the webcast, you can post these questions throughout the presentation by using the chat function below, and we will address them at the end. So Klas, let's go. Klas Forsström: Thank you, Line. And once again, good morning, and very much welcome to this Q3 report. Let me start, as always, to give you some summarizing a few words of the quarter that has passed. A very strong order intake and invoicing complemented with robust profitability in an operating working capital development that pleases me very much. Data center technology in FoodTech, very well positioned for continued strong growth in the years to come. That thanks to the strategic decisions we made and the execution on those decisions. We see solid underlying demand drivers of both business areas, data center demand and the digitization of the food supply chain and our offer is very well fit to capture this growth. AirTech in general is meeting a continued tough battery market and a generally tight industrial investment climate in U.S. and EMEA. To offset these headwinds, we are resetting AirTech to be better fit for the future. They will be well positioned to capture growth when the demand returns with modern factories, continuous sharper R&D and a clearer commercial drive across several sectors. Yet Munters are creating a business with several legs to stand on in a world of continued tariffs, geopolitical tensions and general unpredictability , so this makes us well equipped for continued growth and market share gains. So over to the quarter then that has passed. Strong growth and solid profitability. That is what I think is the headline of the quarter. And drilling into the different components of this. Order intake a 57% increase. If I deduct the currency, it is 70% growth in comparable currency. AirTech showing growth, positive development in APAC and to some extent in Americas when it comes to order, Data Center Technologies increased, continued strong demand in Americas. And as you later will see also margin improvements and market gains in Asia as well. FoodTech, increased as well, solid demand in Americas, EMEA. Toward the backlog, 2% smaller backlog, but compensated to currency actually adjust 4% up. This has mainly been driven by Data Center Technologies. And the orders we receive now that brings us into 2026 and 2027, a pleasing book-to-bill of 1.1. Moving over then to net sales, 17% up, 9% currency, so that would end up in 20% in comparable currencies. AirTech, here, it declined, lower sales across all regions. Data Center Technologies, continued increase, successful execution on the backlog and also FoodTech increased and were driven mainly by controllers in this quarter. Very pleasing to see controllers, an area that we have allocated a lot of more resources into. Solid profitability, as I said. EBITDA margin of 13.5%, driven by DCT, the volume growth, production efficiency, still pleasing product mix and continuous lean improvements. FoodTech, strong contribution, although impacted by continued investments and to some extent, the product mix, as we all know, I mean, a software product has a higher margin than a controller, even if controllers is also on a good level. AirTech, impacted by lower volumes, unfavorable product and regional mix as well as uneven capacity utilization. This has been, to some extent, offset by cost and efficiency initiatives. And in the quarter, we had currency headwinds and more specifically, tariff impacts in DCT, and this I will come back to later on. A fair description of how the world looks like right now, variations in between regions and end markets. Americas represents close to 70% of our total order intake. EMEA about 20%; and APAC, 12%. If I divide it in between the different business areas, you can see that DCT, if I start with that, is -- continues to be dominated by the U.S. market, but very pleasing to see that we have started to make inroads into Asia already now. And when it comes to EMEA or Europe, I would say it is not us. It is the European weaker market that is holding our growth in Europe back. AirTech then more even balanced, 44% in AirTech in Americas and about 1/3 in EMEA and about 1/4, 25% in APAC then. And FoodTech then very much American and EMEA focused. Drilling down in Americas, AirTech the market remains soft, pockets though of growth. DCT continued to rapidly expand, led by hyperscaler investments and a drive across the full sector, to some extent definitely AI-driven. FoodTech, a growing market. Yes, avian flu, bird flu is controlled, but a pickup will take, as always, after that type of outbreak, some time to recover. EMEA, a mixed market sentiment across the sectors, competitive price environment when it comes to AirTech. As I alluded to earlier, DCT, slower markets with signs of picking up, focusing on energy efficiency, and that is good for us because we have the most energy-efficient solution there is in the data center market. And FoodTech positive market outlook, driven by increased regulation and push for better practices in this sector. APAC, signs of improvements in China, though continued high competition, Southeast Asia and India also showing growth as markets. Very pleasing to see that we are making inroads into Asia with data center. That is according to the plan, but it's always good to see that you're executing on the plan as well then. And FoodTech, China is not the focus market, but still, we are making inroads into China and Southeast Asia. Moving over to AirTech then. All in all, a stable growth situation in a challenging environment. You've heard me say many times that I have predicted that the battery segment would be in between 10% to 20% in the coming quarters. Now we were at the low end of 10%, and I will come back with some outlooks on the battery and what is happening there later on. Besides that then, about 50% of AirTech's markets do have a slight positive outlook moving forward. So you can see the blue arrows then in about 50% of the total market of what we have today, that is slightly positive. The order backlog decreased, highlighting here that is clean technology generated good growth in the volatile organic compound area, and that has been supported with good execution of the acquisitions we have done. And then in other areas, as I said earlier, that remained at the flat level in all regions, but not at a lower level. This is one of my favorite pictures. And you can have different views on this. If I take it on the long term, I would say that it's a fairly flat, solid demand across the segments. If I go into a couple of other inroads here, one inroad that as you can see, if you compare quarters to quarters, i.e., quarter 3 over the years, I see a small uptick in each and every quarter, and this is a currency adjusted graph then. And then if you see then last year compared to this year, I will also say, in general, a slight up pick on the total of the year, so to speak. But if I summarize this then, battery is still being in this 10% to 20%. Clean Technology continued to slowly increase, creating another leg to stand on and the other industrial, fairly stable, but a weaker investment climate in Americas. And that, I think, is something that you've heard from all industrial companies that it's a damp industrial economy in Americas at current. Moving over to sales then, lower volumes and profitability. I'm not pleased with the profitability that we generated. It has been affected with some not strong enough execution on move of factories and how we have been able to work with our internal areas. I'm not worried about this. I mean I look upon this as a quarter or 1.5 quarters delay on certain of that, but I'm not really pleased with this. The other side of the coin, that is that it is also a continued weak market as such. I would have anticipated that we would have seen somewhat of an uptick then. And all of this is also leading into that we then, as I will talk about later, are increasing our traction on how to reset AirTech for the future. Also very important, something that makes me very proud. That is, how do we drive investments then. Investment -- or should I say, innovation. Innovation can be driven by that we only innovate internally. For me, innovation is more and more about collaboration, collaborative work. This can be done with academia. This can be done with companies. This can be done by co-investing in certain areas. And here, you see a couple of examples where we have, over the last couple of years, made minority investments in different companies to fuel our innovation. Some highlights, ZutaCore, DCT being very, very close to the ship and how to handle that. AgriWebb and Farmsee FoodTech, when it comes to how to drive digitalization and software in different areas. And Capsol, the latest then addition, where we started to invest a little bit more than a year ago, and we have now invested even more. And now we talk about carbon capture and moving forward in clean technology. For me, this shows that we can co-innovate with others not only inside our own house, so to speak. Coming back then to AirTech. We have come to the conclusion, and this is something that is needed to be done that we need to reset AirTech. That means that we will intensify our cost out and how we work with AirTech. The market demand is lower than expected, and I foresee that it will continue to be flattish, especially when it comes to batteries moving forward. So we need to reset AirTech, position AirTech to the right level at current, but continue to keep it ready for a strong recovery when the market returns. What are we doing then here? We adjust on investments. We drive footprint optimizations. We are more selective on where should we then fuel certain investments. We are optimizing the workforce. We are balancing capacity while safeguarding core competencies. And all in all, we expect here to have an impact of some 200 positions globally. We drive increased efficiency. And you may say, I mean, okay, you don't have enough load in the factory, but you continue to drive efficiency. Yes, that is the never-ending story you have to do because when the market returns, you have an even more modern, even more efficient factory layout that can then have a very, very positive drop through on the way down. And we're on top of that also driving our commercial activities to reach out in wider sectors. All in all then, this will generate a net cost saving of about SEK 250 million to SEK 300 million at the end of 2026. It will generate a restructuring charge of about SEK 150 million, the majority taken in Q4 this year and some of it taken in Q1 next year. This is on top of the previously announced cost savings that are delivering according to plan. It is about resetting and be fit for the future when it comes to AirTech. What about battery? As you saw today, we announced a battery order. And I think this is really telling the story about battery sector. First of all, there is a battery sector. It is not dead, but it's a sector where decision processes are taking much longer time. I can take this as an example. This project that we then recently received, we have been discussing, working, talking about this for about a year. And then they put the thumb on the green button, so to speak, and they released it. I think that tells the story about the battery sector right now. We are working with 3, 4 different projects of some 100 million sizes moving forward. But what is clear, what earlier took perhaps half a year to decide, in current capital squeezed market, especially in the automotive sector, that can take up to a year, sometimes even longer. My other point here, that is, we have the best products in the marketplace. Here, we talk about, I mean, you that are nerds, into dehumidification then a minus 78 degrees Celsius. That means that we can extract humidity at a very, very low temperature, a high-performing type of product. All in all, this generated a USD 30 million towards a U.S. battery cell manufacturer and the planned deliveries for mid and end of 2026. Moving over to another reality. I'm so pleased to see that our strategic initiatives, our execution of those, are delivering order intake where it should be. So an order intake that generated a book-to-bill of close to 1.4 in the quarter, orders that we delivered into 2026 -- during 2026 and into 2027. We received it across the full product portfolio. And I think this is something that's extremely important. We have widened our assortment. And even if I'm a little bit biased, I still say we have the widest and in my book, the most competitive product offering in the cooling market of data centers. EMEA did grow, especially driven by CRAHs and service offer. APAC started to show good growth as well. So all in all, when it comes to orders, I'm very pleased. And I'm also looking forward, I'm very optimistic for the underlying market. But as always, some quarters are very, very high in orders and others could be lower. But with that said, I'm continuous very optimistic moving forward. If we move over to the other side then, net sales increased, successful delivery on the backlog, SyCool and CDUs, CRAHs the full assortment something to highlight. This is the last quarter with SyCool, so that will generate some product mix changes moving forward. We generated an adjusted EBITDA margin that continued to be strong. We had some tariff headwinds of 2 percentage units in the quarter. And here, I can say, I'm not happy to have this but I'm not too disappointed either because what we have, that is the most innovative and efficient chiller product in the market. And at current, we cannot produce that in U.S. We are building up capacity here. And I'm happy that we take and receive orders, so this tariff headwinds, I'm willing to eat, and I know that also data center because we gain market share moving forward. So all in all, we invest in strategic growth initiatives. We had solid volume growth in the quarter and also high production utilization. So a very strong quarter in all aspects in data center this quarter. And here, you can see that we are filling up, and this is just examples of publicized orders and other orders of significant size that and how they are delivered moving forward. In summary, you can say the majority of the orders we receive now that is for 2026 and 2027. Now I have to balance here in between trying to explain this is in as simple words as possible. And at the same time, when I return back to the Munters headquarter also get good enough grades from my experts then saying that I was not shortcutting this too much. But if I try to balance that then, liquid cooling is about the full scheme. It is the large loop, and liquid cooling is about dissipation, capture, transfer and release. You can say in simple terms that this consists of 2 different loops. One loop that is in the dissipation that is close to the chip, very, very close to the heat source, that is one loop then. And then you have the larger loop, the loop where we are the market leader in. That is the capture, transfer and release loop then. Let's call one technology loop and let's call one facility rejection loop. And the thing here that is we have all the products in the facility loop and we have the products that creates this plug and play in between. It is the connection in between the CDU and the LCDs that created this link. So I think what we should remember that is when we talk about liquid cooling, it is 2 loops. And those loops are connected, and they work together. And we have solutions to whatever is happening in the technology loop, we can attach and we can capture, reject and transfer it out. And then on top of that, we are also collaborating with the key players in the dissipation area. So I'm super excited about the different technologies that are here, and I'm super proud of what we have delivered when it comes to innovation and collaboration in this area. On another side then, but I'm also very, very happy about that is, I think that we have started to be the trend finder. I think we have started to be the trend setter. I think we have started to be the trend innovator. And what do I mean with that then? Let me give you a couple of examples. We brought to the market SyCool split, the first and very energy-efficient type of non-water coolant solution. We brought new CDUs of never before seen efficiency to the market. And we decided that either we develop the best chillers in the market, or we acquire the company that provides the best chillers in the market, and we decided to do the second. So we acquired Geoclima. We spotted the trends on where they were going, we developed that, and we brought it to the market. And I can tell you that customers are really saying that we are leading the innovation and technology game here. So that brings me to another trend, a trend that is emerging. I call it modularity in a different way. You have heard me talk about modularity many times. Then we talk about components that can be used in different type of products, and that drives efficiency internally. But when it comes to data center, it's another type of modularity. Look upon this as a little bit of Lego blocks that you put together subsystems and then you can build those subsystems. You can have 1, 2 or many together then. This is a trend that will complement other trends. And I can just tell you that we are also trend setters, trend spotters and working actively with the ones that are driving those trends in the market. So once again, I think we are ahead of the curve in this area as well, super excited about this. If I then go into another area, FoodTech. Here, I think we have something that we can really be proud of. We have made a transition of FoodTech from a more classic old equipment driven company to be now a fully-fledged digital and software company. Many, many companies are talking about this change. Here, we have done this. And this is just in the beginning of what this can deliver. So when it comes to order intake, it increased. Software is growing. Controllers, the new acquisitions and what we had inside our own house are generating good order intake. Synergies is worked in between the old controller companies and the new controller companies. And the order backlog increased in a good way. When it comes to ARR, we are continuing to increase in between 20% to 40% quarter-by-quarter. Here, we have decided to show this in U.S. dollar to take away the currency effect because now we have definitely currency headwind. But here, you can see more volume-driven type of increases and apples-to-apples. Super excited about this, and we are just in the beginning of this trend shift then. So what about artificial intelligence? Artificial intelligence are driving data center growth, yes. But what can a company get out of artificial intelligence using it. Let me introduce to our recently new employers. One, Calvin that are driving internal efficiency and one, Clarity that is driving how to work with our customers. Calvin, that is how do we program in a better way? How do we automate? How are we doing code reviews? How are we becoming faster and more efficient in developing software? And I'm amazed to see how much efficiency, how much innovation can be driven by this new employer, asked them. Controllers, the other area, not software. Here, we have Clarity. An agent that is a virtual assistant that is driving training for us, that is driving training for customers, that are generating customer support online and so on. And look upon those, yes, it is perhaps not tens of thousands of customers, but for Munters and FoodTech, there is an increasingly large amount of the users that we have. 1,300 users have joined Munters Academy. We have more than -- close to 200 training videos. We received more than 3,000 inquiries that was answered by Clarity, and we support 20 languages with our new digital-driven agent and Clarity. So 2 examples of what we do with artificial intelligence to drive efficiency and customer satisfaction. With that, I hand it over to you, Katharina, and please take us through the numbers. Katharina Fischer: Yes. Thank you, Klas. I'm pleased to talk about the continued strong performance for the group. In the third quarter, organic growth contributed with 56% to order intake and 15% to net sales. This was complemented by nonorganic growth of 14% and 11%, respectively. At the same time, we continued to experience negative currency effects of minus 39%. Worth highlighting is also the order backlog, that currency adjusted developed well and then increased about 4% in the quarter. The adjusted EBITA margin remained solid at 13.5%, although lower than prior year's exceptionally high level. Here, data center and FoodTech continued to deliver very strong margins, so really demonstrating operational discipline across the business. As you heard Klas say, the margin in AirTech declined, both compared to prior year and also versus -- slightly versus prior quarter. And this was due to lower volume, unfavorable product and regional mix and then also continued dual site costs for the transition into the new factory in Amesbury, which has taken longer than anticipated and is expected to be fully operational by the end of the year. A key achievement in the quarter was the continued improvement in operating working capital. Here, we have reduced to now 8.3% of net sales. which is well below our target range of 13% to 10%. So this is a clear result of very disciplined work across the organization. Our net debt increased, and this is mainly reflecting then the acquisitions made, debt finance acquisitions and also the higher lease liabilities due to the new facility in Amesbury. Looking at the margin development then. As mentioned, the margin remains solid then at the 13.5%, even though it was lower compared to the high -- tough comparison last year. The different factors then, volume growth for data center and FoodTech had a positive impact on the margin. And for AirTech, it was a negative impact from volume, obviously then. I'm pleased to see that we continue to drive positive net price increases, mainly in data center and FoodTech. We also saw a negative mix impact, both for AirTech due to the higher mix from APAC and also product mix, regional mix from FoodTech. Also then, as Klas has highlighted, we had negative impacts from tariffs in DCT with 2 percentage points, and this is something that we anticipate to remain until the U.S. production of US chillers is up and running then in the U.S. On the operational side, the under-absorption in AirTech weighted