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NTCOY 2025 Q3 财报电话会议

Operator: Good morning, ladies and gentlemen, and thank you for joining us today. Welcome to Natura's Third Quarter 2025 Earnings Call. [Operator Instructions] Joining us today are Mr. Joao Paulo Ferreira, our CEO; and Silvia Vilas Boas, our CFO. The presentation we'll be referring to during today's call is already available on our Investor Relations website. I'll now hand things over to Mr. Joao Paulo Ferreira. Mr. Ferreira, you may proceed, sir. João Paulo Brotto Ferreira: Good morning, everyone. I'd like to start today's call by acknowledging our weak performance this quarter. The results were disappointing, falling short of expectations, both in sales and profitability, even though part of the challenges we faced were deliberate and planned. The main challenges we faced this quarter were: first, G&A. The drop in revenue put pressure on our margins. And while selling expenses were down, total G&A spending stayed above last year's level, driven by the structural investments we have been making. We decided to keep these strategic investments moving forward, including the new consultant network online store as the benefits expected in 2026 are significant. The second challenge was the macroeconomic slowdown, especially in Brazil, where consumer spending was hit harder than we had anticipated. We are not satisfied with our revenue performance in the region. The adjustments we made to our portfolio weren't enough to capture emerging demand trends, largely because the Avon brand wasn't yet ready to respond. That brand could have benefited from the current scenario. And speaking of Avon, I'd like to mention the third challenge. We've continued to see revenue decline for the brand, driven by a slow pace of innovation and new product launches. In the meantime, while we are preparing for its relaunch in the first half of 2026. Finally, challenge #4, they have to do with the final impacts of Wave 2, especially in Argentina. This quarter, the main operational challenges came from Argentina as the major commercial changes affected consultants coming from the Avon network more than we had anticipated. This led to a real drop in revenue in the country made worse by the unfavorable FX movements. Mexico also saw a decline in revenue, though it continued to show steady month-over-month improvements. Finally, in Brazil, the closure of the Interlagos plant caused temporary disruptions in Avon product availability, impacting sales. Despite these challenges, we are confident we'll see progress in the coming quarters. Our business in Mexico is already showing signs of recovery, and Argentina is on track to stabilize by early 2026. In addition, we're moving ahead with structural efficiency initiatives made possible by the post Wave 2 simplifications and harmonization. As a result, we reaffirm our commitment to expanding recurring EBITDA margin in full year or fiscal year '25 versus a full fiscal year 2024, which should translate into stronger profitability as early as Q4 2025. Lastly, our corporate streamlining efforts advanced with the sale of Avon Central America and Dominican Republic and the signing of the agreement of the sale of Avon International. Starting in 2026, once the transformation cycle is complete, our focus will shift towards sustainable growth and delivering returns to our shareholders. I'll now hand things over to Ms. Silvia Vilas Boas, who will walk you through the details of our financial performance for the quarter. Silvia Vilas Boas: Thank you, JP. Good morning, everyone, and thank you for coming. Before going into the detailed financial results, I'd like to emphasize 2 essential points that JP has already mentioned. First, this quarter has disappointed and frustrated our expectations. Later on, I'll give you more details about it, why? Second, the point regarding corporate simplifications. They are extremely relevant to the company, but they do end up making the comparability of our financial statements very difficult. For that reason, we have included a pro forma in the earnings release to facilitate the analysis. In this presentation as well as in the release and the supporting Excel available in the Investor Relations website, we have already provided adjusted and comparable basis. This means that we show the numbers for 2024 and 2025 already excluding Avon International and Avon CARD. In addition, we consider the results reported by the holding company, both in 2024 as well as in the first half of 2025. Only the third quarter of this year already fully reflects the results of Natura Cosmetics after the merger of the holding on July 1. We know that these adjustments have been recurrent and make the analysis more challenging. But as I said, they are important steps in simplifying and they're close to the end. With the conclusion of Wave 2, we're only missing now the sale of Avon International in Russia. Another important point, as agreed this quarter, the release contains a new disclosure of information we presented during Natura Day. This includes the opening of the operational income statement for Brazil and Hispana in addition to other indicators that will facilitate the understanding of the business and the monitoring of the execution of strategy. After analyzing the new openings, we rely on your feedback to continue evolving. Now let's move on to Slide #5 to detail our revenue performance in Brazil. In the third quarter, Brazil, in the consolidated period, had a revenue drop of 3.7% year-over-year. When we look at the brands, Natura Brazil posted a flat revenue versus the same period last year, but it's important to note the sharp slowdown from the low double-digit growth we recorded in Q2 this year in the Natura brand. This movement mainly reflects the slowdown in consumption that affected the region from June onwards, as we have mentioned before, impacting our performance. Avon Brazil recorded a drop of 17.3% in the quarter. This result was influenced by 3 main factors: the adverse macroeconomic scenario impacting purchasing power, the absence of recent innovations in portfolio, a point we have reiterated as the brand prepares for the relaunch scheduled for the first half of 2026, which will bring a renewed portfolio aligned with the new positioning. And due to temporary operational impacts resulting from the closure of the Interlagos plant completed in October. All production was migrated to Cajamar, which impacted the availability of products. Our inventories are in the process of being rebalanced to reverse the last operational impact, which impacted the Avon brand in Brazil. The Home & Style category fell 9%, in line with Q1 '25, but below Q2 '25, which had been driven by an optimistic campaign in the opportunistic campaign in the category. Regarding the channel's performance, it's important to emphasize the reduction in the number of consultants and their productivity is concentrated in the less productive consultants who are more sensitive to credit restrictions. The most productive consultants continue to grow year-over-year. Finally, regarding the non-VD channels, both the digital channel and the retail channel continue to grow at a healthy pace, but still with low penetration in total revenue, emphasizing the role as important levers for the future growth. Moving on now to Slide #6, which details Brazil's profitability. We can see in the left column of the chart that we went from a recurring EBITDA margin of 23.1% in Q3 '24 to 16.2% in this third quarter. The decline is mainly explained by the deleveraging of G&A impacted by the market slowdown and the maintenance of strategic investments. These investments include the project of new integrated planning, which we mentioned frequently on Natura Day, very important project, which will allow from greater demand accuracy to inventory efficiency. Digitization tools to improve the journey, both for customers as well as consultants and investments in innovation, which includes the relaunch of the Avon brand, which will take place in the first half of '26, which brings us exactly to JP's point. These investments that were already underway are fundamental levers to support growth and results from 2026 on. And therefore, we made the decision not to stop these projects. It's worth mentioning that the initial setup and cost for these projects are concentrated in our main market, which is Brazil, impacting G&A. These very same projects will subsequently be implemented in Hispana at a substantially lower cost than in Brazil. In addition, we had a drop in gross margin of 300 bps year-over-year, as shown in the second column on the slide. This margin, however, remains at a healthy level, and the drop is mostly explained by the strong basis for comparison. As evidence that this gross margin is healthy, figures for the first half of 2025 in Brazil showed a gross margin at levels close to this quarter, but with an EBITDA margin around 21%, reflecting a greater expense efficiency in a period of strong revenue growth. However, we are displeased with this quarter's results, and we need to make our company simpler and more efficient. The sharp slowdown we have experienced has made it even more urgent to anticipate structural actions to reduce expenses, which will lead us to less dependency on the macro scenario and a more agile and efficient organization. Now moving on to Slide #7. Let's analyze Hispana's performance. The region posted a revenue drop of 3.9% in constant currency and 24.9% in BRL. Excluding Argentina, the drop in constant currency was 1.6%, which measures the impact we had in the region due to integration made in July. The Natura brand in the region grew 12.3% in constant currency, but showed a drop of 12.2% in BRL, greatly impacted by the adjustment of hyperinflation. In addition, Wave 2 and general slowdown in consumption in the country brought more pressure to revenue. However, when we look at the performance of Hispana, excluding Argentina, we see the Natura brand growing in high single digits in constant currency. This represents an acceleration when compared to the low digits we had presented in the second quarter of '25. This acceleration is explained by Mexico's performance, which showed sequential operational improvements each month in Q3 until revenue stabilization year-on-year in September. Other countries maintained the good performance presented in the first half of the year. Moving on to the Avon brand. Revenue fell 27.2% in constant currency and 41.9% in BRL, also impacted by hyper and Natura impacted by the integration in Argentina in July and slowdown in consumption in the country. In addition, Avon has also been pressured by the total migration of the physical magazine to hard cover to digital distribution. This, which happened in June impacted the third quarter of '25. Although to a lesser extent than Natura, Avon showed a sign of recovery in performance, excluding Argentina, reducing its decline in the quarter to 15.4% in constant currency versus 20.5% decline recorded in Q2 '25. Finally, the Home & Style category also had strong impact from integration in Argentina and continues to be under pressure by the integration in Mexico, but it's more relevant. The category recorded a drop of 35.9% in constant currency, 48.7%, BRL. The channel's decline after Wave 2, along with the trade adjustments in the integration process led to this sharp decline. Now moving on to Slide #8. In terms of profitability, Hispana presented an EBITDA margin of 4.5% in the third quarter of this year, implying a drop of 100 bps year-over-year, as shown in the chart. This performance is the result of opposing forces. The gross margin benefited from the accounting effect of hyperinflation in Argentina, which, on the other hand, significantly pressured our revenue as we detailed in the previous slide. In addition, the start of capturing efficiencies unlocked in our expenses in the region's integration process was still preliminary and not enough to offset the drop in revenue, leading to a deleveraging of SG&A. Looking specifically at G&A in this quarter, there was an impact from expenses with terminations. It is important to note that they are not included in the transformation costs as they're not related to the Wave 2 process, although they also aim at organizational efficiency for the company. Excluding this impact, general and admin expenses at Hispana would have shown a similar drop to revenue, even with part of these expenses linked to the BRL, which appreciated against Hispanic currencies during the period. Finally, it's worth noting that excluding Argentina, the EBITDA margin improved year-on-year, reflecting the recovery in revenue in Mexico and good performance of the more mature integrated countries. Moving now to Slide #9. Now we're going to look at our results in a consolidated way. We see revenue declining 3.8% in constant currency and 13.1% in BRL, reflecting the slowdown in Brazil, temporary challenges of Wave 2 in Hispana as well as the appreciation of BRL against Hispanic currencies and strong impact of hyperinflation accounting on our Argentina revenue. In terms of profitability, we presented a drop of 350 bps year-over-year on a consolidated basis or 360 bps when we look only at the Latam operation. The 10 bps difference between the 2 performances is explained by corporate expenses, which we previously called holding expenses, which decreased 27.7% year-on-year and therefore, accounted for 60 bps for the consolidated revenue versus 70 bps in Q3 '24. Looking at Latam's profitability here, once again, the G&A issue stands out, which explains all the variation in the EBITDA margin year-over-year and forces the urgency of concluding the setups of our restructuring investments and taking structural actions to unlock efficiencies throughout the organization. Now moving on to quarter's total net income on Slide #10. Our last line was once again impacted by noncash and nonrecurring accounting effects related to our discontinued operations, which are available for sale. This quarter, we recorded a loss of BRL 1.8 billion. This figure mainly reflects the impairment of BRL 2.8 billion in the book value of Avon International, excluding Russia. This loss was partially offset by a gain of BRL 1 billion due to the maintenance of Avon's trademarking and the rights in Latin America as detailed in the material fact dated September 18. It is important to note that the impairment of BRL 2.8 billion is explained by the intention to sell the operation for [ GBP 1 ] and its book value, as shown in the second quarter was BRL 2.8 billion. Regarding net income from continued operations, we posted a loss of BRL 119 million in the third quarter. This represents a worsening when compared to the profit of BRL 301 million recorded in the same period last year. This change is the result of revenues and profitability under pressure. As I have already commented, a worsening of the financial results explained by the unfavorable effect of the exchange rate hedge of our debts in dollars. However, these effects were partially offset by lower tax expenses given the reduction of our EBT in the quarter. In Slide 11, we look at our firm cash flow the 9 months of 2025, it totaled BRL 301 million, which represents a reduction of BRL 81 million when compared to the same period of the previous year. This reduction was driven by 2 main factors. First, operational worsening of results, which, however, was almost entirely offset by the tax line. And second, the deterioration of our working capital, which worsened by BRL 37 million. Analyzing the working capital dynamics, we see a significant improvement in receivables, reflecting the tighter credit we have implemented. This, however, is offset by the worsening in the line of payments and other assets and liabilities. Finally, it's worth noting that our inventory line worsened by BRL 65 million year-on-year, explained by revenue that was lower than expected in this third quarter. Regarding free cash flow, the year-on-year worsening was BRL 172 million. This difference is explained by the BRL 81 million reduction in the firm's cash flow. And the remainder is mostly attributed to currency effects on our cash position. Moving on to Slide 12. My last slide, the one on indebtedness. In this quarter, our net debt was practically stable, BRL 4 billion which reflects the firm's cash flow -- neutral cash flow. In the quarter, the payment of debt interest around BRL 90 million. However, our leverage goes from 2.18x in the second quarter of '25 to 2.53x this quarter. Why is this happening mainly due to the deterioration of EBITDA reported in this quarter in the year-on-year comparison. Finally, it's worth remembering that EBITDA for the fourth quarter of 2024, which is used in the calculation basis for EBITDA for the last 12 months, had a negative impact of BRL 564 million from these strategic projects previously led by the holding, mainly related to Chapter 11 of API. So excluding this effect, the net debt EBITDA metric would be 1.87x in the third quarter of 2025. This is our adjusted leverage number. By the end of the year, we expect to end the 12-month period within our optimal capital structure position between [ 1 and 1.0x ] leverage. Before giving the floor back to JP, I want to highlight that the continued recovery in Mexico, the gradual improvement in Argentina's performance and the capture of benefits from the tactical reductions that we implemented in the third quarter will be the factors that will make it possible to an improvement in margin already in the fourth quarter. And finally, the expansion of the recurring EBITDA margin for the whole of '25 versus fiscal year '24, which reiterates our commitment, which we made to the market at the beginning of the year. I give the floor to JP and then I'll turn -- come back for the questions-and-answer session. João Paulo Brotto Ferreira: Thank you, Silvia. Before we move on to the Q&A session. I'd like to wrap up the presentation with my closing remarks. As to 2025, I'd like to echo Silvia's comments and reaffirm the expansion of our recurring EBITDA margin for the year. I'd also like to reiterate that this was the last year we reported transformation costs and adjusted EBITDA. We remain confident that we are well positioned to deliver on the ambitions outlined at Natura Day starting next year. Mainly strengthening and expanding our leadership in Brazil and Argentina, driven by the modernization of our direct selling model, strengthening our business in Mexico, accelerating our growth in D2C channels and in the hair care category, reigniting the Avon brand, implementing a more agile business model designed to capture the new strategic opportunities I just mentioned. And finally, realizing the returns from the structural investments we discussed today driven -- or driving gains in efficiency, profitability and cash conversion. That concludes my remarks. Thank you very much. We will now move on to the Q&A session. We'll now begin the Q&A session. Operator: [Operator Instructions] Danni Eiger, sell side analyst from XP, asks the first question. Danniela Eiger: I'm just going to ask this one. We see a very challenging macro context, especially in Brazil, but you also mentioned Argentina. And we see other players going through similar situations, that it seems there's not a lot of room to handle all of that. And it looks like that you've taken the initiative to move in terms of expenses efficiency a bit more tactical, but evolving into structural adjustments. Actually, I'd like to explore what else can be done? So first, in terms of structural initiatives, if you can provide some order of magnitude in the key areas would be nice. And when the structural project will be concluded. And on the other hand, what else can be done? I don't remember if it who -- which of the 2 of you mentioned the adjustment on the offers that was not enough. JP, I think you were the one who mentioned. Are you looking at other possible adjustments in portfolio or pricing or somehow in your product offer for a more challenging reality for a longer challenging time? I think Avon is being rebuilt sort of say, but in Natura itself, what are you still looking in terms of opportunities? And also in terms of credit, you talk about credit restriction, it makes sense given the default contact at more elevated levels. Maybe you could use Emana Pay, maybe a bit -- overall the leaders kind of fostering Emana Pay. And if you have some kind of flexibility of using that as a driver or others that I haven't thought about what's in your hand to deal with a more challenging scenario besides expenses. João Paulo Brotto Ferreira: Let me start by addressing your question about the revenue consumption and then Silvia will field the question about expenses adjustments. Well, we do not foresee any major changes in consumption. We don't detect any trends that will shift the current scenario. Well, having said that, there's always something we can do the first lever credit. We used to be more restrictive as far as credit goes. That's why delinquency is under control, that will impact the work that our consultants do. But in reality, credits, payments and collection we have in our pay system are top quality. So once you migrate the portfolio to the pay gradually, we'll be able to provide credit more efficiently. That's why we're speeding up the migration. The portfolio to the pay, which in turn, will improve the efficiency of our consultants, and there's more. There are regional opportunities. The consumption behavior we have in the Northeast and in the state of Rio Grande do Sul, and we are monitoring that management at the micro level, at the regional level to determine what's more interesting in each one of these markets and then adjusting the portfolio. And the categories that are more profitable at this time of the year, and we are focusing on those segments. Well, having said that, Avon could be a very important lever for this -- at this point in time, but the portfolio is not appropriate unfortunately. In summary, yes, we can make adjustments to try to boost capture at this point in time, especially in Brazil, as well as in Argentina. Over to you now, Silvia. Silvia Vilas Boas: Danni, thank you for the question. Let me address G&A that was the problem we had in profitability. I'd like to give you more color. As to what we've done so far and what we will still do. Well, this G&A level is not going to be the standard level for the company. This is key. Well, having said that, the book value of G&A dropped quarter-on-quarter. As a percentage of the revenue, we don't see that progress. The slowdown in Brazil was above what we expected. Here's what we started to do when we detected that slowdown. We reviewed our portfolio to shutdown projects that would start this year, we froze all vacancies. We cut on discretionary expenses but that was not enough. That's why we are taking structural measures that are relevant to simplify the organization even further. These measures will bring benefits as of 2026. When we look at G&A in Brazil, we see important impact on projects. As I said and JP said, we decided not to stop. These are projects that had already been going on and they are very important to enable future growth and future returns as of 2026 and they still impact G&A. One of them is integrated planning. We've talked about this project on our Investors Day. It's a complete review that will bring benefits. Efficiency gains in inventory, a very important project that is supposed to -- that we expect to conclude later this year. Other projects related to the digitalization of the consultants journey and the customer's journey, it's also a very important project because the consultant digitalization will allow us to promote direct sales, the non-VD channels and finally, innovation. Innovation impacted G&A this quarter. These are important investments especially when we consider the new Avon portfolio. The kickoff will take place in the first half of 2026. Well, in Minas Gerais, our G&A level has been high. We've had that nominal improvement when compared to Q3 and Q2. We expect to capture additional benefits based on the technical measures that were implemented in Q4 and that urgency to make those structural changes so that we can be prepared for the market. Danniela Eiger: Let me just ask you a follow-up as far as pricing. Do you consider reviewing prices because of those giftable category? There's a tough competition for pricing, not only comparing cosmetics and cosmetics, but maybe jewelry, chocolates, now considering about the seasonality, is there room to maybe make some price adjustments? João Paulo Brotto Ferreira: We always look at the price dynamic comparing the market overall competition. As you said, competition is not always in the same category, but we try to make adjustments and we will make some adjustments, but they are marginal ones, even though they're absolutely relevant. Operator: Our question comes from Luiz Guanais from BTG. Luiz Guanais: It's Luiz, here. I think 2 questions on my side segueing piggybacking on the previous answer, JP, if you could further explore the top down scenario in the market in different segments where Natura does business. How do you see the trend for the end of the year and early next year, if there's any sign, even if it's a small sign for some inflection in categories, consumer categories? And the second question also segueing to Danni's question is how much room we have for price forwarding or -- thinking about next year, if we could expect some room for price increase for the categories that you do business in? João Paulo Brotto Ferreira: Well, let me address the market. The market has been slowing down throughout the year, and it's been growing a little lower inflation. The market used to be growing well above inflation rates. And basically, the main driver is the price. Volumes are flat, slightly negative in the beauty category, the more discretionary categories. These are important categories for us. We haven't seen any major inflection signs. I think the slowdown has been halted. That's the impression we get. But these categories are very elastic to available income and prices. So we have to keep on monitoring what will happen to available income. The government is planning to boost income especially for next year and that -- if that happens, that will be helpful. We'll have to wait and see. We've always tried to adjust prices to work on our margins. And we don't see any problems in doing that, especially when you have a leading brand like we do. We have to determine what the price adjustments are not only list prices, but also through innovation. Our pipeline is very strong for next year, a very innovative one for that matter. So I'm confident we'll be able to implement habits to recover margins through prices as well. Operator: The next question comes from Ruben Couto from Santander. Ruben Couto: Can you elaborate on your expectations on your consultants network. I think there's the journey effect of those less productive consultants in Hispana, is at a different stage in Wave 2? What can you expect from your consultants base, not only at year's end, but also for next year? Are you trying to increase the number of consultants maybe by benefiting from the macro situation in Brazil, the macroeconomics, but do you remain focused on productivity? There's no room for boosting the number of consultants to offset that slowdown. João Paulo Brotto Ferreira: Yes, there is room for growth in the number of consultants. The number was indeed affected by the churn of small consultants, which was also affected by credit restrictions. We see a lot of room to restructure our number of consultants in Hispana as well as Brazil. This is one of the growth vectors for the coming years, for sure. Operator: Our next question is from Rodrigo Gastim, analyst for Itaú BBA. Rodrigo Gastim: Major question that remain for me was what, in your opinion, was this diagnostics for a gross margin in Brazil. JP made a few comments in the beginning, but I would like to explore. We see the macro slowed down, but the growth of the quarter was a bit below the market growth. You mentioned it yourself that you were displeased with the results JP. Question is, if you could go back in time 3 months, would there have been something you could have done differently in terms of revenue. How much in terms of gross margin? I would like explore and understand that a bit more. But now on the micro side, the initiatives for revenue and gross margin were this combo fall short on the third quarter? And the second question in line with the first one. When you look at Brazil margin, the year-over-year drop when you look at a more stable operation in top line in terms of -- with a more stabilized macro condition. What is the ambition in terms of profitability for Brazil, looking at EBITDA margin? Those are the 2 questions. João Paulo Brotto Ferreira: You know we want to defend our leadership and even expand our market share. Year-to-date, the Natura brand has been performing well despite being under our expectations even in Q3 but we keep on working to get to that goal. We won't be able to expand share this year for the Avon brand. In the short term, the levers I mentioned before, could have been moved even more substantially to bring in even more revenue, mostly credit we've been speeding up that migration to pay, which will give us more credit alternatives. If we were to -- if we had moved more quickly, we'd be able to adjust the activity in the channel. And assortment by region, as I said, they have different effects . But looking back I think we could have done little bit better. Silvia will address profitability. Silvia Vilas Boas: Rodrigo, thank you for your question. Let me start with gross margins in Brazil. Gross margin was down when compared to last year. Q3 2024 was very strong, but the gross margin was healthy for Brazil despite this drop when compared to last year. What do I mean? It's healthy. When you look at the first half of the year, our gross margins were at the same level and profitability was around 21% in Brazil. That margin can yield good profitability for Brazil. Looking ahead as far as profitability goes, this is what we said during Investors Day. Profitability has always been strong in Brazil, and we are going to keep delivering on those track record. There are no reasons for the contrary. When we look at 2026, despite all the efficiencies of the structural transitions, you'll be completing the projects this year will allow us to have additional gains in that sense. Rodrigo Gastim: That was very clear, Silvia. Let me just double check on it. Let me make sure I understand it. Margins for Brazil last year, you have a strong comparable basis. If you could explain why? What pushed that margin up last year when compared to Q3 and revenue was used for operational leverage. What would be a reasonable level for Brazil, just to make sure I understand that right? Silvia Vilas Boas: Rodrigo, when we look at Q3 last year, the impact was very favorable because of FX movements in a business that had been growing extensively in categories that had higher contribution margins. Operator: Vinicius Strano from UBS asks the next question. Vinicius Strano: I have 2 questions. Let me focus on to Natura Brazil. What are the categories that are impacted the most? To better understand what the mix importance is down the road. Looking at Avon now, how are you going to invest in to revitalize the brand? What type of repositioning is? What are the main KPIs are expected results or any expected deliveries, that would lead you to discontinue the brand in the long run. And the last question, it's about Avon International. What's the visibility we have in terms of cash evolution? Do you expect closing it for early next year with no need for additional cash inflows? João Paulo Brotto Ferreira: The market has been shrinking basically in all its categories, mildly, slightly in the beauty categories. So makeup, facial products and perfumes, it's not a big difference, but daily use segments and beauty segment have been shrinking considering that beauty slightly a bit higher contraction and our business has a bit more items of beauty rather than daily use. In terms of Avon, I can't reveal all the details of the relaunch of Avon, but I can confirm there's a lot of room in the market where this brand really fits in a very well-defined audience. But to that end, the brand has to be repositioned and the portfolio has to be redesigned. I unfortunately cannot share any more details. But of course, we expect to start growing again. The profitability has improved significantly after integration. So the Avon brand has positive contribution margin in all of the reports after Wave 2. So we want to go back to growing even more profitably. If that does not happen, we'll assess possible scenarios at the right time. Okay. So Silvia, Avon International? Silvia Vilas Boas: Vinicius, Avon International, the plan moves forward as planned. The expectation is to conclude the sale in the first quarter of '26. Now regarding the cash situation, the Avon International team is executing the plan and capturing benefits from the restructuring movements of the first quarter. So there's no expectation of additional cash inflow for Avon International. Operator: Our next question is from João Pedro, Citibank analyst. João, I have sent you a comment so that you can open your microphone. Our next question comes from [ Luiz Guanais ], Goldman Sachs analyst. Irma Sgarz: I have 2 more quick questions. Based on the comments of the release, it looks like you see room for greater growth in Mexico. Obviously, there's a whole issue on recovery after Wave 2. But in terms of market share, do you see that maybe there, there's greater room than in other markets. If you could go into detail a bit more, which categories and how you intend to grab this market share in Mexico and especially? And if you could just explain a bit more what you're thinking in terms of innovation, which was a topic that you highlighted significantly in Natura Day, June, July, I guess. If you could speak to how you are protecting this area, shielding this area during this moment where you're seeking greater efficiencies throughout the organization as a whole. João Paulo Brotto Ferreira: Well, yes, it's true. Mexico is the geography in which we have the largest market share upside because we are the most under-indexed when compared to other countries. There's a very direct and simple driver that starts now, and that's the Natura penetration on the inherited direct sales channel from Avon, a very large channel compared to what we had. And now we have direct access with the Natura brand. So the brand can now go to many more households. That can be translated into an important productivity gain. And on top of that, there is investment to make the brand even more known in that region, just like it is in other countries. And once there's more awareness, we can invest in the brand, and that's a virtuous cycle. And finally, direct sales is not that important in the country. That's why we are expanding our online as well as the store chain using franchises even. So there's a lot of room for growth in the coming years. As to innovation, mostly products that can be innovation, can be commercialization or digitalization, but I would like to focus on product innovation. We have analyzed our pipeline for launches in the coming 3 years. It's been very well defined for '26 and '27, we're very positive about these products, and there's room for some minor changes in 2028 portfolio. And we reviewed the entire innovation pipeline, focusing on those items that can bring in more revenue. And we want to make sure that these high-return launches receive all the necessary resources so that they can perform well. Irma Sgarz: So it's only fair to conclude that you are focused on fewer SKUs and rather focusing on those that can generate more impact, right? So you're focusing on those products? João Paulo Brotto Ferreira: Yes, that's right. Yes, you are correct. We're focusing on high-return launches and reducing the total number of launches. Operator: Alexandre Namioka from Morgan Stanley asks the next question. Alexandre Namioka: Let me just follow up on Avon. The one to the last slide you mentioned the resumption of the Avon brand as of 2026. Back on the Investors Day, I had the impression you were not that confident about this new relaunch of the brand. What makes you more confident now? Do you believe that these structural investments will be enough? Or do you have to invest in marketing even more maybe to reignite that brand as of next year? João Paulo Brotto Ferreira: Alexandre, we have a team working on this launch and in the weekly reviews we have for this project, I see greater and greater enthusiasm. The work that's being done is innovative and even refreshing to say. It is a highly promising path, and I'm stoked. It's fair to say that we have not been able, have not managed to do this up until now. The -- so this confidence does not come from extrapolating concrete results. It's fair for us to wait for this to come into reality, but I am very enthusiastic about it. The necessary investments are the regular business investments, but allocated in a completely different way they are today. So the necessary resources are not excessive. They're in line with the size of the business. But in our opinion, they'll be much more efficient and much more productive. In this case, different than in other topics, we'll have to wait and see if our enthusiasm will come to fruition. Operator: Our next question is João Pedro, Citi analyst. Joao Pedro Soares: Can you hear me now? João Paulo Brotto Ferreira: Yes, loud and clear. Joao Pedro Soares: I do apologize for the tech issue. JP, the point is when I look at the company's top line in Brazil, it looks -- it doesn't look mismatched or disaligned with the Investor Day proposal back to Alexandre's question. The Natura brand apparently gaining market share and Avon is truly reflecting our investments. But when we look below these lines, we see a misalignment or seemingly disalignment between costs and expenses. I'd like to explore and exploit a bit more to understand when you are back to investing in the Avon brand, this will suffer a penalty. There should be some increase in the R&D expenses. There's a phasing seasonality in expenses, which is somewhat challenging to understand. So how do you see this better alignment of the cost and expense structure to reflect the strategy that you yourselves have designed to focus more on the Natura brand. Is that point clear, I hope. And the cash conversion for next year, whether EBITDA or some other operating metric for us to understand the sustainable level of cash conversion for the Latam operation. Silvia Vilas Boas: João, thank you for your question. And you're right, our income state is not balanced due to that G&A impact. As I said, it has to do with different drivers, be it them from Wave 2 or the fact that we are concluding the project this year that will only yield results next year or the deleveraging. I'm certain that G&A level will be significantly lower next year than the one we had this year. They may come from the capture of the results of the projects or the benefits of this organizational simplification. G&A is misaligned, and we expect it will go back to the right level as of next year. On top of that, in profitability, there are some opportunities to be captured in selling coming from the combination of Mexico and Argentina businesses as well as from other countries. Marketing, as you said, we're not considering investing more in marketing than what the business can absorb. JP mentioned or talked about Avon specifically. Investments will be gradual once we see progress in those plans implemented in 2026. Profitability, of course, we want to expand profitability in 2026 when compared to 2025, just like we've done in the past 3 years. On to cash conversion. On the Investors Day, I showed you that we had above 50% cash conversion in 2024. Historically, before those acquisitions, the company had above 60%. With the end of that transformation cycle and the simplification cycle, we're going back to having a company that is very similar to the company we had before the acquisitions. That is to say we expect to go back to the same cash conversion level we had before. Operator: This concludes the Q&A session. Natura's third quarter 2025 earnings call is now concluded. The Investor Relations team remains available to address any additional questions. Thank you. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

