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Operator: Good morning, ladies and gentlemen. And welcome to the Ideal Power third quarter 2025 results conference call. At the end of management's remarks, there will be a question and answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, as a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead. Thank you, Jenny. Jeff Christensen: And good morning, everyone. Thank you for joining Ideal Power's Third Quarter 2025 Results Conference Call. With me on the call are David Somo, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's third quarter 2025 financial results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and company prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described on the call. Please refer to the company's SEC filings for a list of associated risks. We would also refer you to the company's website for supporting company information. Now I'll turn the call over to Ideal Power's President and CEO, David Somo. David? David Somo: Thank you, Jeff. I appreciate everyone joining us today. I couldn't be more excited to join you today for my first Ideal Power results conference call. As many of you know, my new role was announced last week. That said, I want to touch on a few things before handing the call over to Tim Burns. We look forward to your questions after our prepared remarks. I'd like to briefly discuss why I took the role at Ideal Power and then I'll discuss my approach and near-term plans. First, why did I take the CEO role here? Ideal Power has created a compelling and customer-validated solution addressing secular high-growth power applications emerging in the data center, industrial, and automotive markets where power efficiency, power density, and cost are key requirements. There is a multibillion-dollar addressable market for our B-TRAN technology. With the ongoing electrification of our society, we are commercializing our technology at an opportune time by delivering innovative and enabling power semiconductor solutions for a broad array of growing and B-TRAN enabled applications. Obviously, I have high confidence in Ideal Power, or I wouldn't have joined. I want to commend and thank my predecessor, Dan Brdar, for his leadership and strong contributions in guiding the company to where it is today. Second, I see Ideal Power as a technology innovator with its B-TRAN technology, that enables inherent advantages in delivering ultra-low conduction losses, improved power efficiency and power density, and bidirectionality. All on widely deployed low-cost silicon. These are competitive differentiators as we begin to commercialize our B-TRAN solutions with customers. Third, I believe I can help Ideal Power to accelerate its commercial opportunities. I know Ideal Power's markets from my more than thirty years of experience in the semiconductor industry spanning a variety of end-use markets, including data centers, industrial, and automotive. I plan on leveraging my extensive commercial experience and relationships to drive revenue growth in our target markets. Revenue is a priority. I'm sure you are wondering what I plan on doing. David Somo: What you should expect from me. Having joined Ideal Power just last week, and spending time getting my hands on the details of the business. Feedback from our customers during the next several weeks, I will be listening closely to distributors, suppliers, and the outstanding team here at Ideal Power. Because I like to be highly visible with customers, both existing and prospective, I'll be meeting with them to understand their priorities, opportunities, requirements, and listen to their feedback about our technology and their applications. I'll review our opportunities, progress, road map, and strategic initiatives. Those discussions will deepen my understanding of our business and enable me to fine-tune our vision and strategy going forward. Building on the strong foundation that is in place today. Upon completion of that process, I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth including my perspective for product commercialization. Before setting expectations, I want to take the necessary time to thoroughly understand the current state of our business. As an organization, we will strive to execute in all aspects of the business with rigor, discipline, and a strong sense of urgency. We will endeavor to execute on what we communicate not put ourselves in a position to have to reset expectations. Goes without saying that this is important to establishing and maintaining credibility. One thing is abundantly clear. With the strong foundation in place from which to drive our future growth, I'm not going back to the drawing board. We're well-positioned to drive long-term value creation for our customers, suppliers, employees, and stockholders. In closing, I look forward to partnering with Tim Burns, our CFO. I'd like to recognize the entire team for the third quarter progress and results. I'd also like to thank my predecessor, Dan Brdar, for assisting with the transition and providing a strong foundation for our growth. I'm thrilled to be joining Ideal Power at a time when the company has such exciting opportunities ahead. Now I'd like to turn the call over to Tim Burns to discuss our recent progress. Tim? Tim Burns: Thank you, David, and good morning, everyone. Since David just started last week, I'll share an update on our progress since the start of the third quarter. First, we secured a purchase order from Stellantis in late August for custom development in packaged B-TRAN devices targeting multiple electric vehicle applications. We successfully completed our first of five deliverables under the purchase order in late September. The remaining deliverables are expected to be completed next year. Second, we expect Stellantis to award us with a multiyear EV contactor program. As part of the program scope, Stellantis has told us they want to install B-TRAN based contactors in Stellantis test vehicles potentially as early as late 2026. We'll know more about the scope and timing specifics as we work through the program details with Stellantis in the coming months. This program has broad and substantial potential as Stellantis recently shared with us that they are evaluating the deployment of B-TRAN based contactors across all of their EV models and platforms. Third, we are engaged in early discussions with a sixth global automaker. This automaker is evaluating B-TRAN for next-generation high-voltage EV power switching and protection applications where bidirectionality and low conduction losses enable more compact, reliable, and efficient vehicle and charging architectures. We will share further updates on this opportunity as the engagement progresses. Fourth, our first design win customer has successfully completed tests of the updated solid-state circuit breakers that we provided them during the third quarter. We're currently working with them on the finalization of their product design as they prepare for end-customer sampling and production. Fifth, we shipped additional solid-state circuit breaker reference designs to large potential customers including a global power management market leader in Asia. Reference designs are an important part of our commercialization strategy as B-TRAN is a new technology and customers are eager to get hardware in their hands that demonstrates the advantages of B-TRAN in their target applications. Sixth, we increased the power rating of our discrete B-TRAN product by 50% and commenced shipment of these devices with a higher power rating and power density. Development has sparked greater interest from both existing customers and new prospects in our sales pipeline as it aligns well with the market moving to higher power architectures for many applications. Seventh, we continue to expand our global reach, adding our first direct salesperson in Asia. He's already conducting face-to-face meetings with current and prospective customers. Interest in B-TRAN is growing across Asia, which is the world's largest market for power electronics. Excited about the opportunity for B-TRAN in this region as Asian companies typically adopt new technologies faster than their European and American counterparts. Eighth, third-party automotive qualification in testing of B-TRAN devices is well underway with more than a thousand packaged B-TRAN devices from multiple wafer runs. Early test results are positive with zero failures to date. As a new semiconductor device without a long operating history, third-party reliability testing and the data it generates is key for both industrial and automotive customers as they evaluate and adopt B-TRAN for their applications. Moving on to the initial market for B-TRAN, the industrial markets, in particular, solid-state circuit protection for data centers, microgrids, industrial facilities, and grid infrastructure. Our first design win customer is one of the largest circuit-protected equipment manufacturers in Asia, serving data centers, industrial and utility markets, and renewable energy applications. As we have previously mentioned and based on the first design win customer's projections, initial product from this customer could translate to several hundred thousand dollars of revenue for Ideal Power in its first year sales with the opportunity to exceed a million dollars in revenue for us in the second year sales. Importantly, this marks only the beginning. The initial product is anticipated to be the first of multiple products from this customer that will incorporate B-TRAN into solid-state circuit breakers. This customer provides a variety of circuit breaker products across various power ratings, and it is expected that they could expand their portfolio to add a full family of solid-state circuit breakers in ratings similar to their current family of electromechanical breakers. Discussions of other B-TRAN enabled solid-state circuit breaker products have already started, and our team recently built the solid-state circuit breaker prototype with a higher rating to share with this customer. Looking briefly at innovation, we increased the power rating of our discrete B-TRAN product by 50% in commencement shipment of these devices with a higher power rating and power density. This development has sparked greater interest from both existing customers and new prospects in our sales pipeline. Our approach to power ratings of our products is deliberately cautious. An approach that has been well received by our customers as we bring new solutions to their markets and applications. As we accumulate more testing hours and go through additional reliability testing, including the ongoing third-party automotive qualification testing, we're finding that we have more than ample margin in our design to increase the power rating of our products. Elevated product ratings will expand our SAM to include additional applications. It will also strengthen our product's competitiveness in the marketplace as it translates to smaller, lower-cost OEM products for customers to choose B-TRAN as their power semiconductor solution. We previously mentioned that orders near term are not dependent upon the successful completion of automotive qualification. However, achieving third-party automotive qualification would provide additional confidence among industrial customers, regarding B-TRAN's long-term reliability. We would also provide evidence of the device's reliability under extreme conditions, such as high humidity and temperature, which exceeds typical industrial application requirements. Additionally, given that engineers tend to be cautious when adopting new technologies, achieving automotive qualification could help accelerate the adoption of B-TRAN based products by early adopters in our initial target industrial markets. Our B-TRAN patent estate continues to grow. Currently, we have 97 issued B-TRAN patents with 47 of those issued outside The United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe. Representing our high-priority patent coverage geographies. As a result of our continued innovation, our list of pending B-TRAN patents is now at 73. To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of work under strict confidentiality with our wafer fabrication partners. Even if a competitor studied our patents, they wouldn't have the know-how to fabricate the device. Next, I'll discuss our financial results. Our third quarter 2025 cash burn from operating and investing activities was $2.7 million, up from $2.4 million in 2024 and up from $2.5 million in the second quarter of this year. Our Q3 cash burn was at the lower end of our guidance of $2.7 million to $2.9 million. Our cash burn from operating investing activities for the first nine months of 2025 was $7.4 million, up from $6.6 million in the first nine months of 2024. We continue to manage expenses prudently and aggressively. We expect fourth quarter 2025 cash burn to be approximately $2.5 to $2.7 million with a full year 2025 cash burn of approximately $10 million. This compares to a 2024 cash burn of $9.2 million excluding the benefit of warrant proceeds. The higher forecasted cash burn in 2025 compared to 2024 is due to increased semiconductor fabrication spending, and hiring. Cash and cash equivalents totaled $8.4 million at 09/30/2025. We have no debt, a clean capital structure. We recorded modest revenue for 2025 as customers continue to evaluate our technology. Initial orders from the large companies evaluating our products for potential inclusion in their OEM products will be small with order sizes increasing as customers start to prototype their OEM products, progress through their design cycles, and build inventory for the rollout of their B-TRAN based products. Operating expenses were $3 million in 2025 compared to $2.9 million in 2024 with the increase due to higher wafer fabrication costs at our second foundry. We expect operating expenses to increase modestly in the coming quarters due to recent and future hiring, and costs associated with our development and commercialization efforts. We also continue to expect some quarter-to-quarter variability in operating expenses particularly our research and development spending. Due to the timing of semiconductor fabrication runs, product development, other research and development activities, and hiring. The timing of equity grants and related stock-based compensation expense will also cause variability in our quarterly operating results. Net loss in 2025 was $2.9 million compared to $2.7 million in 2024. Considering our asset-light business model, no debt, and modest planned cash burn, we have sufficient liquidity on our balance sheet to fund operations through at least mid-2026. We'll potentially see several sources of funds over the next year such as product sales, development agreements, and other commercial agreements with upfront payments. Additionally, we are exploring strategic relationships with our well-capitalized and large global partners with these opportunities strengthening as we further advance these customer relationships. As a publicly traded company, we also have access to the capital as necessary providing us with additional financial flexibility. At the end of September, we had 8,511,403 shares outstanding, 824,760 options and stock units outstanding, and 653,827 prefunded warrants outstanding. At 09/30/2025, our fully diluted share count was 9,989,990 shares. In summary, we are thrilled to share that our first design win customer has successfully completed testing of the updated solid-state circuit breakers and are now finalizing their product design as they prepare for end-customer sampling and production. We're also delighted to announce that not only securing the purchase order from Stellantis for custom development, and package B-TRAN devices targeting multiple EV applications, but also completing our first of five deliverables under this purchase order. Overall, it is an exciting time at Ideal Power and I look forward to working with David to capture the significant market potential for B-TRAN as an ultra-low loss and bidirectional power semiconductor. At this time, I'd like to open up the call for questions. Operator? Operator: Thank you. At this time, we are conducting a question and answer session. Investors can submit their questions on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please. For anyone using speakerphone, we ask that you please pick up your handset before you press the keys. Our first question is coming from Casey Ryan of Park Capital. Casey, your line is live. Casey Ryan: Thank you. Good morning, gentlemen. David, welcome. Great to have you on board. Tim, thank you for this good update. So I just wanted to start with generally automotive. It feels like the opportunities are with EV platforms and the growth of those platforms. Generally. And so I just want to sort of confirm that for myself. Before we go a little further. David Somo: Yeah. Thanks, Casey. Glad to be on the call, and I appreciate the question. So automotive is one of multiple markets that we're able to sell our products into where there's a strong fit to the applications requirements. As you understand, automotive is also one of the longer development cycles and projects are typically multiyear programs. So we continue to work to I would say, move from the initial engagement through continued evaluation where we've made progress now in delivering enhanced products. To our customers. We've continued multiple stages of the development programs. And each of those is a necessary step in moving towards completing the R&D evaluation of the products and qualification then moving into series engineering and eventually landing into vehicles. On the EV side. Casey Ryan: Okay. Terrific. And then sort of on that EV track, what's driving the automakers to look for better solutions and say what they have currently or what they've had previously because, you know, generally, they must be facing some limitations with sort of existing solutions. Is it battery density or the power of the amount of electronics per vehicle? I'm sort of happy for Ideal Power, but I'm curious what sort of driving it and what sort of barriers they're running into with sort of their current solutions. And, of course, you guys are bringing a better solution to market. David Somo: Sure. Well, one of the fundamental trends in power electronics is a move to higher power architectures, and one of the fundamental ones in EV architectures is the adoption of 800-volt main battery systems. Which is driving redesign of the overall architecture and action inverter, charging systems, contactors, battery disconnect and so forth. So that's what's the reason for continuing to evaluate technologies that provide higher power efficiency, improved power density, and manage the cost. Casey Ryan: Okay. Terrific. And then sort of quickly on, like, charging stations, which I think is also a potential market for Ideal Power. I think charging stations are also moving to 800-volt systems, right, which might cause the same sort of trend where people would be interested in your solution. David Somo: Yeah. Fast DC charging stations actually continue to increase the power. To multiple kilovolts. Gets partitioned out across multiple terminals. So it does present an opportunity for us. Also, in some instances, particularly home charging, they're bi-involved where you can feed into the battery pack and then off hours feed out from the battery pack back in. That district power. So that's unique to the design of our B-TRAN technology. Casey Ryan: Okay. Terrific. That's really helpful. And then I wanted to ask about the Asian I think power management company is what we're talking about them as a customer. So it sounds like, and, Tim, you said sort of a couple $100,000 might be kind of a target range for potential revenues in year one. But what I wanted to ask was, is the product currently available for sale you know, hypothetically today, or will it start to go on sale to the commercial market sometime in '26? Tim Burns: Yeah. So it's not currently for sale. So they're finalizing their product design. We're working with them to do that right now. Don't know the specific timing whether it'll be here later this year or whether it will be next year. That's something we can cover here when we have the update call. In terms of timing. But have the updated prototypes. They've completed testing. It was successful. So those prototypes look good. And we're just waiting for them to share a little bit more on their timing specifics as it relates to their rollout plan. Casey Ryan: Yeah. Well, from my perspective, what's significant, right, is going from concept to testing to sort of turning into a commercial product as having completed cycle, I think, is really impressive. So, that's it for me right now. Thank you for the terrific update. Tim Burns: Thanks, Casey. Appreciate it. Operator: Thank you very much. I will now turn this call back to Jeff Christensen to read questions submitted through the webcast. Thank you. Jeff Christensen: Thank you, Jenny. Gentlemen, the first submitted question is any additional context around the CEO transition? Is this something that was planned for? Tim Burns: So, yes, Dan's retirement was planned. There was an extensive search that was conducted and led by our board. That Dan was involved with to identify our next CEO. And that resulted in us bringing David on board. And I'm actually really excited particularly because of his past experience in semiconductors and commercial expertise. Then it's a great time to bring him on because I think it will really help with what obviously is our priority and what's on investors' mind in terms of revenue generation. Jeff Christensen: Thank you. Our next submitted question is, how do you see the markets evolving? And this is a question for David. How do you see the markets evolving, including data centers, industrial, automotive? David Somo: Casey alluded to part of this question, but I'll give a more thorough answer here. Our B-TRAN enabled solutions from my perspective, it's Excel and high power applications delivering lower conduction losses for improved power efficiency. Smaller systems size for improved power density, bidirectionality, and an enabling lower systems cost. Power levels have continued to trend up, as I mentioned a moment ago, across these applications, including the AI data center, which is now planning a move to 800-volt rack architectures commencing sometime in 2027. Automotive EV with the adoption of 800-volt battery systems and fast DC charging. Terminals. As well as other industrial infrastructure applications that the power grid is enhanced to support these growing applications. In addition, grid to system and system to grid power transfer requires bidirectionality where there is also a growing trend to migrate from electromechanical to solid-state semiconductor enabled systems. Each of these major technology trends involve applications such as circuit breaking and protection, UPS, and battery disconnect system among others, that B-TRAN solutions excel at enabling. So in summary, we could see a continued trend towards higher power levels across these multiple applications looking for improved power efficiency, improved power density, and managing costs that are all strong fit for our B-TRAN technology. Jeff Christensen: Thank you. Our next submitted question is, do you expect the initial sales ramp and milestones to be achieved within 2025? David Somo: Having been in the seat here, a total of eight days, I'm currently spending my time deepening understanding of the details of our business. Once I've been through that process, including the opportunity for face-to-face meetings with key customers, to understand thoroughly the details of the engagements that we have with them. I anticipate scheduling a call and webcast to share more detailed information and discuss certain topics in greater depth. Including my outlook for product commercialization. Revenue is a priority, and I plan on leveraging my go-to-market experience achieved in my thirty-plus years in semiconductors across many end sectors and customers to drive revenue growth in our target markets. Jeff Christensen: Thank you. We have several investors that have submitted questions, and please submit your questions using the ask a question button. And as you think of questions, submit them. Don't, you don't need to accumulate all your questions and submit it at one time. Our next submitted question is, what is Ideal Power doing to expand the sales pipeline? David Somo: Yeah. So as discussed in our prepared remarks and shared by Tim, we have added direct sales in Asia, and are already conducting meetings with current and prospective customers. And we're excited about the opportunity for B-TRAN in the region as Asian companies generally adopt new technologies faster than their North American and European counterparts. While we continue to expand the sales funnel, we have a strong focus on closing the many opportunities available to us from current customer engagements. So having the additional sales capability on the ground in Asia is important to us. We view it as a market that can actually move faster in the adoption of new technology than some of the others. Jeff Christensen: Thank you. Would you compare B-TRAN to competitors, including silicon and silicon carbide solutions? David Somo: Yes. I think about it in this way. B-TRAN has two significant advantages. First, it has ultra-low conduction losses, meaning the higher power efficiency and improved power density. And second, it's bidirectional. These advantages translate to more power-efficient and compact customer products at lower cost compared to alternative silicon and silicon carbide power solutions that are in the market today. Jeff Christensen: Okay. Thanks. Can you provide us with any additional information on tier ones and OEMs besides Stellantis and the automotive? David Somo: Yeah. So we're engaged with several automotive OEMs and tier one suppliers as we've previously said. These prospective customers are considering a range of applications and include power switching, EV contactors, and battery disconnect units, charging systems, and inverters. With the auto industry increasingly moving to the 800-volt architectures, as I talked about earlier, my comments. The opportunity for us in this market is expanding. At this point, it also seems likely there'll be a replacement of electromechanical contactors with Solid State Solutions in EVs. Jeff Christensen: Okay. Thanks. Our next submitted question is when mentioning EVs with Stellantis, is either the drive train or contactor program likely to be included in hybrids? Tim Burns: Yeah. The way this program is really focused on vehicles, but our technology would bring the same benefits to hybrid electric vehicles. So we're obviously engaged with several global automakers, several tier one automotive suppliers, I assume once we start getting adopting EVs, hybrid is also a natural extension of that. So there's definitely an opportunity there for B-TRAN. Jeff Christensen: Thank you. Our next submitted question is a long one. Just to understand, you upgraded the power rating to 75 amps. You stated in the release that this maintains a significant design margin to a tested long-term continuous basis of 150 amps. What does that mean? How would you, at some point in time, increase to 150 amps or would you have to test it at above that at a safe design margin? Is there a standard margin that the industry uses, and how does the 75, 150 margin fit within the standard? David Somo: Sure. So I'll take that one. You can think about it in the following manner. Increasing our power rating enables customers to evaluate our B-TRAN solutions for a wider range of applications as well as increase the power rating while lowering conduction loss in existing applications their current designs. There isn't a specific industry guideline for safe design margin, however, we remain very conservative in rating the device at 75 amps we've tested it up to 150 amps. We want to ensure that we're providing the proper safety margin to our customers, and that varies by customer and by applications. But I would say that we have sufficient headroom to continue to scale the device up for higher power solutions as the trend continues in that direction. Jeff Christensen: Thank you. Our next submitted question is, please provide any color on where we stand with manufacturing. Tim Burns: Yeah. So we have two foundries as we've mentioned, one of them is in Europe. One of them is in Asia. We've been working with the Asian foundry for a little bit longer than we had the European foundry, so I'd say they probably are still ahead of the European foundry in terms of things like yield. But we're comfortable that we could utilize devices from either one for end product sales to customers. And we also have a great relationship with two packaging houses, one that we're using, we use primarily for production, that's actually in Asia and one here in the US that we also continue to do some development work with that we could use for production if necessary. For instance, if we received a government program that required US manufacturing. So overall, I'd say we're in really good shape. Right now, it's just about commercializing the technology. Jeff Christensen: Thank you. Our next submitted question is, what are the main barriers to closing sales? David Somo: Introducing B-TRAN with it being a new semiconductor technology and device structure begins with educating the customers. Engineers are generally familiar with IGBTs and MOSFETs, but B-TRAN features innovative and distinct architecture that functions differently from traditional semiconductor devices. So to help our prospective customers evaluate our products for their applications, we provide evaluation kits and reference designs to simplify this undertaking. Additionally, engineers often adopt a cautious approach, which can extend the evaluation period. Achieving automotive qualification, as we mentioned during our prepared remarks, will help to speed up adoption by demonstrating the technology's proven long-term reliability for their applications. Jeff Christensen: Thank you. Our next question is how should investors think about tariffs and trade policies on Ideal Power? Tim Burns: Yeah. We continue to see that the tariff situation is very fluid. But we anticipate minimal impact on our operations from tariffs in place today. And notably, power semiconductors are often exempt from many of these tariffs, which really limits the potential effect on us. While the situation continues to evolve, we're confident that we're well-positioned to manage and mitigate the impact of future tariff changes, trade policy shifts, and also supply chain disruption. Jeff Christensen: Thank you. That concludes our question and answer session. I'd like to turn the call back over to David Somo for closing remarks. David Somo: Thank you, Jeff. I want to thank everybody for participating in today's calls and for the good questions. As I mentioned earlier, we anticipate scheduling a call and webcast in advance of our year-end results call to share more detailed information and discuss some of the topics explored today in greater depth. Operator, you may end the call. Operator: Thank you. This concludes today's conference. All parties may disconnect, and have a great day.
Operator: Ladies and gentlemen, good morning, and welcome to SuperCom Ltd.'s Third Quarter 2025 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the appropriate key. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. This call is broadcast live over the Internet and is also being recorded for playback purposes. Joining me from SuperCom Ltd.'s leadership team is Ordan Trabelsi, SuperCom Ltd.'s President and Chief Executive Officer. I'd like to remind you that during this call, SuperCom Ltd. management may be making forward-looking statements, including statements that address SuperCom Ltd.'s expectations for future performance or operational results. Forward-looking statements involve risks, uncertainties, and other factors that may cause SuperCom Ltd.'s actual results to differ materially from those statements. For more information about these risks, uncertainties, and factors, please refer to the risk factors described in SuperCom Ltd.'s most recently filed periodic reports on Form 20-F and Form 6-K and SuperCom Ltd.'s press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes EBITDA, a non-GAAP financial measure that SuperCom Ltd. believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, a comparable GAAP financial measure, please see the reconciliation table located in SuperCom Ltd.'s earnings press release that accompanies this call. Reconciliations for other non-GAAP financial measures and comparable GAAP financial measures are available there as well. The content of this call contains time-sensitive information that is accurate only as of today, November 13, 2025. Except as required by law, SuperCom Ltd. disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to SuperCom Ltd.'s President and CEO, Ordan Trabelsi. Thank you, Operator. Ordan Trabelsi: And good morning, everyone. Thank you for joining us today. Earlier this morning, we released our financial results for the third quarter ended September 30, 2025. You can find a copy of the press release in the Investor Relations section of our website at supercom.com. We continue to deliver strong operational performance and strategic momentum across key markets, building on top of our record-breaking first half of the year. Since mid-2024, we have secured over 30 new electronic monitoring contracts in the US alone, including entry into 12 new states and 14 partnerships with regional service providers. These wins reflect growing demand for advanced scalable EM and validate our ability to rapidly expand our US footprint. Importantly, many of these new partnerships involve replacing incumbent vendors. A recurring theme that speaks to the strength of our Pure Security platform and the trust it continues to earn from agencies seeking modernization. We've seen this in states like Virginia, Utah, and Alabama, where multiple agencies have transitioned from legacy systems to SuperCom Ltd. technology within a short time span. In Alabama, for example, we recently launched our third and fourth deployment in less than a year. In Utah, a second sheriff agency selected our platform to overhaul its GPS tracking program after evaluating competing technologies. And in Virginia, another service provider fully transitioned its GPS operations to SuperCom Ltd., marking our second reseller partnership in that state this year. These examples illustrate a growing trend. As agencies seek more reliable, flexible, and cost-effective solutions, they increasingly turn to SuperCom Ltd. for both technology and long-term partnership. Our ability to serve both direct government agency contracts and third-party service providers gives us the versatility to operate effectively in varied regions and support distinct program structures. In addition to these wins, our US presence is reinforced by the continued success of Leaders in Community Alternatives (LCA), our wholly-owned subsidiary in California, which recently secured a five-year reentry service contract valued at up to $2.5 million. LCA remains an important part of our integrated offering, supporting rehabilitation and compliance outcomes alongside our core EM technology. Since our acquisition of LCA, we've secured over $35 million in new contracts in California alone. While our progress in the US has been substantial, we've also continued to expand our presence internationally. We strengthened our presence in Europe with an award of a $7 million national electronic monitoring project in Germany, Europe's largest economy. This milestone marks a strategic foothold in a highly advanced public safety market, achieved by displacing a vendor that had served the German government for more than twenty years. We see this award as a clear validation of our competitive edge and execution capabilities on a global stage. Our leadership in domestic violence electronic monitoring continues to grow. We now support nine nations with domestic violence programs across the US, Europe, and other regions. Governments increasingly rely on our PureTrack and PureChoose Shield technologies to support victim protection and offender accountability. Beyond new market entry, we're also seeing our proven track record lead to deeper engagement in existing territories. A key growth pattern for SuperCom Ltd. has been our ability to enter new countries as a single project and expand into multiple programs as trust and performance are established. In Europe, we've seen this in countries such as Sweden and Latvia, where initial deployment has evolved into broader national coverage. We're now seeing a similar pattern play out in the US. We have entered states like Utah, Kentucky, Virginia, and more with pilot or regional projects and have since expanded into additional counties and service areas. This repeatable expansion model remains a key driver of our long-term growth strategy. Our ability to replicate our expansion model efficiently also ties into how we operate at scale, especially in the US. A core operational advantage for us in the US is our cloud-based centralized platform, as well as integrated inventory management and 24/7 support. This centralization enables us to support nationwide deployments efficiently from a unified infrastructure in one language. In contrast, European projects often require country-specific servers, local language customizations, and decentralized support models, which introduce additional complexity, local partner support, and increased costs. As a result, we can launch new programs in the US more rapidly and cost-effectively, whether at the county level or statewide, enabling faster time to revenue and higher margin potential. This operational advantage supports not only organic growth but also potential expansion through other means. In parallel, we continue to evaluate strategic acquisition opportunities in the US market, targeting established local service providers can help us accelerate our market penetration, enhance vertical integration, and unlock operational synergies. A proven example is our acquisition of LCA in 2016, which, as I said earlier, has contributed to over $35 million in project wins in California alone. And as we scale, we see meaningful potential to replicate this success in additional regions in the US. Alongside these expansion strategies, we remain focused on addressing the core challenges facing modern justice systems. Our solutions directly address some of the most pressing challenges facing criminal justice systems worldwide, including high recidivism rates, prison overcrowding, excessive costs, and unsafe communities. By providing modern scalable alternatives to incarceration, our technology helps governments improve supervision, enhance public safety, and reduce the long-term burden on public safety and correctional systems. Tackling these systematic challenges requires continuous innovation, and that's where our technology leadership plays a central role. Our sustained investment in innovation has been key to our success. Over the years, we've invested more than $45 million in R&D for electronic monitoring solutions alone, enabling us to develop one of the most advanced and versatile electronic monitoring platforms in the world. This ongoing commitment to innovation is powered by our stellar research and development team, a group of highly skilled electrical engineers, software developers, product managers, QA personnel, and other domain experts who continue to push the boundaries of what's possible in public safety technology. Their contributions are a core reason why SuperCom Ltd. continues to win competitive tenders globally, often displacing long-standing legacy providers. As our capabilities advance, so does our ability to capture share in a rapidly growing market. The electronic monitoring market is projected to reach $2.3 billion by 2028, with approximately 95% of that opportunity concentrated in the US and Europe. Notably, the US market is estimated to be more than six times the size of the European market, making it particularly attractive as a driver for long-term growth. As more jurisdictions adopt electronic monitoring as a core public safety strategy, SuperCom Ltd. is well-positioned to capture this growing demand through our proven solutions and expanding footprint. I'll now turn to the financials, reviewing our performance for the third quarter of 2025 compared to the same period last year, 2024. In the third quarter of 2025, we achieved continued profitability and margin expansion, driven by operational efficiencies and improved cost structures. Our revenue for the quarter came in at $6.2 million compared to $6.9 million in Q3 of last year. We delivered significantly improved profitability across all key metrics. Gross profit actually increased this quarter to $3.8 million, with gross margins expanding to 60.8%, up from 45.6% a year ago. This marks one of the highest quarterly gross margins in our history, driven by disciplined cost management, operational automation, and reduced reliance on third-party service providers. It also reflects a favorable revenue mix, with a growing share of higher-margin international project phases and US programs also contributing to the results. As we continue to bring more work in-house and streamline deployment and adoption processes, we're seeing operating leverage as well as margin expansion. Operating income surged to $640,000 this quarter, up from around $30,000 in Q3 of last year, with operating margins increasing to 10.3%. EBITDA doubled to $2.2 million from $1.1 million in 2024, reflecting EBITDA margins of 34.6%. Net income reached $700,000, a turnaround from a net loss of $400,000 in the prior year. And non-GAAP net income surged to $1.9 million, up from $350,000 last year. Non-GAAP EPS came in at $0.39 compared to $0.17 in 2024. And now let's have a look at the nine-month performance of 2025 compared to the same period of 2024. Revenue was $20.4 million compared to $21.3 million in the first nine months of 2024, reflecting a modest decrease due to revenue mix and timing of contract launches. However, despite the lower top line, we delivered strong improvements in margin and profitability. Gross profit actually increased to $12.5 million, up from $10.7 million, with gross margins expanding to 61% compared to 50.1% last year. Operating income nearly tripled to $3 million, with operating margin improving to 14.7%, up from 5.3% last year. EBITDA reached $7.2 million, a 56% increase from $4.6 million in the prior year, reflecting an EBITDA margin of 35.4%. Net income more than doubled to $6 million from $2.5 million in the first nine months of 2024, supported by our improved cost structure, disciplined execution, and the positive impact of certain non-operational financial gains recorded during the period. Non-GAAP net income increased to $9.3 million, with net margin more than doubling to 45.7%. And non-GAAP EPS for the period was $2.17. We also made progress in strengthening our balance sheet. In the past two years alone, we reduced our net debt by nearly $25 million. This was achieved through a combination of strategic debt-to-equity exchanges, executed at premiums of up to 100% or more above market price, and amendments to our senior debt agreement, which extended maturity to December 2028 and lowered the interest rate significantly. In parallel, we raised over $16 million in gross proceeds, including $6 million for a registered direct offering completed in 2025 and an additional $10.2 million for warrant exercises. These steps in unison contributed to a stronger cash position and enhanced our financial flexibility to support future growth opportunities, including new project appointments, continued investment in technology, and potential M&A activity. As of September 30, 2025, working capital stood at $41.8 million, up from $26.1 million just a year ago. Book value of equity tripled to $40.8 million, up from $13.3 million a year ago. And cash and cash equivalents surged 111% to $13.1 million, up from $6.2 million a year ago. While current margins reflect the favorable mix of projects and contracts, they're not yet at a steady-state level. That said, we believe our progress in streamlining operations, automating processes, and improving launch execution is sustainable and positions us for long-term margin resilience and expansion as we scale. Before closing, I'd like to highlight the broader transformation that continues to define SuperCom Ltd.'s trajectory. Since implementing our new strategic roadmap in 2021, we've consistently strengthened the business across revenue growth, profitability, and balance sheet health. We find the results even more compelling when viewed over a multi-year horizon. Revenue more than doubled from a five-year consistent decline, reaching $11.8 million in 2020 to four years of continued growth, reaching $27.6 million in 2024. As of the first nine months of 2025, we reached $20.4 million in revenue, reflecting continued scale relative to previous years. Gross profit grew by 140% from $5.6 million in 2020 to $13.4 million in 2024, and gross profit for the first nine months of 2025 reached $12.5 million, closely aligned with the 2024 full-year figure. GAAP net income turned from a loss of $7.9 million in 2020 to a $660,000 profit in 2024 and has since surged to $6 million in the first nine months of 2025. Non-GAAP net income improved by over $10 million, turning from a loss of $1.7 million to a $6.3 million profit, and stands at $9.3 million year-to-date in 2025. EBITDA has improved from $2.8 million in 2020 to $6.3 million in all of 2024 and has already reached $7.2 million in the first nine months of 2025. These improvements were achieved while navigating macroeconomic headwinds, a global pandemic, supply chain disruptions, rising interest rates, and a regional war, and they underscore the strength of our operating model, technology differentiation, and long-term execution strategy. Furthermore, they underscore the essential role of our solutions, which is resilient through market cycles. And as we continue to scale, we believe this foundation positions us well for long-term value creation. In closing, we are proud of our execution this quarter and the trust our customers continue to place in us. I'd also like to thank our global team for their dedication and performance. Their expertise, commitment, and hard work continue to drive our success. As we look ahead, we remain focused on leveraging our momentum to expand strategically, deepen customer relationships, and continue delivering innovative solutions that improve public safety outcomes around the world. With that, I'll turn the call over to the operator to open for questions. Operator? Operator: If you wish to ask a question on today's call, you will need to press star then the number one on your telephone. If you are using a speakerphone, please pick up your handset before entering your request and speaking on the call. If your question has been answered and you wish to withdraw your question, you may do so by pressing star 2. One moment for the first question. Your first question for today is from Matthew Evan Galinko with Maxim Group. Matthew Evan Galinko: Hey, thanks for taking my question. I'd like to start with the market opportunity in Germany. Sounds like a nice first step into that market. Is there an opportunity to expand there and what would the process look like to expand within that market? Ordan Trabelsi: Good question. And we announced the win in Germany just a couple of months ago. It's a great win and a very lucrative market. The project already that we won has four different types of projects in it, including alcohol monitoring, GPS monitoring, domestic violence, and house arrest. And like we've seen in many other nations in Europe, once we enter with an initial project, and we do good work, and that's what we typically do, we have an impeccable record for our deployments, we end up winning more projects and expanding the existing ones. So while it's our first one in Germany and it's valued at a budget of $7 million, just like we've seen in the past, we expect this to potentially grow in numbers and to grow in scale as it adds additional capabilities from our ongoing growing product offering. Matthew Evan Galinko: Great. Thank you. Second question is, I think you mentioned a service provider in the US that completely switched their GPS tracking over to SuperCom Ltd. products. Can you maybe expand a little bit on is that a repeatable opportunity and how do you see that sort of engagement with the service provider versus M&A like you know, with an LCA? Ordan Trabelsi: Great question. And, we actually had 14 service providers just this year that signed on, and, the model in the US is so fragmented. It's not like in Europe, where it's just a national project. There are many different counties, and each has its own programs, multiple programs in each county. And what's beautiful is that there are these service providers who become mini experts in the field, and they've tried all the technology. And then we come to them. We show them our technology. And they're able to quickly evaluate just how much, you know, more advanced and superior it is in many aspects to what they've tried. So in many of these service providers, it's actually completely replaced the technology they have with our technology. Sometimes it's all immediately. Sometimes it's in process, but they swap out from live offenders. They bring them back in to swap the technology because the advantage is so significant that they want to go through that. Now when you go directly to an agency, and some of the larger agencies have the personnel in-house to run these programs, they know how to put the bracelet on, to write the report, to run the technology. Then we sell directly to that agency. When it's a service provider, they aggregate five, 10, 20, more agencies, and so that's an advantageous angle as well. Both of them are valuable. Are great strategies for expansion, and both have been working very well for us. Matthew Evan Galinko: Great. Thanks. And final question for me before I jump back in the queue. It looks like your debt position declined by about $2 million in the third quarter. I know you mentioned historically doing those debt-to-equity swaps, but I'm curious if you can talk about if there was another one in the third quarter? Ordan Trabelsi: As we discussed in the past, we strategically with our lenders have been doing conversions of debt to equity. It's a small ones, and then in aggregate, they become meaningful to the company as you've seen over the last few years. And we typically do that at a premium, and that helps reduce our debt balance. As described. And you see that as well in the numbers as you follow the quarters. And one thing I wanted to add about your question with the service providers, another thing that's unique in the US that we're doing because we're already in nine countries around the world with our domestic violence solution, and we have a very strong small bracelet with long battery life. It becomes very effective to put on people and ensure that after someone hits his wife, for example, he doesn't come anywhere close to the victim. And our technology does a great job in that. And many other vendors have struggled with this. In the US, of course, like any other place, there is domestic violence, and the fact that we can offer this with such a high level of experience and seamlessness allows our service providers to add a whole new solution to everything they're offering today. So that's also something else that helps us with these service providers together with the normal GPS and house arrest that you've been asking. Matthew Evan Galinko: Thank you. Operator: Your next question is from Gregory Mesniaeff with Kingswood Capital Partners. Gregory Mesniaeff: Yes. Good morning, guys. Couple of questions. When you kind of analyze your revenue number of $6.2 million, if you break that down by geography, how does that compare to a year ago? It seems to me, correct me if I'm wrong, that your US business has been quite strong, and it appears to me that the softness has come from other geographies in the world. Can you kind of give us some color on that? Ordan Trabelsi: Yes. It's a great question. In Europe, most of our revenues are still from Europe and other geographies outside the US. And that's where our focus was originally. We won over 50 national programs around the world with our Pure Security suite. And these projects are multiyear projects and have various phases. Some phases are more deployment and then scaling, and then afterwards, additional add-ons and changes and so forth. So many different projects are running at the same time around the world. And we need to, when we report the financials, we aggregate the revenues from each of them. And that, you know, can mix differently in different quarters. It's not a consistent monotonous growth or monotonous decline. It's just one quarter, there could be more of this project and less of the other ones. So the volatility that you would see, between the quarters, a lot of that comes from those projects. In the US market, which is newer for us, we have a strong base in California that we've been running for years. And then over the last twelve months, we signed over 30 new contracts. And some of them, some start small. Some of them start at a medium size, but they typically continue to grow and add more and more units. And what's beautiful with the market is that almost everything is recurring revenue per unit per day. Now the majority of our business is recurring revenue, but there are still components that are not, especially in Europe. In the US market, those numbers will grow and grow. And over time, because the US market is six times that of Europe, we expect more recurring revenue to be the prevailing part of our revenues, and we've the more consistency upon the quarters together with improved margins. So we continue to grow in Europe and around the world, but the US is becoming and will become in the future based on our expectations and plans a more consistent and predictable element for our total revenues and our financials. Gregory Mesniaeff: Great, Ordan. Thank you. And, if I could expand on that just a bit. As you win contracts in the US, what are typically their time spans? Compared to similar wins in, say, Europe. You had mentioned that the US opportunities have been much more recurring in nature, which is a good thing. But if you could just kind of give us some idea of how long what's the typical length of one of these contracts? And, also, what is the renewal rate that you've been seeing on them as a on a percentage basis? Thanks. Ordan Trabelsi: Okay. Great. Great questions. And let me try to structure it in a way. First of all, in the European market, these are national projects with long bid cycles. And with a competitive process for RFPs, and that could take from four months to twenty-four months or even more sometimes to win these. And, usually, the projects are structured at a five-year span, nine-year span, something like that, between five and ten years. And, typically, the incumbent vendor wins it over and over again. I mean, we displaced the incumbent vendor in Sweden. They were there for twenty-four years. Since then, we won two more projects in Sweden. When we displaced the incoming vendor in Israel, they were there for over twenty years. When we displaced the incumbent vendor in Germany right now, they were there for twenty years. So even though the initial contract is for five years, or ten years, you typically see the incumbent winning again and again. Now for someone to come and displace them, you have to have a significant value proposition that's more advantageous than what they have today. And that's exactly what we've been doing with SuperCom Ltd. in Europe. We've been coming in, displacing long-term incumbents, showing that there's a better way to do things with newer technology, and that's helped us enter the market and then expand. And, naturally, once you win one project or two, you have an easier time winning the next projects. So in Europe, when there's projects coming out in countries where we already exist, we have a much higher likelihood to win them than it was originally. And, originally, we had in our expansion, roughly a 65% win rate in Europe. Now that's the European market. In the US market, you have a mix. You also have, of course, these large RFPs like for ICE, and you have it for some state-level contracts. And some counties are very large. Some county projects in the US are $30 million, $40 million, $50 million alone. But there are also many smaller counties and many smaller programs, and then you could start with them, especially if it's with a service provider. It's not a government RFP. It's a private company at the end, and they sign a contract with you. And the idea is they continue running with you indefinitely. The contract just continues to renew. And they run with you for many years just like in Europe because once comfortable with you and they approach with you and they like the technology, then there'll have to be a big change for them to teach everyone brand new technology. So in the US, it's faster to deploy, especially with the smaller programs. We're able to deploy them faster. Might even start with fewer units and then grow the amount of units, whereas in Europe, you start with a large amount pretty quickly on. And over the years, because we've been deploying so many programs, you have such a high win rate, and we've been expanding so fast. We've reached very fast deployment rates. Some of our projects in Europe, we deploy within a few weeks, and we're able to manufacture very fast and deploy very fast and do it with an impeccable record of doing it seamlessly without causing issues, whereas some other vendors take a much longer time for the deployment. That's one of our advantages. But in the US market, almost everything is recurring. They usually charge per unit per day. So it'd be $4, $5, $3.5. Depends what services are included. And they like their technology. They start with you, and then you see the numbers. Right now, we're doing the US with over 30 contracts in over 12 different states because we're just putting the seeds in different states. And you can see that after a deployment, shortly afterwards, there's another deployment in the same state. And then in some states, already a third and fourth deployment. I think that speaks to the satisfaction of the customers and to the work that we're doing there. So there's a mix, and it's a little bit different between Europe and the US. But the US, as the projects grow in size, just like they did in Europe, then you also see the RFPs in the larger project sizes. But we'll hopefully, as we do continuously, the speed of the deployment will continue to improve as we get better and better at doing more deployments. Gregory Mesniaeff: Okay. Great. So is it fair to say that as more and more of your revenues come from the US, your revenue volatility should decrease over time? Ordan Trabelsi: Yes. That's a great statement. And, also, over time, the margins should expand. So predictability, margin expansion. As I said in the prepared remarks, everything in the US is on the cloud. Everything's in English. We have inventory management centralized, a 24/7 monitoring center that's centralized. You can imagine that's much more simple than having a server farm in Sweden, another one in Denmark, another one in Finland, another one in Germany, with local partners in different languages and different inventory management systems in different regions. So the US has a lot of advantages in that regard, and we're very excited that we're able to expand so effectively into the US market with our technology. Gregory Mesniaeff: Got it. Thank you. Operator: Your next question is a follow-up question from Matthew Evan Galinko. Your line is live. Matthew Evan Galinko: Hey, thanks for taking my follow-up. Just wanted to touch on operating expenses for a moment. It looks like R&D has been steady for a pretty long time. As well as, you know, sales and marketing has been pretty level. I'm just wondering as you continue expanding in the US market, should we expect to see operating expenses pick up at all to help support that effort? Or if you put more spending into boots on the ground in the US, would that help to accelerate kind of your uptake into the US market? Ordan Trabelsi: Good question, and it depends on how much growth you're talking about. The beauty in this market and in our industry is that the contribution margin of each additional bracelet into an existing region is extremely high. It's just that there's fixed costs from running these operations. In that server farm, on the cloud, with inventory management, with the 24/7 support. And so now that we're in the US market and we have a good hold, adding additional units doesn't require a lot of additional costs. Our sales team is still fairly small, and maybe there could be some expansion to it. We've won most of these projects around the world based on our technology. We come to technology first, less, leveraging some relationship that other vendors might have. And we come with new technology that works and that's been resilient and successful in many other projects around the world, and that's how we enter these new markets. So there could be some expansion, but minimal to our operating expenses in order to achieve the continued plan that we're seeing. And in terms of research and development, doing very well. We already put over $45 million in technology. We're far ahead of most of our vendors in almost all aspects. And we continue to invest to maintain and make sure that we are ahead of them. And even if a competitor comes with a brand new technology that they spent tens of millions of dollars on, it's still gonna take them five to six years to get that operational to the level that a large contract would take. They wanna see it first run in smaller projects for a year or two. And then another project, another project, and only afterwards, they'll take it on to larger projects. And we're already in the large projects. Some of our projects, like Romania, over 15,000 units. So we're in a very good place with our technology. We continue with every new project to add more capabilities. We continue to add more seamless integration. We're able to bring a lot of the things that are serviced that our local partners do. We're able to bring a lot of that in-house. We're able to bring all the technology that third-party vendors have developed in-house. We're able to optimize to make the promise more seamless, to have lower cost, and also to make things much more efficient as we continue to deploy and improve our product offering. Matthew Evan Galinko: Great. Thank you. Operator: Once again, if you would like to ask a question, please press 1. Your next question for today is from John Mason with Aegis Co. John Mason: I guess in terms of the rep sorry. Can you hear me? Ordan Trabelsi: Yes. Yes. John Mason: Okay. Great. In terms of the revenue year over year, I know, you know, you've been winning all these contracts in the US. Like, when do you expect to, you know, sort of return to growth year over year on a quarterly basis, as those contracts sort of start to flow in? And I know you mentioned the, you know, they're essentially seeds at this point. But, you know, I guess, one, when do you expect that to inflect? And then, I guess, b, is it essentially that there's turnover on the European market or, like, lower usage? Like, what is causing that kind of year over year decline? And I have a second question. Sorry. But Okay. Ordan Trabelsi: Good question. Good question. So we don't really we're not really losing customers, essentially. As I said, many of these customers stay for a very long period of time. And as you see, we continue to announce more wins in the same region, either with the same government or with sister agencies in the same government. So it's not that we're losing customers. It's that some projects that are not recurring have phases where they're more heavy and they have more deployments, more expansion, more work. And then there are phases that require less work. And then until they again purchase more equipment and more expansion and more capabilities and more units, in the US market, that's less of a metric because everything is pretty much recurring per unit per day, and that helps you just consistently grow. Just like with any software as a service model. We lease our equipment, but a lot of it is software on the cloud, and that's the model that's prevailing in the US. As I said, the US is six times the size of Europe. So over time, we expect that our financials look very much in that way. Currently, there's still some volatility, and it's because of the mix of different projects and different stages that some have recurring revenue and some have purchases and other one-time items, and that can create naturally some volatility. Now we don't give specific guidance and I said that some of them are seeds, but some of the projects in the US are also larger. It's just that any project that's in a new territory, and all of these are brand new, we see as a seed that can grow into many different plants or very large trees. Just like when we started in Europe, the projects were Lithuania of $100,000 or Latvia of $100,000. And now we're talking about projects that are $7 million, $33 million. And there are others that we're bidding on that are also fairly large. So, it's just a process. We entered the US just a year ago. We've been doing great, and we've won many different projects, and we're winning against incumbents that are in the US market for a very long period of time and have very strong relationships. And we're still able to come in brand new with our technology and displace them. And I think that speaks volumes to the potential that we'll see going forward. And, so over time, we hope that everyone will see the benefits of our progress. John Mason: Right. Thank you. And then last question, I guess, you know, I think there's been quite a buildup of accounts receivable or trade receivable on the balance sheet. And I know, obviously, it's a testament to the increased book value growth. But I guess, how do you see the cadence of release of that? Right? I think it's been a pretty big drag on free cash flow. I think you've reported operating cash flow on, like, a semiannual basis. But, yeah, would love to know kind of how you expect that to flow through and when you expect to see that free cash flow. Ordan Trabelsi: Yes. Good question. It's not, and I don't know if you followed SuperCom Ltd. historically, but there was a period of time where we were working in Africa and South America. And over there, collections are sometimes delayed. And it was more of a matter to look at here. We actually don't have that in the US market and the European market. Things are timely. If we do see expansion to And the amount of to our AR, it's because sometimes you have percentage of completion in these projects. The time and effort to recognize revenues is different from the time when you get paid. So there's the misalignment in timing with percentage of completion projects, which is mainly coming from the, again, the long multiyear project deployments of the national scale in the European market. But we don't see an issue there. They're paying on time. We don't have any we haven't had to have bad debt or anything of that sort in a significant manner like we had in Africa. And, sorry, South America. And, when you look at the bad debt that's done on an annual basis, that's typically from the e-gov business, from old debt from those regions, not from the electronic monitoring business in the US and Europe. And one of the reasons why we expanded and shifted into this market was because of the very good collectability and predictability with these customers. John Mason: Got it. Thanks. I think that's all my questions. Thanks so much. Ordan Trabelsi: Thank you. Operator: Your next question for today is from A. J. Hoffman, a private investor. A. J. Hoffman: Hey, man. Congratulations on everything. I may have missed this earlier. But did you state a win rate so far for all these contracts you're getting in the US for the ones where the bids have closed? Is it as high as Europe? Is it lower? And yeah. Ordan Trabelsi: That's a good question. We haven't yet assessed in the US. We've been doing very well. It's probably higher than Europe, but we haven't assessed it because we're still looking at such a large variety of projects in different sizes. So we're gonna wait till we have more, a consistent flow and size of projects before we start to do analysis. But so far, as you see, we're announcing many wins in many new states with many new resellers with direct agencies. And we have very good feedback from our customers. A. J. Hoffman: And as far as scalability in the United States, have you guys calculated what your let's say, after you launch everything, after you put everything on the ground and you're expanding inside of that state, maybe to different municipalities, and at that point, all you're doing is adding, you know, just bracelets to the equation. What is the breakeven for putting that bracelet on somebody to recouping the cost of that bracelet? Like, is it one quarter? Is it a year to recoup your cost? Can you break that down for us so we can kinda understand the longevity of these contracts versus when ROI is complete on actually assigning the bracelet to somebody? Ordan Trabelsi: A great question, and I would love to share that with you. But for competitive reasons, we don't share that specific number. As you can imagine, there are 10 other players in the industry, and everyone is trying to understand the cost structure and the exact prices per bracelet, that the competition and all the customers as well. So we at an aggregate level, you could see from my financials, when there's a new project, a large one, there's cash that's outlaid to manufacture them. And then over the lease, we bring it back. But the margins, especially the additional contribution margins for additional bracelets, are high. And, over time, we expect to see margin expansion in our business as we continue to have the same cost leverage for high revenues. A. J. Hoffman: Thank you. I can appreciate that response. Final question. There have been rumors circulating that you guys have been approached for a buyout. I'd take it with a grain of salt, but is getting bought out something that you guys are considering? Ordan Trabelsi: I don't know where these rumors come from, but I'll share, and I've shared before that we've been approached by a variety of strategics or financial firms to acquire us. Our decision of the board, as always, will be what is best for the shareholders. So I can't get into any specifics on that, but I have shared that that is a situation that has occurred to us. And it's natural considering our performance in the market. We have a very high competitive rate. We're expanding very nicely in our technology. I believe it's highly coveted by other players and could perform very well to help disrupt the criminal justice industry. A. J. Hoffman: Awesome, man. I appreciate your answers. Ordan Trabelsi: Thank you very much. Operator: At this time, I will pass the call back to Ordan for closing remarks. Ordan Trabelsi: I want to thank you all for participating in today's call and for your interest in SuperCom Ltd. Please contact us directly if you have any additional questions. We look forward to sharing our progress with you on our next conference calls, filings, and press releases. Thank you very much, and have a good day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you for standing by, and welcome to the Suburban Propane Partners Fourth Quarter and Fiscal Year End Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I'd now like to turn the call over to Davin D'Ambrosio, Vice President and Treasurer. You may begin. Davin D'Ambrosio: Thank you, Rob. Good morning, everyone. Thank you for joining us this morning for our fiscal 2025 fourth quarter and full year earnings conference call. I'm here with Michael A. Stivala, our President and Chief Executive Officer, Michael A. Kuglin, Chief Financial Officer, and Alex Centeno, our Senior Vice President of Operations. This morning, we will review our fiscal 2025 fourth quarter and full year financial results, along with our current outlook for the business. Once we have concluded our prepared remarks, we will open the session for questions. Our conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to the partnership's future business expectations and predictions and financial condition and results of operations. These forward-looking statements involve certain risks and uncertainties. We have listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in our earnings press release, which can be viewed on our website at suburbanpropane.com. While subsequent written and oral forward-looking statements attributable to the partnership or persons acting on its behalf are expressly qualified in their entirety by such cautionary statements, our annual report on Form 10-K for the fiscal year ended September 27, 2025, which contains additional disclosure regarding forward-looking statements and risk factors, will be filed on or about November 26. Once filed, copies will be obtained by contacting the partnership or the SEC. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures, as well as a discussion of why we believe this information to be useful, in our Form 8-Ks, which was furnished to the SEC this morning. Form 8-Ks will be available through a link in the Investor Relations section of our website. At this time, I will turn the call over to Michael A. Stivala for some opening remarks. Mike? Michael A. Stivala: Thanks, Davin, and thank you all for joining us today. Fiscal 2025 was another outstanding year for Suburban Propane Partners, L.P. In our core propane business, propane demand was strong as a result of a sustained period of more normal winter weather in the heart of our footprint from mid-December through February, the most critical months for heat-related demand, as well as strong demand in our Southeast operations in the aftermath of Hurricanes Helene and Milton in the first fiscal quarter. And incremental volumes from our acquisition of a well-run propane business in our Southwest territory, which we closed in November 2024. I am extremely proud of how our field personnel at every level worked tirelessly to meet the surge in demand when our customers needed us most, while also opportunistically taking on new business when some of our competitors were unable to keep up. This was a real testament to the preparation by our operations teams and the flexibility of our operating model to ramp up when demand dictates. And with safety as our highest priority, what's even more impressive is how our employees performed during a prolonged stretch of very high activity levels and some harsh operating conditions while not compromising on our highest standards for safety. As a result, propane volumes for fiscal 2025 increased nearly 6% compared to the prior year. Strong volumes, combined with effective margin management during a rising commodity price environment and good expense discipline, contributed to a $28 million or 11.2% increase in adjusted EBITDA compared to the prior year. In addition to the higher earnings, we had a number of key accomplishments in fiscal 2025 in support of our long-term strategic growth initiatives. Just to highlight a few, we acquired and integrated a well-run propane business in strategic markets in New Mexico and Arizona for a total consideration of approximately $53 million. Subsequent to the end of fiscal 2025, just in October 2025, we further invested in the growth of our core propane business with the acquisition of two high-quality businesses in attractive markets in California for a total consideration of $24 million. We created a dedicated sales and business development team focused on specific propane verticals that are less weather-sensitive and present opportunities for growth as the advantages of propane become a bigger part of the conversation. These verticals include opportunities in material handling, agriculture, power generation, and over-the-road vehicles. We continue to identify and pursue new market expansion opportunities to establish and extend our presence in certain attractive markets. We secured an incremental supply of renewable propane and exceeded 2 million gallons of renewable propane sales focused primarily in the California market, coupled with expansion into the Florida and Virginia markets to meet customer demand for a renewable alternative. We entered into a multiyear partnership with NASCAR and Speedway Motorsports, making Suburban Propane the official propane partner of NASCAR and Speedway Motorsports, reflecting the reliability of our national presence and demonstrating the power and versatility of propane at one of America's top spectator sports. In our RNG operations, we continue to implement several operational improvements at our Stanfield, Arizona facility to stabilize and grow RNG production, enhance safety protocols, modify feedstock intake practices, and improve our overall plant efficiency to strengthen the long-term performance and returns of the facility, while also advancing the capital projects at our Columbus, Ohio, and Upstate New York facilities, both of which are expected to come online in 2026. We also expanded our RNG management team with dedicated safety, construction, and compliance personnel to bring more expertise in-house. And focusing on our balance sheet, we launched an at-the-market equity program to sell up to $100 million of newly issued common units, raising $23.5 million in net proceeds from the sale of 1.3 million common units at attractive prices during fiscal 2025. Proceeds from the ATM program are being used to support our ongoing pursuit of opportunistic growth and to accelerate debt reduction. During the year, using excess cash flows and proceeds from the ATM program, we deployed nearly $53 million for propane acquisitions, over $25 million for our growth projects in the RNG business, and reduced our overall debt by nearly $2 million. With the increased earnings and slightly lower outstanding debt, we ended fiscal 2025 with a leverage ratio of 4.29 times, a significant improvement from 4.76 times at the end of the prior year. In addition to the strong operating and financial performance during fiscal 2025, we embarked on a multiyear technology modernization initiative that will simplify the way we operate, consolidate our systems platform, and improve the tools we use to serve our customers, delivering a better experience for both our employees and our customers. This initiative will not change our personalized hyper-local business model that sets Suburban Propane apart as best-in-class operators within the propane industry. So fiscal 2025 was a very successful year for Suburban Propane, both in terms of our financial performance and from executing on our long-term strategic growth plans, while remaining patient and disciplined to maintain financial flexibility through a strong balance sheet. A little later, I will provide some closing remarks. However, at this point, I will turn the call over to Michael A. Kuglin, who will discuss our full year and fourth quarter results in more detail. Mike? Michael A. Kuglin: Thanks, Mike, and good morning, everyone. I will start by focusing on our full year results, then give some color to the fourth quarter at the end of my remarks. To be consistent with previous reporting, I am excluding the impact of unrealized noncash mark-to-market adjustments on our commodity hedges, which resulted in an unrealized gain of $2.4 million in fiscal 2025 compared to an unrealized loss of $14.6 million in the prior year, along with certain other noncash items we have identified in the reconciliation of net income to adjusted EBITDA in the press release. Including these items, net income for fiscal 2025 was $128.4 million or $1.97 per common unit compared to $107.7 million or $1.68 per common unit in the prior year. Adjusted EBITDA for fiscal 2025 was $278 million, an increase of $28 million or 11.2% compared to the prior year. Retail propane gallons sold in fiscal 2025 were 400.5 million gallons, an increase of 5.9% compared to the prior year. The volume increase was driven by sustained widespread cold temperatures during the most critical months for heat-related demand, increased demand for backup power generation, and other applications in the aftermath of Hurricanes Helene and Milton, continued growth in our counter-seasonal national accounts business, and incremental volumes from our recent propane acquisitions. With respect to the weather, average temperatures for fiscal 2025 were 9% warmer than normal and 4% cooler than the prior year. During January and February, average temperatures were comparable to normal and 13% colder than the same period last year. From a commodity perspective, average wholesale propane prices for fiscal 2025 were 79¢ per gallon, basis month billed, which was 5.8% higher than the prior year. According to the most recent report from the Energy Information Administration, US propane inventories at the end of last week were at 106 million barrels, which was 6% higher than a year ago and 13% higher than historical averages for this time of year. Given the strength in inventories, wholesale propane prices have trended down from the end of the fiscal year and are currently in the 60¢ range, compared to the 80¢ range at the same time last year. Excluding the impact of the mark-to-market adjustments on our commodity hedges that I mentioned earlier, total gross margin of $866.4 million in fiscal 2025 increased $46.8 million or 5.7% compared to the prior year, primarily due to higher propane volumes sold and higher propane unit margins. Excluding the impact of the unrealized mark-to-market adjustments, propane unit margins for fiscal 2025 increased 2¢ per gallon or 1%, with margin expansion experienced across all customer categories. In our RNG operations, average daily RNG injection for the fiscal year was approximately 13% lower compared to the prior year, primarily due to downtime experienced during several operational improvement projects designed to enhance future RNG production, as well as multiple power outages and extremely cold ambient air temperatures in the Arizona area during the winter that impacted anaerobic digestion. While we remain focused on executing controllable operational improvements, revenues at the Stanfield facility continue to face headwinds from lower prices for both California LCFS credits and federal D3 RINs. California LCFS credit prices remain depressed relative to historical levels, though average prices for fiscal 2025 increased 2.5% compared to the prior year. We are encouraged to see the finalization of amendments to the LCFS program implemented by CARB, made effective as of July 1, 2025, with accelerated carbon reduction targets aimed to create a better balance in the LCFS credit bank. Since the amendments were finalized in June 2025, LCFS credit prices have increased over 30%. Conversely, average federal D3 RIN prices for fiscal 2025 decreased 25% compared to the prior year. With respect to expenses, combined operating and G&A expenses increased $23.7 million or 4.2% compared to the prior year. The increase was primarily due to higher payroll and benefit-related expenses, overtime, and other variable operating costs to support increased activities associated with incremental customer demand, as well as higher variable compensation expense associated with the increase in earnings and costs related to the technology initiative that Mike mentioned earlier. Net interest expense of $76.3 million for fiscal 2025 increased $1.7 million compared to the prior year, due to higher average outstanding borrowings under our revolving credit facility, partially offset by lower benchmark interest rates. Total capital spending for fiscal 2025 of $72 million was $12.5 million higher than the prior year, primarily due to advancing construction efforts at our RNG facilities in Columbus, Ohio, and Upstate New York. For fiscal 2026, capital spending for our propane operations is expected to be consistent with historical levels, which is between $40 million and $45 million, and CapEx for the RNG projects is expected to range between $30 million to $50 million, with the spending concentrated in the first half of the fiscal year. We expect the capital spending at our RNG facility in Upstate New York to qualify for investment tax credits under the Inflation Reduction Act at a rate of 30%, which equates to a range of $7 million to $9 million in tax credits that could be earned and monetized on the assets placed into service. Turning to our results for the fourth quarter of 2025, consistent with the seasonality of our business, we typically report a net loss in the fourth quarter. With that said, excluding the effects of certain noncash items in both years, we reported a net loss of $35.7 million for the fourth quarter, or 54¢ per common unit, which is flat compared to the prior year. Adjusted EBITDA for the fourth quarter was $700,000, which was also essentially flat compared to the prior year. Retail propane gallons sold during the fourth quarter increased 1.8% compared to the prior year. Total gross margin increased $5.3 million or 4% compared to the prior year, primarily due to higher volumes sold and higher unit margins. Combined operating and G&A expenses increased $5.8 million or 4.5%, primarily due to higher volume-related variable operating costs, higher variable compensation, and costs related to our technology initiative. Excluded from adjusted EBITDA for the fourth quarter of 2025 is an impairment charge of approximately $6 million to fully write down the carrying value of our investment in an early-stage energy technology company, as well as income with the reversal of the earn-out reserve associated with the RNG acquisition. The earn-out was contingent upon the acquired assets achieving certain EBITDA thresholds over a certain period. During the fourth quarter, we determined that the contingent consideration would not be earned. These noncash items were reported within OtherNet's statement of operations. Turning to our balance sheet, during the fiscal year, we utilized a combination of cash flows from operating activities and net proceeds of $23.5 million from the issuance of common units under the ATM program to fund a propane acquisition for a total consideration of $53 million, growth capital expenditures of $25.5 million for advancing construction activities at our RNG production facilities, and repayment of outstanding borrowings under our revolving credit facility of $1.8 million. With the improvement in earnings and debt reduction, the consolidated leverage ratio for fiscal 2025 improved to 4.29 times. We have more than ample borrowing capacity under our revolver to support the completion of our planned capital expansion projects, as well as our ongoing strategic growth initiatives. As we continue to focus on the execution of our long-term strategic goals, we also stay focused on maintaining a strong balance sheet. With that, I will turn it back to Mike. Michael A. Stivala: Thanks, Mike. As announced in our October 23 press release, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit in respect of the fourth quarter of 2025. That equates to an annualized rate of $1.30 per common unit. The quarterly distribution was paid yesterday, November 12, due to the Federal Reserve closing on the eleventh for Veterans Day, to our unitholders of record as of November 4. Our distribution coverage continues to remain healthy, at 2.13 times for the trailing twelve months ended September 2025. I also want to take a moment to thank and honor our great American veterans for their service, including so many that are part of the Suburban Propane family, as we just passed Veterans Day. So just a few closing remarks regarding our long-term strategy. Our long-term strategic growth plan remains to foster the growth of our core propane business while making strategic investments in lower carbon renewable energy alternatives through our Suburban Renewable Energy subsidiary, leveraging our core competencies in safety, customer service, and logistics, especially in the localized energy distribution markets. The energy evolution is a long journey, one that requires a pragmatic and balanced approach to identifying and fostering energy solutions that can lower greenhouse gas emissions and our country's overall carbon footprint. It requires solutions that can deliver energy that is reliable, affordable, and sustainable. We have definitely seen a shift in the conversation that is benefiting propane by recognizing propane's versatile, affordable, on-demand nature and its clean qualities as an immediate and long-term solution to helping lower the carbon footprint. We are very well positioned to take advantage of this growing respect for propane given our operational and financial strength and stability. We are also maintaining our focus on innovation to ensure that Suburban Propane continues to be regarded as a trusted local distributor of energy for decades to come. That innovation includes our advancements in delivering renewable propane and renewable natural gas as direct drop-in replacements for their traditional energy equivalents. The energy evolution is in the early innings. The investments we have made have been very measured and focused on long-term growth and sustainability. It is great to see a more pragmatic approach toward the energy evolution and also great to see a supportive regulatory and policy framework that contemplates a more deliberate and inclusive environment to drive down emissions over time and with an all-of-the-above philosophy for energy solutions. We are very excited to be starting a new heating season, and our people and platform are very well prepared to handle whatever this year's weather dictates. With that, I want to thank our more than 3,300 employees for helping make fiscal 2025 another successful year for Suburban Propane and for their unwavering commitment to safety for our customers, our employees, and the communities we serve. And as always, I hope you and your families remain safe and healthy, and I wish everyone a very happy holiday season. We appreciate your support. We would now like to open the call up for questions. And, Rob, if you could help us with that. Operator: Thank you. We will now begin the question and answer session. We will pause for just a moment to compile the questions. And, again, if you would like to ask a question, please press. And we have no questions. I will now turn the call back over to Michael A. Stivala for some final closing comments. Michael A. Stivala: Great. Thank you, Rob. I think we have said enough. We are excited about the new year, and we look forward to talking to everybody after our first quarter in February. And please have a safe and happy holiday season. Thank you. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to Bitcoin Depot's third quarter 2025 Conference Call. My name is John, and I will be your operator today. Before this call, Bitcoin Depot issued its third quarter results in a press release. A copy will be furnished in a report on Form 8-K filed with the SEC and will be available in the Investor Relations section of the company's website. Joining us on today's call are Bitcoin Depot CEO, Brandon Mintz, and CFO, David Gray. Following their remarks, we will open the call for questions. Before we begin, Cody Slach from The Gateway Group will make a brief introductory statement. Mr. Slach, please proceed. Cody Slach: Thank you, operator. Good morning, everyone. Before management begins their formal remarks, we would like to remind everyone that some statements we make today may be considered forward-looking statements under Securities and involve a number of risks and uncertainties. As a result, we caution you that there are a few factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made except as required by law. We also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances including but not limited to risks and uncertainties identified under the caption Risk Factors in our recent filings. You may get Bitcoin Depot's SEC filings for free by visiting the SEC website at www.sec.gov. I'd like to remind everyone that this call is being recorded and will be available for replay via a link in the Investor Relations section of Bitcoin Depot's website. A supplemental earnings presentation highlighting our performance has also been made available on our IR website. Now I will turn the call over to Bitcoin Depot's CEO, Brandon Mintz. Brandon? Brandon Mintz: Thanks, Cody, and good morning, everyone. Thank you for joining our third quarter 2025 earnings call. Bitcoin Depot delivered another strong quarter exceeding the preliminary results we announced in October. Our third quarter performance once again demonstrates the operating leverage in our business model, supported by continued kiosk expansion, higher transaction volumes, and disciplined cost management. As a result, we achieved meaningful revenue growth, a substantial increase in adjusted EBITDA, and further improvement in profitability and cash generation. Consumer demand remained quite strong in the third quarter, with median transaction size up 40% year over year to $350 and total transaction volume moving steadily higher to $162.5 million. Our kiosk growth and optimization plan continued to deliver the intended results, with Q3 gross profit up 40% year over year and adjusted EBITDA up 75% to $16.1 million. We ended Q3 with approximately 9,300 active machines and expect to see continued growth in kiosks for the remainder of the year. As for our BPM relocation strategy, today, 3,800 of our kiosks have been installed for less than one year. As these machines ramp up, we expect to drive further cash flow as our Bitcoin ATMs typically see payback periods of less than eight months regardless of Bitcoin price. Now turning to an update on our growth strategy. First, international expansion. We have now deployed over 260 kiosks to support our ongoing launch in Australia this year. Australia continues to emerge as a global hotspot for Bitcoin adoption, currently ranking third worldwide in total Bitcoin ATMs. While it's still early, we are encouraged by the retail partnerships and expansion opportunities we have identified so far. Beyond Australia, we just commenced operations in Hong Kong, as announced earlier this week, and continue to work through the regulatory process in other jurisdictions. Next is scaling our domestic footprint. We continue to deploy kiosks from the large inventory we secured last year. Once fully deployed, these units could bring our total active fleet to approximately 10,500 kiosks. This will enhance our reach and support further efficiencies across the business. Given the strength of our business and our improved balance sheet, strategic M&A is also an opportunity to scale domestically and internationally. In fact, in early October, we acquired the assets of National Bitcoin ATM, a prominent BPM operator across 27 states. The acquisition adds over 500 kiosks to our network, further solidifying our leadership as North America's largest Bitcoin ATM operator and accelerates our mission to provide accessible, secure, and convenient access to Bitcoin across communities nationwide. Turning to corporate and financial governance. We continue to make significant improvements. In early October, we announced the rollout of our new compliance standards that make Bitcoin Depot one of the only operators in the industry to require customer identification before transacting for any amount of money. This initiative applies to all new and existing customers, ensuring they benefit from the highest level of protection well beyond what is currently required by federal law. We also introduced additional protections for seniors, reinforcing our leadership in consumer protection and responsible access to digital assets. These steps reflect our belief that long-term growth in this industry depends on trust and accountability. While our enhanced compliance standards have had a modest effect on near-term transaction activity, the more meaningful headwind to our outlook stems from recent state regulations that imposed transaction size caps or fee caps across several states. We view both developments as constructive for the long-term health of the industry. As the largest and most compliant operator in North America, Bitcoin Depot is well-positioned to navigate this evolving regulatory environment. These changes are expected to weed out smaller, less compliant operators, further differentiate our business, and support continued growth and leadership in the market. Looking ahead, with over $70 million in cash and digital assets, we remain well-positioned to pursue growth opportunities and strengthen the crypto ATM market. We continue to focus on scaling efficiently, enhancing our compliance protocols, and using our strong balance sheet to pursue accretive acquisitions. Our team's execution, operational discipline, and financial strength position Bitcoin Depot to deliver sustained value for our customers, partners, and shareholders. With that, I will now turn it over to our CFO, David Gray, who will walk through our financial results in more detail. David? David Gray: Thanks, Brandon, and good morning, everyone. I'm pleased to share the financial highlights for our third quarter as follows. Revenue was $162.5 million, up 20% from 2024. This growth was driven primarily by increased kiosk deployment, higher median transaction sizes reflecting strong consumer demand, as well as the results of our kiosk redeployment efforts. Gross profit in 2025 increased 40% to $28.2 million compared to $20.2 million in 2024. Gross margin in the third quarter increased 250 basis points to 17.4% compared to 14.9% in the third quarter of last year. This margin increase was largely driven by leveraging the cost structure of our BTM networks against higher revenue. Total operating expenses were $18.3 million compared to $16.9 million in last year's third quarter, with the increase due to higher non-cash stock compensation expense and indirect taxes. GAAP net income for 2025 increased 139% to $5.5 million compared to $2.3 million for 2024. GAAP net income attributable to common shareholders increased to $5.5 million or $0.08 per share compared to a net loss of $900,000 or negative $0.05 per share in last year's third quarter. The increase was due to higher revenue and income from operations in 2025. Adjusted EBITDA, a non-GAAP measure, increased 75% to $16.1 million in 2025 compared to $9.2 million in the third quarter of last year. This increase was primarily due to revenue outperformance and margin expansion. Now turning to our balance sheet and cash flow. Cash, cash equivalents, and cryptocurrencies as of September 30, 2025, increased to $72.9 million compared to $31 million in 2024. We generated $33 million of cash from operating activities in the first nine months of 2025 compared to $17.3 million during the same period last year, an increase of over 90%. Subsequent to the third quarter end, we raised gross proceeds of $15 million in a registered direct offering. This additional liquidity was raised proactively to afford us the opportunity to be strategic with further M&A opportunities. Debt, which includes a term loan, finance leases, and profit share arrangements, was $70 million at quarter end compared to $60.9 million in 2024. Of the total debt balance, $25 million is our term loan, and $39 million is comprised of profit-sharing liabilities. As a reminder, these profit share arrangements entail an upfront lump sum payment to the company by our partners in exchange for a portion of future profits generated from a specified group of kiosks for a specified period of time. Because we continue to operate and typically retain title on the machines, we must account for these arrangements as debt under US GAAP. We currently do not anticipate further expansion of the profit share program going forward. Now turning to our outlook. We anticipate Q4 revenues to range between $112 to $115 million and adjusted EBITDA to be in the low single-digit millions. As Brandon highlighted, we expect fourth-quarter results to reflect the impact of typical seasonality, recently enacted state regulations, and to a lesser extent, our enhanced compliance standards. While these factors are expected to weigh modestly on near-term results, we believe they reinforce the integrity and sustainability of our business over the long term. As the largest and most compliant BTM operator in North America, Bitcoin Depot is uniquely positioned to lead the market through this evolving regulatory landscape and capture share as smaller, less compliant operators exit the market. We remain focused on operational excellence, maintaining strong profitability, and advancing our leadership position while continuing to invest in growth initiatives, compliance, and technology that will deliver durable shareholder value. With that, we are now happy to take your questions. Operator? Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, please press 1 on your telephone keypad. If you would like to withdraw your question, simply press 1 again. Your first question comes from the line of Harold Goetsch with B. Riley Securities. Please go ahead. Harold Goetsch: Hey. Good afternoon. Good morning, guys. Can you give us a bridge maybe to the components of the difference between the guidance today and maybe prior estimates on the street in terms of, like, how much of it is state regulation, what are the states that are involved, how much do you think this is seasonality? And how much of it is enhanced compliance standards? Like, what would you stack it up as contributors to the guidance? Because it looks to me like you're gonna have a quarter this one of the lowest revenue quarters you've had in three or four years. Scott Buchanan: Yeah. Hey, Hal. This is Scott Buchanan. Thanks for the question. Yeah. If you were gonna stack rank those, the biggest impact is definitely the state regulation. Because those, as you're aware, place limits on transaction sizes or fee limits. And so that's the biggest impact. The second biggest would be seasonality, as we always see Q4 being the lowest quarter. And that'll continue to be the case here. And then third would be the proactive compliance changes that we've made internally, that we announced a couple of weeks ago, with the collecting ID for every customer and enhanced protections for elder customers. I don't have, like, percentage breakdowns of how much I think each of those impact because it's not black and white, but that's definitely the order they would be in of how much impact there is to the volume. Harold Goetsch: Could you give us a feel for what states were kind of the biggest regulatory changes in the quarter and what others might be on tap if that's a major trend? Scott Buchanan: Yeah. So it's less, like, one specific state and more that there's been so many recently. So this year, there's been over 15 states that have enacted some sort of restrictions, whether on transaction sizes or fee caps. And like, six of those went into effect in Q3 into early and go into effect early Q4. And so a bunch of those came in in the past couple of months, and so that's where the bigger decline coming into Q4 is. And kinda like we saw with California, you see the biggest drop initially when you first implement these changes. And then as the rest of the space catches up and becomes compliant as well, then we see volume recover and come back a little bit. So we expect the steepest drop to happen initially. And then as it levels the playing field again and everyone's compliant with the new requirements in each state, I think volumes will recover a little bit in those states from that point. Harold Goetsch: Okay. And if I had a follow-up, what, you know, National Bitcoin ATM is is that deal closed. Right? Is is that how much is that gonna maybe contribute in in the fourth quarter? Scott Buchanan: Yeah. That deal is closed, and we still have to convert all the kiosks. So we buy them, and then we have to convert all the kiosks for our platform to fully get all of the revenue and profits. And so we're most of the way through that now, and it'll be fully completed by Q4. Harold Goetsch: But could you give us an idea of what kind of productivity they were having before you acquired them? Scott Buchanan: I don't have the exact numbers in front of me, but if you take their kiosks as a percentage of our kiosks, they're roughly in line with us in terms of volume per kiosk. Harold Goetsch: Okay. Thank you. Operator: Once again, if you would like to ask a question, please press 1 on your telephone keypad. Your next question comes from the line of Pat McCann with Noble Capital Markets. Please go ahead. Pat McCann: Hey, guys. Thanks for taking my questions. I wanted to piggyback on the question regarding the transaction limits in the states and whatnot. I guess what I'm wondering is, you know, back when that was an issue with California initially, you know, there was that problem of other operators not being compliant. So it was an uneven playing field. And, Scott, you kind of alluded to that, you know, as others become compliant in these recent states to enact regulations, the playing field will level, and that should help recovery of volumes. Is there anything to give you confidence that in these more recently enacted regulations that these states will be strict in enforcing those regulations so that your other competitors will eventually become compliant as you are? Brandon Mintz: Hey, Pat. It's Brandon. Great question. Yes. We've started to see the playing field level in some of the states that were early on in passing legislation. Once bills like this pass, it takes a state a little bit of time for the regulator to kind of evaluate the space and figure out if operators are complying and then figure out how to enforce the law if operators are not complying. Now that SB 401, which was the original bill that had transaction and fee caps that passed in California a couple of years ago, has been active for a while, we've started seeing some enforcement actions against smaller operators who are not complying. And that has helped level the playing field there, and there is now a large reduction of kiosks in California compared to the number of kiosks that were there a couple of years ago. So the remaining kiosks that we have in California are actually doing pretty good volumes today compared to, you know, a year or so ago, for example, when a lot of the operators that were not complying were still able to continue to operate. And so I think that enforcement action that's been happening in California amongst the noncompliant operators is sending a message probably across the entire country to all operators who maybe previously weren't complying with these laws in the states that have passed them that they need to. And it will further put pressure on them to either sell or shut down their businesses. Pat McCann: Thank you for that. And then my other question was regarding 2026. I was just wondering as we look ahead to that, if you could give an overview of what you expect the dynamics to be between your new kiosk deployment versus a redeployment or optimization of existing kiosks? Brandon Mintz: Well, we still do have a large number of kiosks in our inventory today. We still have over a thousand currently, so we do expect to have still a significant number of newer deployments, but at the same time, we do expect to have a significant number of relocations. Obviously, some of the states that have passed legislation this year, it's still just so early. And we don't know the full impact of it since some of the states were just passed a couple of months ago. But as Scott alluded to, we're typically seeing some recovery over time, and typically the worst impact is right after the legislation is passed, and then some competition may be reduced because of that, and then we may recover a bit. So I think you'll continue to see still a number of machines that are less than a year old, you know, in the thousands like you have been seeing. And it's hard to say exactly how much net new kiosks there will be because we don't know how many exactly we will relocate from states that have had legislation passed. But we anticipate for states that have had legislation passed, that we will relocate more machines from those states than states that have not had legislation passed. And I will say if you guys look back a few quarters ago, when we originally had that impact from the California SB401 bill pass, we had a downturn in our numbers temporarily, and then if you look at 2025, we've put out some very excellent beats against guidance and analyst expectations. So we're still confident moving forward that we can continue to optimize our fleet even though there may be temporary bumps in the road. There's still a lot of geography out there for us to deploy in that has not had a regulatory impact yet. And we're continuing to diversify with the international expansion as well. As you saw within the past day or so, we announced that we've entered Hong Kong. Actively working on other international jurisdictions as well that do not have any of these fee caps or transaction limits in place, and we're not seeing any activity brewing in the near future. So you'll continue to see in summary, the relocations, and we will do our best to focus on net new deployments, but hard to specify an exact number. Pat McCann: Thanks very much. Operator: Your next question comes from the line of Mike Colonnese with H.C. Wainwright. Mike Colonnese: First for me, is there any way you could size the market opportunity in Hong Kong as it relates to Bitcoin ATM deployments? And are there any interesting or major players there that are acquisition candidates for Bitcoin Depot? Brandon Mintz: Mike, thanks for the question. The Hong Kong market for the size country it is is kind of interesting because you have a handful of players that are in the 100 plus kiosk range. And even though the industry compared to the US is smaller, we see it as an exciting market to enter into. I wouldn't expect the Hong Kong market currently to grow to, you know, many thousands of kiosks just based on the size of the country. But we do see it as a good opportunity to diversify and build a decent-sized fleet of kiosks that could be meaningful to our overall revenue number and our bottom line. And the operators there potentially could be acquisition targets. Of course, we're open to having discussions with operators wherever we want to expand to, and we always focus on a two-pronged effort of organic expansion and having conversations about acquisitions, and it's all just about ROI and cost-benefit analysis to determine which way we move forward. Mike Colonnese: Got it. Thanks for that, Brandon. And any updates you can provide on your BitLicense with NYDFS? I know you guys seem to be getting closer and closer to that, especially with the more favorable regulatory backdrop in the United States. Just curious if you have any updates or spending any advancement on that front. Brandon Mintz: Right now, it does not seem very likely that it will happen anytime soon for us. We're still not aware of any Bitcoin ATM operator that has received a BitLicense. And I'm not sure of the state's appetite to allow any operator to operate a Bitcoin ATM company in the state based on how it's going today. Mike Colonnese: Thank you for taking my questions. Operator: At this time, this concludes our Q&A session. I would now like to turn the call back over to Brandon Mintz for closing remarks. Brandon Mintz: Thanks, everyone. We'll talk to you guys next quarter. Thank you for joining today for Bitcoin Depot's conference call. You may now disconnect your lines. Have a pleasant day, everyone.
Operator: Greetings, and welcome to Eagle Point Credit Company's Third Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. At this time, I will turn the conference over to Mr. Darren Dougherty from Protech Partners. Please go ahead. Darren Dougherty: Thank you, operator, and good morning. Welcome to Eagle Point Credit Company's earnings conference call for 2025. Speaking on the call today are Thomas Majewski, Chief Executive Officer, and Ken Inorio, Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that the matters discussed on this call include forward-looking statements or projected financial information that involve risks and uncertainties that may cause the actual results to differ materially from such projections. For further information on factors that could impact the company and the statements and projections contained herein, please refer to the company's filings with the Securities and Exchange Commission. Each forward-looking statement or projection of financial information made during this call is based on the information available to us as of the date of this call. We disclaim any obligation to update our forward-looking statements unless required by law. Earlier today, we filed our third quarter 2025 financial statements and investor presentation with the Securities and Exchange Commission. These are also available in the Investor Relations section of the company's website eaglepointcreditcompany.com. A replay of this call will also be made available later today. I will now turn the call over to Thomas Majewski, Chief Executive Officer of Eagle Point Credit Company. Tom? Thomas Majewski: Thanks, Darren. And good morning, everyone. We're glad you've joined the call today. We were very active in managing our portfolio during the quarter, both through deployment into new investments and rotation and optimization of portfolio investments already on the ground. We deployed almost $200 million into new investments, taking advantage of attractive opportunities in both the primary and secondary markets. The CLO equity investments that we made during the quarter had a weighted average effective yield of 16.9%. Additionally, during the quarter, we proactively completed 16 refinancings and 11 resets which strengthened our CLO equity portfolio's earning power and helped partially offset the loan repricings that we faced throughout the year. Importantly, we still have a robust pipeline of additional resets and refinancings planned into 2026. Third quarter recurring cash flows came in at $77 million or 59¢ per share. This is a decrease from $85 million or 69¢ per share in the second quarter. During the quarter, the company generated net investment income less realized losses from investments of $0.16 per share, consisting of 24¢ of net investment income and offset by 8¢ of realized losses from sales on certain investments. The realized losses from investments were primarily driven by rotating some of our underperforming September, our NAV stood at $7 per share, which is down 4.2% from $7.31 per share as of June 30. For the third quarter, the company generated a GAAP return on equity of 1.6%. Our portfolio's weighted average remaining reinvestment period or WARP ended the quarter at 3.4 years, roughly 26% above the market average of 2.7 years. This is slightly higher than the 3.3 years as of June 30, and reflects our long-term strategy to seek to maximize our portfolio's WARP when the reset market is open. As I mentioned at the beginning of the call, we focused efforts during the quarter on portfolio rotation and optimization, which should ultimately enhance our cash flows and earning power going forward. Our position as a majority CLO equity holder in most cases gives us multiple levers to pull to unlock value for the company over time. As many of you know, the loan market has been facing pressure from loan repricings in recent quarters. We did see repricing activity slow down when the credit markets were spooked recently by the idiosyncratic bank of First Brands. However, 42% of loans are trading above par again and we may see repricing activity return. I'd also like to point out that ECC's exposure to First Brands was small, and the losses related to the name were well within our annual credit loss assumptions. In addition, we saw a pickup in LBO activity during September, which is healthy for the market overall and supportive of loan spreads. In other words, an increased supply of new issue loans should help mitigate spread compression pressure, which is ultimately a good thing for our cash flows and our NAV trajectory. During the quarter, we utilized our at-the-market program selectively issuing $26 million of common stock at a premium to NAV. We also issued approximately $13 million of our 7% series double a and b convertible perpetual preferred stock as part of our continuous public offering. We believe this is a highly attractive cost of capital for the company and presents a real competitive advantage for us. We are unaware of any other publicly traded entity focused primarily on investing in CLO equity that has such an attractive program. During the quarter, we paid 42¢ per share in cash distribution to our common shareholders across three monthly distributions of 14¢ per share. Earlier today, we declared regular monthly distributions of 14¢ per share for 2026. The company's board of directors considers numerous factors when setting the monthly distribution level, including cash flow generated from the company's investment portfolio, GAAP earnings, and the company's requirement to distribute substantially all of its taxable income. Before I hand the call off to Ken, I'd like to highlight Eagle Point Income Company, which also trades on the New York Stock Exchange under the symbol EIC. That entity principally invests in junior CLO debt securities. We'll be hosting EIC's investor call today at 11:30 AM Eastern and invite you to join us for that call as well. Ken will now provide details on our financial results. After his remarks, I'll share additional insights on the loan and CLO markets broadly. Thank you, Tom, and thanks, everyone, for joining our call today. Ken Inorio: For 2025, the company recorded net investment income less realized losses from investments of $21 million or 16¢ per share. Net investment income was 24¢ per share. This compares to NII less realized losses from investments of $0.16 per share in the last quarter and NII less realized losses of $0.23 per share in 2024. Additionally, for 2025, the company recorded losses from forward currency contracts of 1¢ per share. Including unrealized gains, the company recorded GAAP net income of $16 million or $0.12 per share for the quarter. This compares to a GAAP net income of $0.47 per share last quarter and 4¢ per share in 2024. The company's third quarter GAAP net income was comprised of investment income of $52 million and unrealized gains on investments and forward currency contracts of $4 million, partially offset by financing costs and operating expenses of $21 million, realized losses on investments of $10 million, distributions and amortization of costs on temporary equity of $6 million, and unrealized losses on certain liabilities held at fair value of $2 million, and realized losses from forward currency contracts of $1 million. As a reminder, temporary equity refers to our multiple series of perpetual preferred stock. In addition, the company recorded an other comprehensive loss of $2.5 million for the third quarter. The company's asset coverage ratios as of September 30 for preferred stock and debt calculated pursuant to Investment Company Act requirements were 239% and 529% respectively. These measures are above the statutory requirements of 200% and 300%. During the third quarter, we deployed nearly $200 million in gross capital into new investments. Our debt and preferred securities outstanding at quarter end totaled 42% of the company's total assets less current liabilities, above our target range of 27.5% to 37.5% when operating the company under normal market conditions. Consistent with our long-range financing strategy for the company, all of our financing remains fixed rate, and we have no maturities prior to April 2028. In addition, a significant portion of our preferred stock financing is perpetual with no set maturity date. So far in the current quarter through October 31, we've collected $70 million in recurring cash flows and expect additional collections throughout the balance of the quarter. Additionally, management's unaudited estimate of the company's NAV as of October month-end was between $6.69 and $6.79 per share. With that, I'll turn back to Tom for a look at market insights and closing thoughts. Thomas Majewski: Thanks, Ken. Stepping back to the market, loan fundamentals remain quite strong. The S&P UBS Leveraged Loan Index returned 1.6% for the third quarter and has continued to perform well through October, returning 30 basis points for the month. There were five leveraged loan defaults during the third quarter, and as of September 30, the trailing twelve-month default rate stood at 1.5%. This is up from 1.1% as of June 30 but well below the long-term average of 2.6%. The widely reported First Brands default drove most of the increase in the default rate, though its impact on the broader CLO market was actually minimal. First Brands accounted for only 30 basis points of our portfolio on a look-through basis, and we do not view it as a widespread indication of credit weakness. While the First Brand loan itself was large, it's important to remember that a good portion of that loan was held in BDCs, not CLOs. Our portfolio's look-through default exposure as of September 30 stood at 34 basis points, which is well below the broader market levels. With rates expected to fall further, we believe defaults should remain muted as loan issuers will have lower interest costs. In addition, corporate fundamentals across the loan market remain quite resilient with issuers generally continuing to grow revenue and EBITDA despite the effects of inflation, tariffs, and movements in interest rates over the past years. During the quarter, the market saw approximately 6.8% of the leveraged loan market or roughly 27% annualized prepaid at par. In general, loan issuers continue to be proactive in tackling their near-term maturities, and the maturity wall we have mentioned on prior calls continues to be pushed out. Unfortunately, while pushing out the maturity wall is good, many of these refinancings by borrowers have also included reducing the spread on loans leading to the spread compression that we've talked about over the past few quarters. On the CLO side, the market saw $53 billion of volume during the quarter, which was up slightly from $51 billion during the last quarter. Reset and refinancing activity for the third quarter was $69 billion and $36 billion respectively, and both of these measures represented significant increases on a quarter-over-quarter basis. Our portfolio metrics continue to stand out versus the market. As of quarter-end, triple C rated exposures within our CLO equity portfolio stood at 4.6%, which is lower than the broader market average of 4.8%. Similarly, only 2.7% of the loans in our CLOs were trading below eighty, and this compares to 3.4% across the market. Our weighted average junior OC cushion stood at 4.6%, well in excess of the market average of 3.7%. These are all important measures that underscore the quality of our CLO equity portfolio. And overall, we believe we have a higher quality portfolio than the market more broadly. The Fed's recent rate cuts have had limited direct impact on CLO equity, as our returns are largely driven by spreads not base rates. In many respects, lower rates can be constructive for the CLO equity asset class easing interest costs for loan issuers. It also helps increase LBO activity, which contributes to new loan supply and potentially wider loan spreads in the future. Looking ahead, we're excited about our near-term investment pipeline. Market conditions have continued to stabilize following the volatility earlier this year. Loan fundamentals remain resilient. If CLO debt spreads remain flat or continue to tighten, we expect to take action on over 20% of our portfolio and unlock refinancing upside in the coming months and quarters. To wrap up, we opportunistically deployed capital at attractive levels, executed resets and refinancings that strengthened the recurring cash flows on our portfolio, and maintained portfolio metrics that are favorable to the broader market. We are positioned with strong fundamentals, meaningful reinvestment optionality within our portfolio, and the flexibility to capitalize on opportunities as they arise. We thank you for your time and interest in Eagle Point Credit Company. Ken and I will now open the call to your questions. Operator? Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate you may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from Gaurav Mehta with Alliance Global Partners. Gaurav Mehta: Thank you. Good morning. I want to ask you on your comments around portfolio resets and refi. I think you mentioned over 20% of your portfolio will be reset and refi. Just want to get some more color on the timeline for that and what would the impact be. Sure. Thank you. Thomas Majewski: Thank you for your question, Gaurav. As we laid out, we completed a significant number of refis and resets during the third quarter, so we were very proactive with our portfolio. And when we talk about our outlook for the future, we're anticipating another 20% of the portfolio makes sense to have some actions taken over the next one to two quarters generically. It's all market condition specific. The biggest thing I would draw your attention to in our investor deck is page 28 or 25 through 28 now where we lay out position by position every single CLO that we have. And what the, what the triple A's are. You'll see the weighted average AAA spread is 134 basis points over SOFR. Right now, generically, you should think of the market as one twenty to one twenty five. Some deals wider, some deals tighter. But and then start looking through the deals that have the highest AAA spreads, and those are gonna be the ones that we that we go after. Combination of triaging, and making an, you know, an educated decision. It's as much of an art as a science of which CLOs will get the biggest potency for us, whether or not we're doing a refi or reset, which ones have the most upside savings or the value in lengthening the reinvestment period. You can see over the course of the year, we've done, I think we're on pace for comfortably over 75 different corporate actions. So, a highly, highly proactive ownership program. And I would expect that to continue market conditions permitting. We may have even a few more slated for this year, and we'll kick off into next year. So I would expect a slow and not slow, but a consistent reduction in triple A costs across the CLO portfolio and lengthening or lengthening of the reinvestment periods of those that were resetting. That said, it is all market dependent, and there's been a period of time. If you look back to Q1, it was reset mania until March 1. And then we put pencils down because the market didn't cooperate proverbially. So there is always that market caveat, but we are working very hard, and we'll do everything, you know, within reason to to to keep the cost lower on the right side of our balance. And I would say no one in the market has done more than us is my belief. Gaurav Mehta: Thanks for that color. Second question, I want to ask you on your near-term investment opportunities. Can you provide some color on what you guys are seeing in the primary and secondary markets for senior equity? Thomas Majewski: Yeah. The market continues open and active right now. Primary market, we continue to see plenty of issuance opportunities. We have a number of loan accumulation facilities, which are kind of the precursor to creating CLOs. Some of those are ripe and ready to go into CLOs whether or not we issue any more this year, a little bit market dependent. As I'm sure you're aware, insurance companies are big buyers of a lot of the rate tranches, and they often have annual budgets to deploy. And they have a funny habit of deploying that budget before the end of the year. So sometimes you see things back up a little bit. In the last week or two. So we may get one or two new done this year. But certainly a robust pipeline into Q1 of next year. And then on the secondary side, you know, hundreds of millions of dollars CLO equity trades every single week. The market's not cheap today by any stretch. It's not you know, bond equity is not being given away. That said, there are still selective opportunities out there. We have both been buying and selling in the secondary market. One of the things we made reference to in our remarks was some rebalancing and lightening on a handful of collateral managers in positions where you know, perhaps we saw more more risk than upside. That said, we've also been deploying in the secondary market in investments where we see more paths for upside. So market is open and active right now. And we are an active participant in every segment of it. But we do remain very selective in the in the areas we're in in the investments we're making. Gaurav Mehta: Okay. Thank you. That's all I had. Thomas Majewski: Great. Thank you very much. Operator: And our next question comes from Mickey Schleien with Clear Street. Mickey Schleien: Good morning, Tom and Ken. I hope you're well. Tom, you mentioned the impact of First Brands on loan spreads. Could you characterize how trends and CLO loan asset spreads in October and maybe even, you know, through mid-November relative to September? Thomas Majewski: Let's see here. So loan spread compression has slowed somewhat. If a few weeks doesn't make a trend. I unfortunately, I wish I could say better there. You know, when we look across our portfolio, you know, this the you know, lots of people ask us about default rates and all that stuff. You know, the number one thing that I don't like right now and you've heard it from us in earnings here for a few quarters, is spread compression. And the weighted average spread on these loans is down I'm gonna say, circa 50 basis points, give or take, over the last year. That is not good. We're doing our part to tighten on the right side through our reset and proactive and refinancing program. An analogy I like to make to people, and this is an analogy, we've got well over a thousand loans and a little over a 100 CLOs. It's kinda picture a wall of sand coming at us on one side. That's the loans repricing. While our team is tossing boulders on the other side. It just things move at a different pace and sometimes a different activity. To your point, there's always a silver lining in clouds, and while, you know, First Brands is certainly not the credit market's finest moment, ironically, it was actually a repricing that they were working on that gave rise to figuring out the fraud, and their quality of earnings were my understanding is the quality of earnings report was getting prepared. And as part of that, some of the things going on at the holdco above the borrower became known. That has certainly put a chill on the repricing market. There are far fewer repricings right now than you'd expect 40% of the loan market trading above par. Regrettably, I'll say it's too soon to declare a victory, though. And, you know, we, you know, we wouldn't surprise me to see a little more pick back up, but it certainly has slowed since the First Brands news. By a non by a healthy margin. Mickey Schleien: Tom, you sort of segued into my next question, which is sort of the longer-term outlook for spreads. Loan spreads. When I look at page 19 of your presentation, you know, those spreads look like they're heading down to their long-term average, as you said, you know, we don't know for sure. Spreads, you know, can move up and down. Over long periods of time, but over the long run, looking at the supply and demand of capital in the loan market, you know, what is your outlook long-term for loan spreads? Thomas Majewski: That's a tough one. Yeah. And we show two averages here. We show the, you know, thirty-five-year average, give or take, and the ten-year average. Obviously, I like the ten-year average better than the thirty-five-year average. What I will say when you think about the pre-2007 average, you know, in the old, old days, and our good friend Peter Gleisstedt might get might I might be slightly off on this. He might know better. Loans had two two two spreads, two fifty and two seventy-five. Like, those are the two choices when you called the loan desk at Chemical or Manufacturers' Hanover a long time ago. Obviously, the market's gotten a lot more sophisticated. When loan spreads were two fifty back in 2006, and I remember as a CLO banker modeling, you know, two fifty, two forty spreads. That was back when AAAs were twenty-five and thirty basis points over. So the funding cost in the market was much, much lower. The loan market and CLO market, whether we like it or not, are inextricably linked. The CLO market, you know, owns about two-thirds of the loan market, even a little more right now. So while we are at the low on spreads over the last ten years at $3.47, I'd love to call a bottom. I can't quite call a bottom there. But when I think about the long-term average going back to the early nineteen nineties, that was influenced significantly by the availability of in those days, LIBOR plus 25 triple A's. When, you know, we're up. A 100 basis points away from that. So if I had to guess, we're closer to the bottom in the ten-year band than well, certainly than the top. You get one or two other credit things pop up. You know, frankly, you know, the way media cycles work, like, I'll use an example. Like, our friends at, you know, Citibank for a while, it felt like they could do nothing right. They had the mistake with the Revlon loan, then that, like, $27 trillion wire. You know, just everything that went wrong, you know, kind of seemed to get attention. My sense is the credit markets are gonna be that kinda get that focus from the media. You know, there was some headline I saw in Bloomberg about a loan in a, you know, in a BlackRock BDC that took a big write-down. Again, it's probably one loan in a portfolio of hundreds, but it got attention. The good news around that is it probably helped abate loan spreads and, you know, potentially even a path for widening. One of the pieces we did share is that M&A activity does seem like it's picking up, which is good. To the extent, you know, what's been going on is a lot of the same loans are just getting repriced and handed around and refinanced and repriced tighter. To the extent we see new names coming into the market, which it feels like we are with loan spreads lower. It makes M&A a little more easy. Could we see a little new supply which would help? So can't call a bottom. I'd love to. We are at the ten-year low if you look at this chart. Hopefully, that means there's some upside to go. Our focus from the media, the credit industry broadly, odd as that sounds, probably is a good fact at least to get on spread compression. Mickey Schleien: I appreciate that, Tom. It's pretty much in line with my thesis. Couple more questions if I can. On page 24, you show that your recurring cash flows dipped below the total of the distribution and your operating expenses. So I'd like to, you know, understand what drove that decline. And could you also walk us through what factors the board considered when you look at that decline in keeping the dividend stable? Thomas Majewski: Yes. We have a prepared answer for the latter one. But to the first one, you know, combination the principal thing, spread compression. Was a nontrivial factor there. I'm gonna say the weighted average spread fell at eight or so basis points. Eight basis points this quarter. So that's you know, it's while we're lowering our costs on the right side of the balance sheet with resets and refis, we're, you know, we didn't lower our weighted average eight basis points, unfortunately, quarter over quarter. So that's you know, that's the principal manifestation of it. That said, there are a and we do say this often, but there seems to be, as I was looking through it the other day, a disproportionate number of investments that haven't yet made their first payments in the portfolio. So that there are some green shoots. It's not as if everything is paying yet. And not that there's a problem with those investments, just a little bit of a delay. In getting in in in you know, when you make investments, sometimes it's six months before the cash flow turns on. So a little bit of that principal driver spread compression, a little bit offset by some reset activity that we do. Even the reset activity hurts cash flows in the first quarter because you gotta pay the bankers, the lawyers, the rating agencies, and that all comes out of your distribution. In the quarter you do that. So in many cases, the equity distribution comes down as for one period as a result of that activity. So those are some things going on there. In ECC, we did maintain the distribution at 14¢ a month. For the first quarter. The board considers any number of factors, all factors regarding both the outlook for company, the portfolio, the economy, taxable income are all drivers in there. You know, obviously, the board reviews these matters every single quarter. No one thing is a particular driver of the decision, but a collage of all the factors. Went into the board's decision. Mickey Schleien: I understand. One last question, Tom. You talked about borrowers taking advantage of tighter spreads and CLO managers and equity holders like yourselves. Also taking advantage of tighter spreads. To refinance. But if I'm not mistaken, your most expensive liability, the series F preferreds, will become callable soon. I might be wrong, but I think I'm right. Thomas Majewski: Yeah. Ken's smiling even when you say that just to on the comes to mind to me. Am I right on that, Ken? Ken Inorio: To tip our hand down. Yeah. It's hard for me to keep track of all of them, but I those are the most expensive. They're callable. Very soon. Under current conditions, does it make sense to refinance them? In other words, did Ken's smile just get broader? Thomas Majewski: And the banker smile might have gotten as well. No. I'm sure if they're listening. But yeah, no. As we look at the capital structure, and this is on page 10 of the deck, a very astute observation on your part. You know, interest rates have certainly come down a bunch. You know, we're above our target leverage limit. You know, target leverage guidelines, I should say, that we say we wanna run the company, and we're well within our statutory limits. And, you know, we talk about while we're doing it very slowly, right now because of where we are, you know, we've got that 7% perpetual preferred program that we issue through Eagle Point Securities the series double a, double b, you know, that I say this. This is a meaningful advantage. No other principally CLO equity-oriented vehicle has such a program. I love that program and, you know, could you see us opening up or doing something with the F five the board will make the decisions on the appropriate days. But the call date is 01/18/2026, and it wouldn't surprise me if Ken has a reminder in his calendar around that day. Mickey Schleien: Yeah. Me neither. Okay. I appreciate it. That's it for me this morning. I appreciate you taking my questions. Thomas Majewski: Thanks so much, Mickey. Operator: And we'll go next to Eric Zwick with Lucid Capital Markets. Eric Zwick: Hey, Eric. Good morning. Thomas Majewski: Good morning, Tommy. Eric Zwick: Hey. Good morning, Tom again. So wanted to my first question, maybe a bit of a follow-up on some of kind of the kind of broader topics you've been talking about. But in terms of, you know, you've mentioned there's quite a bit of opportunity still for some of the, you know, the borrowers, the asset side of the CLOs to refinance. You have opportunities remaining on, you know, the liability side. Just from quarter to quarter, you know, one may outweigh the other, but over the long term, you know, that the kind of the changes should be offsetting, so to speak, your arbitrage opportunity remains the same. Is that the right way to think about it? Thomas Majewski: Generically, yes. Over the long term, and given period, it widens or tightens. You know, the days loans are widening are usually the days CLO debt is widening. Know, that's kind of a you know, a bad fact. The good news is CLO debt is longer than loan debt. And yeah, we things these things move in cycles. Credit spreads tighten. Credit spreads widen back and forth. The good part about loans being shorter term than CLO debt is when things get choppy in the credit markets, you see if you look back historically, and we have the data going back to 2014 on our website, you'll see there's periods of time where the portfolio spread on the underlying loans increases and sometimes increases quite handsomely. The triple A's we're locking in today can be around for twelve years if we need them. So your statement is absolutely correct. When you look over the long term these things have a nice habit of balancing out. And some of it is just due to the CLO market and loan market again are so intertwined. There are periods. And if you were to listen to our calls in 2018, I'm the recordings are gone, but the transcripts are still around. We might have lamented the same thing of spread compression beating us up. And then when it went the other way, and we had the triple A's, you know, locked in place and you know, from January 2020 to the January '21 was a great period. Not a straight line, but a great destination. So over time, these things should all balance out. They rarely feel like they balance out on any given day. Eric Zwick: Got it. That's helpful. And you anticipated that the second part of the question there with your answer, so I won't go on there. Just in terms of, you know, funding activity going forward, you know, it's certainly been a rerating of not only your stock, but the other, you CLO funds that are traded out there. Trading now at a discount to NAV. How does that, you know, change your thoughts about potentially shifting to a share buyback, you know, kind of strategy as opposed to using the ATM? Thomas Majewski: Yep. And, certainly, yeah, so we look at things over a long term. You know, in the vast majority of the decade plus we've been public, the you know, ECC, we've been fortunate, and investors have been demanding the stock such that it's traded at a handsome premium. To NAV. Right now, it has been at a discount as I think have all of the or so substantially, certainly all of the major CLO equity funds. It's a little bit frustrating why that, you know, why that is. There's you know, it could be any number of reasons. The BDC index is down a bunch over the last kinda six days as well. You know, frankly, BDCs, in my opinion, are more levered to interest rates than we are and that they have floating rate loans where the floaters are falling. And they have fixed rate debt which is gonna have to be refinanced wider. So, you know, any number of things. And then overlay, you know, the credit news in the world doesn't help matters. The impact on the major CLO equity funds, ours including, is frustrating. We do make long-term decisions about these things. And our, you know, our management style that Ken and I bring to the table as well as the advice and direction from our board. Very much long-term focused. We won't make hair-trigger decisions around any stuff. That said, I will say all things are, you know, up for consideration at the company, and we'll continue to be. But we think about these things very much on a long-term basis. Eric Zwick: And last one for me, just looking at the, you know, the decline in NAV. Curious if you could kind of frame how much of that is related to changes in kind of market pricing and spreads versus maybe, you know, return of capital, you know, how much of that, you know, could potentially be recaptured if there are changes in the market. Thomas Majewski: Yeah. I have the exact yeah, I don't have the exact split. I'll say the vast we did have some realized losses from repositioning. By and large, those prices were already factored into the NAV. So that's more of just a reclass from unrealized to realized, not our favorite, but not a big NAV impact. And then, you know, the NII was less than, you know, unfortunately, nontrivially less than the cash distributions paid. So I don't have the exact components, but I'm gonna judgmentally say right now, and we can check the numbers later, the largest component of the NAV move in the quarter was the excess of distributions over NII and Ken is nodding. Yes. K. With a yes. That's I'm right, which is good. We're directionally right. It was the myriad of factors that go in there. But the biggest factor, in my opinion, on the NAV move, frankly, was the distribution relative to NII. Eric Zwick: And then I guess my follow-up to that would be in I know Mickey kind of already asked about the dividend a little bit, but I guess maybe what levers or what would need to happen, you know, in the market, or what can you do to potentially get the NII back above the dividend? Thomas Majewski: Yeah. You know, all things are, you know, considered at all times. You know, continuing to rotate the portfolio into higher earning investments. Is something we've been doing a lot of. We haven't used the word rotation, too much lately. Or in a while, but we have used it recently here. In terms of working on a couple of positions that have, you know, not bad, but have underperformed our expectations. And are rerotating into things that we think have some higher earnings potential. I think Mickey was kind enough to suggest we call the apps. And maybe replacing 8% financing with 7% financing. That might, you know, that might have a nice ring to it. Obviously, we'll make the decision on that day based on market conditions. And continuing to optimize, you know, every aspect of our portfolio. At the end of the day, I'm just looking at some numbers here. Bear with me one second. Rotation. Yep. So here to there. So the things we of a selection of things we exited, had a look like, in about an 11% effective yield. And this is the you know, the 20 plus percent effective yield on things that we were putting into the ground during the past quarter. So it's rotating out of some things that were, you know, for whatever reason, either late in life. I'm looking at a 2015 vintage CLO. That just you know, that's one of the larger sales largest sales we had. One of the sales we had, not the largest necessarily. But looking at a nine and a half percent yield, but the weighted average effective yield on the things we sold was 11. And the weighted average, of the things that of a handful of investments that were some of that kind of rotation offsets that have to handle in front of them. So doing everything we can to get more earnings into the box is part of it. We can do that through resets and refis. As well as buying and selling CLO securities. We can also do it by optimizing the right side of our balance sheet. I am mindful of where we are on the leverage ratio. We're, you know, we're comfortably on sides with all the limits, but we are operating outside our target band as well. We do like to be within the target band most of the time, so that's something in the equation. But, you know, it's very much a collage. And very much things that we think about on a long-term basis. We don't know, while we do these calls every quarter, you know, we think about where we wanna be over multiple years, not just are we gonna say on the next quarterly call. Eric Zwick: But we like to have good things on the next quarterly call, of course. Not to dismiss it either. Thomas Majewski: Of course. Thanks for taking my questions today. Eric Zwick: Yep. Thank you very much, Eric. Very thoughtful questions. Operator: And we'll go next to Christopher Nolan with Ladenburg Thalmann. Christopher Nolan: Hey, guys. How are you doing? Tom, on your comments on the twelve-month trailing default rate, I presume that's for industry. And is that First Brands at all? I know First Brands is small, but I'm trying to get an understanding why the trailing default rate starts creeping up the way it is. Thomas Majewski: If yeah. It picked up to that's that's market-wide. It's not really I mean, our default exposure is relatively low. That said, you know, CLO managers have a funny habit of selling things a day before they default to keep their optical default rates low as well. So know, there's any number of factors. That go into that. The pickup in defaults, I think we said there were five defaults during the quarter. First Brands was a roughly $5 billion loan. So that's one of the biggest fees we've had in a long time. So that's the principal driver on a quarter-over-quarter basis. The good news you know, as I that that or the I don't good news, at least for us, I'm in the CLO market. A lot of that loan was held in BDCs. And it was not a CLO only loan by any stretch. It was think that's SOFR plus 500 loan. Which met the met the requirements to get into a lot of BDCs. So our exposure to it was quite low. You know, we model significant amount of reserves for losses. Obviously, we like not to use them. But and this this was well within our tolerable band that we know we're always gonna have a few problems every year. So for us, it was fine. But the overall pickup, which I think we're, like, one thirty or something, 1.3% trailing twelve months, still well less than the long-term average, but you know, if we were talking six months ago, I think that was a double-digit basis point number. So trending up a bit, but driven by, you know, First Brands at 50 basis points, of a $1.5 trillion or $5 billion of a $1.5 trillion market. That one can move the percentage quite a bit. Christopher Nolan: And excuse the what might be a dumb question, but in the case of fraud, let's first who's responsible for vetting that fraud before the CLO's packaged and sold? Thomas Majewski: Let's see. So an investment bank underwrote the loan and placed it. And then institutional money managers who manage the CLOs reviewed the loan and push buy. And we review those institutional money managers to determine that they have, you know, processes they have the right people in place and processes in place. So it's, you know, the chain is somewhere in there. And auditors audit things and tell you what's going on and, you know, that's, you know, the that's kind of the, you know, the broad things that go on in a system like that. One of the interesting things about First Brands, as best I'm aware, and is a lot of the things that were of that are raising questions for sure today. And if you read the headlines and the bankruptcy court docket, a lot of things going on were going on at a holding company. Above the operating company where this $5 billion senior secured loan was. Doesn't make it right or wrong. Obviously, it's still wrong what happened. But it seemed like there were, you know, move money moving up and down from holdco to opco. Our loan at Opco is where that $5 billion loan was facing. The subsidiary of Holdco. It seems like they were getting advances from Holdco, best I'm aware based on factoring some receivables. But it sounds like they may have been, you know, multiple factored. The company had something like a billion dollars of EBITDA a year ago. I might mine might be slightly off on that, but directionally accurate, I believe. And, you know, on the surface, like, you know, $5 billion of debt against a billion of EBITDA, that's, you know, that's not low, but that's not absurdly high either. In the credit market. That said, and while they talk about brands and First Brands, you know, things they made, you know, or generic, you know, aftermarket auto parts, with limited exception. Do you know what brand windshield wipers you have on your car? You know what I mean? It's not like you think about, like, a J. Crew, which went bankrupt many years ago. J. Crew still exists. The brand is valuable. And, you know, and that, you know, people, oh, I buy my stuff at J. Crew. My son likes to get his stuff there. He thinks he looks cool. A lot of the products, I think Fram is one of the brands that First Brands. Maybe some people have some loyalty to that for oil filters and things like that. But there's not a lot of you know, the biggest challenge that I see is a lot of those parts, while they're essential to the operation of your automobile, if you're a kind of person purchasing at a, you know, at an aftermarket shop, are you gonna buy one versus the other? Who knows? And if these guys are not able to produce and get product to the stores, someone else will, and they lose their shelf space. So when we look at the ultimate recovery on First Brands, which is still quite uncertain in my opinion, some CLOs still own it, we've got this dynamic of okay. Let's say they were at a billion of EBITDA a year ago. That doesn't mean they're gonna be at a billion of EBITDA next year. I would certainly take the under on that. They did get some additional funding on their DIP facility released but it sounded like cash was extremely tight there. For a while. So my sense is it probably continues in some way, shape, or form, but it's probably a much smaller company. The ultimate recovery for the creditors, you know, the jury's still out. Doesn't look great, but not but I think a lot of it will be how quickly they can get back into business and if they're a $700 million EBITDA company, versus a $300 million EBITDA company, and I'm just pulling those numbers out of the air, could be very, very different outcomes for the creditors that remain. Christopher Nolan: Great. That's great color. Thank you. Thomas Majewski: Welcome. Thank you. Operator: And we have time for one final question, and that will come from Timothy D'Agostino with B. Riley Securities. Timothy D'Agostino: Hey, Tim. How are you? Thanks for taking the question. Good. How are you? Great. Thanks for taking the question. Joining a little bit late here, I apologize if I'm reiterating anything. But in the press release, you mentioned that your common stock issuance via your ATM was issued at a premium to NAV. Was just wondering if you could quantify how much accretion to NAV that created. Ken Inorio: Yeah. Sure. It was a few pennies. We have it in the press release. I would say 2 to 3¢ accretion. Timothy D'Agostino: Okay. Great. And then just one another quick question. In the third quarter, you did 11 resets in 16 refinances. I was wondering if you could provide an update quarter to date of how many you've done for the fourth quarter. Thomas Majewski: I don't think we we don't publish that number. And that sometimes it's episodic earlier versus late. We do give the cash flow collected because most of it comes in and out in the first month of the quarter. We haven't published it per se, so if you wanted to figure it out, what I'd probably see we do list every investment we have. If you look on Bloomberg, you can see which of those have been reset. I recognize that that would take a little bit of time. So we don't we don't publish the stats around that. Just because at this midpoint in the here we are exactly roughly at the midpoint of the quarter. It may not be indicative of the total volume. So I can assure you we've continued with them and we will continue with them. But we don't we don't share a mid-quarter stat on that. Timothy D'Agostino: Okay. Great. Thank you so much. Yeah. Those are the two quick ones for me. Thomas Majewski: Thank you very much. Operator: And this now concludes our question and answer session. I would like to turn the floor back over to Thomas Majewski for closing comments. Thomas Majewski: Great. Thank you very much, everyone, for joining the call today. We really appreciate your attention and frankly, the very thoughtful questions from all the analysts. Ken and I are around for the balance of the day. If people have further questions, we're happy to continue the discussion. Thank you very much for your time and interest in Eagle Point Credit Company. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, have a great day.