on the margin, although there was a positive offset from the high factory utilization in data center. And then it's worth mentioning also that all business areas continue to drive very strong efficiency improvements. We also continue to invest in our strategic initiatives, as we have mentioned in prior quarters, and this has to do with building digital capabilities, system support and further strengthening our footprint across the globe then. And then finally, the currency had a negative impact for this quarterly result. Turning to cash flow then. If we look at the main cash flow movements, cash flow was strong for the first 9 months, although slightly lower than prior year, and this was due to lower -- slightly lower operating earnings and also a less favorable development in working capital. If we look at the individual business areas, data center continued to deliver very solid cash flow, supported by customer advances and strong profitability. And in AirTech, there was a negative cash flow then due to the weakness in the battery market and also the continued under-absorption. If we look at cash flow from investments, you see that the main part there is that we, earlier this year, bought the remaining shares in the software company, MTech, and also the continued investments in the manufacturing footprint and mainly in Amesbury. Also, this slide is showing the continuing operations. If you look at the discontinuing operations, you will also see the SEK 1 billion that we received for the divestment of the FoodTech equipment business earlier this year. And we, of course, continue to maintain a very strong focus on cash management, and I'm very pleased to see the positive effects of all the efforts that we have ongoing to increase operational efficiency and also the capital discipline across the group. Looking at investments then. We maintain a highly disciplined approach to the capital allocation. We focus our investments in the areas that generates the strongest long-term growth and also supports profitable, sustainable growth. In the third quarter, the ratio CapEx to net sales was 3.9%. And if you look 12 months rolling, it was 6.7%, so although the quarterly level was a little bit lower in Q3, in the near term, we expect it to be somewhat elevated above the historical levels, as we continue to invest in automization and innovation and digital capabilities. And an example of this, of course, in the coming quarters, is the ongoing expansion of the Virginia site for data center, where we are setting up chiller production then in the U.S. and also investing in a new test lab. And these investments, of course, strengthen our technological capabilities and also the regional manufacturing footprint. So we are very well positioned then to remain and be able to capture future growth in this area for Americas. Looking at leverage. The leverage ratio was 2.8, which is then unchanged compared to the second quarter. if you compare to Q3 last year, it's somewhat elevated then, and this is due to the acquisitions made recently, and then also the increased liability for Amesbury. And in the coming quarters, I want to highlight that we will be paying some holdbacks relating to some acquisitions made recently, including Geoclima and MTech. And we maintain our ambition to keep leverage within 1.5 and 2.5%. And we are comfortable staying above this level temporarily since this is due to the strategic investments that are so important for us to really further develop our competitive position and support our long-term growth. I also want to mention that we, in the third quarter, issued our second green bond, so now we have more access to the credit market, and we have been able then to diversify our funding beyond the bank, traditional bank loans. Moving to service then. So expanding service is, of course, a key priority across all our business areas. And in the quarter, we had an organic growth of 6% for service. And of course, here, we want to keep our systems running for our customers in a very efficient and sustainable way through the whole life cycle. But of course, also for Munters, it creates stable and recurring earnings base for us. So that is also important. And service is defined as aftermarket service across the business areas and then also the software revenue for FoodTech. Components has also developed well in the quarter. And this is, as you know, sold mainly within AirTech. So here, we have dehumidification rotors and evaporative pads as growth drivers. And the group's ambition for service and components is to be above 1/3 of group net sales. And in the quarter, we were at 24%. And also if you look 12 months rolling, it was on 24%. And then if we look to the individual business areas, you can see that both AirTech and data center increased their service shares. So AirTech is at 22% and data center at 5%. FoodTech here has 21%, which is a decline compared to last year, but that has to do with this year, we have a higher mix of controller sales and they don't have as much service. So going forward, we will continue, of course, to build on our growing installed base and continue to invest in smarter and more connected and even more energy-efficient products that creates value for our customers and make our products even more reliable. And then looking at our sustainability initiatives here. So here, we continue to make very meaningful progress. Circularity is something that is part of our daily operations. And one example of this is the circularity program that we have been running them with Combient Pure. So this is about how we can increase circularity within AirTech with regards to their processes and products. So it's about designing for reuse, recycling and do it more efficiently. And here, we have identified opportunities for even higher materiality circularity with 15% and there is also a possibility then to further reduce Scope 3 emission by developing our service offering more broadly. Just recently, we also announced a very interesting collaboration around innovation. So here, the residues from our rotor production will be reused for plasterboard manufacturing. So this is a really innovative initiative where we will turn waste into new material and really strengthen our regional circular value chain. So I think 2 really good examples within circularity. And of course, this is a continued focus for the group. We will further expand this across the organization, and we will also deepen the supplier engagement further going forward. With that, I would like to thank you and hand it back to you, Klas. Klas Forsström: Thank you very much, Katharina, and let me then start to summarize the quarter before we move into Q&A then. How are we performing towards our overall financial targets? The numbers that is in the quarter. So currency adjusted growth, 26%, adjusted EBITA, 13.5% and operating working capital, 8.3%. So operating working capital ahead or below in positive terms of the target. Adjusted EBITDA a little bit shy of the set target and adjusted currency growth then ahead of the target. And I think this is very much the pattern that we've had the last -- very often, we have 2 out of 3 then beating or be very close to it. So all in all, we continue to progress towards those targets. If I summarize the quarter, strong performance driven by growth in key industries, predominantly data center and FoodTech. DCT, maintaining a strong momentum, and I said it in the past, and I say even stronger now, I am very confident for the future. We are delivering the right products to the right customers and expanding it to more than just one region. FoodTech advancing on the fully digital business, something that I think has not really brought full attention with one exception. Our customers are very, very interested in this. And then AirTech navigating short-term challenges, building a long-term strength, as I said, resetting it to current circumstances, but then also be fit for the future with very efficient factories, continued strong innovation and an even more focused sales force that's spread out not only in certain categories, but across the different industrial segments. So with that, let's go over to Q&A. Line Dovarn: Absolutely. Thank you, Klas, and Katharina now. So we are now ready for Q&A session. [Operator Instructions]. Operator: [Operator Instructions] The next question comes from Joen Sundmark from SEB. Joen Sundmark: Congrats on a very nice order intake in data centers. If we start with the margin there, you talked about tariffs impacting margins of some 2 percentage points in data centers. Do you sort of expect to get those 2 percentage points back once you have the new factory in the U.S. up and running? Or will sort of change mix offset that improvement once we are there? Klas Forsström: Thank you for the question. So if I divide it into 2 sides then on this coin, as you have heard me say several times, Joen, that is then, yes, we will have a gradual change in the mix, and that will start to intensify next quarter. And then later on then, when we have moved up chiller production and moved it in to be closer to the market, I mean, the mix will start to change back again, the normal pattern. The more we produce, the better it will become, so to speak. So that is the mix movement, so to speak, and that is according to what we have said for several quarters then. When it comes to the tariffs then and here, we look upon it like this. We have a fantastic product that we know that we will start to produce in U.S. first quarter next year. This product is very sought after. So when we sell it, at current, we will send it over from Europe to U.S. That's the reason why we have the tariffs impact this quarter. And I can say like this, if we need to take some more tariffs, i.e., if we sell more, I'm happy to take that for a short time period because that generates market share. When we have the production up and running, I mean then the tariffs are gone and at the same time, they have also become much, much better in producing those chillers. So you can say we balance it out over the long run. Joen Sundmark: Okay. Very clear. Then as you're talking about more measures taken in AirTech, when you sort of look into 2026 and your ability to reach this 13% to 16% margin range. How confident would you say that you are to reach those levels having both cost measures in mind, but then also combined with the current lower demand situation overall? Klas Forsström: Also a good question. I mean, the reason why we are driving those cost measures that is, as I said in the beginning, it was a weaker market than we foresee in the beginning of the year. At current, we say that the battery sector will continue to be subdued during the majority of 2026. But with that, and on and off, we may pick up orders, but it will continue to be in the range of 10% to 20% of the total order intake. So that is one thing then. So then we are resetting the organization to be handling that level. What we need to have in order to come up to the numbers that would please me, the 13% to 16%, of course, that is also more volumes. And that is the reason why we are resetting now and with modernization of the factories that we've done and continued efficiency then we will gradually start to move towards that target. But as I said in earlier statements, I think that we now have a prolonged period of somewhat weaker margins then, and that's the reason for the program. Line Dovarn: We'll take another question from the telephone conference. Operator: The next question comes from Adela Dashian from Jefferies. Adela Dashian: Klas, it'd be difficult to limit myself to just 2 questions after today, but I'll try my best. Just firstly, on the book-to-bill in DCT, you did promise a ratio above 1 last quarter, and you did deliver that today. So congratulations to you and Stefan and the rest of the team. Should we expect some quarterly volatility going forward? Or are you interpreting this as a new norm given the very strong market drivers that you're seeing in the market? Klas Forsström: Adela, thank you for the congrats, and thank you for the question and this is the silver bullet question, I think. My best way to phrase it, that is like this. I see a very strong market that continues for years. I see us having a very, very strong product offer. And then I see customers that sometimes are putting many orders, sometimes are waiting for a longer period. With all that said, I think that we have a strong market, a strong offer and a great team, so I'm optimistic for the future. If I would say a certain level, the only thing I can guarantee that is that I would be wrong. But I'm very positive moving forward. But to predict, I mean, what will come in orders in a quarter, then I should buy me a lotto ticket at the same time then, but I'm positive. Adela Dashian: Well, this quarter, you were right, so and for my second... Klas Forsström: And I bought the ticket. Adela Dashian: For my second question, I'm going to just try to push 2 into 2 and be a bit broader here. On the order book composition in DCT, I believe so far, the majority of the orders have still been for the traditional air cooling. But you do mention some CDU orders here, and I also noticed that the share of indoor units is increasing. So are you entering now a phase where liquid cooling solutions are starting to gain real traction? And then on the, I guess, flip side, SyCool is now diminishing as a share, but we did hear one of your paper partners announce an integrated platform for waterless direct-to-chip, so could this potentially reinstate the interest in refrigerant-based systems? Klas Forsström: I try to answer this expanded question with one answer as well. The first one, that is that we have now, in my book, the widest product offer when it comes to different cooling solution there is. And we have also, and here I'm biased, I know, but I say it anyhow, the most energy efficient and modern assortment. Our vitality Index for the group is about 40, i.e. of what we are selling, what is -- 40% has an age of less than 5 and in data center, much higher than that. Yes, you're right. We are shifting more and more to what we call them the liquid cooling universe. And here, we have really targeted right type of products. We have 2 different, call it, shifts when it comes to portfolio. One shift is towards the CRAHs that have a weaker profitability. And then we have the CDUs and we have the chillers that have higher than the average of what we have done. We are shifting out the SyCool that had the highest. And then to just complicate this, short term on the chillers, everything we sell into U.S. at current, we have a tariff then surcharge, but that will, of course, disappear. So if I shorten this up, we will have a headwind when it comes to mix on the quarters to come, but that will then gradually turn around when tariffs and more and more production of chillers, et cetera, are driving through efficiencies. So a little bit tougher moving forward, and then it will lease up. That is what I predict. Adela Dashian: Could you just expand a bit about the SyCool and what the trends that you're seeing and... Klas Forsström: Absolutely. Here, super excited. I think that we will have opportunities here. But as always, when it comes to this cooling very close to the chip, I mean, the euro is still there, but I'm optimistic for that. I don't see that we will generate short-term billion Swedish krona orders on it, but I'm definitely, call it, looking forward to see orders coming in, in that area. And here, we are unique. Line Dovarn: Let's take another question from the telephone conference. Operator: The next question comes from [ Karl Degenberg ] from DNB Carnegie. Unknown Analyst: So 2 questions from my side. And first of all, on the backlog of SEK 6.6 billion DCT, I just wanted to hear, could you give any sort of quantification of how much of that is for delivery in '26? And a related question to that as well is on invoicing capacity in DCT, I think we had that discussion on the last quarter results again. And that's around, I think you've been at around 1.5% in the revenues in DCT now for roughly 3 quarters. And I just wanted to understand, given the capacity that you're adding and so forth, for '26, '27, what kind of quarterly run rate could you achieve given the capacity additions? Klas Forsström: If I generalize, you can say, with current footprint in DCT with one exception that I will come back to then, we could definitely without -- if we add shifts, if we tighten the chip to some extent, we could easily deliver 30% more deliveries out of our factories. And then we have one exception, and that is now we are definitely, we cannot deliver much more when it comes to chillers short term from our European setup to U.S. But as soon as we have that up and running, I mean, we will have close to double capacity of chillers also in U.S. And then, of course, we don't have to pay the tariffs on that, so to speak. So we have plenty of room to grow. But in one area, we are short term, a little bit squeezed, but that is according to plan. Unknown Analyst: Yes, yes, very well. And then I'll maybe take my follow-up on the same topic. I mean I guess the chiller exposure came predominantly from the acquisition of Geoclima, correct me if I'm wrong. And given that you -- I mean remembering when you bought that business, it was obviously quite an addition for the division but given that it has a 2 percentage point impact now on the imports on the margins, it sounds like the growth has been very, very significant since you acquired the entity. So could you say anything, what's the share now? And maybe if you look at your own portfolio, let's say, transformation away from SyCool and so forth, what do you expect the mix to be, let's say, '26, '27 without giving any absolute forecast? Klas Forsström: No. What I can say that is -- and now I don't have that picture in front of me, but you see the graph there on one of the slides where we have the different components and how that is spread. There you can have some indications. But if I'm a little bit more straightforward, I'm super pleased with acquisitions of Geoclima. I mean it is the world's best chiller, and we have a very strong sales force. So in my book, we have achieved or we have overdelivered on what the chiller sales could generate here. And then according to the plan that we deliver on then to add this into the U.S. setup and then we have an in the region, in the market for the market. And suddenly, we also get rid of this volatility when it comes to tariffs then. And here, I just want to underscore, you can never be happy to pay tariffs. But if I have to choose in between having no chillers, and paying tariffs, I'm happy to pay tariffs because we have the world's best chiller in the market. Line Dovarn: Sorry, we need to break that, we are running out of time. Thank you very much for that. We do have more callers on the line, but we will reach out to you separately. We also have received some questions here. And I will just finish off with one last question for you, Klas, that you can answer quickly, if you can. Klas Forsström: I will try. Line Dovarn: What is Munters' biggest challenges going forward, Q4 and further on, 2026 to 2030? Klas Forsström: That was a broad-based question. I think that -- and I don't call this a challenge that is we should continue to be on the toes when it comes to drive innovation, when it comes to be very, very close to the customers. And then we need to get best use of our decentralized setup. We have 2 skyrocketing divisions at current and one that has tougher. And that is in the decentralized way. I mean then we handle the opportunities when we are skyrocketing, and we handle the challenges when we have tougher and that is what I think we will continue to work with. Line Dovarn: Great. Thank you very much. Thank you, Klas and Katharina, for presenting. Thank you, everyone, for listening in. And we will, as I said, reach out to those of you that we did not have time to talk to. With that, thank you and wish you a nice weekend. Klas Forsström: Thank you. Katharina Fischer: Thank you.