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KALV 2025 Q3 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to KalVista Pharmaceuticals' 2025 Third Quarter Financial Update and Operating Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your first speaker, Ryan Baker, Head of Investor Relations. Please go ahead. Ryan Baker: Thank you, operator. Good morning, everyone, and thank you for joining us to discuss KalVista Pharmaceuticals' 2025 Third Quarter Financial Update and Operating Results. Please note, we'll be making certain forward-looking statements today. We refer you to KalVista's SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements. On the call with me today from KalVista are Ben Palleiko, Chief Executive Officer; Nicole Sweeny, Chief Commercial Officer; Brian Piekos, Chief Financial Officer; and Dr. Paul Audhya, our Chief Medical Officer. Ben will begin with a review of the company's progress during the 3 months ended September 30, including an overview of EKTERLY's early launch, both in the U.S. and abroad as well as other regulatory updates. Paul will give an update on recently presented data from our KONFIDENT-KID trial in HAE for children ages 2 to 11, as well as new patient satisfaction data. Nicole will review the company's commercial progress to date, and Brian will cover the company's financial statements for the most recent quarter. We will then open the call for questions. With that, I will now turn the call over to Ben. Benjamin Palleiko: Thank you, Ryan, and thank you, everyone, for joining us today. And I want to wish a Happy Veterans Day to all my fellow veterans listening in. We are highly encouraged by EKTERLY's first 3 months on the U.S. market. Adoption has been steady and linear, with real-world utilization tracking as we expected. The takeaways are clear. Demand for EKTERLY is strong. It is being used to treat a significant number of HAE attacks, and it is meeting the expectations of people living with HAE for a highly efficacious and safe therapeutic alternative. We continue to believe that EKTERLY will evolve to become the foundational treatment for HAE. In addition, we are executing on our mission to bring EKTERLY to people living with HAE globally. The German launch is now underway with initial uptake validating the ex-U.S. interest in EKTERLY. The approval footprint continues to grow, with a recent approval in Australia, adding to the existing authorizations in the U.S., U.K., EU and Switzerland. In parallel, we continue to evaluate optimal strategies to expand access in geographies where we won't launch on our own. In addition to the collaborations we've previously announced, we anticipate that we will be completing more agreements later this year and in early 2026. We also continue to generate important new data to help educate the HAE community generally, as well as to demonstrate the real-world benefit of EKTERLY to people living with HAE. Last week, during the American College of Allergy, Asthma and Immunology Meeting, we provided a report on the high satisfaction rates for patients in KONFIDENT-S who had switched to sebetralstat from injectable on-demand therapies. Additionally, interim results from our KONFIDENT-KID trial showed sebetralstat enables early, effective and safe treatment of HAE attacks in children ages 2 to 11. Paul will provide more detail on all of that in a minute. We've also continued to grow the key capabilities of the company, demonstrated by the recent hires of Bilal Arif as our Chief Operating Officer; and Linea Aspesi as Chief People Officer. Both bring decades of experience that will make them important contributors as we work to evolve KalVista into a leading rare disease company. Finally, with our recent convertible note offering, we are fully financed through profitability, allowing us to remain sharply focused on executing the EKTERLY launch while evaluating additional growth opportunities. I will now turn the call over to Paul, who will update you on the latest data from KONFIDENT-S and KONFIDENT-KID. Paul Audhya: Thanks, Ben. I'm pleased to highlight that we continue to generate and publish important insights from our ongoing clinical trials, further building the case for EKTERLY across various patient segments. Starting with our late-breaker ACAAI, we provided a significant update on our registrational KONFIDENT-KID trial for sebetralstat in children with HAE aged 2 to 11. With 36 children enrolled, this is the largest trial ever conducted in the pediatric HAE population, and we are incredibly proud to have fully recruited it almost a year ahead of schedule. This speaks to the high level of unmet need for these children and their caregivers. A remarkable finding from the interim analysis is the extent to which this group of children is experiencing attacks. As of June 6, 2025, 65 attacks were treated by 26 children, translating to an attack rate of 0.8 attacks per patient per month. This far exceeds the historical understanding of attack frequency in this population. We believe that the high-attack rate in KONFIDENT-KID reflects an accurate unmasking of the true disease burden that was previously hidden by the difficulties associated with administering and receiving injectable treatments. The invasive and burdensome nature of intravenous and subcutaneous on-demand treatment creates a powerful disincentive for children and their parents to seek treatment for anything but the most severe attacks. We believe that this has led to significant underreporting of attacks. The availability of an oral on-demand treatment fundamentally lowers the barrier to treatment. This allows for a high-attack rate to be documented because children and their caregivers are no longer faced with the choice of enduring the trauma of an injection versus riding out a potentially worsening attack. Returning to the results. Treatment was rapid, with caregivers or the children themselves administering sebetralstat ODT in a median of 30 minutes. This option where children can actually treat themselves is a totally unique feature of KONFIDENT-KID and increases the importance of the results as the inability to self-treat attacks by children is such a major issue with injectables. The median time to symptom relief was a rapid 1.5 hours in the dosing group who experienced the vast majority of attacks. Crucially, there were no treatment-related adverse events or reports of difficulty swallowing the orally disintegrating tablets formulated for kids. These results further highlight EKTERLY's potential to expand to people of all ages living with HAE. We expect to submit the NDA for pediatrics in Q3 of 2026. Turning now to our long-term open-label extension, KONFIDENT-S. We continue to amass a large volume of data collected under conditions that mimic real-world utilization. For October 31, the trial has accumulated over 2,700 attacks treated with EKTERLY. Notably, this includes 59 laryngeal attacks, 560 attacks in patients receiving long-term prophylaxis and 584 attacks treated by adolescents. The highest number of attacks treated by an individual participant is 118 over 23 months. As our patient experience has grown, we have observed key changes in dosing behavior. We focus on patients who reached 30 treated attacks, representing about 1/4 of confidence participants. We noted a clear trend. The proportion of patients using a second dose of EKTERLY within 12 hours fell from 22.5% during the first attack to just 13.5% by the 30th attack. In the same group, the use of conventional injectable therapy dropped from 8% at the beginning of the trial to 0% by attack 30. We believe these marked reductions in the use of a second dose or conventional therapy reflect patients' growing assurance in EKTERLY's reliability. We plan to present this important data in more detail at an upcoming scientific congress. Coming back to ACAAI, we presented new treatment satisfaction data from KONFIDENT-S in participants who had switched from injectable on-demand treatments to sebetralstat. The median satisfaction score for attacks treated with sebetralstat was 2, or very satisfied on a 7-point scale, ranging from minus 3, which was extremely dissatisfied to 3, which was extremely satisfied. Overall, 84% of attacks treated with sebetralstat were rated by participants as ranging from satisfied to extremely satisfied, with the vast majority being either very or extremely satisfied. The high-satisfaction scores reported by patients who have successfully transitioned from injectable therapies to sebetralstat speak to the impact of having a simple, effective and reliable oral on-demand treatment readily available. So what are the implications? We know that a patient's decision to switch medication is often a direct measure of their unmet need or dissatisfaction with their current regimen. Therefore, as patients achieve a high level of satisfaction with EKTERLY, the probability of them seeking to switch therapies in the future is expected to decrease. This supports EKTERLY's role as a foundational therapy for HAE for the long term. To conclude, the breadth and depth of our clinical data, coupled with a high level of patient satisfaction is translating into early commercial momentum. We're seeing strong uptake and growing confidence among the prescribers as awareness of EKTERLY continues to build. To discuss how the launch is unfolding, I'll now pass the call to Nicole. Nicole Sweeny: Thanks, Paul. I'm pleased to share that the U.S. launch of EKTERLY continues to accelerate with sustained demand and growing enthusiasm among prescribers and patients. In less than 4 months since launch, we have received 937 start forms, representing more than 10% of the HAE community. This level of early engagement is strong by any launch standard and reflects an extraordinary level of community adoption. Importantly, this demand is broad-based. We are seeing rapid uptake across all HAE patient segments, including prophylaxis users as well as adolescents. People are switching from all on-demand therapies, but the greatest number have been from FIRAZYR and icatibant as expected, given their market share. Also, as we expected, the earliest and greatest number of those switching to EKTERLY have been high-burden patients who experienced frequent attacks, whether or not they are on prophylactic therapy. Provider activation is also expanding rapidly. We have 423 unique prescribers and continue to add 3 to 4 new prescribers each day. Awareness levels are exceptionally high with 100% of Tier 1 HCPs and 95% of all-target HCPs reporting awareness of EKTERLY. These metrics reflects both the strength of our field execution and the enthusiasm of the medical community for EKTERLY. As prescribers gain more experience with EKTERLY and hear from their patients who have switched, their confidence continues to rise. Launch to date, repeat prescribers account for 75% of all EKTERLY start forms, a strong indicator of familiarity and trust in EKTERLY's profile. This provider enthusiasm is matched by a strong depth of utilization in patients. Though the data is early, patients that are refilling their prescriptions, including those on QuickStart and paid therapy, are doing so every 3 to 4 weeks. For context, most injectable on-demand therapies average only 3 to 4 refills per year. This level of refill frequency is a clear indicator of growing real-world reliance and confidence in EKTERLY. Note that the majority of these refills are driven by patients with a high disease burden. They report experiencing 2 to 4 attacks per month, despite generally also being on prophylaxis therapy, which indicates the lack of adequate disease control. Refill quantities are consistent with this level of burden and higher than our initial expectations. That all said, as adoption expands beyond to the highest burden patients, we expect refill patterns to normalize in line with the broader HAE community with both a lower frequency of refills and a lower volume of refill quantities. As demand continues to build, payers are actively moving towards formal coverage for EKTERLY. Since approval, patients have been able to leverage medical exception to gain access to EKTERLY. The medical exception approval rate and time to ped shipment are consistent with our expectations less than 6 months following approval. It is very encouraging that we have seen medical exceptions approved by all PBMs, and all large payers for both commercial and Medicare cases. We continue to advance formal access with multiple regional and national payers already establishing EKTERLY policies. The majority of policies are ped label, which is consistent with other branded on-demand therapies. As expected, the minority of policies require a step through icatibant, which patients are able to move through quickly as most HAE patients have experienced with generic icatibant. Our market access team is currently engaged with PBMs and remaining national payers, with an aim to formalize access in early 2026. At this point in the launch, we are encouraged to see access to EKTERLY growing as payers recognize the need for EKTERLY as part of an overall HAE treatment plan. Outside the United States, we are seeing early signs of momentum as we expand the reach of EKTERLY. Following EMA approval, we launched in Germany in mid-October and recorded first-day commercial sales, an immediate validation of both prescriber enthusiasm and the strength of EKTERLY's differentiated oral on-demand profile. In the U.K., with approval now received, we are advancing pricing and reimbursement discussions with NICE in preparation for a first half 2026 launch. And in Japan, we continue to progress towards a PMDA approval and launch in the first quarter of 2026 with our partner, Kaken Pharmaceutical. Taken together, accelerating utilization, repeat prescribing and growing favorable access provide a clear signal. EKTERLY is quickly on its way to becoming the foundational therapy for HAE treatment. What initially began with the highest burden patients is now expanding in only a few short months across the broader HAE population as physicians gain confidence and patients increasingly choose EKTERLY for their attacks. I'll now turn the call over to Brian to review our financial performance. Brian Piekos: Thanks, Nicole. Our full financial results were included in the 10-Q filed after the close yesterday. So, I'll provide a few highlights for the 3-month period ending September 30. We are pleased to announce sales of EKTERLY were $13.7 million for the launch period through September 30, which includes the $1.4 million recorded in July and previously reported. Subsequent to the July period, our specialty pharmacy partners stocked additional locations and built inventory in a disciplined manner, supporting the growing patient demand. In the initial 3-month launch period, we are seeing the average number of cartons per shipment on the high end of our expected range, which aligns with utilization among high-burden patients, the core of our early adopter base. When looking at gross to net, I'd note it came in towards the low end of our expected range this quarter, driven largely by lower co-pay utilization typical for this time of year. Shifting to expenses. Total operating expenses for the period were $59.7 million, consisting of approximately $12 million in R&D expenses and approximately $46.5 million in SG&A expenses. Looking ahead to the remainder of 2025, we expect SG&A expenses to remain relatively consistent as we continue to invest in EKTERLY's global launch. Importantly, with our recent convertible note financing, our cash position is sufficient to fund operations through profitability. With that, I'll turn the call back to Ben for closing remarks. Benjamin Palleiko: Thanks, Brian. The early momentum and rapid growth we described today reinforce our belief that EKTERLY is positioned for long-term success as market awareness continues to grow. Our near-term focus is on aggressive and disciplined execution, scaling in the U.S., expanding access globally and reinforcing confidence in the role of EKTERLY across the treatment landscape. We continue to believe that oral on-demand therapy should broadly displace the injectable options and that EKTERLY will be the clear market leader based upon the breadth and depth of the data we have generated that shows EKTERLY can benefit all people living with HAE regardless of their attack location, frequency or severity. We are and will remain the only company that has demonstrated in a clinical trial setting, the effectiveness of our therapy for treatment of HAE attacks in accordance with modern treatment guidelines that call for patients to consider treating all attacks and to treat early. Through our gold standard design clinical trials and our many publications of the data, we've established a strong position as a patient-focused organization that is dedicated to improving lives, and I expect our reputation will continue to strengthen based upon our early success and our most recent data updates. With strong execution, a clear strategic runway and fully funded path through profitability, we believe we are well on our way to establishing EKTERLY as a foundational therapy for HAE and to generating long-term growth for the company. With that, we'll open the call for questions. Operator?[Operator Instructions] Our first question coming from the line of Maury Raycroft with Jefferies. Maurice Raycroft: Congrats on the great quarter. Maybe to start off, wondering if you could talk more about trends for types of patients who are switching to EKTERLY early on, particularly the high-burden patients? Are you putting percentages on how the 937 start forms break down? And how could these trends change over time? Benjamin Palleiko: Maury, thanks for joining today, and thanks for the question. Nice to talk to you. I guess I'll start and maybe Nicole will add some other details. What was really important here when we launched EKTERLY was we always presumed that the most rapid adopters would be the people living with HAE who have a very high treatment burden. And we've talked about this for a long time, and I think there's been substantial questions in some quarters about whether that patient population exists and also how severe their attack rates are. What we found through the third quarter was that that actually those people do exist and they are transitioning just as we would have expected. Roughly half of all the patients who have switched to EKTERLY to date self-report an attack rate of 2 or more attacks per month, which we consider to be high burden. And that accounts for, obviously, a fair amount of prescriptions, but also those people refill at higher rates and in larger quantities as well. So clearly, the discovery we've made here is that, that group really does exist that they actually aren't well controlled on prophylaxis and that their needs are being met by EKTERLY. In the longer run, obviously, we expect that number to decline, right? That's a fairly small portion of the population. And as we broaden out EKTERLY's reach, all those items will go down, the refill rates will decline and the number of cartons per refill will also go down. But for now, that group seems to be getting a lot of benefit from EKTERLY just like we anticipated. Nicole Sweeny: Yes. And just to add some further color on the patient base. As Ben was describing, these are patients with a high burden of disease who are also on prophylaxis and continue to have unmanaged HAE. In terms of the product that they've been switching from, we see broad adoption or broad switching across all of the on-demand therapies. The vast majority of patients are switching from Berinert to icatibant, which is very much in line with our expectations as in advance of approval, we often heard about the shortcomings of a subcu injectable. But again, very exciting and encouraging to see just the broad adoption across all of the different on-demand treatments. Maurice Raycroft: Got it. Helpful perspective there. And then maybe one follow-up. Just for the 937 new starts, are you seeing more on what proportion is converting to drug? And are you breaking down paid versus free drug at this time? Nicole Sweeny: Yes. So from an access standpoint, we are very encouraged by the continued increase in paid. Week-to-week, we see the paid rate continue to grow. And we've seen successful use of the medical exception, both in terms of consistency over time, as well as I should add more recently as the EKTERLY policies have started to come into play, we're seeing clarity in terms of path forward for patients to gain access to EKTERLY. So overall, at this point in time, certainly, our paid and the access dynamics are unfolding as we'd expect. Benjamin Palleiko: And Maury, for perfect clarity because I don't know if this is where we're going, all those start forms reflect prescriptions. Those are people who are actually switching to EKTERLY. A start form is inherently tied to a prescription for that person to switch. Operator: Our next question coming from the line of Stacy Ku with TD Cowen. Stacy Ku: Congrats on a great quarter. So the first is just a follow-up. Are you willing to talk a little bit more about these refill rates or maybe disclose on average number of doses for these high-burden patients? And maybe help us compare that to where you would expect things to normalize, especially given your work with claims data? And of course, as it relates to payer willingness to treat these high-burden patients, maybe talk about the quantity limits that you're seeing for chronic use of EKTERLY? So that's the first question. And then the second question is just maybe as we look to the commentary, you're kind of trying to highlight for us around those patient bolus dynamics that you're seeing. Just help us understand what that means for the remainder of the year versus what we've seen in Q3? And of course, I'm putting you a little bit on the spot here. As we look to next year, again, still really early days, we totally understand that. But just your level of comfort around consensus as we think about the 937 patient start forms that you've already grabbed in '25? Benjamin Palleiko: Thanks, Stacy, for all the questions. We'll work our way around the room here to answer them. So on the first one, you asked about refill rates. Our presumption going into this when you look at claims data is that the average person with HAE is refilling about once every 3 to 4 months. And that will normally be with FIRAZYR or icatibant is typically sold in pack of 3s. So, that will typically be at least 3 doses and maybe multiple packs because actually, I think the average rate of refill is higher than that. What we've seen to date, driven again by this high-burden population has been refill frequencies of probably kind of 1/3 that off frequent, maybe once a month or even more frequently than that. So, these people are very high or have, in some cases, very high-attack rates and so they're refilling quite frequently. And they are, when they refill, typically refilling with multiple cartons at a time. So it's many more doses than we would expect on average. As I said in the last answer, that's because of the subpopulation that has come to EKTERLY early. As we go over time, certainly, we'd expect those rates to normalize more towards what you see in the icatibant type marketplace where you've got refills that are multiple months apart and probably, on average, volumes will be lower. In terms of quantity limits, actually, you don't you take it from here, Nicole? Nicole Sweeny: Sure. I'm glad to step in. Quantity limits are certainly the norm for the current branded on-demand treatment. And it is something that we're seeing and expected to see with EKTERLY. Having said that, to date, the quantity limits that we're facing with EKTERLY, again, very consistent with the other products and have not created impediment to a patient continuing to gain access to EKTERLY. And historically, there are means to overcome quantity limits should we end up in that situation on a patient basis. Also, just to transition to your question regarding demand for the remainder of the year, certainly, we recognize going into the holiday season, there are time out of office for physicians and for staff as well as just a very busy time for all of us. So, we do anticipate potential disruption to demand in the remainder of 2025. Benjamin Palleiko: And then do you want to talk to some of the financials? Brian Piekos: Yes. On consensus, Stacy, what we see, there's quite a range in the consensus. I think over a three-fold gap, we understand the challenges of modeling this new prescription that is an on-demand therapy. It is challenging. It's far more complicated as we change our fiscal year now to a calendar year basis, and I'm not sure all the estimates have caught up to that. And so I think that dispersion in estimates is warranted as we kind of really figure out what utilization will look like over the long term. Stacy Ku: Yes. Understood. And then just to confirm, a carton is 2 doses, correct? Benjamin Palleiko: Yes. Operator: Our next question coming from the line of Paul Matteis with Stifel. Matthew Ryan Tan: This is Matthew on for Paul. Congrats on all the progress. I guess I just wanted to better understand with the multiple cartons per shipment, do you think there's any stockpiling behavior within the patients just given how convenient it is to have this oral and the storage is easier? And I guess, how do you see that evolving in the future? Benjamin Palleiko: Actually, we don't know. Actually, we don't know. We got put on mute by accident for a second there. People don't have to tell us what's happening. Given that the self-reported attack rate among these folks is quite high, we do think there's obviously a high level of utilization there. But I don't know that we could allocate between how much they're storing it up like as they probably should really to have in places where they can access it when they have attacks versus actually using it. Again, stepping back a little bit, whether it's because of initial -- some kind of initial stockpile, although again, these refill rates have been pretty consistent or usage. Like I said, as we expand further into the population, we do expect the overall attack rates to normalize more towards what you see in the population as a whole. That means that, again, usage will probably be less on average. Refills will be less frequent on average, and the volumes per refill will come down to some extent. But even people that don't really have high attack rates, when they do refill, seem to be refilling at higher levels than we expected, that's probably maybe more indicative of stockpile than I think the really high-attack rate folks. I don't know if you have anything to add? Nicole Sweeny: Yes. Just a reminder that the treatment guidelines do -- that physicians have developed both in the U.S. and around the world do encourage that patients keep product on hand to treat multiple attacks, 2 to 3 attacks. And so that is something that is fairly common in terms of practice here with patients in the U.S. Operator: Our next question coming from the line of Joe Schwartz with Leerink Partners. Joseph Schwartz: It's great to see that according to our math, the rate of PSF has stayed fairly constant through your first couple of updates so far. Do you expect this relatively linear PSF growth rate to continue? At what point, either months into the launch or overall penetration-wise, do you expect PSF growth to taper off? And then ex-U.S., it was great to see the German launch is underway. What is the price you agreed upon in Germany, and how does that compare to the U.S.? Benjamin Palleiko: Yes. Thanks for the questions. So the PSF rates have been quite consistent as we've indicated through the first, now 4 months of the launch. As Nicole said a few minutes ago, we do -- the fourth quarter here, especially the November, December as we get to the holidays is definitely a time when we wouldn't be surprised if the numbers slow a bit, right? I mean, people just are not going to be going to their physicians for this type of thing over the holidays. So, we would expect that there will be some slowing in the fourth quarter, really just driven by the kind of seasonality of the thing. As we get into 2026, again, we think the fundamentals on demand are really good, right? People seem to be still getting these appointments at a quite a consistent clip. Inexorably, over time, the rate of start forms will slow down to some extent just as we get deeper into the patient population. But at this point, we really don't have enough information to give an indication of whether that's earlier or later in 2026. But the clip we are on now, while we're quite happy with it, certainly, we wouldn't really expect it to be this fast paced all 2026. So, that's the first part. Nicole Sweeny: Certainly, German price, that's something that is not disclosed at this time. We're early in the days of launch there, and we'll be in ongoing negotiations and discussions with German authorities. So, that's something certainly we could revisit in the new year. Joseph Schwartz: Okay. What about other European countries in '26? What are the plans there? Nicole Sweeny: Certainly. We certainly have approval in the U.K., and so that is something we're in active discussions with NICE and planning for a launch in the first half of 2026 as well as moving out to some of the other larger countries in Europe towards the end of 2026. Operator: Our next question coming from the line of Jon Wolleben with Citizens Bank. Jonathan Wolleben: Congrats on the progress. When you guys talk about kind of normalization of these rates, wondering if you could talk a little bit about your expectations for how many patients do you expect to ultimately be trialing EKTERLY because the high burden makes sense now, but do you think that this is going to be broad across people with low burden as well? Or is it going to be a majority of these high-burden patients over time? And then in the prepared remarks, you mentioned that gross net towards the low end of your expected range. I was hoping you could just remind us of what that expected range is. Benjamin Palleiko: Sure. I'll do the first part. Again, Jon, we do fundamentally expect oral therapies to displace the injectables. I think we've fairly conclusively shown that EKTERLY offers all the benefits of the existing HAE therapies with much better equivalent efficacy in all likelihood, right? We haven't -- it has been shown head-to-head, but I think people generally accept that the safety has been pristine so far. There's really no advantage to anyone using -- continue to use an injectable or an IV therapy. So on a fundamental level, we do expect orals to overtake the injectables over time. And so there's a sort of high level how the market evolves in our viewpoint. That does -- to your point about whether the rate slows as you move into lower usage people, that's certainly likely. There's definitely just like there's a very high burden population, we presume a commensurate very low burden population that may be less inclined to move over time. To date, we have seen people across the board switching to EKTERLY. I mean, again, we said -- we've seen certainly the high population be through the third quarter, half of those folks. But the other half are much more of a distribution of attack rates. So the urgency may not be as high as we move deeper into the market, but we do think the fundamentals are that people will switch over time. I mean, a lot -- there's certainly a lot of folks who we believe are still a little bit and see how it's working for someone they know before they switch. Some of these folks will have tried ORLADEYO before and maybe not have a satisfactory response. And so we do anticipate there could be a little bit of initial caution about another oral therapy. But again, given the anecdotal reports we've seen so far and just the commentary we've heard from physicians who've talked to their patients, we think people are exceedingly satisfied right now. And we do believe that, that will play through over time, and that will bring these people who may be less motivated for whatever reason, right, initially to move, to switch over to EKTERLY in a timely fashion. I don't know if you want to add anything on that. Nicole Sweeny: Yes, I would just offer that building upon Ben's point, anecdotal feedback as well as market research we've conducted with patients, we see very high satisfaction ratings, both with patients who have a high burden of disease as well as patients with a more moderate or lower burden of disease. And that satisfaction relates specifically to EKTERLY as well as with our patient support services that received high marks in terms of supporting patients to gain access. Brian Piekos: And with respect to gross to net, Jon, like other specialty medicines, we expect to see gross to net to be on average, upper teens, low-20s. Operator: Our next question coming from the line of Serge Belanger with Needham & Company. Serge Belanger: Congrats on the quarter. First question, I wanted to go back to your initial focus on high-burden patients. Is that just a function of the market or the docs that you -- prescribers that you have initially targeted? And are they using these higher burden patients as leveraging them to get experience with the product and familiarity? Secondly, when prescribers are writing patient start forms or prescriptions, are these PRNs or are they limiting them to a certain number of boxes or cartons? Nicole Sweeny: Sure. So in terms of the high-burden patients, these are the patients that spend most of their time in with their physician. So, these are individuals that are typically on prophylaxis and have HAE that is largely uncontrolled. And so given the high need that they have, they're very much on the physician's radar. Having said that, these are also the patients who are most informed. So in advance of approval, they're actively seeking new treatments. And with the approval of EKTERLY, we know that they made appointments and went into their physicians' offices to discuss. So, I will say that it's a bit of the patient demand due to the burden of the disease as well as certainly significant awareness on the physician side that they need to support those patients. And yes, I think to some extent, your point, it enables them to test EKTERLY in some of the most difficult cases to really validate that what the profile we saw in the clinical trials really playing out in the real world, which we know has increased confidence of physicians as we see the majority of start forms that are coming from repeat prescribers. Just in terms of how they write the prescription, typically, a prescription is written for PRN, so that, that allows the flexibility for the patients to gain access to refills at the frequency and the magnitude of which they need. That's historically how it's been done with the other on-demand treatments and what we see with EKTERLY today. Serge Belanger: Okay. Great. One quick one for Brian, just on inventory. Out of the $13.7 million that was reported this quarter, how much of that was inventory? And did you exit the quarter at steady state on that front? Brian Piekos: Yes. We're seeing, obviously, with the first 2 months of launch, inventory build coming in by the specialty pharmacies, particularly as they add additional locations as the launch gained momentum. We think our specialty pharmacy partners are performing in a disciplined manner with a view of growth. It's not steady state. It's going to continue building in front of expected demand. Operator: Our next question coming from the line of Debanjana Chatterjee with JonesTrading. Debanjana Chatterjee: Congrats on the quarter. So, can you talk a little bit more about how your insurance negotiations are progressing and how we should think about the cadence of payers coming online in the first half of next year? Nicole Sweeny: Sure. Absolutely. Leading into launch, we anticipated that it would take roughly 6 months to both drive demand and for payers to assess EKTERLY and establish policies. What we're seeing at this point in time is that, yes, we are leveraging medical exception on a consistent basis to gain access, but we're also seeing some of the regional and national payers create policies for EKTERLY that are largely favorable. Looking towards the end of this year and into the early part of next year, we are planning to, I would say, wrap up discussions with some of the larger payers and PBMs with an aim to have policies in place again, early in 2026. Debanjana Chatterjee: Sure. And a quick follow-up. So, you've also mentioned that in the early quarters, revenues can be a bit bumpy as refill rates stabilize. So, can you talk about how we should think about revenue trajectory in the immediate like next couple of quarters? Brian Piekos: I mean, it's a hard question as we just talked about. We continue to expect initial fills to come through. We've talked about that as adoption expands, the burden of disease on patients will, on average, go down. That will impact both initial fill amounts as well as refill rates. This is an on-demand therapy. We're going through a holiday period. It's really hard to understand exactly kind of the nature of the revenue to kind of comment on what trajectory should look like. Operator: And there are no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