Operator: Good morning, and welcome to the LiqTech International, Inc. Reports Third Quarter Fiscal Year 2025 Financial Results Conference Call. After today's presentation, there will be an opportunity to ask questions. To submit a question, you may type it into the ask a question box on the webcast screen. Please note this event is being recorded. I would now like to turn the conference over to Robert Blum, with Light and Partners. Please go ahead. Robert Blum: Alright. Thank you very much, and good morning, everyone. As the operator indicated, thank you for joining us today to discuss LiqTech International, Inc.'s third quarter 2025 financial results for the period ended September 30, 2025. Joining us on today's call from the company are Fei Chen, the company's Chief Executive Officer, and David Kowalczyk, the company's Chief Financial and Chief Operating Officer. Before I turn it over to management, I do want to remind everyone that there will be a Q&A at the end. To ask a question through the webcast portal, again, simply type your question into the ask a question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement. This conference call may contain forward-looking statements. Although the forward-looking statements reflect the good faith and judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the conference call. The company, therefore, urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Securities and Exchange Commission, including risk factors that attempt to advise interested parties of the risks that may affect our business, financial condition, operations, and cash flows. If one or more of these risks or uncertainties materialize or if the underlying assumptions prove incorrect, the company's actual results may vary materially from those expected or projected. The company, therefore, encourages all listeners not to place undue reliance on these forward-looking statements, which pertain only as of the date of the release and the conference call. The company assumes no obligation to update any forward-looking statements to reflect any events or circumstances that may arise after the date of the release and conference call. With that, I'd like to turn the call over to Fei Chen, Chief Executive Officer of LiqTech International, Inc. Fei, please proceed. Fei Chen: Thank you, Robert. And good day to everyone on the call. There is a lot of optimism for the future based on the execution during the third quarter. Not simply because of the growth in revenues, improvement in gross margins, and reduction in operating expenses, but also due to the strong order books during the third quarter, which sets the stage for a nice fourth quarter. A key driver during the quarter was the strength within our water treatment systems business, led by our swimming pool vertical, which achieved its highest quarterly revenue to date. Equally important is that the new bookings received during the quarter indicate a continuation of this positive trend. It is clear that the market is increasingly recognizing the unique attributes of our ClariFlow filtration system and the competing alternative it offers to traditional media filtration systems used in commercial pools. Beyond the swimming pool vertical, we are making progress in a number of other applications which leverage our robust silicon carbide membrane technology, including water for energy, industry applications, and the marine industry. The increased order flow and interest is the direct result of the numerous successful pilot programs we have implemented over the past two years, showing the success of our systems in real-world examples. We have long emphasized that this transformation would take time, and we now believe that we are on the verge of broad adoption of our systems across multiple market verticals. Where system sales are the ultimate measure of success, we have spent considerable effort rightsizing the business and electing operational efficiencies to drive down costs, both from an OpEx perspective as well as from a manufacturing side. During the quarter, our contribution margin was one of the highest levels we have seen over the past five years, and the gross profit was at 19.6%, also at an improved level. Further, our operating expenses are at their lowest levels in many years. Let me circle back on a few of the key activities during the quarter, starting with the swimming pool vertical. As mentioned, we delivered systems to six customers during the quarter, totaling $1,000,000 in revenue. The systems delivered were much larger in size than many of our historical systems, and it really highlights the progress we are making within the larger swimming pool systems. The orders delivered during the quarter were fulfilled through our partners Boundary and Total Pool in the UK and Oxidime in Spain. These partners have been instrumental to our success, particularly as we have strengthened our collaborations in the past three years. During the quarter, we continued to expand our pipeline within our key markets, including systems in the UK, Denmark, and Holland. This really shows the depth of what we have accomplished in the past few years, building these relationships, but also the internal team's role in helping move projects forward and showcase what is possible with our solutions. Another key development within our swimming pool solutions has been the development of the modular design system, which allows for ease of deployment. Since I took over, we have worked hard to move away from many customized solutions, which often take too long to create and cost too much money. Further, it created too much confusion among customers. This theme of creating a modular design system and driving down costs is not just applicable to our swimming pool vertical but across other applications as well. To that point, we are working with our joint venture partners in China to reduce the cost of components and assembly of our marine water treatment systems, making them more competitive in the market. We will continue manufacturing the silicon carbide membrane in Denmark, but we are also exploring the potential to leverage our Chinese assembly and sourcing capabilities to drive cost reductions across our systems and applications. Another exciting development we are seeing in our China joint venture has been the receipt of two first orders for marine dual-fuel engine water treatment systems. The marine CP industry is moving towards cleaner, fuel-efficient applications, with most new vessels equipped with dual-fuel engines that require reliable water treatment for exhaust gas recirculation systems. According to published data, approximately 400 new vessels are on order with ISO EGR solutions planned between 2024 and 2027. One of the two marine dual-fuel engine orders is scheduled to be delivered here in the first quarter, with the other set for delivery in early 2026. We believe more opportunities are on the horizon. Transitioning from China to the US, we have talked about this for a while now, but the water for energy market is rapidly growing within the US. We have worked with partners such as Resubac Direct and Renewal Resources lately to build a presence in the US. For this reason, we have moved forward with the opening of a dedicated service center near Fort Worth, Texas. The new facility is being launched in partnership with Hydro Systems and opened a few weeks ago. For those not familiar, Hydro is an industry service provider with extensive experience in energy, oil and gas, and industry sectors. They specialize in equipment servicing, maintenance, and field support. The center will strengthen support for our water for energy business segment, offering deployment of certified service technicians, availability of critical spare parts, remote and on-site technical support, and system maintenance and repairs. As we scale our operations in the US, this new service center allows us to respond faster and support customers with deep local knowledge and reflects our strategy to offer fully integrated filtration solutions, from engineering and commissioning to lifetime service. On the topic of new system deployment, we are actively engaged with several end customers and hope to have updates to share soon. Taking a step back, I think it is important to remind everyone of the number of new systems that we have deployed during the past couple of years. Since the beginning of last year, we have deployed nine pilots or commercial systems across a wide range of industry applications, from multiple oil and gas industry systems to lithium brine production, plastic removal from a US petrochemical company, MEG recovery, tomato processing, the broader marine industry, and the most recent order of an advanced membrane-based filtration system to treat oily wastewater to BlueScope Steel, a major US-based steel producer. We are establishing a consistent cadence for large system deliveries each quarter, alongside our base business, including swimming pools, plastics, and DPF filters, bringing us closer to revenue levels that approach breakeven and profitability. This has been our goal, and I am very pleased with the progress we have made. Let me now turn the call over to David to review the finances in more detail. I will then make a few closing comments and look to open the call for your questions. David Kowalczyk: Thank you, Fei. And good day, everyone. Let me take some time diving into the financial results in a bit more detail and add some color to what was in the press release. So let's start with revenue. Revenue for the quarter came in at $3,800,000, up from $2,500,000 in the year-ago third quarter. Broken down by verticals, sales for the third quarter were as follows: Water system sales and related services of $2,000,000 compared to $700,000 in the same period last year. CPF and ceramic membrane sales were $800,000, down from $1,100,000 in Q3 last year. And finally, plastic revenue came in at $1,000,000 compared to $700,000 in Q3 last year. The key takeaways for the quarter include strong year-over-year improvement in water systems, driven by a combination of multiple swimming pool orders and the remaining portion of the industrial order for the steel industry. Growth in plastics, which was up 54% due to strong external interest, especially within food processing and the upgrade of our production facility in Q3 last year. And stabilization of DPFs and ceramic membranes sequentially but still off the year-ago quarter. Looking ahead to Q4 of 2025, we anticipate revenue to be between $4,600,000 and $5,600,000, which would equate to a 38% to 67% increase from Q4 2024. For the full year 2025, we expect revenue to be between $18,000,000 and $19,000,000, representing a 23% to 30% increase compared to 2024. We do want to note that we do want to be cautious and provide a slight change to guidance solely driven by timing in purchase orders in our systems business. The visibility we have to receive formal purchase orders for two systems during 2024 are likely shifting to 2026. Turning to gross margin, as we continue to be below our optimal revenue level, we continue to have fixed production costs that are not being fully absorbed. Those lower the normalized gross margins. That said, for the third quarter, gross margins were much improved from the year-ago period, coming in at 19.6% compared to a negative margin of 8.5% in the year-ago period. We had previously reported on a contribution margin basis, which excludes the impact from our fixed overhead. This margin for the quarter was significantly higher. The gap between gross margin and contribution margin will narrow in the coming quarters, driven by cost improvements and volume growth. Turning to OpEx, total operating expenses for the quarter were $2,100,000 compared to $2,400,000 in Q3 last year and compared to $2,600,000 in 2025. As we look to the future, our breakeven target, measured on an adjusted EBITDA basis, measured at EBITDA adjusted for amortization, reduced assets, cost of stock-based compensation, continues to be a quarterly revenue of approximately $6,000,000. The one caveat I will state is that there's a product mix component to it. Concluding on the P&L, net loss was $1,500,000 for the quarter, compared to a $2,800,000 loss for the comparable period of 2025. A substantial improvement driven by revenue growth, improved gross margin, and reduced operating expenses. And finally, from a cash perspective, we ended the quarter with $7,300,000 in cash. Everything else was very much in line with our normal operating procedures from a balance sheet perspective. And with that, let me turn it back to Fei. Fei Chen: Thank you, David. Can you hear me? Robert Blum: Yes. Please proceed, sir. Fei Chen: Okay. Thank you, David. To close things out, before I turn the call over to questions, our proprietary silicon carbide filtration technology stands as a foundational element in tackling the planet's most urgent ecological issues. These cutting-edge ceramic membranes deliver exceptional results in the toughest water treatment scenarios, spanning from produced water in oil and gas operations to pool filtration systems. By helping industries comply with rigorous environmental standards, we are cutting down on water and energy use, resolving vital purification problems, and advancing true sustainability. Recent achievements, like landing record orders for swimming pool systems, major contracts for treating produced water, marine applications, and industry applications such as that for the steel industry, highlight the rising worldwide appetite for our innovative solutions. The potential moving forward is immense, fueled by escalating water shortages and tough global regulations. Through key client alliances, we are broadening our impact with application-oriented, ready-to-deploy solutions. Such partnerships enhance our capability to offer complete systems that guarantee regulatory adherence, streamline operations, safeguard assets, and lower costs for customers. In the years to come, we are dedicated to advancing and expanding our filtration solutions to seize these vast possibilities. Again, thank everyone for your support of LiqTech International, Inc. With that, Robert, we would be happy to take any questions. Robert Blum: Alright. Fantastic. Thank you very much, Fei and David, for your prepared remarks. Again, to everyone listening on the webcast player there, if you have a question, you can type it into the ask a question feature on the player there. We do have a few questions submitted already. We'll begin here. Besides swimming pool systems, which segments are seeing the most sustained order momentum? Fei Chen: As mentioned in my speech, we have very much momentum in the water for energy segment as well. And we are also starting to get orders from the marine industry. But I would say compared to the marine industry, it's just that the water for energy is getting momentum. Robert Blum: Okay. Very good. Next question here. Is the uptick in gross margin sustainable? Where do you see gross margins trending over the next few quarters? David? David Kowalczyk: Yeah. Sure. Thanks for the question. I would say, yes, this is very much sustainable, and with expected higher revenues, we will see also further increases in the gross margin. There's a strong link between the size of revenue and really the gross margin. So talking about a defined level, I think it's hard, but we will see increases with an increase in revenue. Robert Blum: Okay. Very good. Next question here is how is your capacity utilization trending? Are there any metrics you can provide there? David Kowalczyk: Yeah. Obviously, we have different matrices for capacity and also different sites. But I think, in general, it's fair to say that we have spare capacity, which is also why we provide the insight on the difference between gross margin and contribution margin. We have plenty of capacity to support growth with very, very limited investments. Robert Blum: Alright. Very good. Again, final reminder here, if you have a question or would like to submit a question through the webcast player, please go ahead and submit that now. Barring any further questions coming in, the last question here is what would be a reasonable target for 2026 revenue growth? Fei Chen: That's a very good question. We're actually in the process of making our budget for 2026, so we cannot say any concrete number yet, but we definitely believe and see a very strong growth trend in 2026. Robert Blum: Okay. Very good. I am not showing any further questions at this time. So with that, I will turn it back over to you, Fei, for any closing remarks. Fei Chen: Thank you, everyone. I would like to thank you all very much for being with us today. We look forward to communicating with you soon. Thank you. Operator: Thank you. The conference has now concluded. Robert Blum: Thank you for attending today's presentation. You may now disconnect. Operator: Thank you.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Sunrise Realty Trust 2025Q3 earnings call. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Gabriel A. Katz, Chief Legal Officer. Please go ahead. Gabriel A. Katz: Good morning, and thank you all for joining Sunrise Realty Trust Earnings Call for the Quarter Ended September 30, 2025. I'm joined this morning by Leonard Mark Tannenbaum, our Executive Chairman, Brian Sedrish, our Chief Executive Officer, and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our 10/07/2025 press release and is posted on the Investor Relations portion of our website at sunriserialtytrust.com, along with our third quarter 2025 earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, market developments, our investment pipeline, anticipated portfolio yield, and financial performance and projections in 2025 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Sunrise Realty Trust's most recent periodic filings with the SEC, including our quarterly report on Form 10-Q filed earlier this morning for certain conditions and factors that could cause actual results to differ materially from these forward-looking statements and projections. During today's conference call, management will refer to non-GAAP financial measures including distributable earnings. Please see our third quarter earnings release uploaded to our website for reconciliations of the non-GAAP financial measures with the most directly comparable GAAP measures. The format for today's call is as follows: Len will provide a general business and capital markets overview. Next, Brian will cover our view on the state of the commercial real estate lending markets, discuss our existing portfolio, and provide an outlook for our investment pipeline. Then Brandon will provide an update on our financial position. After that, we'll open the lines for Q&A. With that, I will now turn the call over to our Executive Chairman, Leonard Mark Tannenbaum. Leonard Mark Tannenbaum: Thank you, Gabe. Good morning, and welcome to our third quarter 2025 earnings conference call. The quarter ended 09/30/2025, SUNS generated distributable earnings of $0.31 per share of common stock which covered our dividend of $0.30. Before Brian walks through our pipeline and portfolio, I want to take a moment to highlight what really sets SUNS apart from other commercial mortgage REITs. At SUNS, our investment focus is clear. We originate transitional loans to properties primarily in the Southern United States. This is a region we know well, and that local expertise allows us to generate attractive risk-adjusted returns through disciplined underwriting and thoughtful structuring. As of 09/30/2025, our leverage was approximately 0.4 times. That should increase as our existing loan commitments continue to fund. This is substantially below our targeted leverage of one to one and a half times. The peer average, however, is substantially higher than our target. As our long-term goal is to achieve an investment-grade rating from the top agencies in the next three to five years. Now turning to the portfolio, our weighted average loan to cost at closing is only 56%. This conservative positioning has led to our strong credit performance. Additionally, our new vintage portfolio with no loans made before January 2024 has also contributed to our strong portfolio performance. About 95% of our loans are floating rate, with an average SOFR floor across the portfolio of about 4%. SOFR has now dropped below 4%, and is anticipated to go lower. Given the SOFR floors in place across our loan book and our credit line's much lower floor and approximately 2.6% have the potential to earn additional income through the expansion in SUNS' net interest margin. As the company's largest shareholder, I believe SUNS presents a terrific risk-adjusted return at a lower effective tax rate. My confidence in our company is why I've continued to make frequent share purchases since our first day of trading. In my view, SUNS today offers a compelling entry point and a meaningful discount to book value with stable dividend coverage and clear earnings and dividend growth potential. We've also built a team that's built for success. Our eight-person dedicated real estate team within the larger Tannenbaum Capital Group platform gives us this disciplined underwriting, deep local market knowledge, and a differentiated focus on transitional commercial real estate projects across the Southern U.S. With that, I'll turn it over to Brian to discuss the market environment and walk through our portfolio in more detail. Brian Sedrish: Thank you, Len, and good morning, everyone. Before turning to our current portfolio and pipeline, I wanted to take a minute to discuss what we are seeing generally in the real estate market. We have seen a notable pickup in activity over the past quarter. As financing requests have increased meaningfully relative to the first half of the year. We believe this is a result of borrowers gaining greater confidence that short-term interest rates are on a path of gradual decline. This renewed sense of interest rate stability is encouraging more sponsors to come off the sidelines and actively engage in capital planning, whether it be refinancings or new projects. The increase in activity is not limited to refinancing opportunities, as we are also seeing a rise in financing requests tied to new acquisitions. The bid-ask spread between buyers and sellers continues to narrow, and that is helping to increase transaction volume. We are well-positioned to finance new acquisition business plans where the basis has effectively been reset to levels that better align with current rent growth and for-sale housing assumptions. We are also seeing traditional commercial banks gradually reenter the market, primarily focusing on lower leverage lending. While their activity remains selective, they are playing an important role as back leverage providers for many of the transactions that we have been targeting. We view that as a healthy development indicative of improving liquidity in the broader CRE financing ecosystem. That said, the depth of the commercial real estate market remains out of balance. There remains a meaningful gap between primary and secondary markets, across property types and at different stages of an asset's life cycle, from construction through to stabilization. Most of the new financing activity is concentrated in the bridge lending space, primarily within multifamily and industrial properties. These are assets that have largely completed their improvement plans and are moving towards stabilization. As a reminder, at SUNS, we primarily focus on transitional real estate projects that have yet to reach stabilization or near stabilization. Our focus remains on this segment as we believe this part of the market still provides the strongest risk-adjusted returns. TCG's real estate pipeline primarily comprises loans to transitional assets backed by highly qualified sponsors that require a more structured solution, whereby our team can capitalize on its expertise in prestabilization business plans and complex deal structures. We believe that these unique core competencies allow us to capture the most attractive opportunities emerging in this current market environment. Turning to our active pipeline, we have continued to see improvements in both the quantity and quality of deals sourced. As of today, the TCG real estate platform has two signed nonbinding term sheets in documentation totaling approximately $170 million. We expect funds to be allocated a portion of these investments. Turning to the portfolio, our originations for the quarter ended 09/30/2025 partly reflected the slower market dynamics, which has picked up since quarter end. Specifically, in Q3, the TC real estate platform originated a $60 million senior secured loan for a two-tower condominium development in the Brickell neighborhood of Miami, Florida, of which SUNS committed $35 million. Over the period, SUNS funded $33 million of new and existing loans. As of 09/30/2025, the SUNS portfolio had $367 million of commitments with $253 million funded. Subsequent to quarter end, SUNS successfully closed on $56 million of loan commitments, which include approximately $26 million in a financing package comprised of two senior loans for collection suites and industrial for-sale development, including two projects located in Doral and West Palm Beach, Florida, and a $30 million loan in a senior bridge loan for the refinancing of a seven-story Class A retail property in the Galleria section of Houston, Texas. I remain highly confident in the opportunities set ahead, and I look forward to capitalizing on the many attractive opportunities currently in front of us. With that, I will now turn the call over to Brandon Hetzel, our Chief Financial Officer. Brandon Hetzel: Thank you, Brian. For the quarter ended 09/30/2025, we generated net interest income of $6.1 million and distributable earnings of $4.12 million or $0.31 per basic weighted average common share, and had GAAP net income of $4.05 million or $0.30 per basic weighted average common share. We believe that providing distributable earnings is helpful to shareholders in assessing the overall performance of SUNS business. Distributable earnings represent net income computed in accordance with GAAP excluding noncash items such as stock compensation expense, unrealized gains or losses, and the provision for current expected credit losses, also known as CECL. For the quarter ended 09/30/2025, the Board of Directors declared a $0.30 dividend per share outstanding. The dividend was paid on 10/15/2025, to shareholders of record as of 09/30/2025. We ended the 2025 with $367 million of current commitments and $253 million of principal outstanding spread across 13 loans. As of 11/03/2025, our portfolio consisted of $421.1 million of current commitments and $295.2 million of principal outstanding across 16 loans with a weighted average portfolio yield to maturity of approximately 11.8%. I'd also like to note that as of 09/30/2025, our CECL reserve was approximately $400,000 or 17 basis points for our loans at carrying value. As of 09/30/2025, we had total assets of $258.8 million and our total shareholder equity was $184.6 million with a book value of $13.76 per share. With that, I will now turn it back over to the operator to start the Q&A. Operator: Thank you. Star one one on your telephone and wait for your name to be announced. And to withdraw your question, please press 11 again. And our first question will come from Timothy D'Agostino with B. Riley Securities. Your line is now open. Timothy D'Agostino: Hi. Thank you. Good morning, and congrats on the quarter. Just getting into the pipeline a little bit. In the investor deck, you had mentioned the pipeline assets are broadening your presence across the Southern United States. I was just wondering what new geographies within the Southern US you're seeing in that pipeline. Brian Sedrish: Sure. Thanks for the questions, Brian. We are staying true to our focus of primarily the Southern U.S. I mean, that has not changed. Florida, Texas, of course, we are currently looking at. We have one signed in the Carolinas. In this case, specifically North Carolina. Georgia, Tennessee, those really remain the primary markets that we're seeing a preponderance of our deals. And then sporadically, as we've said, if there are interesting deals that we believe represent good risk-adjusted returns, we'll look at those, as well. Timothy D'Agostino: Okay. Great. And then I guess within the geographies you just mentioned, are there any that stand out as the most attractive in terms of investment? Brian Sedrish: Not particularly different than what we have historically been looking at. We still are seeing really interesting pockets in the state of Texas. There are certainly some interesting deals still within Florida. It's obviously asset class dependent. You have to worry about oversaturation. So just like anything, you have to be cognizant of the particular on-the-ground dynamics. The Carolinas still remain interesting. Tennessee, we're looking at a bunch of deals right now. Those are continuing to be the areas that we're focusing on, and we're seeing enough deal flow to really enable us to continue to stay focused on those areas. Timothy D'Agostino: Okay. Great. Thank you so much, and congrats again on the quarter. Brian Sedrish: Thank you. Operator: And our next question comes from Jade Rahmani with KBW. Your line is open. Jade Rahmani: How are things going on the debt side of the business strategy? I know you have been focused on further syndication, bank participation, and the repo line. As well as plans for a bond issuance. Leonard Mark Tannenbaum: Okay. Start with the easy one. We're not going for a repo line for sure. We really are differentiated from the other mortgage REITs in that we don't want to do these four-time leverage deals. And repos. We think that's how you get in trouble. We're instead going more after the latter financial model of getting an investment-grade rating over time, not levering over one to one and a half times. From a bank perspective, it's really great. There's a lot of interest in banks. Think Jeff Bacuzzi, who leads our DCM desk, is doing a good job educating these banks as they come in one by one. And they have very positive experiences. But because our portfolio is really strong. So I think so far, so good. With expanding our bank lines at that two seventy-five over SOFR level. So I think that's the way we're gonna continue finance. I did say in the last call that I was gonna look to do a I don't know, either preferred or unsecured offering. We're still working on it. We're watching the tape today as read after read has started to print perpetual preferreds. And they're actually being absorbed by the market. So we are watching that market. We do intend to be there this quarter or next quarter. But, you know, you do have to have the market open. So I think that is gonna be a good Okay. A good enhancer. Jade Rahmani: Where do you think the cost of the preferred would be? Leonard Mark Tannenbaum: I mean, you're seeing them at the at a Right? You see a $7.07 eights today, from one read. Eight got done. Pine got one done at eight. So it seems like that's the number. I really don't wanna price much higher than that. Because, I wanna make sure we get a good net interest margin over time. So we'll wait for the right price if we have to. Jade Rahmani: Okay. And you prefer to do that than to take up leverage through warehouse line? Leonard Mark Tannenbaum: Absolutely. I really I have no desire to do repo. I no desire to do warehouse. In this product. This product, you know, I own 25% of the product. We wanna protect our investors downside by not over levering it. So we oh, we, by the way, may not be preferred. It could be debt. I like I really liked our unsecured debt too. You know, five and six and seven year unsecured, it could be a baby bond, it could be a preferred. There's a lot of variety of things that we could do that we could lever appropriately and not get not get into trouble in the downturn. Jade Rahmani: Thanks. It's been an interesting cycle. We have not really seen you know, I would say, high volatility and sort of violent pressure on the repo side as what we saw in the financial crisis. We've seen managed deleveraging from several of the mortgage REITs that have major credit issues, but it's been, you know, a lot more stable on credit lines or bank you know, warehouse lines are an area that banks definitely seem to be looking to be more active. Could you please comment on the portfolio underlying performance and any trends in the underlying deals? That you're seeing thus far? You know, I know these are construction deals, so completion is probably the the biggest hurdle. But if you could, you know, give a comment on as to how the largest deals are trending. Brian Sedrish: Sure. Yes, Jade, I'll take it. It's Brian. Our portfolio now is performing as really as expected. I mean, of course, in any of these deals, there are always things that pop up that need to be addressed. Borrower calls us and says, know, they'd like to do something because they think it's more value add or maybe there's a two-week delay here or there. But that's just ordinary course. The underlying construction activity and progression has been going well on all the loans that we have. And then on the top line, in terms of if it's presales on condos or whether it's lease-up, they've all been, they've all been moving along as expected. There's nothing particularly exciting about the progress, which is what we love. Slow, steady, expected. And that's that's what we're continuing to see. There's actually been a bit of a pickup recently on a couple of our for-sale projects, just resulting from, I think, just a view of more migration down this particular case to South Florida. I expect that will continue in light of some of the political environment. But other than that, everything's pretty normal course. Jade Rahmani: Thanks very much for taking the questions. Brian Sedrish: Sure. Thanks a lot. Operator: I am showing no further questions in the queue at this time. I would now like to turn the call back over to Brian for closing remarks. Brian Sedrish: Great. Well, thank you everybody for joining. We are excited about the upcoming quarters and the prospects and the pickup of momentum. We look forward to talking to you again in the coming quarters. Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.
Operator: Good day, and welcome to the MarineMax, Inc. Fiscal 2025 Fourth Quarter and Full Year Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. I would now like to turn the call over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Advisors. Please go ahead, sir. Scott Solomon: Thank you, operator, and good morning, everyone. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President, and Mike McLamb, the company's Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance and recent highlights, Mike will review the financial results and provide the company's fiscal 2026 financial guidance. Brett will make some concluding comments and then management will be happy to take your questions. The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinemax.com. And with that, I'll turn the call over to Mike. Mike? Mike McLamb: Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, global economic conditions, and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share, and numerous other factors identified in the company's most recently filed 10-Ks and 10-Qs and other filings with the Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. On today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non-GAAP basis. The reconciliation to non-GAAP financial measures GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett. Brett? Brett McGill: Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our fiscal fourth quarter and full year 2025 performance. Let me begin by recognizing our team's exceptional dedication throughout what has been a challenging year for the recreational boating industry. Elevated interest rates, persistent inflation, and the uncertainty stemming from the trade wars and geopolitical tensions have resulted in many consumers deferring their boat purchases. In the face of these headwinds, our team has remained focused on delivering world-class customer experiences that continue to set us apart as reflected in our industry-leading net Promoter Scores. Our full-year adjusted earnings and adjusted EBITDA were in line with the guidance we gave last quarter. For the fourth quarter, we achieved revenue of over $552 million with same-store sales growth of more than 2%. Despite significant pressure on new boat margins due to the sustained elevated inventory level across the retail industry, our gross margins expanded to 34.7%. Demonstrating the strength of our diversified business model and the benefits of our strategic focus on higher-margin businesses such as finance and insurance, parts and service, superyacht services, and marina operations, including IGY. These diversified revenue sources provide important balance and support our financial resilience through different macroeconomic and industry cycles. We also benefit from cross-selling opportunities between yacht deals, superyacht services, and marina operations, and we are regularly finding new ways to unlock synergies between each of these businesses and deliver greater value for our customers and our shareholders. There are many examples, including a 35-meter Yacht sale at the recent Fort Lauderdale International Boat Show, which resulted from touchpoints across all of these businesses. This is a great example of how we continue to see tangible results across yacht sales, charter bookings, and storage through these connected marketing and sales initiatives. We are confident that our integrated approach will continue to support retail yacht sales and strengthen the connection between superyacht services and marina operations. On the retail side, we continue to add customer service capabilities and strengthen our network. The launch of our flagship yacht sales and service center in Fort Myers, Florida is representative of MarineMax's focus on innovation and customer service. This facility spans more than 30,000 square feet and brings together sales, maintenance, storage, and on-water services in one convenient location in one of Florida's top yachting and boating markets. Locations like these, which combine world-class service and traditional retailing, enhance the customer experience and support efficient cross-selling of our products and services. As the industry's recognized technology leader, we set the standard for digital innovation in recreational marine services. And we are continuing to invest in technology to support customer growth and engagement. A great example is Boatyard, our subscription-based customer experience platform. Which streamlines service ordering, payment, invoicing, and estimating making the boating experience frictionless for both customers and dealers. Since its launch, Boatyard has been well received by the dealer community and has been recognized as one of the industry's most innovative companies on six occasions. Boatyard's active subscriber growth has increased by more than 160% over the past twelve months. And while still in its growth phase, this momentum validates our technology leadership and positions us well for continued expansion. In addition to Boatyard, we are harnessing the power of proprietary technology platforms like CustomerIQ, our business growth intelligence engine, CustomerIQ integrates artificial intelligence and automation to provide us with real-time insights enabling our sales teams to engage more efficiently and effectively with customers and drive conversions. We're in the process of rolling out CustomerIQ across all MarineMax businesses, including IGY and Financial Services. It's a step we believe will further amplify the technology's contribution to company-wide growth. Along with these investments in customer service, technology, and innovation, support long-term value creation, we are also taking steps to optimize our business to enhance operational efficiency. By eliminating underperforming brands and refining our product portfolio, we're aligning more closely with evolving customer demand and driving greater value. Combined with strategic store optimization, this brand and portfolio rationalization enhances operational efficiency and positions MarineMax for stronger returns when macroeconomic conditions normalize. Before I conclude my prepared remarks, I want to take a moment to update you on the success we had at Fort Lauderdale as well as a few other developments. MarineMax had a significant presence at the recent Fort Lauderdale International Boat Show. I am happy to report that the show was stronger than last year and several of our displays produced modern era records. Which along with great customer engagement is very encouraging. Collectively, we sold more boats at the show than any time post-COVID and generated a sizable increase in contracted versus last year. Across the show, we saw exciting developments in sustainable materials, autonomous features, and enhanced vessel connectivity from a wide range of OEMs. Innovative brands are advancing the industry and we are exceptionally proud to be partnering with many of these companies. I would add that our brand Cruisers Yachts launched several new models at the show, including a new 50 flybridge and the 38 VTR. Overall, cruisers set a post-COVID record show in terms of units and dollars. Last month, I had the privilege of joining senior executives from the world's largest marina organizations at the ICOMIA World Marinas Conference. It was a powerful opportunity to reinforce our role as a strategic voice in marine services. Shared perspectives, emerging global trends, and deepened relationships with key stakeholders across the industry. These platforms not only elevate our visibility but also ensure we remain at the forefront of shaping the future of marine experiences worldwide. To support our strategic initiatives and long-term positioning, we recently added two distinguished new members to our board of directors, Odilon Almeda and Dan Shiapa. Odilon and Dan each have proven track records in driving innovation and scaling complex global operations and we're confident that their expertise and fresh perspectives will yield immediate contributions to our board and company. Looking at the broader industry landscape, we are optimistic the sector is near or at an inflection point. While the industry is currently managing inventory normalization, and macroeconomic uncertainty. The underlying fundamentals for premium recreational boating remain exceptionally strong. Now let me turn the call over to Mike for our financial review. Mike? Mike McLamb: Thank you, Brett. I want to echo Brett's appreciation for our team's outstanding performance during this challenging period. Total revenue for the fourth quarter was over $552 million which was down modestly from last year due to the impact of our store rationalization efforts including the strategic closure of 10 stores since 2024. During the quarter, same-store sales increased over 2% driven by growth in used boat revenue, finance and insurance, parts and service, and contributions from superyacht services, and Marine operations, including IGY. In terms of units, they were down in the quarter as we continue to see a migration to higher average unit prices. Gross profit was over $191 million and our gross margin increased to 34.7%. The increase in gross margin as Brett noted reflects continued growth in our diversified higher-margin businesses and was achieved despite historically low boat margins due to the challenging retail environment. Selling, general and administrative expenses were over $177 million. The increase primarily reflects the greater contribution of service-related revenue which drives gross margin dollars, but does have a higher cost dynamic than retail store operations. Along with increases in targeted marketing investments incurred to maximize sales opportunities in a challenging environment as well as higher foreign currency translation costs. Due to a weaker dollar. Interest expense was down slightly year over year. The reported net loss in the quarter was just under $1 million or $0.04 per share which was the same as the adjusted loss per share. Adjusted EBITDA was $17.3 million in the quarter. For fiscal 2025, revenue was $2.31 billion reflecting a same-store sales decline of just over 2% due to the challenging industry environment while total revenue declined 5% given our strategic store and brand optimization efforts. Our full-year gross margin was 32.5%, down slightly from last year despite historically low boat margins across the industry. Our reported net loss per share was $1.43 with adjusted earnings per diluted share of $0.61. Adjusted EBITDA for the full year was about $110 million compared with the $160 million in the prior year. Our balance sheet remains strong with cash of more than $170 million despite buying back a significant amount of shares this year acquiring a great marina and retail operation in Shelter Bay in the Keys, as well as making regular investments in our business including the opening of IGY Savannah, the Stewart Marine expansion, and the opening of the expanded Fort Myers operation among other initiatives. Inventories decreased by nearly $40 million year over year. Reflecting our continued efforts to optimize inventory levels with our manufacturing partners. Our net debt to adjusted EBITDA ratio was about two times quarter end. Providing substantial financial flexibility. Based on current business conditions, recent industry registration data, retail trends, and other relevant factors we expect fiscal 2026 adjusted EBITDA to be in the range of $110 million to $125 million with adjusted net income in the range of $0.40 to $0.95 per diluted share. Our guidance assumes industry units for our fiscal year will be down slightly to up slightly depending on the various factors that have affected consumer demand. This implies same-store sales growth will be flattish to slight growth subject to mix. Retail margin pressure is expected to continue across the industry through the end of our fiscal second quarter which corresponds to the seasonally slower winter months. We expect industry inventory levels to be healthier in the second half of the fiscal year than the same period in fiscal 2025. Given the success of our higher-margin business expansion, we expect to be able to maintain our annual consolidated gross margins in the low 30s. Our guidance incorporates the currently announced interest rate cuts, and uses an annual effective tax rate of 26.5% with a share count of around 22.8 million shares. These projections exclude the potential impact of material acquisitions or other unforeseen developments, including changes in global economic conditions. When you think about 2026, keep in mind our revenue EPS, and EBITDA was tracking well for the first six months of 2025 through March. Despite the challenging environment. It wasn't until after Liberation Day that things grew much more challenging. As such, our front half comparisons overall are more difficult than the back half comparisons. Now let me comment on current trends. October finished with positive same-store sales growth, and Brett discussed the successes we had at the Fort Lauderdale Boat Show. In both cases, we are encouraged but we also recognize the undeniable softness that has persisted in the industry as evidenced by a soft September. Especially for fiberglass boat sales. But while we are encouraged, we are also balanced. Now let me turn the call back to Brett for closing comments. Brett? Brett McGill: Thank you, Mike. Although our fiscal 2026 outlook reflects a prudent approach in light of macroeconomic uncertainty and persistent industry headwinds, we remain confident in MarineMax's long-term strategy and growth opportunities. Our management team has guided the company through multiple challenging economic cycles, and we believe that the continued execution of our strategy will drive sustainable and profitable growth for our shareholders. Our diversification across higher-margin businesses, combined with our strong balance sheet, support our resiliency in the face of industry headwinds while also providing us with the flexibility to invest in growth and seize emerging opportunities. We will continue to focus on strategic initiatives and product innovation, digital engagement, and customer experience. Areas that are becoming increasingly valuable as buyers become more discerning. The recreational boating industry is approaching several potentially positive inflection points. Industry-wide, inventories are expected to more normalized levels over the coming quarters, which should provide margin relief. Additionally, interest rate cuts are generally positive for our consumer, and the further rate cuts that many expect to occur over the coming months should support improved customer demand. The fundamentals supporting recreational boating remain exceptionally strong. Interest in the boating lifestyle continues to accelerate. As evidenced by robust activity levels at our marinas, service centers, and at the recent Fort Lauderdale Boat Show. Premium consumers increasingly view boating not as a discretionary purchase but as an essential lifestyle. As macroeconomic conditions improve, our strategy positions us to emerge more resilient, more diversified, and uniquely poised to capture the long-term opportunities in the global recreational marine market. With that, Mike and I will be happy to take your questions. So operator, please open up the line for Q&A. Thank you. Operator: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star, and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, in the interest of time, please limit yourself to one question. One moment, please, while we poll for questions. We take the first question from the line of James Hardiman from Citi. Please go ahead. James Hardiman: Hey. Good morning. Thanks for taking my questions. So obviously, the same-store sales number accelerated nicely from 3Q to 4Q. I was hoping you could help us out just splitting sort of how much of that was units versus ASPs and then I guess similar question on the month of October. I think you said positive same-store sales for October. Are you actually seeing, you know, unit acceleration, into the off-season? Thanks. Mike McLamb: Yeah. A great question, James. So, obviously, you guys follow the industry. The industry for the core categories that we're in has seen softness, double-digit declines in July, August, and September. Some categories, 25%, etcetera, from a unit perspective. So we typically outperform the industry. So our units for the quarter are down in the mid-single-digit range, which is better than the industry overall. So the difference from down mid-single-digit to up 2% is the increase in average unit selling price during the quarter. And then on the month of October, you gotta keep in mind the month of October last year, we were dealing with a hurricane in Florida. But our units were up in the month of October and we all did see a modest increase in average unit selling price. James Hardiman: That's really helpful. And then just very briefly, just wanted to dig into the rate environment. Obviously, we've gotten a couple of 25 basis point rate cuts. I think the ten-year is modestly lower than maybe the last time we spoke. Are you seeing that show up in terms of relief from your lenders and, you know, is that having any impact from a consumer perspective as they contemplate, you know, lower payments? Mike McLamb: Yes, James. Good I I think, you know, rates for the consumer, obviously, we're kinda dealing in a higher-end segment as we've always talked about. So, you know, monthly payment maybe isn't driving the need to just rush out and buy something. But I've said before, a lot of our customers are small business owners, you know, construction companies, etcetera. And, you know, when there's a rate environment that's more favorable for their business, they get a little more excited and optimistic about things and, you know, they come forward with a boat purchase. So I think both of those things are helping, but, consumer feeling better about the rate, I think, we see some of that, like even at Lauderdale, feeling better about that things are going to come down is, you know, given a positive news that they haven't had in a while. James Hardiman: Got it. That's helpful color. Thanks, guys. Mike McLamb: Thanks, James. Operator: We take the next question from the line of Mike Albanese from The Benchmark Company. Please go ahead. Mike Albanese: Hey. Good morning, guys. Thanks for taking my question. I just want to ask about gross margins. Obviously, jumped, I think, 34% in the quarter. You've been pretty consistent keeping them above 30% here in tough, you know, market. And, obviously, you know, some of that is mix, but it appears your adjacencies are holding up well. Could you just, you know, kinda tap into that a little bit deeper? And I'd love to kind of understand, you know, how much of that has been kind of strategic initiatives, cross-sell synergies, etcetera versus just sustainable demand within those segments? Thank you. Mike McLamb: I can comment. I'll take a first stab that, yeah. In the current environment, boat margins are the second lowest I've seen in twenty-seven years. They're not down as far as they were in the great financial crisis, but they're very low. They're, like, three to 350 basis points below normal. And so hopefully over time, we'll see some upside in boat margins as inventories normalize. But I do think our strategy of expanding in these higher-margin categories, whether it's the marinas, superyacht services, finance and insurance, service, parts, and accessories. A lot there's a lot of different higher-margin components that we've been expanding with. I think, really shines in an environment like this and helps us maintain elevated gross margins overall. It comes through in the quarter. And, Mike, when we set out with this strategy and we're very focused on it with these higher-margin business businesses and the growth we've had in those and the investments we've made in those businesses. It does show through. It shines. And you ask a question. Yeah. Those businesses, you know, have what's close to recurring type revenue as you can get. So you kinda rely on those types of things. Of course, you gotta manage the business. But we're continue to unlock different synergies, cross-selling, know, consumers feeling good about, you know, buying a larger yacht at a MarineMax, you know, Fort Myers location, let's say. Then feeling good about, wow. What if I wanna put that in charter with Fraser Yachts or whatever it might be so that they feel comfortable with that all the way up to, you know, where are they gonna put their boat when they get to The Caribbean through our IGY marina. So we're seeing a lot more of those synergies. And we'll continue to unlock those as well. Mike Albanese: Got it. Thank you, guys. Thank you, Mike. Operator: We take the next question from the line of Joseph Altobello from Raymond James. Please go ahead. Joseph Altobello: Hi, good morning. This is Martin on for Joe. Just wanna take a finer point onto the promotional drag in the quarter. Could you a little bit more color to what that headwind was and sort of what we can expect entering the New Year. Mike McLamb: Yeah. If I understand your question right, Martin, good question. So the I'd say this entire fiscal year, we've seen a very challenged environment because of elevated inventory levels. Really across the industry. Certainly true in the current quarter. I just commented a little while ago just how soft boat margins are. When we think about 2026 and in our guidance, we're not expecting much of a lift in boat margins. I think I commented in my prepared remarks that at least through the wintertime when there's a lot of dealers who are, you know, are feeling softer sales and increased pressure, when it comes to carrying costs, etcetera, I think the margin the pressure will still be there. It is thought that later on in the year when you get into the summer selling season as inventories begin to normalize, that we could see some relief on the margin side. But obviously, it won't snap back overnight, but it will potentially begin to improve like in the summertime in the back half of our. Joseph Altobello: Thank you, Mark. Thank you. Operator: We take the next question from the line of Eric Wold from Texas Capital Securities. Please go ahead. Eric Wold: Thanks. Good morning. Mike, kind of looking at the guidance for fiscal 2026, I guess, your industry assumptions relative to your same-store sales. It looks like, I mean, unless I'm reading this wrong, it looks like you're expecting kinda more in line of performance with the industry versus kind of more of the outperformance that you've had before, especially given the mix towards, you know, higher-end premium boats. Am I reading that wrong? Are you are you trying to take a little more cautious view? On mix, or how should we think about kind of what's embedded in that guided in terms of, you know, relative performance to the industry? Mike McLamb: No. Eric, I think you're reading that right. I think the, you know, the first assumption is does the industry get the flattish units from negatives. That's one assumption that's in there. And then, obviously, what happens with mix from our perspective. But I think we're trying to be prudent in terms of our guidance figures because you're right. We typically do outperform what the industry does. But I think we're really trying to see let let's let's get through fiscal 2026. Let's see that the industry really does get back to, you know, first to zero instead of negative and then to slightly positive in the second half of the year. Eric Wold: Got it. And then just quickly, update us on where you are with, you know, rationalizing kinda operating expenses and in general and overhead and kinda what you expect, as you move through fiscal twenty-six? Mike McLamb: Well, I commented that we've, we have closed 10 stores now since last year and we've made other cost cuts and savings. There is a current drag that's going on within the business, which is just additional marketing spend, additional inventory maintenance spend, etcetera, really that the whole industry is having with the slower turns that we've had, which would improve. But in our 2026 guidance, we're not baking in any substantial, additional cost savings from what we're seeing in the current levels of 2025. Eric Wold: Got it. Thanks, Mike. Mike McLamb: Thanks, Eric. Eric Wold: Thank you, Eric. Operator: Thank you. We take the next question from the line of Anna Glaessgen from B. Riley Securities. Please go ahead. Anna Glaessgen: Hey. Good morning. Thanks for taking my question. I'd like to start on same-store sales cadence. On the one hand, it seems that we're assuming some sequential improvement as we get to the back half in terms of market performance. But then on the other hand, we have some sort of one-time lapse, like, you know, lapping the hurricane in Florida last year, which drove, you know, the easiest comp in one Q. So just trying to understand the puts and takes as we think about the shape of the year. Mike McLamb: No. It's a great question. You're right. I mean, the state of Florida was impacted by hurricanes. We were down negative 11% in the December quarter, then up 11 in March. So technically, we do have an easier comparison right now, which is why I said with October being up, it's up against storms. And then when you go out throughout the year, obviously, the quarter with Liberation Day, which is the June quarter, in theory, is another easy comp. We were down 9%. And then it sort of levels off in September. So you do gotta bake all it in from an assumption perspective. I think the point that I was trying to make in my prepared remarks is that when you look at our bottom line financial performance in the December and the March, we exceeded, you know, our thinking in the street and our guidance in those two quarters. From an EBITDA and from an earnings perspective. So when you're modeling out the whole year, factoring in the same-store sales questions that you're asking. We actually have an easier comparison from an earnings perspective in the back half of the year than the front half of the year. Anna Glaessgen: Got it. Thanks. And then turning back to the boat margin question, you know, understanding the seasonal aspects of maybe getting some improvement once we get through the March when we enter the retail selling season. But trying to understand kind of, like, the key drivers of improvement there. Is it getting through some of the aged inventory that maybe competitors feel? Is it improved market performance? Or is it really just, you know, that seasonal aspect that's impacting the first February of the year? Thanks. Mike McLamb: Yeah. And I'll comment. Yeah. I think that aged inventory, you know, getting rid of that, getting inventory levels down to a more, you know, manageable level and to kind of balancing the supply-demand side is fundamental to everything. The promotional activity is strong. You know, there's also, I think, a consumer sentiment. You know, boat prices have really increased over the last five years. So there's pressure on, you know, just a consumer feeling like they need a discount. Even if there's, you know, not an age inventory or too much inventory. So just gotta kinda lap through that and let customers, you know, get back to a more normal buying pattern. But inventory levels are definitely gonna help, get the margins squared away. Yeah. Industry levels. Yep. Anna Glaessgen: Great. Thanks, guys. Mike McLamb: Thanks, Anna. Operator: Thank you. Ladies and gentlemen, I will now hand the conference over to Mr. McGill for his closing comments. Brett McGill: Well, thank you, everybody, for joining us today, and look forward to keeping you updated on our next call. Have a great day. Operator: Thank you. Ladies and gentlemen, the conference of MarineMax, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.