Operator: Greetings, and welcome to the Boston Beer Company Third Quarter 2025 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Mike Andrews, Associate General Counsel and Corporate Secretary. Thank you, Mr. Andrews. Please go ahead. Michael Andrews: Thank you. Good afternoon, and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of The Boston Beer Company. I'm pleased to kick off our 2025 third quarter earnings call. Joining the call from Boston Beer are Jim Koch, Founder, CEO and Chairman; and Diego Reynoso, our CFO. Before we discuss our business, I'll start with our disclaimer. As we stated in our earnings release, some of the information we discuss and that may come up on this call reflect the company's or management's expectations or predictions of the future. Such predictions are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-Q and 10-K. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. I will now pass it over to Jim for some introductory comments. C. Koch: Thanks, Mike. I'll begin my remarks this afternoon with an overview of our strategy, operating results and brand updates and then turn the call over to Diego, who will focus on our supply chain and the financial details of our third quarter results, as well as our updated financial outlook for 2025. Immediately, following Diego's comments, we'll open the line for questions. I would like to start by thanking Michael Spillane for his service as CEO and for continuing to provide counsel to me as a member of our Board of Directors. While I've now stepped back into the CEO role, our company priorities remain unchanged. They continue to be innovation, supporting our full portfolio of brands with advertising investment and focused execution and driving margin improvement. I'll personally be particularly focused on our high-impact areas, including our innovation pipeline and ensuring that we are appropriately investing in our brands through both advertising and local end market execution. We've made strong progress on our margin improvement initiatives and to help continue those efforts, Phil Hodges has been named Chief Operating Officer. Phil has 30 years of operations experience in consumer packaged goods at Carlsberg, Mondelez and Kraft Foods, and he has led our supply chain efforts for the last 3 years. His team has delivered strong efficiency improvements in our breweries, which have positively impacted our gross margins. In his new role, Phil will continue to report to me and will focus on continuing to improve execution across all functions and implementing our previously announced margin enhancement initiatives. I'm excited to be back in the CEO seat and to partner with our highly experienced executive leadership team to execute our plans to improve volume trends and create long-term shareholder value. Now turning to the current industry environment. I mentioned on our last call that we were experiencing a challenging macroeconomic environment. And those trends continued into the third quarter. Economic uncertainty that has consumers more tightly managing their budgets as well as pressure on Hispanic consumers continues to impact consumer demand negatively across the overall beer industry. Moderation trends are also having an impact on demand and in certain states, hemp-derived beverages are competing for shelf space and drinkers. Despite these current industry headwinds, we continue to see long-term growth opportunities in the beyond beer category, also known as the fourth category. Beyond beer represents more than 85% of our volume. We believe that the beyond beer category share will grow as the drinker is younger and more diverse than traditional beer. Our brands are well positioned to participate in this growth and our strong innovation culture allows us to move quickly to add to the portfolio as consumer trends evolve. The latest example is Sun Cruiser, which was one of the top volume gainers in RTD Spirits so far this year. We're continuing to innovate and invest across our portfolio of brands to position us well for when the industry environment improves. As Diego will discuss in his remarks on our guidance, we are reinvesting some of our gross margin over delivery into additional advertising spend. This includes media spend as well as a new local market activation program. As part of this local activation, we're investing alongside our wholesalers to support local sponsorships, local radio, sampling teams, brand ambassadors and grassroots events support. With respect to innovation, we're currently testing a number of brands, and our goal is to further expand Sun Cruiser in 2026 and launch an additional innovation brand. With that as context, let's move on to our results and brand performance. In the first 9 months, our depletions were down 3% compared to an overall beer industry that we estimate to be down over 4% in volume. In the third quarter, our depletions were down 3% and as we expected, shipments were significantly below depletions at down 14%. As we mentioned in our last call, this was mostly driven by shipping ahead of depletions in the first half of the year due to the timing of wholesaler demand for Sun Cruiser as well as lower than target wholesaler inventory levels last June. In terms of depletions, we're encouraged by the strong consumer reception to Sun Cruiser, a second consecutive quarter of growth in Angry Orchard and positive drinker reception to our higher ABV offerings. However, industry headwinds are impacting our larger brands, particularly Twisted Tea, which are likely to persist for some time. Despite a softer volume environment that we planned at the start of 2025, we have delivered strong margin expansion and grown our EPS for the first 9 months of the year. This was primarily driven by continued progress on our profitability initiatives, which Diego will discuss in his remarks. And to a smaller extent, a positive product mix from our new product innovations. These efforts have allowed us to raise our gross margin guidance for the year, while we continue to absorb tariff costs. We also hit record high consumer service levels and reached over 50% gross margin in the third quarter, which is our highest gross margin since 2018. Our business generated over $230 million in operating cash flow in the first 9 months, which enables us to both invest in our brands and repurchase over $160 million in shares year-to-date. I'll now provide an update of our brand performance and plans. Twisted Tea had strong growth for many years and is the #10 brand family in the overall beer market with over $1.2 billion in annual retail sales in measured off-premise channels. Going into the year, we planned the brand to growth consistent with an FMB market that grew 7% in dollar sales in measured off-premise channels during 2024. During 2025, the brand has gained distribution but has declined in velocity and retail displays and features. Year-to-date, in measured off-premise channels, Twisted Tea is down 5% in dollar sales and losing share in an F&B category that is down 3%. We continue to believe that the macroeconomic environment is a significant driver of weaker alcohol trends and the deceleration in Twisted Tea performance. Inflation and general economic uncertainty below the middle income consumers has resulted in lower traffic at retail and fewer social occasions. The Twisted Tea drinker profile is particularly sensitive to these impacts as they typically have less household income than breakers of our other brands. Hispanic consumer buying rates remain challenged across the industry. Twisted Tea is slightly over-indexed with Hispanic shoppers compared to overall alcoholic beverage shoppers. They are a sizable portion of the Twisted Tea drinker base and have an impact on the brand's volume performance. In addition to these macro factors, we believe the Twisted Tea retail displays are being impacted negatively by retailers making additional space for RTD Spirits, which are currently their key category growth driver. As I mentioned on our last call, according to numerator data, approximately 20% of the drop in Twisted Tea is due to the Vodka tea category, of which Sun Cruiser is one of the brands. To the extent that Sun Cruiser sources volume from Twisted Tea. This is revenue and gross margin accretive for us. Twisted Tea brand equities remained strong with growing distribution of very large organic social following and the highest organic engagement among the top 10 beer brands. It is a clear leader in malt-based hard tea with over 85% market share in measured off-premise channels. So far this year, single-serve is performing much better than large packs, which tells us that the consumer interest in the brand remains strong. We believe that softness in larger pack sizes is driven by its higher absolute price point with more cost-conscious shoppers. To address this, we will refine our pricing in certain markets, as necessary. In addition, in certain markets, we have recently added an under $10 for package 16-ounce four pack to help increase lower price points and drive demand. Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities, our packaging redesign has improved sales per point of Twisted Tea Light. Twisted Tea Extreme Lemon and Blue Raz are still the top 2 growth SKUs in the convenience channel among all FMBs. To meet drinker demand, we're planning to add a Twisted Tea Extreme variety pack early in 2026. We expect Twisted Tea Light and Twisted Tea Extreme to be growth drivers for the brand for the remainder of 2025 and beyond. We have strong advertising plans for the rest of the year to position the brand for future growth. Key campaigns to drive awareness for the balance of the year include our high-performing key drop ads along with our college football and fall fest programs with spends across ESPN, ABC and CBS during key college football matchups. Our college football program includes in-game advertising, sponsorships with ESPN, and expanded retailer programs with team specific packages in key markets. In the coming months, we're adding other promotions, key programs and partnerships and media that resonate with our drinkers, including Country music, NASCAR and WWE Wrestling, as well as NFL-related promotions. And lastly, we're increasing our investment in Hispanic and Spanish language brand content, including new media and digital content to continue to widen the brand's appeal to more drinkers. In summary, Twisted Tea is our largest brand, and we're continuing to support it with advertising investment and innovation. We continue to believe that despite near-term challenges, these actions, coupled with an improvement in the macroeconomic environment will return the brand to growth in the long term. Moving to Sun Cruiser now, which launched last summer and went national in January of this year. Sun Cruiser has been very well received by wholesalers, retailers and drinkers, particularly in the highly visible on-premise channel. Many consumers were introduced to Sun Cruiser in this channel, and we believe it is the right place to build the brand. According to Nielsen data, Sun Cruiser is the leading RTD spirits, tea and lemonade brand in on-premise bars and restaurants. Sun Cruiser has quickly grown to become the fourth largest brand in the RTD spirits category, continues to increase distribution and has one of the highest velocities of the leading RTD spirits brands. It is now on shelf in larger national chain retailers and has tripled its points of distribution compared to earlier in the year. This expanded presence is beginning to be reflected in measured off-premise channel data. However, given Sun Cruiser's strong presence in on-premise and independence measured off-premise data still only reflects a small portion of the brand's total volume. We believe Sun Cruiser will be the next iconic brand for our company and an important growth contributor for the beyond beer category. We are focused on building the brand's distribution, displays and retail promotion while investing in media and key sponsorships that keep the brand relevant throughout the 4 seasons of the year. From a product innovation perspective, we intend to keep a disciplined number of tea and lemonade styles while continuing to expand package options. Sun Cruiser will be available in the 19.2-ounce cans format in New England this month, which will be expanded nationally in early 2026. Advertising support for Sun Cruiser is built around the "Let the Good Times Cruise" brand campaign as well as sponsorships of sports and music venues, including NFL, PGA Golf and MLB media and sponsorship of the AEG music concert series. The media campaign also includes paid social and digital advertising and key influencers. Additionally, Sun Cruiser's presence in AVP Beach volleyball and the World Surf League further reinforce its positioning as a brand for sun, sand and fun. In summary, it is early, but we are very excited about the outlook for Sun Cruiser and its contribution to our hard tea portfolio. We will continue to increase investment in both Sun Cruiser and Twisted Tea with our goal for 2026 being to increase our share and grow volume in the overall hard tea category. Turning to Hard Seltzer. The overall Hard Seltzer category declined 4% in dollars in measured off-premise channels in the third quarter as consumer preferences continue to shift towards more premium RTD spirits-based beverages, while Truly continues to be a top 2 hard seltzer brand and top 4 Beyond Beer brand year-to-date, we're not satisfied with its performance. We are focused on improving Truly's brand message and relevance, promoting our lead flavor wildberry, bringing variety through seasonal rotator packs and building on the momentum of our high ABV innovation Truly Unruly. Our new creative platform we recently launched is built around, make your dreams come Truly. This includes new creative content and a significant investment in regional media in key markets and new retailer campaigns. Truly will continue to leverage its relationship with U.S. soccer as it's Beyond Beer sponsor and its recently announced sponsorship of the American Outlaws, the official fan club of U.S. soccer. Truly will launch a U.S. soccer collector set of singles to help promote the year-long lead up to the 2026 World Cup, which will take place in North America for the first time in more than 3 decades and include 11 cities and over 100 matches. High ABV offerings continue to be a bright spot in hard seltzer. Truly Unruly has grown to a 3% volume share of Hard Seltzer, and the Truly Unruly variety pack is the number $1 12 pack share gainer in Hard Seltzer in the last 12 months. Our second variety pack Truly Unruly lemonade launched in April and is helping Truly Unruly build momentum and gain shelf space. In Cider, Angry Orchard has returned to growth behind the consumer trend back to more flavorful options. Depletions grew in the third quarter and year-to-date, driven by a higher level of focus across the organization including increased investment and new sponsorships. The new campaign, "Don't Get Angry, Get Orchard" and our sponsorship of WWE Wrestling, positively impacted results and helped the brand gain shelf space. The brand's current programming is focused on owning Halloween, and we are executing an exciting program featuring Jason from Friday the 13th movie-themed advertising, promotions, packaging and displays for Halloween and the peak fall Cider season. Our beer brands, Samuel Adams and Dogfish Head have combined to hold share in a challenging craft beer category. We are excited that in early 2026, Samuel Adams will begin programs and promotions as well as launch limited edition packaging to help celebrate Americas 250th anniversary. For Dogfish Head, we are particularly pleased that Dogfish Head's grateful dead beer collaboration has helped fuel Dogfish Head's return to growth. In summary, I'm confident we have the right strategies and team in place. We're continuing to invest in our brands. We're building a strong innovation pipeline, and we're highly focused on our multiyear productivity initiatives. Importantly, we're focused on controlling what we can control. We're executing in the marketplace to improve share trends and to expand our margins. I'd like to thank our Boston Beer team, our distributors and our retailers for their continued support and remaining agile in a dynamic operating environment. I will now pass the call over to Diego to review our third quarter financial results and 2025 guidance. Diego Reynoso: Thank you, Jim. Good afternoon, everyone. As expected and as Jim noted, during the third quarter, our shipments rebalanced relative to our depletion, which unfavorably impacted third quarter shipments and revenue. Depletions decreased 3% and shipments decreased 13.7% compared to the third quarter of last year, primarily driven by declines in our Twisted Tea, Truly Hard Seltzer and Samuel Adams brands, that were only partially offset by growth in the company's Sun Cruiser and Angry Orchard brands. We believe distributor inventory of four and 1.5 weeks on hand as of September 27, is an appropriate level for each of our brands. Revenue for the quarter decreased 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix. Our third quarter gross margin of 50.8% increased 450 basis points year-over-year, and it's the highest level we've had since 2018. Gross margin primarily benefited from procurement savings, improved brewery efficiencies, price increases and product mix, as well as a favorable comparison against higher inventory obsolescence in the prior year. These factors were partially offset by increased inflationary and tariff costs. Advertising, promotional and selling expenses for the third quarter of 2025 increased $16.8 million or 11.3% year-over-year primarily due to $20.9 million in increased brand media and local marketing investments that were partially offset by lower freight costs. General and administrative expenses for the third quarter increased $1.1 million or 2.5% year-over-year, primarily due to increased salaries and benefit costs. For the first 9 months of the year, the strong progress we have made in our supply chain initiatives enabled us to deliver 49.7% gross margin and generate $11.82 of EPS. Our 3 buckets of multiyear savings projects, which we are executing ahead of our initial timing expectations are positioning us to respond better to potential changes in the volume environment, product mix and tariffs. We are continuing to execute projects across all 3 buckets, which I'll now discuss. In brewery performance, we continue to see improvements in OEs driven by process improvements, which helped to increase our internal production capacity. In the third quarter, we produced 90% of our domestic volume internally compared to 66% in the third quarter of last year. Year-to-date, our domestic internal production increased to 83% of our volume compared to 71% in the first 9 months of the last year. In our procurement savings, our third quarter results benefited from lower negotiated pricing on certain packaging and ingredients. Our efforts year-to-date have resulted in procurement savings more than offsetting inflationary impact. In waste and network optimization, we're continuing our efforts to improve our customer ordering and inventory management system that we implemented last year. These efforts resulted in a 28% reduction in obsolete inventories year-to-date. Turning to our guidance. Given that 3 quarters of the year are behind us and our fourth quarter is seasonally smaller quarter, we are narrowing our volume guidance range and raising our gross margin and EPS guidance for the full year, inclusive of higher investment spending in our brands. We now expect our volumes to be down mid-single digits for the year. Our depletion trends for the first 42 weeks of 2025 have decreased 4% from 2024. We continue to expect price increases of between 1% and 2%. Based on strong gross margin performance year-to-date, combined with a lower-than-expected impact from tariffs, our gross margin guidance for the year is now 47% to 48%, up from 46% to 47.3% previously. We now expect tariffs to have an unfavorable impact of $9 million to $13 million, which is a gross margin headwind of 40 to 60 basis points. The change to our tariff estimate is due to lower-than-anticipated tariffs primarily on material source from Canada and exempt from the tariffs as a U.S. MC compliant goods. In the first 9 months, we have incurred $7.1 million in tariff costs. Given our strong margin performance, we are using some of the upside to increase our advertising investments in our brands in the fourth quarter. We now expect increases in advertising, promotional and selling expenses to range from $50 million to $60 million, an increase from our previous estimate of $30 million to $50 million. This does not include any changes in freight costs for the shipment of the products to our distributors. We are revising our full year 2025 EPS guidance range inclusive of tariffs to $7.80 to $9.80, up from $6.72 to $9.54. Tariffs are expected to have an unfavorable impact of $0.60 to $0.80 on earnings per diluted share. As you model our fourth quarter, please keep in mind the following factors. Due to seasonality, the fourth quarter is our smallest revenue quarter with the lowest absolute gross margin rate of the year. Meaningful improvement in our gross margin performance began in last year's fourth quarter, which we will be lapping. Additionally, we expect volume deleverage in the fourth quarter combined with a higher year-over-year shortfall fees. Turning to capital allocation. We ended the quarter with a cash balance of $250.5 million and an unused credit line of $150 million, which reprise us with flexibility to continue to invest in our base business, fund future growth initiatives and return cash to our shareholders through our share buyback program. For the full year 2025, we are lowering our capital expenditure guidance range by $20 million to between $50 million and $70 million, with a portion of the reduction driven by timing. We continue to focus our spend on supporting our productivity programs. During the 13-week period ended September 27, 2025, in the period from September 27, 2025 through October 17, 2025, we repurchased shares in the amount of $50 million and $12.1 million, respectively. As of October 17, 2025, we had approximately $266 million remaining on the $1.6 billion share repurchase authorization. This concludes our prepared remarks. And now we'll open the line up for questions. Operator: [Operator Instructions] And our first question comes from the line of Nik Modi with RBC Capital Markets. Nik Modi: A couple of questions, just clarifications. Maybe Diego, Jim, if you guys can talk about the timing of some of the spend you talked about promotional spend, perhaps behind Twisted Tea. I'm assuming that would be more behind the 12 pack. And then some of this local marketing spend, Jim, that you discussed at NBWA, just -- is this year thing? Or is this going to bleed also into next year? So that was the first question. And I guess the broader question is, given kind of what's going on with consumers and affordability, I hear a lot of pack size innovation coming from Boston Beer, but what about smaller pack sizes? I think the carbonated soft drink industry has had a lot of success with 8-ounce cans. Even Constellation has done some stuff with 7.5-ounce bottles. Just curious on your thought process there as it relates to maybe putting some of your core brands and some of those pack sizes? Diego Reynoso: Thank you, Nik. I'll start the question a little bit with the numbers and then I'll hand it off to Jim to talk a little bit more about the spend and where we're doing it. So I think if you remember at the beginning of the year, we said this year, we're really going to take up our spend and really support our brands. And so we've started this year. You've seen in our results, how part of it has already been in our numbers, and we're going to double down in the balance of the year, and that's why we're taking up a little bit our A&P spend guidance. We're working on next year's plan, but there's no reason why we wouldn't continue to invest in our brands, given some of the things that we're seeing in some of the innovation like Sun Cruiser and some of the great results we've had there. So I would say we'll come back in more detail for 2026, but definitely in the back end of this year, and we expect to kind of keep going into next year. We'll continue to support our brands, and we like the results we've seen coming back from. Jim, I'll hand it off to you a little bit more in the detail of what we're doing around that. C. Koch: Sure. Good questions around pack size. And we are figuring how to surgically implement some more promotional spending on Twisted Tea. So we are -- one thing that we've announced is a 4 times 16-ounce to a 4 pack of 16-ounce cans that will come under $10. It will be depending on the market, $8.99 to $9.99. So a more attractive entry point. And then on the 12 packs, which is the biggest source of weakness, singles are okay, but 12 packs in certain markets are notably weak and we believe that the pricing got pushed up well beyond the traditional space where Twisted Tea has lived, which is kind of in between mass domestic peers and above them, but below craft, below imports and below many of the other FMBs to we have a more blue-collar drinker. So in some markets -- I've been in markets where we were actually -- the 12 packs were priced above Modelo or Stella even, and that's probably the wrong price point. So we're going to be surgical about trying to bring -- puts the tea price point on a 12 pack under imports, under craft and in some cases, under other FMBs. With respect to like smaller sizes in beer, to me they're not that appealing. They don't represent much value. Consumers 10 to 12 ounces. And from a margin side, you start doing like the Coronado is a 7-ounce bottle, the costs are not that much less than a 12-ounce bottle. So per ounce, they're significantly more expensive. So in terms of the price pack architecture, we're looking ways to deliver comparable or more value. So on one hand, we'll have a lower entry point with a 460-ounce cans. And then on the other side, we will have right markets 18 packs and 24 loose packs that will present to the consumer more value. Operator: And the next question will come from the line of Filippo Falorni with Citi. Filippo Falorni: I wanted to talk on the gross margin performance, very strong performance again. So congratulations on that expansion. Maybe like what levels were you able to extract considering the volume deleverage this quarter that came in better than you expected? And then just more broadly, Diego, maybe like you talked about the high 40%, low 50% gross margin target in the next couple of years. Are you feeling better in terms of getting there maybe a little bit faster than you initially anticipated? And maybe what are the drivers of potentially getting to the target. Diego Reynoso: Thanks for your question, Filippo. First, just to clarify, I think I've always said high 40s, so I'm not sure I went to low 50s. But I look to -- we're really happy with gross margin. I mean we haven't had a quarter like this in a long time. And it's a result of constant projects, savings agendas and deliveries by our operations team and the rest of the organization, price mix, revenue management. So as we laid out a couple of years ago, we said, look, we think we can get to high 40s despite or in spite of volume changes because we had 3 big buckets, which was procurement savings, which was brewery efficiencies and with was our distribution footprint. And the reality is, what you're seeing now, it's a little bit of an acceleration of how long we thought we were going to take to deliver on some projects, but it's those same areas that are delivering. So I feel very comfortable of our ability to get to and maintain high 40s. Now in order to get past that line, then you do have some other things that we have to take into account volume being one of them. And then tariffs, for example, being another one where this year we only have a fraction of what the wraparound would be if nothing changes. So what I would say is we internally would definitely want to go past high 40s and get to 50s. But to get there, we need to, one, continue down the projects that we're currently running in our savings agenda. But two, we do have -- now at that level, we do have some dependencies with volumes and costs and inflation. So we will ensure that we get to the highest number that we can. But right now, we're very, very happy with where we are today. Filippo Falorni: Great. That's helpful. And then maybe just -- did you offset the shipment deleverage this quarter maybe were the levers that you were able to pull to kind of offset the negative this quarter? Diego Reynoso: Yes. That's a great question. And one of the things that I think it's important to remind people is it's really hard to look at quarter-to-quarter because although we talk about shipments and depletions, there is one other volume that we don't talk enough about, which is production. And therefore, it's not just how much you ship, but it's also how much you produce. And we had a strong production number, especially in our own footprint. So if you look at our percentage internal and external, it was up significantly versus last year. And therefore, that helped us that plus the brewery efficiencies plus the other buckets that I mentioned, helped us offset that from a volume point of view. So if going back to some of the numbers we had 90% in Q3, internally, we had 66% last year, as just as a matter of how we plan out the volume. So that helped us in the quarter. Operator: And the next question comes from the line of Peter Grom with UBS. Peter Grom: So I wanted to get some perspective on just how you see the top line growth evolving within your portfolio as you look out over the next 12 to 18 months. Obviously, some cruiser momentum has been impressive this year. You've been able to partially send the declines that you're seeing interested in Truly. But you highlighted some of the challenges which that are likely to linger. It seems like Truly could be under pressure as well. So just as you think about the path forward, and I know we'll get guidance ever. But just how do you think about the move pieces as you look ahead given what we know today? And maybe specifically, whether you think the growth or the contribution from Sun Cruiser can be as strong next year versus what we're seeing this year. Diego Reynoso: Perfect. Thank you for the question. I'm going to start the answer, and then I'm going to hand it off to Jim. So as you've mentioned, we're working on our 2026 plan. But there are things we're very happy with. Sun Cruiser, we're very happy with. It's 1 of the top brands, and we still think it has a lot of runway. So from that part of your question, yes, we still have strong hopes for the brand. We also have other innovations and things that we feel strongly about. But it's also important where the total market is. We like our portfolio. We like the ability to win share, but there is a question of where the market is going to go, and I think that will be a piece of it. So in that tone, I'm going to hand it off to Jim, and Jim, please, if you can share your view. C. Koch: Yes. In general, we are looking to at least maintain share for each of our brand families within their segment, if you will. So Sam Adams and Dogfish Head, and Craft Beer, which we were able to do this year, Angry Orchard and hard cider, it's actually gaining share as it grows. Our issues are Twisted Tea and Truly to be honest. Twisted Tea surprised us. It was couple of months of 2025 that was positive by -- it was growing maybe 5%. And then it's relatively quickly in this business flipped and if you look into kind of in the last 13 weeks, it's gone from plus 5% to down double digits. So our view of Twisted Tea is it ought to be able to maintain share within the FMB category. It's one of the two largest brands in that category. It's got significant marketing support ranging from what we believe are effective national advertising campaigns to a lot of local marketing and support with our wholesalers. So we would look to get that back to holding share within the category. And the same thing with Truly. It is, in fact, been losing share in Hard Seltzer. And we've seen some growth from both of the styles in Truly Unruly. So we're -- that's growing as a part of our portfolio, but we would like to get that close to the category. And we are, as you can see, ramping up brand support in all the different levers that we have with Truly, we're the sponsor of the U.S. soccer team. So we believe that the World Cup will be a major event in the U.S. We're doing special things in the 11 cities and our wholesalers and retailers are very excited using Truly as the World Cup ramps up and takes up a lot of the summer. So that's how we look at those 2, and that leaves Sun Cruiser, which we believe has significant runway. Next year, we will have full presence in chains. This year, we really missed most of the chain sets in the spring and had to kind of limp in during the fall resets, but next year we will have a full -- across all of the major chains, full representation. We're very happy with the performance this year just didn't have distribution, but we were the #1 in tea, and vodka lemonade in Walmart, where we did have good distribution. So we think we'll have a full year in market next year. We are focusing on some underpenetrated markets in that Atlantic area that are big vodka tea markets where we're not -- where we think our share should be. So we see another year certainly grown double digit, maybe even triple-digit growth for Sun Cruiser in 2026. Peter Grom: Great. And then just on the brand support, you mentioned -- how do you think about the balance of reinvestment versus kind of allowing savings to flow to the bottom line? I just -- I understand you have more flexibility and you want to support the brand longer term, but it doesn't seem to be shifting the depletion performance in the near term. So just how should we think about that moving forward? Diego Reynoso: Go ahead, Jim. C. Koch: You should think of us as having a bias towards growth. That is how we look at the world. We believe that we should be growing our revenue. As a company, we are heavily weighted away from traditional beer towards what people call beyond beer, I like to call it a fourth category because it's not just beyond beer, it's beyond liquor, beyond wine. And there's a bunch of different ways to define that beyond beer. But the way we're looking at it, it is -- there's a big growth gap between traditional beer, which this year looks like it's off by maybe 5.5%. We'll see where the numbers come in at the end of the year. And then beyond beer, which is down maybe 1 or 2. So there's a 4% gap. And we are thinking next year it won't be down were 5.5% for the overall beer category. We're thinking it will be down less, but we don't have a crystal ball. And we're thinking that the fourth category will return to a very modest growth next year. So we play in a part of the total beer and beer like SKUs much more heavily than the rest of the traditional beer industry. So we believe that we are playing in what will be a growth category over the long run, and we're investing accordingly. Diego Reynoso: Yes. I will also build on -- I will build on Jim's point just to clarify. If you look -- if you go back -- if you just look at this year, yes, you can say, well, the split between how much has gone to profit versus the brands. But if you look back 2 or 3 years, we've actually generated savings for both, right? We've improved our profitability and we've invested in our brands. So I think what we've shown that we are very good at is reacting to the market. So the market conditions and where our brands are, I think we're doing the right thing. But we're also -- as we go forward and plan for next year, I think where things are working, we'll invest more where we feel like we should drop to the bottom line or invest in something else, we will. So we will continue to share our capital allocation as we go forward with you guys. Operator: And the next question comes from the line of Eric Serotta with Morgan Stanley. Eric Serotta: Great. A couple of housekeeping items. First on the year-to-date, I think it's 42-week depletions were down 4% versus down 3% through the 39 weeks. Is that just rounding and maybe a case of down 3.4% versus down 3.6%? Or did the business slow in October? Diego Reynoso: So I mean, the numbers are very close. So it's not there was a significant change in the last period. It's, to your point, more about where the numbers end up. Eric Serotta: Okay. And then, Diego, your comment on the higher volumes and your own production footprint in the quarter and the higher production volumes overall. Do you see that as sustainable into the fourth quarter and early next year? And more broadly, where do you stand in terms of reconfiguring the third-party production that you guys have put in place several years ago now? Diego Reynoso: Okay. Let me break that into the different parts of the question. So no, we don't foresee that going into the fourth quarter, and our guidance reflects that. As we've said before, the fourth quarter is our lowest production volume of the year. And because of that, the lowest margin quarter by far. There is also -- we're also lapping, for example, Sun Cruiser had already started a little bit last year in the fourth quarter. So no, we're not projecting in our guidance for that production strength to continue into the fourth quarter. But that's why we focus on the full year guidance because quarter-to-quarter, it can easily move without it being significant to the full year guidance. 2026, we'll come back and we'll talk a little bit more when we give guidance for 2026. And the third part of your question is we are constantly updating our relationships with our third-party, but I do want to remind people that the volume need is not the only reason why we have co-packers. Part of it is also it has allowed us not to have to build a facility for any type of emergency or any reason we would have to stop our production in our own facility. So we always have a backup and then we feel that's important. And it's also geographically advantageous for some of our products. So we are continuing to review that, and we -- every couple of quarters, we look at upcoming renewals of contracts, and we'll brief you as those come up. Eric Serotta: Great. And then just one last housekeeping item. I believe you gave the shortfall fee outlook in the Qs, I'll have to check the latest, but can you just remind us the amortization of the prepaid expense. Does that step down next year? And sort of what's the magnitude there? Diego Reynoso: Yes, you are correct. Like there's 2 pieces to the shortfall fees. So the amortization does go away, but we continue to have the regular short part piece. So you can see in our 10-Q, you can see year-by-year what our forecast is for each one of the shortfall fees. And I'm happy to send it to you, if needed. Eric Serotta: I could check the Qs, but thank you. Operator: And the next question comes from the line of Robert Ottenstein with Evercore ISI. Unknown Analyst: This is Greg on for Robert. I was wondering if you could just talk a little bit about the impact from both hemp beverages and then the Hispanic consumer on your products. You talked about them both on like a higher level. But have you guys done any work into like how much of this 5% to 5.5% decline in the beer category is due to the weaker Hispanic consumer and then how much you think hemp beverages is impacting demand to your products? Diego Reynoso: Jim, would you like to answer that question? C. Koch: Sure. There isn't really great data on these things. So I'm going to be pulling numbers out of the air. I think for us, the -- about 20% of our drinkers for Twisted Tea are Hispanic, and that's broadly reflective of the total market. I would -- the biggest -- to me, the biggest 4 things are basically the overall macroeconomic situation, which kind of broadly is okay. But for the 80% of the population in the bottom 4 quintiles, it's not good. And that's -- those are heavily beer drinking. So that's weak. The second is health concerns. So those to me are the 2 biggest things. There's just lots of media on alcohol causes cancer despite the National Academy of Sciences and their more considered opinion. So we have that -- those 2 big things going on. Hemp, it's smaller, maybe of that 5.5%. It might be 1% because it's limited to only a smaller number of states and availability. And I guess so that's the economy and the health issues, I think, are the 2 biggest things, and maybe those represent over half of that 5.5% and then the Hispanic community and then hemp. And after that, you have a little noise things, GLP-1 and things like that. Does that help? Unknown Analyst: Yes. That's great. And then just maybe within the hemp beverages, when you guys see consumers like moving towards some of those products and like which of your products do you think are most exposed to those market share losses? Diego Reynoso: I don't think we have that level of detail, to be honest, just by each one of the brands because to Jim's point, it's such an evolving legal framework and category like every day you wake up and a state is in, it's out, et cetera. So that would be a hard question to answer. But as we go forward and things clarify, we can share that. Operator: Thank you. And our final question comes from the line of Bill Kirk with ROTH Capital Partners. William Kirk: So I asked a very similar question last quarter, but now year-to-date EPS is almost $12 a share. Full year guidance implies a 4Q loss of $4 a share to $2 a share. So when you look at 4Q, is there really no scenario where you see positive EPS. And I asked because before 2021, 4Q was always a positive earnings quarter. Since 2021, it hasn't been positive once, I don't think. But I guess, what changed with the earnings seasonality that makes 4Q a negative earnings quarter? Diego Reynoso: So well, clearly, you didn't like my answer last time. But I think -- look, we've been very clear how the fourth quarter is always the lowest quarter. But one of the things we did do this year and we -- from the beginning, we said is we were really going to try to produce a head of demand to avoid some of the issues that we saw in the summer last year and at the end of the year. And also, we had very high hopes for Sun Cruiser. So again, from a production shipment point of view, we went ahead -- and you saw our days kind of grow in the second quarter and start coming down in the third quarter. So there has been a change in our production and shipment pattern from previous years as we've really tried to make sure that our distributors and our customers had access. That would be one. The other one is we took up our guidance for marketing spend for the full year and that -- a lot of that will come in the fourth quarter. So we are going to invest significantly more in the fourth quarter than we did last year in our investments. So I think if you put those things together, that's why the full year guidance is we're improving it in total, but Q4 has a different shape than the year before. C. Koch: Bill, I can give you a little more color. Essentially, what's happened over the last, whatever it is, 5 or 6 years, our mix has moved to -- from primarily craft beer and hard cider to primarily Truly and Twisted Tea. That means we've moved more to very summer-oriented beverages like Truly, and Tea and now Sun Cruiser away from Sam Adams and Angry Orchard. And Sam Adams was always a trade up, much like the fourth quarter is the biggest quarter for spirits. It was a trade-up to Sam Adams when people were entertaining, they were out, on-premise was strong. And for Angry Orchard October and November are the biggest months because it's big Halloween, Thanksgiving, Apple Harvest, those kind of things. So our primary products move from more summer oriented away from more Q4 oriented. William Kirk: That makes a lot of sense. And then a few years ago in Vermont, right, they put spirit-based RTDs next to the malt products. At the time, I would guess that you wouldn't have supported that change. But now with Sun Cruiser, where does Boston Beer stand on channel access initiatives for spirits or even tax equivalency proposals? And are there any large legislative changes out there that are possible in the near term? Diego Reynoso: Jim, I will hand that over to you. C. Koch: Yes. Our position hasn't changed. We think that historically, I mean, going all the way back to, I think, 1794, the first sort of broad taxes in the U.S. that were not import duties, we're on whiskey. So spear and not on beer, beer did not get a federal tax to believe it or not to fund the civil war, which was a little while ago, but the tax hasn't gone away. So we support the historical tax structure and availability structure that's served the alcohol industry quite well since prohibition. So our position on equivalency hasn't changed. We believe there's a difference between beer is the beverage of moderation and our friends over in the spirits industry. We're still with the Beer Institute on this. Operator: And at this time there are no further questions. And now I'd like to turn the floor back over to Jim Cook for any closing remarks. C. Koch: Thank you all for joining us, and I'm looking forward to talking to you again in February when we can sum up this crazy year in the beer business. Cheers. Operator: Thank you. And this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.