146天前Insight Analytics约5分钟阅读

SFL 2025 Q3 财报电话会议

Espen Nilsen Gjøsund: Welcome to SFL's Third Quarter 2025 Conference Call. My name is Espen Nilsen, and I'm Vice President of Investor Relations in SFL. Our CEO, Ole Hjertaker, will start the call with an overview of the third quarter highlights. Then our Chief Operating Officer, Trym Sjølie, will comment on vessel performance matters, followed by our CFO, Aksel Olesen, who will take us through the financials. The conference call will be concluded by opening up for questions, and I will explain the procedure to do so prior to the Q&A session. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. Please note that forward-looking statements are not guarantees of future performance. These statements are based on our current plans and expectations and are inherently subject to risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, but are not limited to, conditions in the shipping, offshore and credit markets. You should, therefore, not place undue reliance on these forward-looking statements. Please refer to our filings within the Securities and Exchange Commission for a more detailed discussion of risks and uncertainties, which may have a direct bearing on operating results and our financial condition. Then I will leave the word over to our CEO, Ole Hjertaker, with highlights for the third quarter. Ole Hjertaker: Thank you, Espen. We are pleased to announce our 87th consecutive dividend as we continue to build SFL as a maritime infrastructure company with a diversified and high-quality fleet. For the third quarter, we reported revenues of $178 million and an EBITDA equivalent cash flow of $113 million. Over the past 12 months, EBITDA amounts to $473 million, reflecting the continued strength and stability of our operations. In recent quarters, we have taken decisive steps to strengthen our charter backlog, securing long-term agreements with strong counterparties and deploying high-quality assets. At the same time, we have made substantial investments in cargo handling and fuel efficiency upgrades across our fleet while divesting older and less efficient vessels. Our Chief Operating Officer, Trym Sjølie, will elaborate on this later. As part of our fleet renewal strategy, 5 57,000 deadweight ton dry bulk vessels built between 2009 and 2012 have been sold with the final vessels delivered in the third quarter. In addition, 8 older Capesize bulkers were redelivered to Golden Ocean and 7 2002-built container ships were redelivered to MSC during the second and third quarters. These actions, combined with our efficiency upgrades have materially improved the operational and fuel efficiency profile of our fleet, delivering tangible benefits to both SFL and our customers. We have also advanced our commitment to cleaner technology with 11 vessels now capable of operating on LNG fuel, including 5 newbuildings currently under construction. During the third quarter, we announced new 5-year charters for 3 9,500 TEU container vessels on charter to Maersk, adding approximately $225 million to our charter backlog from 2026 onwards. These vessels will be upgraded with advanced cargo handling and fuel efficiency features in line with our larger containership fleet. Turning to the Offshore segment. The drilling rig Hercules remained idle also in the third quarter. While we continue to evaluate strategic alternatives for Hercules, we remain optimistic about securing new employment for the rig in due course. Hercules remains warm stacked and can be mobilized on relatively short notice. So it is difficult to provide timing guidance at this stage. With the announced $0.20 dividend, SFL has now returned approximately $2.9 billion to shareholders over 87 consecutive quarters. This represents a dividend yield of over 10% based on yesterday's share price. Our charter backlog stands at $4 billion with 2/3 contracted to investment-grade counterparties, providing strong cash flow visibility and resilience amid current market volatility. Over time, we have consistently demonstrated our ability to renew and diversify their asset base, supporting a sustainable long-term capacity for shareholder returns. Our solid liquidity position, including undrawn credit lines and unlevered vessels at quarter end ensures that we remain well positioned to continue investing in accretive growth opportunities. And with that, I will now hand the call over to our Chief Operating Officer, Trym Sjølie. Trym Sjølie: Thank you, Ole. Our current fleet is made up of 59 maritime assets, including vessels, rigs and contracted newbuildings. Over the last 12 months, we have sold 22 of our older vessels at an average age of more than 18 years. This has reduced the fleet average by about 2 years to a new average age of less than 10 years per vessel. We have a diversified fleet of assets chartered out to first-class customers on mostly long-term charters and the majority of our customer base is large industrial end users. Our backlog from owned and managed shipping assets stands at approximately $4 billion, and the fleet following Q3 is made up of 2 dry bulk vessels, 30 container ships, 16 large tankers, 2 chemical tankers, 7 car carriers and 2 drilling rigs. Our backlog is mainly derived from time charter contracts. And from Q3 onwards, we have 4 container ships left on bareboat leases, the rest on time charter. The charter revenue from our fleet was about $178 million, and we had a total of 4,748 operating days in the quarter. Operating days is defined as calendar day less technical off-hire and dry dockings or stacking for the rigs. Following several quarters with high number of ships in dry dock, this quarter, we had 2 vessels in dry dock at a cost of around $3.8 million. The 2 vessels in dry dock were 1 car carrier and 1 tanker. Our overall utilization across the shipping fleet in Q3 was about 98.7%. Adjusted for unscheduled technical off-hire only, the utilization of the shipping fleet was 99.9%, a very high availability. In August, our car carrier SFL Composer had a collision in Denmark when approaching Golden [ Ocean ] pilot station going in for a special survey dry docking at Farahead. The collision happened when an overtaking container vessel struck the port quarter of the SFL Composer. There were no injuries to personnel nor pollution as a result of the incident. And furthermore, the vessel was empty of cargo in preparation for upcoming dry docking. She went straight into Farahead after the incident and completed her dry docking as well as damage repairs in a total of 34 days. We are fully covered for the extra time required for repairs by our loss of hire insurance as well as the damage repairs less USD 200,000 in deductible by our Hull & Machinery insurance. It is likely we will recover part of the deductible following the outcome of court proceedings, alternatively a settlement with owners of the other vessel. The current commercial and regulatory environment means that energy efficiency and emissions reduction is fundamental to SFL's ability to attract and retain first-class charters. Our toolbox includes energy efficiency measures, operational optimization and not least new low-emission fuel technology. We have taken significant strides in optimizing and renewing our fleet to meet these challenges by installing scrubbers, energy efficiency devices and investing in new tonnage with dual fuel capabilities. By modernizing and enhancing our fleet, we position ourselves for growth, either by providing new vessels with modern technology or extending the life of existing ones. On the container side, we have, over the last 2 years, upgraded 13 container vessels with 3 more to come by carrying out major upgrades to cargo systems, energy saving technologies, propeller enhancements or replacements and Hull modifications like [indiscernible]. The upgrades amount to almost USD 100 million, fully or partly funded by our charterers and have been instrumental in securing new charters or charter extensions. On notable vessel acquisitions, we have since 2023, bought 2 dual-fuel chemical tankers and taken delivery of 4 LNG dual-fuel newbuilding car carriers. We also have 5 16,000 TEU dual-fuel LNG container vessels on order for charter to a leading European container operator. I will now give the word over to our CFO, Aksel Olesen, who will take us through the financial highlights of the quarter. Aksel Olesen: Thank you, Tim. Starting with our financial performance. This slide illustrates how our diversified portfolio of vessels contributed to an adjusted EBITDA of $113 million for the quarter. Starting on the left, our container vessels remain the largest contributor at $82 million, supported by long-term charters with leading counterparties such as Maersk, Hapag-Lloyd and MSC. Our car carrier fleet added $23 million compared to $26 million in the second quarter as SFL Composer underwent a scheduled dry docking. The Tanker segment generated $44 million, benefiting from 17 vessels on long-term charters, further supported by strong underlying tanker market. Dry bulk contributed with $6 million, down from $19 million as over the last few quarters have divested certain dry bulk carriers as part of our overall fleet renewal strategy. And finally, revenue from our energy assets of $24 million came mainly from the LINUS, which is on a long-term charter contract to ConocoPhillips until May 2029. Altogether, these operations produced $179 million in gross charter hire, including profit share income. After accounting for net operating expenses for about $66 million, we arrived at an adjusted EBITDA of $113 million, which highlights the strong underlying cash generation capacity of our diversified fleet of maritime assets. We then move on to our income statement. SFL delivered solid operational results in the third quarter, supported by stable charter hire income and disciplined cost control. Total operating revenue for the quarter was $178 million, including $1.8 million in profit share. Vessel charter hire contributed with approximately $154 million, reflecting strong utilization across our shipping fleet, while the rigs contributed with approximately $26 million. Total operating expenses were $69 million compared to $86 million in the previous quarter, reflecting the recent divestments of vessels and fewer dry dockings during the quarter. After accounting for depreciation and financing costs, net income for the quarter was $8.6 million or $0.07 per share. Turning to our balance sheet. Our financial position remains strong and well capitalized. We ended the quarter with approximately $278 million in cash and cash equivalents, supplemented with approximately $40 million of undrawn credit lines, giving us total liquidity of approximately $320 million. On the financing side, we made ordinary loan repayments of $56 million during the quarter. We have remaining capital expenditures of $850 million remaining on 5 container newbuildings expected to be funded through pre- and post-delivery financing, in addition to approximately $25 million on our existing fleet relating to efficiency and general upgrades. Looking at the capital structure, our book equity ratio stands at approximately 26% at the end of the third quarter. Let me close with a quick summary of SFL's position today. We currently own and operate 59 maritime assets across key shipping sectors, including container, car carriers, tankers, dry bulk and offshore energy units. The diverse asset base gives us balanced exposure to multiple markets and long-term counterparties. At quarter end, we have $278 million in cash and cash equivalents, reflecting a strong liquidity position and prudent financial management. Our fixed rate charter backlog now stands at approximately $4 billion, offering excellent visibility on future cash flows and earnings. These contracted revenues underpin both our dividend capacity and our ability to reinvest in modern fuel-efficient vessels. And finally, the Board has declared a quarterly dividend of $0.20 per share, marking our 87th consecutive quarterly dividend, a track record that very few companies in our industry can match. And with that, I give the word back to Espen, who will open the line for questions. Espen Nilsen Gjøsund: Thank you, Axel. We will now open for a Q&A session. [Operator Instructions] We have our first question coming in through the chat. Do you guys expect Hercules to be leased in the new year? And the Gulf of America [ our ] Continental Shelf Oil and Gas Lease Sale 262, also referred to as lease sale BBG 1 under the Big Beautiful Bill Act is scheduled for December 10, 2025. Is that going to affect the Hercules lease potential? Ole Hjertaker: Thank you. I think the best way to maybe explain that is that we are, of course, looking for all opportunities out there for the Hercules. However, referring specifically to the Gulf of Americas, this rig is a harsh environment, a specialized harsh environment drilling rig equipped to drill in winter season in the Northern Hemisphere. And the last campaign it was in Canada, where it was drilling partly during -- going into the winter season. So there are a lot more rigs that can work in a more benign environment weather-wise like in the Gulf of Americas. And therefore, do not need the specifications and the features that the Hercules represents. So we have predominantly focused the marketing effort in the areas where this rig has unique capabilities and where there are relatively few rigs competing. And that includes the North Sea and specifically the Norwegian Continental Shelf. It's typically west of Shetland in the U.K. region. You have Canada, which also have very harsh environments. And you have certain areas in southern part of Africa like Namibia and potentially also South Africa. So we have focused the marketing effort there because there's relatively less competition, and there are fewer rigs that can do that work. Espen Nilsen Gjøsund: Thank you, Ole. We will take our next question from Sherif Elmaghrabi. Sherif Elmaghrabi: Ole, just maybe to start off with a follow-up. It's very helpful commentary around where the Hercules might work. But I'm interested also in the type of work, are you considering well intervention opportunities for the Hercules? Or do you feel that that's something that might preclude you from drilling work? Ole Hjertaker: No, we are looking for any opportunity to bring the rig out to work. So it could be well intervention or it could be exploration drilling. What we also did, and this is back in 2023 after we took the rig back, that rig had been working as an exploration rig for many, many years. And we did some upgrades to the rig to make it feasible also for development drilling where you have the potential for longer contracts. So we -- our focus is to bring the rig back to work and produce positive cash flow. And exactly what work it's going to do doing that, there we are more flexible. Sherif Elmaghrabi: And then shifting to the tanker fleet. Most of your fleet is fixed past next year. But for those rolling off, given the sustained strength we're seeing in tanker spot rates and the order book, of course, is it too soon to think about securing long-term work for these vessels? Ole Hjertaker: Yes. It's too soon. The vessels that run off first have 2-year options attached. So there is a possibility for the charterer to extend that charter. While saying that, there is also a profit share feature relating to those vessels, and these are 4 LR2 product tankers that have been on now almost 4 years on charter to Trafigura. And the profit share feature, and this is in case the vessels are being sold, these vessels would be significantly in the money. So it's too early to have an opinion on what could -- how that could -- what that could transpire into. But we believe there is significant value beyond the book value embedded in those vessels linked to the profit share. Espen Nilsen Gjøsund: We now have another question that we've gotten through the -- we got through the system here. It's from [ Harris Shannon]. Can SFL please provide any updates on the implementation of the $100 million buyback? Aksel Olesen: Sure. Just to briefly comment on that. So we have about $80 million remaining on the buyback. And so far this year, we've bought back equivalent of $10 million of share at an average price of approximately $7.98 per share. Espen Nilsen Gjøsund: We have another question from [ Climent Molins ]. Unknown Analyst: Today, we've seen some news on the office mentioning they may pause their attacks on commercial shipping in the Red Sea. If this truly holds, how fast do you think container ships operator will -- how long do you think it will take for them to go back to the region? Ole Hjertaker: Thank you. I think for now, it's a little bit of a wait-and-see procedure. There have been periods in the past where the [ Hoodie] said that they were going to put sort of an ease to it and then suddenly, they started attacking vessels again. We are very -- of course, always very concerned with the safety of the crew and the vessels. And while you can get insurance coverage for the -- to take vessels through there, we are in close dialogue with our customers. And that is one good thing with working with, I would say, sort of blue-chip counterparties like work and others is that they are as concerned in doing this as we are. So I think there is a risk evaluation that will go on now. everybody noticed the sort of the statement. But we also, as I said, seen that they changed their minds. So I think it's going to be a relatively sort of slow, call it, rollback in activity through the Red Sea. I think for some of the countries around that, like Egypt, who have seen a massive decrease in canal fees, I mean, they certainly welcome it. So hopefully, we will see some more efficiencies in the fleet from that. From our perspective, in SFL, since we have our vessels on time charter, long-term time charter, we don't make -- this will not transpire into a higher time charter rate. But when -- if and when our vessels move back into the Red Sea and you have shorter travel distances, we expect to see a reduction in operating expenses because one of the effects of the trading where many vessels that used to go through the Red Sea now go around Africa means that these vessels have had to run at higher speeds through the sea and therefore, have had higher engine loads and thereby been using more lubrication oil, for instance, and other factors than normal. So that's, I would say, more the direct effect on us if this actually materializes and if that trade goes back to normal. Espen Nilsen Gjøsund: Okay. We have another one coming into the system from [indiscernible]. Do you have purchase obligations in any of your charter contracts? And if yes, can you share any details? Aksel Olesen: Yes. In terms of purchase obligation, that's something more in the past. I think the most recent ones are the 7 MSC vessels that were called or delivered back to MSC at, I believe, quarter end Q2. And then we have 4 more remaining in the associate that are on long-term bareboat to MSC. As we have mentioned on previous calls, we have kind of transformed the business from bareboats where you have various customers that have these purchase obligations to now run the ship on a time charter basis where we maintain and keep the upside in the residual value of the vessels. So predominantly, we own the residual. And in some instances, as Ole mentioned, we also have a profit sharing on those vessels where we take a significant part of the market upside as well. Espen Nilsen Gjøsund: Another question from [indiscernible]. What is the outlook for new transactions outside of the Container segment? Ole Hjertaker: Yes. we are segment agnostics. So we look at opportunities, I would say, across the maritime space. What we look for are opportunities where we can charter, I would say, more commodity type, not too specialized type vessels to very strong counterparties. So we've done deals in addition to the container segment, we've done car carrier deals with very strong counterparties. We've done tanker deals with very strong counterparties. We have relatively few dry bulk vessels left, but it's definitely a segment we would like to do more business in. But it's all down to structuring the right deals with the right return characteristics that fits our sort of threshold. So we are constantly looking for opportunities. We're using our network to explore what we can do, but we cannot give specific guidance on how much we will invest in any specific segment. We will announce deals if and when they materialize. And what we've seen in the past is that we don't have a stable investment sort of per quarter type investment profile. We try -- some quarters, there are fewer investments and then some quarters, there are no investments. And then in other quarters, there are higher investments. So I think this is balancing well out over time, but we definitely have investment capacity for new transactions currently. Espen Nilsen Gjøsund: As there are no further questions from the audience, we would like to thank everyone for participating in this conference call. If you have any follow-up questions to the management, there are contact details in the press release or you can get in touch with us through the contact pages on our web page, www.sflcorp.com. Thank you for joining.