Operator: Good day, and welcome to the American Shared Hospital Services Third Quarter 2025 Earnings Conference Call. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kirin M. Smith from PCG Advisory. Please go ahead. Kirin M. Smith: Thank you, operator. And thank you everyone for joining us today. American Shared Hospital Services' third quarter 2025 earnings press release was issued today before the market opened. If you need a copy, it can be accessed on the company's website at www.as.com under the Investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans, and prospects for the company constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC, including the company's quarterly report on Form 10-Q for the three-month period ended June 30, 2025, and the annual report on Form 10-K for the year ended December 31, 2024. The company assumes no obligation to update the information contained in this conference call. Before I turn the call over to management, I'd like to remind everyone about our Q&A policy where we provide each participant the time to ask one question and one follow-up. As always, we are happy to take additional questions offline at any time. With that, I'd now like to turn the call over to Raymond C. Stachowiak, Executive Chairman. Ray, please go ahead. Raymond C. Stachowiak: Thank you, Kirin, and good afternoon, everyone. Thanks for joining us today for our third quarter 2025 earnings call. I'll begin with some opening remarks, then turn the call over to Gary Delanois, our CEO, for additional details, followed by Scott Frech, our CFO, for a financial review of our third quarter and first nine months of 2025 results. Following our prepared remarks, we'll open the call for questions. I'm pleased to report third quarter and September 2025 revenue increases, respectively, which were primarily driven by increased direct patient care services revenue as our new physicians in Rhode Island start to ramp up. I'm also happy that we continue to realize improved margins and we remain diligent and focused on operational efficiencies. We are continuing to see the benefit from our transition from a medical equipment leasing focus to a more patient-centric service model, providing clear benefits. I'm happy to see our diversified model is working, and we look forward to the remainder of 2025 and 2026. We remain focused on building long-term shareholder value and a continuation of our historical trend of consecutive years of significant revenue growth and improved margins. As with many small growth businesses, there will be normal fluctuations quarter over quarter. But over the medium to longer term, we're primed to continue our long-term track record. As we continue to execute on our strategic initiatives and upcoming milestones, I believe this will positively benefit our long-term investors. We have set the course for long-term outperformance as we execute on our growth strategy and work towards building significant shareholder value. Now I'll hand the call over to Gary and Scott, who will walk you through our overall business, quarterly and year-to-date financial results, and our business development pipeline that provides for exciting strategic growth opportunities. With that, Gary, please proceed. Gary Delanois: Thanks, Ray. And good afternoon, everyone. This is an exciting time for the company, and I am very enthused by our near and longer-term growth opportunities. Our business growth strategy is solid, and I'm excited as we continue to execute our business plan. For this past quarter, we saw a 2.5% year-over-year revenue growth, and year-to-date revenues are up 5.6% from last year at this time. I am pleased to share we saw significant growth from our new radiation therapy treatment center in Puebla, Mexico, which showed a 263% annual revenue growth. It was also great to see an almost 17% year-over-year increase in 56% of our total revenue for the third quarter. I am also very happy to report that our gross margins increased almost 16%, and our operating loss narrowed with a 92% improvement as we remain focused on operational efficiencies. As we continue to execute on revenue growth initiatives, we also remain focused on improving profitability. Our third quarter 2025 adjusted EBITDA came in at $1.9 million compared to $1.3 million in 2024, a 42% increase. We remain diligent in controlling our costs and are primed for growth as treatment volumes, particularly in Rhode Island, continue to increase. We continue to capitalize on operating efficiencies and growing the business. And while we do expect to see continuing quarterly improvement in treatment volumes, I am energized by the growth we have been seeing in overall business and with our business development initiatives that we have in motion. I'm also excited about the benefits from our acquisition of the three Rhode Island cancer treatment centers and our newer one in Puebla, Mexico. At the Rhode Island centers, our new radiation oncologists are seeing new patient consultations at our three centers where volumes have recovered back to historical levels, and we expect to see additional growth in the fourth quarter. Having the right team in place is a critical element for growing our market share to propel future growth. I remain confident that we will see steady growth in treatment volumes through continued physician engagement with the healthcare community and particularly with our health system joint venture partners, Care New England and Prospect CharterCare. We also remain focused on further optimizing our equipment leasing segment by working closely with our health system customers to increase greater community awareness among referring physicians to drive increased utilization of their Gamma Knife systems, which is recognized as the gold standard for stereotactic radiosurgery. Our international business segment represents another large growth opportunity. We expect continued momentum. We have the only Gamma Knife centers in Peru and Ecuador. At our third international center in Puebla, Mexico, we are treating cancer patients for a full range of cancer diagnoses with the most advanced radiation therapy treatment capabilities available in our catchment area. We're also excited about the opening of our fourth international center, a Gamma Knife Center in Guadalajara, Mexico, where we expect to start treating patients and generating revenue in 2026. This will be the only ESPRIT Gamma Knife in a country of 130 million people and not only provides a major benefit to patients in Mexico, it also clearly represents an untapped growth engine for us. Over the months and years ahead, we expect stronger international growth from additional treatment volume in Ecuador, strong volume from our newly upgraded center in Peru, and our two new centers in Guadalajara and Puebla, Mexico. We also continue to expand our footprint in Rhode Island beyond our three existing radiation therapy treatment centers, which were our first direct patient care cancer treatment centers in the U.S. As we have discussed, we were granted a Certificate of Need (CON) to construct and operate a fourth radiation therapy center in Bristol, Rhode Island, where permitting is underway. And we also officially obtained a CON this past December to construct and operate the first proton beam radiation therapy center in the state of Rhode Island, where we are making progress on securing land and starting the permitting process. These two new facilities represent major growth opportunities for the company, and we look forward to providing additional updates as they progress. In closing, we are extremely confident in our overall business plan. We are positioned to weather short-term fluctuations, and we remain focused on current operations and new business developments. I have great confidence in the strategies we have in place, our management team, and the prospects for long-term growth. And lastly, our solid track record of long-term revenue growth and improved margins, together with our balance sheet, gives me great confidence that we will accomplish these initiatives in the coming years. And with that, I'll turn the call over to Scott Frech, our CFO, for a financial review. Scott Frech: Thank you, Gary, and good afternoon, everyone. I'll start with an overview of our third quarter results, followed by the year-to-date nine months results, and then we'll open the call for Q&A. For the third quarter ended September 30, 2025, total revenue increased 2.5% to $7.2 million compared to $7 million in Q3 2024. For Q3 2025, revenue from our Direct Patient Services segment increased 9.4% to $4 million compared to Q3 2024. This growth is primarily driven by increased procedures at the new facility in Puebla, Mexico, where we launched operations last year. Although off of a small base, revenues grew by 263%. Clearly, we're off to a great start there, and it also exemplifies the powerful growth these centers represent. Revenue from the medical equipment leasing segment decreased to $3.1 million from $3.3 million in Q3 2024 due to lower proton beam radiation therapy (PBRT) volumes. Revenue from PBRT increased 16% year over year to $2.1 million for Q3 2025, and the number of Gamma Knife procedures in Q3 2025 was 231, up from 218 in Q3 2024. Revenue from proton beam radiation therapy (PBRT) increased to $2.1 million in Q3 2025, a 10.8% increase from 2024. Total proton therapy fractions for 2025 were 1,150, an 8.1% decrease from 2024. This decrease was primarily due to normal cyclical fluctuations. Revenue from linear accelerator (LINAC) systems was up 15.9% from Q2 2025 to $2.9 million for Q3 2025 and up 51.2% compared to 2024 due to the launch of operations in Puebla, Mexico, and being fully staffed with radiation oncologists in our Rhode Island operations. Our gross margins for Q3 2025 improved to 22.1%, with an increase of 60% year over year to $1.6 million, primarily due to higher treatment volumes. Q3 2025 operating income dramatically improved to a loss of $344,000 compared to a loss of $889,000 in 2024. Net losses attributable to American Shared Hospital Services for Q3 2025 improved significantly to $55,000 or $0.00 per diluted share compared to a net loss of $207,000 in Q3 2024 or $0.03 per share. Adjusted EBITDA, our non-GAAP financial measure, increased 41% to $1.9 million for Q3 2025 compared to $1.4 million in Q3 2024. And now I'll review our nine-month results. For the first nine months of 2025, total revenue increased 5.6% to $20.4 million compared to $19.3 million in the first nine months of 2024. Revenue from our Direct Patient Care Services segment increased 36.5% year over year to $10.7 million for the first nine months of 2025 compared to $7.8 million in the first nine months of 2024. This significant growth is primarily driven by revenues from Rhode Island Radiation Therapy operations and the new operations in Puebla, Mexico, in 2024. Revenue from the equipment leasing segment decreased to $9.7 million from $11.5 million in the first nine months of 2024. Gamma Knife revenue declined 4.2% to $6.8 million for the first nine months of 2025 compared to $7.1 million in the first nine months of 2024. The number of Gamma Knife procedures in the first nine months of 2025 was 703, compared to 831 procedures in the first nine months of 2024. This decline was primarily due to the expiration of three customer contracts since 2024 and lower PBRT volumes. Revenue from PBRT decreased 23% to $5.7 million in the first nine months of 2025 compared to $7.4 million in the first nine months of 2024. Total proton therapy fractions for Q3 2025 were 3,095, an 18% decrease from 3,764 fractions in the first nine months of 2024. This decline was primarily due to normal cyclical fluctuations. Revenue from the linear accelerator (LINAC) systems was $9.7 million for the first nine months of 2025 compared to $4.8 million in the first nine months of 2024 due to the acquisition of the Rhode Island Radiation Therapy operations and the launch of operations in Central Mexico. Our gross margins for the first nine months of 2025 improved 20.4% to $4.2 million compared to $6 million in the first nine months of 2024. This decline in gross margin reflects lower volumes and increased operating costs driven by the shift to direct patient services, which have lower margins compared to the leasing segment. For the first nine months of 2025, operating loss was $2.2 million compared to a loss of $975,000 in the first nine months of 2024. Net loss attributable to American Shared Hospital Services for the first nine months of 2025 was $922,000 or $0.14 per diluted share compared to net income of $3.5 million or $0.54 per diluted share in the first nine months of 2024. This was primarily due to the $3.9 million bargain purchase gain generated from the Rhode Island acquisition and net income earned from Rhode Island facilities acquired. Adjusted EBITDA, our non-GAAP financial measure, was $4.6 million for the first nine months of 2025 compared to $5.1 million in the first nine months of 2024. Now we'll look at our balance sheet. We ended Q3 2025 with a strong financial position supported by our solid balance sheet. As of September 30, 2025, cash and cash equivalents, including restricted cash, stood at $5.1 million compared with $11 million at December 31, 2024. This decline includes $7.5 million spent on capital expenditures for Peru, Bristol, Rhode Island, and North Westchester locations. Shareholders' equity, excluding non-controlling interests, was $24.6 million or $3.78 per outstanding share compared to $25.2 million or $3.92 per outstanding share at December 31, 2024. Fully diluted weighted average common shares outstanding were 6,856,000 for Q3 2025 and 6,482,000 for Q3 2024. This concludes the formal part of our presentation. Thank you again for joining us today. We look forward to updating you on our progress in the quarters ahead. We'd now like to turn the call back to the operator to open it up for questions. Operator: We will now begin the question and answer session. Our first question comes from Tony Kamin with Eastwood Partners. Please go ahead. Tony Kamin: Thank you. Ray and Gary, congratulations. It's really encouraging to see the execution and the sort of integration of Rhode Island really starting to work in, as you've said, Ray, with kind of the long-term vision you've had. You can now start to see it really where it's going to go. And also, I guess, with your pipeline seeming so strong with real projects, and I would guess even more projects or more early-stage stuff you haven't talked about. I would imagine the pipeline is strong. So the company is doing well. My question is that the shareholders are not doing well. And I think the simplest way to sort of illustrate that and my concern is if I annualize, again, just to make it simple, the EBITDA this quarter, it's about $8 million. You came in this morning with a $13 million market cap, and that's about 1.5 times EBITDA to market cap, whereas I would think a company like this would trade much more likely conservatively at a six maybe up to a 12 multiple. And even if you look at the low end of that at a six multiple of EBITDA to market cap, the shares would be over eight. And unfortunately, they're still in the very low twos. So my question is, now that you've got the company going and I know you've been wanting to focus on that, isn't it now time and in the interest of all shareholders and all constituencies of the company to do a little bit more in terms of investor outreach, going to conferences, etcetera? And my last sort of comment on that is, would you, I know Ray, you've bought a lot of stock. It would be nice to see the rest of the Board members make some significant purchases to demonstrate their alignment with the shareholders and their belief in the company. I think a lot of the long-term shareholders really believe in the company, and we want to see that stock start to reflect what seems to be an incredibly undervalued situation. Raymond C. Stachowiak: Thank you. Ray, you want to go ahead and start on that? Gary Delanois: Yeah. Sure. So, Tony, thanks for joining us again today. I appreciate your question as well. You do have to recognize we do have some debt in there when you talk about an $8 per share valuation. You do have some debt. So, you know, we've attended some investor conferences, and with your opinion here, we probably should be doing more. It's duly noted. I think management has been so focused on cost efficiencies, operational efficiencies, you know, they're doing the blocking and tackling. We'd like to see our results speak for themselves. But sometimes that doesn't take place without a bullhorn at the investor conferences, so to speak. So, Tony, very duly noted. Operator: Great. Thank you. Our next question comes from Anthony Marches, private investor. Please go ahead. Anthony Marches: Yes. Hi, good morning, guys. Again, good results. Ray or anybody else, I'd love to hear your opinion as to why we're trading at a fifty-two-week low when everything that you're talking about the future, even today's results seem to be all positive. There seems to be a significant disconnect between the market and what you guys are saying. So I'm trying to understand what's your opinion as to why that's the case? Why is it that people don't want to, I don't want to use the word acknowledge, but why don't people want to take into account what you've been doing relative to the market valuation? Raymond C. Stachowiak: Yes, I think a lot of it has to do with we're so thinly traded and we've got such little exposure, and it kind of goes back to Tony's first question about increasing that exposure. And, Kirin, I might ask you for your thoughts and opinions on this matter as our Investor Relations firm. We've tried a few things here and there. And what I'm hearing very loud and clear here is, we ought to be doing more outreach. Kirin M. Smith: Yes. Thanks, Ray. And, yeah, I echo those comments as well, Tony. I think getting the story out there, telling it more often definitely increases the exposure for the overall company. I also echo Ray's comments. Getting the fundamentals down straight sometimes takes several quarters in a row. If you note, the last three quarters in a row have shown sequential improvement, so it does take a little time for that to get on the radar. Management's had their heads down nicely, focused on the operations of the business. And I think now is a good time for them to get out there and increase that exposure as well. Operator: This concludes our question and answer session. I would like to turn the conference back over to Gary Delanois for any closing remarks. Gary Delanois: Thank you, operator, and thank you, Tony and Anthony, for your questions. We'll reflect on them, and thank you. And thank you all for joining us today. We are at a key point in time as we execute on our growth strategy. With large business development opportunities in our pipeline, we have the right team and the foundation in place and are acutely focused on building strong momentum as our growth strategy takes hold for the long term. We look forward to updating you on our progress as we drive further top-line growth, profitability, and long-term success. As always, if you have any questions, please don't hesitate to reach out to us. And thank you for being here today and have a great one. Kirin M. Smith: Thank you, operator. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Ballard Power Systems Third Quarter twenty twenty five Results Conference Call. As a reminder, participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Sumit Kundu, Investor Relations. Please go ahead. Sumit Kundu: Thank you, operator, and good morning. Welcome to Ballard's third quarter financial and operating results conference call. Joining me today is Marty Neese, Ballard's President and Chief Executive Officer and Kate Igbolodi, our Senior Vice President and Chief Financial Officer. Before we begin, please note that we will be making forward looking statements that are based on management's current expectations, beliefs and assumptions concerning future events. Actual results could be materially different Please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. I'll now turn the call over to Marty. Thank you, Sumit, and welcome everyone to our third quarter earnings call. Today, alongside our quarterly financial and operational highlights, and updates on our market verticals, Marty Neese: I'll share progress on our recent restructuring and strategic alignment. Discuss our path toward becoming cash flow positive and provide updates on key developments across our global organization. I'll begin with an overview of our business and markets. Overall, I'm pleased with our performance in the quarter. We continue to progress on pace with order delivery resulting in 120% year over year revenue increase largely from our deliveries to the bus and rail segments. Representing more than 70% of this quarter's revenue. Net order intake was approximately $19,000,000 and we achieved a positive gross margin of 15%. Reflecting meaningful progress in reducing product costs and a net reduction in onerous contract provisions. While this margin result may not represent a new ratable baseline, it demonstrates the progress of our product cost improvements and overall profitability trajectory. Our revenue makeup highlights the importance of the bus market. A market we expect to continue growing in the coming years. I recently had the opportunity to attend Bus World and meet with bus OEMs and transit operators. What was truly eye opening was the interest in electrification for buses has grown substantially with combustion engines, largely absent from the show and an almost exclusive focus being on electric alternatives. Including fuel cells. This is not surprising when considering that nearly 60% of new bus sales are now zero emission. In this electrified space, the advantages of fuel cells to serve a wide variety of routes short refueling times and the increasing infrastructure costs in face of grid constraints is becoming ever clearer. As the market attractiveness and technical and competitive merits of fuel cell buses grow, so too is the competition in the fuel cell bus engine space. With new entrants coming in, it is more important than ever for us to continue to differentiate ourselves as the fuel cell industry leader. Here, we believe that our decades of innovation and hundreds of millions of delivered kilometers positions us well. Having the most experienced and most durable reliable products with the lowest demonstrated total cost of ownership sets us apart. We are also ready for the next generation of buses At Bus World, we launched the FC Move SC, and initial feedback from OEMs has been very positive. Customers recognize the potential benefits of higher power density simpler and more integrated functionality a smaller lighter footprint and higher operating temperatures. These are all features that lower their total cost of ownership. Further, we continue to improve our core stack life and industry leading durability. Taken together, our customers are excited with these innovations. In terms of timing, product availability is expected to line up well with OEM timing for homologation into their next generation of vehicles. Additionally, we are enhancing our product cost leadership and long product life with a more comprehensive focus on delivering best in class service. We are complementing our products with additional services including digital operations and maintenance services, extended warranties, spares management, and on-site and virtual technician training and support. Our strong balance sheet and commitment to long term service and support sets us apart and our customers are eager to engage with us further to enhance these offerings. Moving briefly to our Rail and Marine segments. We continue to see momentum for freight and passenger rail locomotives. Recently in a milestone for sustainable transportation, Stadler's Flirt H2 hydrogen powered train officially entered service in San Bernardino, California. Another important step towards carbon free public transit. The train sets a new benchmark for clean, efficient and passenger passenger friendly rail travel in the region that we are proud to be powering. In the Marine segment, during the quarter, we recorded our largest order ever to the marine market with our order totaling 6.4 megawatts to ECAP and Samskip. These are both interesting markets for Ballard though I would add that both these markets remain at early stage of development and customer adoption. For the stationary power market, let me address the topic that is particularly hot at this time. AI data centers. It is clear that the rapid growth and the need for data centers and related is creating challenges for local grids and there's a shift to evaluate potential sources of off grid power as well as address CO2 emissions rules and noise requirements in many jurisdictions. This applies for both backup and primary power sources. Ballard's stationary solutions to date have demonstrated that we can supply kilowatts to megawatts of power. Our near term product offering for this market is focused on backup power solutions to replace diesel generators. Unit volumes in our forecast continue to increase as does our product evolution. From hundreds of kilowatts to multi megawatts. We are leveraging these factors to innovate further with our stationary power and data center customers. Our FC Move XD product enables us to increase power densities today to 500 kilowatts and up to two to three megawatts in a small form factor module in the near future. This leading power density in a compact footprint opens the door to potential additional use cases. Hydrogen supply partnerships are essential and we are actively working on collaboration opportunities in this area. This is an exciting area of product innovation. We will continue to provide updates as customer engagement engagements develop further. Turning to our strategic realignment. We are making meaningful progress as we work toward cash flow positivity. On the cost side, our recent restructuring actions are delivering tangible benefits. With significant reductions in cash operating costs and total operating expenses excluding restructuring charges. On margin and revenue, we remain focused on driving down product costs in the expanding our order book and total order back. Backlog. Building out our order pipeline is taking additional time as we work with current customers to secure more sustainable Sumit Kundu: contract terms Marty Neese: and some orders have shifted to Q4 twenty twenty five or Q1 twenty twenty six. We believe this extra time is well invested to ensure long term sustainability and appropriately balanced commercial agreements. Looking ahead to 2026 and 2027, we anticipate further improvement in gross margins supported by ongoing pricing and growth initiatives. Additional product cost reductions and the initial sales of our FC Move SC product. In addition, we expect further growth as we reenter the material handling market. We are seeing interest in our extended durability stack offering which more than doubles current material handling stack lifetimes available in the market today. Customers see this product as an excellent way to increase their delivered value and lower their overall cost. Especially related to stack service and maintenance. As mentioned, as we further refine our product offering, for the stationary power market, we expect growth in this market as well. For both material handling and stationary power, we'll provide more details on pipeline and order book conversion efforts as these potential opportunities mature. Taken together, these efforts are critical in moving us towards our goal of cash flow positivity. While there is still work to be done to achieve long term sustainability, we are taking the right steps to grow our business in areas that make strategic sense all while maintaining a strong balance sheet for our long term resilience and in support of our customers. Moving to two other items of note for Ballard's global operations. First, due to changes in funding options and updated capacity outlook, we have decided not to pursue the Texas Gigafactory development. Our analysis shows our existing global manufacturing capacity with minor adjustments will meet forecasted volumes. This decision underscores our commitment to capital discipline and focus on efficient execution. And second, as part of our strategic focus, we are further reducing our involvement in the way Ballard joint venture in China. Allowing us to concentrate resources on North America and Europe. Before I pass the call to Kate to review our financials, I would summarize this quarter as showing progress on our turnaround efforts. Year over year growth in shipments and revenue progress on margin expansion, executing disciplined capital spending and launching compelling new products and services that deliver lower costs and more value to our customers is a really good start. There is much more to do to further transform the company and get to cash flow positivity and we are committed to this overarching goal. With that, I'll turn the call over to Kate for a detailed review of our financial results. Sumit Kundu: Thanks, Marty, and good morning, everyone. Kate Igbalode: For the 2025, Ballard delivered revenue of $32,500,000 an increase of 120% year over year driven primarily by the bus and rail deliveries. Gross margin improved to 15%, compared to negative 56% in Q3 twenty twenty four. A 71 improvement. This reflects lower manufacturing overhead, continued product cost reduction, and a net reduction in owner's contract provisions. This reduction in owner's contract provisions coupled with a higher margin one time off road sales transaction contributed to the outsized gross margin performance in the quarter. Without these one time benefits, our gross margin would be slightly negative, still illustrating a marked year on year and quarter on quarter improvement. As Marty highlighted, we continue to make measured progress towards gross margin expansion and expect this to be reflected in our 2026 outlook. Total operating expenses were 34,900,000.0 down 36% year over year or 55% lower when excluding restructuring costs. Cash operating costs declined 40% year over year as the benefits of restructuring actions flowed through to our results. The rightsizing of our corporate cost structure, while never easy, was critical for our long term sustainability and financial health. Adjusted EBITDA improved to negative 31,200,000.0 compared to negative $60,100,000 in the prior year. Cash used by operating activities was 22,900,000.0 an improvement from $28,600,000 in 2024. We ended the quarter with 5 and $25,700,000 in cash and cash equivalents no bank debt, no near term financing requirements. Our strong balance sheet and firm hand on prudent capital allocation is a amongst peers key differentiator and provides us with business flexibility and resilience in this dynamic macro environment. Looking ahead, consistent with prior practice, are not providing specific revenue net income or margin guidance given the early stage of market development. We continue to expect revenue to be back half weighted for the year and total operating expenses excluding restructuring charges are expected to be below the low end of our 100,000,000 to $120,000,000 guidance range. Including restructuring costs expenses are expected to be towards the high end of the guidance range. We now expect capital expenditures of 8 to $12,000,000 down from our prior guidance of 15,000,000 to 25,000,000 reflecting disciplined capital allocation and deferred facility investments. Operator: Looking to 2026, Kate Igbalode: you can expect us to maintain our lean organizational cost structure and continue to demonstrate capital discipline. Maintaining a healthy balance sheet and accelerating our pathway to profitability is critical for our success and to deliver value to our shareholders. With that, I'll turn the call over to the operator for questions. Sumit Kundu: Thank you. Operator: We will now begin the question and answer session. We ask callers to kindly limit themselves to one question and one supplemental. The first question comes from Rob Brown with Lake Street Capital Markets. Please go ahead. Sumit Kundu: Hi, good morning. Marty Neese: Just wanted to get your thoughts on the growth kind of Rob Brown: rates in the bus market. Are there additional kind of growth order activity that you're pursuing? And get a successful kind of conference activity. But just wanted to get your sense on the growth rate in the bus market going forward? Marty Neese: Yes, would answer that Rob. By saying that the reception at Bus World was tremendous. The The new product is being very well received. And that's by both existing OEMs and some OEMs in development. If you will. Sumit Kundu: Further, the Marty Neese: constraints I mentioned around infrastructure pinch points per battery electric charging infrastructure if you will is starting to change the dynamics for fuel cells where we look much more compelling than previously outlined if you will relative to battery electric. So I would say that that's a a good news for fuel cell story and starts pointing towards larger fleet size adoption Rob Brown: especially where Marty Neese: the infrastructure constraints can be overcome by adopting fuel cell buses. So in general, I would say Europe is making steady and improving progress and adoption rates for fuel cells North America is essentially flattish year over year and that's that's where I'd leave it. Rob Brown: Okay. Thank you. Then quickly on gross margin, I think you talked about slightly negative sort of adjusted out. Is that the baseline you expect to grow from or improve from going forward? Marty Neese: The short answer is yes. But Kate maybe you provide some more details on the gross margin bridge. Rob Brown: For Marty Neese: Q3 and then kind of what you're out looking from there? Kate Igbalode: Yes, absolutely. So you're spot on, Rob, in that in our remarks we did highlight that without this kind of one time pieces in the quarter, would be slightly negative. That's kind of where we expect to close out in Q4 as well. Looking into 2026, again, I think you can expect Sumit Kundu: low to mid single digits on our gross margin. Kate Igbalode: We don't provide margin guidance, but I think you do expect us to see incremental progress going forward from here on out. Rob Brown: Okay. Thank you. I'll turn it over. Operator: The next question comes from Jeff Osborne with TD Cowen. Please go ahead. Sumit Kundu: Thank you. I was going to ask on the former Project Ford in the Texas facility, some of the targets that were laid out for the restructuring there. Jeff Osborne: Are those still achievable without the Texas facility? Can you remind me how important that was as it relates to getting gross margins higher than what Kate just mentioned? Marty Neese: Yes. Would say Project Forge is primarily automation and materials efficiency And that is in fact still in flight yielding well heading in the right direction and not dependent on Texas in any way shape or form. Texas was more of an integrated view for a complete stacks and modules with Project Forge and the automation being a core attribute. But that's being done in Canada as we speak. So we're good on that front. Jeff Osborne: Good to hear. And then Marty, you mentioned reentering the material handling space. I think from memory, years ago, you were just in the liquid cooled side for the ride on units versus I think the smaller pallet jack lifters were air cooled? Are you doing both? Or are you just doing the liquid cooled? Can you just further detail what specifically the strategy is on material handling? Marty Neese: Yes. The near term interest we're seeing is for air cooled. And so air cooled with additional durability is resonating well with a handful of new customers And when I say additional durability, I mentioned at least 2x the state of the art as we see the market today. That really is attractive when you think about the service obligation for customers over the long run. And so different customers are really valuing that in a more thoughtful way as they get more and more experience servicing and managing a long lifetime fleet. And so that durability equation is starting to show economic clarity for them. Jeff Osborne: Got it. Thanks for the detail. Operator: The next question comes from Craig Irwin with ROTH Capital. Please go ahead. Sumit Kundu: Hey guys, it's Andrew on for Craig. One quick one for me. So Congrats on the signing your largest marine order to date with the Samskip vessels I know you've been working with this partner for a couple of years now, think since 2021. So can you kind of talk about the just evolution of this agreement, how it came about and maybe what you can take away from it and learn from -- for other customers? Marty Neese: Yes. I might pass that to Kate for additional clarity. But the headline is we have been developing this opportunity for a couple of years. And the product, FCwave product is [ DNB ] certified for a marine application. And so that took a good bit of time on certifications and standards bodies, but we were the first ones to do that. And after that heavy lift was complete on the [ certs, ] then we started seeing an adoption rate like the Samskip order. Noteworthy is that FCwave product has additional use cases beyond marine, and that certification of DNB, if you will, for the marine application, provided a lot of comfort to other customers in using that product and the approach that we use relative to that product. So that's kind of what I know from a background or context standpoint. If there's more relative to the contract evolution, Kate, that you want to add, feel free. Kate Igbalode: No, I think those are excellent points, Marty. And I think I'm glad you asked about this, Andrew, because I think there's a number of key learnings, not only on a technical basis, but also commercial and contractual with how we work with customers. I mean these are large projects. They take years to develop and form. And I think for me, one of my big takeaways was how are we listening to our customers in terms of what's important to them from a technological point of view and how we're using that to inform our next generation of product development. And then I think the other piece, too, is understanding their entire ecosystem around how they're getting hydrogen supply at a cost that is affordable to them. So it's kind of looking at the whole holistic view of what it really takes to get these projects across the ball line. And it's a very collaborative effort for us with our technical teams, our commercial teams, and also on the after care and service piece is incredibly important in these types of applications, which really require very high reliability and ease of maintenance. So I was really happy to be involved on this across the last number of years, and I'm thrilled to see it coming to fruition. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Marty Neese for any closing remarks. Please go ahead. Marty Neese: Thank you, everyone, for participating in today's call. Really appreciate it, and we look forward to providing additional updates in the future. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Thank you for standing by, ladies and gentlemen. Welcome to the EuroDry Limited Conference Call on the Third Quarter twenty twenty five Financial Results. We have with us today Mr. Aristides Piras, Chairman and Chief Executive Officer and Mr. Tazos Aslidis, Chief Financial Officer of the company. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed Before passing the floor over to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, EuroDry will be making forward looking statements. These statements within the meaning of the federal securities laws. Matters discussed may be forward looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide number two of the webcast presentation has the full forward looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to turn the floor over to Mr. Pizzas. Please go ahead, sir. Aristides Pittas: Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Mr. Tatius Aslivis, our Chief Financial The purpose of today's call is to discuss our financial results for the three and nine month period ended 09/30/2025. Please turn to Slide three of the presentation. Our financial highlights are shown here. For the 2025, we report total net revenues of $14,400,000 and the net loss attributable to controlling shareholders of $700,000 or $0.24 loss per basic and diluted share. Adjusted net loss attributable to Controlli shareholders for the quarter was $600,000 or $0.23 loss per basic and diluted share. Adjusted EBITDA for the quarter was $4,100,000 Please refer to the press release for the reconciliation of adjusted net loss and adjusted EBITDA. Our CFO, Patmos, go over our financial highlights in more detail later on in presentation. Our work today will have purchased about 135,000 shares of our common stock in the open market for a total of $5,300,000 under our $10,000,000 share repurchase plan, which we announced in August 2022. Our Board of Directors has approved an extension of the program for an additional year. We intend to continue executing a processes up to the originally approved amount of $10,000,000 at a disciplined rate. Taking into account the company's liquidity needs, and relatively small free flow. Please turn to Slide four to view our recent On 10/21/2025, we delivered motor vessel LNVP to have new owners and unaffiliated third party. The EVP was one of our oldest ships and the longer held vessel in our fleet. She was sold for $8,500,000 On the chartering plant, our fixtures during the third quarter were predominantly short term. Several of our vessels are currently employed under time charters ranging between a month to a little over three months. conditions improve. Allowing us to position our vessels to the advantageously as well While the Red Sea disruption disruptions continue to influence route decisions and freight premiums, their impact on drybulk charter rates has largely stabilized. Towards the end of the quarter, seasonal patterns began to reassess themselves and the market showed signs of recovery which still continue. The specifics of the charter is fixed during the period, are outlined in the accompanying presentation. Most notable are often due to the length of the charter is the motor vessel, the administrator, which secured an extension of its index linked charter at 115% of the average Baltic ship from end time charter index. Until at least November 2020. Six, During this quarter, motor vessel Santa Cruz completed a special survey and dry dock over a period of thirty five days. Slide five shows Eurodrive's current fleet, which consists of 11 vessels with an average age of approximately ten point eight years and the total carrying capacity of about seven sixty seven thousand deadweight tons. In addition, we have two Ultramax vessels of the construction each with a capacity of 63,100 tons scheduled for delivery in the 2027. Upon delivery, our fleet will expand to 13 vessels with a total carrying capacity of just under 900,000 deadweight tons. Now please turn to Slide six for a visual update on our current fleet employment. As of 09/30/2025, our fixed rate coverage for the remainder of the year stands at approximately 5%. Based on existing time charter agreements. This figure excludes vessels operating under index linked charters which, while subject to market fluctuations, still have secured employment. We currently have four vessels the Maria, Goodheart, Molyboslak and Jani Peters trading on index linked charters with durations ranging till March 2026 at least November 2026. Turning to Slide eight, we will go over the general market highlights for the third quarter ended 09/30/2025 and up until recently. Panama export rates rose steadily through the 2020. Five. Increasing from an average of about $14,100 per day to approximately $14,950 per day by corporate rent. Reflecting a slight increase. As of November 7, spot rates for Panamax vessels increased further and now stands at around $15,500 day. Now, one year tax time charter rates are a bit lower than the spot rate and Clarksons gives the standard Panamax one UTC rate at $15,125 per day. During the third quarter, the Baltic Dry Index and the Baltic Panamax Index recorded year over year increases of approximately 614% respectively reflecting a slight market slightly better market compared to the same period last year. This recent recovery in the Super range was supported by stronger than expected demand from minor bulks robust grain trade flows and the marginal tightening in vessel supply driven by longer volume distances and regional trade disruptions. Please now turn to Slide nine. According to the IMF's October 25 projections, global growth is expected to ease slightly from 3.3% in 2024 to 3.2% in 2025 and three point one percent in 2026. With advanced economies growing around 1.5%. And emerging markets and developing economies just above 4%. Persistent trade tensions and ongoing policy abandoning investment and trade activity And as tariffs work the way, through supply chains and onto consumers. The IMS predicts a gradual, but not too severe global growth deceleration. Global inflation is projected to moderate worldwide though unevenly across regions, remaining above target in The United States where risks attempted to the upside and most subdued elsewhere. U. S. Growth is projected at 2% in 2025 and two point one percent in 2026. The modest upgrade revision from earlier forecast reflecting smaller than expected effects from tariffs and more favorable financial conditions. In late October, the Federal Reserve load lowered the target range for the Federal Funds rate by 25 basis points to 3.775% to 4%. Chair Powell has not ruled out a possibility of an additional rate cut at the December meeting. The overall outlook remains fragile with downside risks stemming from persistent uncertainty potential protectionist measures and ongoing labor constraints. Among emerging markets, India is growing the and is forecast to expand by 6.6% in 2025 and six point two percent in 2026. Supported by robust domestic investment resilient agricultural output and the vital services The ZM5 economies are also expected to post solid growth of around 4.2% in 2025 and four point one percent in 2026. Underpinned by the healthy regional rate and the continued industrial activity. China's economic outlook is projected to continue well at a decelerating pace. These challenges include the widening gap between supply weak domestic demand. As well as ongoing trade tensions with The U. S. Including the new tariffs on Chinese goods export controls and restrictions on high-tech exports. China's growth is consequently expected to moderate to 4.8% in 2025 and four point four percent in 2026. Despite domestic headwinds, Chinese economy is being supported by strong export performance to regions like Southeast Asia and the EU And the still resilient manufacturing sector. Turning to the drybulk sector to see how the global growth affects the demand for drybulk Clarkson Research now projects drybulk trade demand growth at just 1.4% in 2025 two point one percent in 2026 and one point eight percent in 2027. Indicating a stronger trajectory than previously estimated growth. The recovery supported by steady output in Asia continued demand from iron ore bags and improving agricultural and coal trade flows. Please turn to Slide 10 to review the current state of the order book in the drybulk sector. As of November 2025, the order book stands at approximately 10.9% of the existing fleet. Longer higher than the 7% recorded in 2021, it remains amongst the lowest levels in history. For context, the order book accounted for 8% of the fleet in 2008 and nearly 30% in 2004. Fourteen. Current ordering activity remains limited due to shipyard capacity constraints high new building costs and uncertainties surrounding future fuel technologies and environmental regulations. Turning to Slide 11, let us now look into the supply fundamentals in a little bit more detail. As of November 2025, the total drybulk fleet comprises roughly 14,150 vessels. According to Clarkson's latest estimates, new deliveries as a percentage of the existing fleet are projected at 3.7% for 2025, 4.2% for 2026 and three point four percent for 2027. With actual fleet growth expected to be slightly lower due to slippage and demolition activity. The fleet age profile shows that about 10.6 of the global fleet is over twenty years old. Representing a pool of potential scrapping candidates particularly if market conditions worsen and environmental requirements tighten further. Overall, fleet renewal remains balanced amongst the various vessel size. The majority of vessels are concentrated in the ten to fourteen year old range while still most vessels built around that time were not ECO ships. Therefore, the number of ECO vessels available in the market is still a minority amongst the existing fleet. Please turn to Slide twelve, where we summarize our outlook for the drybulk market. The drybulk carrier market spreads at notably junior sales courses with average time charter rates for Sucom and Panamax vessels increasing by roughly 13% quarter on quarter. Reflecting improved demand trends. Across several key commodities. The Red Sea attacks earlier in the summer disrupted Canal transit further. And tightened vessels supply further supporting trade Demand for larger vessel classes remains while smaller segments also recorded strong gains adding to the overall positive event. We Looking ahead to the remainder of 2025, market conditions still remain uncertain. Shaped by the recent Geopolitic geopolitical and policy developments. In October 2025, as we all know, The U. S. And China escalated its the trade dispute introducing reciprocal port fees on each other's vessels. Which added complexity to shipping operations. However, following the meeting between President Trump and Xi, last month, both sides signaled a temporary de escalation and port fees postponed. Meanwhile, the ceasefire between Israel and Hamas has also drawn attention to potential leasing of Red Sea disruptions. For now, shipping companies are still adopting the cautious wait and see stance and no immediate changes in routing patterns have been experienced. In 2026, the market still faces challenges around trade growth and protection pattern of trade. Adjustment. However, Chinese demand from both and iron ore will remain a key driver while global infrastructure spending should continue to support industrial Materials trade. Strong harvest in The U. S, Brazil and Russia are also expected to sustain robust grain exports for the Sukhovix Panamax Also expected is a rebound in corn trade and steady minor bulk demand. However, the potential normalization of Red Sea traffic could result in lower ton mile demand as routes resorted again. On the supply side, ordering activity remains limited due to shipyard capacity constraints in continued uncertainty about fuel technologies. Especially after the recent IMO decision to postpone the adoption of of its proposed environmental friendly new routes ship owners are confused on what type of ships to order. The order book to fleet ratio currently near historical launches I said before, provides a solid backdrop for the charter rate and casualty should demand strengthen. Although there is a clear industry shift towards alternative fuels, the pace of transition is likely to be slower than anticipated. Constrained by technical challenges, economic consideration and ongoing delays in the IMOs next net zero framework. Azerbition related measures such as the EXI, CII, EU ETS, UME, UMAD Times. Are fully implemented apparent supply could tighten further through increased scrapping and slower vessel speeds. By 2027, the drybulk market is expected to enter the rebalancing phase with new deliveries declining and scrapping activity picking up leading to a more balanced supply demand environment. Let's turn to Slide 13. As of 11/07/2025, the one year time charter rate for Panamax vessels stood at $15,125 per day remaining modestly above the twenty year historical median of $13,375 per day. As of the 2025, the market for ten year old Panamax bulk carriers remains firm. In fact, we have seen an approximately 10% increase over the low seen in Q2 which represented the lowest point since mid-twenty twenty three. Current asset value stands at approximately $26,000,000 which are well above the historical median of $15,500,000 and the ten year average of 18,000,000 Underscoring continued resilience in second revenue building orders. And also the disposal of one of our we are in a position to continue modernizing our fleet and preparing ourselves for the next bull run which will as usually, perhaps suddenly and possibly when least expected. Let me now pass the floor over to our CFO, Tassos Ostovidis, to go over our financial highlights in more detail. Tassos Aslidis: Thank you very much, Aristin. This Good morning from me as well, ladies and gentlemen. Over the next four slides, I will give you an overview of our net Aristides Pittas: financial highlights Tassos Aslidis: for existing vessels financial and also the disposal of one of our we are in a position to continue modernizing our fleet and preparing ourselves for the next bull run which will as usually, first suddenly and possibly when least expected. Let me pass the floor over to our CFO, Patrice Ostlidis, to go over them. Our financial highlights in more detail. Thank you very much, Aratindis. Good morning from me as well, ladies and gentlemen. Over the next four slides, I will give you an overview of our financial highlights for the third quarter and nine months of 2025. And compare them to the same periods of last year. For that, turn to slide 15. For the 2025, we reported net revenues of 14,400,000.0 representing a 2.2% decrease over total net revenues of $14,700,000 during the third quarter last year which is primarily the result of the decrease decreased average number of vessels we operated and relatively lower market compared to the same period of last year. Details and other financing costs including interest income, for the 2025, amounted to 1,600,000.0 compared to $1,900,000 for the same period of 2024. Interest expense third quarter of this year were lower primarily due