Baard Erik Haugen: Good morning, and welcome to Hydro's Third Quarter 2025 Presentation and Q&A. We will begin shortly with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. And as usual, we will finish off with a Q&A session. [Operator Instructions] When we get to the Q&A, I will then read your questions on your behalf to Eivind and Trond Olaf. And with that, I turn the microphone over to you, Eivind. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. Safety, as always, is our key priority. It's the most important metric in our quarterly reporting. The health and well-being of our employees is fundamental to the success of the company. And we have had positive development and lowered the number of injuries and incidents for a long period of time. The downward trend continued also over the last few years has continued also this quarter. And I'm pleased to report that both the total number of recordable injuries and the number of high-risk incidents are lower compared to the last quarter. However, we're also well aware that good results and safety cannot be taken for granted. This situation can change rapidly. Maintaining these low numbers demands continuous attention and commitment from all employees across all our locations. Our strong safety culture is rooted in genuine care for our people, ensuring everyone remains healthy and safe while working for Hydro. The commitment to safety is also essential for keeping our operations stable and efficient 365 days a year. By fostering a safe work environment, we are able to achieve our strategic targets and to increase our long-term value creation. Now let's have a look at the key highlights this quarter. We will get back and dig deeper into this also later on in today's presentation. Challenging markets are affecting the results this quarter, leading to an adjusted EBITDA coming in at NOK 5.996 billion. Now despite this, I'm also happy to report a solid free cash flow generation at NOK 2.2 billion, yielding an adjusted RoaCE of 11%, which is above our target of 10% over the cycle. Measures have been taken to meet the uncertainty in the market, and many initiatives are being executed to further increase robustness. And we can already now report progress on our strategic workforce adjustment and the cost reduction initiative announced back in June. On the energy side, we are pleased to have added another long-term power contract to our sourcing portfolio. Alouette has signed an agreement in principle for continued long-term power supply. This quarter, we also received a final judgment in the Dutch court dismissing all claims against Hydro filed by Brazilian Cainquiama and 9 individuals back in 2021, based on both legal as well as factual grounds. And lastly, we can report concrete results coming from our targeted strategic approach to partnerships. We continue to advance our low carbon and circular solutions through close customer collaborations. Executing on strategic workforce and cost reductions as a response to market uncertainty, we did launch a new cost-cutting measure in addition to strategic workforce adjustment measures back in June. The workforce adjustment project aims to reduce white collar manning by 600 people in 2025 and another 150 people for 2026. In addition, we introduced the hiring freeze and limitation on travel and consultancy expenditures. The estimated gross redundancy cost is estimated to be around NOK 400 million this year and estimated cost savings are NOK 250 million. This gives us a net cost of around NOK 150 million in 2025. As we can see from the graph, annual net run rate savings included travel and consulting cost reductions are estimated to be NOK 1 billion from 2026. This gives an adjusted EBITDA improvement altogether for the improvement programs for 2030 of NOK 7.5 billion. Processes like these are always challenging, and we are doing our best to be considerate and to be transparent towards all our employees. And to ensure a professional process, we work in close collaboration with employee representatives. I do want to emphasize that this project is done in parallel with other ongoing performance and capital discipline measures. We still conduct our improvement program with undiminished strength. There is also a parallel restructuring process in Extrusions with large reductions in employees already taking place. And lastly, we have reduced our CapEx guidance announced last quarter. These initiatives aim to strengthen Hydro's ability to navigate global uncertainty. We're not pulling the brakes on our strategy, but we are ensuring that when we grow, we do it with the right structure and with the right priorities. Moving on to some good news on Alouette, where Hydro holds a 20% ownership stake. This quarter, Alouette has signed an agreement in principle to secure supply of power from 2030 to 2045. The agreement is signed with the government of Quebec as well as Hydro-Quebec. This will ensure long-term competitive prices in a market where the energy balance is tightening. As you can see from the graph, our total power consumption in the years to come requires us to constantly explore alternatives for renewable power sources in order to maintain our energy resilience. And this agreement is an important step to ensure stability for Alouette and to further strengthen Hydro's global portfolio of long-term renewable power. Now let's move to another strategic priority. It's been almost a year since we announced the phaseout of Hydro Batteries, a decision driven by persistent market challenges. And I am pleased to report that we have made progress on the phase-out process. We have recently done 2 battery portfolio transactions in line with Hydro's strategic ambitions for 2030. Earlier this month, Hydro Energy Invest entered a transaction to exchange its minority stake in Lithium de France for a minority shareholding in the listed company, Arverne Group. In addition, Hydro signed an agreement to divest its entire ownership stake in a maritime battery company, Corvus Energy, and the closing is expected to happen early November. Hydro continues to remain engaged in the energy transition, but these transactions help us concentrate on core business within energy and step up our ambitions within renewable power generation in line with the 2030 strategy. Another important event this quarter was the final judgment issued by the Rotterdam court in the case for against Norsk Hydro ASA and its Dutch subsidiaries on September 24. The court fully dismissed all claims, including claims of pollution caused by Alunorte following the heavy rainfalls in the region in February of 2018. The court's dismissal was based on both legal and factual grounds. During the proceedings, Hydro presented extensive evidence, including expert analysis as well as empirical data. On this basis, the court confirmed an established fact that there was no overflow from the bauxite residue deposits back in 2018. And consequently, no harm was caused to the environment. And this is an important confirmation supporting our position throughout the years since the lawsuit was filed. Lastly, I will round off my part of the presentation with 2 customer cases from the past quarter. A key priority in our 2030 strategy is to shape the market for greener aluminum in partnership with customers. We are pleased to see the results of our increased efforts in this area. Our strategic partnership with Mercedes-Benz has continued to accelerate over the years, aiming to decarbonize their value chain. This picture is from the last month where the new electric CLA cars produced with Hydro REDUXA 3.0 aluminum from Årdal, drove from Oslo to Årdal. Hydro can provide Mercedes-Benz low-carbon aluminum, ensuring a traceable and transparent value chain. And this is important for Mercedes to be able to deliver on their ambitious sustainability targets. Another exciting collaborative initiative this quarter and in fact, a large milestone for us is a new bridge in Trondheim called Hangarbrua. This is the first aluminum bridge built in Norway since 1995. The pedestrian bridge is made entirely from recycled aluminum sourced from the decommissioned Gyda oil platform from the Norwegian continental shelf. It is built by Leirvik in collaboration with COWI, partnered with Hydro, Aker Solutions and Stena. This project demonstrates that aluminum can be used in producing bridges of tomorrow, contributing to innovative solutions for the infrastructure sector. And it shows how end-of-life aluminum can be transformed into durable and valuable building materials. Although this project is relatively small, it's a tangible example of the significant potential for aluminum in public infrastructure development, a sector where demand is expected to grow substantially in the years ahead. So for me, these 2 partnerships illustrate the growing demand and potential for low-carbon aluminum and our success in expanding the market for circular and sustainable solutions. With that said, let me give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Eivind, and good morning from me as well. So I'll start my part with the market side and starting with the bauxite and alumina markets. After an eventful 2024 dominated by refinery disruptions and bauxite supply challenges, the global alumina market balance has been normalizing since the start of 2025. Around 10 million tonnes of new alumina capacity is expected to come online from India, Indonesia and China this year with full impact expected in 2026. After the drop in alumina prices we saw in Q2 this year, alumina traded around USD 360 per tonne for most of Q3. With more capacity ramp-up, especially in Indonesian refineries, we saw alumina prices falling to around USD 320 per tonne at the end of the quarter. The excess supply is putting pressure on global refiners. If prices stay at the current level, we could see curtailments for high-cost refineries, especially in China. We would then expect a future tightening of the alumina market, pushing back prices to a more normalized level. According to CRU, a small surplus of around 500,000 tonnes is expected in '25, down to a 300,000 tonne surplus in '26 in the 58 million tonne world ex-China market. Consequently, the market would remain sensitive to any production disruptions. Moving to the primary aluminum market. Despite the rate increase to 50% of U.S. Section 232 tariffs on aluminum coming into effect in Q2, the LME and premiums continued to digest its consequences in Q3. Looking at the global primary aluminum balance, external estimates suggest that the market will remain roughly balanced in '25. The 3-month LME aluminum price rose during the quarter, starting at USD 2,599 per tonne and ending at USD 2,681 per tonne. The U.S. Midwest premium continued to surge in Q3, starting at USD 1,432 per tonne and ending the quarter at USD 1,631 per tonne, driven by 232 tariffs, the structural aluminum deficit and the need to attract metal into the U.S. In Europe, the quarter opened with a duty paid standard ingot premium of USD 185 per tonne, increasing to USD 258 per tonne at the end of Q3. As in previous quarters, Hydro's main concern remains the broader risk of a global economic slowdown from tariffs, which would weaken demand and challenge current price levels as a consequence. Then moving downstream. Extrusion demand stabilized at moderate levels in both Europe and North America during Q3 compared to the same quarter last year with light uptick in order intakes. In Europe, extrusion demand is estimated to have remained flat in Q3 '25 compared to the same period last year, but decreased by 20% from Q2 due to seasonality. Demand for building and construction and industrial segments has stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production, partly offset by increased production of electrical vehicles. For Q4 '25, CRU estimates that European demand for extruded products will increase by 1% year-over-year. Overall, extrusion demand is estimated to be flat in '25 compared to '24. In North America, extrusion demand is estimated to have increased 2% in Q3 '25 compared to the same quarter last year, but decreased 2% compared to Q2. Extrusion demand has continued to be very weak in the Commercial Transport segment, driven by lower trailer builds. Automotive demand has also been weak. Demand has been positive in the Building and Construction and Industrial segments, while the ongoing impact from the introduction of tariffs are still uncertain, order bookings have developed better for domestic producers due to lower imports so far this year. In Q4 '25, North American extrusion demand is expected to increase by 5% year-over-year. Overall, extrusion demand is estimated to decrease 1% in '25 compared to '24. Looking at our own numbers, Hydro Extrusions sales volumes increased by 1% year-over-year in Q3 '25. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the U.S. transport market were down 5% in Q3 compared to minus 11% in Q2. Automotive sales in Q3 were still negative in Extrusions Europe, driven by continued moderate production at some car manufacturers. Automotive sales in North America increased 5% in Q3 from a low base than the same quarter last year, as negative overall market development was offset by increasing volume to key customers. Sales volume growth in the Industrial segment was stable in Q3, while sales in the Distribution segment increased by 8% in Q3, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q3 '25, mainly caused by tighter consumer spending and an inventory offloading at customers. For Q4, total sales volumes in Hydro Extrusions for EU and the U.S. are expected to be in line with underlying market growth expectations. Then moving to the financials. When looking at the results Q3 versus Q2, adjusted EBITDA decreased from NOK 1.8 billion -- from -- sorry, NOK 7.8 billion to NOK 6 billion. The main driver was normalization of eliminations. Realized all-in aluminum and alumina prices contributed negatively with around NOK 300 million. Upstream volumes had a net neutral impact where somewhat higher volumes in aluminum metal were offset by somewhat lower volumes in bauxite and alumina. Raw material costs contributed positively by approximately NOK 700 million, mainly driven by lower alumina costs in aluminum metal. This was partly offset by higher energy costs and a slight increase in other raw material costs. Extrusions and recycling margins and volumes had a negative impact of around NOK 300 million. 85% of the effect came from Extrusions and the remaining 15% from recycling in metal markets. The negative development in Extrusions was largely driven by lower sales, partly offset by positive impact from the metal effect through the higher Midwest premium. In Energy, lower production and lower prices impacted results for the quarter with a net negative impact of around NOK 100 million. Furthermore, fixed costs were around NOK 200 million lower compared to Q2 with positive Extrusions. Currency effects negatively impacted the results by around NOK 400 million with 70% of the effect related to aluminum metal and 30% to bauxite and alumina. This was mainly due to a stronger NOK compared to U.S. dollar. The largest negative effect this quarter was normalization of eliminations, which amounted to NOK 1.4 billion. In the second quarter, realization of previously eliminated internal profit had a positive contribution of the same size. Finally, net other elements had a net negative impact of around NOK 100 million. And this concludes the adjusted EBITDA development from NOK 7.8 billion in Q2 to NOK 6 billion in Q3. If we then move to the key financials for the quarter. Comparing year-over-year, revenue increased by around 1% to NOK 51 billion for Q3. Compared with Q2, revenue decreased by around 5%. For Q3, around NOK 200 million positive effects were adjusted out of EBITDA, mainly related to NOK 206 million unrealized derivative loss, mainly on LME-related contracts and a net foreign exchange gain on risk management instruments of NOK 66 million. The result also included NOK 116 million in rationalization charges and compensation for termination of a power contract, of which NOK 251 million is related to future periods. This results in an adjusted EBITDA of NOK 6 billion. Depreciations were around NOK 2.5 billion in Q3, resulting in adjusted EBIT of NOK 3.5 billion. Net financial income for Q3 was around negative NOK 450 million. This was largely driven by net interest and other finance expenses of around negative NOK 730 million. This was partly offset by an unrealized currency gain on around NOK 380 million, mainly reflecting a stronger NOK versus euro affecting embedded euro currency exposures in energy contracts and other euro liabilities. Furthermore, we have an income tax expense of around NOK 900 million for Q3, and the quarter was mainly impacted by high power surtax. Overall, this provides a positive net income of around NOK 2.1 billion and foreign exchange gains of approximately NOK 380 million are adjusted out together with the EBITDA adjustments mentioned earlier and partly offset by income taxes of around NOK 120 million. And this results in adjusted net income of NOK 1.9 billion in Q3. Adjusted net income is down from NOK 3.5 billion in the same quarter last year and down from NOK 3.6 billion in Q2. Consequently, adjusted EPS was NOK 1.02 per share. And let's then go to the business areas and give an overview of each of the business areas, starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 3.4 billion in Q3 '24 to NOK 1.3 billion in Q3 '25. This was mainly driven by lower alumina prices, higher fixed costs from a low level in Q3 '24 and negative currency effects caused by a weaker U.S. dollar against the NOK. This was partly offset by higher sales volumes and positive year-on-year effects from the full implementation of the fuel switch to natural gas. Compared to Q2 '25, the adjusted EBITDA decreased from NOK 1.5 billion to NOK 1.3 billion in Q3 '25, mainly driven by negative currency effects caused by a stronger BRL versus the U.S. dollar and lower sales volumes. Alumina realized prices decreased but maintained above market prices indications due to intra-group pricing mechanisms. Raw material costs were slightly higher Q3 versus Q2 and fixed costs remained stable. For Q4, we expect the production volume at nameplate capacity. And compared to Q3, we expect stable fixed costs and raw material costs are also expected to remain relatively stable. Moving then to Aluminum Metal. Adjusted EBITDA decreased from NOK 3.2 billion in Q3 '24 to NOK 2.7 billion this quarter. The main drivers year-on-year were negative currency effects caused by a stronger NOK against the U.S. dollar, partly offset by higher sales volumes and lower alumina costs. Compared to Q2 '25, adjusted EBITDA for aluminum metal decreased from NOK 2.4 billion, and this was driven by lower alumina costs, partly offset by higher energy costs, currency effects caused by stronger NOK against U.S. dollar and lower all-in metal prices, mainly caused by a sales mix pushing premiums to the lower end of the guiding. The raw material cost release was around NOK 700 million, which was lower than we guided for in the Q2 reporting. The reduction was lower than expected, mainly due to intercompany alumina pricing mechanisms, where the opposite positive effect is realized in higher B&A alumina price and result. These effects cancel each other out on the group level. Decrease in fixed cost was above guidance at around NOK 200 million caused by currency translation effects. And this brings me then over to the guiding for the next quarter. For Q4, AM has booked 72% of its primary production at USD 2,597 per tonne, and this includes the effect from our strategic hedging program. We have booked 40% [indiscernible] USD 423 per tonne, and we expect realized premiums to be in the range of USD 310 to USD 360 per tonne. On the cost side, we expect stable total raw material costs and increased fixed costs in the range of NOK 100 million to NOK 200 million, and sales volumes are expected to remain stable. Moving to Metal Markets. Adjusted EBITDA for Metal Markets decreased in Q3 from NOK 277 million in Q3 '24 to NOK 154 million due to lower results from sourcing and trading activities. And those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the results for Q3 was NOK 174 million, down from NOK 375 million in Q3 '24. And compared to Q2, adjusted EBITDA for Metal Markets decreased from NOK 276 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 93 million, down from NOK 136 million last quarter. The decrease was mainly due to seasonally lower volumes, partly offset by positive premium development. For Q4, we expect lower recycling results following continued margin pressure. In our Commercial segment, we also anticipate a lower contribution from sourcing and trading activities in Q4. As always, we emphasize the inherent volatility of trading and currency fluctuations. And given the realized results year-to-date, we have adjusted down the guidance for the commercial area adjusted EBITDA, excluding currency and inventory valuation effects to NOK 200 million to NOK 400 million for the full 2025. Moving to Extrusions. The adjusted EBITDA increased year-over-year from NOK 880 million to NOK 1.1 billion, driven by positive metal effects from increasing Midwest premiums, partly offset by pressure on sales margins. We saw 1% higher sales volumes as well as somewhat weakened sales margin primarily in Europe. Furthermore, lower recycling production negatively impacted the results with around NOK 100 million. And compared to Q2 '25, adjusted EBITDA for the Extrusions decreased from NOK 1.2 billion due to seasonally lower sales volumes, partly offset by positive metal effects and lower costs. Looking into Q4, we should always look towards the same quarter last year to capture the seasonal developments in Extrusions. External market estimates suggest a positive volume development year-over-year of 1% for Europe and 5% for North America. However, we foresee increasing pressure in both Extrusions margins and Recycling margins. We expect further metal effects year-over-year of NOK 50 million to NOK 150 million based on current spot Midwest premiums, reminding that metal effects are strongly dependent on the movements in the Midwest premium. And then moving to the final business area, Energy. The adjusted EBITDA for Q3 increased to NOK 828 million compared to NOK 626 million in Q3 '24. The increase was mainly driven by higher gain on price area differences, partly offset by lower production. Compared to Q2, adjusted EBITDA decreased from NOK 1.1 billion, mainly due to lower production and lower commercial results. The price area gain was NOK 330 million in Q3 at a similar level as in Q2. Looking into Q4, as always, we should be aware of the inherent price and volume uncertainty in energy. For the next quarter, production volumes and prices are expected to increase mainly due to seasonality. Furthermore, price area gains are expected to be lower following seasonal convergence between area prices. And then let's move to the final financial slide this quarter. Net debt decreased by NOK 1.9 billion since Q2. Based on the starting point of NOK 15.5 billion in net debt from Q2, we had a positive contribution in adjusted EBITDA of NOK 6 billion. During Q3, we saw a net operating capital build of NOK 1.4 billion, mainly driven by increasing inventories and receivables related to indirect CO2 compensation, partly offset by a release in net accounts receivables and accounts payables. Under other operating cash flow, we have a negative NOK 200 million impact, mainly driven by net interest payments, settlement of taxes and reversal of net income from equity accounted investments, partly offset by positive mark-to-market reversals and adjustments for noncash effective bonus accruals. On the investment side, we have net cash effective investments of NOK 2.2 billion. As a result, we had a positive free cash flow of NOK 2.2 billion in Q3. And finally, we also had negative other effects of NOK 300 million, and this was mainly driven by payments of new leases, partly offset by positive net currency effects on cash debt. As we move to the adjustments related to adjusted net debt, hedging collateral has increased by NOK 400 million since the end of Q2. And furthermore, during Q3, the net negative pension position decreased by NOK 700 million, turning into a net asset position of NOK 600 million positive. And finally, we had no changes in other liabilities during Q3. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q3 of NOK 21.1 billion. And with that, I end the financial update and give the word back to Eivind. Eivind Kallevik: Thank you, Trond Olaf. Now as we conclude today's session, I'd like to summarize our continued priorities going forward. As always, health and safety remain our top priority, and we are fully committed to safeguarding the well-being of our employees. While we recognize that strong performance metrics can shift in just a moment of inattention, the ongoing positive trend in this area stands as a clear evidence of our dedication. We are navigating an increasingly volatile geopolitical situation that continues to affect our markets, but in response to these uncertainties, we are proactively refining our operational structure to target our most critical strategic priorities. This quarter, we have taken steps to execute on the phaseout of our battery operations in accordance with our strategy. We have several performance and capital discipline programs ongoing to help us better navigate global uncertainty and keep up the attention on profitability. We are seeing positive outcomes in our power sourcing portfolio highlighted by the Alouette recent long-term contract, which strengthens our energy resilience. Continuing to identify and pursue new opportunities in power sourcing remains essential to secure our future energy needs. Achieving tangible results on our 2030 strategy remains critical, and we are proud to see that we are taking steps in the low-carbon aluminum transition. Our market for recycled low-carbon products continues to advance, exemplified by the partnership with Mercedes-Benz and the infrastructure project in [ Tonya ]. We create growing markets through partnerships while we execute on our decarbonization and technology road map. And these concentrated efforts on growth and profitability ensure that Hydro continues to stay relevant. And we are committed to our decarbonization strategy, and we will continue to pursue our 2030 ambitions with unwavering determination. Thank you so much for your attention. And with that, I hand it over to you, Erik. Baard Erik Haugen: Thank you, Eivind, and thank you, Trond Olaf. We will then move into the Q&A session. [Operator Instructions] And we have a few already, so let's get started. First one is from Liam. Can you please give your latest thoughts on CBAM? Do you expect implementation from early 2026 or potential delays? Eivind Kallevik: Thanks, Liam. The way we look at this today, we do expect CBAM to be implemented from 2026. What we are, I would say, excitingly awaiting is any changes or adjustments to CBAM, for instance, around the scrap loophole. That remains to be seen as we get towards the tail end of this year. Baard Erik Haugen: And then there's a second question from Liam. Is it possible or likely that you will underspend versus the NOK 13.5 billion CapEx guidance for 2025? Eivind Kallevik: We are keeping the CapEx guidance at NOK 13.5 billion. Remember that Q4 is typically the quarter with highest maintenance and sustaining capital. Now if we have any updates to that, we will certainly be sure to give it at the Investor Day that we have in late November. Baard Erik Haugen: Then there's a question from Amos. Can you discuss the state of play with the Tomago's energy contract? Is it reasonable to assume that the smelter shuts in 2029? Eivind Kallevik: So Tomago is, of course, placed in an area where renewable power is hard to get in Australia and the power situation is pretty tight, leading to high energy cost. Currently, today, energy costs is roughly 40% of operational costs for the Tomago smelter. We continue to work with the stakeholders to see if there are any opportunities to get renewable power post the end of '28, but it is a challenging situation. And we will make sure that we update the market if and when there are news in this context. Baard Erik Haugen: And another one from Amos. Is there any change to guidance for Metal Markets trading and commercial EBITDA contribution for '25? I think that one was covered already. Trond Christophersen: Yes. So as I said, we have reduced the guiding to NOK 200 million to NOK 400 million, down from NOK 300 million to NOK 500 million, as we said in the Q2 report. So that is the reduction in the guiding. Baard Erik Haugen: And then a question from Matt. Considering the recent volatility in alumina prices and the increase in refinery capacity from Indonesia with potential developments in Guinea, how is Hydro approaching the balance between LME linked and PAX-based pricing for future alumina contracts? Also, could you please provide some more color on the Alba supply agreement in Q3? Eivind Kallevik: Yes. So when it comes to pricing of alumina, PAX remains the predominant pricing parameter and that I suspect you should also expect going forward for the new contracts that we enter into. When it comes to the Alba contract, it's a contract that we are very happy to enter into. It's a long-term partner in the Gulf. Other than that, I really cannot comment on specific commercial details of any contract. Baard Erik Haugen: And then there's a question from Hans Erik. Any news regarding potential tariffs on scrap exports from Europe? Trond Christophersen: Yes. So the commission in the EU had planned for an announcement late in Q3. That has now been postponed until late Q4. So that is the latest information we have. So then again, we expect the news at the end of Q4. Baard Erik Haugen: Question from Magnus. There seems to be a miss versus guidance of NOK 300 million on raw material costs, looking at the group combined. Can you explain the drivers here? Trond Christophersen: Yes. So Magnus, on the raw material costs, I think you need to look at bauxite and alumina and aluminum metal together. And we guided on NOK 1 billion to NOK 1.2 billion. We realized NOK 700 million. But if you add roughly NOK 200 million plus from B&A to that guiding due to the internal pricing mechanism, we are closer to the NOK 1 billion. And then with some slight increases in energy costs and less reduction of carbon costs, both below NOK 100 million. But if you add all that together, you are within the guiding. So that is basically the difference. Baard Erik Haugen: Then we have a question from Bengt. Looking at actual price changes for premiums during the quarter and your expected range of USD 310 to USD 350 per tonne, the midpoint implies lower realized premiums quarter-on-quarter, whereas premiums are up quarter-on-quarter. Are there a temporary change in sales mix that explains this? Eivind Kallevik: So thanks, Bengt. And you are correct. When we've looked to the value-added products market, both in Q3 and when we look into Q4, we do expect to produce somewhat more standard ingots compared to what our normal product mix would be. And that, of course, drags the average premium somewhat down. Baard Erik Haugen: Then there's a question from Ioannis. Market expectations were for a meaningful increase in extrusion volumes in 2026 from through levels. Q1 '26 outlook suggests just 2% to 4% improvement year-on-year. Can you provide some color on end markets and whether you are seeing any uptick in Automotive and HVAC going into next year? Trond Christophersen: So I would say that the overall extrusion market is the market where we see a lot of uncertainty. It is difficult to give sort of additional flavor on the expected volumes going into next year. We use the external CRU as a reference. And as we said this quarter, we roughly followed the development for CRU, which we also expect for the coming quarter. We have been expecting a recovery in extrusion market for quite some time now. But again, as always, it's very difficult to tell when we will see the market turn. Baard Erik Haugen: Then we have a follow-up from Bengt. Follow-up on the standard ingot. Is that normal seasonality or changes in end-user demand? Eivind Kallevik: So I think you need to look at this 2 ways. One is that demand in Europe has been relatively weak, as Trond Olaf has been through. That's part of it. Second part of it is that customers -- our customers is then also drawing down their inventories quite significantly, both in the U.S. and in Europe towards the year-end. And as such, we produce somewhat more standard ingots to get our operating capital also out the door. Baard Erik Haugen: Then there's a question from Magnus. Are we done seeing significant positive eliminations? Our impression was that there was more to come as the Q2 release was smaller than the buildup in the year before. Trond Christophersen: Well, eliminations are unfortunately difficult to predict also for us internally. But if you look at the total accumulation of negative eliminations through the price increase for alumina, we accumulated roughly NOK 2 billion. And now we have released, I think, yes, around NOK 1.76 billion in total. But the remaining level we keep in the balance will fully depend on the development of the alumina price. And I think sort of the positive twist on this is that since we now are generating much better cash flows in bauxite alumina compared to the situation before the alumina price surge we saw last year, we then will have a higher eliminations in the balance if the current market prices stay. Baard Erik Haugen: Then there's a question from Amos. What is your guidance for Q4 working capital movements? Trond Christophersen: Yes. So we maintain our guiding that we gave at the Capital Markets Day last year that we will deliver the NOK 30 billion at year-end. Baard Erik Haugen: Okay. Then there seem to be no further questions, in which case we will round it off here. Thank you all for joining us here today. Please don't hesitate to reach out to Investor Relations if you have further questions. And we wish you all a great day. Thank you.
Operator: Good afternoon, everyone, and thank you for joining us today for Ategrity's Third Quarter Fiscal Year 2025 Earnings Results Conference Call. Speaking today are Justin Cohen, Chief Executive Officer; Chris Schenk, President and Chief Underwriting Officer; and Neelam Patel, Chief Financial Officer. After Justin, Chris and Neelam have made their formal remarks, we will open the call to questions. [Operator Instructions] Before we begin, I would like to mention that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in our press release issued today, our final prospectus and other filings filed with the SEC. We do not undertake any obligation to update the forward-looking statements made today. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in our press release issued today, a copy of which may be obtained by visiting the Investor Relations website at investors.ategrity.com. I will now turn the call over to Justin. Justin Cohen: Good evening, and thank you all for joining Ategrity's third quarter 2025 earnings call. This is Justin Cohen, and I am joined here today by Chris Schenk, our President and Chief Underwriting Officer; and Neelam Patel, our CFO. Ategrity delivered record results this quarter. Gross written premiums grew 30% year-over-year, including accelerating growth in property lines. Our combined ratio improved to 88.7% as we began to demonstrate operating leverage. With investment income, our adjusted net income was $22.8 million, translating into 78% year-over-year growth. These results were ahead of guidance despite industry data pointing to a deceleration in the E&S market. We believe that's because we are executing a model that is truly differentiated. It's built on specialization, analytics, automation and distribution, and we are capitalizing on these strengths to drive sustainable growth and profits. This was a quarter characterized by expanding top line, operating leverage and improved economics. First, on top line growth. We achieved a 30% increase in gross written premiums, supported by 70% submission growth. That's 7-0, not 17. Our distribution network is exceptionally large for a company our size, and we are driving deeper engagement by bringing new and attractive solutions to the market. Second, on operating leverage. Our operating expense ratio improved 2.7 percentage points as prior investments in infrastructure and process efficiency began to deliver. Expense growth moderated while earned premiums accelerated, and we are realizing this upside even as we invest in new lines of business and next-generation technologies that are expected to drive the next phase of leverage. Finally, on improved economics. Our policy acquisition ratio improved 1.8 percentage points as we continue to optimize our business mix. We have been deliberately increasing the percentage of our premiums written in our brokerage channel where acquisition costs are lower. This has been underway for several quarters and is now earning through in our results. Now turning back to the broader E&S market, where headwinds have emerged in certain areas. Competitive intensity has increased, but conditions remain rational in the small- and medium-sized space. This segment has remained relatively insulated given the challenges that new entrants face in trying to profitably write $10,000 policies without the requisite scale. Against that backdrop, we are focused on extending Ategrity's structural advantages of speed, competitive products and technical pricing to drive disciplined share gains. So with that, I'll now turn it over to Neelam for the financials. Neelam Patel: Thanks, Justin. We delivered another strong quarter of financial performance. Adjusted net income came in at $22.8 million, up from $12.9 million in the same quarter last year, driven by top line growth, improving margins and higher investment income. Let me walk you through the main line items, starting with premiums. Gross written premiums grew by 30% in the quarter. Casualty premiums increased by 41%, while property premiums went up by 11%, both contributing meaningfully to our overall growth. Net written premiums grew by 42%, reflecting a higher retention rate year-over-year. Net earned premiums were up by 29%, reflecting the natural led earnings recognition of our growth trajectory and a quota share reinsurance treaty we placed in 2024. Net earned premium growth accelerated sequentially, consistent with our prior comments of abating headwinds in the second half. Our fee income came in at $2.2 million compared to $0.2 million a year ago, reflecting higher policy fees as we continue to implement standard market practices. Turning to underwriting results. Our underwriting income for the quarter was $10.6 million, up nearly 208% year-over-year. This translates into a combined ratio of 88.7%, an improvement from 95.3% last year due to reductions in both our loss and expense ratio. The loss ratio declined 2.1 points to 60% with strong underlying results in our property business. In the current quarter, we had no prior year development compared to 1.7 points last year that were related to a change in how we reserved for legal expenses. Catastrophe losses represented 4% of net earned premium this quarter, down from 12.1% last year, which had an active hurricane season. Our expense ratio declined 4.5 points to 28.7%, reflecting improvements in both operating efficiency and business mix. Operating expenses represented 10.8% of net earned premiums, down 2.7 points from last year and also lower than the second quarter of 2025. The declines were driven by expense leverage and higher fee income. Policy acquisition costs as a percentage of net earned premiums declined to 17.9% from 19.7%. The improvement was primarily driven by favorable mix shift as growth has been concentrated in lines of businesses carrying lower gross commission rates and higher ceding commissions. Moving on to investment results. Net investment income was $11 million in the third quarter, up from $6.8 million last year, driven by increased assets from our IPO and higher yields on our fixed income portfolio. Realized and unrealized gains contributed another $9.2 million, supported by strong results in our absolute return portfolio. Our effective tax rate for the quarter was 20.6%, bringing the net income to $22.7 million. Adjusted net income, which adds back IPO-related compensation costs was $22.8 million or $0.46 per diluted share. Turning briefly to the balance sheet. Our cash and investments grew by $86 million from the second quarter to $1.1 billion, reflecting strong operating cash flow. Book value increased by $29 million, driven by $23 million attributable to increased retained earnings and the rest to increased AOCI. Our book value per share ended the quarter at $12.24. With that, I will hand it over to Chris to talk about our underwriting and operating performance. Chris Schenk: Thanks, Neelam. Ategrity grew 30% and improved margins this quarter. I'll talk to you about the contributors to those results, and then I will provide some perspective on why our differentiated underwriting approach is resonating in the current market. I'll start with top line production. Retentions remained stable. We achieved mid- to high single-digit renewal rate increases. That was in both property and casualty and new business growth was very strong. Four key points illustrate the quality of this growth. First, there was record high demand for Ategrity quotes. This was in both property and casualty, where we saw submissions increase more than 70% year-over-year. Second, we saw stronger partner engagement. Our 2023 and 2024 distribution cohorts contributed meaningfully. They delivered same-store growth in the range of 80%. Third, we expanded our distribution reach. After more than doubling our distribution network from 2022 to 2024, the number of active distribution partner once again grew this year by another 25%. This extends our runway for growth. And fourth, we maintain discipline underwriting. Our hit ratio was in line with plan. That is low single digits in brokerage, and this is because we are staying selective and firm on price. Last quarter, we highlighted 3 growth initiatives: the retail trade vertical, which we launched in brokerage, our professional liability lines and Project Heartland, our Midwest regional strategy. Each once again contributed meaningfully in Q3. Together, they accounted for about half of our growth. Turning to underwriting margins. In our property book, we experienced lower frequency and lower severity. And relative to expectations, casualty losses are developing favorably. We recorded a conservative firm-wide loss ratio of 60%, although our pricing loss ratio is meaningfully lower. From an operating leverage standpoint, while net written premium grew more than 40%, we realized efficiency gains across our business. This translated into only moderate expense growth. In Q3, we processed record submissions and quotes and manage a larger in-force book, all while delivering the speed and service that our brokers expect. As we maintain a conservative hit ratio, automation continues to safeguard operating margins. We also reduced acquisition costs. This is because we wrote more business in our broker channel and capitalized on 2 new growth initiatives. The first initiative is our digital brokerage channel. We launched a technology-enabled solution that provides small business agents with streamlined access to our brokerage product. These agents occasionally need to place midsized policies and have limited options to do so. Through Ategrity's digital brokerage, they can now receive quotes on midsized accounts with what we believe is market-leading response times. The second initiative is a specialty offering for our real estate vertical. We innovated a product that addresses the evolving lending requirements for multifamily developers. These requirements are imposed by Fannie Mae, Freddie Mac and the larger banking sector, and we have developed a casualty product that responds to those requirements. This is very different than our standard casualty offering. And as far as we know, there's nothing comparable in the market. As a result, we have been able to distribute it while achieving superior policy acquisition economics. Finally, turning to our competitive positioning. In Q3, a record number of brokers wanted to present an Ategrity quote to their clients. As we have talked about, our pricing tends to be higher than our competitors. So we believe that this demand is driven by the appeal of our product. Instead of relying on unfair exclusions and wording ambiguity, we deliver fast, high-quality quotes with coverage that the insured actually needs. And for that, we charge a fair and technically sound price. Brokers are telling us that they want an integrity quote because they know and trust our product. With tighter lending standards and a more volatile political and judicial environment, there is heightened focus on coverage quality and contract certainty. And our product strategy, which offers clear comprehensive coverage with only the necessary exclusions is standing out in a very crowded marketplace. So those are some of the dynamics behind our results. In short, Ategrity's productionized underwriting model is doing exactly what it was designed to do. It's delivering disciplined growth and expanding margins and at the same time, it's strengthening our position in the market. With that, I'll hand it back to Justin. Justin Cohen: Thanks, Chris. This was another strong quarter for Ategrity. It reflects an organization that is analytical, efficient and innovative. We are a company that does what we say we're going to do, and we remain focused on driving towards sustainable world-class returns. For the second quarter in a row, we delivered gross written premium growth more than 20 percentage points above the E&S market. As we look toward the fourth quarter, we believe we have the partner engagement, submission flow and delivery capabilities to achieve that outcome again. Based on the industry's current growth pace, we believe that would translate into roughly 30% year-over-year growth. From a margin perspective, we are aiming to deliver a 90% combined ratio in the fourth quarter. Finally, we look forward to spending time with investors and analysts in the days ahead. In addition to discussing our results and