146天前Insight Analytics约5分钟阅读

TDW 2025 Q3 财报电话会议

Operator: Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to West Gotcher, Senior Vice President of Strategy, Corporate Development and Investor Relations. Please go ahead. West Gotcher: Thank you, Liz. Good morning, everyone, and welcome to Tidewater's Third Quarter 2025 Earnings Conference Call. I'm joined on the call this morning by our President and CEO, Quintin Kneen; our Chief Financial Officer, Sam Rubio; and our Chief Operating Officer, Piers Middleton. During today's call, we'll make certain statements that are forward-looking and referring to our plans and expectations. There are risks, uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comments that we're making during today's conference call. Please refer to our most recent Form 10-K and Form 10-Q for additional details on these factors. These documents are available on our website at tdw.com or through the SEC at sec.gov. Information presented on this call speaks only as of today, November 11, 2025. Therefore, you're advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures can be found in our earnings release located on our website at tdw.com. And now with that, I'll turn the call over to Quintin. Quintin Kneen: Thank you, West. Good morning, everyone, and welcome to the Tidewater Third Quarter 2025 Earnings Conference Call. I'll start as usual by providing some highlights of the third quarter, updating you on our current view on capital allocation and then discussing the offshore vessel market and our outlook on vessel supply and demand. West will then provide some additional detail on our financial outlook and give you our 2026 guidance. Piers will give you an overview of the global market and global operations, and then Sam will wrap it up with our consolidated financial results. Third quarter revenue and gross margin nicely exceeded our expectations. Revenue came in at $341.1 million due primarily to a higher-than-expected average day rate and slightly better-than-anticipated utilization. Gross margin came in at 48% for the quarter, about 200 basis points better than our guidance. The primary factor driving the increase in average day rate was the benefit of our fleet rolling on to higher day rate contracts. Additionally, fleet utilization continued to benefit from the substantial drydock and maintenance investment we've made over the past few years, driving meaningful uptime performance compared to our expectations. During the third quarter, we generated $83 million of free cash flow, bringing the first 9 months of 2025 total free cash flow to nearly $275 million. Free cash flow generation we continue to demonstrate alongside balance sheet and liquidity enhancements we completed during the third quarter provides us with a substantial degree of confidence in our ability to deploy a significant amount of capital over time to drive shareholder value. Based on the estimate for 2026 that West is going to cover shortly, absent any cash used in M&A or share repurchases, we will be ending 2026 with close to $800 million in cash, which, while we like the pace of cash flow generation, we would find unacceptable from an allocation of capital perspective. We currently retain our $500 million share repurchase authorization, representing approximately 18% of shares outstanding as of yesterday's close. As discussed on last quarter's earnings call, we see this share repurchase authorization as a long-term program that we will lean into based on competing capital allocation opportunities we have before us. In this regard, we did not repurchase any shares during the past quarter due to these competing priorities. Our current leverage position is such that we feel comfortable in potentially using a substantial amount of cash in an M&A transaction and are comfortable adding leverage to the business provided that we have confidence that the near-term cash flows provide the ability to quickly delever back to below 1x net debt to EBITDA, very similar and consistent with what we have done in our prior acquisitions. Importantly, given our current balance sheet, future cash flow generation and liquidity position, M&A and buybacks are not necessarily an either/or proposition. However, how certain M&A discussions progress and whether or not they ultimately come together can shift our cadence and immediate tactics in executing share repurchases. But I don't want to leave you with the impression that we are limited in the long run on our ability to execute on both. Much of the commentary for offshore activity during 2025 has been on the pace and amplitude of the recovery from a relatively muted period of tendering for near-term offshore drill projects. We believe there are a number of factors that have precipitated this white space dynamic, not the least of which have been macro uncertainties, OPEC production and a relatively tepid commodity price environment and supply chain bottlenecks for critical offshore infrastructure. By all accounts, including observations by the drilling contractors, recent public commentary and conversations with our customers, it appears that the next few quarters represents a shoulder period of drilling activity ahead of an uptick towards the end of 2026, with increasing conviction on the state of drilling activity into 2027 and beyond. We believe this to be a reasonable expectation given our conversations, but also more broadly evaluating expected total global hydrocarbon demand projections and what appears to be a hydrocarbon supply curve that will be in a slight surplus in 2026, moving to a meaningful deficit thereafter. This should result in capital expenditures to bring on new production ahead of the shortfall, providing further confidence to the uptick in drilling activity that appears to be developing as evidenced by the recent tendering activity for offshore drilling units. In the intervening period, Tidewater is in the advantageous position compared to many in the offshore sector and that we are the beneficiary of a wide variety of offshore activities, all of which remain robust. Production support is a critical piece of our business, comprising roughly 50% of what we do today. This base level of demand remains steady and is supported by current commodity prices. The continued proliferation and deployment of incremental FPSO units is providing additional vessel demand. FPSO support has always been a component of our business, but the volume of units that are delivering and expected to deliver over the coming years is fairly unique in the history of the offshore industry. In addition, many of these FPSOs are being deployed into frontier areas that have limited shipping infrastructure and are in challenging weather and wave conditions, which should ultimately disproportionately benefit our larger vessel classes. On the EPCI and Offshore Construction segment of our business, our observation has been that backlog for these projects usually have a few years of lead time before converting into vessel demand. We've seen that backlog begin to convert into a meaningful increase in demand. And based on customer conversations, that demand is set to further strengthen in 2026 and in 2027. These demand drivers are important components of our business and help mitigate some of the near-term softness we see in the drilling market. In the longer term, the structural growth in these markets will continue to put added strain on vessel supply. And when drilling activity growth does resume in earnest, vessel supply will be that much more constrained by the growth in these other sectors, providing even more leverage to vessel owners than what we saw in the 2022 to 2024 period. As important as these factors are, particularly in straining vessel supply and a drilling recovery, in the near term, these factors don't adequately offset the absence of additional drilling activity to provide us the ability to aggressively push up day rates. However, we do expect this nondrilling demand to help us retain our utilization and day rates next year. To the extent drilling activity comes in a bit stronger than what we are guiding today, we would expect some additional benefit to our 2026 financial performance. We continue to believe that tight vessel supply will remain a tailwind for the sector and that the structural limitations that impact new build investment decisions will limit any significant new build vessel programs for the foreseeable future. In summary, we are pleased with the cash flow that our business is generating. We are optimistic about the long-term outlook for the offshore vessel industry and remain exceptionally well positioned to drive earnings and free cash flow generation over the coming years. Additionally, we are in the fortunate position of having a significant amount of capital to deploy, and we remain committed to deploying this capital to its highest and best use for our shareholders. And with that, let me turn the call back over to West for additional commentary and our financial outlook. West Gotcher: Thank you, Quintin. At the end of the third quarter, we had $500 million of share repurchase authorization outstanding. Our share repurchase capacity is a function of the refinancing that we completed during the third quarter of 2025. Under the bonds, we are unlimited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than 1.25x pro forma for any share repurchase. Under the new revolving credit facility, we are also unlimited in our ability to repurchase shares provided that net debt to EBITDA does not exceed 1x. Under the revolving credit facility metric, to the extent that we exceed 1x net leverage, we still retain the flexibility to continue returns to shareholders, provided the free cash flow generation is in excess of cumulative returns to shareholders. Our net debt-to-EBITDA ratio at the end of the third quarter was 0.4x. Specific discussions of these limitations can be found in the respective agreements filed with the SEC. Our philosophical approach to leverage remains consistent. Whether it be for M&A or share repurchases, our litmus test is that so long as we can return to net debt 0 in about 6 quarters, we are comfortable to proceed with a given outlay of capital. From time to time, we may exceed this threshold only for M&A, depending on the visibility and durability of the acquired cash flows, but this is our general approach. This approach is important to keep in mind as we navigate the opportunities before us and also informs how we evaluate a combination of M&A and share repurchases. Our intention is not to use leverage for leverage sake, but rather to efficiently deploy capital while maintaining the strength of our balance sheet. We remain opportunistic on share repurchases, and we'll look to execute share repurchase transactions when suitable M&A targets are not available. Turning to our leading-edge day rates. I will reference the data that was posted in our investor materials yesterday. Broadly, our weighted average leading-edge day rate for the fleet was down marginally in the third quarter compared to the second quarter, primarily a function of our midsized PSVs in West Africa and larger PSVs in the North Sea. Rates for these vessels were resilient elsewhere around the world. We did see a nice uplift in our largest class of anchor handlers with contracts in Africa and the Mediterranean and a bit of a movement up in our smallest PSVs. During the quarter, we entered into 34 term contracts with an average duration of 7 months as we look to a strengthening market as we progress into the back half of 2026. Turning to our financial outlook for the remainder of 2025, we are narrowing our full year revenue guidance to $1.33 billion to $1.35 billion and a full year gross margin range of 49% to 50%. We've narrowed our range for the remainder of the year with the revenue outperformance in the third quarter bringing up the low end of the range, and we've lowered the high end of the range due to a few projects ending earlier than anticipated in the Americas and as we expect a bit more idle time in West Africa as we close out the year. We now expect utilization to be roughly flat sequentially as the benefit we expected from lower drydocks is now offset by the lighter-than-anticipated activity I just mentioned. The midpoint of our revenue guidance range is approximately 99% supported by year-to-date revenue plus firm backlog and options for the remainder of the year. Turning to the 2026 outlook. We are initiating a full year 2026 revenue range of $1.32 billion to $1.37 billion and a full year 2026 gross margin range of 48% to 50%. We anticipate a relatively consistent quarterly cadence of revenue generation and margin profile throughout the year. Our expectation is for a relatively even year with the potential for uplift depending on the strength of drilling activity picking up towards the end of the year. Our firm backlog and options represent $316 million of revenue for the remainder of 2025. Approximately 78% of available days for the remainder of the year are captured in firm backlog and options with our larger and midsized classes of vessels retaining slightly more availability to pursue incremental work as compared to our smaller vessel classes. Looking to 2026, our firm backlog and options represent $925 million of revenue for the full year, representing approximately 69% of the midpoint of our 2026 revenue guidance. Approximately 57% of available days for 2026 are captured in firm backlog and options. Our full year revenue guidance assumes utilization of approximately 80%, providing us with 11% of capacity to be chartered if the market tightens quicker than we are anticipating. Our largest class of PSVs retain the most opportunity for incremental work, followed by our midsized anchor handlers and small and midsized PSVs, largest anchor handlers. Contract cover is higher in the earlier part of the year with more opportunity available later in the year. The bigger risk to our backlog revenue is unanticipated downtime due to unplanned maintenance and incremental time spent on drydocks. With that, I'll turn the call over to Piers for an overview of the commercial landscape. Piers Middleton: Thank you, West, and good morning, everyone. First off, as both Quintin and West have mentioned, our overall long-term outlook for the offshore space remains very positive for the OSV market. And while we have some short-term headwinds to navigate through, our and the industry's expectations are that as we get to this time next year, we will start to see that expected uptick in drilling demand that everyone has been so vocal about, which layered on to the record EPCI backlog should bode well for OSV day rates in the latter half of 2026 and into 2027. OSV supply growth is expected to remain very moderate, supporting market dynamics overall with the OSV order book of 134 units according to Clarksons Research, still representing roughly 3% of the current fleet, reflecting limited capacity for supply growth. Newbuilding activity in the OSV space continues to be subdued, and we see no signs of significant new supply entering the market in the foreseeable future. Turning to our regions and starting with Europe. We saw continued pressure on day rates, mainly in the U.K. However, utilization across the whole region compared favorably to previous quarters as our teams worked hard to keep the boats working in the U.K., Med and Norway. Uncertainty over the U.K. energy profits levy remains. However, market chatter suggests that the U.K. government may soften its approach to the next budget on the 26th of November, which, if this happens, will be an unexpected shot in the arm for the region as we go into 2026. The longer-term outlook for both Norway and the Med remains positive with our teams now working on several multi-boat tenders all to start during 2026. Any awards, however, are not expected until the early part of next year, with much of the work kicking off in the latter half of Q2 2026. In Africa, we continue to see pressure on day rates, which as we mentioned last quarter, was in part because of the slowdown in drilling in Namibia, where we have been very active over the last 6 or 7 quarters, supporting operations with our largest 900 square meter class of PSV. With the anticipated slowdown in drilling, the team has been focused on winning work elsewhere in the world, and we can expect to see a few vessel movements out of Africa over the next few quarters as we mitigate against some of the expected softness in the first half of 2026. Longer term, we still remain very bullish for the region with recent announcements of Total lifting force majeure in Mozambique, Shell announcing they are returning to Angola after a 20-year absence to restart deepwater exploration with all the Orange Basins to still be developed, we remain very confident that the region will bounce back very quickly once all these pieces fall into place. In the Middle East, vessel demand and day rates continue to strengthen in the quarter, driven mainly by the EPCI contractors operating in the Kingdom as well as additional incremental demand in Qatar and Abu Dhabi. As we have mentioned previously, this is a very fragmented market, which makes it much harder to drive rates aggressively. However, we continue to see supply constraints in certain vessel classes. And as demand has been increasing, the team has been doing a great job pushing day rates during 2025. And with no significant slowdown in demand in sight, we expect day rate momentum to continue into 2026 and beyond, especially with the recent news that Saudi Aramco plans to start reactivating some of the rigs that they had suspended last year. In the Americas, we had a solid quarter with day rate and utilization improvement primarily came from our operations in the Caribbean and Brazil. The Gulf of America and Mexico both continuing to be flat demand. Brazil or Petrobras specifically, is likely to face some short-term headwinds in 2026 as the NOC is rethinking its offshore logistics model and financial strategy as Brazil enters into an election year in 2026. Longer term, we don't expect any slowdown in drilling or production demand in Brazil. However, we may see some Petrobras specific projects moving to the right as the politics around the election push start times close to the end of 2026 or even the beginning of 2027. Lastly, in Asia Pacific, Q3 saw a solid jump in both day rates and utilization as projects in both Australia and Asia continued on from Q2. We have seen some pressure unnecessarily in our view in Australia on day rates with competitors. But more broadly in the region, day rates for our larger class of vessels have held up well. And looking out into 2026, we see some positive signs of various drilling projects coming back to the region from Q2 onwards after a bit of a hiatus during the majority of 2025 caused by various political machinations in certain areas. Overall, we're very pleased with how Q3 has turned out and how our teams are focused on delivering strong results even with the short-term white space headwinds to contend. So even with the short-term headwind, we remain very optimistic on the long-term fundamentals for our business, still being very much in the shipowners' favor for some time to come. And with that, I'll hand it over to Sam. Samuel Rubio: Thank you, Piers, and good morning, everyone. At this time, I would like to take you through our financial results. My discussion will focus primarily on sequential quarterly comparisons of the third quarter of '25 compared to the second quarter of 2025, including operational aspects that affected the third quarter. As noted in our press release filed yesterday, we reported a net loss of $806,000 for the quarter or $0.02 per share. Included in the net loss was a $27.1 million charge related to the early extinguishment of our debt, which will be discussed later. For the third quarter, we generated revenue of $341.1 million compared to $340.4 million in the second quarter, essentially flat quarter-over-quarter, but about 4% higher than our expectation. Third quarter average day rates of $22,798 were 2% lower versus the second quarter. We saw a nice increase in active utilization from 76.4% in the second quarter to 78.5% in the third quarter, due mainly to the decrease in idle and drydock days as we saw a lighter drydock load in the back half of the year compared to the first half of the year as expected. Gross margin in the third quarter was $163.7 million compared to $171 million in the second quarter. Gross margin percentage in the third quarter was 48%, nicely above our Q3 expectation, but below our Q2 margin of 50%. The margin outperformance versus our expectation was primarily due to higher-than-expected day rates and utilization, combined with a decrease in operating costs. Lower operating costs were driven primarily by lower crew salaries and travel costs, combined with lower supplies and consumables expense due to fewer idle and repair days, offset somewhat by higher R&M expense. The margin decrease versus Q2 was due to an increase in operating costs. Operating costs for the third quarter were $177.4 million compared to $170.5 million in Q2. The increase in cost is due primarily to an increase in salaries and travel, R&M and consumables with continuing FX impacts also contributing. Adjusted EBITDA was $137.9 million in the third quarter compared to $163 million in the second quarter. The decrease is due to the previously mentioned lower gross margin as well as a sequential lower FX gain. G&A expense for the third quarter was $35.3 million, $4 million higher than the second quarter due to an increase in professional fees. We are projecting G&A expense to be about $126 million for 2025, which includes about $14.4 million of noncash stock-based compensation. For 2026, we are projecting our G&A costs to be about $122 million, which includes approximately $13.4 million of noncash stock-based compensation. We conduct our business through 5 operating segments. I refer to the tables in the press release and segment footnotes and results of operations discussions in the 10-Q for details of our segment results. In the third quarter, as mentioned, we saw overall revenues decrease slightly sequentially. However, results varied by segment with our APAC, Middle East and Americas revenue increasing. These increases were offset by decreases in Europe and Mediterranean and African regions. Gross margin versus the previous quarter increased in 4 of our 5 regions with our Europe and Mediterranean regions seeing a decrease of about 12 percentage points. The increase in the Middle East region was due to increases in average day rates and utilization, while operating expense was essentially flat versus Q2. The increase in the Americas region was due to increases in average day rates and utilization, offset by a 2% increase in operating expenses. The improvement in utilization was primarily due to fewer drydock idle and mobilization days. The increase in the APAC region was primarily due to a 7-point increase in utilization and a 5% increase in average day rates, offset by higher operating costs, primarily driven by higher salaries due