to partly offset by the increased average amount of debt that we sell. Adjusted EBITDA for the 2025 was 4,100,000.0 compared to $05,000,000 achieved during the 2024. Basic and diluted loss per share attributable to the the controlling shareholders for the 2025 was $0.24 calculated on approximately $2,800,000 base diluted weighted average number of shares outstanding compared to loss per share of $1.53 probably to about the same number of basic and diluted weighted average number of personal savings for the third quarter of last year. Excluding the effect from the loss attributable to controlling shareholders, for the quarter of the unrealized loss on derivatives The adjusted loss for the third quarter of this year would have been $0.23 per share based to diluted compared to an adjusted loss of $1.42 per share basically diluted for the same period third quarter twenty four. Let's now look at the numbers for the corresponding nine month period. Ended September 30, 2025 and convert them to the same period the nine months of 2024. For the first nine months of 2025, we reported total net revenues of 34,900,000.0 representing a 25% decrease over total net revenue to 46,600,000.0 that we said during the first Operator: And the decrease and the offset partly for the increased level of debt we gave. Adjusted EBITDA for the first nine months of 2025 was five compared to $7,600,000 during the first month month of 2024. Again, excluding the effect on the net loss attributable to the controlling shareholders for the first nine months. Of the year. Of the unrealized loss on the EBITDA and the net gain on sale of a vessel the adjusted loss for the nine months period ended 09/30/2025 would have been $3.39 per share, basically diluted compared to adjusted loss for the nine months ended 09/30/2024. Please move now to Slide 16. To review our fleet performance. We'll start our review by looking at our fleet utilization rates for the third quarter and nine month period of 2025 and convert them to the same period of last year. During the 2025, our commensurate utilization rate was 100% while our operational utilization rate was 99.3% compared to 100% commercial and 98.5% operational in the corresponding period of 2024. On others, we own and operated 12 vessels in the first nine in the first three months in the third quarter, sorry. Of 2025 earnings and other time charter equivalent rate of $13,232 a day compared to 13 vessels in the same period the 2024 and another $13,105 per vessel per day. Our total daily operating expense including management fees general and administrative expenses but excluding buybacks and costs, were $7,013 per vessel per day in during the third quarter twenty twenty five compared to $6,851 per vessel per day for the same period of last year. The new charter down is stable, We can see the cash flow breakeven level. Which also take into account in addition to the above expenses, for the entire growth and expenses interest expenses and loan repayments. Thus, for the 2025, our daily cash flow breakeven level was $12,200,182 dollars per vessel per day compared to $15,145 per vessel per day for the first quarter of last year. Reviewing out the same figures for the nine month period, and comparing to the same period of last year We said commercial utilization rate about 99.6% and operational acquisition rate of 99.2% for the first nine months of this year compared to 99.9 commercial and 98.7% operational for the same period of last year. On average, we operated 12.3 vessels during the first nine months and then another trade of $10,210 compared to operating 13 vessels during the same period of last year, earning on others $13,639 per vessel per day. Fuel analysis further down for operating expenses, Our operating expenses including management fees and G and A expenses, excluding the operating costs were $7,285 per vessel per day in the first nine months of this year compared to $6,927 for the same period of last year. And if we include on this figure, the interest expense the loan repayment and the direct working expense, our total cash flow breakeven level for the first nine months of 2025 would be $12,071 as compared to $13,789 per vessel per day for the same period of 2024. Let's now move to slide 17. To give you some highlights regarding our debt. And our forward cash flow breakeven. As of 09/30/2025, UroGiles debt stood at 97,900,000.0 with an average margin of about 2.05%. Assuming a three month short rate of 3.84% cost of our senior debt is approximately 5.9%. The repayment schedule of our debt you can see on the top right chart of this slide which shows total debt repayments of $13,100,000 in 2025, 10.3 of which have already been made. And if on the top of that, include interest expenses and loan As of September 30, 2025, cash and other assets in our balance sheet stood at approximately $18,800,000 while we said advances for newbuildings amounted to about 7,200,000.0 In addition, on the asset side, we have the book value of our vessels which was about 176,000,000 resulting in total book value of our assets of roughly $2.00 2,000,000 On the liability side, total bank debt as I mentioned in the previous slide stood at 97,900,000.0 which is roughly 48.4% of the book value for our assets We have other liabilities of 5,200,000.0 representing about point 6% of our This result in the book value for shareholders' equity of almost 9,000,000 translating into a net book value per share of $31.8 Based on our own estimates, though, the market value for our fleet is higher than the respective book value We estimate it to be about $214,000,000 as compared to $176 as I mentioned earlier. Approximately $38,000,000 above the book value. In plan, the net asset value of our fleet on a per share basis to be in excess of $44 If we compare this to the recent trading days of our sales, which is around $13 per share. It becomes evident one more time that there is significant potential upside potential for share appreciation should market conditions improve or other capital costs but discount to level. And with this, statement, I would like to pass the floor back to our teams to continue our call. Thank you, Basos. Let us now open up the floor for any questions you may have. Thank you. We will now be conducting Aristides Pittas: Thank conducting a question and answer Our first question comes from the line of Hans Baldahl with NOBLE Capital Markets. Please proceed with your question. Hello. Operator: The market fundamentals Tassos Aslidis: are looking more promising for 2026, and we've seen the rates push up And I know you mentioned a breakeven rate of 12,000 Can you talk about your threshold for shifting from the short term index linked exposure in possibly securing some longer term coverage Are there specific rates you're looking for Operator: Yes. We will reach to longer term coverage if we see numbers between around 16,000, 15,000, 16,000, 17,000, that's that's the area where we will be concentrating to Tassos Aslidis: to get some exposure hedged. Operator: Through time charters or FFAs Tassos Aslidis: Okay. And is that across the board or is that average between the Kamsarmax, Panamax Supramax, Operator: It's another let's say, what I just told you. Obviously, our Elder Panamax es earn less So we might fix something at a little bit lower rate. The younger cancer MAXs and Tassos Aslidis: the Supra and Ultramaxes. Operator: They are probably around the same these days. Tassos Aslidis: Okay. Tassos Aslidis: And I see the Exterini is looking for employment Do you have a time line of when you expect that vessel to start start up again? Operator: The Irini was sold Tassos Aslidis: Not the Ectorini. Ekaterini. Operator: Yes, the Catarini was fixed a couple of days ago. So we didn't make it here in the presentation. For trip via South America back to the Far East. So about ninety to one hundred days at the level which is about $16.5100 dollars a day. Tassos Aslidis: Okay, understood. My last question is the near term debt. I know with the Arini sale and the refinancing step your liquidity improved recently. But you still have the $12,200,000 in current debt. Do you have any plans to improve the near term liquidity? Operator: Yes. Our liquidity has improved significantly because we did a couple of things. We they're not reflected in the numbers for the nine months, but because they kept in or are about to get in. We're refinancing Janus Pitas which will release about $4,500,000 We have sold Tirini, which will release about $6,500,000 I think. After we paid couple of million of debt that was there. And we have also it's in the press release arranged to finance the pre delivery installments Tassos Aslidis: payments for our newbuildings. Operator: One, which has already been paid by the new the debt we arranged So, I think we have improved significantly our liquidity The difference by end of the year is plus $15,000,000 after this test that we did. That we took. Aristides Pittas: Okay. Tassos Aslidis: Thank you very much. That's everything for me. Operator: Our next question comes from the line of Poe Fratt Alliance Global Partners. Please proceed with your question. Operator: Yes. Good afternoon, Aristides. Good afternoon, Tassos. Aristides Pittas: Just wanted to follow-up on the newbuild financing Tassos Aslidis: Tasos, did you say that you're going to draw down the first one of the two newbuild facilities in the fourth quarter Operator: Yes. So we've already done that. The second these new buildings had the second payment that that was to be made this year. For one of them that the payment was due, we already made that We already took a loan and the payment was made using that loan. The other payment is still coming up. And we have another loan with a different bank I think it's in the press release. And which will bring you forward that payment as well. Tassos Aslidis: So, I'm trying to to figure out when you're going to show the incremental debt on the the balance sheet. Because the new bill payments, as I understand it, they're call it, 60% of the total cost of the new builds, and those aren't due until mid-'twenty seven. So can you just sort of give me an idea of what Operator: the incremental debt looks like in 'twenty seven? And Tassos Aslidis: 'twenty six and 'twenty seven? Passes? Operator: I mean, by the end of by the delivery of these vessels, we would have drawn approximately $53,000,000 debt to finance the two new buildings. Dollars 26,000,000 and 26,900,000.0 I think is the numbers. So that's by the delivery of the vessels. And if we draw debt to finance pre delivery installments, we'll show obviously in our balance sheet. Yes. Okay. Just to clarify that. Tassos Aslidis: And then, Aristides, can you talk about the market a little bit? I'm trying to reconcile the one, the sudden increase in rates on the Alexandros P and Christos K in sort of the August, September time frame. And can you just highlight the reasons you think that the rates went from Alexander's P went from $6,000 to 28,000 And then Christos went from call it, the low teens to 28%. And then can you give me an idea of sort of the rate outlook for both of those into the rest of the fourth quarter? And into the early twenty twenty six timeframe? Operator: Beautiful. The market, the overall market is slightly improving as is shown also by the various indices. However, the indices are comprised of various different voyages. The voyages from the Far East to the Atlantic generally, are low paying voyages. The voyages from the Atlantic to the Far East are high paying voyages. So if you secure a trip like the Ecuadorini, Which Starts From The Far East, goes to South America, and returns to the Far East, then you will get the average rate, which today is around $16,005 that we fixed. But in the two cases that we're talking, we're talking about the first two voyages were positioning voyages to places where you can get higher rates to go back out. And that is why you see those big differences in the earnings. Is it clear? Aristides Pittas: Yes. I guess the next Tassos Aslidis: sort of question would be then they'll have to probably reposition for the rest of the fourth quarter. So we should look at a lower rate for the rest of the quarter. Is that fair? Operator: Aristides, on those two things? I think on average, you should be looking at average charter rates. So the way we run our models at least we take those assumptions into in account and we run our models for three, six months or a year or whatever. So, we generally use vein decks to reflect what we think will be happening, because it's very difficult to decide exactly how to value every ship. But yes, if a vessel is in the Far East, is in China, it will have a cost to go to a place where it will be able to command higher for us. Freight rates. Clearly, it depends on the type of the next picture. If it's within the Paris, it will be closer to the average. If it's back and forth in the Atlantic, Again, for the average. If it's go to the Atlantic, it will be lower the lower rate that I previously mentioned because then you get a better rate to go to the Pacific So, wherever the cutoff falls from the end of the quarter, but so taking the average is probably safe bet. Tassos Aslidis: Yes. Okay. Fair enough. And then when I just want to clarify that the 115% of the BSI-fifty eight Is that number on Page eight so that the four that you have on the index right now or earning 115% of right now, it looks like sixteen point six hundred and twenty five Is that correct? Operator: Yes. It takes the BS Tassos Aslidis: Index Operator: and multiply it by 1.6 to get what we have paid for these four vessels as we say. Tassos Aslidis: Okay. And on your your chart that shows your employment on Page I think it's page six, You don't have any dry docks on through the middle of 'twenty six. Will there be any dry docks over the next nine months? Or could you just highlight what your dry docking schedule might look like in the Operator: Yes. There is a dry dock of Vixenya that is going to happen very soon. Other than that, I don't think we have something else within the next six months to nine months. We only have one of our dock within 2026, I can't remember which ship it is. And it's towards the second half of this. For the whole year, there is just one write off. Have explained now and one in 2026. Tassos Aslidis: Okay. And then typically, I guess, you talked about your fleet renewal business or program. And it was more in the context of lower rates. And making that decision of doing a dry dock on a twenty year old plus asset versus selling it And can you just highlight when the dry docks might occur on the Starlight and the Blessed Buck, which you're still two of the oldest Panamaxes you have out there. The Santa Cruz was done in the third quarter, so I'm assuming you're going to keep it for a while. Operator: Yes. I think less luck and starlight are super drives your in. 2027, I think second quarter. Aristides Pittas: Mr. Pettus, it appears we have no further questions at this time. I'd like to turn the floor back over to you for closing comments. Tassos Aslidis: Thank you. We will Operator: thank everybody for participating in today's call. And we will be back to you in the New Year with the results of the full year. Thank you. Thanks everybody for attending. Aristides Pittas: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Operator: Good morning. My name is Martin Fernandez, and I will be your operator today. At this time, I would like to welcome you all to the Imunon Third Quarter Financial Results Conference call. All lines have been placed on mute to prevent any background noise. Following the speaker's prepared remarks, there'll be a question-and-answer session. You may press star and one on your phone to ask a question at that time. Please keep in mind, if you're using a speakerphone, you must release your mute function to allow the signal to reach our equipment. Again, that's star and one to ask a question during the Q&A session. I would now like to turn the call over to Peter Vozzo from ICR Healthcare, Investor Relations Representative for Imunon. Please go ahead. Peter Vozzo: Thank you, Myron. Good morning, everyone, and welcome to Imunon's Third Quarter 2025 Financial Results and Business Update Conference call. During today's call, management will be making forward-looking statements regarding Imunon's expectations and projections about future events. In general, forward-looking statements can be identified by the words such as expects, anticipates, believes, or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company's periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed, and actual results may differ materially from such statements. I also caution that the content of this conference call is accurate only as of the date of this live broadcast, November 13th, 2025. Imunon undertakes no obligation to revise or update comments made during this call except as required by law. Peter Vozzo: With that said, I would like to turn the call over to Dr. Stacy Lindborg, Imunon's President and Chief Executive Officer. Stacy. Stacy Lindborg: Thank an you, Peter, and good morning, everyone. Joining me on the call this morning is Dr. Douglas Faller, our Chief Medical Officer, and Ms. Kim Graper, our Interim Chief Financial Officer, who will be reviewing our financial results for the third quarter of 2025. Mr. Michael Tardugno, the Executive Chairman of our board, and Dr. Khursheed Anwer, our Chief Scientific Officer, are also on the line and will be available for Q&A. We continue to make meaningful progress with our proprietary IL-12 immunotherapy, IMNN-001, through the OVATION 3 pivotal phase III trial for newly diagnosed advanced ovarian cancer. The urgency of this program remains front and center to our efforts to create value for shareholders and to address the unmet need of ovarian cancer, which continues to claim far too many lives as the standard of care in the frontline setting has not advanced in over 30 years. Stacy Lindborg: Our OVATION II study demonstrated the first-ever overall survival benefit in a critical FDA endpoint in our randomized frontline trial. We are now laser-focused on confirming those unprecedented results in a well-regarded, rigorous phase III trial. Three days ago, we hosted a highly successful R&D day in New York City at the Harvard Club, featuring renowned ovarian cancer opinion leaders, clinicians, statistical experts, alongside members of our leadership team. The event underscored the transformative potential of IMNN-001 for women with newly diagnosed advanced ovarian cancer. The investment community and those interested in advances in ovarian cancer treatment and women's health more broadly heard directly from investigators about the unmet need in this disease affecting globally 300,000 new cases each year and claiming the lives of 13,000 women each year in the U.S. alone. Stacy Lindborg: This is why IMNN-001's potential to deliver a 13-month median overall survival benefit in phase II, with a hazard ratio as low as 0.42 in PARP-maintained patients, represents a potential paradigm shift. We have just come off a powerful series of presentations at the world's leading oncology and scientific forums, including ASCO, SITC, ESMO, the AACR Ovarian Cancer Special Conference focused on advancements in ovarian cancer, and finally, IGCS. The momentum is undeniable. OVATION 3 enrollment is surging ahead of plan, and this one-to-one randomized trial is evaluating IMNN-001 plus the standard of care, neoadjuvant and adjuvant chemotherapy with interval debulking surgery versus standard of care alone in women who have treatment-naive advanced ovarian cancer. In July, we initiated a 500-patient all-comers trial of women with advanced ovarian cancer, which has the flexibility to prioritize a 250-patient HRD-positive subgroup. Stacy Lindborg: This would enable us to realize a 40% cost savings with this prioritized group. The study design employs interim analyses for early efficacy stopping rules demonstrating trial success with power above 95% on the clinically meaningful primary endpoint of overall survival. As was discussed at R&D day, this analysis is accelerated over a traditional trial, which would only read out the overall survival at the end of the study. Success with these interim analyses is expected to deliver full approval, not accelerated approval. Key updates since our last call that I'll just quickly tick through. First, the site activation status of Ovation III. We have been deliberate and consistent with our cash management responsibilities, which applies to our decisions around site activation. Four sites were initially activated in the U.S., and we expect this to double before year's end with four additional sites well-progressed in startup activities. Stacy Lindborg: Returning investigators from OVATION 2 are being joined by additional top-tier centers, many of which are proactively reaching out to Imunon following the recent publication of the OVATION 2 study results in the Journal of Gynecologic Oncology, which was published on the same day as the 2025 ASCO platform presentation. We also have inquiries about the trial from interested sites at other recent conferences. Furthermore, while we have moderated the activation of sites in 2025 to reflect our current cash position, we are preparing for a site activation surge. To this end, we have accelerated the engagement of a global CRO to identify new study centers for startup in the new year, and we estimate we will have all sites in the new trial activated before the end of 2026. Next, I'll comment on enrollment velocity. Stacy Lindborg: You know, the first patient in OVATION 3 was randomized and treated in July of this year, and we have seen strong investigator enthusiasm for the trial, which has surpassed our internal enrollment target set for the end of 2025, with nine patients randomized by the end of October. I think you can all appreciate how important it is to have strong momentum at the start of the trial, and we have started this trial with an impressive pace. Moving to regulatory and design validation, the FDA has endorsed overall survival as a single study registration endpoint, and based on precedent and European regulations, we expect OVATION 3 to meet regulatory expectations for approval in Europe. During our R&D day, Dr. Stacy Lindborg: Giorgio Poloni, PhD in statistics with the company Berry Consultants, a highly regarded statistical consulting firm, highlighted this adaptive event-driven study design, a technique that is well-aligned with precedented FDA approvals in oncology via interim analysis of overall survival. He also highlighted the robust statistical foundation of our phase III trial with conservative power estimates, yielding high estimates of probability of success of this trial. Let me just pause, and if you did not have the opportunity to join our symposia live, I would encourage you to look on our website, the imunon.com website, in the Investor tab and under Scientific Presentations to watch it. We provide details of the power assumptions, and it is remarkable to hear directly from these experts that were on the faculty that day. Lastly, new translational data and our MRD study. We had Dr. Stacy Lindborg: Amir Jazari from MD Anderson Cancer Center presenting at our R&D day. He's the lead PI for the ongoing phase II minimal residual disease, or MRD study, being conducted in collaboration with the Breakthrough Cancer Foundation. Dr. Jazari spoke to data collected so far in the trial, demonstrating IMNN-001's preferential uptake by peritoneal macrophages, including profound tumor microenvironment remodeling. Patients achieved complete pathological responses with durable intratumoral IL-12 and interferon gamma expression, all with negligible systemic exposure and excellent tolerability, even as IMNN-001 in this trial is being administered with bevacizumab, and treatment has continued in maintenance settings. Additional biomarker data, which was presented at CITSI last week by Dr. Faller, further confirmed T-cell and macrophage infiltration and immune activation that's predictive of superior prognosis. Dr. Stacy Lindborg: Primal Thacker from Washington University emphasized during the R&D day that IMNN-001 is able to turn what are immunologically cold ovarian tumors hot by engaging both innate and adaptive immunity, renewing the promise of immunotherapy in this devastating disease. These mechanistic insights, paired with unprecedented survival signal, have fueled investigator commitments to accelerate enrollment. We estimate full enrollment in OVATION 3 will occur by late 2028, and I'll note that this can be accelerated with financing. I'll now turn over the call to Dr. Douglas Faller for some clinical commentary and comments. Douglas? Douglas Faller: Thank you, Stacy. As Stacy noted, our R&D day on Monday in New York really crystallized the excitement we are seeing within the gynecologic oncology community regarding IMNN-001 and OVATION 3. Dr. Thacker's and Dr. Jazari's presentations, followed by the rich discussion during the Q&A portion of events, underscores the clinical importance of the data collected and reported in both OVATION 2 and in the MRD study in women treated with IMNN-001. Excuse me. As Stacy mentioned, over the last three months, we've been invited to present our OVATION 3 trial and the emerging translational data from OVATION 2 at four prestigious international scientific and clinical congresses. These include the ESMO 2025 in Berlin, the International Gynecologic Cancer Society meeting in Cape Town, the AACR Special Conference on Ovarian Cancer in Denver, and the Society for Immunological Therapy of Cancer CITSI International meeting in 2025 in Washington, D.C. Douglas Faller: These global forums gave us the opportunity to interact with both scientists and clinicians. After our presentations, a number of clinical investigators, impressed by our novel therapy and the patient benefit realized in OVATION 2, approached me asking if their hospital could participate in the OVATION 3 trial. Similarly, scientists intrigued by the demonstration in patients that IMNN-001 turns immunologically cold tumors into hot tumors with anti-tumor activity asked about the possibility of collaborating with us. Interestingly, at the CITSI meeting several days ago, several participants noted the renewed interest in harnessing the powerful anti-tumor effects of interleukin-12, as evidenced by at least 15 interleukin-12 related presentations. However, they also noted that with the exception of ours, these presentations were focused on their early attempts to formulate or deliver interleukin-12 so as to avoid the well-known systemic toxicities. These attempts include intratumoral injection, which is not a long-term strategy. Douglas Faller: All of these efforts were preclinical or early phase I. In contrast, Imunon, as you know, has a pivotal phase III registrational trial, OVATION 3, actively recruiting. This OVATION 3 trial has been fully leveraging the excitement of IL-12 as a cancer therapeutic and the remarkable OVATION 2 clinical outcomes. As Stacy mentioned, study startup, as defined by protocol approval, to patient enrollment was achieved in 15 weeks, nearly half of what is typically seen as the industry standard for phase III trials. As we engage with our first set of study centers, we continue to see great interest and enthusiasm from our investigators, with the early sites so far activated far exceeding monthly estimates of the number of patients enrolled per site per month. OVATION 3 is still in its early stages, but we're observing clean safety run-in data from the first patients. Douglas Faller: Meanwhile, the ongoing phase II MRD study, as Stacy mentioned, continues to reinforce IMNN-001's favorable profile, giving us real-time confidence as we scale the pivotal trial. Following a recent MRD study DSMB meeting, we're pleased to share that the benefit-risk profile of IMNN-001 has been further strengthened in this MRD study and mirrors what we have seen in OVATION 2: no dose-limiting toxicities, no discontinuations due to IMNN-001, and no elevations in immune-related adverse events. Furthermore, preliminary clinical data presented by Dr. Jazari at R&D day highlights a high probability of progression-free survival on the IMNN-001 arm, a lower MRD positivity rate, and a lower percentage of biopsies positive during second look in the MRD patients. Douglas Faller: Lastly, the MRD study's demonstration of the feasibility and safety of combining Imunon with bevacizumab and the preliminary view into the idea of IMNN-001 as maintenance positions IMNN-001 uniquely for future trials and possible label extensions that could contribute even further to the fight against this terrible cancer. Back to you, Stacy. Stacy Lindborg: Thanks, Douglas. Before turning to our financial update, I'd like to offer and really further highlight progress in advancing our MRD trial and share an update. First, notably, the Breakthrough Cancer Foundation selected this trial for funding from hundreds of competing proposals, which is a very strong endorsement that echoes Dr. Jazari's remarks at our R&D day of the importance of frontline therapy as the best opportunity to achieve a cure for ovarian cancer. Based on the preliminary clinical data from the trial that Douglas just reviewed, we are thrilled with the consistency of IMNN-001's effect compared to our OVATION 2 clinical results. We've made great progress in the enrollment of the MRD trial, with three patients being randomized and treated in the month of October, resulting in a total of 25 patients randomized to date. Stacy Lindborg: Based on this progress, in September, we reviewed the MRD study and confirmed that its core objectives, which include those that we have internally for the IMNN-001 development plan and Breakthrough Cancer Foundation's goals as well, these core objectives can be fully met with a smaller cohort of patients. Accordingly, we decided to cap enrollment at 30 patients in the intent-to-treat population, a milestone that we expect to reach in the first half of 2026. We will be thrilled to close out this trial and capture its full learnings, enabling us to channel our resources into the pivotal OVATION 3 phase III trial. In fact, I'll mention that we've already begun conversations with this success in mind. We've started conversations with MRD investigators about transitioning their sites to OVATION 3 at that time, a move that would further accelerate enrollment in our registration trial. Stacy Lindborg: I'll note that we've received positive reactions to these inquiries. Turning to our financial strategy, we continue to navigate a challenging biotech capital markets environment with discipline and foresight. Our multi-pronged approach, combining the potential for non-dilutive partnerships with prudent equity raises, opportunistic use of our ATM facility, remains on plan, and we've made significant progress. Shareholder dilution is a valid concern, and we share it. That's why every financing decision is a stress test against our commitment to preserve value while actively working to fully fund this pivotal program. We have ongoing reviews for potential partnerships with Theraplast and interest expressed by pharmaceutical companies on PlaCCine from a recent scientific meeting, but nothing that is imminent. These kinds of partnerships take time to build, and I look forward to providing more detail if we advance these discussions to terms. Stacy Lindborg: On the equity side, we've raised $4.5 million during the third quarter through warrant exercises and targeted ATM usage. Monthly cash burn is now approximately $1.25-$1.5 million, reflecting streamlined G&A expenses, renegotiated facility leases, and a laser focus on advancing IMNN-001 milestones. Furthermore, operating expenses for nine months ended September 30 between 2025 compared to 2024 is 31% lower, which includes a 44% decrease in R&D expenses and a 52% decrease in CMC expenses. Mind you, this is all while manufacturing product for phase III, conducting CMC development work in preparation for reduced cost of products sold in the commercial landscape, and accelerating site patient activation. With cash through mid-Q1 2026 and multiple near-term catalysts such as enrollment momentum, regular presentations at medical and scientific congresses, and the potential for partnership progress, we are well poised to extend our runway further, ideally through value-enhancing non-dilutive transactions. Stacy Lindborg: A few other updates of note: the NASDAQ compliance matter is closed. We achieved the dollar minimum bid price requirement on August 9th. We sustained shareholder equity above the $2.5 million confirmed on August 22nd. In fact, we're far above this. This matter was also formally closed by NASDAQ on September 3rd, 2025, and I'm delighted to report that, as reported in the current NQ, we are at $4.1 million in the shareholder equity threshold. Now I'll turn over to Kim Graper for our review of the third quarter 2025 results. Kim Graper: Thank you, Stacy. Detail of Imunon's third quarter 2025 financial results are included in the press release we issued this morning and in our Form 10-Q, which we filed before the market opened this morning. As of September 30, 2025, cash and cash equivalents were $5.3 million. During the third quarter, the company received approximately $4.5 million of net proceeds from the exercise of warrants and sales under our ATM equity facility. The ATM facility carries a nominal 3% fee with no warrants. We project that this cash balance extends our operating runway into mid-quarter, first quarter of 2026. R&D expenses were $1.9 million for Q3 2025, down from $3.3 million in the same period last year, primarily due to completion of the OVATION 2 study and lower costs associated with the phase I PlaCCine DNA vaccine trial and development costs for the PlaCCine DNA vaccine technology platform. Kim Graper: G&A expenses were $1.6 million in Q3 2025, down from $1.7 million in the same period last year due to lower employee-related legal and travel expenses. Net loss for Q3 2025 was $3.4 million, or $1.16 per share, compared to $4.8 million, or $3.76 per share in the third quarter of 2024. Please note that all shares and per-share amounts have been adjusted to reflect a 15-for-1 reverse stock split of our common stock, which we effected on July 25th, 2025, and the 15% stock dividend we have declared in the quarter. With that, the financial review, I'll turn the call back to Stacy. Stacy Lindborg: Thank you, Kim. Before we open the line for questions, I want to reflect on the questions we received through the webcast, the live webcast at Monday's symposia. I was able to work the majority of these questions into my prepared remarks, with the exception of one question that I'd like to address as we kick off our Q&A. This question came from David Bouth through our tool, and I'll read the question. It looks like macrophages are the primary cell type that takes up IMNN-001, but how long do these cells continue to produce IL-12 based on the presence of IMNN-001? Is there some type of feedback mechanism that IMNN-001 produces to prolong the production of IL-12 in these cells after IMNN-001 is metabolized, or is there an IMNN-001 plasmid that encodes IL-12 long-lasting? It's a very great question. Stacy Lindborg: I apologize, David, we did not see it and were not able to address it day of the meeting, but I would like Khursheed to offer comments to this question. Khursheed Anwer: Sure, Stacy. Yeah, it's a good question, of course. The unformulated plasmid, which is administered into the peritoneal cavity, typically clears, I would say, within 24 hours and may last a little longer if it is formulated with a delivery system such as that in IMNN-001, where the nanocomplexes have a protective effect on the DNA. However, once the plasmid is taken up by the cells of the peritoneal cavity, such as macrophages or other immune cells or epithelial cells, it is internalized into the cell nucleus and can stay much longer, giving rise to long-lasting, up to several days, the levels of gene product, which is IL-12 in the case of IMNN-001. Yes, it is indeed the plasmid inside the cell that lasts longer, giving rise to the pharmacokinetic that we have seen with IMNN-001 of IL-12 and interferon gamma production. Stacy Lindborg: Thanks, Khursheed. I appreciate that. Operator, with that, please open the call for questions. Operator: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star and then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star and then two. We'll pause for a moment as the callers join the queue. We have the first question from the line of David Bouth from Zacks. Please go ahead. David Bouth: Hey, good morning, everyone. Stacy, I appreciate you answering that question that I had the other day. Sorry, I wasn't able to ask it in person there. Thank you for that response there. I wanted to start, actually clear something up to make sure I understood. You had mentioned that positive results in one of the interim efficacy in looking at the interim analysis would lead to a full approval, you think. Is that a full approval for all ovarian cancer patients, or would it be just for the HRD population? Stacy Lindborg: Yeah, you're clarifying that. I think that when we were talking about the ability to accelerate the analyses through the use of an internal interim analysis, I wanted to make sure that people understood that that was the acceleration of getting to results. If we are successful and we meet the statistical thresholds that are outlined and agreed to by the FDA, we would expect full approval in the group that we're testing. The trial is continuing in an all-comers population, then at the end of the trial, that would allow a broader label indication. I think it is really important to understand we're really reflecting the devastation of this disease and the need, as we saw. We know that we're also making rather conservative assumptions, power assumptions. Stacy Lindborg: It is very possible, like Giorgio spoke to, the likelihood of being successful at one of the two interim analyses. We want that urgency to be very clear. We want to be able to move forward rapidly with a BLA filing based on that data, and then to be able to allow for the product to be approved in that indication and accessible to patients. It would allow the trial to continue to the end and to have to then potentially expand to the all-comers population. Operator: Okay, thanks. That makes sense. Kind of keeping along the same theme, what P-value, or can you say what P-value needs to be hit at either the first or second interim analysis in order to be able to stop the trial if it's efficacious? Stacy Lindborg: Yeah, unfortunately, it's a little more complicated than just a raw P-value, and this is where Giorgio did a really great job of really highlighting the simulation results. They set complex operating characteristics that ultimately are needing to take into account kind of an information fraction of where you are in the trial and therefore appropriately control type 1 error rate. The logistics of it are very well documented, and there was a very large report that was submitted to the FDA that these simulations really documented proper control of type 1 error rate, and then all of the operating characteristics that the FDA would be keen to understand. It's not just a fixed P-value, and if you are interested in more, we can have perhaps another conversation on it. It's very well laid out based on where this would occur. Stacy Lindborg: Because when in the point of the trial, when the 50th HRD event, which is the trigger for the first interim, would occur, that's not a fixed point in time. It's an unknown that will evolve, and then that will affect these thresholds. Operator: Okay. Yeah, understood. Lastly, I believe it was Dr. Hazard had talked about pain management for when IMNN-001 is administered and kind of how that pain management has evolved, basically, with her experience with the drug. I'm just curious, is there a set protocol for that pain management at all the different clinical sites, or is it kind of up to the clinician's discretion? Stacy Lindborg: That is a really great question. Douglas, do you want to take that? Douglas Faller: Be happy to. Thank you for asking the question because, obviously, patient comfort is critical for us and for the ability of patients to get the drug. In patients who have ovarian cancer in the peritoneal space, they are often quite tender because of the inflammation that is there before the drugs start to work. Infusing anything into the space can cause discomfort for patients. This happened in some patients in OVATION II, and the physicians, in combination with Imunon, decided that rather than waiting for this to occur, we could prophylactically treat patients, give them some analgesia prior to the infusions, prior to even the first infusion. If there were going to be any discomfort, this would alleviate it. If it turns out it is not necessary later on, that could be stopped for individual patients. It has been quite useful, quite successful. Douglas Faller: We're not seeing this was this, and it's, to answer your question more fully, this is part of the protocol. This is mandated for all patients. This was also incorporated into the MRD study, and we have data from Dr. Jaziri's sites that he's managing that this has been very successful. They've not had problems with any sort of abdominal discomfort in patients. In Ovation III, we've not seen that either. The prophylaxis for potential discomfort with the infusion seems to be working very well. Operator: Okay, great. I appreciate that, and thanks for taking the question. Douglas Faller: Thank you. We have the next question on the line of James Malloy from Alliance Global Partners. Please go ahead. James Malloy: Good morning. Thank you very much for taking my questions. I had a question for Dr. Faller. One of the things you talked about on the R&D day was about the durability response in sort of speaking to the mechanism of action of triggering the immune system and some of the IL-12 expression in the fluid and tissues. Can you walk us through that a little bit, please? Douglas Faller: Very happy to. Please stop me if I'm telling you something you already know and it's not appropriate to your question. The problem with IL-12 delivered systemically, as you know, has been it's simply not tolerable. It's too potent. Like IL-2, you can't give it at high enough doses systemically, let's say intravenously, because of its, it's hard to call it toxicity. Let's call it adverse events. I don't call it toxicity because it is actually the intended activity of the cytokine. Patients have, just like IL-2, patients with third space, a lot of fluid outside of the vascular system, low blood pressures, fevers, etc. That's prevented IL-12, excuse me, and IL-2 from being used effectively. Here, we're delivering the drug where the tumor is, into the intraperitoneal space. That's where the ovarian cancer has spread in all the patients that we're treating. Douglas Faller: As Khursheed mentioned earlier, this is a gene therapy. The plasmid gets taken up by the tumor cells and also by the tumor microenvironment cells, the stromal cells, and express IL-12. IL-12 then induces interferon gamma and TNF alpha, two incredibly potent immune effectors that stimulate both the adaptive and the innate immune systems. The IL-12 levels in the peritoneal fluid we've reported in Ovation I and Ovation II go up by several logs. There's a tremendous amount of IL-12 and its downstream effector cytokines expressed in the intraperitoneal fluid and in the tissues, as you would expect, in the peritoneum. However, in Ovation I and in Ovation II, we've monitored IL-12 levels systemically, and we don't see increases in IL-12 systemically, no more than twofold. This is the basis for the remarkable safety we have. Douglas Faller: We're not seeing the kind of immune adverse events that everyone else who tries to deliver the drug systemically has seen. We're not seeing any cytokine release syndrome kind of events, which completely goes along with the fact that we're not elevating cytokines, IL-12 or its effectors, systemically. It's just where the tumor is in the intraperitoneal space. The durability, Khursheed already addressed the amount of time that the plasmid is expressed. We can see IL-12 levels in the peritoneal fluid for at least a week after a single injection, and we give the drug weekly, at least during the time that the patient's getting chemotherapy. The durability of responses, when I was pointing to the slides, was just showing that we give the drug during the chemotherapy, which is six cycles essentially, plus interval debulking surgery at the beginning of treatment for the patients. Douglas Faller: Yet we're seeing effects years later. We're seeing the curve separate. We're seeing a benefit for survival in patients. This is long after we've stopped giving the drug. This is consistent with what you would like to see, what you'd expect to see from an effective immune therapy. Once you've educated the immune system to kill the tumor, it should persist. You should not necessarily have to keep stimulating, although in the MRD study, we are exploring maintenance therapy to see if that would add additional benefit. James Malloy: Great. Thank you for that. One of the things that Stacy had mentioned, I think, as well as talking about the OVATION 3 meeting, the regulatory approval for the EU, any details on that process? Maybe also, I know you mentioned, Stacy, that obviously you are constrained by the amount of cash you have to run the trial. If you had more cash, you could run it quicker. If you had unlimited funds, how quickly could you run this trial? Douglas Faller: Stacy, maybe I could address, if you do not mind, the regulatory issues, and then you could talk about the financial ones. Stacy Lindborg: Please, go ahead. Douglas Faller: Okay. The issues in Europe are twofold, as I'm sure you know. One is getting the trial, excuse me, is getting the drug approved by the EMA. Equally important is getting payers to actually agree to support use of the drug in Europe. What payers want to see in cancer is survival. PFS is not something that traditionally, in my experience, payers are willing to pay for. Our endpoint is overall survival. We've already ticked the box that the payers would want to see. The study is designed in a way that should be completely acceptable to the EMA. I've had a lot of experience in dealing with the EMA and many other regulatory agencies outside of the U.S. We could open studies in Europe. Douglas Faller: It's not necessary for European approval, but let me turn it over to Stacy now with respect to what we'd like to do with adequate funding. Stacy Lindborg: Yeah, it's an interesting question. I can tell you that when you think about some of the remarks that Douglas provided that really characterize how quickly we're moving, I can promise you we're going to be very focused on advancing this trial and taking advantage of every opportunity that we can. We've done a number of different kind of internal forecasts. As I shared before, right now, our estimate is that we'll be able to fully enroll this trial in about three years. We have done a forecast that is as quick as two years. I think that is something that we put plans behind to consider how we would achieve it, and we believe that it is possible. Beyond that, I really wouldn't want to go too much further. There are ways that you could actually pull it in even further. Stacy Lindborg: I think it gives you an idea of the way that we're looking at this and ensuring that we will be ready and able to accelerate very quickly some of these proactive approaches with the CRO that we're working with that, interestingly enough and importantly, do not change the overall price that we expect to pay, including even pay the CRO. We're just advancing activities so that we'll be poised and we can actually see the site activations when we want them, rather than waiting to engage them at that time. Those are some of the operational strategies. James Malloy: Thank you very much for taking the questions. Stacy Lindborg: Awesome. Thank you. Douglas Faller: Thank you. We have the next question from the line of Emily Bodnar from H.C. Wainwright. Please go ahead. Stacy Lindborg: Hi. Thanks for taking the questions. First one, I'm curious if you're planning to share an update from the OVATION 2 trial, particularly the PARP inhibitor-treated patients in terms of median OS since in the last update. It was not reached yet. If so, when you might expect to do that? Second question, how many sites for the OVATION 3 trial are you expecting to be sites that were part of OVATION 2? Are those the sites that you're kind of targeting initially? Thank you. Stacy Lindborg: Yeah. Emily, thanks for both of those questions. Let me take a stab at both, and then if there are other points, Douglas, you could maybe add on. In terms of OVATION 2, in our protocol, we stated that we would monitor overall survival. We designated the period of time that we would continue to monitor it. It really puts us in a place where we're starting to wind down sites. We expect by the end of the year that we'll have the data fully refreshed and the sites that will be closing. I think at the end of the day, when you look at this trial, we know that the data that we've collected, even going to the very first interim across the all-comers, the median was observed in both treatment arms. We know the data was mature for very robust conclusions. Stacy Lindborg: I think I would say we shouldn't expect, nor would the medical community expect to see significant changes to these results. We will likely have this process really finalizing towards the end of the year and early next year. Douglas, I don't know if you have any kind of—you already commented on the reflection of how long we're seeing this effect past the treatment period. When we ultimately look at the size of separation, and at R&D day, we looked at some of the graphs that have come out of these recent immune checkpoint inhibitors where you see really no separation. Tell me your reflection as a clinician on the time periods when we were observing and did these two readouts. Really, were these appropriate in terms of when you would be expecting the separation, the phase of the curve to really be well-estimated? Douglas Faller: Certainly. You have actually already spoken to it, Stacy, that in Ovation II, the primary endpoint is median, well, a secondary endpoint was median survival in the entire population. That is when our initial readout, we achieved that information. In trials in cancer, once you have gotten median survival in your primary population, longer observations yield less and less information, I think. Curves with fewer patients on them start to become less informative. We are very pleased to be seeing the effects over time that we have seen. I think that the concept of using this drug in the neoadjuvant setting really was a remarkably smart choice early on in its development. This became of great interest at ASCO. Using immunologically active drugs in the neoadjuvant setting where there is still tumor there allows the immune system to be educated in the setting of the tumor. Douglas Faller: Using it later in an adjuvant setting when there's little or no tumor there, drugs even like checkpoint inhibitors, as was being realized at ASCO, are much less effective. I don't have anything beyond that to say, Stacy. Stacy Lindborg: Thank you. Emily, your second question was about the sites from Ovation II and maybe even I do not know if you were getting at the overlap or the total number in Ovation III, but we will have great overlap in Ovation II and Ovation III. Not surprisingly, we started with sites that were very strong enrollers, very enthusiastic about the trial. We see that certainly extending to many other sites from Ovation II. We will have new sites simply because we are planning to have up to 50 sites. We will ultimately look at the number of sites that we need to really stay with our forecast and keep enrollment going. We will plan accordingly. We have flexibility in the way the protocol is written that we can go higher if we decide we want to do so. Stacy Lindborg: It's a careful, you have to carefully manage not bringing in too many sites, really keeping your sites that are performing extremely well. The enthusiasm of these early sites, and I would say really the sites from Ovation II, not only from their knowledge of the product. You heard Dr. Thacker at R&D day actually comment on the fact that she's been working on IMNN-001 for almost a decade. She was involved in Ovation I. Ovation II now is, again, the study PI for Ovation III. Their confidence and conviction in what's happening in these women, which of course they see when they're doing surgery, they observe as they're meeting with them for years after enrollment in the trial. It's palpable, right? It's incredibly clear. They believe very much that the potential for this product to be transformative to care is great. Stacy Lindborg: It's really wonderful to see these clinicians that are also offering up to meet with new sites. They're very willing to share operational updates as well as really talk about data and what they've observed in patients over time. It really is kind of the best of both worlds. Stacy Lindborg: Thanks for taking the questions. Stacy Lindborg: Thank you, Emily. Douglas Faller: Thank you. Ladies and gentlemen, that concludes the question-and-answer session for today. I will now turn the call back over to Dr. Lindborg for closing remarks. Stacy Lindborg: Thank you. And thanks to everybody for joining the call. With OVATION 3 enrolling ahead of plan, we've talked about the compelling clinical and translational data from R&D day and also recent conferences, including SITC just last week. And active partnership discussions, Imunon is poised for multiple value-inflecting milestones. We remain diligent in stewarding the resources you provided, as I hope you're able to see very clearly in the queue, and are steadfast in our mission to redefine ovarian cancer treatment and deliver lasting shareholder value. So thank you all for your support and look forward to meeting again at the next quarterly earnings. Douglas Faller: Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for participating, and you may now disconnect your lines.