strategy, we would love to hear investor input on balancing additional insider support through open market purchases with the desire to increase public float. We intend to increase our float in the course of time at appropriate valuations, as other specialty insurance companies have after their IPOs. We greatly care about doing the right thing for investors, so I would appreciate your feedback on this topic. With that, I thank you again for your time and interest in Ategrity. Operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Alex Scott with Barclays. Taylor Scott: First one I had is on the property market and just what you're seeing in the environment. On the casualty side, it sounded like some of the things you're doing are pretty bespoke and nuanced. Do you feel like as we head into 2026, you're going to be able to continue growing in property, the rates you've been growing though? Justin Cohen: Yes. In property, if you'll recall, we talked about last quarter that in the third quarter of 2024, we began raising rates actually somewhat materially in small- to medium-sized property. In the third quarter of this year, therefore, we lapped those rates. We're not going to get into 2026. But as we're looking forward, you see that we accelerated. Well, you see that we accelerated in this quarter from the growth from last quarter, and we're hopeful that we can achieve the same. It is more of just doing -- executing our business model and having now gotten ahead of the curve on pricing. Taylor Scott: That's really helpful. Second thing I wanted to ask you about is just some of the continuation of what we've been doing with technology, but I think it was mentioned earlier on the call that you were looking to advance some of that further. And I was just interested in some of the things you're working on, some of the areas you might push on the tech front to further what you're doing in the market. Justin Cohen: Great. I'll pass it over to Chris to talk about some of the innovations that are actually launching now and others as well in the future. Chris Schenk: Yes. So as you know, we've been launching pre-price solutions and some OCR AI-enabled intake automation processes and a number of different innovations across the business. We have an innovation lab that we funded about a year ago that is now bringing all of these stand-alone solutions into one single platform. That is going to be a critical unlock for us in the coming quarters. But what it does, it makes delivery of innovation much more efficient and which we already have an efficient approach to development. But in terms of maintenance of an innovation ecosystem, having everything in one platform allows us to get more value out of it and also enhance it as technology evolves. Operator: The next question comes from the line of Pablo Singzon with JPMorgan. Pablo Singzon: With the employment picture and small business optimism softening a bit, have you seen any change in the economic health of your clients? Justin Cohen: We have not seen any direct change, but it really matters vertical by vertical. Pablo Singzon: Yes. So in the small -- you said change in our clients? Justin Cohen: Yes, the end clients. The end clients. So there is a dynamic of what we call nano accounts. Nano accounts are accounts that they're very -- they're priced at admitted market pricing. So let's say, a small business with sub-$1,000 pricing. That business is always in between E&S and admitted and there is some pulling back of it into the admitted space. Sometimes a lot of that business also go away. So it has never been core to us, and they don't provide really good economics because lower retention and they could be volatile. So we are seeing that sort of disappearance again of the nano accounts. So it's not a lot of premium. Chris Schenk: It can be volume. But in terms of the -- we are 2 degrees removed from our end clients, but we do study that, and we study the economy. We talked about last quarter how each of our verticals has a different sensitivity. But overall, we have not seen any material change in our end clients' financial and economic health. Justin Cohen: Yes. So what -- where we are seeing some change in consumer preference or insured preferences is in the midsized middle market clients. So think of a family real estate investment firm, 5 apartment buildings. They're now facing tougher lending requirements from Fannie Mae and Freddie Mac. Banks are scrutinizing their financing. Meanwhile, there is regulatory uncertainty that's being driven by adoption of building codes on the property side as well as some things like even the New York City municipal elections, which would affect housing and real estate development. So you have all these dynamics that they are really attentive to coverage. So I've had the privilege of meeting some of our retailers and actually some end insurers over the last quarter. And that's what I'm hearing from them. They're worried about these developments and how they will affect coverage. Pablo Singzon: Okay. And then my second question, the submission volumes, interesting data point there. Are you able to process and quote as much of those submissions as you're seeing? Or is there any bottleneck in your operations right now? Justin Cohen: No, we have a very efficient operation, and that's been part of our story is to be able to handle this kind of volume, and we've done it. And we talked about during the IPO process, how we had front-loaded the investments ahead of growth to be able to manage these. One thing we have done is we've been very conservative about the box and our underwriting appetite. Chris, do you want to talk about that? Chris Schenk: Yes. So on the underwriting -- sorry, the restriction. Ultimately, what you're seeing is a lower hit rates for our business or stable hit rates at relatively low levels, which really speaks to the conservatism of what we're doing, but we can handle this volume. Justin Cohen: Yes. Sorry. Yes. So in one of the -- in my comments, I said also quote volumes went up, right? I think that's a really strong story for us because we have been investing in the technology capability to handle high volume at the top of the funnel, the top of the funnel being submissions, right, where you need to sort through a lot and not everything is going to fit the box, and we have been tightening the box in each of our channels. So we are able to -- we were able to handle and absorb that volume with significantly lower relative cost. And when it comes to quotes, our streamlined quoting process for the small to medium-sized to low medium-sized accounts, which is our simplified productionized underwriting where we're looking at the essential things that matters for the risk at hand and not following the industry's randomness, if you will. For that category, we were able to crank through a lot of quotes with the resources we had in place. Operator: Your next question comes from the line of Elyse Greenspan with Wells Fargo. Elyse Greenspan: My first question, within the fourth quarter guide, right, you guys said that you expect to continue to grow about 20% above the industry. Is that a target? Like when we think out to '26, '27 and beyond, is that something that you guys think you can kind of hit on a consistent basis? Justin Cohen: So thanks for that question. We're not going to talk about '26 guidance, but this is the way we think about the business. And you can -- as we come to the next quarter, you'll hear from us in how we describe how we expect to take share, and we measure that in outsized growth relative to the market. We obviously think we have a big runway here. Our network continues to grow, and we have lots of -- not only our existing growth initiatives that you've been hearing about are still in the early days. We also have new growth initiatives in the pipeline that are to come. As you heard, these type of growth opportunities are really truly proprietary to us, and therefore, we think we have an edge to be able to continue taking share in the market. Elyse Greenspan: And then the fee income, right, piece continues to grow a little bit over $2 million in the quarter, and I think, right, just around 2.4 points a contra on the expense ratio. Is that -- how do we think about modeling going forward just relative to the fee income contribution? Chris Schenk: Yes. The fees can be variable depending on the type of business that we write in the quarter. This happened to be a quarter that lined up for higher fees. We think that we'll even guide to here that as we look to Q4, we think the number would be more like $1.5 million. But furthermore, when you think about how you model that as well, there are direct third-party expenses that go along with those fees. So it's not just a pure top line adjustment. Justin Cohen: So it's really important to understand there's a service at the end of the fee, right? So if the service is required for the insured at hand, that's when we charge it. So depending on what we're writing, it's not premium driven, it's volume driven. Elyse Greenspan: That makes sense. And then from a loss ratio perspective, it doesn't sound like there was anything one-off in the loss ratio. Obviously, some shifting with mix shift towards casualty. But anything within the loss ratio? I know there was no PYD and a small amount of cat, but anything else you would call out in the quarter? Chris Schenk: No. I would just describe that if you're looking at our ex-cat ratios, for example, and you will see that there was some increases there. This is really all associated with conservatism in property. And so we have had a lower, effectively a lower amount of claims. But as a public company, we are not taking any risk in terms of late claims coming in. So we have booked at higher losses. So that's really the dynamic that you're seeing there, conservatism in our property. Elyse Greenspan: And with the conservatism in property, would you settle that in the fourth quarter like in the current year? Or if there's favorable development? Or would that be something you would think about next year? Chris Schenk: It really is rolling, and it's really actuarial based. And so we leave that to our Head of Reserving to do that and look at it on a claim-by-claim basis as well as the trends and the expected downside in terms of late reported claims. Operator: Your next question comes from the line of Andrew Kligerman with TD Cowen. Andrew Kligerman: Justin, I think you guided to just a little while ago to like a 90% combined in the next quarter. And I was -- I thought that the expense ratios were particularly compelling, particularly the operating expense ratio at 10.8%, but the acquisition expense ratio worked better than I had expected as well. Should we be looking at the overall expense ratio at about 29%, maybe a touch less than that as a run rate in that 90% combined ratio that you just cited? Justin Cohen: Yes. That is not far from it. We -- there will be some small benefits coming through on the commission ratio sequentially. but that is going to be an overtime type situation. On a gross basis, it is -- there are strengths there. Remember also that we have the quota share rolling off, which is going to provide more income to us, but that will be an offset as we move forward as well. And then with the operating expense ratio, with the adjustment in fees, there will be a tick up in the fourth quarter, but we are very enthusiastic about our ability to continue to drive operating leverage over time. And so those are some of the dynamics there, and that would lead to that 90% combined. Andrew Kligerman: Got it. That was helpful. And yes, I mean, pretty exciting 70% increase in submissions and I know earlier you were talking about the hit ratio not being super high. But what I'm kind of interested in is the expansion of your distribution and the type of expansion? Is this coming mostly from the brokers as opposed to the agents that are doing kind of smaller ticket stuff? Like maybe a little color around the type of distribution expansion you're seeing more of. Justin Cohen: Yes. It is very broad-based across both brokers and agents, and it also weighs in with our growth initiatives, which are -- we're obviously opening new relationships for these growth initiatives. I'll pass it over to Chris to talk further about the details there. Chris Schenk: So we're attracting sort of a broad spectrum of agents and brokers who focus on the small and medium-sized risk that we are aligned to plus those who have access to unique geographies such as the Midwest. So it's really exciting to watch the numbers come in on our Midwest strategy because these are partners who are -- they are in South Dakota, and you may not think many of our peers would maybe not even visit them, and we have and we have built a strong relationship and explain the value proposition, it's appealing. So that's one demographic that's driving it. The other demographic is really what we've talked about before. It's the digital native brokers. It is that new generation of brokers who are a little bit fed up with the way the business is transacted in this space. And the 5 days -- waiting 5 days to hear back if you're even going to get a quote is just not working for them. we are able to offer something that is appealing. There's a lot of enthusiasm there. And then there is your sort of more established brokers within the larger agencies within the larger brokerages who really value just the straightforwardness of what we're offering to the market. They know what they're getting. They have gone through cycles. They've seen p gimmicks and they're kind of over it. And when you can speak plainly to them and say, this is what we offer, this is what we don't do, it works. Andrew Kligerman: Got it. And maybe if I can just sneak one more in. I was on the Chubb call this morning, and they talked about pricing being particularly soft in property in the large end of the market, and now it's kind of seeped into the larger end of mid but the lower end of mid, it just hasn't gotten there yet and certainly not in small per their commentary as well as many others. So my question to you is, how are you thinking about pricing down the road? Do you think your small business and maybe the lower end of mid will hold up for a long period of time? Or do you see this pricing pressure keeping in eventually and maybe sooner than later? Chris Schenk: Thanks, Andrew. We are endeavoring not to make a market call here. We are -- what we are seeing is we are getting mid- to high single-digit rate increases in property, which is in our space, which is really quite good. You'll remember that we -- I mentioned earlier that we had higher rate increases that we've anniversaried, but we're getting solid rates. Justin Cohen: Yes. So pricing is one of those foundation stones for us. Technical pricing cost, charging the cost of product is essential. So I mentioned product, and that's becoming more and more the requirement. It's not optional for the insured, right? So there's been this hypothesis that it's all about pricing, customers don't care about coverage once they're in E&S. Well, that's not the case anymore because there's a mandate. There's a requirement at the federal level. So I'll give you -- if you'll indulge me, I'll give you a very obscure example that is really impactful and what's happening in the industry right now is nobody else is thinking about it, which is a problem. So there were -- there's new national electrical codes that were established in 2023 that have to do with things like basically grenifying of buildings, right? So when there's a coverage on the property, ordinance and law, where you have to effectively coverage for bringing buildings back up to code once they are repaired. Well, these new requirements are driving up the requirements for ordinance law. So people might say property market is soft, but someone is going to get a loan and they need to now have 25% of their value -- building value towards ordinance and law. So when you start talking about coverage and what is required, they're going to pay a premium for that because they need the loan. So it's not a -- in that mid space, I don't see a soft market or a perceived soft market filtering up. I see actually maybe a hardening in that space because of lending requirements. Operator: The next question comes from the line of Matthew Heimermann with Citi. Matthew Heimermann: A couple of quick ones, I think. Just it's not like you're growing property very rapidly relative to total. But I'm just curious, how much more growth before we have to think about reinsurance structures changing relative to how you've historically articulated PMLs and other risk tolerance metrics. Chris Schenk: Yes. No. If you'll recall, we operate a limited cat strategy, and so we are not exposing ourselves to incremental amounts of cat risk. And our growth is manageable here, and it's well within the context of our existing reinsurance contracts. Matthew Heimermann: Okay. And that's just tying the -- or connecting the dots that's a lot of the property growth you talked about getting was going to come out of Midwest strategy, and that's effectively what we're seeing at this point? Justin Cohen: Yes. So we have talked about our geospatial spread approach to writing property. That's really coming through in the Midwest. There are about 730 hamlets, I'll call them across the Midwest where we never had a footprint, and we are now writing business there. Those are large spaces where we are spread out, right? So that geospatial spread element is coming through as we win in the Midwest. The Midwest, as I mentioned, was along with some other initiatives was responsible for about 50% of our growth, and that was particularly strong in property. So we are not adding in Florida. That's the thing. We're not adding in Texas. We're not only adding in Texas and Florida rather. We are everywhere. Matthew Heimermann: Okay. That's good. As a Minnesota kid, I never really thought about my backyard as the English Country side, but I appreciate the compare. The other -- a couple of other questions I have was just, can you give us any sense of just kind of what the growth rates look by maybe the premium cohorts because you add a couple of brokerage clients through your digital channel with a small agent in the Midwest, right, like that's a disproportionate kind of impact. So I'm just wondering if there's other -- another lens on growth kind of by account size or cohorts. Justin Cohen: Yes. The account size bands have not changed meaningfully in any way. We have -- as Chris mentioned earlier, we've written less of these nano accounts, but we're also writing small midsized accounts. So there are offsets there. So really, overall, the bands themselves are not changing very much. Matthew Heimermann: That's helpful. And I guess the last one is -- well, one numbers question quick was just can you give the -- can you split the utility income disclosure in the press release between kind of income and mark -- sorry, in your investment income disclosure, can you split the utility income between income and marks? Justin Cohen: Yes. It's less than $100,000 net in core NII for the utility and infrastructure investments in NII. Are you asking for further split in the realized and unrealized gains? Matthew Heimermann: No. If I've got that, I can -- I think I can back that out of the utility, and then I can wait for the queue for the rest. The other question was just can you elaborate -- you used this term improved economics, and it wasn't clear as I was listening and maybe I didn't hear what you were trying to say. But in your opening comments, you talked about improved economics. in the quarter. And it implied more than just kind of what's happening with the expense ratio, but I just wondered if you could revisit that if there's anything you'd embellish or clarify there. Justin Cohen: Yes. We were referring to the holistic nature of now that we have scale in brokerage that as we're writing more business in brokerage, that is accretive to our bottom line. And you're seeing that in the commission ratio. You can see it in the expense ratio, but you can't exactly see how that's coming through, but that's what's happening. Matthew Heimermann: That was helpful. I was trying to contrast that with your rate comment, and it wasn't obvious from that, but that would have in and of itself explain it. Justin Cohen: We're expecting for that to acquire an account to fill it. Operator: Your last question comes from the line of Alex Scott with Barclays. Taylor Scott: I just wanted to see if you could give any color on products that you may be prepping to expand into the brokerage area like going upmarket a bit. Can you talk about if you have any of that kind of activity going on over the next, call it, 6 months or so? Justin Cohen: Right. In terms of the -- this question of upmarket, what you've seen, we don't think of it that way. What we've done in the past 6 months is we have taken products and verticals that we underwrite and we have opened them in the brokerage channel. Those are paying off. And those -- we're going to continue to have those work over the next several quarters. Anything else, Chris, you'd like to add to that on product? Chris Schenk: Yes. So we launched a retail vertical, most recently in brokerage, that's an example of what's to come. In terms of true product launches, nothing on the road map that we can discuss now. And what we are continuously doing, though, for the micro segments we're in, we are genuinely studying the external environment and trying to model out those cause and effect scenarios and optimize our offering within each of those verticals. So when we think of product, we don't think about doing more products, we think about like really meeting the evolving needs of these markets that we're already in, and that's a huge opportunity for us. Operator: There are no further questions at this time. Management, do you have any closing remarks? Justin Cohen: No. We just want to thank everyone for joining and listening, and we look forward to catching up with many of you in the days ahead. Take care. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.