to movement of some Southeast Asia vessels into Australia. The increase in utilization was primarily due to lower idle and repair days. Africa's gross margin percentage was marginally higher versus the previous quarter and the decrease in our Europe and Mediterranean region was driven by an 11% decrease in day rates, combined with a 6 percentage point decline in utilization as well as an increase in operating costs. The cost increase was primarily due to higher R&M and higher fuel expense due to lower utilization. The decrease in utilization was due to higher drydock and repair days as well as an overall weaker spot market compared to a very strong Q2. We generated $82.7 million in free cash flow this quarter compared to $97.5 million in Q2. The free cash flow decrease quarter-over-quarter was primarily attributable to lower cash flow from operating activities, lower cash proceeds from asset sales. For a while now, I have mentioned that we had received -- we had not received payment from our primary customer in Mexico. Although we did not receive payment from them prior to the end of the third quarter, subsequent to the quarter end, we did receive a payment of $7.4 million, and we expect to receive additional amounts prior to year-end. Our outstanding AR balance at the end of September before the payment was made represented approximately 17% of our total AR and other receivables. We will continue to monitor and assess the situation closely. As we communicated on our previous call, we successfully refinanced our 3 previous secured and unsecured debt instruments to a single longer tenured unsecured structure, and we also entered into a senior secured 5-year credit agreement, which provides for a $250 million revolving credit facility, a $225 million increase over previous revolving credit. As part of the refinancing, we recognized a charge of $27.1 million or about $0.55 per share related to the early extinguishment of the previous debt instruments. As a result of our new debt structure, we will only have small debt repayments that are related to the financing of recently constructed smaller crude transport vessels. We have no payments until 2030 on our new unsecured notes. We incurred $17.6 million in deferred drydock costs in Q3 compared to $23.7 million in the second quarter. In the quarter, we had 943 drydock days that affected utilization by about 5 percentage points. For the year, we're projecting drydock costs to be about $105 million, which is down about $2 million from our prior call. The decrease is due to the net effect of changes in timing of our various 2025 projects with some push to 2026. In addition, we see savings generated from projects completed for the remainder of the year. For 2026, we are projecting drydock costs to be $124 million. Included in that number is $21 million in engine overhauls and $7 million of carryover projects from 2025. We are expecting drydock days to affect utilization by 6 percentage points. In Q3, we incurred $5.1 million in capital expenditures related to ballast water treatment installations, DP system upgrades and various IT upgrades. In addition, we exercised an option to purchase a vessel that we had been operating in our fleet for the past several years under bareboat lease. This purchase option was significantly below market value and allows us to keep a high-quality young vessel in our own operated fleet. The purchase option is reflected in the financing section of the cash flow statement. For the full year, we project capital expenditures of about $30 million, which is down $7 million from our previous forecast. Similar to our drydock projects, the cost savings are due to timing of projects that will be done during drydocks deferred to next year. For 2026, we are projecting capital expenditures to be approximately $36 million, which includes the $7 million carryover from 2025. In addition to this year, we have 2 other vessels under a leasing arrangement that we intend to purchase in 2026 for approximately $24 million. In summary, Q3 was another strong quarter from an operations and execution standpoint. We delivered both strong financial results and free cash flow. Our balance sheet is in an excellent position, and we are well positioned to continue to drive earnings and generate meaningful free cash flow in the future. The industry long-term fundamentals remain very strong, and we remain very optimistic about the opportunities that lie ahead for Tidewater. With that, I will turn the call over to Quintin. West Gotcher: Thank you, Sam. Liz, would you please open it up for questions. Operator: [Operator Instructions] Your first question comes from the line of Jim Rollyson with Raymond James. James Rollyson: Quintin, if I kind of take some of your comments around how the market is shaping up at this stage for '26, I'm curious your thoughts on -- it seems like the production support end of the business is steady to growing with your comments about FPSOs kind of over the next coming years. The construction market has been steady to strong. And really, it's been the rig market that's kind of been the differentiation between you guys having the pricing leverage you had before and not. And I'm curious, as that starts to return, but you're seeing the production support market continue to grow. Do we need to get back to the same rig levels we were at, at the peak in '24 to get your pricing back? Or does that actually come a bit sooner because you've soaked up some capacity into the production market since then, do you think? Quintin Kneen: Jim, thanks for the question. And I think you summed it up really well. No, because of the increasing activity in both FPSOs and EPCI and Subsea broadly, I would expect that we would get there sooner. So -- and there's also been vessel attrition over the intervening 2 years that I think will help us get there sooner regardless. But no, I would love to see the drilling activity get back to where it was in '24 because I think that's going to give us the ability to push day rates again at that $3,000 and $4,000 a day per year level, which is really what we need in this industry to get back to earning our cost of capital. We need a couple of years of that. James Rollyson: Right. Okay. That's helpful, and that's what I figured. And then if I read between the lines and some of your comments, you talked about capital, where capital flows between buybacks, between M&A potential. And obviously, this quarter, you guys built a lot of cash and didn't buy back anything and you didn't really buy anything. But I'm assuming kind of the way you operate that the lack of share repurchases in this quarter maybe suggests that you're at least looking at some M&A opportunities that you're kind of holding some dry powder for. Not that I expect you to tell me who you're buying, when that's happening or anything like that, but I'm just curious, is that an accurate read that at least you're pursuing some things that could happen and maybe that's why you didn't do any share repurchases this quarter? Quintin Kneen: Jim, a very thoughtful and great question. Allow me to say that we had material nonpublic information during the quarter, but I just have to leave it at that. James Rollyson: Okay. Appreciate that color and good job, and look forward to how things play out as we go into '26. Operator: Your next question comes from the line of Fredrik Stene with Clarksons Securities. Fredrik Stene: And appreciate all the detailed commentary as always. I wanted to dive a bit into the guidance for 2026, and I must say that I was a bit surprised that you gave it during the third quarter since you gave it at the fourth quarter for last year, but clearly positive to see that you have confidence enough in next year to guide at this point. With that as a preface, I wanted to ask if you could help me with a bit of granularity when it comes to which regions would be of course more exposed to open capacity, which regions are well covered, et cetera, when we think about this 69% midpoint revenue number that you gave, West, and the 57% of available days that were booked. Is there any sort of regional discrepancies going into next year, some regions to watch closer when we try to assess whether or not you'll hit that guidance or even outperform? Quintin Kneen: Listen, thanks for the question. I'm going to give a quick response, but then I'm going to hand it over to West and Piers because they've got more detail on that. But as it relates to the guidance timing, we just think it's appropriate at this point in the year to give people guidance. And if we can give people guidance at this point in the year that is somewhat firm, we're going to do it. This year, we have a little more confidence than we had last year. And I think that we could characterize this year's guidance as kind of a base case. We're hopeful to see that upside in the latter part of '26, but we are very confident that we could deliver a year in '26 that was at least as good as '25. And so we wanted to get that information out. But as to the regional breakup, let me pass it over to Piers because he's got more detailed knowledge. Piers Middleton: Fredrik. Yes, I think that looking at it, we have -- Africa has a little bit more exposure towards the second half of '26, which is not unusual when we look out into -- for most years. And then Asia is a little bit more on the nearer term as we go into '26 as well. There's a little bit more exposure there, which again, as I sort of mentioned, we've got a number of things we've got in the -- we're working on at the moment. So maybe that changes as we work through things, but that exposure is primarily Africa and Asia as we look out through the year. Elsewhere, we've got fairly solid coverage, I would say, as we go into 2026. Fredrik Stene: All right. And just as a follow-up to that one. You're talking about 69% from firm revenues and options. Are you able to give a split there or at least give some color on whether or not it's sensible that most of those options will be exercised given whatever price that are priced at. Piers Middleton: I don't have the split on firm and options at hand at the moment. So -- but I would say we've got options which we do have the ones which were done a while ago. So we're very confident they will get -- will taken when they come. Fredrik Stene: Just one super quick one at the end here, which doesn't really relate to any market. But in your 10-Q, you're talking about a case, call it, the Venezuela case where you are potentially owed around $80 million. And to my understanding, there's potentially a verdict by year-end. How should -- is this something to care about? Is there a chance that you'll be able to collect that money if it's going in your favor? Any commentary would be super helpful as more cash is obviously a positive. Quintin Kneen: Fredrik, it's Quintin. The timing on these types of cases is so difficult. I mean this has been going on for 12 years now. So yes, we do feel that we're getting really close. But trying to call it whether it's the end of this year or the first half of next year, I would tell you, is really difficult. I would say that most people are thinking it's going to settle [indiscernible] Operator: Your next question comes from the line of Josh Jayne with Daniel Energy Partners. Joshua Jayne: Quintin, you alluded to it a little bit in the answer to the last question, but I'm going to go ahead with that anyway about confidence level. So as we sat here a year ago, there was a lot of questions about domestic energy policy in Saudi, and we just changed presidents and offshore white space. All of those went on to, I think, impact offshore activity over the course of '25. Do you get a sense that customers have a better sense of the playbook today and are more confident in the next 12 months, maybe more so than you were a year ago? Maybe just elaborate on that a little bit more would be great. Quintin Kneen: I do just because we've had a year of dealing with this volatility and uncertainty, and we're getting a sense for which regions it impacts and what it doesn't. But also, we've gotten a real good view on OPEC and how they're releasing excess barrels into the market and how they're managing price expectations as they do that. So yes, I think that operators broadly have a better sense for where they want to go and how deep they want to go in particular regions. But let me look it over to Piers and Piers, you may have some other commentary to like add. Piers Middleton: Yes. Josh, I think when we speak to our customers at the moment, they do seem to have a little bit more of a view as to where they think this is going to go. And you can start seeing that in some of the conversations and what you probably heard from the drillers in terms of second half of '26. We're seeing a lot more tenders and pretender type of discussions at the moment across all of our regions. So there's definitely a good undercurrent of noise coming out in terms of giving us that sort of positive outlook as we go into the second half of '26. I mean you mentioned Aramco, I mean they've already come out. I mentioned briefly about reactivating rigs they had suspended last year. So that's a very positive sign from that side. We're seeing a lot more activity in places like the Med and obviously, the Caribbean as well. So it's very positive in all the conversations we're having at the moment. So yes, customers seem -- they seem to have plans in place and they're starting to move on those plans, which I think is a positive sign for us. Joshua Jayne: And then you talked about the 34 contracts that were signed over the course of the quarter for an average term of 7 months, the general consensus view has been we do see some uptick in rig activity in the second half of 2026. And just when I think about the timing, is that intentional on your part? Or is the duration of those contracts? Or is that just sort of where the market is today, what customers are willing to sign? Maybe just speak to that a little bit more. Piers Middleton: It's really sort of where the market is today. I mean we've -- and I think I mentioned this on the last call, when we've had this sort of some expected softness or the white space that we talk about, we've obviously been chasing little bit of utilization. So some of those contracts are just to get us through into the second half '26. And I think the thing which we're very conscious of is keeping utilization up at the same time, making sure we don't overcommit to longer term because we believe in this uplift in the market in the second half of '26 and into '27, and we don't want to be locking in something which we think is a little bit subscale today. So some of the contracts we're signing now about just giving that cover and getting us into the second half of '26 is how we sort of been focusing in terms of commercial strategy. Joshua Jayne: And then maybe if I could just squeeze one more in. I'd love to get your thoughts on just the newbuild fleet today. You highlighted the number of vessels, but then also just the ongoing attrition that happened over the last 2 years. Could you just frame that against the attrition that you're expecting over the next 12 to 24 months and your expectation if the number of vessels that are on order today all ultimately get built? West Gotcher: Josh, it's West. I'll give a little bit of view and Piers or others want to chime in, that's fine. What we've seen over the past, I guess, a couple of years now is a handful of orders from folks in different parts of the world. For the most part, these are not coming from legacy industrial participants. You see some orders from, if you will, new entries into the industry. You do have some new builds that are -- that have been ordered down in Brazil against contracts, which we think is -- makes sense, especially given the rates that those reportedly have been won at. But as of today, again, it's roughly 3% of the fleet across both PSVs and anchor handlers that have been ordered. Now what does that mean? That matters as it relates to net new build additions or net incremental supply. And as we look out over time in an industry where the assets are 20- to 25-year live, that would tell you every year, you'd lose roughly 4% to 5% of the fleet. It doesn't always work out as elegantly as that because not all vessels are built kind of pro rata over time. But over the course of a few years, you would expect dozens, if not more, vessels to reach that 20- to 25-year life, at which point they should otherwise attrition. Now if you're in an economic environment such that spending a considerable amount of money to keep a vessel going, that's possible that, that can happen. But there is a finite life for a lot of these vessels. And so what we see is less new build activity or less new build vessels on order than what attrition would tell you would lead to net new supply once these vessels start to deliver. Now whether they ultimately deliver, I don't think there's any reason to believe they won't. If they're in a shipyard today and they're being built and they have the financing to do that, presumably, they should deliver. The question is on what time frame. A lot of these vessels haven't been built in a long time. And so there's some muscle memory that has to be put back in place at the shipyards. But I think it's fair to assume that they do indeed deliver. But against that attrition dynamic in our mind, does it create a net new boat? And if it doesn't, then we're still in as good of a place as we've been. Operator: Your final question comes from the line of Greg Lewis with BTIG. Gregory Lewis: Quintin, I realize you mentioned the non-tier public information around potential M&A. But beyond that, could you give us any color like as we think about potential opportunities? Clearly, you -- the company has a diversified fleet. It's interesting because I think some people like anchor handlers better than PSVs. As you think about the world evolving offshore, which it clearly looks like it's going to over the next 5 years, do we kind of have a preference for specific asset types? Or hey, we think asset prices are attractive. And if it's on the water, we want to buy it type view. Quintin Kneen: Greg. So I will tell you that similar to some commentary I've made in the past. I mean we've been real focused in the Americas. And I will say that South America to us is probably more interesting than North America at this point. The vessel class, I would say large PSV is definitely a real preference, medium and large anchor handlers, not the extra large anchor handlers, but the medium and large anchor handlers for sure, too. I'm not looking really to stretch too far out of that right now, but we could. I mean I do like the Subsea market, but there's a -- you really need scale to get into that market appropriately. And so we'd have to really think hard about stretching further than the typical PSV and anchor handlers, but it's certainly a possibility based on the core competencies of managing vessels, managing crews and managing customers and things like that. Gregory Lewis: Okay. And I appreciate that you -- in a market like West Africa, which is a key basin, you have there's a lot more medium sized than large vessels in your fleet. But I guess any kind of color on the kind of the -- what is keeping the larger vessels pricing stronger relative to the medium/small vessels? Is that mix of work? Is that scarcity of vessels? Any kind of commentary you can have around that? Piers Middleton: Greg, it's Piers. It's -- I think just on the larger PSVs, I think it's a combination of all those. I mean it's -- they're always the go-to vessels that our customers want to get, size matters if they can get it. I wouldn't say there's a little bit of a scarcity and we have some -- we have obviously a very large fleet of those vessels around the globe. But I think when you're doing an EPCI contract or you're doing a drilling program in particular, there's definitely a need for as large PSVs you can get to put as much space on. So it definitely works to our advantage to have that fleet. You mentioned Africa. I mean, you just go through these waves occasionally where there's a little bit of a slowdown in activity. But we've been able to -- we are being able to -- there's enough work out there where we can reposition some of our larger PSVs into different regions. So it gives us that option and people prepared to pay to mobilize vessels to different places to support drilling and construction projects as well. So I think it's a combination of all the things that you mentioned in terms of what's allowing us to keep rates high enough, but could go higher always, of course, and that's where we're hoping to get as we go into the next half, next year, as Quintin mentioned. Gregory Lewis: Okay. And then I guess it's on the last caller, I'll just ask one more. Around next year's guidance, thank you for that. I think somebody else mentioned that, that was great to see. I think it kind of shows you your kind of outlook on the market. But I guess I just had a couple of questions around that. One is, if we kind of think about -- I remember about, I don't know, maybe 1.5 years ago, you kind of -- we had some hiccups around maintenance and we've kind of been thinking about potential impacts to utilization. I guess, as we think about utilization for next year, are we kind of carrying through some cushion for those kind of always unexpected unplanned downtimes. And then just one other question, and I apologize, I was late dialing on. It seems like myself included, everybody expects a stronger half -- the back half of next year versus the front half. Any kind of view on how we think maybe the revenue shakes out in second half versus first half? West Gotcher: So I'll start with the first part, Greg. We -- in the prepared remarks, we said the quarterly cadence of revenue next year, we actually see it to be fairly even. So it's not necessarily a back half weighted outlook. We did say, however, to the extent drilling comes back in a little bit stronger than what we currently are able to see, and that may influence the back half higher from what we've guided to. But right now, what we indicated was that the quarterly progression will be fairly even. In terms of down for repair time, as we've talked about. If you've noticed the past 3 quarters or so, we've continued to have better uptime performance than what we saw about 1.5 years ago, as you mentioned. And so 3 quarters is better than 1 quarter in terms of establishing a trend and seeing the fruits of the investments and all the work that have gone into the wherewithal of our vessels. And so for next year, we didn't dive into it specifically, but I do think we have a bit more confidence in the operational wherewithal of the vessels at this point in time. Operator: That completes our Q&A session. I will now turn back over to President and CEO and Director for closing remarks. Quintin Kneen: Liz, thank you. Thank you, everyone, and we look forward to updating you again in February. Goodbye. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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HSAI 2025 Q3 财报电话会议