Reese McNeel: Hello, and welcome, everyone, to this Q3 presentation for Prosafe. I'm Reese McNeel, and I'm the CEO, and thank you for joining the presentation today. I would like to start the presentation today by just giving a little bit of a highlight of Prosafe again, reminding people who we are. Prosafe, we are the largest operator of offshore accommodation rigs. We currently have 5 accommodation rigs. We've been in this business for over 30 years, and we're one of the leading operators worldwide, headquartered in Norway, but with offices, as I'm speaking from here today in Rio and operations in the U.K. and Australia. Talk a little bit, I'd like to spend a bit of extra time during this Q3 presentation to talk a little bit about what we have been up to the last couple of quarters and particularly the last quarter. Prosafe has been through quite a transformation. We've got a new management team in place, and we've been really refocusing and repositioning the business. So I'll spend a little bit of extra time on that during this presentation. So as mentioned, we got a high-end fleet. All modern units that we currently have are contracted to 2027. We have a very leading position in Brazil. We got backlog extending into 2030, very strong market fundamentals. I will spend a bit more time on that during this presentation, particularly talking about what's happening on the tender side. We're driving -- we've set ourselves an ambitious goal to be the most efficient operator in the accommodation segment. And at the same time, we're exploring strategic and M&A opportunities, and I'll talk a little bit about why that is the case and why we are looking into that. Jumping back just slightly to Q3 and how we did during the Q3 specifically. I'm very proud to say that this was a quarter where we actually had all 5 of our units working during the quarter and 100% utilization in September. We got to go several years back since we actually had that. So I'm very proud to be here and to be able to say that all 5 of our units are working. But a good safety performance, 99% to 100% uptime during the quarter. And very happy to say that we are well on the way to getting Safe Boreas onto her gangway connection in Australia. She's on a standby rate from 1st of September, and we're now expecting her to be gangway down between the 10th and the 15th of December in Australia. Also Safe Caledonia, those who have been following us will see that she did have 2 of the 10 weeks -- sorry, 2 of the 12 weeks of options called. So we have 10 weeks of options remaining. I will say that we are very optimistic that several of those options will be called in the very short time and really impressed with how Safe Caledonia has been delivering for Ithaca. To the financials, a very good result this quarter as well, $12.8 million in EBITDA. I'll say that's before reorganization costs. I'll come on to some of the cost initiatives we've been doing, but in particular, part of that is restructuring the organization, and we did have approximately $1.5 million of one-off reorganization costs in the quarter. We completed the recapitalization in the quarter. I'll talk a little bit more about that to establish a sustainable cap stack. And we currently have a solid liquidity position at over $83 million. Looking a little bit ahead, we're still on track with our guidance at $35 million to $40 million, which we've communicated several months ago. I think the market is very strong. I'll spend quite a bit of time on that in this presentation in this quarter. And again, we're looking into more strategic opportunities. The refinancing, we talked about, I think, in the last quarter, but again, a highlight here for us. We have significantly reduced the debt on our balance sheet. We've gone from net interest-bearing debt of $400 million down to $200 million. Approximately, that's cutting almost the debt load in half. And in addition, we've obviously, through that exercise, gained extra liquidity. And I can say that we have a sustainable capital structure now in place with liquidity to get us through to meet these working capital and CapEx needs, which we have coming at us. So it's very pleased again that we were able to close this refinancing exercise early in Q3. The management team and the strategy. This is very important for me. We have been through a difficult time in Prosafe, but we are coming out. We're seeing the back end. I think we're very well positioned. If you look at the position in the market, we did in the past 12 months, extend the safe notice on a substantially better contract than she was before. So we are capturing the market potential that is there. We have gone from $6 million EBITDA to $28 million annual EBITDA on the notice contract. And I think what we see, and I hope I can demonstrate a bit of that in the slides to come, is that this market is actually very tight. There's a very high utilization. I think we will continue to see high day rates and potentially even increasing day rates going forward. At the same time, coming out of the restructuring, we got a new management team on board. We got a new Board. I think we're very focused on what we have outlined strategically, reducing the cost base, becoming the most efficient operator and really leveraging particularly our position in Brazil. And part of this initiative is obviously to reduce not only operating costs, but also our general administrative costs. And we've set ourselves an ambitious target of reducing that by greater than 15%. As I commented on, we have had some one-offs this quarter, and I think that's part of driving that. I think we already are on a good path to reach that 19% number on a run rate basis and in 2026. Little bit on the new management team. Very happy to say that we've got a very experienced team, very experienced Board, very interactive Board with Carey Lowe on board, who was at Valaris as the COO. We've got Monique, who's the Deputy CFO in Constellation with a really strong Brazil experience. We've got also some banking experience and some good experience with Knut from TechnipFMC. And on our side, you got myself, who've been with the company for 3 years. I was the CFO. I'm very pleased to step into the CEO position. And alongside me, I have Ryan, who's been with the company for 20 years. I think Ryan is Mr. Floatel, if I can say that he knows this market in and out. And Claudio is a long-term employee, I think is very focused together with myself and driving efficiency and supporting our Brazil business going forward. The fleet. During the last year, we have actually trimmed back the fleet. We sold the Concordia and we also sold the Scandinavia. So I think if we look at our fleet now, we are very much consolidated around the high-end fleet. We have the Safe Caledonia, which is working for Ithaca. She is a more unit. But with her as side, we are very focused now on DP3 high-end units. And if you just look at them and where they're able to operate, we operate in the harshest, most difficult environments, whether it's in Norway or down here in Brazil. I'll say that I was on board, for example, the Caledonia a few weeks ago. 15 odd wins, quite a lot of swell. The performance of these units is very impressive. And even in Brazil with high swell, DP3 units, follow target mode on a moored, on a turret moored unit with [indiscernible], we are able to hold position. So we have very high and high-performing assets. And those assets, as I mentioned, are largely booked. We have backlog into 2030 with the recent notice extension at a much higher rate. And we have the Safe Zephyrus, Safe Eurus and Safe Boreas all working and all booked out during 2026. So we're very happy about that backlog picture, and we have an eagle-eye focus, particularly going into '26 of extending the Zephyrus and Eurus. I'd like a little bit in this presentation to, as I mentioned, to go a little bit more in depth on the market and what is happening in this market because it makes me very excited. I think it's a very exciting market and a very exciting time that we find ourselves in. As we know, there has been some discussions about the oil price, the oil price has been down, some discussions about operators pulling back on exploration spend. I would like to say that Prosafe and in particular, the accommodation sector, we are very much a Brownfield maintenance-driven business. If you look at our operations, where we're earning our revenue, approximately 80% of that is coming from maintenance and operations of installed installations. So we are much more focused on what has already been installed, maintaining what's already been installed than we are on hookups, commissioning new projects. So I think that reduces our exposure to the short-term volatility. And I'll come back to that, our correlation is much more to the age and number of installations rather than sort of new developments. And I think that positions us in a very positive place in the market despite the short-term fluctuations. Looking at the global market of accommodation, we define the accommodation fleet as 31 units. These are the units, high-end units at the top, and we have some lower-end units. I think some of our competitors, they define the market a little bit more narrow. We define the market as those players who we see participating in tenders or participating in RFIs, RFQs where we are also participating. So this is the sort of in-scope competitive fleet and how we see it today. It's a relatively limited 31 units. One thing I will say is that this market is quite fragmented. We are the largest player in this market. If you look through, we have several one asset owners. And despite there being sort of a significant increase in the number of units, we've also seen a number of -- an increase in the number of owners. And we feel that ourselves as the largest player with the sort of market position that we have and the strength of our operations that we should be well positioned to be able to consolidate some of this market. We know that these units for some of our competitors are noncore. And therefore, we think there is a positive opportunity here when it comes to consolidation and M&A. There's a lot of SG&A floating around this marketplace, and we think that, that can be -- we can create a much more efficient marketplace for all participants. When we look at that market and these 31 units, where are they? Where are these units? Where are these units working? Brazil. Brazil is the main focus of the accommodation market today. It's approximately 50% of all active units. If you look there, we've got 13 units currently in South America at the moment, they're actually all in Brazil. By far, this market has shifted. It used to historically be a bit of a North Sea market. It has shifted. It's now very much so a Brazilian driven marketplace. And on the back of that Brazil demand, we see that -- which has increased, I'll come on to that in my next slide. This Brazil demand is driving us to all-time highs in across the accommodation segment. So if we look at the contracted demand at the moment is at a 10-year high. That means that we haven't seen this much demand in the last 10 years. You got to go back to sort of the last cycle before you can see this higher demand. And we see utilization rates getting up to 90%, particularly on the high-end units. And I think when you see utilization going above 80% into 90%, that's when we really tend to see historically, and we see it now, good increases in day rates going forward. And this, I would like to highlight is on top of the fact that there has been an increase in the supply. So the supply has been absorbed and utilization remains at a 10-year high and at approximately 90% for the high-end units. So a very positive market dynamic for us. What is driving that? As I mentioned, a key driver to this is Brazil and a key driver to this is not necessarily the installations or new developments, which is the installed base of FPSOs in Brazil. There are 67 floating production units in Brazil. There's a forecast that's going to go up to over 80. When we are working in Brazil, what we see is that after approximately 2 years of new installation, they are getting serviced by an accommodation unit. It's a quite harsh environment. Some of the players here, Equinor, others, they mentioned to us that the corrosiveness of the environment in Brazil is 2x to 3x what they see in the North Sea. So the maintenance demand is very high, and these very high-end FPSOs producing 180,000 to 200,000 barrels a day. They require more extensive maintenance, more beds and it's in a relatively difficult met ocean environment, and that's where the demand for high-end accommodation units is really picking up. And you see that on the graph on the right. This is a graph that shows from 2024 peaking up into 2026, we see a substantial increase in the actual demand for units in Brazil. And this is what is sort of being that -- as I mentioned, with this being 50% of the market, this is driving the utilization and driving the rates much higher. We, as Prosafe, I think it's very fair to say we have seen this trend for a couple of years out. We strategically positioned the Safe Zephyrus down here a couple of years ago, and we are proactively taking initiatives to align our organization to this growing market and be best positioned to capitalize on this. So we've taken some actions even recently. We've closed -- recently closed our Stavanger office. We have an office in Oslo. We're also closing our Singapore office, and we're moving many of our core functions to Brazil to align ourselves with this growing market and also to be much more cost efficient in serving this market here where we do see the most opportunities going forward. What does that really mean for us? When we say that the market is increasing, Brazil is a big demand driver. How are we going to actually capitalize on that and drive improved earnings, improved EBITDA shareholder value? I think the key to this is we have 2 units, the Safe Eurus and Safe Zephyrus. I think they're both very well positioned with contracts rolling over in '27. They're very well positioned to capitalize on this increase. We see the trend. You can see it in the charts here. Again, notice from 75 to 140 a day. When we see that there's additional tenders coming, not only from Petrobras, what we see historically from Petrobras is that they are out retendering or negotiating extending contracts approximately a year before units roll off of existing contracts. For us, these contracts, Eurus rolling off in April, Zephyrus rolling off in September of '27. So that means that realistically, we think that Petrobras is going to be in the market. There's going to be concrete discussions, tenders, negotiations really starting here in the first half of '26. And I think not only do we see demand from Petrobras down in Brazil, but we also see an increase in demand from others. Recent RFI from MODEC for multiyear accommodation job. We see also Karoon, Brava, SBM, Yinson, many of the other players here, PRIO, all now using accommodation services in Brazil. So it's not only a Petrobras game, but it's also a growing market, again, driven by the need to support this installed FPSO base, which is increasing. Now when you look a little bit further over the horizon, you have to say that the real planned FPSOs, the number of FPSOs that are sort of in planning, I'm not talking about the number of installed or existing FPSOs, but those which are planned in the future, again, where is this demand coming from? What you see is that future planned FPSOs, actually, it's the rest of the world that's dominating looking over the horizon. And here, we are talking about Guyana, potentially Suriname, Namibia, again, locations with a met ocean condition or environment relatively similar to Brazil. And I think what we're going to see is that the combination of Brazil with a high installed base and new additional FPSOs coming into this market in new markets, which, again, they're already planned. I think we're going to see a very solid base upon which we should see rates increasing. There are actually tenders out in these markets as well. Recent tender now from SBM for work in West Africa, and there's currently several units working in West Africa. So -- and one unit almost consistently working in Guyana. So this is actually happening and coming to fruition. And we see the similar day rate trend, particularly looking at the rest of the world that we've seen in Brazil, maybe not such a steep curve, but still steadily increasing also in these markets. So we're going to wrap up on the market side, I think we're very optimistic and positive on the market, driven in large part by installed base and increasing number of FPSOs in Brazil and a supply, which is relatively limited at 31. So we're very positive that we will continue to see market rates, and we are very well positioned as Prosafe to capture that. Little bit on our operations and what we've been doing, particularly in the quarter and looking a little bit ahead. Again, in the quarter, very good utilization, 86%. As I mentioned, all the units operating at a certain point in this quarter, which is the first time many years. Looking a little bit ahead, I think this quarter is also going to be very good, very high utilization expected, 88%. And as I mentioned, expecting shortly to have a full day rate on the Safe Boreas in Australia and expecting also to know a little bit more on the South Safe Caledonia options, which cross fingers, we should see more of those options called and increasing utilization also in Q1 '26. Backlog, I think this very much ties into what we're talking about in the market. We're seeing utilization at 10-year highs. We're actually seeing our backlog. We've got to go quite a way back. We got to go all the way back to 2017 to see the backlog level that we have now. So we are very focused on expanding that backlog, particularly as, again, re-contracting on the Eurus and Zephyrus, but it's good to see that actually it's not only that the market is highly utilized, but we're seeing the backlog coming through. Caledonia, I'd like to highlight there. Again, these 10 weeks of options. I think we're quite optimistic that we will see some additional options called going forward. And with the performance that Caledonia has had on that field, we are optimistic that we'll also be able to find work for her in 2027 in particular. A little bit on the financials for the quarter. Income, $42 million, I think very solid income in the quarter. I think some of that is actually -- is reflective of the fact that Boreas is on hire on the standby rate. So we do start to allocate the mobilization fee, which we have received. So that's a positive impact on our income. And we also have now a significant portion of reimbursables coming through, the reimbursables for the Boreas heavy lift contract and other reimbursables largely related to the contract for Boreas with Shell down in Australia. Income statement. The one thing to highlight on the income statement from my side for this quarter is the financial gain related to the refinancing. I think that has taken us again from being a little bit undercapitalized to having sufficient capital in the balance sheet to go forward. So in the balance sheet, again, cash position, $83 million, solid position coming out of the restructuring and a significant decrease in our net interest-bearing debt, again, having that position from where we were the previous quarter. Very important for me and very much on my mind, cash flow. If we look at the cash flow in the quarter, it was, of course, heavily impacted by the restructuring. We got some new money in. We had to pay, of course, or we closed out some of the refinancing costs or costs associated with the refinancing. So there are some impacts in the cash flow from that. But I think when we look at EBITDA, CapEx and net working capital, very much driven this quarter by the mobilizations. So we have invested a significant amount of working capital into Safe Boreas and in preparation for the Safe Zephyrus SPS, which should start here in a couple of weeks' time. So major working capital movements and CapEx are associated with these projects. Good cash position at the end of the quarter, $83 million. And if we look a little bit ahead, I do think that we're in a decent cash and liquidity position for the coming quarters. Looking a little bit at where we are as far as potential. As I mentioned, we see a significant increase in rates. We've seen rates go from $8 million run rate to $28 million run rate. If we take those sort of run rate EBITDAs per vessel, and we mark-to-market the contracts which are coming up and we take into account the cost-saving initiatives which we are driving today, we see that there's an EBITDA uplift potential from where we are today at $35 million to $40 million to $90 million to $100 million looking out in a couple of years. So significant potential in driving the rates up and also that would lead to a significant reduction in our net interest-bearing debt position. So I think we're in a good position again to capitalize on this increase and to see a significant improvement in earnings and a significant decrease in our leverage and a strong value creation for all of our stakeholders and our shareholders. This is also supported by the rig values. If you look sort of where we are EV-wise, it's significantly lower than the broker values in the market and also, of course, significantly lower than the replacement cost on these vessels. So I think as we see the market pick up, utilization pick up, rates pick up, EBITDA pick up, I very much expect that the valuation here will increase significantly and come much more in line with broker values. I'd like to just wrap up a little bit with a couple of slides on where we are in the outlook and what some of our strategic objectives are. On the outlook, we reiterate our guidance, $35 million to $40 million. We do expect Boreas to be on hire -- full day rate on hire. She's on hire on the standby. We expect it to be full day rate sometime between the 10th and the 15th of December. We're expecting Safe Caledonia to stay working a little bit longer. We got options extended into mid-December, very much expecting that this will take us a little bit further. And looking a little bit into 2026, I think we're going to have Safe notice on a new contract into 2026. And also, we're going to have, I think, a good utilization from the rest of the fleet with Safe Zephyrus having completed her SPS, Safe Boreas on a full contract. So I think we've got a good outlook looking into 2026 as well. I would like to talk first before I come to sort of my strategic priorities, I'd like to reiterate a bit again what we're very focused on is sort of a new Board, a new management team. I think we've achieved a lot. We've got an uptick in the rates and uptick in the EBITDA run rate, particularly on notice. We're actually delivering on that. I think we have taken some tough cost reduction measures, reducing both senior management and the organization, realigning the organization to the Brazil market where we see a really strong potential. We have also a cost focus now on improving our operational OpEx. We've got long contracts in Brazil. We can actually really focus on driving cost efficiency in our operations. I think we're doing some of that. We got key projects kicked off in procurement, key projects kicked off in sort of some of our maintenance and inventory management. So I think we are very much focusing on becoming this most efficient operator. When we look out, key focus, key priorities, continuing to execute on what we've been doing, safe operation, high uptime, get the backlog, as we talked about at higher rates with the reset of the Eurus and Zephyrus coming, focus on keeping our capital structure, it's all about good execution on the projects that we have coming. A final key priority for us is continuing to pursue strategic opportunities and M&A and what we continue to see as a very fragmented market. I would like to highlight that we intend to go on a non-deal roadshow in the coming weeks where we look forward to presenting the recapitalized and reenergized Prosafe to many of you. With that, I would like to thank you very much for participating in this presentation, and I will be back very shortly with the Q&A. Reese McNeel: Welcome back. I have a couple of questions here. So let's get started. The questions are from Braga at Clarksons Securities. And Braga is asking if I can give a little more color on Safe Caledonia and what is the expected outcome of the unit as it rolls off its current contract? I think as I mentioned previously, we are very positive that the vessel will continue working. We're expecting additional options to be called. And I think that she will be working into early 2026 with Ithaca. Beyond that, our expectation is that 2027 will be quite positive for her. We see an improving market and opportunities in 2027. We're still looking after opportunities in '26, but I think the most likely outcome is that once you rolls off the current contract, we will probably be looking at a contract in 2027. I don't see that I have any more questions. So with that, I'd like to thank everyone very much and look forward to seeing you all again either on the upcoming non-deal roadshow or at the next quarterly presentation. Thank you very much.
Operator: Good afternoon, and thank you for joining the PetroTal Q3 Webcast. Manolo Zuniga, President and CEO; and Camilo McAllister, Executive Vice President and CFO, are your presenters. You can submit questions via the platform, and we will do our best to answer as many of these as possible in the time available. Without any further ado, I'll hand over to Manolo and Camilo. Manuel Zuniga Pflucker: Thank you, Mark, and good morning, everyone, and thank you for joining PetroTal's Third Quarter 2025 Results Webcast. My name is Manolo Zuniga, and I'm the President and CEO of PetroTal, and I'm joined today by Camilo McAllister, our Executive Vice President and Chief Financial Officer. Today, we're walking through the financial and operational results that we published overnight. If you access this webcast via the link included in today's press release, you should be seeing our slide presentation on your screen. Before we get started, I'd like to point out that there are disclaimers located at the end of the main presentation and also on our website. We encourage you to review those after the prepared remarks. I will now pass the microphone to Camilo to give a brief overview of our third quarter 2025 financial results. Camilo McAllister: Thank you, Manolo. Turning to Slide #2. I wanted to give a quick summary of our third quarter financial results. The message may have been lost in the rest of the press releases today, but it's worth noting that our financial results were actually quite good at this quarter. Our production averaged over 18,400 barrels of oil per day in the third quarter. which was a 21% increase over the same period last year. We benefited from unusually wet weather this year, which boosted river levels compared to 2024. We were able to export essentially 100% of our production capacity during the dry season this year, which was a very good outcome. Oil prices rebounded a little bit in the third quarter, but our net operating income fell slightly compared to the prior quarter. Even though our operating costs normalized following some expenses from pump replacements in the second quarter of 2025, our transportation costs were a bit higher this quarter. Lastly, even with a slight increase in capital spending, we still generated just over $12 million in free cash flow during the third quarter bringing our year-end-to-date free cash flow to more than $87 million. We have already returned approximately half of that free cash flow to our investors through dividends and buyback prior to the suspension of our fourth quarter dividend, which we also announced today. I will now pass the microphone back to Manolo to walk through our operational results. Manuel Zuniga Pflucker: Thank you, Camilo. Moving to Slide 3. I would like to have an open discussion about some of the operational challenges that we are facing right now. Overall, I think our track record has been very good for the past few years. But unfortunately, we seem to be dealing with a number of headwinds at the moment. We have already disclosed a series of pump failures and tubing leaks in 2025. And while I have been very happy with the swift response from our operational teams, the reality is that we need to prepare for the possibility that we may experience additional failures in 2026. Our people are preparing contingency plans right now to ensure we can minimize production next year in the event that more wells fail. Water handling has always been an important consideration for PetroTal, but the issue has become more pressing in 2025 after we brought 7 wells on stream last year. If you consider that each of our horizontal wells produce more than 10,000 barrels of fluid per day, the excess water handling capacity must be built out in advance of our development wells. Otherwise, we may have to shut in existing production to accommodate new wells, which is obviously not ideal. Moving into 2026, we had originally expected our drilling rig to arrive at Bretaña early in the year. However, for a variety of reasons, that time line has now been pushed back by at least 6 months with limited ability to generate organic production growth for the medium term, it seems clear now that our base production is likely to decline throughout the first half of 2026. When we combine the impact of falling production with a weak oil price outlook, we have been faced with some difficult choices as we finalize our 2026 development program. We would like to resume development drilling as quickly as possible, but ideally, once we have sufficient water handling capacity in place. The team is working on enhancing the activity on our existing water disposal wells to bring back up to 5,000 barrels of oil per day of currently shutting production. Turning to Slide 4. We have tried to summarize the range of production outcomes we are seeing in our development plan right now. The dark blue line shows our actual monthly production so far in 2025. As you can see, the general downward trajectory is expected to continue until at least the middle of 2026. The dotted green line shows our best case production scenario, which assumes we are able to move a rig to Bretana by the middle of 2026. In this scenario, we believe it would still be possible to drill and complete 3 development wells by the end of the year. Depending on production deliverability, it's possible PetroTal would exit 2026 with production in excess of 20,000 barrels per day. Enhancing our water disposal capacity, as mentioned before, will put us somewhere in the middle of both curves. The lower dotted blue line shows our low case production scenario, which basically assumes we are not able to complete any drilling activities in 2026. I think this scenario is unlikely for [indiscernible] possibility that we do not drill any wells next year. In this case, we would likely center our capital program on investments in water handling capacity, preparing for improvements in oil pricing in 2027. I should point out that we are also considering other scenarios that are not pictured here. For example, it's still possible we could send a drilling rig to Block 131, where we don't have to invest in water handling capacity before bringing new development wells. We are also looking at options to secure a third-party drilling rig, which will give us more flexibility to resume drilling in the event that our own drilling rig continues to be delayed. In any case, we plan to finalize our 2026 budget in January, at which point, we will provide more specific details on our development program. So please stay tuned. I will now hand the microphone back to Camilo to discuss the financial implication of our announcements today. Camilo McAllister: Thank you, Manolo. On Slide 5, we have prepared a summary of the initiatives we are undertaking to preserve liquidity as we navigate this period of uncertainty. Although we have a rough idea of the activities we must undertake in order to restore production capacity at Bretana, the reality is that we won't know our through funding requirements until we have finalized our 2026 development plan. However, we do know that with production declining and considering the prevailing outlook for oil prices, we would not be able to support both a reasonable development program and a regular dividend in 2026 without substantially drawing on our available cash reserves. So at our Board Meeting this week, when faced with a decision to let approximately $14 million out of the company in December, we felt it was in the best long-term interest of PetroTal and its shareholders to suspend the dividend immediately. I would like to stress that dividends are not the only lever we are pulling to preserve liquidity. Our Board of Directors has given us a clear directive to cut costs so that we are better positioned to return capital to shareholders at a wide range of oil prices. We will immediately focus on OpEx, where we have a very high fixed cost base at Bretana. We will also be targeting substantial G&A cuts as this is a metric on which we have not compared favorably with our peers. We will provide additional color on our cost-cutting initiatives with our 2026 guidance in January. But the reality is that any savings we achieve will be paled in comparison to the $55 million of dividends that we pay out annually. The simple fact is that dividends are by far the most powerful lever that we have at our disposal to preserve liquidity. We certainly hope to resume our return capital program as soon as possible. But that would only occur once PetroTal has achieved a structural reduction in its cost base. I will now pass the microphone back to Manolo to provide some closing remarks. Manuel Zuniga Pflucker: Thank you, Camilo. I would like to wrap up by pointing out that although our stock is understandably not reacting well to our announcement today, our conviction in PetroTal's investment case remains strong. As shown in Slide 6, the challenges we're experiencing right now are entirely aboveground issues. I would like to remind you that our team have resolved many big issues before, including COVID and multiple river blockades. Right now, we're working around the clock to resolve our current issues as well. Bretaña is still a great asset, and I am confident that the barrels will still be waiting for us once we have expanded our water handling capacity, resume drilling and oil prices have improved. In the meantime, we are well capitalized to wait things out while we formulate a sensible development plan for the Bretaña field. PetroTal has drilled 19 horizontal wells at Bretaña, and we still have 16 wells left out in our 2P reserves, plus underdetermined amount of inventory in the VS-1 formation. In other words, we're still very much in the middle of this [indiscernible]. These new wells, especially those in the VS-2 sand will require additional water disposal investments. The first 19 wells have seen Bretana generate over $400 million of free cash flow, of which we have returned more than $155 million to shareholders, and we paid a $100 million bond. These are real tangible returns that we have generated for shareholders and which we hope to replicate again in the future. In conclusion, I would like to thank our shareholders for their ongoing support. We look forward to providing more details on our 2026 development program in January. That wraps up our prepared remarks. I would like now to turn the call back to Mark for questions. Operator: Thank you, Manolo, Camilo. So first question, where is the new drilling rig? It's been over a year since it was supposed to arrive on site. Why didn't you rent the old rig for a longer period until the new one was in country? Manuel Zuniga Pflucker: The rig is in Houston in Conroe, Texas. It was supposed to arrive about midyear this year. So it's going to be about a year delay. And the old rig is decommissioned. And the old rig, we cannot use it for the new Bretana wells, which is why we decommissioned that rig. Operator: Can you share the scenarios or assumptions that led the Board to the conclusion that dividend had to be completely suspended? Could 2026 estimated CapEx exceed $100 million despite only 2 wells being drilled? And any guidance on 2027 CapEx? Camilo McAllister: So I mentioned in the remarks just now, we shared a couple of production profiles. Let's hypothetically assume a $60 oil price next year and a 15,000 barrel a day average production. With our current cost structure and discounts to Brent, that would mean the company would have a total source of roughly $175 million. And we have a starting cash balance, say, of $100 million for next year. Now our uses and that we have to pay interest, taxes, debt amortization, CapEx at CapEx levels, say, around $130 million, that leaves our ending cash at about $16 million. We have spoken to all of you in the past that we want to maintain at least $60 million in our cash flow. That is a little bit too conservative. But to us, it's prudent because we don't really know what's going to happen to oil prices next year. So as we finalize our budget, we want to make sure we have enough liquidity to have a good year. Operator: Thank you, Camilo. Is water handling capacity maxed out? And how is this level compared to expectations a year ago? Manuel Zuniga Pflucker: The water handling capacity, it is currently maxed out. And part of the plan is to be able to expand that on an ongoing basis. And the target right now is to bring it up to 240,000 from the current 170,000 barrels per day. And as we drill more wells, we're going to have to continue expanding that water handling capacity. It is part of the plans. It is just taking longer to implement all of that. Operator: Okay. Next question. Please tell us about the leakages on the 5 wells. Does this indicate that preventative work will have to be done on the other older wells? Manuel Zuniga Pflucker: The issue with the tubing that brings the oil up to the surface is that we have a corrosion caused by CO2 in the oil and the water. And that's -- the chemicals that we were injecting we're not reaching the proper point. So we have now -- we understand now the issue. We have already replaced a number of pumps where we have provided the corrective measures and the ongoing cooling campaign will do that. Of course, there are other wells that were set up in the past. Right now, we don't see any evidence of any failures. So we're hoping that nothing happens next year, but we just wanted to caution our investors that maybe we'll have more than one well that will also fail because of the same situation. But the important thing is that we now understand the issue, and we have taken the corrective measures. Operator: What happened to you expecting between 500 and 1,500 barrels a day in additional production from Los Angeles after the workover? Manuel Zuniga Pflucker: When we did the workovers, we noticed that the existing cement behind [pipe] was actually not completely stopping the water from below. And that then has forced us to evaluate how to remediate that while we plan to bring a drilling rig to start drilling an initial well -- development well in Los Angeles. So that's why production at Los Angeles has not increased. But now we have also a good understanding of what's going on, and we plan to ideally drill a well next year. Operator: Are you going to buy back shares at these low prices? Camilo McAllister: We will continue to evaluate. I mean, our message today was clear in suspending our return to shareholders, and this is obviously one way of doing it. And depending on what share price does, it's something we continue to evaluate. Operator: Thank you, Camilo. What are the reasons behind the equipment failures, quality of product, poor installation, et cetera, will they be identified as possible risks beforehand and how can you ensure they don't happen again? Manuel Zuniga Pflucker: As I mentioned before, we now understand why is that the chemicals were not reaching the proper point. And now that we are changing the pumps and the tubings, we are actually setting up the electric submersible pumps much, much higher. That also reduces the cost of these replacements. It also reduces the amount of energy that we need to lift all of the fluids as the pumps are much, much higher and also allows us to ensure that we have the chemicals at the right entry point, and we should not have issues in the future. Operator: Okay. What's PetroTal's all-in corporate breakeven oil price, including all costs and debt finance? Camilo McAllister: From a cash perspective, is about $60 per barrel. Operator: Thank you, Camilo. There's an exploration commitment to drill 2 wells in Block 107 by February '27, will today's update affect this commitment and any update in finding a farm-out partner? Manuel Zuniga Pflucker: The commitment that we have, we plan to have an extension given to us. So that will give us more room to maneuver. And we continue to try to find a partner or partners to come in. There's a couple of companies looking at information. So we will continue looking to be able to drill a well in the future. Operator: Can you explain delays behind the rig? You didn't explain why it was going to be delayed by at least 12 months. Can you expand at all? Manuel Zuniga Pflucker: Yes. We had issues during the commissioning of the rig. We ended up switching contractors, and that has delayed the process all of this time, unfortunately. So when you do a change in contractors, there's always delays, as you can imagine. Operator: Okay. Can you give any more guidance on how much CapEx you may spend on increased water handling capacity? And when? And has this expectation changed over the course of the year? Manuel Zuniga Pflucker: The expectation, it doesn't change. We have a plan that we try ideally to have the water disposal capacity at about the same time as we have -- we drill new wells. I have explained this since I raised the initial capital 8 years ago. Unfortunately, it's always difficult to have a perfect match. And so now, as I mentioned earlier, from the 170, we want to go to the 240, eventually, we're going to go to the 300 as more wells come in. Operator: Thank you, Manolo. Next question, it sounds like the need for increased water handling facility has been a bit of a surprise. Have the recent wells been seeing higher water cut levels than you expected? Manuel Zuniga Pflucker: The water handling facility has not been a surprise. We always knew this. I will always give examples to our investors that we have 20 wells, you're going to have to manage 200,000 barrels of fluid. And that's a 10,000 per well. If the wells produce 15,000 barrels per day, then you're going to have 300,000. So that's always been that. Our original 3P case had a total of 20 wells. So I will provide that example to the investors. Amazingly, we are now surpassing the original 3P case. That's something I promised investors that we would do, that we are limited right now on total fluid handling of about 200,000, which, again, initially, that was my 3P goal, 200,000. Right now, if I open all of the wells fully, we will be at 300,000. So we're short. So we need to carry up to add more handling capacity. We believe we can go up to 240,000, and that will allow us to open up oil wells to bring an additional 5,000 barrels of oil per day in the next few months, and we're working on that, which is why in that graph in the presentation, I mentioned, with that, we will be somewhere between the 2 curves as shown. Operator: Thank you, Manolo. Looking at the reserves auditors 2P profile and future development cost at year-end 2024, how much peak water handling capacity were they assuming? And how much of the $645 million of the future development cost in the 2P case was for water handling? Manuel Zuniga Pflucker: How much was water handling? I will need to go back and check that. I can -- I see the person that asked that question to answer that. I don't have the number exactly with me. But again, given that the wells on average produce about 10,000 barrels of fluid, on the 2P case, we have 32 wells. So we're going to need to manage 320,000 barrels of fluid per day and that is the follow-up goal. So from 170, 240, 320, and then we event -- actually, of the 1P case nowadays is 32 wells. The 2P is 40 wells. So that will mean that we will go to 400,000 in the future and beyond. And the more we can process, the more oil we can produce and the more money we can make because here, we are to add value, not only production. Operator: Okay. Thank you. How much CapEx does the low case full year '26 production profile of 12,000 barrels a day assume? Camilo McAllister: We will provide that guidance in January as we finalize the budget. Operator: Thank you, Camilo. And a follow-on, in light of production and the rethink on development, how are you seeing 2P reserves directionally versus year-end 2024? Manuel Zuniga Pflucker: Well, we have -- we are going to end up producing about 7 million barrels this year. And given that they have been no drilling, I imagine the reserves are going to drop accordingly. So 2P reserves were a substantial number of 108 million barrels. So we are going to still have a lot of oil to be produced. As mentioned in my remarks, we're in the middle of the game. Operator: Thank you, Manolo and Camilo, if you want to move on to any closing remarks at this stage. Manuel Zuniga Pflucker: Well, I want to thank our shareholders for all their support. As we have mentioned, we have some headwinds against us right now. As also mentioned, these are all aboveground issues that we need to tackle and we are tackling. I have promised also investors that this project was going to be a free cash flow machine that requires that we complement the number of wells with the water handling capacity because it is to be truly a water -- a free cash flow machine in the future. So this is a hiccup that we're going to have for a year or so, and we will try to go back to paying dividends as soon as possible. Well, with that, I want to thank everybody. Camilo McAllister: Thank you, everyone.
Operator: Good morning, and welcome to LPA's Third Quarter 2025 Earnings Conference Call. My name is Jeannie, and I will be the operator for today's call. [Operator Instructions] Please note that this call is being recorded. [Operator Instructions] Now I would like to turn the call over to Camilo Ulloa, Investor Relations. Please go ahead, sir. Camilo Ulloa: Welcome to LPA's Third Quarter 2025 Earnings Conference Call. My name is Camilo Ulloa with LPA's Investor Relations team. Joining me on today's call are Esteban Saldarriaga, our Chief Executive Officer; and Paul Smith, Chief Financial Officer. Before we proceed with a review of LPA's financial and operating results, please note that the information presented during this call is intended for informational purposes only and does not constitute an offer to buy or sell any securities. Forward-looking statements made during this call are subject to a number of risks and uncertainties, which are discussed in LPA's filings with the SEC. Our actual results, performance and prospective opportunities may differ materially from those expressed or implied in these statements. We undertake no obligation to update or revise any forward-looking statements after this call. We have prepared supplemental materials that we may reference during the call. We encourage you to visit our website, ir.lpamericas.com to download these materials. Please also note that all comparisons that we will discuss during today's call are year-over-year unless we note otherwise. Esteban will begin today's quarterly review. Esteban, please go ahead. Esteban Gaviria: Thank you, Camilo, and good morning, everyone. Thank you for joining our results call. Our international logistics platform continued to perform very well in the third quarter, delivering mid-teen revenue growth, driven primarily by Peru and Colombia, where domestic consumption remains healthy and leasing conditions highly favorable. Although not observable in our 3Q figures, just last week, we leased the remaining available space in our operating portfolio in Bogota to a now cross-border customer, one that is renting space in Costa Rica. This is another clear indication of sustained demand and customer preference for our high-quality logistics facilities and the benefit of our regional model. Also, we expect the leasing of our Bogota facility to take us to full lease status by the end of 2025. It's important to highlight that Mexico contributed to the 14.3% revenue increase in the third quarter, supported by our recent acquisition of 2 logistics facilities in Puebla, which are anchored by DHL under a 5-year dollar-denominated lease. This marks the first of many investments we expect to make in Mexico, both organic and inorganic as we systematically and thoughtfully expand into this large and attractive market. That expansion enables us to grow alongside our existing multinational customers while positioning us to win new ones that operate across multiple jurisdictions where we have a presence. As a reminder, we plan to grow in Mexico through strategic purpose-driven partnerships, such as our collaboration with Alas and the recent acquisition of the Puebla facilities. By combining our partners' deep local market insights with LPA's operational and institutional expertise, we can acquire mission-critical logistics assets in ideal locations and couple this with our development capabilities when supported by market conditions. In some cases, partners may also contribute land, similar to one of our latest developments in Costa Rica, a 750,000 square foot facility that represents a high-value project, the financing of which we arranged with local equity investors, thus enhancing LPA's rate of return while enabling us to continue serving customers that are growing in this market. We remain mindful of uncertainty stemming from evolving tariff policies in Mexico. However, recent data is encouraging. Vacancy levels in key northern markets such as Juarez have begun to abate. Closing rents remain resilient across most submarkets, especially in Mexico City, and net absorption continues to recover. Importantly, our investment strategy in Mexico is initially focused on submarkets driven by domestic consumption, the same resilient demand profile that underpins our success in LPA's foundational markets. We continue to find attractive opportunities where demand for premium logistics facilities remain strong and which we are continually assessing. Turning to the other markets in our asset portfolio. We are advancing several high-quality developments. Construction at Parque Logistico Callao in Lima, Peru is moving ahead efficiently with Building 300 already delivered on November 3 to one of the world's largest food and beverage companies. To our knowledge, this is the first LEED Gold logistics building in Peru and attests to the demanding specifications that only a company like LPA can credibly deliver on time and on budget. Without a doubt, this is a significant milestone in elevating the quality and sustainability of logistics infrastructure in the region where LPA is a leading operator in this compelling market segment. We're also progressing with construction of Building 200 on that same complex and where 75% of the GLA in both buildings is pre-leased under dollar-denominated contracts that will contribute to rental growth in 2026. Returning to our third quarter results. Revenue for the quarter reached close to $13 million, driven by higher leasing rates as we mark our portfolio to market by the addition of newly delivered facilities and also by robust occupancy. We ended the quarter with 98% of our GLA under contract, a testament to the strength of our markets and enduring customer relationships. Third quarter NOI was also gratifying, increasing 8.7% to $10.4 million compared to third quarter 2024. For the first 9 months of 2025, revenue and NOI grew 11.2% and 6.2%, reaching $36.4 million and $29.4 million, respectively. With leasing renewals for the next 12 months now completed across our operating portfolio, we have a solid operational foundation and strong visibility heading into 2026. We, therefore, continue to envision sustained double-digit revenue growth. On the cost side, we are pleased to highlight that SG&A decreased 5% year-over-year. We expect expenses to remain relatively stable, creating meaningful operating leverage as we further expand our property portfolio, roll over leases to market rates and thus bolster revenue generation. Before turning the call over to Paul, I think it is important to address the recent performance of LPA share price. Since the expiration of the 18-month lockup period on September 27, as explained in our filings and related to legacy shareholders from our business combination last year, our stock has faced notable pressure. While volatility can be expected around the lockup event, our focus remains firmly on execution. Moreover, our fundamentals, continued strengthening quarter-over-quarter and our strategy is delivering clear results. We're also actively enhancing our communication with the market to help ensure that investors see the depth of our operational progress, our growing profitability and the long-term value embedded in LPA's expanding international platform. Most importantly, we remain confident in the trajectory of our business. Even as we navigate industry and market headwinds that arise such as the slower-than-expected easing of interest rates and noisy political headlines, we are steadfast in advancing our strategic plans, and we are doing this from an advantageous position. And when monetary policy, especially in the U.S., eventually turns into an economic tailwind, we expect the underlying performance and strength of our company to be even more visible to the market. With that, I'll turn it over to Paul to discuss our third quarter financial results in more detail. James Smith Marquez: Thank you, Esteban, and good morning, everyone. Colombia and Peru drove the double-digit increase in our consolidated revenue, which was $12.9 million in the third quarter and in line with our forecast. Their rental revenue increased 17.6% and 16.9%, respectively, while Costa Rica decreased 1.5%. Mexico is now a reporting segment and contributed roughly $222,000 in rental revenue in the quarter. Revenue from Mexico is expected to grow significantly over time as we expand in this key market. The increase in our regional platforms revenue was mainly due to the stabilization of one building in Peru and another in Costa Rica during the year. Increases in rental rates this year, primarily in Colombia, also contributed to our revenue growth. The stabilization in Peru was Building 100 in Parque Logistico Callao back in February of this year. The related revenue growth was also enhanced by higher occupancy rates in our Lima Sur Parque. Stabilization in Costa Rica was Building 400 in Parque Logistico San Jose-Verbena in July of last year. The revenue increase of this was more than offset by a decrease in other revenue, adjustments to rent leveling assets and pursue vacancies during this quarter. The rental rate growth in Colombia was mainly due to lease rollovers that included U.S. CPI-linked escalations this year and to occupancy of previously vacant space. Consistent with our growth strategy, LPA's operating GLA increased 8.4% year-over-year to 5.6 million square feet with lease GLA increasing 4.2%. Our development GLA consisting of 2 buildings in Peru increased 187% to 478,229 square feet bringing total GLA to almost 6 million square feet, which was 14% higher than last year. This expansion sets the stage for significant NOI growth in 2026, irrespective of any properties that we might acquire. Average rent per square foot of our leased GLA was $8.14, representing an increase of 2.8%. Operating expenses were also in line with our projections, increasing 10.5%, mainly due to expected increases in credit loss provisions, higher utility and maintenance costs, increased property management fees as well as higher real estate taxes. Cash NOI increased 13.5% to $10.5 million in the quarter and increased 9% on a 9-month basis to $29.3 million. Esteban already covered SG&A, so I'll move to property valuation, which is determined by an independent appraiser. We reported a valuation gain of $7.1 million compared to a gain of $8.2 million in the third quarter of 2024. The 12.5% decrease in gain was mainly due to the stabilization of the mark-to-market rent appreciation that we saw in Colombia in the third quarter of last year, a valuation gain in our [indiscernible] and La Verbena parks in Costa Rica and the impact on valuation of our construction investment in our Callao Parque in Peru. Our financing costs were 15% lower than last year, primarily due to lower interest rates in Costa Rica and Colombia and the capitalization of interest related to the development of buildings in Parque Logistico Callao in Peru. Additionally, at the end of the quarter, LPA maintained a healthy debt profile with net debt to investment properties improving 70 basis points from the end of last year to 41%. That concludes our prepared remarks. Operator, please open the call for any questions. Operator: [Operator Instructions] Your first question comes from the line of [ Geronimo Cuevas ] with JPMorgan. Unknown Analyst: Congrats on the results. My question is regarding like the future strategy in Mexico. Are we looking to look into more JVs like the one with -- that was done with Alas or maybe looking into buying some of the Terrafina assets? Any color on that would be great. Esteban Gaviria: Thank you for joining the call. Regarding your question, we are constantly looking at growing through partnerships like the one we did with Alas. We think it's a way of really playing to our strength. So we are welcoming of that sort of strategy. We're also, I would say, prioritizing acquisitions right now. So we are constantly monitoring the market to see if there can be a portfolio that can come to market and that we can directly evaluate and acquire. So we -- I would say we are focusing right now on those 2 segments, and that's the way we're looking at the market right now. Operator: Your next question comes from the line of Amir Asgari with Saba Talent. Amir Asgari: My main question is on the new [indiscernible] investment, the deal that LPA has made with them, which, in my opinion, I just don't see the advantages. Can you please elaborate on that? Esteban Gaviria: Thank you, Amir, for that question and for joining our call. Look, this is a very customary arrangement. It's essentially preserving optionality for our firm. It's not yet effective. So it has not taken any effect. Because of the government shutdown, the SEC has not been able to review that filing and declare its effectiveness. What we're thinking about here is introducing something similar to an ATM or an equity line of credit just to preserve flexibility. It is discretionary at the company's choice when to apply it. The idea is to, again, put in place a set of tools in our toolbox to address potential acquisition opportunities and just have an additional funding mechanism. And that's the crux of it. So I don't know, Paul, if you want to address anything else or cover anything towards that new Circle arrangement. James Smith Marquez: No, I think you covered well all the basis here, Esteban, but we welcome any more questions from any other participant. Operator: Ladies and gentlemen, with that, we will be concluding today's audio question-and-answer session. We will take the webcast questions now. The first question comes from the line of [ Felipe Montessinos of Vulcan Capital ]. Do you expect to expand into the Chilean logistics market? Esteban Gaviria: Thank you Felipe. Chile is a very interesting market. It's certainly one where many of our multinational and global tenants have a presence in. And from that regard, we're constantly monitoring it. We have great relationships in Chile, and it is adjacent to our operations. Having said that, we are prioritizing our entrance into Mexico. So even though we want to monitor it, we want to keep an opportunistic eye on it in Chile, we think right now, the best course of action as we expand into Mexico and prioritize Mexico is to keep along that path. I think there's also another question regarding PE multiples. Paul, do you want to cover that one, please? James Smith Marquez: Absolutely. Thank you, Esteban. Yes, there was a question regarding PE multiple on the earnings per share. We didn't necessarily understand the question, but I would highlight that Note 14 on our financial statements has all the detail to determine the earnings per share. And yes, more than happy to respond to any further questions on our IR investor e-mail as well. Operator: At this time, there are no further webcast questions. I would now like to turn the call over to Esteban for closing remarks. Esteban Gaviria: Thank you, operator. A few takeaways before we end today's call. Our regional platform continued delivering strong revenue and NOI growth in the quarter. We also maintained a 98% occupancy rate while completing all lease renewals for the next 12 months. During the quarter, we closed our inaugural investment in Mexico, consistent with our growth strategy and business model, namely operating and the region's only cross-border provider of premium logistics solutions to global and regional companies. Through our expanding network of relationships in Mexico and our foundational markets, we continue identifying attractive investment opportunities, generally upmarket ones to selectively acquire and build institutional quality logistics assets in strategic locations with high barriers to entry. And essentially, we are regarding any existing assets that we might acquire as those that would bring tenants that meet our strict standards, among other demanding investment criteria that guide our decisions, our capital decisions. Similarly, no development projects will be spec built at this time. We are leveraging the strength of the LPA brand, and we always have a keen eye on capital efficiency and risk management. We will invest alongside select partners who bring complementary strengths such as local market know-how, strategic located land and a network of additive relationships. To conclude, we continue benefiting from the limited supply of premium, well-located facilities in LPA's markets, foundational markets, while also having established a beachhead in Mexico to further increase our growth optionality and the value of our diverse property portfolio. We look forward to updating you on our progress during our next earnings call. Have a good day, everyone. Operator: This concludes today's conference call. You may now disconnect.