Operator: Welcome to the conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Anand Srivatsa: Okay. Thank you, and welcome again, everyone. This is Anand Srivatsa. I'm the CEO of Tobii. Joining me today is Asa Wiren, who is our Interim CFO, along with Rasmus, who heads our Investor Relations. I want to remind you that I have announced my decision to resign from Tobii in August of this year. My intention is to move back to the United States for family reasons, and my family has already relocated. I will remain with Tobii in my current role until the end of January 2026, and the Board is in the process of looking for a new CEO. And at this point, we do not have any additional information to share on the process. Now let's move on to the quarterly results. Q3 was a weak result for Tobii on both the net sales basis as well as on overall results. The net sales reduction is related to the end of acquisition-related revenue as well as lower-than-expected revenue in all 3 segments. In the Products & Solutions segment, we saw a year-on-year decline in revenue because of weakness in the U.S. market, while other regions demonstrated growth. In the Integration segment, we saw weakness in our XR NRE project pipeline, but we do expect to see some improvement in Q4 as customers shift their focus to new smart glasses type of solutions. On the Autosense side, we had a reduction in year-on-year revenue, but this is related largely to revenue recognition timing based on NRE projects. We expect that the Autosense business will show robust growth on a full year basis, and we expect that quarterly revenue levels will become more stable as we transition from NRE to license revenue over the next couple of years. The overall lower levels of revenue resulted in lower overall result, but we have still taken steps to move towards profitability with one clear example of our -- being our cash-related OpEx being 30% lower than the comparable quarter last year. Beyond the financials for the quarter, this was a milestone quarter for our Autosense business with our single camera DMS and OMS offering launching at IAA Munich. I will speak more about the significance of where we are with Autosense at the end of this presentation. Finally, we continue to be extremely focused on addressing our financing needs for the company. This has been an explicit focus over the last 1.5 years. Evaluating where we stand at the end of Q3 2025, we assess that we need additional cash to ensure that we are adequately financed for the next year. We intend to take the following steps to address this. We're taking a new cost savings target to reduce cash-related OpEx by SEK 100 million versus our Q2 2025 baseline for the 12 months that follow that timeline starting in Q3 2025. We're also continuing our strategic review process, including the divestment of assets, and this effort has made progress over the quarter, and we expect that a successful outcome will substantially strengthen our cash reserves. The Board has also selected an external adviser to evaluate capital market options as a backup for these strategic initiatives if needed. With the combinations of these tools, we believe that we can address our financing need for 2026. Before we discuss our financial results in detail, let's take a quick overview of our 3 business segments. Tobii is organized into 3 business segments with each of them at different stages of maturity and scale. Our expectations are that the Products and Solutions and Integration business segment will be profitable in the near-term, while Autosense is still in an investment phase. The Products & Solutions business delivers vertical solutions to thousands of customers every year, ranging from university research labs to enterprises and PC gamers. In Q3 of 2025, the Products & Solutions business represented 53% of Tobii's net sales. The EBIT result of Q3 of negative SEK 22 million is a slight improvement versus our last year results despite revenue decline because of our lower OpEx level. The Integration business segment engages customers who integrate Tobii's technologies into their offerings. This segment also includes some revenue from acquisition-related revenue. The onetime effects of that have ended in Q2 2025. In Q3 2025, this business represented 43% of Tobii's net sales, and this business was profitable for the sixth straight quarter. The result for the quarter does reflect temporary effects of the Dynavox contract that we signed in Q2 2025. The Autosense business segment sells driver monitoring and occupancy monitoring software solutions to automotive OEMs and Tier 1s. In Q3 2025, this business represented 4% of Tobii's overall net sales and delivered overall net sales. The business delivered minus SEK 42 million EBIT, a slight improvement versus last year despite a lower revenue level, lower capitalization and higher levels of depreciation. We expect the Autosense business to show solid revenue and profitability improvement on a full year basis. Now over to Asa for the detailed financials. Asa Wiren: Thanks, Anand, and good morning, everyone. Needless to say, Q3 was a weak quarter. Product & Solutions has its market challenges, for example, in the U.S., integrations, where the last part of the Dynavox deal did not fully compensate for the acquisition-related revenue that ended in Q2. For Autosense, we see a timing matter. Operating result and margin have decreased compared to last year, even if our cost levels is significantly lower. On that note, I will already now put some more flavor to our new savings target that Anand mentioned. When we presented our Q2 results, we emphasize that our cost reduction and efficiency focus still remains. Our target is to lower cost by at least another SEK 100 million for the 4 quarters starting Q3 2025 compared to Q2 2025. This is the same methodology we used for our previous initiative for which we reached savings of SEK 263 million, SEK 63 million above the target. This demonstrates that we have the ability to deliver. The savings will further rightsize the company for us being able to continue our product development and meet customer demands. That being said, let's move to Page 6 and look at some group details. I've already commented on the figures as such, but what this illustrates is the impact of the work that has been done. We see overall EBIT and EBIT margins lower than the comparable quarters last year. This is, of course, driven by lower revenue levels, but also by lower levels of capitalization and higher level of depreciation in this quarter. If we normalize for effects of capitalization and depreciation, we would have an improved level of profitability in this quarter. This improvement is due to the significant progress we have made on cost reductions. We are on the right track, but more work needs to be done. Turn to Page 7 for some Product and Solutions comments. The negative sales trend continues with a decline of 5% in organic growth and is mainly related to the Americas. Cost level is lower than previously. And to remind ourselves, in Q2 this year, write-downs of SEK 33 million impacted EBIT. Turn to Page 8 for some integrations comments. The last part of the Dynavax prepurchase deal did not fully compensate for the acquired imaging-related revenue that ended in Q2. As mentioned in Q2, from Q3 and onwards, there is a quarterly minimum guarantee in the Dynavax deal until 2029. We also saw fewer nonrecurring revenue projects during the third quarter. Turn to Page 9 for the Autosense segment. This segment is still in a phase with lumpy timeline dependent revenue as well as with nonrecurring revenue. These elements impact both how revenue is recognized and cost, such as capitalization and depreciation, as mentioned before. In Q3, revenue was pushed forward, capitalization decreased and depreciation increased. Let's continue to Page 12 for comments on our balance sheet and cash flow. During Q3, Tobii repaid SEK 91 million of its COVID-related tax release. This remaining -- the remaining debt has been reclassified to short-term and long-term interest-bearing debt previously reported as current liabilities. In Q4, we received the last SEK 45 million from Dynavox prepurchase deal. Where we are right now, there is a risk of insufficient financing for the coming 12 months. Having said that, with the measures taken and in progress, I repeat that we believe we can address the financing needs for 2026. With that said, thank you for your time, and over to you again, Anand. Anand Srivatsa: Thank you, Asa. Now I'm going to spend a few minutes talking a little bit more about Autosense. Q3 2025 was a milestone quarter for this business, and I want to share with you where we stand in our journey to become a leader in automotive interior sensing. First, let's take a look back at what has happened since our acquisition of the FotoNation business in February 2024. Since making the acquisition, we have built a comprehensive and combined road map that enables us to offer a leading in-cabin sensing product portfolio. This was capped off with the successful launch and final release acceptance of our SCDO product in Q3. We have continued to demonstrate our credibility in bringing our solutions to vehicles on the road over the last 1.5 years. We've increased the number of OEMs who are choosing Tobii solutions from 9 to 12, and our solutions are being deployed in volume from 300,000 vehicles on the road at the time of the acquisition to more than 800,000 vehicles currently. We are working hard on ensuring that our solutions meet the demanding requirements of the automotive industry in terms of quality and process. Notably, we have achieved ASPICE Level 2 for our SCDO program operating as a software Tier 1 to a leading European OEM. Our solutions have also achieved regulatory approval with EU homologation for both our DMS and SCDO offering. Finally, we have built an efficient and empowered team where Autosense engineering has been consolidated into Romania, and the organization has more centralized responsibility to deliver on our ambition by having functions from engineering to sales reporting into the same leader. We have realized the investment synergies as part of getting this efficiency by reducing our investment levels by more than 40% versus our 2024 peak. Looking back, I would say that we have substantially realized the rationale for the acquisition, including the synergies we expected. We have done this by reducing our overall investment, building a leading product portfolio and increasing our credibility in the automotive industry. A critical aspect of building automotive credibility is showing that your technology can get through the rigorous testing and validation of OEMs and start shipping in vehicles on the road. Tobii's Autosense Interior solutions have been shipping in vehicles on the road in 2019, and we continue to see significant growth in this footprint. As of the end of Q3 2025, we have more than 875,000 vehicles on the road with Tobii solutions, and we expect that this number will continue to accelerate as our high-volume passenger car wins get into production in 2026. Now I want to talk a little bit more about building a leading product portfolio for in-cabin sensing. The rationale for making the acquisition of FotoNation was the realization that for success in this space, Tobii required a full offering, not just driver monitoring systems. We could already see in 2023 that RFQs were looking for offerings that could support both driver and occupancy monitoring. Our belief was that the market would see increased adoption of DMS and OMS to the point that they would both become required capabilities. We are already seeing the early stages of this play out as we expected. Camera-based DMS is already a requirement in the EU starting in 2026. And we now see that Euro NCAP requirements for 5-star safety require more occupancy monitoring capabilities over the next few years. We believe that for new platform shipping in 2028, OMS will be required to get a 5-star rating. Tobii has been shipping DMS and OMS systems into vehicles in the road since 2019 and 2021, respectively. We recognize that while in DMS, we are not the market leader, our bet has been to move -- that move into a leading position in the space is based on our leadership in single camera DMS OMS and that this method will be the preferred deployment for in-cabin sensing systems in the future. Over the last 3 years, Autosense has pitched single-camera DMS OMS, but this approach has been met with skepticism as companies were unsure whether DMS from a rearview mirror location would get regulatory approval. This concern from the industry reflects the fact that DMS methodology from a rearview mirror position is quite different than the typical DMS systems that are deployed today, which have a much clearer and closer view of the driver's face. Given this context, our achievement this quarter is extremely meaningful in both getting EU homologation for our support regulatory approval and getting acceptance for our final release for our premium European OEMs launch in the second half of this year. We expect that our SCDO system will start shipping with our OEM in the second half of 2025 and be in end customers' hands in early 2026. Now we have expected over the last year -- last 3 years that a single camera DMS and OMS solutions mature, that the industry as a whole will also validate our view that this approach is not only feasible, but the most cost-effective approach for in-cabin sensing. The question, of course, is when would the industry take notice of SCDO and share their view on this approach? I am thrilled that we have seen significant industry momentum already this month with the keynotes and presentations at in-cabin Barcelona 2 weeks ago. At the event, Volkswagen, Magna and Gentex, leading OEMs and Tier 1s in the industry, shared their view of the suitability of doing DMS and OMS from the rearview mirror position. Volkswagen was even more specific, as you can see the slide that's shared on the screen about the benefits that this approach offers over traditional DMS and OMS systems that require 2 cameras. They shared that the single camera approach from a rearview mirror position saved over 30% of BOM cost, implementation cost, design complexity, et cetera. This is a stunning number that validates our view that SCDO will likely be the volume deployment for in-cabin sensing in the future. The outcome from this event is certainly surprising to us, but surprising for industry analysts as well. To quote Colin Barnden, principal analyst from Semicast Research from his post on LinkedIn following this event, he says, "What came over me in Barcelona is the sudden shift in industry awareness of the viability of both driver and occupant monitoring from the mirror. For several years, it has been clear there was a campaign of misinformation from some parties saying that the mirror is unsuitable for driver cabin monitoring. Those voices magically have become advocates of this idea already. He declares in his post that after the event, the question is, why wouldn't an OEM do DMS and OMS from the mirror? We at Tobii could not agree more. With a proven and mature offering that has gone through grueling acceptance test at one of the most demanding OEMs in the world, Tobii is well positioned to win as more OEMs come to the conclusion that DMS and OMS from the mirror is the most cost-effective and scalable approach for in-cabin sensing. Okay. Let's wrap up. Q3 2025 was a mixed quarter where we saw significant milestones achieved in Autosense, but where we saw weak revenue in the quarter that resulted in lower profitability. Our ambition in the long-term is clear that we intend to be leaders in all of our business segments and execute in a profitable and financially self-sustainable way going forward. We are already leaders in our Integrations and Products and Solutions business segments. And the progress that we have made so far in the Autosense business segment and industry validation of our approach puts us in a great position to build a leadership position as SCDO scales in the market. In the near-term, we have a key focus on addressing our financing needs. We will address this with 3 major approaches. The first is our new cost reduction target, which will reduce our cash need in 2026. We're also executing on a strategic review, which includes potential divestments, and our belief is a successful outcome in this area will substantially strengthen our cash reserves. Finally, the Board has engaged an external adviser to evaluate capital markets options as a back for these strategic initiatives. We are confident that with these tools, we will be able to resolve our near-term financial needs and allow us to focus on our objective to achieve sustained profitability, which we remain fully committed to. With that, thank you, and over to Q&A. Operator: We have received several questions about our combined DMS and OMS solution, how our offering compares to our competitors, what Tobii's position in the market is relative to our competitors and how we view the time line regarding ramp-up of SCDO. Can you please provide a comment on these questions? Anand Srivatsa: Absolutely. As I shared in my deeper dive on Autosense, we believe that we have been the clearest voice around the fact that the most scalable and most cost-effective approach for in-cabin sensing is a single camera DMS and OMS offering from the rearview mirror position. There are other players who have launched hardware solutions. And from our proprietary research, we believe that at the time of our launch, we have the most complete offering as well as an offering that delivers both DMS and OMS. We believe that our position in this space is that we have the leading offering here as well as an offering that has both proven itself and has matured as we have had to go through acceptance as a software Tier 1 for one of the most demanding OEMs in this space. We acknowledge that, of course, in this in-cabin sensing arena, we are not the -- driver monitoring systems, but our bet for getting to a long-term leadership position is that as SCDO sales, our leading position will put us in a great place to go and win future RFQs. We recognize again that over the last couple of years, there has been industry skepticism about whether a single camera approach will work, especially because the position of the sensors are farther away from the driver. We believe that a lot of these concerns are being addressed now with the successful launch that we have enabled, and we believe that RFQs will increasingly request this type of approach, and we are well positioned to win in the space. Operator: Is Tobii provider for eye tracking to Samsung Moohan? Anand Srivatsa: Samsung announced a new high-end VR headset. We are not the eye-tracking provider for that headset. Operator: Did you receive the SEK 30 million out of the SEK 100 million in Dynavox revenue in cash this quarter? And did you also receive the SEK 45 million in royalty from Dynavox from previous quarter this quarter? Anand Srivatsa: And I'll let Asa take that and clarify that question. Asa Wiren: We received the SEK 30 million in Q3 and the SEK 45 million in Q4. Operator: What types of assets are you planning to divest? Would you consider divesting one of the business units? Anand Srivatsa: Again, as you can imagine, these strategic reviews are extremely sensitive. We're not going to go into details of exactly what assets we are planning on divesting except for the fact that we believe that a successful outcome here will substantially strengthen our cash reserves. We will share more details as possible as these activities progress into maturity. Operator: Thank you for this presentation. On Autosense, in materials from Qualcomm, Tobii is a pre-integrated partner. What does this mean? Also, this seem to be a much wider opportunity than with EU regulatory requirements. What is your look on this? Anand Srivatsa: One of the big advantages of the engagement that we have had is that our solution is shipping on Qualcomm's Snapdragon Ride platform with our premium OEM. This has meant that we have done substantial work to go and pre-integrate the solution. Qualcomm's expectation is that they want to sell a pre-integrated solution that delivers their domain controller type architecture along with their ADAS functionality. The ADAS functionality does depend on capabilities that are enabled by in-cabin sensing technologies that we have -- like we have. We believe this is a big asset for Tobii, not only that we've gone and delivered a mature and proven platform, but that partners like Qualcomm see our solution as pre-integrated and an easy way for them to scale their offerings into the automotive industry as well. Operator: What is the total cost in absolute numbers for OMS and DMS for the car manufacturer? Please elaborate on the topic. Anand Srivatsa: We cannot, of course, share algorithm pricing levels. And in terms of overall system cost, you will have to go and speak to the Tier 1s who typically provide the hardware. Again, what I think is super meaningful as we look at the in-cabin sensing opportunity as a whole is that DMS and OMS are increasingly becoming requirements in this market. And therefore, from a regulatory perspective, these are required systems. And again, there's high interest from the OEMs to offer these in the most cost-effective and scalable way possible. The fact that Volkswagen has been clear that there is a substantial cost savings by offering DMS and OMS from a rearview mirror position in a single camera offering validates our view that this will be the way that in-cabin sensing is typically delivered to go and ensure that you can meet your regulatory needs. Operator: Is it correct to assume that you are involved in Samsung XR through your collaboration with Qualcomm? Anand Srivatsa: So you should assume that we are talking to lots of different companies in the XR space. We're talking to most of their leaders. We understand that people make decisions on their choices of algorithms for a variety of reasons. As I've mentioned before, on the specific Samsung Moohan VR headset, we are not the eye tracking provider in that system. Operator: Is the total Dynavox royalty SEK 52 million or SEK 45 million from Dynavox? In that case, when are the remaining SEK 7 million received in cash? Asa Wiren: The total is SEK 52 million, and the cash was delivered in Q4. Operator: Congratulations to fast acting. Is Tobii eye tracking integrated in Sony Siemens XR headset? Anand Srivatsa: I don't think we have made any announcement there. We will -- again, we will not comment on that particular headset. Okay. Thank you very much. That's the end of the Q&A section. Thank you all very much for participating, and we look forward to sharing our next set of results with you in 2026. Thank you. Operator: Thank you.