Operator: Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference call is being recorded. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Head of Capital Markets. Please go ahead. Yuanting Shi: Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's Third Quarter 2025 Earnings Conference Call. Our earnings release is now available on our IR website at investor.hesaitech.com as well as via Newswire services. Today, you will hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, our CFO, Mr. Andrew Fan, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release and filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead. Yifan Li: Thank you, Yuanting, and thank you, everyone, for joining our call today. Let's start with an overview of this quarter's progress. Q3 was a quarter of powerful momentum and exceptional execution with net revenue surging nearly 50% year-over-year and a landmark milestone achieved, we produced over 1 million LiDAR units in 2025 alone and are the first to do so globally. We've also led the long-range automotive LiDAR market for 7 consecutive months, capturing an impressive 46% share in August, 1.5x the second player and 2.4x the third according to Gasgoo. Our profitability performance is even more remarkable. After turning solidly profitable ahead of schedule in Q2, we kept the momentum going in Q3, delivering a record quarterly GAAP net income of RMB 256 million and a 9-month GAAP net income of RMB 283 million, achieving our full year target of RMB 200 million to RMB 350 million, well ahead of schedule. This milestone further reinforces our undisputed financial leadership in the LiDAR industry. With robust growth and solid profitability working hand-in-hand, we're building powerful long-term momentum and creating sustainable value for our shareholders. Now let's dive into our Q3 business highlights. Starting with our progress in the ADAS market. Firstly, for ADAS, LiDAR is no longer optional. It's rapidly becoming a standard feature. As a result of our product leadership and strong client relationships, we are proud to announce our new design wins from both of our top two ADAS customers across all their 2026 models, achieving 100% LiDAR adoption. On top of that, select facelifted versions of Zeekr's flagship models are now rolling out with Hesai LiDAR as a standard feature. Looking ahead, a growing number of best-selling models across our diverse client base are slated for SOP with Hesai in the second half of 2025 and throughout 2026, further cementing our position as a LiDAR partner of choice. Beyond this, we are excited to see China taking decisive steps towards higher-level autonomous driving. In September, the MIIT introduced conditional approval for L3 vehicle production for the first time. This was quickly followed by a public consultation on the new mandatory safety standard for L2 systems. Together, these regulatory developments are clearing the runway for a new era of smarter, safer autonomous driving in China. As regulations take shape, one thing is clear, a higher-level autonomous driving system cannot tolerate a single point of failure, making safety redundancy not just important, but essential. At the same time, LiDAR sensors must be factory integrated rather than retrofitted, pushing automakers to future-proof their platforms for tomorrow's L2 and L3 capabilities. The trend is accelerating even as software capabilities continue to evolve, pioneering OEMs are already launching multi-LiDAR vehicles in 2025. These models featuring 2 to 5 LiDARs are winning consumer recognition and achieving strong sales results. To gear up for the new era of L3 autonomous driving, we launched our Infinity Eye B LiDAR solution in April. It pairs our forward-facing long-range ETX LiDAR, a new benchmark with the world's longest detection range, with FTX blind-spot LiDARs, offering the industry's widest field of view. Most excitingly, I'm thrilled to share that this quarter, ETX landed yet another design win, this time with a top 3 domestic new energy vehicle automaker, one of our valued existing customers, paired with multiple FTX units for full 360-degree blind-spot coverage. Mass production is slated for late 2026 or early 2027. These developments reaffirm a principle we've always stood by. The cost of LiDAR is nothing compared with the priceless value of human life. As the auto industry moves toward higher-level autonomy, LiDAR content in new vehicles is ramping up fast. We now expect 3 to 6 LiDARs per L3 vehicle, representing a system value of roughly USD 500 to USD 1,000 per car in the long run. This trend is massively expanding our addressable market and supercharging the long-term growth potential of our ADAS business. Beyond our progress in ADAS, our Robotics business is becoming an increasingly powerful growth driver, fueled by expanding autonomous driving fleets. As core technologies advance rapidly, autonomous driving companies worldwide are approaching a tipping point towards scaled operations, and we're proud to be a key enabler of this transformation. In China, the latest generation of autonomous driving fleets are adopting ADAS LiDAR solutions alongside optimized chips and vehicle design to lower total BOM costs and accelerate commercialization. Spearheading this shift, we've recently signed new deals with Pony.ai, Hello Inc. and JD Logistics. And I'm excited to share that for some of their models, all LiDAR units, up to 8 main and blind-spot LiDARs will be supplied entirely by Hesai. Internationally, we have also made strong progress. Many overseas robotaxi companies continue to favor mechanical spinning LiDARs for their performance and stability, making them less price sensitive and creating meaningful opportunities for us. We are proud to share that we have signed new LiDAR supply agreements with leading global autonomous driving companies, including Motional and others across North America, Asia and Europe. These large-scale programs represent deals worth tens of millions of dollars, with strong follow-on potential as deployments expand. As our partners move toward large-scale operations in the coming years, this marks a defining milestone for the autonomous driving industry. Building on these operational milestones, September marked a historic moment for Hesai as a public company. We successfully listed on the Main Board of the Hong Kong Stock Exchange, becoming the world's first LiDAR company with dual primary listings in both the U.S. and Hong Kong. This was the largest IPO in the global LiDAR sector, raising USD 614 million after the greenshoe option, with strong support from global institutional investors and industry leaders. The offering underscores confidence in the long-term potential of the LiDAR industry and in Hesai's ability to deliver at scale. More importantly, it strengthens our financial foundation, enabling us to invest in innovation and capture new market opportunities. To wrap up, our strong Q3 results are a powerful testament to Hesai's momentum and execution. The successful completion of our Hong Kong IPO marks a bold new chapter for Hesai. We are witnessing the dawn of an AI-driven fourth industrial revolution, an era that promises unprecedented gains in productivity and human well-being. As we look toward the decade ahead, Hesai is rising to this moment, evolving into a full spectrum technology infrastructure builder that redefines how cars and robots perceive and interact with the world. With that, I will now turn the call over to Andrew to share more details on our financial performance and outlook. Andrew, please go ahead. Peng Fan: Thank you, and hello, everyone. Before we get into our financial performance this quarter, I'd like to start with a key milestone for Hesai as a public company. In September, we completed our dual-primary listing on the Main Board of the Hong Kong Stock Exchange under the ticker, 2525. Through this global offering, Hesai has become the world's first LiDAR company to be listed in both the U.S. and Hong Kong capital markets. The market response to our Hong Kong debut was exceptional. The public tranche was nearly 169x oversubscribed, while the international tranche attracted demand of more than 14x the available shares. In total, we raised USD 640 million after the greenshoe option, further strengthening our balance sheet and improving trading liquidity. These resources have greatly enhanced our capacity to invest in innovation, expand production and drive operational excellence. We are now in a strong position to capture growing opportunities in the global LiDAR market and extend our leadership as adoption continues to accelerate. I will now walk through our Q3 financial and operational performance. To be mindful of the length of our earnings call today, I encourage listeners to refer to our earnings release for further details. Q3 was another outstanding quarter, delivering record-breaking results across the board. Total shipments reached 441,398 units, up 229% year-over-year, while net revenue surged 47% to RMB 795 million or USD 112 million, marking our sixth consecutive quarter of robust year-over-year growth. This powerful momentum fueled by the surging adoption of our category-defining ATX amid the industry's rapid shift toward LiDAR as a standard feature along with a 14-fold year-over-year rise in robotics LiDAR shipments across expanding applications underscores the strength and scalability of our business model. Our gross margin remained healthy at 42%, driven by economies of scale and continued gains in manufacturing productivity. Just as importantly, we're now embedding AI across R&D, operations and customer support, unlocking new efficiencies and strengthening the foundation of a lean optimized expense structure. You may have noticed that today's prepared remarks are being delivered through AI-generated voices. While the pronunciation isn't perfect yet, it's a small but meaningful example of our commitment to wholeheartedly embrace AI across the organization. We believe that for companies today, embracing AI is just like embracing digital transformation 20 years ago. It's the key to building greater competitiveness for the future. Since Q2, we've deployed an intelligent assistant across a wide range of daily workflows, cutting costs, shortening cycles and improving quality. This AI-driven approach has already delivered tens of millions of RMB in savings across travel, documentation, hiring, testing, coding and more. As a result of our adoption of AI and other cost control measures, total operating expenses declined year-over-year in Q3, keeping us on track to achieve RMB 100 million in OpEx savings in 2025 compared with last year. Building on our strong momentum, we delivered a record net income of RMB 256 million or USD 36 million in Q3, bringing our 9 months total to RMB 283 million or USD 40 million. We've already hit our full year profit target of RMB 200 million to RMB 350 million, 1 quarter ahead of schedule. This achievement reflects the scale and efficiency our business has reached, where growth is now translating directly into earnings. Higher volumes drive better unit economics, which in turn fuels more growth, creating a self-reinforcing cycle of profitability and innovation. It's worth noting that Q3 net income included gains from equity investments of RMB 148 million or USD 21 million. Excluding these gains, quarterly net income would have remained strong at RMB 108 million or USD 15 million. Taking this into account, we are raising our full year GAAP net income guidance for 2025 to a range of RMB 350 million or USD 49 million to RMB 450 million or USD 63 million, and we expect full year net income, excluding these gains from equity investments to stay within our earlier guidance range of RMB 200 million to RMB 350 million. For the remainder of the year, we expect to carry forward the strong momentum we have built. For Q4, we're projecting net revenues of between RMB 1,000 million or USD 140 million and RMB 1,200 million or USD 169 million, representing a year-over-year increase of 39% to 67%. To wrap up, our successful listing on the Hong Kong Stock Exchange marks an exciting new beginning for Hesai. We're growing faster, scaling smarter, and executing stronger than ever with accelerating revenues, solid margins and a proven profitability. We're building competitive advantages that will keep compounding over time. We are more energized than ever to seize the opportunities ahead. This concludes our prepared remarks today. Operator, we are now ready to take questions. Operator: [Operator Instructions] Your first question comes from Tina Hou from Goldman Sachs. Tina Hou: Congratulations on a very strong result. So my question, the first one would be related to the pricing side of things. As we go into the last quarter of this year and enter into price discussion with customers next year. So just wondering if you could give us any color in terms of what kind of pricing we're looking at for next year, considering everything, the annual price cut, competitor dynamics. That's number one. Number two is in terms of the volume. So just wondering if management is seeing next year, the OEM customers are going to accelerate the adoption of LiDAR. And in your view, when will be sort of the starting point or the takeoff point for mass market models to start having LiDAR as a standard option? And I guess related to that, if there is any color you can give us in terms of your 4Q as well as 2026 guidance or any kind of color on volume, it would be really helpful. Peng Fan: Thank you, Tina. So I understand your question. I will try to cover the -- our, like guidance or forecast or color for the current year and also year 2026. Let's talk about the 2025 year, full year guidance first. On revenue side, our Q4 revenues are expected to reach about RMB 1.0 billion to RMB 1.2 billion, bringing full year 2025 revenues to approximately RMB 3.0 billion to RMB 3.2 billion, representing a year-over-year increase of nearly 50%. This strong growth is driven by the rapid adoption of LiDAR in passenger vehicles and the expanding use of the robotic LiDAR across new applications. Volume and ASP. During the first 3 quarters of 2025, we shipped about close to 1 million units in total. We expect the shipments to continue accelerating throughout the year with 4Q shipments reaching approximately 600,000 units as a seasonal high. The ATX LiDAR is expected to account for roughly 80% of total deliveries in Q4 in terms of volumes. It has a market price of around $200 with discounts offered to major customers on our pricing strategies. The stronger-than-expected demand for ATX has accelerated its replacement of the AT128 LiDAR among our OEM customers in the second half of 2025. Meanwhile, several automakers have adjusted their second half production schedules for vehicle models equipped with AT128, leading to softer demand for the product. As AT128 is priced at several times of the price of ATX, this shift in product mix has resulted in a relatively lower blended ADAS ASP for year 2025. Margin-wise, the blended gross profit margin is expected to remain healthy at around 40% in Q4. We are raising our full year 2025 GAAP net income guidance to RMB 350 million to RMB 450 million. Excluding gains relevant to equity investments recorded in Q4, normalized full year GAAP net income remains within our previous guidance range of RMB 200 million to RMB 300 million. On the non-GAAP metrics, you should add an additional RMB 120 million for stock-based compensation. Looking ahead for year 2026, we see it as a true inflection point. On one hand, we anticipate strong demand for ADAS LiDAR in passenger vehicles with our LiDAR shipments expected to reach at least 2 million to 3 million units or potentially even higher if L3 adoption becomes an industry-wide trend. On the other side, we do anticipate a potential decrease in blended ASP. That's mainly due to three things: one, a shift in product mix towards our ADAS LiDARs, which have a relatively lower unit price, but we will see higher deliveries and revenue share; two, the modest volume-based pricing for our large order strategic customers; three, the standard annual decline for downstream customers. That being said, there is reason to be optimistic. We expect a strong positive catalyst to emerge in year 2026 and 2027. First, L3 vehicles deployment in China will drive multi-LiDAR setups, pushing LiDAR content per vehicle to USD 500 to USD 1,000. We've already landed a flagship L3 program with a renowned customer and more exciting deals are in the works. Second, our overseas ADAS business is expected to start contributing, marking the beginning of global ADAS LiDAR mass production. Third, our Robotics business continues to gain momentum across diverse applications and customers, and it typically carries a higher ASP and margin compared to ADAS. Fourth, we are also exploring new growth engines, and we'll share more updates as things progress. On the profitability front, we expect gross margins to remain relatively stable in 2026 compared with 2025, supported by continued cost optimization across product and ASIC design, supply chain and manufacturing. At the same time, growing adoption of multiple LiDAR in ADAS is expected to help offset pressure on blended ASPs. In short, we expect to enter 2026 with a clear path towards a double-digit year-over-year revenue growth, accelerated shipments, a stable margin profile and potential new growth engines. Detailed guidance will follow in the coming quarters. Altogether, this sets the stage for sustained growth in the years ahead. Tina, hopefully, this covers your questions about our guidance in the next... Yifan Li: And I just want to say that was actually, Andrew. It's not a robot, and I am not a robot. Operator: Your next question comes from Tim Hsiao from Morgan Stanley. Tim Hsiao: This is Tim. Congratulations on the robust results and steady project wins. I've got two questions. The first one about the competition because we noticed that the competitors in China launched new products to undercut Hesai's ATX product. So how should we think about the peers, the mainstream product like EMX versus the key volume driver of the Hesai, i.e., ATX? The second question is about the technology because we noticed lots of discussions over the past few months about the SPAD SoC system and chip lately. So how should we think about the advantage of SPAD-based digital LiDAR? So I also want to get some updates from the management. Yes, those are two questions from my side. Yifan Li: Thank you, Tim. Let me try to give you a little more insight on both competition and our view on some of the upcoming technologies. The first one is competitive products. It's a very competitive market, and we're facing -- always facing very strong competitions from quite a few players, and you name one of them. It's a great product, and they always have great technology. But I do want to bring your attention to maybe zoom out a little bit. And what I'm trying to help you understand is that our strategy is that we have a very structured time line to release each generation of product, right? And in the mechanical LiDAR era was like a Pandar128. It was really the king of the world. We don't have to go there. Then AT128, I think it's fair to say, looking back, it is the LiDAR that defined the automotive LiDAR industry. We shipped the largest volume and was also relatively expensive with a higher ASP than the competitors. And most importantly, people believe that's the highest quality, highest performing by a large margin product, super successful, right? That's Gen 2, right? Then Gen 3 is ATX. And the ATX, I think by now, it's fair to say it's another complete victory on the market that we received way more contracts than any of the competitors, and we're shipping a much larger volume. And I think everyone believes that this is a much higher performing and as reliable as any Hesai product to the highest quality standard. So again, that's Gen 3, that's ATX, that's clear, right? So -- and of course, we also have our own time line to release the next generation. But as a company that has enjoyed the highest market share and the most premium brand and product, we don't want to have to rush things just because competitor released a product after us, that shouldn't be the strategy. The strategy is that you have a certain rhythm or pace and you put everything -- all the good things into the product based on the timing you have. So -- and that's the biggest reason that when somebody released a product like half a year or a year after us before our next generation, there always some interesting features. But in the end, if you zoom out and look at the overall results, we -- at least so far, we always had the greatest achievement on performance, volume, definitely margin. And in the end, it's really always the most well-rounded and the best-performing product on the market. So hopefully, we'll be able to continue the trend. We will never know what we don't know in the future. But so far, leveraging our semiconductor technology, our manufacturing capability, our strong brand power and the super trusted relationship with almost all of the top OEMs in China. In China, we believe we'll be able to continue that. Even though every generation, we will have a price decline because that's the nature of such a market. We also continue to innovate to keep the gross margin as you continue to see, right? And so that's what we see. Hopefully, that gets the first question out of the way. Now Tim, you also mentioned a very interesting question, which is the second one is on SPAD. SPAD stands for Single Photon Avalanche Diode, right? I'll give you a little more insight that's beyond pure competitive advertisement. A, we're actually the first one to use SPAD technologies on any automotive LiDAR for all the competitors we know. We shipped the first fully solid-state automotive LiDAR for near-range blind detector, FT120, I think, since 2, 3 years ago, not in large volume, but it is a fully automotive grade product that's on cars globally, right? And then we also acquired SPAD technology companies out of Switzerland because we believe they have interesting technologies and we look at them, we feel like it will be a good addition to us. We actually did that. However, having said that, we wanted to be objective and rational about what SPAD can and cannot do today. One of the things is that if you use off-the-shelf SPAD technology and you simply integrate them, one of the challenges you face is actually noise. And when you look at any LiDAR with noise, the challenge you face is that it will have a higher chance of false trigger because SPAD is great, but it's too sensitive. You need to be able to mitigate that. And that's, I think, the biggest question and the challenge for the industry today. And I think everyone is trying to find a solution. But today, if you look at the long-range SPAD, people always tell you with a high sensitivity, there's always a higher chance of false trigger, which is actually very bad for LiDAR as a safety product. You don't want your product to experience that type of problem. And we're diligently working on that. We have our in-house solution, hopefully to be able to address that. But our strategy isn't always just try to buy off-the-shelf components that is the latest and just put it in. Our goal is to incorporate whatever is mature enough as a safety component. And then put in latest and the greatest. That has to be in that order. Your reliability, safety has to be first. You don't want to be sacrificing your reliability. You don't want to increase the chance of false triggering for such a thing as a LiDAR. We always try to explain to the market. It's almost like your invisible airbag. Just to make it simple for people to understand, you probably don't want to sacrifice the chance of a new airbag when you know there is challenge of false triggering and you definitely want to be able to solve that. And we do believe that will be solved. We do believe SPAD has a lot of great new features and also more room on cost that will be eventually adopted, and we're also diligently working on that. But I just want people to be more informed on the pros and cons of such an interesting technology that everyone is carefully evaluating. Operator: Your next question comes from Jeff Chung from Citi. Ming Chung: David, this is such a great result and congratulations with the excellent earnings. So I have a question on L3 for David. So any sign for the improvement of the product mix and LiDAR per car? And any view on the Level 3 legislation in both China and Europe? And I also got a question for Andrew. So it looks like the 4Q guidance is really optimistic in the sense that in the best case scenario, revenue should up 50% Q-on-Q and the core earnings should up 100% Q-on-Q. Could you share with me the views of why you're so confident on this? Peng Fan: Jeff, okay. Let me first cover these two questions. For the legislation in relation to L3, we are thrilled by China's decisive push towards higher-level autonomous driving. As regulations evolve, safety redundancy becomes non-negotiable and the LiDAR must be factory integrated rather than retrofitted, driving automakers to future-proof platforms for L3 capabilities. The market is moving really fast. Leading OEMs are already rolling out multi LiDAR vehicles in year 2025. Huawei's AITO M9 with 4 LiDARs, AVATR 12 with 4, Zeekr 9X with 5 and NIO ES8 with 3, all received strong customer demand and proving that demand for smarter, safer vehicles is real. So we see tremendous upside in LiDAR content growth. As L3 adoption accelerates, the number of LiDAR units per vehicle is expected to increase to 3 to 6 or even more, along with the trend towards upgrading main LiDARs to high-end models like our ETX. This could lift the total LiDAR content per vehicle to around USD 500 to USD 1,000. Beyond the numbers, every additional LiDAR unit directly enhances safety, underscoring the irreplaceable value of our technology and the critical role we play in shaping the autonomous driving future. We are seeing customers increased discussion for L3 applications and, of course, more LiDARs. We have signed a flagship program featuring ETX and multiple FTX already and more contracts on the way. Stay tuned for future developments. We will share more details when available. Yifan Li: Thank you, Andrew. And this is David. I wanted to also give you a little more insight on how I think about this problem. Obviously, we're talking about price. We're talking about the total dollar amount on each of the vehicles. But I think in the end, what's deciding a dollar amount is really the value it creates, right? So -- and that is rapidly changing from Level 2 to Level 3, right? In the Level 2 era, we're looking at an airbag, right, or a seat belt. Then of course, it's important. Of course, it's saving lives. But if you look at airbags, it's also saving lives. It has a certain price expectation people have. You're not going to be willing to pay $10,000 for airbag, even though it's life-saving. So for such a function, in the end, we feel like below $200 is the right range, and we're at there. That's why I think feel -- this is the biggest reason penetration rate is exponentially growing. Everyone wants that, and they feel like it's a good value buy. Having said that, Level 3 is a completely different game, especially when people think about Level 3, I think people are already remotely thinking about Level 4. Maybe I'll talk about Level 4 just to give people some ideas on how I think we should think about the problem. Again, we think about value creation. What is value creation? For cars, other than safety, the value creation is the time the machine gives back to us, right? And if you buy a Level 2 car, at most, it gives you an hour or 2, a day back to you, right? But for Level 2, it doesn't even quite give it back to you. They ask you to have your hands on the steering wheel. So that's why it's great as a life-saving device, but it's of limited value. If you look at Level 4 or aka robotaxi, you are literally looking at maybe 20 hours per day of the utilization of such a product. By the way, I quote this from one of the great leaders of the industry who isn't a big fan of Hesai. It's from Elon Musk. He said that, which I agree that the change for such a level will allow the utilization of the machine to be maybe 10x. And if you think about it, if you're creating something that has potential to have a 10x of the traditional value, you naturally are able to afford much better sensors, much better driving system, computation and everything, so that you can be the best in creating such a product. So that's the way I look at Level 3 and especially Level 4. And the total dollar amount on a car, maybe not 10x, but people's tolerance is much higher because it's creating roughly 10x of the value, if not more, comparing to the Level 2 system we used to be on. And that's why people should be more excited about the total content and the value create as a complete sensor suite. Operator: Your next question comes from Jesse Lo from Bank of America Securities. Peng Fan: Sorry, Operator, hold on for one second. Let me finish Jeff's second question regarding some additional color on our 2025 full year guidance. Jeff, as we said in the script, we are very confident that our full year numbers will fall in the range, but I'm not assuring that -- assuring you that we will reach the high end of the range. So let's take the low end of the range, for example. We are basically guiding that our Q4 revenue will be above RMB 1 billion, comparing to roughly 800 million in Q3. If that achieves the additional net profit comparing to Q3 will be roughly RMB 80 million pretax. If you look at our first 9 months results in this year, our total or accumulated net income is about 256 -- sorry, it's USD 283 million. As we mentioned in the earnings release, we actually have a one-off investment gain from an equity investment, which is roughly RMB 150 million. So if we exclude that, our normalized first 3 quarters earnings is roughly RMB 130 million, so if we add another RMB 180 million to that, it already adds up to more than RMB 350 million net income in year 2025. So that's why we are relatively confident that our full year revenue and profit will fall in the range that we just mentioned. Okay. Operator, let's move on to the questions from BofA. Yu Jie Lo: My question is on -- could you share some color on BYD's 2026 LiDAR order given that it is quite a debatable topic, more specifically on the timing of the LiDAR adoption on this mass market model and also the Hesai's wallet share? And second, how do we think about the pricing strategy of such customer given its much higher vehicle sales? Peng Fan: Okay. We are pleased to see the leading domestic automakers actively accelerating their efforts to make intelligent driving mainstream. Their commitment exemplified by BYD's move to equip its models priced above RMB 100,000 with LiDAR and deployed its God's Eye ADAS systems. This creates massive market demand and accelerates consumer adoption, which benefits the entire ecosystem and raises awareness across the industry and consumers. With this trend, we are proud to be a key partner of BYD. We have gone into mass production with BYD since Q1 2025 and are supplying LiDARs for BYD's models launching in year 2025. This year, we are taking a strong share of BYD's LiDAR supply with our AT128P and ATX, with ATX leading in volume. Our partnership extends across double-digit vehicle models with an exciting wave of new SOPs rolling out through year 2025 and 2026. We will share more details on this customer, their new models and autonomous driving plans once they are ready to make an official announcement. Compared to automakers, Hesai has been investing in LiDAR R&D for 10 years, starting with more complex L4 applications. This has enabled us to accumulate extensive experiences and achieve superior product performances. Meanwhile, by leveraging our years of investments in ASIC technology, we have achieved excellent cost control while maximizing economies of scale through a broad customer base. We believe proactive collaboration between automakers and LiDAR companies helps create a win-win situation. In summary, Hesai serves as an index to the overall autonomous driving industry, and we are excited to see BYD leading the way in making intelligent driving more accessible while strengthening our partnership with them. Operator: Your next question comes from Aaron Wang from Jefferies. Weijie Wang: My question is about Robotics side. Given the increasing demand in robotic area in the coming years, could management share more color on our robotic shipments in 2026 and also in the next few years, and also the proportion of different end markets and our product mix in this segment? Peng Fan: Our Robotics business, which generally enjoys higher ASPs and margins is contributing strongly to the company's overall financials with the growth momentum accelerating. For the robotaxi part, Hesai is the largest robotaxi LiDAR supplier in the world, holding roughly 60% to 70% market share. Our main LiDAR and blind-spot products are widely used by all the top robotaxi players in China. Companies like WeRide, Baidu, Apollo Go, DiDi, Pony and Hello have all adopted our technology. Traditionally, robotaxi operators relied on mechanical spinning LiDARs for small fleet testing and operations. But recent trends in China show an urgent need for scalability. By using our flagship ADAS LiDARs, customers can achieve a better balance of sensor prices and performances, enabling faster fleet growth and helping them move closer to profitability. Spearheading this shift, we have recently signed new deals with WeRide, Pony and Hello Inc. Excitingly, for some of their models, up to 8 LiDAR units per vehicle, main LiDAR and blind-spot LiDARs will come entirely from Hesai. At the same time, we have signed new LiDAR supply agreements with leading global autonomous driving companies, including Motional across North America, Asia and Europe. These programs represent tens of millions of dollars in deals with strong follow-on potential as their partners scale up. The difference is that global players tend to favor high ASP mechanical spinning LiDARs for their performance and stability, making them less price sensitive. Regardless of LiDAR type, the gross profit from our robotaxi business is calculated as fleet size times number of LiDAR per vehicle times ASP times gross margin ratio. With cost reductions and large-scale commercial deployments, we expect the fleet sizes of leading players to grow exponentially in the coming year, driving significant profit growth for Hesai, whether they use mechanical or ADAS LiDARs. The other robotics applications beyond the robotaxi, we have seen huge opportunities in non-auto applications with intelligent robots rapidly gaining traction, our proven strength in high-performance, scalable LiDAR positions us to take the lead. Since starting production of our JT Robotics LiDAR, we shipped around 40,000 to 50,000 units every quarter in year 2025. This new product serves as a wide range of robotics applications. Home, factory and agricultural robots are clear front runners, freeing people from routine work and creating real value from day 1. In the long run, we believe the robotics market could have a TAM several times larger than ADAS. You can only drive one car, but in the future, 10 robots could be working alongside you. We anticipate that Robotics LiDAR volume could double in year 2026 versus 2025, and we plan to share updates on developments along the way. Operator: Your next question comes from Chunsheng Xie from Huatai Securities. Chunsheng Xie: My question is about the major customers for next year. Could you please share which OEMs will be the key customers for the ADAS products? And what kind of the demand scale or volume you are expecting for the next year? Peng Fan: In the ADAS spaces, we are also seeing very strong momentum from a number of key OEMs. Based on our current visibility, we expect the following OEMs to be among our top ADAS customers in year 2025 and very likely in year 2026 as well. They are Li Auto, Xiaomi, BYD, Leapmotor, Zeekr and Great Wall Motor. Of course, these names are not ranked in particular orders. Meanwhile, more major customers are also kicking off SOPs with us extending into year 2026, including Geely and Chery. These customers are rapidly advancing in intelligent driving with some of them expanding LiDAR adoption across more vehicle lines as a standard feature preparing for L3 capabilities with market LiDAR configurations. These companies are not only leading players within China's rapidly evolving smart EV sector, but also represent a diverse range of vehicle platforms from high-end to mass market vehicles, providing a rich foundation for our technology adoption and expansion. Operator: Your next question comes from Sia Huang from SPDB International. Jiaqi Huang: This is Sia. I've got just one question regarding our overseas update. And for the project with the top European OEM customer, is everything on track? And could you please also share more color about the overseas update in terms of other potential customers and design wins? And how do we expect the contributions of overseas revenue for the next 2 to 3 years? Peng Fan: Beyond our success and solid base in China, we are also stepping up our game internationally, both in ADAS and Robotics. On the Robotics side, recently, we have further strengthened our leadership with new LiDAR supply deals across North America, Asia and Europe, covering everything from robotaxi, robotrucks to robovans and factory automation. For example, we are proud to be the exclusive supplier for Motional's next-generation all-electric robotaxi. And as we shared earlier, we also signed a multiyear deal worth over USD 40 million with a leading U.S. robotaxi company, with deliveries running through 2026 and room for more as their fleet grow. In ADAS, momentum is just as strong. As you all know, we have already secured an exclusive design win with a top European OEM and several more are now in the sourcing and negotiation stage for their global programs with European players clearly setting the pace. As competition heat up, global OEMs are doubling down on autonomous driving and safety is something they are never compromised on. There is now a clear consensus across the industry that LiDAR is becoming the airbag for autonomous driving, especially for L3 and above. And once these global OEMs make up their minds, they move decisively. So give them a little time to gear up their AD versions, both ICE and EV, and we believe more LiDAR deals will follow soon. Now for the global OEMs China JVs, things are also moving faster. They are right at the front line of the ADAS race. We have already won design win programs with five major JVs, Volkswagen, GM, Audi, Toyota and Ford and several are already in SOP. A recent highlight came in September when Audi E5 Sportback featuring Hesai LiDAR standard configuration hit the market and racked up over 10,000 orders in just 30 minutes. That's a huge commercial validation and sets the stage for global expansion ahead. Another exciting part of our strategy is backing Chinese OEMs in their global push. We will be the LiDAR supplier for models heading overseas with mass production kicking off in year 2026. We can't share more for now, but stay tuned. Updates are on the way. All in all, these wins reflect the growing trust and recognition we have earned from customers worldwide. Looking ahead, we will keep building on our strengths and serve an even broader range of partners across regions and across industries. Operator: Your next question comes from Lou Jia from BOCI. Jia Lou: Congratulations on the excellent results. My question is related to our new business initiatives. At our Hong Kong listing event, management mentioned that for the next decade, Hesai will be more than just a LiDAR company. So could you share with us more about the potential new areas beyond the LiDAR, Hesai is considering expanding into in the future? Yifan Li: Thank you for this, very exciting question, David, I'll probably take it. I think there are a few things that are super, super interesting and worth exploring and has a lot of potential and the extremely large TAMs that we feel like we are best positioned for. I'll go through some of the things that's on my list. I think the first thing is still sensing itself because not only for robots and also for cars, we're -- especially for cars, we're looking at safety. And for safety, you're never satisfied just by 99% or even 99.9%. You always try to find the failed cases and you try to build a better product to make things safer. And we feel like on the sensing side alone, there are still many, many things we could do to bring safety to the next level, including a longer range, higher density and being able to recognize different materials, being able to measure speed, we're using all different working principles to help our robots and vehicles be able to sense the surroundings better. And that alone is a much bigger market than just the LiDAR TAM we see today considering the importance of such a task. And number two is the best sensing capabilities plus AI. Today, we actually have the capability to do perception software stack, and we actually work with OEMs for that. But today, we're not directly charging them for it. It's because the value we provide is only really part of someone else's software stack. But a lot of the robotics applications, a lot of the sensor applications, we actually see the possibility of having AI capabilities on the already the best sensing hardware we built, essentially making -- number one was making the sensors see better, and number two is making the sensors think better. And that's actually happening and a lot of our software capabilities are being used on that. And number three is along the lines of number two, when you have the software capability, AI capability on top of the best sensing capability, you are no longer being limited by cars. You're looking at a lot of opportunities in the general definition of space sensing. And I won't be able to give you more details on this little part, but we definitely see a lot of customer demand, directly from customers in being able to fully sense and capture the 3D world around us. Think about how cool would that be if you are able to record the 3D world with the product we provide, right? So those are the things. And of course, last but not the least is we've been talking about sensing so far. But the truth is that we really did sensing because sensing was the most critical part of the physical AI 1.0 for cars. For 2.0, we're not only building the LiDAR sensors for the robots. There are just so many infrastructure technologies that we feel like we are uniquely positioned to be able to do because we're super proven and good at high-end sensing semiconductor capability, manufacturing capability, the product iteration and quality capability as a whole, and we feel like there is a very good chance we'll be able to leverage that into more infrastructure business that's beyond sensing. And I'd like to conclude with one of the new quote, I learned from the great Mr. Jensen Huang, I think he said something like in the future, anything that moves will be autonomous. And I'd like to add to the second part that anything that is autonomously moving is likely to need the best sensing capabilities from us. Thank you. Operator: This concludes our question-and-answer session. I'll now hand back to management for any closing remarks. Yuanting Shi: Thank you once again for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you, and goodbye.