Operator: Ladies and gentlemen, welcome to today's conference call of Wienerberger's Q1 to Q3 2025 Results. I'm Sarah, your operator for today. [Operator Instructions] And the conference is being recorded [Operator Instructions] We're looking forward to the presentation. And with this, I hand over to Therese Jander. Therese Jander: Good morning, everyone, and warm welcome to Wienerberger's Q1 to Q3 results update. Thank you for taking the time to join us today. My name is Therese Jander, and I'm pleased to be hosting this call from the headquarters in Vienna. I'm joined by our CFO, Dagmar Steinert; and a special welcome also to our CEO, Heimo Scheuch, who is calling in today from Hungary. We will begin with a brief presentation of the key developments and the financials for the period. And afterwards, we will open the line for questions. With that, I will hand over to Mr. Scheuch. Heimo Scheuch: Thank you, Therese, and a warm welcome also from my side. You will wonder why I speak from Hungary. As you recall, we explained to you that the roofing is a very major attention point for our future development. And as you are well aware, we have been working on two new factories for concrete roof tiles and one is in Hungary, one is in the Southeast of London. Both of them are now operational. The one in England is already fully on the market and the one here in Hungary is about to go on stream. And so we are glad to say that in a record time of more or less 1 year, we have put two new factories up in this market, and we grow our exposure to this very important segment of ours, the roofing segment in Europe. So that's why I'm here today with our Hungarian management. But let's go now to our set of results for quarter 3. Ladies and gentlemen, if you look at our results and operating EBITDA was EUR 202 million EBITDA in the third quarter comes in more or less or roughly on the level of 2024, so in line with last year's performance, a slight margin expansion when you compare to last year, and the revenue is pretty much on the same level of last year as well. All of this is a very strong performance if you look at the underlying market. Why? Because we have seen, as we have told you, in the New Residential Housing segment, no major developments as far as uptick is concerned. On the contrary, if we move, first of all, to North America. The North American market has suffered considerably in the segment of New Residential Housing, 1 and 2 family houses, especially. Let's start for a change with Canada, Ontario, the Toronto market, down compared to the previous year, 2024, this year with more than 30%. So we had to digest quite a significant decline in activity in this very important market. That's the major market of Canada anyway, Ontario. So you've seen here a strong decline in the new residential housing market. The U.S. as such, has also suffered due to a lot of reasons. The mortgage rates are still pretty high. You have here also the instability, volatility, politically speaking. I don't have to expand on that. Everybody follows it very clearly and in detail. So this is obviously also an impact on the new residential housing market in the U.S. And therefore, we have a decline of about 10% in this market as well to digest when it comes to our activities. Keep in mind that this North American operation is the most exposed one to new residential housing market as it comes to Wienerberger because this is where we still have a majority of our business that is exposed to new residential housing. If we move now more to Europe, we have here, I would say, a situation where we see in the U.K. and in Ireland, a different market development. We have seen that especially now in -- after the summer that the U.K. is also dropping in activity rate. That's due to mortgage rates have not come down as everybody has expected. There's also some instability in the marketplace. And here with about -- when we compare running rates about 9% down in new residential housing market when we talk about September, October in this period of the year. So we have seen no pickup; on the contrary, a decline in activity. And also in Ireland, a slight decline in this new residential housing market. However, and this is now important because this is a major difference. If you look at the U.K., Irish operations of Wienerberger, they have a majority of its exposure already in the roofing and in the piping business. So renovation, infrastructure plays an important role. And therefore, this business has performed overall better because here, stability in turnover and in profitability. So we have not suffered so much when it comes to the profitability of the business in this region due to this new business that we have, a business that is far more oriented to renovation and to infrastructure. So a very important point to mention here to the respect of U.K. and Ireland. On the continent, as such, we have seen a mixed picture. All of us have expected a better running rate when it comes to new residential housing in all of the European markets. This has not happened. The only market actually that performed according to our expectations is the Netherlands. So the rest of Europe, Western Europe, especially was down. There's no sort of uptick in the market as we speak. There are, however, some encouraging signs, if I may say so, in Germany and France because the permits are up in these two countries. So we can expect, hopefully, into the next year, a little better development in new residential housing. Renovation has supported the strong roofing performance in the region. So there's a lot of activity, as I may say so on the roof maintenance. So this has helped our business there. And infrastructures have been more or less stable, the spending. So here, a trend that we have basically built on the beginning of the year. And if you look now to Eastern Europe, Eastern Europe has been also a market where we have not seen any expansion of new residential housing. So I would say, a rather stable, subdued market in a lot of these Eastern Europe economies. The only country where we have seen a little uptick is the one I'm currently in, in Hungary. This is to political reasons. Next year, we have Hungarian elections. So the Hungarian government has launched a special initiative to give sort of better mortgage rates to be first-time homebuilders and buyers. So all-in-all, when you look at Wienerberger's performance in these geographies, and we have added some charts in the presentation. I don't need to go into the details, but you see actually three things. First of all, that the mortgage rates have not come down as we originally expected them to do so in order to stimulate new residential housing. So that's the first very important point. The second one is that the new residential housing markets, nearly in all of the markets except, as I mentioned, the Dutch market and the Hungarian are down. So there's no uptick in these markets. So we were confronted with markets that are below the '24 levels. And thirdly, which is also very positive, that Wienerberger in ceramics and pipes outperformed the underlying market due to our focus on innovation, very strong focus on our customers. And therefore, we were able to outperform the underlying market. So I think this is the nutshell of the current environment that we are in. I don't see any major changes, by the way, for the rest of the year. So after the third quarter into October, November, December, we will see the same trend. So this declining environment will continue for the rest of the year. So this is, I think, from my perspective, the major sort of underlying developments. If we now move a little bit on from the macro and the sort of performance-oriented one to some of the numbers that Dagmar will elaborate a little later. So from a revenue perspective, you see here that we are more or less a little bit up by 4% compared to last year to about EUR 3.5 billion. EBITDA is slightly down from last year. This is obviously due to the fact that we have a lesser contribution from the new residential housing segment and also some cost pressure when it comes to labor cost and energy costs. But here, Dagmar will elaborate a little bit more in detail. On the profit after tax side and the earnings per share side, we have a strong increase due to the fact that, obviously, there's no impact on some of the balance sheet issues that we had due to the sale of the Russian business last year. This year, obviously, is a normalized year. So it will be a strong uptick in these two aspects. If we now move on a little bit more to the migration, as I call it, from Wienerberger's perspective, you see here that over the years, and I explained this already a few times, but you see it, especially in these tough market environments that Wienerberger is operating in, how important it is and it was to migrate the business from a purely New Residential Housing business to now a much stronger resilient business based on new build infrastructure and especially renovation. So I think this has shown clearly that from a strategic path, we are on the right way forward. We will continue to do so. And I think the current environment offers us opportunities. Let's move a little bit on in this external growth field. We have done several acquisitions. I mean when we look at Wienerberger over the last 10 years, it's by far more than 41 (sic) [ 40 ] acquisitions that we did. So all of them are very strongly value enhancing. We have been very disciplined first of all, with the purchase price, with the integration and the synergies. When we take the biggest one that we did, Terreal last year, we are fully on track with respect to synergies. So all the synergies that we have originally planned for are coming in actually a little bit better already. The market as such, the underlying is obviously weaker. I don't have to explain that. I did it already at the introduction. So here, in this difficult market environment from a pricing perspective and synergy perspective, we are doing better as we originally planned. So here, we see the strong operational leverage that we have when we do such acquisitions. So they are from the first day onwards value enhancing. When you look at Terreal, I would say, what the difference or what the changes in prediction is that we see that the full contribution in EBITDA due to the fact that the markets are not yet picking up. It will be probably a year more that we gain this EUR 150 million EBITDA contribution. So we have put here the chart clearly in line for you that we expect this contribution a year later. However, as I said, from a synergy and cost perspective, we have already achieved all of it. Let's look a little bit what we have done so far in this year 2025. Again, here, an interesting set of development because we have focused on water management, clearly when it comes to all sorts of innovative features like creating a scalable platform for capturing growth when it comes to water quality to measure the volume of water and to help water companies in managing their water systems. So that's WIONIQ, a strongly growing business when it comes to IT-based and artificial intelligence-based solutions for water management. Then we have done a very important step in Ireland in order to consolidate further the market when it comes to infrastructure, drainage, roofline and cable duction systems as a consolidation in this market, so fully effective there as well. And then we have bought 100% of our GSEi business. That's a framing business for solar panels. That's not solar panels as such. It's a framing operation where we have now 100%, which is growing fast because here, we have this integrated solution for roofs, and we grow not only in France, but especially also outside France very quickly. So when we look strategically speaking, infrastructure and renovation are the key drivers also this year in this market circumstances where new residential housing is under pressure. So we will focus on this more in -- when we talk about infrastructure, it's the expansion of our piping operations, water management, especially. Here, we see a high degree of growth potential in all of our markets that we are active in. Keep in mind that Wienerberger is now with its operations in the north of Europe, now clear #1. We grow our business strongly in U.K. and Ireland, and we are also very strongly growing in the Benelux, especially in the Netherlands. And the next focus areas will be the Eastern part of Europe where we want to grow this business and obviously also in Western Europe, where we see still potential for further growth. So here, organic and inorganic growth is on the list for Wienerberger in the years to come. Let's move then a little bit to the renovation market. The renovation market is for Wienerberger, especially the roof market. Here with the acquisition of Terreal and now the Framing business for solar panels, we see here a strong potential for further growth. We will focus on accessories and the parts that the roof needs on the roof and under the roof. We have here the necessary platform to do so. And we have seen that especially in situations where the markets get a little tougher, we have now strong market shares in order to have pricing power on one side, but also to push innovation and solutions through. So these are two especially very important markets for growth for Wienerberger. And if I may, before I hand over to Dagmar, say a general word with respect to acquisitions as such. When we look at the current market environment in North America and in Europe, it offers unique opportunities for Wienerberger for attractive growth. Why? Because a lot of small and midsized companies, family-owned businesses in such difficult moments, they are not only driven by the macroeconomic development, but also the regulatory development, especially in Europe with all the new regulations coming its way. So here, we have a strong potential for further growth in order to expand our operations and to deepen the value creation when we talk about Solution businesses on the roof and in the infrastructure field, but also in new residential housing. So I think here, we are ideally positioned as Wienerberger to grow. We have shown that we are a world-class operator when we integrate all these sort of operations very quickly, very efficiently on the platform side when it comes to systems, like the whole back office, but on the front office as well due to our strong sales approach in the different geographies that we are active in, so a good base for further growth at Wienerberger. So Dagmar, I may hand over to you to elaborate a little bit more on the financials. Thank you. Dagmar Steinert: Yes. Thank you very much, Heimo, and a warm welcome from my side here from Vienna as well. I will go now a little bit more into details about our financials. And just to sum it up a little bit, our first 9 months result shows a really solid performance in this weak new build market, as Heimo explained. And our group revenues increased to EUR 3.5 billion, and operating EBITDA came in at EUR 584 million. Our margin amounts to 16.6%. So let's now look a little bit more into detail and let's have a deeper look at the revenue and operating EBITDA bridge. Our revenue development. We increased our sales by 4%, and that is driven, as you can see, by scope. And that's mainly due to our Terreal acquisition, where we have a strong roofing performance and which pays off in the renovation volume increase. Organically, we grew by 1%, what we lost as well on the currency side via translation. If you look at the operating EBITDA, it is slightly below previous year. And organically, we missed our previous year's performance and show there minus 4%, and that's due to still ongoing cost inflation and that our pricing overall for the whole group is more or less in par with previous year. And therefore, we didn't manage so far to cover our cost inflation. On the currency side, it's minus 1% or minus EUR 5 million. And our M&A activities gave us EUR 13 million additional EBITDA. Overall, our profitability remains robust, and it's overall demonstrating the flexibility of our operations. If we now have a look at our segments, starting with Western Europe. There, as you can see, our revenues increased by 8%, and that's a result of strong renovation activities. Roofing is there the main driver and Belgium, Netherlands as well as France remain there the top performers. The new residential housing market, of course, is, as already explained, really weak, but we see a meaningful growth in Netherlands there. The U.K. market is difficult for us, especially in new build. But as we are strong in renovation and piping activities there, we outperformed that market as well. Looking at the operating EBITDA, it's up 15%. Of course, part of that is a result of our acquisitions of scope. But we continued to show a solid performance. We have a solid cost management. And therefore, due to higher utilization, we managed to increase our margin. With that, I would like to come to our development in Eastern Europe. In Eastern Europe, our revenue grew by 2%, and that was mainly supported by slightly higher clay block volumes. On the earnings side, operating EBITDA, it's down by minus 7%, but we are still showing a margin of 18.1%. In Eastern Europe, we have very high burdens on cost inflation, especially on the energy side. And there, it's mainly gas. There, we increased. There, we had to face a very deep increase of prices. Markets are difficult in Eastern Europe as well. And in the new residential housing market, only Hungary shows a significant growth, and that's due to government support because there, they support fixed interest rates for first-time house buyers. Let's now turn to the development in North America. North America at the moment is quite a difficult market. And of course, what you see in these pictures as well is a negative impact from currency translation. Our external revenues came down by minus 8%, and that is due to weaker brick demand and yes, the difficult markets. Our piping volumes improved, but we faced there due to lower raw material prices as well lower prices on our side. Operating EBITDA came in at EUR 106 million, and we still show a very healthy margin of 19%. North America remains for us a really profitable and strategically important region, and we are well positioned for recovery once new residential housing market returns. In this challenging environment, we have set up a new program Fit for Growth. And that program Fit for Growth that will deliver structural savings across all regions. And what are we doing with that? We are focusing on processes. We want to simplify processes. We want to reduce overhead. We want to become a much more agile organization, and we want to be as fast as possible towards our customers. Part of that program as well is the topic of optimizing production. We target EUR 15 million to EUR 20 million annual savings. That definitely is a run rate. And with that, of course, we want to ensure that we are best-in-class serving our customers and have a really lean organization. I already said -- mentioned in our half year call, and of course, it still remains as it is, we face very high cost inflation, especially on the gas prices. And therefore, I would like to give you a little bit deeper insight how it works. As you know, we are fixing prices for our future volumes of gas, which we need. And in the past, we benefited from that quite a lot. So in the years 2024 and 2025, for instance, we are buying gas for prices below market price. Anyhow, the prices we are paying today in 2025 are far above the levels we used to pay in the last year. Giving you a little bit of an outlook for the year 2026 due to the development of the market prices for gas prices compared with the year 2025 came down. We still, of course, fixed a certain amount. But there, in the next year 2026, as far as we are able to see it as of today, we will not benefit as much as we did in this year and the last years. I hope that will give you a better understanding how energy costs work within our group. With that, let me turn to our free cash flow. Our free cash flow came in at EUR 155 million, and that's reflecting a solid cash generation for the first 9 months. As you might see, we are a little bit more investing in our working capital compared to this previous year, but that's just a seasonal thing because as you know, we are always building up inventory during the year, especially during the first 9 months. Maintenance CapEx is on the level of previous year, and there's no bigger change in lease payments as well. Having said that, I would like to move over to our net debt development. Our net debt at the end of September amounts to EUR 1.9 billion. And the leverage of that is 2.5. By the year-end 2024, we showed a number of 2.3. As you can see within the development, we have our free cash flow of EUR 155 million. Our growth CapEx and M&A amounts to EUR 105 million. And of course, we paid dividend and we did some share buybacks, which amount to EUR 135 million. And I can assure you we have an ongoing disciplined CapEx and cash management, and we will keep the leverage stable and of course, I'm sure that we won't increase last year's number. So with that, before we come to the outlook, I would just like to sum up the -- for me, most important topics of our performance for the first 9 months. Looking at our macroeconomic environment, we are still facing high mortgage rates. On the other hand, new residential housing market is developing not as stable or positive as we originally expected, except the Netherlands and Hungarian market. And I would like to point out with our performance with these 9 months, we, as Wienerberger, outperformed the ceramic market and the pipe market regarding the market environment. And with that, I would like to hand over again to Heimo. Heimo Scheuch: Thank you, Dagmar. And I think you made it very clear, and I can only sort of add to that, that in this complex, volatile and really fast-changing environment, Wienerberger has proven that our not only strategy mid and long term, but our sort of proactive management style focusing on costs and being very quickly when it comes to adjustments and efficiency improvements have proven right. Some of you will say, why didn't you start earlier to talk about a change in the outlook because at half year, we said, listen, from a perspective that we see summer months, July, August are always weak months and don't give a lot of indications. When we look at the performance of quarter 3 and the September, especially, we were hopeful that actually the markets as such were picking slightly up or were developing in a better way. However, we have unfortunately seen that especially in North America and the U.K. were driving in the other direction. So again, we had here, obviously, to experience not only further declines but a much weaker environment in new residential housing that we originally anticipated. Obviously, when we gave the full year guidance, we said at the beginning of the year, under two assumptions, that interest rates would come down and that the new residential housing market will slightly improve, especially in the second half of 2025 and show positive trends. Both didn't materialize. On the contrary, and this is, I think, the strong message that we can send to you, we had to suffer a completely different environment than we originally planned for. And under these circumstances, I think this performance that we show that we are actually better performing than last year in an even lower market environment shows that we really work hard on our things that we can influence. As Dagmar has shown, we have already implemented a Fit for Growth project again in order to make us even more efficient in more of the businesses. We have proven that from a pricing point of view, we are very disciplined when it comes to pricing and obviously, also in digesting a very significant cost increase when it comes to wages, especially labor costs and on the energy side. So all of this coming our way, we had to digest this year. And so I think it has to be seen under these circumstances that we have a very solid, strong performance. The renovation markets are the only markets that remain stable as we have foreseen it. The infrastructure markets took a slight hit also due to the budgeting constraints that especially European countries imposed due to the shift more into defense budgets and to defense spending away from infrastructure. So these are things that we have to look at also from a perspective of current development. Let's then summarize everything as the performance goes for the rest of the year. Some of you will ask Dagmar and myself already in a couple of minutes, are you really sure you will achieve the EUR 750 million? Yes, we will. The impact of FX, as Dagmar has explained in detail, is also an important one which we need to consider. But like-for-like basis, I think the EUR 750 million is the number that we will achieve. We are working hard. It means also for us a good and very strong quarter 4, where we work on right now and where, as I said, all the measures that we implement ourselves and with which we can influence are playing out in our favor. The rest we have to take as they come. So this is, I think, a very important and clear message that Wienerberger does everything in order to improve its business in this, I would call it, a significant slowdown in new residential housing around our markets. However, if I think -- and very important also, I think that what Dagmar says and she is keeping really a strict discipline in the company on the net debt position here. You have seen how disciplined we are on the CapEx and the spending side. So at the year-end, we will be in the range of 2.2 to 2.3 EBITDA to net debt. So here, again, strong performance when it comes to the financials of the company and the balance sheet discipline. Let's not keep out of mind also the midterm and our development. Some of you will say, do you still have the EUR 1.2 billion as a midterm target in mind? Yes, of course. Why? Because obviously, the company has this potential to grow to this number, provided that some criteria play out. And we've put here, I think, four, that are very clear to determine on this slide. First of all, further interest rates cut have to happen. You have seen how high actually the mortgage rates are. So we need to keep more an eye not only interest rates in general, but especially mortgage rates and the mortgage policies in the different geographies that we are operating in because it gives a signal of affordability for people to buy into the housing -- new residential housing market or not. Then something which is very interesting to monitor for us is this European Social Housing plan that might kick in. There's a lot of discussions. We have meeting at the month end again in Brussels with the commissioner and the commission about this. So this could also be of a very important part for the new residential housing market for us in the not-too-distant future. Obviously, potential peace in the Ukraine will boost the whole region of Eastern Europe. And therefore, we hope for that and for the people, especially in the Ukraine. And then also the U.S. market recovery because the potential and the demand level is substantial also in these geographies in Canada and the U.S. However, as I said earlier, the mortgage rates need to come down and a little bit more political stability should be also in the U.S. in order to stimulate the new residential housing market. Under these conditions, I think we are very well positioned in order to achieve this number. And Wienerberger from an efficiency perspective, cost base perspective and also the very important industrial base that we have now is a very strong one that we can work on and continue. I think what you should take away from this call, it is more than a quarter call because we gave you some update on strategy, also the importance of the migration of this business, Wienerberger from new residential to a much broader business and a resilient business proves right, gives the group a very strong direction when it comes to stability in cash flows and in margins, but also a growth base for the future. And I think the U.K. and Ireland is a very, very good example if you compare the two, the U.K. and Ireland to North America. North America, we are still very exposed to new residential housing. That's why we'll take a hit there as far as profitability is concerned. And when we look our performance compared to the competitors that are more into new residential housing in U.K., especially, it's a much stronger one. It's a much more resilient one and margin-wise, a much better one because the business is already very balanced when it comes to infrastructure and renovation. So I would like to close on these statements strategically, and thank you very much for your attention. And Dagmar and myself, as always, will take your questions. Operator: [Operator Instructions] The first question comes from the line from Yassine Touahri from On Field Investment Research. Yassine Touahri: I think I would have two questions. First, I think you had cost inflation of 4%, 5% in 2025. You're expecting, I understand a bit more energy inflation in 2026. Should we expect more of a mid-single-digit cost inflation next year? Or should we expect something similar to what we've seen in 2025? That would be my first question. Then my second question is that we've seen so far that prices has been very broadly stable. So I think you've not been able to offset this cost inflation and all the benefits from the savings that you've been implementing have been absorbed by this cost inflation. How do you think about next year? Have you already started to announce price increase? Do you see your competitor announcing price increase in an environment where the volume is a bit more muted that you were initially expecting? Do you believe that any price increase that have been announced could stick? It would be great to get a sense of the scenario that we've seen in 2025 where a lot of your efforts are absorbed by cost inflation could be [ overproduced ] or not next year? Heimo Scheuch: Thank you very much, by the way, for these very important questions. I will leave, if I may, Dagmar, to you on the cost inflation side, and we'll focus on the price side to start with. I think we have shown a great discipline in pricing throughout the group this year. And you are absolutely right in such an environment, especially in the new build sector, it's difficult to increase prices. However, we were able to do so in some geographies, so that cannot be sort of said with respect to the whole group right now. And 2026, it's too early to give here a statement. However, as always, we start in November working on the markets, working with our customers to prepare them. So you will see a more detailed picture, I would say, in March of next year. If they stick or not, we will certainly do something in the pricing. It's not going to be huge steps, but I would say sufficient steps, and this is what we are going to work on for '26. But as I say, it's a difficult market environment when we talk about new residential housing. So I don't expect here big jumps, but we always work on this very hard in order to improve renovation and infrastructure will be a little different. I hand over to Dagmar. Dagmar Steinert: Yes. Well, regarding cost inflation, yes, we face cost inflation between 4%, 4.5% for the running year. And yes, we will see some cost inflation, of course, next year as well. But I don't expect it to be at the level of the cost inflation 2025. And regarding the energy, what I tried to explain regarding our gas price, what we are paying in the year 2026 that will be not above market price. But as we benefited from energy fixing in the running year, we will face some kind of inflation regarding the energy prices in the year 2026. Yassine Touahri: So just to understand on inflation, how the -- the 4% to 4.5% that you're seeing in 2025, is it mostly -- it's a mix of labor cost and energy costs. When you look at 2026, what would be the difference? You would see less labor cost inflation and energy inflation, something similar. So overall, you would expect something which is less than the 4% to 4.5% that we're seeing in 2025. Is that the right way to look at it? Dagmar Steinert: That's the right way to look at it, yes. Yassine Touahri: And -- but it's too early for you to give an idea if it's closer to 2% or 3% or 4%. Dagmar Steinert: Yes, that's too early because we are still in the phase of preparing everything. And of course, there are price movements on the cost side as well. It will be below the inflation of the running year, but it's too early, far too early to give you a decent number. Operator: So -- and then we have the next question from the line from Cedar Ekblom. Cedar Ekblom: I just had a question on that cost point again. Just to confirm that 4% to 4.5% is across all buckets of costs, so energy, labor, et cetera. Could you give us a little bit of color on what the actual portion was for your fixed cost buckets? So that's the first question, just to get a little bit of differentiation there. And then can you just remind us, there's a couple of cost-cutting programs that are now in the business. And we've got the new announcement today. Can you just remind us how to think about efficiency gains into next year? Is it just the EUR 15 million to EUR 20 million? Or is there anything also coming from other programs that have been in place in this business for some time? Heimo Scheuch: Thank you, Cedar, for the very spot on questions. Let me say something on the cost savings side and the program. The Fit for Growth is obviously, as Dagmar explained, the new program that will be added on to the existing ones. You remember that we said that the existing ones have come to an end and have proven to be very effective in the business. So they will obviously produce some additional input also next year because they are running these programs and they're not finished yet, as you correctly pointed out. So these will be to be added on and Dagmar will give by all due means and respect a number at the beginning of next year. And I think if you bear with us a little bit, I think we are putting together budgets right now in this volatile times, it's not easy. We have also indicated to you that we would like to give you a much more detailed outlook and overview of the business early next year in a Capital Markets Day. So I think if you can sort of be patient with us on this subject to give you here a clear update. But to answer the question, the EUR 15 million to EUR 20 million will be the new program running rate for -- as we speak from next year onwards and some inflow comes also from the existing programs. And for the cost structure and the fixed cost, I hand over to Dagmar, please. Dagmar Steinert: Yes. Our cost structure is mainly dominated by personnel expenses. They account for roughly above 30% of our overall costs and our energy costs are 10% of our overall costs. And these two portions dominate, of course, our cost inflation. And all the rest, if it's like raw material, if it's rents, if it's consultants, IT costs, whatsoever, of course, there we face cost inflation as well. But on the other hand, if we have a very disciplined way to approach that, we manage to keep it low. And therefore, I would like to reduce for you our main cost drivers regarding inflation just to energy and personnel expenses. Cedar Ekblom: That's really helpful. What I'm trying to understand is, can you give us a bit of color on what the sort of personnel expense inflation is? Because what I'm trying to break out is cost inflation on items that are within your control relative to cost inflation on the energy side of things, which obviously, you can do your hedging, but to some extent, that's much more a factor that you can't control. So could you give us a number for personnel cost inflation if the overall cost is 4% to 4.5%? Dagmar Steinert: Well, the cost inflation regarding personnel expenses in the running year in 2025 is roughly for the group overall at 5%, and it will be below 5% 2026. Cedar Ekblom: That's helpful. No more questions from me. Heimo Scheuch: Cedar, keep in mind that we had higher cost inflation, obviously, in Eastern Europe also this running year. You remember when we told you that there is a pressure in the labor market and especially in Eastern Europe, strong increases on labor and the collective bargaining agreement. So this is, I think, what Dagmar was referring to. Operator: We now have a question from the line -- by now the last question from Julian Radlinger. Julian Radlinger: A couple of ones left for me. So first of all, the implied Q4 guidance means that EBITDA in Q4 could actually be up year-on-year despite all the headwinds you've called out. And so if that's the outcome, I'm just wondering what would that be driven by? Is that volume? Is that cost management? And what scenario would EBITDA be up in the fourth quarter? And then secondly, so your margins actually expanded in Western Europe in Q3 on a year-on-year basis. Is that a clean result? Is that just higher capacity utilization like you wrote in the presentation? Or is there any kind of one-off effects in there that we should be aware of? And then just maybe a very quick last one. How much of your energy costs are now fixed for 2026? So how much visibility at this point do you have? I know it's usually quite a lot on a 12-month forward basis. Heimo Scheuch: Dagmar, may I hand over to you to do this or if you want me, then you say. Dagmar Steinert: No, no, that's fine. I do it. I will start with the energy. There, we fixed roughly overall for the whole group between 50% and 60% of the volume. And so there is still a lot of room for movement. Your question regarding our Q3 results, if there are any major one-offs? No, there are not any major one-offs included in our Q3 results. And it's a result of our strong performance in renovation and outperforming the market environment. And of course, regarding our cost discipline, things starting to pay off. And if we look at our adjusted full year outlook for the running year, if we deliver EUR 750 million operating EBITDA. That, of course -- it's mathematic. It's very easy. It means that we have to reach in the first -- in the fourth quarter of the running year, something between -- above EUR 160 million EBITDA. And that, of course, is above previous year. And I mean, we -- yes, at the moment, we are overall in our pricing more or less stable on the previous year's level. But as we told you, we see markets where we a little outperform even on the pricing side, the markets, we have our initiatives, the running ones, the Fit for Growth where we benefit from. And therefore, we are confident to deliver. Operator: There are no more virtual hands at this time. I would like to turn the conference back over to Therese Jander for any closing remarks. Therese Jander: Thank you. I would like to state firstly, that our -- you should save the date for our next Capital Markets Day, which we have scheduled now for the 24th of February next year. So I just wanted to add that to the conversation, and we will get you more information when it's a little bit closer. And by this, I would like to thank you all for joining us today and for all your questions, and we truly appreciate your engagement. And therefore, we also hope to see you again for our next results call, which is on the 18th of February. Until then, take care and goodbye from all of us here at Wienerberger. Heimo Scheuch: May I just add something Therese in the name of Dagmar and myself. We all wish you a happy ending towards the year because with some of you, we won't meet personally. So enjoy this season and all the best in this very volatile times and exciting times. But I think we gave you a good outlook for Wienerberger as far as our markets are concerned and be assured that Dagmar and myself will have our hands full for the rest of the year, as she said. So all the best, and see you soon. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Operator: Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the LandBridge Third Quarter 2025 Results Call. [Operator Instructions] It is now my pleasure to turn the call over to Mae Harrington, Director of Investor Relations. Ma'am, the floor is yours. Mae Harrington: Good morning, and thank you for joining LandBridge's Third Quarter 2025 Earnings Call. I'm joined today by our Chief Executive Officer, Jason Long; and our Chief Financial Officer, Scott McNeely. Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance, and which are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC. I would also like to point out that our investor presentation and today's conference call will contain discussion of non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation. I'll now turn the call over to our CEO, Jason Long. Jason Long: We're pleased to report another strong quarter, marking our sixth consecutive quarter of revenue and EBITDA growth since going public. In Q3, revenue increased 7% sequentially, adjusted EBITDA rose 6% with contributions from all of our key revenue streams. Our growth strategy remains focused on maximizing the economic output of our surplus position. In the near term, we continue to focus on delivering a differentiated value proposition for our pore space offering. To summarize three core advantages of our approach, First, we control over 300,000 highly contiguous acres, largely insulated from the elevated pore pressure challenges impacting other areas of the statewide region. Second, our partnerships, particularly with WaterBridge enable critical transportation of produced water to underutilize pore space our acreage. WaterBridge, one of the largest produce water infrastructure operators in the U.S. continues to expand its footprint on our land, reinforcing mutual growth. Third, our development strategy aligns with recent guidance from Texas Railroad Commission, which emphasizes responsible pore space management. We actively avoid overconcentration of produced water handling assets by our customers to preserve pore space integrity. Further, this quarter demonstrated the value of our active land management strategy beyond the oil and gas industry. We continue to unlock new opportunities with leading developers across energy, infrastructure and environmental sectors, creating diverse and resilient cash flow streams that we believe will continue to compound over the long term. Let me highlight a few of our recent and ongoing commercial developments. First, we finalized the sale of a 3,000 acre solar energy project in Reeves County with the proposed generation capacity of up to 250 megawatts. The transaction includes an upfront payment and contingent milestone based payments. We also entered into a new long-term lease with a subsidiary of ONEOK for a natural gas processing facility in Loving County, Texas. Further, we continue to execute our strategy of accretive land acquisitions as demonstrated in our recent acquisition of approximately 37,500 acres for Mike's 1918 Ranch & Royalty. This acquisition brings immediate cash flows and long-term growth potential. The Loving County acreage enhances our force-based offering, while the Reeves County position is well suited for future alternative energy development. We expect this acquisition to contribute approximately $20 million in EBITDA beginning in 2026. And finally, our progress on power infrastructure and data center initiatives is accelerating, and we're eager to keep you informed as new milestones are achieved. Before I turn it over to Scott, I want to briefly address our approach to transparency. We remain committed to keeping investors informed and we'll continue to share meaningful updates on our commercial progress. At times, the level of detail we can provide may be limited due to commercial sensitivities, contractual obligations or legal constraints. We appreciate your understanding and continued engagement as we balance transparency with these considerations. With that, I'll turn the call over to Scott to talk through the financial results. Scott McNeely: Thank you, Jason. We delivered another quarter of strong financial performance with total revenue reaching $50.8 million, up 7% sequentially and 78% year-over-year. Quarterly growth was broad-based across all three revenue streams. Surface used royalties and revenue increased 2%, driven by higher commercial activity, new project easements and increased royalties from WaterBridge's BPX cracking development, which commenced operations early in the quarter. Resource sales and royalties also rose 2%, supported by a rebound in water sales from Q2 levels. Oil and gas royalties posted a 22% sequential increase with net royalty production rising from 814 barrels of oil equivalent per day in Q2 to 912 in Q3. Importantly, our direct exposure to commodity prices remains limited, with oil and gas royalties representing approximately 7% of year-to-date revenue. Adjusted EBITDA for the quarter was $44.9 million, up 6% sequentially and 79% year-over-year with a margin of 88%. The strong margin performance underscores the efficiency and scalability of our operating model. Cash flow from operations totaled $34.9 million and free cash flow was $33.7 million. Capital expenditures were $1.2 million and net cash used in investing activities was $1.1 million. At quarter end, total liquidity stood at $108.3 million, including $28.3 million in cash and $80 million in available borrowing capacity. Total borrowings outstanding under our term loan and credit facility were $369.3 million, down from $374.3 million at the end of Q2. Our net leverage ratio was 2.1x at the end of the third quarter compared to 2.4x last quarter. We continue to deploy free cash flow in a disciplined and balanced manner, focused on three priorities: First, pursuing accretive M&A opportunities, particularly in acquiring underutilized and undercommercialized land where we remain committed to rigorous underwriting criteria. Second, maintaining a strong balance sheet with an optimal capital structure, targeting a net leverage ratio of 2 to 2.5x. And finally, returning capital to shareholders through dividends and opportunistic share repurchases. This quarter, we declared a quarterly dividend of $0.10 per share payable on December 18, 2025, to shareholders of record as of December 4. Finally, we are reaffirming the midpoint of our full year 2025 guidance with adjusted EBITDA expected between $165 million and $175 million. We're proud of our consistent performance and remain focused on executing our growth strategy, expanding our asset portfolio and delivering long-term value to our shareholders. Thank you for your continued support. With that, we'll now open the line for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of John Mackay with Goldman Sachs. John Mackay: Can we talk about the new acquisition a little bit? You framed up some related to EBITDA for '26. Maybe you can kind of talk about your visibility on that visibility of growth on the footprint. And maybe more broadly, as part of that, how you think right now about kind of what's the right kind of price to pay for some of these acreage packages out there? Is it multiple? Is it dollar per barrel pore space available? Maybe just walk us through the framework as well. Unknown Executive: Thanks for the thoughtful question. Yes, so really excited about 1918, as we kind of think through it here, kind of conservatively expecting $20 million of EBITDA being contributed from that acquisition to next year. That's not really predicated on any growth relative to the run rate when we bought it. And so kind of conservatively forecasting that flat. But that said, the economic profile of this acquisition is very similar to what we've seen previously. When we acquired Hanging H Ranch, we acquired East Stateline Ranch is two good examples kind of stepping in at 12-ish x investment multiple and then through driving growth, getting that down to more of a 3 to 4x investment multiple over several years. When you think through what is driving the potential there I'd really categorize it into two buckets. The first on the eastern portion of the footprint, there's roughly 900,000 barrels a day of incremental pore space capacity that not just adds to the depth of our pore space inventory, but also gives us additional reach into the Southern Loving County, which really unlocks some new commercial opportunities. So that pore space just at today's prevailing market rate for royalties could generate mid-50s of EBITDA. And then on the western side of the footprint, there's already a very impressive but down of transmission and power infrastructure that makes it a very attractive location for clean energy and energy transition projects. And then incremental to those two, I've just summarized by also saying this is a fantastic surface as you think through potential for digital infrastructure. So all of that would be obviously very additive incremental growth. And so yes, as you know, as we see kind of the investment here, again, it's very similar to the underwriting thought process that went into those prior investments that have worked out well for us, and we're excited to get this one done. Now to the second part of your question, how do we think through acquisitions. There's no magic formula. Ultimately, we look through underwriting each acquisition a bit differently, and it's really a function of ensuring the land we're buying has both an attractive entry point as well as a lot of upside that we can capture through our active land management strategy. 1918 is a great example of that, where the sellers very sharp group of folks, but not necessarily folks that look to monetize it in the same way and same fashion that we did. And so we think there's a lot of upside there. So when we think through kind of stepping into new M&A deals, very similar. We're going to look for the right land in the right locations that have just been undercommercialized historically relative to our expectations. And as long as the math works and we feel good about that option value, the M&A could opportunities could make sense in that context. John Mackay: I appreciate those comments. Maybe just a second one for me. I understand you guys aren't really ready on this call to talk about anything kind of formal on the power side. But I guess if we look more broadly, compared to a year ago, we are starting to see a bunch of kind of power and data center projects pop up kind of more formally across the Permian. Can you just walk us through one more time when you guys are having these conversations, what are you seeing you're bringing to the table relative to some of those other kind of locations or partners out there? Unknown Executive: Yes. I mean the announcements have come out recently are no surprise. I mean, the economic fundamentals of West Texas just made that inevitable. And as I've said before, it was always a when, not if discussion, and we're starting to see those come to fruition here. I mean, from our seat, we are further along into existing conversations and also engaged with a number of new blue-chip counterparties in these discussions. And so we're very excited and very optimistic about the progress we're making, and we look forward to sharing new milestones when the time is right. Ultimately, being able to deliver what is a packaged solution of land, power via our power partnerships and water as well as in locations that are very conducive to both power and data centers, particularly as you think through things like fiber availability. It really just allows us to deliver this, call it, derisked package that's just challenging for others to match. And that's something that's been very well received by counterparties. Again, several processes kind of fairly far along, and we're really excited about what's to come. Operator: The next question comes from the line of Theresa Chen with Barclays. Theresa Chen: I have a follow-up to the 1918 transaction. Scott, specifically to your comments about the southern portion of Loving County, unlocking new opportunities and reaching potentially that incremental mid-$50 million of EBITDA. What kind of time frame or cadence are you expecting for that how much commercial visibility do you have on inking those agreements? And then on the Western side, as far as opportunities for incremental transmission and power it sounds like these could come as more discrete events, if you will. How much visibility do you have there as well, please? Scott McNeely: Yes. Theresa, the -- on the Western side of the pore space, we're already actively engaged with discussions on opportunities for folks to unlock that pore space. And so while we're not baking that into the $20 million figure, we've included for next year. I certainly think we could start seeing, call it, incremental EBITDA outperformance, particularly in the back half of the year, just given the pace of those conversations at this point. When you think through growing to kind of the levels you alluded to, we think that's, call it, a 3- to 4-year timeline in terms of our ability to go out and action that. On the western side on those energy transition and clean energy projects, those are just inherently longer runway projects but ones we're actively engaged on now. And so when you think through the ability for us to get those commercialized here over the next, call, 6 to 12 months. We'll certainly kind of make those announcements, let the public know the progress we're making, although the material EBITDA contribution on those types of projects are typically 3 to 4 years out, just given the development runway. Theresa Chen: And on your solar project transaction, understanding that there are many commercial sensitivities here, but if you can help us frame up even qualitatively, what this economically means for your company? Or what are the next steps or milestones that would be really helpful. Scott McNeely: Yes. I mean this is one that we're excited to get done. We've voiced over both with you all on the analyst side as well as the public effectively since our IPO that we have been working towards this towards getting this opportunity across the finish line. We're excited about the counterparty, the large, very reputable public clean energy developer and operator out of respect to their ask for confidentiality here. We can't share their name or were too much about the details on the project. But that said, I'll just say we're excited to get it done. I think it's a great win for the company as we kind of see the project come online here and get developed out over the next several years, we would expect to see those milestone payments hit. And then once the project is online and running, we would expect to see more recurring revenue as a result of that. Operator: Next question is from Alexander Goldfarb with Piper Sandler. Alexander Goldfarb: Just a question for you -- just two questions. First, just going back to the amount of the number of people talking about building power data centers in West Texas. Is this one of these things like sort of field of dreams, if it's built, the hyperscalers will come? Or are the hyperscalers already like committing that they want to access West Texas and therefore, it's just a matter of people coming online and building the facilities and then the hyperscalers will be there. I'm just trying to figure out the sort of field of dreams or the hyperscalers are already out there and they want to be and they're just waiting for someone to build. Unknown Executive: Yes. I think the kind of chicken and egg dynamic you're speaking to was more prevalent last year when West Texas really kind of got on the map, so to speak, when it relates to data centers. I mean, the engagement we've seen call it, over the last 6 to 12 months has shifted a bit, where typically these hyperscalers or the data center developers and operators are partnering directly with power providers. And so it's more of a package negotiation, not necessarily waiting for the power to be committed to in the hopes that the data center comes. And so I would say it's a much more sophisticated, call it, packaged approach now. And as a result of that, I think you're seeing just a lot more willingness for folks to kind of move quickly and get these projects across the finish line. Alexander Goldfarb: Okay. And then can we get an update on the existing data center deal that you did. I think it's been a few quarters since you received the initial deposit. And I think Five Point is still in sort of that option window. Are they -- do you think they're close to getting everything signed and fully committed and rolling out? Or just what's the update on their process? Unknown Executive: Yes. Just to kind of remind the group. It's a 2-year option period, that partnership between Five Point and Commonwealth Asset Management, which also works in partnership with Silver Lake still active. I can't provide any specifics on where they're at in their process, though. Operator: Next question comes from Charles Meade with Johnson Rice. Charles Meade: Jason, I want to ask a question about the natural gas processing lease with ONEOK. And I respect in your prepared comments, you have to balance transparency with, I guess, your commercially sensitive terms. But can you give us some detail on how those sorts of deals are typically structured whether it's an upfront payment, an annual payment duration? Just anything you could add to just kind of help size that, at least in our mind? Jason Long: Yes, no problem. These are all usually upfront payments for long-term lease and we have additional payments per year. The other thing that opens up a big opportunity here is just the amount of infrastructure associated with these plants, the pipelines, the electrical, et cetera. So there's a recurring revenue associated with these. Charles Meade: Got it. Got it. So it's not just -- if I understand you correctly, it's not just this processing plant, but it's all the infrastructure and pipelines and electrical transmission that needs to get there. That's all other revenue opportunities for whether gas... Unknown Executive: Yes. Charles Meade: Okay. Great. And then I want to ask a question about just this new slide or is at least new to me on Page 15 where you guys are putting out the long-term, I guess, shortfall of disposal capacity in the Delaware Basin. And I think I get the main point of the slide, which is access pore space is going to become more valuable over time not less. But I wonder if you could just give your interpretation of why you guys put this slide together and also maybe talk through what some of the important assumptions are? Like I know it looks like this is specific to the Delaware Basin. So this is -- does that shortfall exclude the possibility of moving, say, Delaware Basin produced water up to the Central Basin platform, things like that? Scott McNeely: Charles, I'll take this one. Jason is struggling with his voice from a cold, if you can pick up on that. So yes, we take -- continue to take a close look at pore space in the Delaware Basin. And I think the punch line on this slide is that, that pore space is not a commodity. There truly is a differentiation as it relates to pore space. and the approach with managing that pore space. And we've spoken in the past about the overconcentration of assets along the state line and just the negative pore space or the negative geology reaction as a result of that. And as a reminder, the recognition of that is ultimately what drove us to start LandBridge initially in 2021 as we wanted to ensure that we did have a very different differentiated pore space solution. We wanted to have large amounts of contiguous acres. We wanted to have geographic proximity to operations, and we wanted to have not just a clean slate from a pore space perspective to ensure it's unencumbered by historical mismanagement, but control of that pore space to ensure that going forward, we weren't going to be burdened with the mismanagement of other landowners or other operators. And so what we're really showing on this slide is the byproduct of some of that overconcentration, again, particularly along the state line and what it's doing to pore space capacity and operating capacity of existing produced water infrastructure assets. And so on the bottom left, we're showing a chart of just produced water growth that's expected in the Delaware Basin through 2035, after 2026, this is effectively assuming a 1% growth rate on oil. And this was a forecast that was put out by a combined effort between the Pickering Energy consulting arm as well as B3 Insights, which is a great consulting firm that's very sharp on this type of stuff. And as you can see, I mean, there's a healthy amount of produced water growth, but the unfortunate byproduct of these pore space issues is the existing produced water infrastructure today represented by that yellow line is going to be losing operating capacity going forward. And you see that delta continue to grow over time. And by the time you're at year-end 2035, there's going to be a 9 million-barrel a day shortfall between the produced water that's expected in the Delaware Basin and the infrastructure based on what's currently in place today. And so it really drives two very real needs. The first is just the need for more produced water handling infrastructure. But the second, more importantly, in this context, is the need for access to the kind of pore space that LandBridge offers to serve as an outlet. And so we really like this slide because it really does highlight not just the fact that pore space isn't a commodity and a differentiated approach matters, but also that the macro tailwinds are really going to drive the need for further pore space access, and we're in full position to capture a lot of that. Operator: Next question is from Derrick Whitfield with Texas Capital. Derrick Whitfield: Congrats on all of your operational accomplishments over the last quarter. With my first question, I wanted to focus on your outlook. While I realize you're not offering 2026 guidance today, how would you frame the step-up in EBITDA in next year -- over the next year, kind of based on the line of sight growth you have from WaterBridge, the acquisition you've recently closed and the other service agreements you recently announced? Scott McNeely: Yes. No, great question. When we look through next year and kind of the primary growth drivers, obviously, the 1918 acquisition is going to be an immediate step change. But in addition to that, just given the line of sight on produced water volumes we have from WaterBridge, we would expect to see pretty healthy growth through the course of the year on the surface use royalty side. And I want to -- we're going to wait to provide full year 2026 guidance. And when we do that, we'll break down kind of more quantitative specifics. But I do think the surface use royalties piece is worth calling out because we have line of sight there and that is going to be a meaningful driver. But incremental to that, we've got a great backlog right now of commercial opportunities on the other surface-use revenues piece. So we continue to see both the surface use royalties as well as the other revenues be the primary growth driver for our business stepping into 2026. It continues to exceed our expectations. I think that, generally speaking, not just the oil and gas industry, but more broadly, the economic industries out in West Texas are eager to partner with landowners like ourselves who have the right surface in the right areas. And are very eager to do commercial deals. And so I would expect the surface use side, both -- again in both on royalties as well as the rents and other revenues to be the main growth driver stepping into next year. But as it sits today, I would say our 2026 expectations are certainly exceeding what they were a year ago. Derrick Whitfield: Terrific. And as my follow-up, I wanted to take a slightly different approach on the power and data center discussion. As you guys kind of think about the sheer magnitude of power and AI developments that have recently been announced across West Texas, and the implication it has for the opportunity set for LandBridge. How do you -- I guess, how do you see that? I mean while we've clearly seen the size of data center development double since we first started talking about it, I mean do you still see a pathway to 2 to 4, 4 to 6 developments? Just how do you think about it? Scott McNeely: It's a great question. I would say we've got a number in the pipeline right now, and I don't want to give what that specific number is, but it is an opportunity set that has only expanded, I would say, relative to what we thought when we initially started exploring this opportunity initially. I would add outside of just those primary opportunities, there are just so many secondary opportunities that exist because of the compounding ecosystem that's kind of growing in West Texas as a result of all this activity. And when you think through just what's going to be needed to support these data centers outside of just the direct power, but just the broader commercial ecosystem, the broader industrial ecosystem, all of that is going to necessitate land access. And again, we are in the best position to be the providers of that. And so we obviously will continue to pursue, and we're very excited about our direct opportunities as it relates to power and data centers, but we are also going to catch the broader macro tailwinds that are benefiting West Texas as we continue to see the ecosystem out there compound. Operator: Your final question comes from Kevin MacCurdy with Pickering Energy Partners. Kevin MacCurdy: I wanted to dig in a little bit into the segment results. We see easement and other surface-related revenues, it's kind of outpacing our expectations pretty handily this year. And I wonder if you could talk a little bit about the drivers of growth in that segment over the last several quarters? And was there anything that kind of surprised you guys to the upside there? Scott McNeely: Yes. It's a great question, Kevin. I appreciate you hopping on. I would say when we put out expectations at the beginning of the year, coming off of the back of both the Wolf Bone acquisition as well as the larger a series of acquisitions earlier. We took a conservative stance on expectations there, obviously, relative to what's come to fruition, very much by design. And I think kind of with where we sit today, we've got a really healthy view of that commercial backlog stepping into next year. But ultimately, that outperformance we saw this year is going to be driven by call it intentional conservatism coming off of acquisitions. But as we've said many times over, there is a very high demand for access to our surface by a number of different counterparties. And what you're really seeing is the financial impact of that reality coming to fruition here. Kevin MacCurdy: I appreciate that, Scott. And then maybe on the produced water side, going back to the forecasted shortfall in disposal capacity, I mean, is there anything that you can share like high level on what you're seeing on royalty rates on new contracts versus legacy contracts? And do you think that the market is kind of beginning to forecast and realize those constraints in pore spaces? Scott McNeely: Yes. As it sits today, we haven't seen, call it, any meaningful shift in the prevailing market rate for royalties relative to within the last 1 or 2 quarters, call it. Obviously, supply-demand economics continue to play out. That is certainly subject to change. And just base on the dynamics we spoke to just a few minutes ago with Charles. That's certainly very real potential for us to capture additional econs going forward. Now does the market generally, call it, recognized pore space constraints going forward? I would say absolutely. And I would say the prudent operators out there are the ones that are getting ahead of it. Like we announced last quarter, Devon is a fantastic example of a forward-thinking operator in our area who is very intentional about securing pore space that they need access to over the long term, and that led to the minimum volume commitment and pore space access agreement directly with LandBridge rather than with WaterBridge or another water infrastructure company. And so there's absolutely an acknowledgment of the criticality of what it is we bring to the table. It's already been validated commercially, again, by Devon and others, and we expect that trend to continue. Operator: With no further questions in queue. I will hand the call back to Scott McNeely for closing remarks. Scott McNeely: Yes. Thanks again for joining us today. Again, we're very excited about the quarter. We're very excited about what we're working through commercially at the moment and across multiple opportunity sets, and we look forward to circling back and sharing more news with you here in the future. But again, I appreciate you all's efforts on learning more a bit about us and look forward to staying in touch. Thanks. Operator: And this concludes today's conference call. You may now disconnect.