146天前Insight Analytics约5分钟阅读

BWAY 2025 Q3 财报电话会议

Operator: Good day, and welcome to the BrainsWay Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Ritchie with LifeSci Advisors. Please go ahead. Brian Ritchie: Thank you all, and welcome to BrainsWay's Third Quarter 2025 Earnings Conference Call. With us today are BrainsWay's Chief Executive Officer, Hadar Levy; and Chief Financial Officer, Ido Marom. The format for today's call will be a discussion of recent trends and business updates from Hadar and Ido, followed by a detailed discussion of the financials. Then we will open up the call for your questions. Earlier today, BrainsWay released financial results for the 3 months ended September 30, 2025. A copy of the press release is available on the company's Investor Relations website. Before I turn the call over to Hadar, I would like to remind you that this conference call, including both management's prepared remarks and the question-and-answer session, may contain projections or other forward-looking statements regarding, among other topics, BrainsWay's anticipated future operating and financial performance, business plans and prospects and expectations for its products and pipeline, which are all subject to risks and uncertainties, including shifting market conditions resulting from geopolitical, supply chain and other factors as well as the use of non-GAAP financial information. Additional information regarding these and other risks are available in the company's earnings release and its other filings with the SEC, including the Risk Factors section contained in BrainsWay's Form 20-F. Finally, please note that the company's 6-K will be filed tomorrow at approximately 6:00 a.m. Eastern Time in accordance with the SEC's operating schedule. I would now like to turn the call over to Hadar. Hadar Levy: Thank you, Brian. Welcome, everyone, and thank you for joining us today. We are excited to announce record quarterly revenue of $13.5 million reported in the third quarter of 2025. This represents a 29% increase compared with the same period last year. In addition, we shipped a total of 90 Deep TMS systems during the quarter, representing a 43% increase compared to the same period last year. This brings our total installed base to more than 1,600 systems across the globe. With our quarterly results continuing to trend towards the higher end of expectations and improved visibility into the remainder of the year, we are raising the midpoint of our guidance for the full year 2025, including increasing our revenue guidance to a range of $51 million to $52 million, which is up from our previous guidance of $50 million to $52 million. We now expect to report operating profit in the range of 6% to 7% of revenue, up from the previous guidance of 4% to 5% and adjusted EBITDA in the range of 13% to 14% for the year, up from the previous guidance of 12% to 13%. Let me now take a deeper dive into our performance and why we believe our long-term growth is being built into the current execution of our strategy. As I have mentioned previously, we made the decision approximately 2 years ago to focus our attention on selling to large enterprise customers who value our technology and high level of customer service to support their Deep TMS systems. To this end, we have structured multiyear lease agreement, which in turn provide us a steady foundation from which to grow our business and maintain gross margin every year. As a result of our team's dedication to this sales model, we have transitioned the majority of our sales over with approximately 70% of our recent customer engagement being lease agreements. And I want to highlight that the customers are aligned with this type of engagement as we have had a high rate of customer retention with many customers deciding to extend and even expand their agreement out several years. And this outcome really highlights the scalability of our business. And while perhaps the initial focus each quarter is on the revenue numbers, internally, we also find value in looking at our book-to-bill ratio for the quarter, which was 1.3x indicating that bookings were solidly above our billing. And our remaining performance obligation under existing customer agreement was $65 million at the end of the quarter. These are just a couple of metrics, which we believe reflects a strong market demand momentum and give us confidence in our forward visibility and revenue trajectory. I am proud of how effectively our team has executed our business model to date. Let me take a minute to walk you through our strategy, which includes 3 main key pillars, which we believe are our key to driving long-term growth: one, further elevating market awareness of Deep TMS and its clinical impact; two, advancing our R&D road map to unlock new and expanded treatment indication; and three, broadening patient access through global expansion and health system integration. At the core of these initiatives is our regulatory approvals and clinical data, which continued to set Deep TMS apart and allow us to lead the market. Most recently, we announced that the U.S. FDA has granted an expansion of the treatment protocol for the Deep TMS system to include an accelerated protocol for major depressive disorder or MDD treatment. As a reminder, the traditional Deep TMS protocol involves a 4-week acute treatment phase with 1 session on each day of treatment. This is compared to an accelerated protocol, which involves a significantly shorter acute phase, taking place over several treatment days. This is a very exciting development for us in the treatment centers using our systems, as we believe the accelerated protocol has the potential to improve convenience and thereby make Deep TMS substantially more appealing to prospective patients. As a reminder, Deep TMS is the only TMS modality cleared by the FDA and with peer-reviewed published clinical evidence for a broad range of indications, including depression, anxious depression, late life depression, OCD and smoking addiction. We are also supporting the evaluation of accelerated protocol for these other indications. For example, the U.S. NIH recently awarded approximately $2.5 million in 5-year grant for the clinical study evaluating the mechanism of action and potential efficacy of the accelerated Deep TMS protocol to treat alcohol use disorder or AUD. This study will be conducted by research team led by Dr. Claudia Padula and Dr. Michelle Madore of Stanford University and the Palo Alto Veterans Institute of Research. This study, which is posted on clinicaltrial.gov for any of you that would like to review the details, will utilize our novel Deep TMS 360 system, which has been designed to provide more comprehensive and uniform stimulation of the neurons in the targeted brain regions. The accelerated protocol being evaluated in this study is similar to the accelerated protocol for MDD, including an acute phase taking place over several treatment days as compared to the traditional protocol, which is several weeks. Moving on to our investment initiatives. As previously announced in late 2024, we identified a new opportunity to generate shareholder value by making minority interest investment in mental health providers as well as other enterprises that we believe are complementary to our business. This strategy allows us to tap into the market we know well, building additional market awareness, R&D road map, data analysis capabilities and expanding access to Deep TMS while avoiding stepping into an operational role outside of our core focus of Deep TMS. To support us in this initiative, Valor Equity Partner made a $20 million strategic equity investment in our company. This investment provided us with the capital needed to quickly move ahead with this strategy on a broader, more meaningful scale. We are pleased with the rollout of this initiative to date, which most recently included our third and fourth investment in 2025. This recent strategic investment have come quickly on the heels of our first 2 agreements with Stella Mental Health and Axis. This collaboration is already making meaningful contribution as utilization of Deep TMS system at those clinics is up over 50% from the start of our relationship. During the third quarter, we also announced an initial strategic investment in Neurolief LTD, a developer of the world's first wearable noninvasive multichannel brain neuromodulation platform that is designed for use at home. This agreement includes a milestone-based funding for up to an additional $11 million of convertible loan over 2 tranches, along with an option to fully acquire the company. These strategic investments are an exciting new part of our story, and we look forward to helping each business grow initially through the additional fund the investment provide, but also through strategic counsel as they look to navigate faster and larger growth. We look forward to identifying additional investment, and we'll keep you updated on these initiatives. This is a truly exciting time in our history as we continue to identify ways to drive long-term shareholder growth. As we just heard, there is significant momentum in all aspects of our business, so much so that it is too much to cover on this call. Therefore, we will be hosting a virtual Investor and Analyst Day on December 1 to further discuss our operations, clinical, regulatory and financial progress. Additional details will be announced shortly. With that, I will now turn the call over to Ido for his review of our third quarter 2025 financial results. Ido? Ido Marom: Thank you, Hadar. As Hadar noted, Q3 2025 was another record quarter for BrainsWay with revenue of $13.5 million, representing a 29% increase compared with the $10.5 million reported for the same period last year. During the quarter, we placed 90 Deep TMS systems, bringing our total installed base to more than 1,600 systems as of September 30, 2025. Gross profit for the quarter was $10.2 million, up $2.4 million from $7.7 million in the prior year period, while maintaining a strong gross margin of 75% compared with 74% for the same period last year. This stability continues to reflect the strength of our recurring revenue model and disciplined cost management. Turning to operating expenses. Sales and marketing totaled $4.7 million compared to $4.1 million in Q3 2024, an increase of approximately $0.6 million, driven by targeted investment in commercial expansion and marketing programs. Research and development expenses were $2.4 million compared to $1.8 million last year, an increase of $0.6 million, primarily from our ongoing clinical trials and development activities. General and administrative expenses were $1.8 million compared to $1.5 million in the prior year period, an increase of $0.3 million due in part to additional legal fees and due diligence costs related to new investments. Operating profit was approximately $1.3 million, which is a $1 million increase compared with the $0.3 million reported for the same period last year. Adjusted EBITDA increased to $2 million from $1.1 million in the prior year period. Net profit for the quarter was $1.6 million compared to $0.7 million in the same period of 2024, demonstrating the operating leverage in our model as we scale. From a balance sheet perspective, we ended the quarter with $70.7 million in cash and cash equivalents, up $1.1 million from $69.6 million at year-end 2024. This increase was driven primarily by very strong collection during the quarter despite deploying $7.3 million for our minority equity investment as part of our strategic initiative. Remaining performance obligations grew to $65 million, a 37% year-over-year increase, providing strong visibility into future revenues. Cash flow from operations in the quarter was positive, further reinforcing the strength of our recurring model and high collection efficiency. Our capital structure remains debt-free, giving us significant flexibility to pursue strategic growth initiatives, including the investment program Hadar outlined earlier. As Hadar mentioned, after a strong third quarter and increased visibility for the remainder of the year, we have raised the midpoint of our guidance for the full year 2025, which includes revenue guidance of $51 million to $52 million, up from our previous guidance of $50 million to $52 million. This guidance represents a year-over-year growth rate of 24% to 27%. We also expect operating profit in the range of 6% to 7% of revenue, up from our previous guidance of 4% to 5% and adjusted EBITDA in the range of 13% to 14% for the year, up from our previous guidance of 12% to 13%. The increased operating and adjusted EBITDA margins reflect the increased scale of our operations. This concludes my remarks, and I will now turn the call back to the operator to please open up the call for questions. Operator? Operator: [Operator Instructions] The first question comes from Jeffrey Cohen with Ladenburg Thalmann. Jeffrey Cohen: Congrats on the quarter. So I guess, firstly, could you talk about the accelerated protocol and give us some sense of current treatments that are taking on the accelerated protocol and what you may expect over the coming quarters? Hadar Levy: Yes. I think the accelerated protocol is a really big news for patients around the world that is basically shortening the acute phase protocol from 4 weeks to only 6 days in which we are increasing the dosage, the amount of treatments per day to 5 treatments per day. The demand so far looks pretty good. And I think that, that's what's really driving the demand for the growth of the company. Jeffrey Cohen: Okay. Got it. And then secondly, could you talk about minority equity investments? Congrats on the handful already this year. But what might we expect as far as the pipeline and other investments over the coming quarters? Hadar Levy: Yes. So we have a full hand of pipeline of this minority investment that we are speaking and exploring the option to collaborate with them. We still need to check the box on part of our due diligence process to make sure that this growing enterprise are growing, they are profitable. They have the right management team and that we believe that they can execute upon their business plan. So the goal before the end of the year is to sign at least one more. And there is a handful of additional opportunities for 2026 that looks very promising. Jeffrey Cohen: Got it. And then lastly for us, could you give us an update on Neurolief as far as any activity currently going on in Japan and EU and then talk about U.S. timing or anticipated activities here. Hadar Levy: Yes. I think we're all anticipating to -- for Neurolief to receive the FDA clearance toward the end of the year. We're hoping there won't be some additional delay with that, but things might look a little bit slow due to the current situation with the FDA administration. But we're hoping to get this FDA clearance for the end of the year. Once we get clearance for that, they're ready to market their -- to distribute their device through different channels. It could be VA, it could be IDNs. And obviously, TMS clinics through BrainsWay customers. But the most promising one that we're waiting for is FDA clearance towards the end of the year. Operator: The next question comes from Carl Byrnes with Northland Capital Markets. Carl Byrnes: Congratulations on the quarter. I'm just curious what you're seeing in terms of system placements from the minority partners thus far. And then again, looking at adding 5 or so partnerships per year, what we should expect potentially in terms of incremental system placements? And then I'll jump back into the queue. Hadar Levy: Yes. Each one of these minority investment is providing us with a business plan. And based on their expectation, they are planning to expand and to grow in between to an opening up additional 10 to 15 new clinics every year. Obviously, the first year is always the most challenging one to make sure that they've got all the necessary setup. But once they got the funding and they got everything they need, they should deliver on that, either by merger and acquisitions or opening some de novo clinics. So that's pretty aligned with our expectations. We're not sharing the data of current installed base that we received from our minority investment, but I can only share with you that aligned with our expectations. I did share a very important fact that with the most early investment that we've made with both Stella Mental Health and Axis, both of them grew their utilization rate more than 50% since inception, since the collaboration with us. And that's the most important sign. It means that they like the technology, they're utilizing this technology, and they're expanding, which is pretty aligned with our expectations. Operator: [Operator Instructions] The next question comes from Ram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Congratulations on the quarter. I wanted to ask about, first of all, how you think you will alter metrics reporting going forward in general, if we can expect greater granularity on, for example, what you expect to be growth in total installed base, what you anticipate to be performance with respect to some of the individual minority investments and so on? And also, I wanted to ask a couple of specific questions about where we are currently. Firstly, if you could elaborate on where you are with respect to the upgrade cycle across the installed base. And how you expect that to play out over the course of the coming quarters, that would be very helpful. And then if you can offer us any granularity regarding the state of the international business and geographically speaking, where you expect the bulk of growth to come from as we look ahead to 2026? Hadar Levy: Yes. Great. Thank you for the questions, and I'm hoping I won't forget anything. So in terms of the metrics or KPIs that we are measuring, I think it's going to be a mix of some very relative KPIs. It will be a number of systems that we are shipping on a quarterly basis, and we can -- we see some very consistent growth on that. It will be also the additional indications that we're also selling on top of the traditional one, it could be the OCD, the H7 or the H4 for addiction. That will be another important KPI, the book-to-bill ratio and most important, again, like is the new initiative with this minority investment that we most probably going to share much more information and trajectory on the Analyst Day meeting on December 1. So I promise to give you a bit more details about some of those metrics and how you can all try and measure the progress of the company in 2026 and beyond. For your questions about the international growth. So we continue to strength our distribution channels, mainly, mainly, mainly in Asia Pacific and in Europe. So I do expect a very strong trajectory from Japan, China, South Korea, Taiwan, Thailand, all this region and India, of course, all these regions continue to grow their demand and increase awareness in this market, but also in the main countries in Europe, like Germany and France and Spain and Italy, we're seeing some constant demands in those markets. And last but not least, also the Israeli market is also growing in a very nice way. So overall, I think that the international growth is pretty aligned with our expectations. I believe there is a chance for us to even expand faster with the additional indication that we currently cleared in those area, which is beyond the mental health, mainly some of them relates to addiction, some of them relates to neurology indications that we're seeing some good results in these areas. But that's a very, very promising target, market targets for the company for 2026 and beyond. Raghuram Selvaraju: And just one other quick one, if I may. Maybe this is more for Ido. Do you have any plans to alter the way in which you report revenue, particularly given the minority stakes that you are acquiring, if you're going to break out revenue coming from those sources or any other changes that you anticipate with respect to top line item reporting? Ido Marom: Yes. So those minority investments won't impact our top line revenue. We are still -- need to examine that with our auditors for the financial statements at the end of the year. But right now, those investments will be written either in their fair value or as an equity under the operating profit. So it's not part of our top line. Operator: This concludes our question-and-answer session. I would like to turn the conference over to Hadar Levy for any closing remarks. Hadar Levy: Great. Thank you. I would like to thank all the investors, analysts and other participants for their interest in BrainsWay. With that, please enjoy the rest of your day. Goodbye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

146天前Insight Analytics约5分钟阅读

BWAY.TA 2025 Q3 财报电话会议

Operator: Good day, and welcome to the BrainsWay Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Ritchie with LifeSci Advisors. Please go ahead. Brian Ritchie: Thank you all, and welcome to BrainsWay's Third Quarter 2025 Earnings Conference Call. With us today are BrainsWay's Chief Executive Officer, Hadar Levy; and Chief Financial Officer, Ido Marom. The format for today's call will be a discussion of recent trends and business updates from Hadar and Ido, followed by a detailed discussion of the financials. Then we will open up the call for your questions. Earlier today, BrainsWay released financial results for the 3 months ended September 30, 2025. A copy of the press release is available on the company's Investor Relations website. Before I turn the call over to Hadar, I would like to remind you that this conference call, including both management's prepared remarks and the question-and-answer session, may contain projections or other forward-looking statements regarding, among other topics, BrainsWay's anticipated future operating and financial performance, business plans and prospects and expectations for its products and pipeline, which are all subject to risks and uncertainties, including shifting market conditions resulting from geopolitical, supply chain and other factors as well as the use of non-GAAP financial information. Additional information regarding these and other risks are available in the company's earnings release and its other filings with the SEC, including the Risk Factors section contained in BrainsWay's Form 20-F. Finally, please note that the company's 6-K will be filed tomorrow at approximately 6:00 a.m. Eastern Time in accordance with the SEC's operating schedule. I would now like to turn the call over to Hadar. Hadar Levy: Thank you, Brian. Welcome, everyone, and thank you for joining us today. We are excited to announce record quarterly revenue of $13.5 million reported in the third quarter of 2025. This represents a 29% increase compared with the same period last year. In addition, we shipped a total of 90 Deep TMS systems during the quarter, representing a 43% increase compared to the same period last year. This brings our total installed base to more than 1,600 systems across the globe. With our quarterly results continuing to trend towards the higher end of expectations and improved visibility into the remainder of the year, we are raising the midpoint of our guidance for the full year 2025, including increasing our revenue guidance to a range of $51 million to $52 million, which is up from our previous guidance of $50 million to $52 million. We now expect to report operating profit in the range of 6% to 7% of revenue, up from the previous guidance of 4% to 5% and adjusted EBITDA in the range of 13% to 14% for the year, up from the previous guidance of 12% to 13%. Let me now take a deeper dive into our performance and why we believe our long-term growth is being built into the current execution of our strategy. As I have mentioned previously, we made the decision approximately 2 years ago to focus our attention on selling to large enterprise customers who value our technology and high level of customer service to support their Deep TMS systems. To this end, we have structured multiyear lease agreement, which in turn provide us a steady foundation from which to grow our business and maintain gross margin every year. As a result of our team's dedication to this sales model, we have transitioned the majority of our sales over with approximately 70% of our recent customer engagement being lease agreements. And I want to highlight that the customers are aligned with this type of engagement as we have had a high rate of customer retention with many customers deciding to extend and even expand their agreement out several years. And this outcome really highlights the scalability of our business. And while perhaps the initial focus each quarter is on the revenue numbers, internally, we also find value in looking at our book-to-bill ratio for the quarter, which was 1.3x indicating that bookings were solidly above our billing. And our remaining performance obligation under existing customer agreement was $65 million at the end of the quarter. These are just a couple of metrics, which we believe reflects a strong market demand momentum and give us confidence in our forward visibility and revenue trajectory. I am proud of how effectively our team has executed our business model to date. Let me take a minute to walk you through our strategy, which includes 3 main key pillars, which we believe are our key to driving long-term growth: one, further elevating market awareness of Deep TMS and its clinical impact; two, advancing our R&D road map to unlock new and expanded treatment indication; and three, broadening patient access through global expansion and health system integration. At the core of these initiatives is our regulatory approvals and clinical data, which continued to set Deep TMS apart and allow us to lead the market. Most recently, we announced that the U.S. FDA has granted an expansion of the treatment protocol for the Deep TMS system to include an accelerated protocol for major depressive disorder or MDD treatment. As a reminder, the traditional Deep TMS protocol involves a 4-week acute treatment phase with 1 session on each day of treatment. This is compared to an accelerated protocol, which involves a significantly shorter acute phase, taking place over several treatment days. This is a very exciting development for us in the treatment centers using our systems, as we believe the accelerated protocol has the potential to improve convenience and thereby make Deep TMS substantially more appealing to prospective patients. As a reminder, Deep TMS is the only TMS modality cleared by the FDA and with peer-reviewed published clinical evidence for a broad range of indications, including depression, anxious depression, late life depression, OCD and smoking addiction. We are also supporting the evaluation of accelerated protocol for these other indications. For example, the U.S. NIH recently awarded approximately $2.5 million in 5-year grant for the clinical study evaluating the mechanism of action and potential efficacy of the accelerated Deep TMS protocol to treat alcohol use disorder or AUD. This study will be conducted by research team led by Dr. Claudia Padula and Dr. Michelle Madore of Stanford University and the Palo Alto Veterans Institute of Research. This study, which is posted on clinicaltrial.gov for any of you that would like to review the details, will utilize our novel Deep TMS 360 system, which has been designed to provide more comprehensive and uniform stimulation of the neurons in the targeted brain regions. The accelerated protocol being evaluated in this study is similar to the accelerated protocol for MDD, including an acute phase taking place over several treatment days as compared to the traditional protocol, which is several weeks. Moving on to our investment initiatives. As previously announced in late 2024, we identified a new opportunity to generate shareholder value by making minority interest investment in mental health providers as well as other enterprises that we believe are complementary to our business. This strategy allows us to tap into the market we know well, building additional market awareness, R&D road map, data analysis capabilities and expanding access to Deep TMS while avoiding stepping into an operational role outside of our core focus of Deep TMS. To support us in this initiative, Valor Equity Partner made a $20 million strategic equity investment in our company. This investment provided us with the capital needed to quickly move ahead with this strategy on a broader, more meaningful scale. We are pleased with the rollout of this initiative to date, which most recently included our third and fourth investment in 2025. This recent strategic investment have come quickly on the heels of our first 2 agreements with Stella Mental Health and Axis. This collaboration is already making meaningful contribution as utilization of Deep TMS system at those clinics is up over 50% from the start of our relationship. During the third quarter, we also announced an initial strategic investment in Neurolief LTD, a developer of the world's first wearable noninvasive multichannel brain neuromodulation platform that is designed for use at home. This agreement includes a milestone-based funding for up to an additional $11 million of convertible loan over 2 tranches, along with an option to fully acquire the company. These strategic investments are an exciting new part of our story, and we look forward to helping each business grow initially through the additional fund the investment provide, but also through strategic counsel as they look to navigate faster and larger growth. We look forward to identifying additional investment, and we'll keep you updated on these initiatives. This is a truly exciting time in our history as we continue to identify ways to drive long-term shareholder growth. As we just heard, there is significant momentum in all aspects of our business, so much so that it is too much to cover on this call. Therefore, we will be hosting a virtual Investor and Analyst Day on December 1 to further discuss our operations, clinical, regulatory and financial progress. Additional details will be announced shortly. With that, I will now turn the call over to Ido for his review of our third quarter 2025 financial results. Ido? Ido Marom: Thank you, Hadar. As Hadar noted, Q3 2025 was another record quarter for BrainsWay with revenue of $13.5 million, representing a 29% increase compared with the $10.5 million reported for the same period last year. During the quarter, we placed 90 Deep TMS systems, bringing our total installed base to more than 1,600 systems as of September 30, 2025. Gross profit for the quarter was $10.2 million, up $2.4 million from $7.7 million in the prior year period, while maintaining a strong gross margin of 75% compared with 74% for the same period last year. This stability continues to reflect the strength of our recurring revenue model and disciplined cost management. Turning to operating expenses. Sales and marketing totaled $4.7 million compared to $4.1 million in Q3 2024, an increase of approximately $0.6 million, driven by targeted investment in commercial expansion and marketing programs. Research and development expenses were $2.4 million compared to $1.8 million last year, an increase of $0.6 million, primarily from our ongoing clinical trials and development activities. General and administrative expenses were $1.8 million compared to $1.5 million in the prior year period, an increase of $0.3 million due in part to additional legal fees and due diligence costs related to new investments. Operating profit was approximately $1.3 million, which is a $1 million increase compared with the $0.3 million reported for the same period last year. Adjusted EBITDA increased to $2 million from $1.1 million in the prior year period. Net profit for the quarter was $1.6 million compared to $0.7 million in the same period of 2024, demonstrating the operating leverage in our model as we scale. From a balance sheet perspective, we ended the quarter with $70.7 million in cash and cash equivalents, up $1.1 million from $69.6 million at year-end 2024. This increase was driven primarily by very strong collection during the quarter despite deploying $7.3 million for our minority equity investment as part of our strategic initiative. Remaining performance obligations grew to $65 million, a 37% year-over-year increase, providing strong visibility into future revenues. Cash flow from operations in the quarter was positive, further reinforcing the strength of our recurring model and high collection efficiency. Our capital structure remains debt-free, giving us significant flexibility to pursue strategic growth initiatives, including the investment program Hadar outlined earlier. As Hadar mentioned, after a strong third quarter and increased visibility for the remainder of the year, we have raised the midpoint of our guidance for the full year 2025, which includes revenue guidance of $51 million to $52 million, up from our previous guidance of $50 million to $52 million. This guidance represents a year-over-year growth rate of 24% to 27%. We also expect operating profit in the range of 6% to 7% of revenue, up from our previous guidance of 4% to 5% and adjusted EBITDA in the range of 13% to 14% for the year, up from our previous guidance of 12% to 13%. The increased operating and adjusted EBITDA margins reflect the increased scale of our operations. This concludes my remarks, and I will now turn the call back to the operator to please open up the call for questions. Operator? Operator: [Operator Instructions] The first question comes from Jeffrey Cohen with Ladenburg Thalmann. Jeffrey Cohen: Congrats on the quarter. So I guess, firstly, could you talk about the accelerated protocol and give us some sense of current treatments that are taking on the accelerated protocol and what you may expect over the coming quarters? Hadar Levy: Yes. I think the accelerated protocol is a really big news for patients around the world that is basically shortening the acute phase protocol from 4 weeks to only 6 days in which we are increasing the dosage, the amount of treatments per day to 5 treatments per day. The demand so far looks pretty good. And I think that, that's what's really driving the demand for the growth of the company. Jeffrey Cohen: Okay. Got it. And then secondly, could you talk about minority equity investments? Congrats on the handful already this year. But what might we expect as far as the pipeline and other investments over the coming quarters? Hadar Levy: Yes. So we have a full hand of pipeline of this minority investment that we are speaking and exploring the option to collaborate with them. We still need to check the box on part of our due diligence process to make sure that this growing enterprise are growing, they are profitable. They have the right management team and that we believe that they can execute upon their business plan. So the goal before the end of the year is to sign at least one more. And there is a handful of additional opportunities for 2026 that looks very promising. Jeffrey Cohen: Got it. And then lastly for us, could you give us an update on Neurolief as far as any activity currently going on in Japan and EU and then talk about U.S. timing or anticipated activities here. Hadar Levy: Yes. I think we're all anticipating to -- for Neurolief to receive the FDA clearance toward the end of the year. We're hoping there won't be some additional delay with that, but things might look a little bit slow due to the current situation with the FDA administration. But we're hoping to get this FDA clearance for the end of the year. Once we get clearance for that, they're ready to market their -- to distribute their device through different channels. It could be VA, it could be IDNs. And obviously, TMS clinics through BrainsWay customers. But the most promising one that we're waiting for is FDA clearance towards the end of the year. Operator: The next question comes from Carl Byrnes with Northland Capital Markets. Carl Byrnes: Congratulations on the quarter. I'm just curious what you're seeing in terms of system placements from the minority partners thus far. And then again, looking at adding 5 or so partnerships per year, what we should expect potentially in terms of incremental system placements? And then I'll jump back into the queue. Hadar Levy: Yes. Each one of these minority investment is providing us with a business plan. And based on their expectation, they are planning to expand and to grow in between to an opening up additional 10 to 15 new clinics every year. Obviously, the first year is always the most challenging one to make sure that they've got all the necessary setup. But once they got the funding and they got everything they need, they should deliver on that, either by merger and acquisitions or opening some de novo clinics. So that's pretty aligned with our expectations. We're not sharing the data of current installed base that we received from our minority investment, but I can only share with you that aligned with our expectations. I did share a very important fact that with the most early investment that we've made with both Stella Mental Health and Axis, both of them grew their utilization rate more than 50% since inception, since the collaboration with us. And that's the most important sign. It means that they like the technology, they're utilizing this technology, and they're expanding, which is pretty aligned with our expectations. Operator: [Operator Instructions] The next question comes from Ram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Congratulations on the quarter. I wanted to ask about, first of all, how you think you will alter metrics reporting going forward in general, if we can expect greater granularity on, for example, what you expect to be growth in total installed base, what you anticipate to be performance with respect to some of the individual minority investments and so on? And also, I wanted to ask a couple of specific questions about where we are currently. Firstly, if you could elaborate on where you are with respect to the upgrade cycle across the installed base. And how you expect that to play out over the course of the coming quarters, that would be very helpful. And then if you can offer us any granularity regarding the state of the international business and geographically speaking, where you expect the bulk of growth to come from as we look ahead to 2026? Hadar Levy: Yes. Great. Thank you for the questions, and I'm hoping I won't forget anything. So in terms of the metrics or KPIs that we are measuring, I think it's going to be a mix of some very relative KPIs. It will be a number of systems that we are shipping on a quarterly basis, and we can -- we see some very consistent growth on that. It will be also the additional indications that we're also selling on top of the traditional one, it could be the OCD, the H7 or the H4 for addiction. That will be another important KPI, the book-to-bill ratio and most important, again, like is the new initiative with this minority investment that we most probably going to share much more information and trajectory on the Analyst Day meeting on December 1. So I promise to give you a bit more details about some of those metrics and how you can all try and measure the progress of the company in 2026 and beyond. For your questions about the international growth. So we continue to strength our distribution channels, mainly, mainly, mainly in Asia Pacific and in Europe. So I do expect a very strong trajectory from Japan, China, South Korea, Taiwan, Thailand, all this region and India, of course, all these regions continue to grow their demand and increase awareness in this market, but also in the main countries in Europe, like Germany and France and Spain and Italy, we're seeing some constant demands in those markets. And last but not least, also the Israeli market is also growing in a very nice way. So overall, I think that the international growth is pretty aligned with our expectations. I believe there is a chance for us to even expand faster with the additional indication that we currently cleared in those area, which is beyond the mental health, mainly some of them relates to addiction, some of them relates to neurology indications that we're seeing some good results in these areas. But that's a very, very promising target, market targets for the company for 2026 and beyond. Raghuram Selvaraju: And just one other quick one, if I may. Maybe this is more for Ido. Do you have any plans to alter the way in which you report revenue, particularly given the minority stakes that you are acquiring, if you're going to break out revenue coming from those sources or any other changes that you anticipate with respect to top line item reporting? Ido Marom: Yes. So those minority investments won't impact our top line revenue. We are still -- need to examine that with our auditors for the financial statements at the end of the year. But right now, those investments will be written either in their fair value or as an equity under the operating profit. So it's not part of our top line. Operator: This concludes our question-and-answer session. I would like to turn the conference over to Hadar Levy for any closing remarks. Hadar Levy: Great. Thank you. I would like to thank all the investors, analysts and other participants for their interest in BrainsWay. With that, please enjoy the rest of your day. Goodbye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