Operator: Good morning, and welcome to Fiera Capital's earnings call to discuss financial results for the Third Quarter of 2025. I will now turn the conference over to Natalie Medak, Director, Investor Relations. You may begin your conference. Natalie Medak: Thank you, and good morning, everyone. Welcome to the Fiera Capital conference call to discuss our financial results for the third quarter of 2025. A copy of today's presentation can be found in the Investor Relations section of our website. Comments made on today's call, including replies to certain questions, may deal with forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ from expectations. Please refer to the forward-looking statements on Page 2 of the presentation. Our speakers today are Maxime Menard, Global President and CEO; and Lucas Pontillo, Executive Director, Global CFO and Head of Corporate Strategy. Also available to answer questions will be John Valentini, President and CEO, Private Markets. With that, I will now turn the call over to Maxime. Maxime Ménard: Good morning, everyone. Thank you for joining us today. We are pleased with our operating and financial results for the third quarter of 2025. Total assets under management increased 4% to end the quarter at $166.9 billion, supported by market appreciation and total net organic growth of $900 million. Within our public market platform, assets under management reached $145 billion at the end of the third quarter, up 3.9% from the end of Q2, reflecting market growth and positive net flows. And assets in our private market platform ended the quarter -- third quarter at $22 billion, up 5.3% from the end of the prior quarter, reflecting strong net inflows of approximately $850 million, along with market growth. I will now turn to highlights of our commercial and investment performance across our asset classes, starting with our public market platform. Total net organic growth was $55 million during the quarter. We secured new mandates of close to $500 million, primarily into our U.S. growth equity strategy and positive net contribution from non-sub-advised AUM of close to $400 million, mostly across a mix of our equity and fixed income strategies. This was largely offset by outflows of approximately $700 million from sub-advised strategies. During the quarter, we announced an extension of our partnership with Wellington-Altus with the launch of our Canadian Corporate Bond Plus, an investment fund focused primarily on Canadian corporate bonds and exclusively available for purchase by Wellington-Altus Advisors. This mandate joins the Canadian High Conviction Equity strategy, which was announced in the prior quarter. Both mandates are expected to fund over time, but carry strong growth potential. Turning to investment performance in public markets. Our fixed income strategies continue to perform well in the third quarter with nearly all strategies adding value. Approximately 86% of our fixed income AUM have outperformed their benchmark over the 1-year period and 97% have outperformed over 5 years. We are pleased to report that Fiera Capital was recognized as Fixed Income Manager of the Year at the European Awards 2025. This recognition reflects the strength of our fixed income platform, along with our leadership and long-standing expertise in the insurance investment space. Among our equity strategies, outperformance relative to benchmark was challenged during the quarter. Although equity markets delivered solid gains during the third quarter, relative outperformance of a select group of companies continue to create a challenging environment for generating alpha. Year-to-date, our Canadian equity strategy delivered positive returns, but performance relative to benchmark during the third quarter was impacted by softness in select high conviction holdings and limited exposure to outperforming sectors like materials and energy. Nevertheless, the strategy continues to add value since inception. Returns on our U.S. Equity Core and Atlas Global Companies strategies were also positive for the quarter and year-to-date. However, outperformance relative to benchmark was affected by security selection within a few key sectors. Both strategies continue to outperform since inception. Our International All Cap ADR strategy remained a highlight, outperforming its benchmark by close to 50 basis points in the quarter and 500 basis points for the 1-year period, led by strong selection in health care. Among our sub-advised strategies, the Global Equity strategies performed in line with its benchmark. However, U.S. and international equity were impacted by security selections in financials and industrials and limited exposure to index leaders. Despite short-term challenges, each strategy continues to outperform its benchmark since inception. Turning to our private market platform. Net organic growth was approximately $850 million for the quarter, driven by new subscription of more than $900 million. As we announced during the quarter, we received an initial investment of approximately $800 million from the Canadian District of the United Brotherhood of Carpenters and Joiners of Americas and to the newly launched Canadian Built Opportunities Fund. The initial commitment is divided equally between infrastructure and real estate investments and aims to reach over $1 billion in assets within 3 years. The fund has a dual mandate of generating attractive risk-adjusted returns on capital and supporting jobs for union members and is a testament to our ability to design and deliver high-impact customized investment solutions. During the quarter, we returned capital of approximately $150 million to investors in our private market strategies. And year-to-date, we have returned capital of more than $500 million. We also deployed approximately $400 million of capital into new projects during the third quarter and $1.5 billion year-to-date. Our pipeline of undeployed committed capital increased to $2.1 billion from $1.3 billion at the end of Q2, reflecting the initial investment into the Canadian Built Opportunities Fund during the quarter. In September, we announced that we made changes to our global infrastructure capabilities to broaden the range of strategies available to institutional investors and strengthen the execution risk and oversight. After a careful and deliberate process, we appointed Bruno Guilmette as Global Head of Infrastructure. Bruno oversees both our infrastructure equity and debt capabilities, which manage approximately $5.5 billion in assets and are supported by a team of more than 30 professionals across key global markets. Bruno brings more than 25 years of experience leading large infrastructure platforms and has held senior investment and governance positions in several public sector institutions, including Canada Infrastructure Bank, PSP and CDPQ. Moving on to investment performance. Our private market strategies continue to deliver steady investment performance with key strategies generating positive returns in the third quarter and absolute returns of 5% to 10% over the 1-year period. Private credit strategies, in particular, performed well in the quarter. Our infrastructure debt fund returned 2.6% in Q3 and produced an internal rate of return of more than 11% since inception. The team completed 2 investments during the quarter and is on track to complete its remaining capital commitment by late 2025 or early 2026. Our Direct Lending Opportunities Fund also returned 2.6% for the quarter and more than 10% over the 1-year period. The team has tightened underwriting standards, keeping leverage at conservative levels to ensure borrowers have an adequate flexibility. Our Global Private Equity strategy delivered a solid return of 2.1% in the third quarter, supported by earnings growth and free cash flow generation across core portfolio companies. Lastly, our Global Agriculture strategy returned 1.5% in the Q3 as strong operating results were tempered by a challenging commodity environment. Turning to Private Wealth. Assets under management of $14 billion at the end of the third quarter increased 2% from the end of Q2. The quarter was impacted by negative net contribution largely out of treasuries and sub-advised strategies. We continue to view the private wealth business as highly complementary to our public and private market platforms and remain committed to driving sales growth within this key channel. With that, I will turn it over to Lucas for a review of our financial performance. Lucas Pontillo: Thank you, Maxime, and good morning, everyone. I will now review the financial results for the third quarter of 2025. Beginning with total revenues. Across our investment platforms, we generated total revenues of $167 million in the third quarter. Total revenues were up $4 million quarter-over-quarter or 3% as a result of higher base management fees in both public and private markets as well as an increase in performance fees in private markets. Revenues were down $5 million or 3% from the same quarter last year, reflecting lower base management fees in public markets and lower commitment and transaction fees in private markets. This was partly offset by higher base management and performance fees in private markets. Base management fees of $153 million in the third quarter were up $5 million or 3% from the previous quarter, but down 1% year-over-year. On a year-to-date basis, base management fees of $455 million were flat from the same period last year as higher base management fees in private markets continued to offset a decline in fees from public markets. As Maxime highlighted, this quarter, we received an investment of over $800 million in newly launched Canadian Opportunities Fund within private markets. These assets are currently within committed undeployed capital and are expected to be deployed over the time beginning in the first half of 2026, with the related revenues beginning in the second half of 2026. Assets are expected to be fully invested within 3 years. As a result, our base management fee rate in the quarter reflects a portion of the impact from the increase in undeployed capital. As assets are invested and begin to generate revenues, our fee rate is expected to increase commensurately. Turning to public market revenues. Base management fees of $103 million in the third quarter increased by $4 million over the prior quarter as a result of net organic growth and market appreciation. Base management fees declined $4 million from the same quarter last year, primarily reflecting lower sub-advised assets under management. On a year-to-date basis, base management fees of $306 million were down 3% from the same period last year, reflecting lower sub-advised AUM. Performance fees were $200,000 during the quarter, down from fees of less than $1 million in the same quarter last year. And other revenues of $1.6 million in the quarter were flat compared to the last quarter and down from $3.7 million in the same quarter last year as this was largely due to revenue related to an insurance claim in the prior year. Turning to private markets revenues. Base management fees of $50 million in the third quarter increased by $600,000 from the prior quarter and were up $3 million or 5% year-over-year. This increase was primarily driven by us taking a controlling interest in a U.K. real estate platform during the first quarter of 2025, along with higher deployed AUM within our real estate and agricultural mandates. On a year-to-date basis, base management fees of $149 million increased $10 million or 7% from the same period last year, offsetting the decline in public market base management fees over the same period. And transaction fees of $2 million for the third quarter compared with fees of $5 million in the prior quarter and $4 million in the same quarter last year and reflect lower transaction fees earned from clients as some new mandates won during the quarter did not generate commitment or transaction fees. Performance fees of $7 million during the quarter were $4 million higher quarter-over-quarter and $2 million higher year-over-year, reflecting fees from our global agricultural fund in the current quarter. Lastly, share of earnings in joint ventures related to our U.K. real estate business were $1.4 million in the quarter, down slightly from the prior quarter and same as last quarter last year. Year-to-date basis, earnings from joint ventures were $6 million compared with $11 million from the same period last year, reflecting income earned from completion of several large construction projects in the prior year and the fact that the consolidation is now in base management fees of our controlling interest in our U.K. real estate platform. For the quarter, private markets comprised 13% of total assets under management and generated 37% of our total revenues. Private markets platforms continues to deliver solid AUM and revenue growth and provide attractive diversification to our overall business. Turning now to expenses. SG&A expenses of $117 million, excluding share-based comp in the third quarter were down slightly quarter-over-quarter and down $3 million or 3% year-over-year, primarily reflecting lower sub-advisory fees, lower travel expenses and fixed compensation expenses, which were partly offset by higher variable compensation due to increased organic growth. On a year-to-date basis, SG&A expenses, excluding share-based compensation, were down $9 million or 2% for the same period in the prior year as a result of our ongoing cost management efforts and lower sub-advisory fees. We remain committed to improving our operating efficiency and continue to prudently manage our expense base. Turning to adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA for the quarter was $50 million, up $5 million or 10% quarter-over-quarter as increased revenues and decreased SG&A expenses helped drive margin expansion for the quarter. Year-over-year, adjusted EBITDA was down slightly for the quarter by $1 million as lower revenues were mostly offset by lower SG&A expenses, excluding share-based comp. Year-to-date, adjusted EBITDA of $139 million was down $3 million or 2% for the same period in the prior year as lower SG&A expenses, excluding share-based comp, helped to partly offset lower other revenues and lower earnings from joint ventures. Our adjusted EBITDA margin was just over 30% for the quarter, up from 28% in the prior quarter and flat from the same quarter last year. Looking at earnings. Net earnings attributable to the company's shareholders were $6 million or $0.05 per diluted share for the quarter, up from $4 million or $0.03 per diluted share last quarter. This compares with $13 million or $0.11 per diluted share for the same quarter last year. On an adjusted basis, net earnings were $25 million or $0.23 per diluted share for the quarter compared with $27 million or $0.24 per diluted share last quarter and $29 million or $0.25 per diluted share in the same quarter last year. Last 12 months free cash flow of $87 million compared favorably with $75 million for the prior quarter. The increase primarily reflects improved changes in noncash working capital for the quarter. While the last 12-month free cash flow was below the $95 million generated in the LTM period from the prior year, it is important to note that last year's number included over $31 million in public market performance fees from Q4 2023. Turning to our financial leverage. Net debt was $680 million at the end of the third quarter, down $33 million from the end of the prior quarter as we used a portion of higher free cash flow to pay down our credit facility. We expect net debt to continue to decrease as we prioritize directing a greater share of free cash flow towards debt repayment. Our net debt ratio declined to 3.5x in the quarter from 3.7x in the prior quarter. Funded debt ratio, as defined by our credit facility declined to 2.9x from 3x in the prior quarter. Delivering value to our shareholders remains a fundamental pillar of our strategy. During the quarter, we opportunistically repurchased approximately 540,000 shares for total consideration of $3.6 million. On a year-to-date basis, we repurchased 1.6 million shares for total consideration of close to $10 million. We continue to see significant value in our stock at the current prices. Lastly, the Board has approved a quarterly dividend of $0.108 per share, payable on December 22, 2025, to shareholders of record on November 24, 2025. I'll now turn the call back to Maxime for his closing remarks. Maxime Ménard: Thank you, Lucas. We are pleased with the operating and financial results we delivered this quarter as we continue to make progress executing against our strategic priorities. We continue to grow our private market business, which saw AUM increase more than 5% in the quarter and close to 12% year-to-date. The positive net organic growth during the quarter was driven by 2 large mandate wins, which we believe are a testament to the strength of our distribution teams and our ability to design and deliver high-impact customized investment solutions and reflect the confidence that clients continue to place in our investment capabilities. We exercised good expense control and generated a 30% adjusted EBITDA margin. We improved our financial flexibility, paying down our credit facility and reducing our net debt ratio. And we returned capital to shareholders through our quarterly dividend and share repurchases. I will now turn the call back to the operator for questions. Operator: [Operator Instructions] First, we will hear from Etienne Ricard at BMO Capital Markets. Etienne Ricard: So to circle back on the launch of the Canadian Built platform, there's a lot of talk about new infrastructure projects by Canadian trends. So it sounds like the opportunity set is there. But I think we're all aware the pace of capital deployment can be lumpy in infrastructure. So I'm wondering what's the potential for this strategy to scale over time? John Valentini: The potential for... Etienne Ricard: Yes. For the strategy to scale over time. John Valentini: Yes. Well, we -- first of all, let's say it's a large mandate. It's the biggest mandate we've ever gotten in our private markets platform. I think there is a significant opportunity in this type of mandate to continue to grow. I would also say that we're currently also in discussions to grow this particular mandate in similar mandates. So I think there is a potential. I think there is growth potential in this particular strategy and mandate. To answer more specific, I mean, in terms of our pipeline of similar types of opportunities, we are discussing similar opportunities with different parties in Canada. So it's -- yes, we do see this as a growth potential. Etienne Ricard: Okay. And Lucas, I think you said that you would -- you expect to invest this capital over a 3-year period. Have you -- do you have commitments at this point or it's more in the future? Lucas Pontillo: No, no. So the comment was relative to the capital commitment that we already have. So the idea being that it would be deployed over a 3-year period. So starting early next year and then likely ramping up in the following year and following into the third year as well. So it was with respect to the capital that's already been committed, the $800 million we referred to. Maxime Ménard: Yes, the mandate carries a good revenue scheme in terms of management fee and also performance fees. So we think it's on a relative basis compared to our private markets revenue, I think this is going to be -- it's going to be accretive. Lucas Pontillo: Yes. So again, like not to extend too much on this, but I think what's really interesting, again, we were able to come up with a very customized solution for a group that was looking for deployment of capital. I see a great opportunity and our ability to continue to grow it as they've committed already $800 million in both strategies, real estate and infrastructure. We already have committed to some projects, more importantly, in the real estate right now, and we continue to look for infrastructure. And I think as we deploy this capital, there potentially is other groups that will join as part of other unions and increasing the capital potentially allocated to this. And so we don't yet have a number, but certainly, there is upside potential in increasing the pool of assets committed to that solution. Etienne Ricard: Okay. Appreciate the details. And switching on public markets. What interest are you seeing for active equity strategies from institutional investors given that we continue to see a concentration of market returns? John Valentini: Yes. I think the last quarter is not necessarily indicative of how much interest there is across public markets. In fact, I think we've seen probably the most of interest across our different strategies in the last 2 quarters, including, as I mentioned, a large proportion that went to an active U.S. large cap mandate. And again, this is probably the largest asset class that typically would go nonactive. So I think the last quarter was a difficult one for, call it, high conviction active managers. But nevertheless, I think in the long run, we've seen an increased appetite for public markets and active managers and especially the managers that we tend to have, which is high conviction managers. So whether it's Canadian equities, whether it's U.S. equities and even global, we've seen a constant demand in RFPs coming in. Maxime Ménard: And I would just add to that, despite the difficulties in the quarter, when you exclude the sub-advised mandates, we actually had positive net organic growth in public markets of almost $800 million. And it was a nice diversified set of new mandates across everything from Canadian equity to U.S. equity. So I'd say we continue to see good demand for our products in the quarter. Operator: Next question will be from Jaeme Gloyn at National Bank Capital Markets. Jaeme Gloyn: Yes. First question, just on the cash flows. Just kind of trying to pick up the note from the presentation around timing of accounts receivable, timing of other items. Can you try to kind of normalize some of those factors and what kind of contribution that might have had on the increase in LTM cash flows? Lucas Pontillo: Thanks, Jane. Great question. Actually, I would say it -- I'll reverse it a bit. It actually is quite normalized for the quarter, where we had a significant working capital drag was last year. So when you compare that $95 million versus the $87 million, that's where you're seeing the difference. So we ran a much tighter sort of noncash working capital turnover this quarter, which I would say is probably more in line with how we should be running it. And the last year's number got really impacted by 2 things. It got impacted by large performance fees, as I mentioned, in Q3 2023 -- Q4 2023. And then likewise, there was some slippage with the working capital last time. Jaeme Gloyn: Okay. Understood. And then in terms of the organic growth story, any insights on how Q4 is shaping up? Maxime Ménard: Again, we continue to see lots of interest for the different asset class we have. Again, like it's a little early for me to say how this is going to look like. I've mentioned that there's a bit of a softness in terms of the performance in some of the strategies. Q4 is not necessarily indicative of a lot of decision-making within the institutional world, but we're keeping a close eye on flows. But again, as I said so far, it's hard for me to give you any indications of how this is going. It's a mix of some outflows and again, some positive flows in some of the accounts that we recently won. But we're keeping a close eye on this. Operator: [Operator Instructions] Next, we will hear from Graham Ryding at TD Securities. Graham Ryding: Some solid performance fees in the quarter. I think Q4 historically has been your sort of bigger performance fee part of the year. Your Frontier Markets fund, the performance there has been lagging, but you've had solid performance on your emerging market strategy. So can you give us a feel for sort of how things are looking in terms of performance fees given I believe those funds are sort of fairly material drivers historically. John Valentini: Yes. Thanks for that, Graham. Indeed, as you said, some of the performance, it's a bit lopsided. We've got one that's doing quite well and one that is underperforming. I mean, certainly, at this point, where we are during the year, you can see we're lagging a bit even in terms of the crystallization of some of those performance fees relative to prior year. And as things stand, we're not expecting to have the same level. But again, with these things, it's always so volatile. We still have 6 weeks to go in the year and the sensitivity, particularly around those emerging market strategies, I mean, we've seen it come and go in a matter of weeks at times. So at this stage, we're watching it prudently, but we're certainly more cautious going into Q4 than we would have been historically. Graham Ryding: Okay. Great. And then I know you've made some changes in leadership at the private debt interest or I guess, your infrastructure sort of vertical overall. How would you sort of describe sort of the changes that you're expecting to see there? Is this performance focused, distribution focused? What are you sort of hoping to see come out of that? And a second on that, I think there's some redemption requests, sort of legacy redemption requests there. Are those material in nature? And how are you sort of managing through that? Maxime Ménard: Yes. So the changes that you're referring to is Bruno Guilmette that we brought in, in terms of Global Head of Infrastructure. The goal on that was to strengthen the team in terms of our capabilities around what I consider to be probably one of the most attractive asset class on a go-forward basis. And the point of this is a combination of many things. Again, it's the way we approach the client base and the way that we are coordinating between the debt and the equity. So we decided to bring the 2 asset classes under one leadership, and Bruno had lots of experience on this. In terms of the queue, again, like we're addressing the situation with a combination of making sure that we create the necessary liquidity to address the queue, but also while protecting the performance of the fund. Operator: And at this time, Ms. Medak, we have no other questions registered. Please proceed. Natalie Medak: We'd like to thank everyone for joining us this morning. Please reach out if you have any other questions. Sylvie, with that, we can end the call. Operator: Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Limited and Tidewater Renewables Limited Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, November 13, 2025. I would now like to turn the conference over to Ian Quartly, Chief Financial Officer. Please go ahead, sir. Ian Quartly: Thanks, Chloe, and welcome, everyone, to the joint conference call for the third quarter 2025 results of both Tidewater Midstream and Infrastructure Limited and Tidewater Renewables Limited. Joining me today is our CEO, Jeremy Baines, who will provide an update on operations during the quarter. I will follow with the financial results, and then we will open the line for your questions. This morning, both Tidewater Midstream and Tidewater Renewables reported results for the third quarter ended September 30, 2025. A copy of the news releases, financial statements and MD&A may be accessed on SEDAR+ or on their respective company websites. Before we get started, I'd like to note that today's call is being recorded for the benefit of individual shareholders, the media and other interested parties who may want to review the call at a later time. The recorded call will be available through Cision. Some of the comments made today may be forward-looking in nature and are based on Tidewater's current expectations, judgments and projections. Forward-looking statements we express today are subject to risks and uncertainties, which can cause actual results to differ from expectations. Further, some of the information provided refers to non-GAAP measures. To know more about these forward-looking statements, non-GAAP measures and risk factors, please see the company's various financial reports, which are available on their respective company websites and on SEDAR+. I'll now turn the call over to Jeremy. Jeremy Baines: Thanks, Ian, and thanks to everyone for joining us today. During the third quarter, we continued to advance our strategic initiatives, including the acquisition of the Western Pipeline, which successfully closed on September 25. Across our portfolio, we delivered consistent operational performance in our midstream assets and solid financial results at Tidewater Renewables, all while executing planned maintenance and turnarounds to ensure long-term reliability and efficiency. I'll begin with Tidewater Renewables, followed by Tidewater Midstream, covering regulatory and strategic developments, operational performance and maintenance activities and followed by commercial updates. Starting with regulatory developments. On September 5, 2025, the government of Canada announced a $370 million biofuels production incentive program to address the economic challenges caused by U.S. subsidies and policies. The incentive program is expected to provide per liter support for qualifying Canadian producers of renewable diesel and biodiesel from January 2026 through December 2027. With the HDRD complex expected to produce between 150 million and 170 million liters annually during this period, Tidewater Renewables is well positioned to benefit once the program is implemented. In addition, the government of Canada also announced its intention to make targeted amendments to the clean fuel regulations to further support Canada's biofuel sector. We understand the government will develop the amendments in consultation with industry stakeholders this fall, and we are actively planning to participate in this process. Moving to operations at the HDRD complex. Throughput during July and August averaged 2,920 barrels per day or 97% of design capacity prior to the scheduled turnaround in September. The turnaround was originally expected to last 3 weeks, but was extended by 2 weeks due to higher-than-anticipated following in the hydro deoxygenation reactor beds. Following the planned turnaround, there was a 2-week unplanned outage during October due to an equipment anomaly, which was temporarily repaired to resume operations. Throughput has averaged approximately 2,330 barrels per day to date during November with rates expected to return to full capacity in December 2025 after the affected component is reinstalled. Utilizing the learnings from the first 2 years of operations, including insights gained from this turnaround, we have optimized the turnaround schedule to extend the catalyst life to approximately 2.5 years. This means that the next turnaround at the HDRD complex is planned for the spring of 2028, which allows us to maximize production during 2026 and 2027, while the biofuels production incentive program is in place. And lastly, for renewables, a few comments on commercial progress. We have significantly increased our contracted offtakes, which now cover 100% of forecasted renewable diesel production for the remainder of 2025. This compares to 70% of forecasted production for the second half of 2025 as disclosed in Q2. Looking ahead to 2026, over 80% of forecasted renewable diesel production is expected to be directed toward renewable diesel sales inclusive of environmental attributes. All of these sales are structured with U.S. import parity pricing benchmarks aligning pricing of prevailing U.S. market values and reducing our exposure to Canadian emission prices. The remaining volumes are expected to be sold into the spot market where current Canadian pricing remains favorable. Tidewater Midstream regulatory developments and strategic initiatives. Starting with regulatory and strategic developments on November 12, 2025, Tidewater Midstream executed an initiative agreement with the government of British Columbia to provides BC-LCFS credits to support the production of both carbon renewable diesel and renewable gasoline from the hydrotreater coprocessing unit at the Prince George Refinery. These BC-LCFS credits are expected to fund approximately 50% of the cost of renewable feedstocks required to operate the hydrotreater coprocessing unit during 2026 and 2027 at previously achieved rates of 300 barrels per day. In addition, the sale of co-processed, low-carbon transportation fuels into the British Columbia market will generate CFR emission credits and additional BC-LCFS credits for Tidewater Midstream. On the strategic front, we closed the acquisition of the North segment of Pembina's Western Pipeline System on September 25, 2025. Now that the transaction has closed, our immediate focus is on integration activities and having our team take over operations of the pipeline in November. Once that occurs, we expect to be able to start realizing the expected operational synergies and the $10 million to $15 million of anticipated annual cost savings we announced previously. We also continue to advance our noncore asset sales program. On October 21, the Sylvan Lake gas processing facility was sold for cash proceeds of $5.5 million. We continue to work on further divestiture opportunities, including growing market interest in repurposing energy sites for data center development. We look forward to updating the market as discussions progress. Next, let's turn to the operations at the Prince George Refinery. Throughput at the Prince George Refinery averaged 10,313 barrels per day in the third quarter of 2025, a 4% increase from Q2 2025, though lower than Q3 2024 due to differences in feedstock composition and operational adjustments. The semiannual heat exchanger cleaning was completed in early October, and throughput levels have since normalized to approximately 12,200 barrels per day. As part of our ongoing maintenance optimization strategy, we have transitioned PGR to a 5-year turnaround cycle with the next major turnaround plan for the second quarter of 2028. While refined product margins remained under pressure during the third quarter driven by wider wholesale discounts and an oversupply of diesel in Western Canada stemming from U.S. renewable diesel imports and elevated regional refinery utilization, we are encouraged by the stronger crack spreads observed recently. Prince George crack spread averaged $90 during the third quarter, which increased to 93% for October and has been over $100 during November. These improving market conditions are expected to contribute to better realized margins in Q4 and into 2026. Now I'll move on to our broader midstream operations. At the BRC gas processing facility, throughput averaged 124 million cubic feet per day in the third quarter, up from 95 million cubic feet per day in the second quarter of 2025. As disclosed last quarter, the increase was expected following the repair work completed at Plant 3 in late June. Ram River gas plant remains temporarily curtailed. We have experienced record low natural gas prices during the third quarter and operations have not yet presumed. Once we see natural gas market conditions improve on a substantial sustained basis, combined with the more supportive sulfur markets we are experiencing, Ram River is expected to return to prior throughput levels, enhancing overall midstream gas processing capacity. Commodity markets in Western Canada remain challenging with low AECO spot prices leading to selective shut-ins. However, we remain optimistic longer term as LNG Canada and other export projects ramp up, supporting higher forward AECO prices and renewed demand for processing capacity. Looking ahead, we remain focused on driving operational excellence, enhancing margins and executing strategic initiatives, including maximizing efficiency at PGR and HDRD complex, strengthening commercial platforms and offtakes, advancing our SAF project while managing capital prudently, progressing noncore asset sales to unlock liquidity and continuing to advocate for a fair regulatory environment. We believe these building blocks position us for both revenue growth and margin expansion during the remainder of 2025 and beyond, ensuring we continue to deliver value for shareholders while advancing our long-term strategy. With that, I'll now turn it to Ian for the financial review. Ian Quartly: Thanks, Jeremy. I'll begin with Tidewater Renewables financial results, and then we'll discuss Tidewater Midstream's consolidated financial results. Tidewater Renewables reported a net loss of $1 million during the third quarter of 2025 compared to net income of $13 million for the second quarter of 2025. The decrease in net income is primarily due to 2 noncash items, the first being a significantly smaller unrealized gain on soybean oil derivative contracts in the current period and the second being a loss on the warrant liability revaluation, which resulted from the significant increase to Tidewater Renewables share price during the third quarter of 2025. Adjusted EBITDA was $16.5 million for the third quarter of 2025, a 54% increase over the second quarter of 2025, primarily due to higher player contributions from the equity investment, which totaled $7.9 million during the third quarter. As Jeremy mentioned previously, we continue to have success selling renewable diesel, inclusive of all the environmental attributes, which we call R100. There are a number of significant advantages to this commercial structure compared to selling the emissions credits separately, which I want to quickly highlight. The first benefit is that R100 sales result in faster cash collection and reduced working capital, as the total cash proceeds from the sale of the diesel and all the environmental attributes are received within a week or 2 of the physical sale. The second benefit is that R100 is priced of highly liquid and observable U.S. benchmark prices. In the future, we may hedge a portion of contracted R100 sales and the corresponding feedstock purchases to effectively lock in the gross margin on contracted sales. And the third benefit is that our customers are used to purchasing under this commercial structure as it mirrors how they purchase the import alternative. As a result, Tidewater Renewables expects to sell over 80% of forecasted 2026 production is R100. Turning to Tidewater Midstream. The third quarter consolidated net loss attributable to shareholders was $34.1 million compared to a consolidated net loss attributable to shareholders of $16.3 million for the second quarter of 2025. The increase in net loss is primarily due to the unrealized gain on derivative contracts that was recognized in the comparative period. Consolidated adjusted EBITDA was $16.2 million for the third quarter of 2025, consistent with the $16 million reported in the second quarter of 2025. A higher contribution from the equity investment in the third quarter was offset by lower midstream margins resulting from the historically low AECO pricing and higher corporate costs. On September 30, 2025, with the support of our syndicated lenders, the Tidewater Midstream senior credit facility was amended to waive the requirements to comply with the quarterly financial covenants at September 30, 2025 and December 31, 2025. The amendments provide Tidewater Midstream with added flexibility as we continue to execute ongoing strategic initiatives. And finally, on August 28, 2025, following the special resolution approved by the Tidewater Midstream shareholders at the May 27, 2025 Annual and Special Meeting, Tidewater Midstream completed a share consolidation on a 20-for-1 basis. Proportionate adjustments were also made to the conversion price of the corporation's outstanding convertible unsecured debentures as well as the corporation's LTIP plans. That concludes our prepared remarks. Chloe, please operate the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Rob Hope from Scotiabank. Robert Hope: Maybe on the $370 million biofuels program incentive, how have discussions with stakeholders progressed on that? When could we see some additional clarity on that? And is the expectation that it will be in place for Jan '26? Jeremy Baines: Yes. So we are waiting for the final release of the details, but they have clearly stated it will be in place for January 1, 2026. We expect to hear late this year or early in the new year, but government seems very committed to this, and they announced it in the fall economic statement a year ago. And then with the announcement by the Prime Minister, it's all moving ahead. There are -- we are waiting for final details of exactly how it works, but it looks like it's going to be a very good support for the Canadian renewable diesel industry. Robert Hope: And would you be willing to give an estimate of just assuming it is laid out as planned, how much of a benefit it will be in '26 for LCFS? Jeremy Baines: Yes. We're not 100% -- we haven't seen the final rules and regulations, so we don't know exactly what's included or what's not included. But based on us back calculating into the potential liters of production of renewable diesel and biodiesel that we see that could be in place for this program, our best estimate is it somewhere between $0.15 and $0.21 on per liter. Operator: [Operator Instructions] Our next question comes from the line of Maurice Choy from RBC Capital Markets. Maurice Choy: Sort of come back to the PGR move to a 5-year turnaround cycle from 4 years previously. Can you speak to that position as well as if there is a trade-off in terms of utilization rate? For example, do you need to run at a lower rate in order to have a longer turnaround cycle. And just more broadly, I think you mentioned in the MD&A that 5 years is well within the industry norms. What was the reason why it was 4 years in the past? Jeremy Baines: Yes, it's a good question. Thanks for the question. It's hard for me to speak to a lot of the past practices. But with advances that are being made in catalyst technology and industry advances. We always are monitoring the performance of these things. And we've seen at many other refineries go to these 5-plus year turnaround cycles, and we've been doing a very heavy risk sort of evaluated determination of is this appropriate for us. We think we can go all the way without seeing impacts to throughput and yield. So obviously, we're going to monitor performance. We always monitor the performance of our catalysts and so forth as we go, and there's a couple of sort of call it, critical spare pieces of equipment based on what we saw last turnaround that we might look to put on hand just to make sure that if something on that front went wrong, we could quickly address it. So we're very confident that we've done the right risk-based approach that we can make it without impacting throughput yield and that we -- obviously, this extends the -- lowers our maintenance CapEx at the refinery almost 20% over a 5-year cycle. So it's what was previously a 4-year cycle. So it's very meaningful. It is industry -- pretty much industry standard, and we are managing it appropriately. Maurice Choy: I understand. Maybe as a quick follow-up. So I guess, Jeremy, you're coming up to your 2 years as CEO here. And I wonder whether or not like comments about the past management. Anything that you are now seeing that it's worth changing in terms of whether it's turnaround, whether that's culture, whether it's people, anything of that sort that you want to tackle in your third year? Jeremy Baines: Yes. I mean we've already made a significant amount of changes around people. I believe we made a lot of changes around culture, and we're focusing on -- it's continuing to move that focus on real cash flow generation and efficient and reliable operations at our facilities, making sure we're doing the appropriate risk things and coring up our assets to make sure that all the assets are actually generating an appropriate return or that we're turning them into cash. So it continues. We've done -- when you start looking at the long list of changes we've made in, I guess, it's almost 2 years, maybe call it, whatever, 19 or 20 months that we're at now. It's a continuation of that program. There were a lot of things that needed to be changed, and we've made a lot of progress, and we're going to continue that path. Maurice Choy: Understood. And if I could finish off with -- I think, Ian, you made a comment about the benefits of selling your production as R100. Can I ask what was the obstacle from selling this as R100 in the past that perhaps has changed to allow you to do so now? Or was it a strategy decision not to do so in the past? Ian Quartly: Yes, Maurice. The reason we didn't previously sell R100 is we had the contract with Tidewater Midstream to sell essentially all the LCFS credits produced from July 2024 to March 2025 under the transaction that was completed kind of mid-2024. So we couldn't produce a fully loaded barrel. So that ended in April, and we essentially transitioned to R100 sales from that point forward. Jeremy Baines: And just one other piece, I guess, to add to Ian. The change in the long Canadian renewable mandate made it a little bit easier to do that as well. But it's been -- it's extremely helpful to the business and to keep sustainable reliable cash flow throughout the year with a quick cash level. Operator: There are no questions at this time. I would now like to turn the conference back to Mr. Quartly. Please go ahead. Ian Quartly: Thanks, everyone, for joining the call. The team is available to address any outstanding items with our contact information at the bottom of each company's press release. Thank you. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a wonderful day.
Operator: So ladies and gentlemen, a very warm welcome to Bilfinger's Third Quarter 2025 Results Conference Call. My name is Jasmin Dentz, and I'm joined today by Thomas Schulz, our Group CEO, and Matti Jakel, our Group CFO. As always, all documents related to our Q3 reporting have been made available on our website. As usual, we will start our webcast with a presentation of the quarterly highlights, the current market environment and our financials and then open the webcast for your questions. [Operator Instructions] The webcast will be recorded. And I will now hand over to our CEO. Thomas, please, the floor is yours. Thomas Schulz: Thank you. Hello, everybody. As always, we start with our highlights for the -- this time, the quarter 3 2025. We had quite a good stable development in a very volatile market. Our orders received increased by 1%, at least by 1% absolute and our revenue by 8%. Our EBITA margin is on 5.8%, and our earnings per share moved slightly up to EUR 1.47. Significant improvement close to 30%, we had in the free cash flow, which went from EUR 55 million to EUR 71 million. We updated our outlook and gave a new revenue outlook of EUR 5.3 billion to EUR 5.5 billion for the year and 5.4% to 5.6% EBITA margin. I would like to repeat what we said in the last few calls, we always hit the midpoint of the guidance, what we give. That's what we are after. And very important, and you are all invited, and we hope that you all participate, we will give new midterm targets on the upcoming Capital Markets Day in the area of Frankfurt on December 2 this year. Before we go more into market data and so on, as always, our ESG topics, and it is with a strong focus on safety. When you look here into that slide, on the left side, we have the total recordable incident frequency. It's based on 1 million working hours, and you see that we moved quarter-on-quarter from 0.88 to 1.01, which is a slight, yes, creating of a disadvantage. We work on to have 0 as a figure there. We put a lot of effort, time, actually emotions and money into it. With our current result and what we proved in the last few years, we are actually playing in the top league, not only in the industrial services segment. The other figure what we report on, which is quite important, too, is the lost time injury frequency on 1 million hours, too. And there, we have an improvement from 0.29 to 0.17, and there, we are, let's say, closer to the 0 and 0 means we have no accidents in whatever we do. And that in a company with more than 30,000 people is definitely an achievement if we come there. Out of that, we look into the market. And for us, we have one indicator what we show since several quarters, it's the production index. It's based on 2019, and it is for Europe, Middle East and North America. And we show our 4 biggest industries where we operate in, which means where we have more than 10% of our revenue line for a longer period of time. And when you see, it's the typical gap, the green line, which represents pharma, biopharma is still on a growth, which means this industry develops quite well. Whereas the other 3 like energy, oil and gas versus 2019 is slightly up in the production index and chemicals and petrochem is actually below 2019. When we then look into the specific industries, I just said that chemicals and petrochem is below 2019 in these areas for the base of -- for the production index, it's predominantly Germany, which lowers here the figures. When we look into the demand is on the side movement. Again, it's Germany, which has a negative impact here. It makes 23% of our revenue share, but the outsourcing potential, the potential where we can as Bilfinger can go to our clients to offer them to take over all the maintenance and for us to in-source, for them to outsource, to have a stronger efficiency gain if professionals like us, like Bilfinger is doing it is quite a good market, predominantly based on the pressure what our clients see in the global market for chemical and petrochem products. The second industry is energy, 23% of the revenue share. The demand is good, and the outsourcing potential is good. What we see especially and that for a longer period of time is the increasing demand for storage and transmission. The third one is oil and gas. There, we have a strong LNG demand, and we have lower refinery demand. It means 20% of our revenue share is in that part. Demand is good overall, and outsourcing potential is good. About pharma, I already said, where it comes from that they are on that good growth path for quite a while now, the demand is good and the outsourcing potential is good, and it makes -- made in that quarter 13% of our revenue line. Out of that, some selected orders to see what we really do on the client side, let us start with Germany in adjacent industries. Adjacent industries are all the industries we work in, which are not belonging to the 4 big ones, what I showed before. And here, it's about a semiconductor manufacturer in Germany where we got the order for prefabrication and installation of the wastewater treatment system, for, of course, efficient resource, efficient chip production. The second one is out of the area of energy in Sweden from the German client, E.ON. It's the prefabrication and assembly of heat accumulator to increase reliability and sustainability in district heating supply. I hope you remember that we, as Bilfinger, are a leading company in district heating solutions. It's all about liquids and gases, and there we are really great. Then the last one is oil and gas out of Kuwait. It's with our well-known KNPC client, and it's for the North Oil Pier. It is about a front-end engineering design service. And of course, the background is enhancing operational efficiency, which is the core of our offering. When we talk about core of our offering, we are on innovation. This time, we introduce to you the so-called DRIS 2.0. It is a system to inspect insulation during routine operations to describe where the challenge comes from. If you are in an area with low temperatures, northern part of Europe, for example, and you open the insulation on a pipe with a higher temperature, you always create moisture in between the insulation and the pipe. If you then close the insulation, you actually create a situation where rust and other damages can happen. That's the reason that in general, this kind of investigations and opening of insulation on these type of pipes are only happening during a so-called turnaround schedule. And the turnaround schedule means shutdown of that part of a plant or the whole plant. When you do that, shutdown of a whole plant or a part of a whole plant, then you can imagine it costs the customer a lot of money. So we worked on how to reduce the turnaround schedule. One part is that we can inspect and repair and work on the insulation in these weather conditions without harming the system, and we came up with a portable solution to do that. This kind of solution actually gives us a possibility to shorten the turnaround, the shutdown of the complete plant time by more than 10%. We see always more than 5% cost savings, and it helps the clients to do what we call case-based execution. It's another word for if they believe or if we see there could be a damage and we don't need to shut down the whole plant, we can do then the repair and everything during regular operation. This is a big advantage in a more efficient world. Out of that, I would like to look into the Bilfinger demand. You know our opportunity pipeline. The opportunity pipeline is that what we, as a Bilfinger Group, quote and work with inquiries and possible upcoming business in the market judged by, if it really will happen and how likely it is that we have a share as Bilfinger in that. And we go 2 years back, that means July 2023 is the 100. And when you look into, we actually have from last year, third quarter 2024 to this year's third quarter 2025, quite an increase of 15% of the opportunities. When we look more into detail into that, it is clearly that the demand for enhancing efficiency on customer side, no matter which industry is increasing, and it's a proof of that, what we said before, Bilfinger will perform if the market goes up or if the market goes down, and we have that mixed picture in the world between the center of Europe and, for example, the Middle East and North America and the growth part on the other side. Orders received is 1% up to EUR 1.36 billion coming from EUR 1.344 billion. For us, important in that is, of course, the development, as we always say, of the order backlog, that's 7% up. If we look year-to-date, we actually have a book-to-bill year-to-date of 1.1 which is good. We are in the order intake as revenue year-to-date because we are already in the mid of November, quite a growth as we predicted as midterm targets. Out of that, I would like to give to Matti, our Group CFO. Matti Jakel: Thank you, Thomas. Good afternoon, ladies and gentlemen. I guess, by now, you will have studied the material that we published earlier today or in the early hours of the morning. Let me add some comments to our financial performance for the third quarter 2025, which was the CEO said a good quarter, the CFO says it was a solid quarter. Thomas Schulz: Thank you. Matti Jakel: Important, if you look at year-to-date performance, it does demonstrate the progress that Bilfinger is making. Into the numbers, revenue up by 8%, 7% organically to almost EUR 1.4 billion for the third quarter 2025. You see the changes there. Contributors were all segments. Europe at plus 5%; E&M International at plus 8%. Organically, even 14% in International. However, you all know how weak the dollar has developed over the last few months, and hence, we have a foreign exchange effect here. Technologies up almost a quarter, 24% or 25%. And I'll come to the segments in a moment. Thomas talked about the movement and changes in our core industry. They are reflected in the 2 pie charts here. The share in chemicals and petrochemicals went down by 2 percentage points, 25% to 23%. Conversely, oil and gas went up from 17% to 20%. So we see a bit of a revival here in oil and gas is well known. However, it also demonstrates our strong position in oil and gas offshore in the North Sea on the Norwegian side as well as the British side but also increased activities in facilities for the production of hydrogen. Looking into profitability. The third quarter 2024 was very strong in terms of gross profit at 12.3%. This quarter, in absolute numbers, we are on the same level as last year, 11.3%. An interesting feature this year is that all 3 quarters now were above 11.0%, which means we have also, like you've seen in cash flow, leveled out the profit generation throughout the year. On the SG&A, we made some progress. The ratio went from 6.1% down to 5.8%. In absolute numbers, we went from EUR 78 million to EUR 80 million. That's due to the acquisitions that we communicated early on, the Rodoverken in Sweden and the nZero in the U.K. On the EBITA margin, also slightly down from 6.0% to 5.8%, in absolute terms, an increase of EUR 5 million, everything as we had expected and communicated earlier. A little bit on to the segments. If we look into E&M Europe, which is our largest segment, so what you see on the group number is also reflected here. Revenue grew by 4%, overall flat. And if you look at it organically, again, the 2 acquisitions added to the overall growth. Sorry, that was on the orders received. On the revenue, it's up 5%, 2% here, you can see the additions of the 2 acquisitions as well. So where do we see growth, in energy and oil and gas industries and chemicals, as we all know, petrochemicals remain challenging there. Profitability, slightly down by 0.2%, but absolute an increase of plus 2%. On International, quite some progress. Orders received up at 17% organically and 10% due to the U.S. dollar weakness, 10%, up to almost EUR 200 million for the quarter 2025. Interesting in the U.S. is that the business in the industry or for the industry, is very active, while the business that we have for the U.S. government and governmental entities has slowed down quite a bit due to DOGE activity of Mr. Musk earlier this year, but also due to the shutdown, which luckily for, I guess, a lot of people was finished or completed last night. So it will not release everything that was not done in the last few quarters immediately, but we will see some better numbers there in the future quarters. Revenue growth predominantly in the Middle East, but also in our maintenance business in the United States, again, here, plus 14% organically, including foreign exchange adjustments plus 8% to EUR 182 million and a book-to-bill of 1.05, indicating further growth. On the profit side, you may remember that we had an impact last year in the third quarter from an arbitration case, which was then offset at group level. But here for the segment, we've done quite well to 4% for the quarter, proving that especially the transition and transformation in the U.S. is taking good shape. In Technologies, order intake is flat, about EUR 270 million, plus 1% organically, that's the business where we see more of the larger projects. And we do see some volatility in the order intake, as you can see from the graph, but EUR 270 million is a strong quarter as was the quarter 3 in 2024 as well. Revenue up 24%, 25% to EUR 239 million. Very strong business in life science and nuclear, where we had received a good order intake in the last few quarters, now sort of in execution. On the profit side, plus 42%. So a good increase, not only in absolute terms, but also 90 basis points from 6.9% in to 7.8%. And again, operational excellence, derisking efficiency improvements, all of this is at work in the segment Technologies. Net profit for the quarter remained at EUR 55 million last year and this year. You can see that the tax rate increased from 21% to 25%. That's the impact of a change in law in Germany, where the corporate tax rate will be reduced by 1 percentage point per year until 2028 and thus lowering the value of our deferred tax assets. So that's a onetime effect in this quarter. The earnings per share is EUR 1.47 this time versus EUR 1.45. Why the difference? We have a smaller number of shares as we are progressing with our share buyback program. The number of shares is reduced. Cash flow. Free cash flow, operating cash flow, both benefiting from what you see on the right-hand side. The net trade assets or trade working capital over revenue as a percentage came down to 8%, which is the target that we have given ourselves, thus improving the free cash flow over and above what we generate in profitability. Positive contributions from all segments, and I think I now stop counting because it's the ninth consecutive quarter of positive cash flow. Maybe in -- or the fourth quarter 2025, we counted 10 and then we stop this. Thomas Schulz: Solid performance. Matti Jakel: Yes. Group net liquidity and leverage, nothing much to report here. Liquidity follows the free cash flow. Leverage at about 0.4, way below the threshold of 2, which then brings me to our outlook. Let's look at the segments first. This is based on the current performance or the year-to-date performance 2025, where we narrowed the bandwidth for E&M Europe on the revenue side from EUR 3.5 billion to EUR 4 billion, now to EUR 3.6 billion to EUR 3.9 billion. On the margin, 5.8% to 6.2% now. E&M International is unchanged, performing there as we planned. And with some of the uncertainty in the U.S., we've felt more comfortable to leave it as is. Technologies, as you saw, the very good performance. We increased revenue update or outlook from -- to EUR 800 million and EUR 850 million and profitability quite an increase to 6.8% to 7.2%. And then on the Reconciliation Group, some minor adjustments. Group totals. On the revenue side, EUR 5.3 billion to EUR 5.5 billion for the full year, targeting the midpoint. EBITA margin, 5.4% to 5.6%, targeting the midpoint. And free cash flow based on the good performance so far, quite an increase to EUR 300 million to EUR 360 million for the free cash flow, again, targeting the midpoint. So much from my side, and I turn it back to Thomas for the wrap-up. Thomas Schulz: The -- as you saw with that what we announced, we are always referring, of course, to the midterm targets, what we set ourselves at the beginning of '23, where we clearly see that we are on a good level to achieve that what we promised. And it's, of course, quite nice to see that we -- with the NTA, net trade assets, are already on 8% down, which is quite good. So to summarize that, let's say, solid performance with orders received fairly flat, revenue 8% up, EBITA margin 5.8% versus actually, the third quarter last year was the highest operating real EBITA for more than 15 years and longer, we couldn't look back. Earnings per share up to EUR 1.47. Cash flow close to 30% up in the quarter. We narrowed the guidance. And as we communicated quite often, we actually always hit and have in mind the midpoint of guidance range and there we are on a good way. And very important new midterm targets will -- which we then will talk a lot about for the coming 5 years on the Capital Market Day on December 2. And with that, Jasmin? Operator: Thank you, Thomas. Thank you, Matti. [Operator Instructions] So the first one comes from Michael Kuhn from Deutsche Bank. Michael Kuhn: I'll start with the opportunity pipeline. I think that number looked particularly strong compared with what we had over recent quarters. So interested in the underlying drivers and let's see where you see the most pronounced pockets of strength. Thomas Schulz: Yes. That's true. It is. And -- the -- of course, our acquisitions, what we did in the last few years. This year, it will be 3 acquisitions, for example, they are enablers and kind of unlocking more potential with the existing business, what we have to make it in more crisp wording, if we bid on a service contract and we got here and there some more additional competence, we actually can enlarge that what we bid towards the client with the whole base of the Bilfinger offering. This is part of our M&A strategy, and that works out. That's one part of the stronger opportunity pipeline. And the second one is, and we will talk more about when we come to the Capital Markets Day, we know what we have to, how to say, put on the next development step within the company to achieve more leverage in the different markets because we see quite a lot of growth in our existing markets, but we have to get more aggressive in sales. Michael Kuhn: Understood. Then one on E&M Europe, and I know it's a bit nitty-gritty because the margin was just down 20 bps, still we got so used to margin increases. Was there anything particular you would like to find out? Or is it just a normal fluctuation? Matti Jakel: Michael, this is Matti. I would say it's a fairly normal blip, which we see from quarter-to-quarter, 0.2 percentage point is not disconcerting at all. Sometimes the contract mix or product mix offers a different composition of margin generation. What we do see, although is we don't see sort of a harmonized picture. We see variances from quarter-to-quarter between the regions. So sometimes the German-speaking region is up, and United Kingdom is down, and the next quarter, it's different. I think it's also fair to say, Michael, that Technologies is operating in Europe exclusively. So if we combine or look together at the performance of the E&M Europe segment plus Technologies, which is the total of our European business, I think we're quite well underway. Michael Kuhn: That's for sure. And then I also wanted to actually ask about Technologies. Obviously, very strong year-to-date development also order-wise and that more and more translating into profitability. You pointed out some pockets of strength here, nuclear, life science. Could you give us an idea, let's say, in terms of percentage contribution of those particular growth drivers and let's say, what margin differentials you see within Technologies, so bandwidth in terms of what's the lowest margins you generate there and the highest and how the mix is evolving? Thomas Schulz: Yes. The -- we are generally not going too much into details within the segment. But actually, the thing is that we see regarding Technology that especially in the pharma, biopharma area was quite a lot of revenue growth in it. And oil and gas, some, energy keeps roughly the same level. It is fair to say that all the improvements, what we did in the last few years on the Technology segment worked out quite well. It's fair to say that our people there are doing a great job. But as Matti rightly said, it is actually part of Europe. And we are very much combined with that what we do in the E&M Europe segment, too. So both together is maybe a better view than to separate them. Operator: So the next question comes from Olivier Calvet from UBS. Olivier Calvet: First one, maybe on order wins. You showed an increase in opportunities, but orders received are flat organically. Can you comment on your order win rate perhaps? This is the first one. Thomas Schulz: Yes, I can comment that we will not give more further comments on that. But the thing is orders, what we see in the opportunity versus that what we already have then in the order intake. There is, of course, always a time delay in it, too. And the time delay is related with that what the clients are doing, permitting the whole thing what you have, number one. Number two, we always have this with the order intake and the opportunity pipeline. Last quarter, we had a very strong order intake growth. And we had to explain why it was strong. Now we explained why it was only, which is still a very good level, flat order intake. We have these movements in between the quarters. For us, more important in the order intake is actually the year-to-date order intake movement, the order backlog, and that's then in relation with the opportunity pipeline and then, of course, the hidden win rate and so on. And we see here in the year-to-date order intake was roughly 5%, is going exactly in the direction as we actually promised at the beginning of '23, where we -- what we said before, already could recognize that at the beginning of '23, our 2% industry growth, what we believed year-on-year for the next 5 years, was too high. We see actually in hindsight that the industry growth, which was realized in the areas where we are in '23 and '24 was not hitting the 0.4%. Despite that, we are in our 4% to 5% growth area, which shows that our self-propelled growth actually worked quite well. Olivier Calvet: Yes. That makes sense. Second one is on staff. I see employee numbers up 1% year-on-year. Just wondering if you're facing any issues in hiring and if that's a limiting factor for your growth going forward? Thomas Schulz: We are not seeing any real issues in that. You always have issues if you are in remote areas. I think that's obvious. If you are in an area with a lot of people living, it's easier to recruit. If you are more on the country side with low people living per square kilometer, it's, of course, tougher. But in general, we don't see that. We are, as Bilfinger, especially in the blue color range, very attractive. We have a good learning and development program. We can bring regular educated people up to engineering level and so on. So with that, we don't see that discussion what we always have in the newspaper that there's a shortage of staff. We don't have that in that way. Olivier Calvet: And then just on the U.S. shutdown and sort of government-related demand. Could you quantify the share of your revenues within E&M International that is directly impacted by the shutdown or by sort of government demand generally? And do you see any upside to your E&M International sales now that the shutdown is over? Matti Jakel: The share of revenue in International is about 20% to 25%, that we do for government entities across all levels within the United States, be it federal, state and sometimes municipal. Things that linger for months and months, even if a compromise has been found, will take a few more months until the administration goes back into normal working mode. So we're not expecting anything to change quickly. The U.S. is having Thanksgiving later this month, and then Christmas is around the corner. So I would think we see improvements starting in the second quarter of 2026 because that will take some time to get going again and then issue contracts and then we can get started on the work there. So more during the Q2, Q3 2026. Operator: So now that we've talked about the opportunity pipeline already twice. I also received a question on this behalf via the chat function. It comes from Nikolas Demeter from Bankhaus Metzler. And he says, looking at the opportunity pipeline, we see growth of around 15% compared to last year. While the order backlog shows organic growth of 7%. I have 2 questions on this. I recall you once mentioned that the current reported order backlog essentially reflects only the orders to be executed over the 12 months. With that in mind, has the total multiyear order backlog beyond this 1-year horizon increased more strongly than the 7%, which will support revenue growth in 2027? I think he means '26 and the years after. And second, what should we expect for Q4 in terms of order intake? Can we expect a solid level of new orders, given that the opportunity pipeline appears to be quite strong? Thomas Schulz: Yes. The order backlog -- at first, thank you for your question. I look, of course, to my solid CFO, the -- any comment on the order backlog development? Are we going that much in detail? Matti Jakel: Well, let's make sure that we all understand how we report contracts. On multiyear contracts, we only show the next 12 months as order backlog. On project contracts, which have a fixed duration, be it 6 months, 12 months or be it 24 or 36 months or any time, we show the full contract value. So only on framework contracts where the drawdowns, the call-offs are uncertain, we show the expectation for the next 12 months. Comparing the order pipeline and the backlog development is something that we do all the time. But it's not easy to find a correlation. The order pipeline includes anything from what we have heard is going to come, anything that is in assessment, anything that -- where there is a tender out there or anything that we're negotiating even without a tender with our clients. All of this goes into the pipeline. So there's a lot of judgment in the order pipeline. Internally, we certainly have rules, how to judge what's in the pipeline. And hence, that determines the development. So I think it would be wrong to assume that the development of the order pipeline is exactly then to be seen in the order backlog. Many things happen between an opportunity in the pipeline and then the contract award. So I would think that the relation of a 15% increase in the pipeline that converts into 7% order backlog growth is a very good conversion. Thomas Schulz: Yes. And to look -- when you look several quarters back where we showed a percent you see that actually very often our order intake development is on a higher percentage than the pipeline development. Just to say that we eat market share out of that is too simple. We have a lot of variables, as we call it, in the opportunity pipeline, but you have to have that because you forecast is actually that work happening, what means that the customer makes an order out of it. And second, is it -- which part is coming to Bilfinger and not only into the peer group. And third, the timing element. And you can imagine that a direct correlation is tricky, but it gives us the opportunity pipeline, a good view in the detail how to reestablish our resources for the future to be early enough aware of where we go up, where we go down and so on. And of course, it helps very much in the discussion with the single customers how the actually workload out of the industry -- in the whole serving industry is, which makes it easier for the clients to manage their timing too. We hope that was not too theoretical. I actually can talk for hours about it, but the -- it is a good indicator how we see opportunities for Bilfinger developing. But it's not a direct correlation to the order backlog development. Operator: Okay. Our next question comes from Craig Abbott from Kepler Cheuvreux. Craig Abbott: Yes, I'm trying to just understand a little bit more on the accounting impact on these acquisitions. I think you've done 3 to date. If we could maybe just like have a combined -- some combined figures here for sales and EBITA that have been realized so far and what do you expect them to contribute on a full year basis? Rough figures are fine, of course. And then also how much you paid for these? And if you could also point us to the line item in the cash flow because maybe it's just been folded up in a general line item. I didn't see it, but how much you've been paid -- you paid for these acquisitions? That would be my first question, please. Matti Jakel: Yes, Craig. Accounting impact of the acquisitions. We have made 2 acquisitions that are included in the year-to-date numbers of -- for the group. The third acquisition just closed on October 1. So nothing included in until the end of September. The top line figures are the contribution to order intake is about EUR 35 million to EUR 40 million. The revenue is about the same number. So compared to the group, it doesn't change or it doesn't move the needle much in terms of numbers, but it puts us into a much better position. Profitability wise, they do deliver what we said when we talk about M&A, it needs to be accretive, and they have added above-average EBITA margin year-to-date. And we expect this to continue throughout the fourth quarter. The third acquisition, Nordic Mechanical Solutions, which we did or closed on the 1st of October, will add a small portion again, but not move the needle much in terms of revenues and profits. In terms of purchase prices, we don't disclose those. And if you didn't find them in our publication, then that's not a surprise. The free cash flow is not impacted by our M&A. Craig Abbott: No, I know. But I was looking at the statement of cash flow in the Slide 27 and 28 of your quarterly statement. But anyways, we can follow up afterwards... Matti Jakel: Yes. please. Craig Abbott: Okay. Now the second question is just on the cash flow in general, obviously, we saw a very good trend in the first 9 months, and you obviously raised your guidance there on your target. So congratulations there. That's all obviously in the right direction. But I'm just trying to get a feel for how sustainable this is. I know there was a big swing in the trade payables and advanced payments there, about EUR 90 million was a big factor. Not to get like too nitty-gritty, it is just to get a feel for -- do you see this development as like being sustainable? Or were there may be some special factors there you'd like us to be aware of so that we don't like extrapolate this kind of development going forward? Matti Jakel: But as I said before, it's 9 quarters in a row that we are positive in cash flow. So I guess you can call that sustainable. So going forward, that should be the measure for us. This year is stronger than what we had expected, but it also includes, as we communicated earlier this year, a onetime payment from the arbitration settlement last year, which was a mid-double-digit number. That's not recurring next year to say that. With -- if you look at the midpoints and everything, then our cash conversion rate for this year will probably come out somewhere between 100% and 110%, which is higher than the above 80% that we're targeting. So in the long run, the plus 80% that we have set as midterm targets is what you should be expecting from us. Operator: So Nikolas from Metzler has another question regarding the E&M International segment. He says you mentioned that a larger M&A transaction in North America or the Middle East could be on the agenda if valuations were appropriate. That makes sense to me as these markets appear to offer strong growth and potential and improving profitability. I would, however, ask you to remind us why a large acquisition is considered necessary. Looking at the numbers, with order intake up 15% organically and organic revenue growth of 14%, the segment already appears to be performing very well, especially in the Middle East region and the 9-month figures also reflect solid momentum. It would be great if you could elaborate on this again. Thomas Schulz: Yes. Very good question. At first, thank you for the appraisal what we get here. But I make it like this 14%, 15% of very little is still very little. And our issue in North America and, to a large extent, in the Middle East, is that we are just subscale. Size matters in our business. If you have hundreds of people on a location or only 50 people on a location, if you are bigger, you are the one in the top position to get the big, quite profitable long-term agreements. If you are the small one, you are more like fast in, fast out supplier, which is not that stable and creates actually more internal work, more admin work. So out of that, we have to get bigger. We have 2 opportunities to get larger scale as we have it in our positioning, strategic lever. We do an organic run. That is what you see in the figures. But to have based on the timing with that good growth environment in North America as well as in the Middle East, we already said last year, it is necessary to look more into M&A, into unorganic growth, and that is what we will refer to on the Capital Markets Day more in detail, but it is necessary to do larger steps in that. Last thing what I have is when -- there is no definition on larger M&A. Our definition on larger M&A is we are conservative people, Matti and myself, and we are actually very proud of it. And we will not do anything which would put the company in any kind of risk. On the other side, an acquisition of a EUR 50 million revenue is not seen as a larger M&A. It's as a bolt-on M&A. So when you then look to the cash flow, our conservative positive approach in how we manage the company, I think it's clear that large for us is maybe not as big as for our bigger corporates. Operator: There's another question in the chat from Chaima Ferrandon from ODDO BHF, and it reads, regarding Germany, could you please give us a sense of the performance you have seen in Q3? And what to expect for the end of the year? Can you give us an update regarding the infrastructure, defense plan in Germany? Have you seen any signs of first orders towards your clients? Thomas Schulz: Yes. Let me start with the second one, infrastructure, defense. In defense, money is spent. Quite a lot goes into Ukraine, as you know. Some is going into infrastructure. Germany will be a kind of a logistic hub in a situation of self-defense to follow our German government wording. And as you know, compulsory service voluntarily and then a little bit with, let's say, additional motivation will come on the way. So there, money will be spent. Infrastructure just takes longer to get money into investment because we are blessed with not only Brussels regulation, we are blessed with Berlin regulation. And that makes investments into infrastructure quite a long-term item. So out of that, we don't see yet on our customers that they had additional top line through these -- through the infrastructure package. In defense, we are actually more or less not in. So out of that, as we said before, we don't believe that we would see something coming towards us from our clients who then got something before the end of '26. When we look in general into Germany, you saw most likely the announcement of the chemical industry in Germany. They are fairly under pressure. Utilization is low. Production is low. Costs are high. When you hear that, then you can get quite negative. We out of Bilfinger, for us, it's a call to support our clients more with enhancing the efficiency on the assets, what they have to get them best performing under the current situation. And in that respect, we think that, a, our strategy to be the one who delivers efficiency improvement to our clients is quite a good one. It pays off quite good. And last thing, what I have is, and that is what I learned on my own side out of by far more cyclical industries, if companies go through a tough recession, as some of our customers in Germany do and they survive with all the necessary activities, they are actually very competitive when that is over. So we are for the mid- to long term, not too negative. Operator: [Operator Instructions] And there is another in the chat. It comes from Metzler from Gerard O'Doherty, could I ask for 2 points of clarification, please. In the pipeline, you mentioned opportunities in the chemical sector. I assume this is outside Germany. In your comments at divisional level, you mentioned the jump in profits and Technologies was part due to derisking projects. Could you expand on this, please? Thomas Schulz: Yes. At first, with the pipeline, yes, we have quite a lot of chemical customers or customers out of the chemical industry outside Germany, too. And in some parts, there is actually the business going quite well. So Germany is in the chemical industry, actually very much the very far low end in the development. Matti Jakel: Yes, Gerard. On derisking, it's not about derisking projects. It's derisking sort of the contract profile that we have in not only Technologies, but also in the other 2 segments, Europe and International. What we have started 2.5 years ago with setting the updated strategy is looking at the entire contract portfolio and look at where we had larger and smaller risks or more significant risks in the past. We tried to stay away from lump sum turnkey projects, which was a part where Technologies had suffered quite a bit. We don't do those. We don't do those anymore, full stop. We talk to our clients. We ask them to award large projects in phases, an engineering phase or a design phase and engineering phase and then a construction phase so that everything is quite clear when things have to happen. We looked at long-term contracts, framework contracts, where we didn't make the margins that we think we should be making, and we renegotiated rates. Sometimes we walked away when the client wasn't willing to come to the table. So in that sense, we increased the level of profitability slowly piece by piece by piece. And you can see that in the margin -- gross margin development, but also profit margin development over the last 2.5 years. So it's not something that we did just in quarter 3 and not just in Technologies, but for the last 10 quarters across the entire group. Operator: So thank you very much, Thomas and Matti. There are no further questions at the moment. So thank you all very much for your active participation in today's call. And as mentioned twice already, but also from my end, our next event will be our Capital Markets Day on 2nd of December. And I'm really hoping to welcome as many of you in person there as possible. So please make sure to find your way to our Capital Markets Day. It will be worth it. And if there are any remaining questions, of course, as always, please reach out to me or the Investor Relations team. So thank you very much, and goodbye.