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IGD.MI 2025 Q3 财报电话会议

Operator: Good afternoon. This is the Chorus Call operator. Welcome to IGD's Conference Call presenting results for the First 9 Months of 2025. [Operator Instructions] I will now turn the conference over to Mr. Roberto Zoia, CEO of IGD. Mr. Zoia, you have the floor. Roberto Zoia: Good afternoon to all of you. We released a press release and the presentation as well was released a couple of years ago. So let me start diving into a presentation, and then we'll leave room to your questions, of course. Let me start with Page 2 in the deck of slides. Well, we'd like to remind you that the path we outlined with our business plan is heading in the right direction. And over the last 9 months, we secured a loan for 600 -- Green-secured loan for EUR 615 million. And we have recently issued a EUR 300 million Bond, and we had already stated after the first funding that we would have monitored the market to catch the right window. And so in 10 months, as you could see, we've refinanced almost EUR 1 billion. So we think it's a good result, indeed, considering that both transactions enabled us, and we'll see more in detail as we proceed through the presentation to increase our maturity profile and decline the average cost of debt. Of course, we keep disposing of our assets in Romania, 3 assets were disposed for EUR 14 million, and we have already negotiations at an advanced stage always in Romania. With the rationale we've already disclosed, we're going to focus on a single asset basis, maybe it's long negotiations, but they are providing the expected results. So I am confident that even the last 40 days from now to year-end, that might be surprises because we have advanced negotiations ongoing. And also from the operating side, not on one-off, but on the recurring basis, results are very positive as to our portfolio on a like-for-like basis, end of September, we are up 3.8% versus September last year. EBITDA, core business EBITDA, always on a like-for-like basis is up 2.9%. And first and foremost, we had excellent results for our funds from operation, landing at EUR 31 million. Last but not least, let me say, is an excellent signal for each and everyone is the performance of our group net profit. And for this quarter, we started with about EUR 10 million in the end of June, we are at now EUR 17.6 million. And we are talking about -- we are down EUR 32 million, and we have a positive delta of EUR 50 million overall. So an excellent result was achieved. From an operating standpoint, tenant sales are up, and they're up 1.3%, and that is very important because this is really supporting us when we go and renegotiate contracts with tenants. And we had meaningful upsides for new contracts and relettings. Footfalls are also faring very well, they are up 3.7%. And that is much higher than the CNCC average. And of course, they are monitoring about 300 shopping centers. So the footfalls result is definitely driven by some anchor tenants that we have placed in some of our shopping center shopping malls. Primark in Livorno that is really attracting a lot of visitors. And we introduced Action into one of the shopping centers do. That is now turning out to be a very meaningful traffic generator, and it was placed in Ravenna and Casilino, Rome, with very, very interesting results. Also very interesting is the up -- 1.6% of the hypermarkets that are owned by IGD. So in our portfolio, most of our hypermarkets were downsized versus the main shopping area. And they are starting to grow in a very interestingly, I will say. If we move to Page 5, if everything is always very consistent performance wise. We have tenant sales that are growing, footfalls that are growing and occupancy as well. Over 1 year, we've grown 1% in occupancy. We have a time from here to 2027, we want to get to 98%. We're now at 96%. So time after time, quarter after quarter, we are achieving the growth. We're also working very hard on extending our contracts. You see in 4 quarters. We've been stopping at 2 years as far as our WALB is concerned. But many contracts are now due. And tenants had a break option rolling 12-month rolling, keeping 2 years, retaining 2 years, those who have all contracts for 1 year, the new contracts will be 3 years long. And from now to 2027, we want to get to 2.5 years WALB. Upside for Italy, up 1.3%. 8.3% of the malls total rent was either renewed or relet. The average of upside is 1.3%. We're up 0.3%, and its net after inflation and then you have to add inflation to it, which is also reflected in our assessment and evaluation. So world occupancy and upside are also heading in the direction that we had already identified in our business plan. On Page 6, you can see a few pictures. I mentioned Action as a new brand, they are really doing exceptionally well, especially as far as footfalls are concerned. They are a wonderful attracting brand. We focus very much on La Piadineria for food. They are currently very, very successful among young visitors, among young people. And then Mini Market, Arcaplanet, and Douglas are also really driving the performance. Page 7. And again, one of our lines of action mentioned in our business plan, we want to focus on digital transformation. We've completed 11 apps or the main shopping centers in 2025. And this digital system is really enabling us to increase profiling activities to deepen the knowledge of our customers, like clients and to come up with ad hoc promotion based on customer classes. So we're very much focusing on this. We call it IGD ecosystem, and it goes hand-in-hand with leasing activity, and we started excellent relationship with the big chains. And we came up with other apps as well already applied in 28 shopping centers, rolled out in 28 shopping centers to really increase and improve the relationship between owners and tenants. So we constantly have an ongoing dialogue with tenants for the events we organize at the shopping centers. We get their turnover every day. So we have this ongoing relationship, which is excellent because retailers have finally understood that they save time. Everything is -- where we keep track of everything and they're using these platforms really well. It's a good time also for real estate. I mean, retail real estate, you saw the results for the first 9 months they were really outstanding, meaning that a retail asset class was the top asset class, the #1 and transaction-wise, was much better than logistics and offices. So somehow, it's a close second -- sorry, hospitality is a close second. And in the past, we did have volumes, but it was either high street buildings or supermarket and hypermarket was over the first 9 months of 2025. We see comeback of shopping centers, for instance, the Veneto one, the small ones, the 2, Bennet purchased or the 2 in Rome, but eventually, we had a big transaction in the Oriocenter transaction, EUR 470 million in 1 single transaction where there's a partnership. We have launched ourselves when we first created our 2 funds. It's industrial players with financial players interacting. So if Orio, Percassi bought it back. They have built promoted and managed. So it's a big property asset manager. And of course, they work with a more financial players such as Generali. And therefore, this was indeed one of the main transactions in retail real estate. And I think this is really a good introductory factor for further development going forward. The same thing we see in Romania. Romania, we know is a very small country, transaction-wise also, but you see that retail -- practically, the retail transactions accounted for half of the overall real estate transactions. And therefore, there's a certain appetite for retail real estate in Romania, too. Let's move to Page 9, some financial highlights. We are still focusing on our goal to reduce our Loan to Value. In the first 9 months, we reduced our Loan to Value by 40 basis points, landing at 44%. And then a few more detailed pieces of information we keep reducing our cost of debt as well. Let me remind you that last year, full year, we were at 6%. Now we are at 5.3%. And post new bond issue, estimating the EUR 300 million issued on November 4. In that case, too, we would have a positive impact landing so that we land at 5.1% weighted average interest rate. And that will generate benefits for 2026 as well. So in the first 9 months, 90 basis points, that is really -- I hope it really meets the expectations everybody had vis-a-vis IGD. And very interesting as well, I'm on Page 10 now. The net rent -- net rental -- if you deduct the net rental income of disposed portfolio, food portfolio in the first few months of 2024, EUR 5.2 million. And then you start to see the erosion coming from -- of revenues coming from the disposals of Romania, but they were offset -- net rental income wise they were offset by a growth, both in Italy and Romania with -- so the changes, the delta versus 2024 is still positive, up 3.8%. So net rental income from freehold landing at EUR 75.9 million on the EBITDA wide. We -- it's slightly lower the increase because we have some costs that we have to cope with in the last quarter when we had some items to the deal with on the -- an offset on the receivables and payables side, but still EBITDA -- core business EBITDA is nonetheless growing, up 2.9%. And then on Page 12, you see our financial position. We cost saving over the first 9 months that goes from EUR 52.1 million to EUR 43.6 million. So we have a cost on nonrecurring items or charges on the one hand, but also and mainly, that will be very useful for 2026 and 2027, a financial management, where we saved EUR 8 million that will then, of course, have a positive impact on our FFO figures. Page 13, FFO. This positive EUR 8 million from our financial position coming from last year, helps us offset missed revenues deriving from disposed assets. And on the one hand, we have a delta in the consolidation scope. So we lost EUR 5.3 million of revenues, but improving our net financial position and improving our average cost of debt and improving our EBITDA delta from core business. So these two items add up to EUR 10 million. So they more than offset the EUR 5.3 million we lost due to the portfolio disposals. We had over the same time frame, so we improved our core business and our financial position on a like-for-like basis. So they more than offset the effects of our disposals. So this makes us say, we are -- we should speed up in actions in Romania. So because in addition, on the one hand, yes, we missed out on revenues, but we will improve our financial position, group net profit. Last year, we had to write down or impair our third stake and not having that charge or burden. Now we are a machine producing profit that could be more or less strong depending on the years, but our core business is really generating profits, both from an FFO wise and also from a revenue standpoint. So the group net profit landed at EUR 17.6 million, and we had to expense with the repayment of the bond in February, all the ancillary costs they have to be expensed, but they were more than offset by the operating results. I think that our new issuance, and I'm on Page 15, now the new bond issued is telling us a lot. And what do I mean by this? I mean that first of all, we are back to the capital market. And if you remember, on the -- in 2023, we performed a transaction, the last useful day at very, very costly conditions while this issuance, I really told us that market appreciated how we managed our financial position over the last year. We had orders for over EUR 1.35 billion, so more than 4x the book we were offering, that is to say we offer EUR 300 million. And that, of course, generated a cost compression we came up with a guidance at 4.7%. That was then closed at 4.45% as annual coupon. What is the benefit? It's a strategic advantage or edge, if you want. I don't -- I said I don't like to say -- I'd like to have 100% secured debt or 100% bank debt. So now we really have offset our funding sources because EUR 300 million come on the market. And we also have rebalanced secured and unsecured loans. As you see in the following slide, we are -- we have more than EUR 630 million of freed up of unencumbered assets because, of course, in case of issuance, we wanted to free up assets and we know that rating agencies like this very much. We have extended our debt maturity profile because the facilities that we have closed. Now we have added 1x per year without cliffs from 2029 and 2030, and we have improved our maturity profile. On Page 16, you see that despite of disposals, our NFP went down, Loan to Value went down too. The average cost of debt went down. And ICR, the interest cover ratio went from 1.8x to 2x. And we get net debt on EBITDA went from 7.9x to 8.1x. So with the improvements we have achieved, thanks to disposals, we should be back to a more appealing figure, let's say. And then on Page 17, you see the Group's’ Maturities Profile, the maturity we have in 2029 has now shifted to 2030. And just look at the slide and you will have a perception -- a clear perception of the work we have done so far. We're working on maturities from here to 2028. The banking is the bank loan dates back to 2022. And the idea, the objective here is to attack that funding, extend the maturity because it's also the most expensive instrument and so try and fine-tune our margin for 2026 to further cut it. You see between 2026 and 2027, we have no meaningful maturities, and we're already working on the 2028 financing. So we will extend the maturities there too. But I am confident that we will have a further decline of the average cost of debt. So we've extended maturity. You probably read that Fitch confirmed our ratings, both corporate and issued bond as well. So it's an investment-grade bond that was issued based on Fitch's Rating. And it could be improved based on the comments made by the 2 rating agency. Also thanks to the -- as we've cashed in money, so we are going to free up bonds, and we will get to EUR 776 million of unencumbered assets, as you see on Page 18. Let me say once again, market we are 37.1% and unsecured is 39.09%, almost 40% of total IGD assets, it would be, let's say, 40% of the debt breakdown on the right-hand side of the slide, both the refinancing in February and the bond were classified as were rated as green. So that's why we're very much focusing on ESG factors so that our assets are as much as possible at the level that banks and the market considered as green assets and green funding or financing, 82% of our portfolio is certified with a minimum of very good rating. We are talking about the BREEAM certification. And then we have excellent as well. And this is something that we feel is a priority. We committed to it. We're also very much working on photovoltaic systems. We signed a major contract with Edison, and Edison is investing and through our lease contract, we acquire energy from them at fixed prices and low costs that has a twofold benefit. So we're not using capital for that, and we have clean energy, renewable energy, and we have 3 cases already. We've seen that installing photovoltaic-type panels is very much appreciated in parking places, it's appreciated by users, just because in the summer, it's a shade against the sun. And in the winter, it protects them against the rain or snow. So this is another target in our business plan that we very much see priority. And [indiscernible] building energy management systems. We can work out consumption, we can see peaks when there's no need for air conditioning or lighting, the system works automatically to achieve energy savings. In the first 4 months, we had 20% saving on the used energy. So that was also a goal in our business plan that is to say, using AI to reduce energy consumption. And we are really investing heavily in this. And it will be the leitmotif also going -- our light motive also going forward. And then of course, we have some annexes. Should there be any specific questions, we gave you a breakdown of tenants and how they are placed in our portfolio, how they are we make a comparison between them and our merchandising mix locally and internationally, and then WALB & WALT, number of contracts we have. So we put in a lot of material that you can look at. I'm not going to go into it, but I'd rather answer your questions and have a dialogue with you now if you need any further info. Thank you very much. Operator: [Operator Instructions] First question comes from the line of Arianna Terazzi with Intesa Sanpaolo. Arianna Terazzi: You are moving really fast in executing our business plan. So first of all, I think you have the right pace to really beat the guidance you gave us for FFO. So could you elaborate on that? And then for 2026, financing and funding, what are your expectations as far as average cost of debt is concerned for the next year? Roberto Zoia: Good question. And as you could see, we are up EUR 31 million. Our guidance is 39 for the business plan. And given the time we are going through, so every day, there's a factor coming into place, it could be tariffs, it could be something else. So it's not easy for me because a part of it is really hyped and would like to take the guidance up because it's in the figures. But we said, let's be cautious. Let's see how this quarter performs goes and then maybe we'll come back and increase our guidance. And if you look at FFO for the last 3 quarters in the worst-case scenario, we should anyway be higher than EUR 39 million. I don't want to officially increase our guidance. I'm not in favor of that, but I'm more than confident that we can do better than those EUR 39 million, so 39, sorry. As to the cost for average cost of debt for 2026, it will further decline. Without the refinancing of 2028, we would land at 5.1%, which is what we wrote post issuance, bond issuance. It's clear. However, that started from January 1, 2026. We have to really focus on our 2028 maturity to have an expansion of that maturity and at the same time, to achieve a reduction in cost of debt. But we are talking about EUR 150 million. So if we compare it to the EUR 800 million, even if it were 50 basis points, it would still be 10, 15 at the end of the day basis points. But the objective I gave the target I gave all of my teams is to get below 5% with our average cost of debt because the EUR 300 million were placed with a coupon for 4.45% because if you think 4.45%, it's a 2.2% spread. We have financings that are almost 3%. So there's room that 70, 80 basis points for further negotiations. Of course, it's only one chunk of our debt because the bond will be carrying forward on its own for the next 5 years. But the objective for 2026 is to go below 5%. The guidance, of course, you can interpret it as you wish. I'm very optimistic and very confident. Now we are -- guidance is EUR 39 million, but we are very close to 40%, let's say. Operator: The next question comes from the line of Simonetta Chiriotti with Mediobanca. Simonetta Chiriotti: I have a question on the market. You said that the market is quite buoyant right now volume-wise, and -- could you elaborate on the transactions that they given some interesting signs as far as valuations are concerned as well or appraisal, what are the expectations for full year 2025? And also looking ahead to next year going forward? And in a more buoyant market scenario, how about your project somehow dispose of assets within your consolidation scope? Can it be really fulfilled? Roberto Zoia: Thanks for the question. Today, it's clear that, as I said before that. If we look at our market comps on rates that are eventually finally, normal or aggressive, we have audio center for actually it's the shopping center. It's a major shopping center in North of Italy, you name it. But we could see both in small transactions for small shopping malls in the Veneto region and the Bennet transaction. We've seen that we start to see a little bit of decompression, if I may say. Up until a year ago, every time people approach the shopping malls you would think of double digits. Now it's starting to go down. So my perception is we had early November, so I don't have the visibility yet over the full figures, but I think there will be an adjustment because rents will grow structurally. And also the market is so big that which should be somehow deflate or decompress or even stay flat with a 10 basis point decompression with revenue increase. But bear in mind that we have not yet seen a very strong decline in discount rates. Above and beyond what the ECB did, they did a lot of reduction. But if you look at discount rates for December and June, we have not yet seen a real decompression of the discount rate, which I hope that I am confident will materialize going forward. So the bouyant market, as we think Simonetta, and I am confident that it will lead to a slight decompression. And recently, I have met some players. We know that retail in Italy together with Spain is probably Italy and Spain are the countries that are performing best. In Spain, transaction, the later transactions were made at a very high price. So even some very big players are saying maybe it's worth going to Italy, where I still have a pricing benefit vis-a-vis Spain. And at the same time, we are aware that there are 150 basis points between Italy and Spain. So and that even splitting that in half, 75%, it would mean excellent returns for Italy anyway. This is what we get from looking at the market. Portugal and Spain are the ones that are faring best retail-wise, then comes Italy better, much better than France and Germany. And therefore, also players who, in the past, were most skeptical about this asset class, if it's a retail are changing their mind. I think there can be an excellent -- well, a good result in 2025. And at the same time, this can have a further impact in 2026. We looked and were contacted, true that -- that would be more interest in putting assets on the market, in the market and cashing in without contributing liquidity into our sync, but there are still players who think that a partnership with IGD where we are 51% and they are 49%, still, they would still have very interesting dividends. So we have this ongoing open negotiation table with very, very frequent meetings. It's a project that players, especially industrial players like very much and they still want to retain assets also from -- under a different legal form. And also for the juice fund, the one with the 6 supermarket, we've started to look around because for us, too, it could be interesting right now at this moment in history to dispose of part of the assets that belong to that portfolio. And for us, it would mean recovering equity that it's now blocked in the fund. So it's a highly dynamic market. We're very careful looking around. We are focusing on disposing of Romania, but also very much focusing on strengthening and growing alliance inc., which could be a turning point not to be committed to huge investments, but to increase to benefit from an LTV perspective to benefit from the leasing network. So we are definitely working a lot on the alliance project. Operator: The next question comes from the line of Federico Pezzetti with Intermonte. Federico Pezzetti: I have a couple of things I'd like to ask. The first one in Italy, we saw a speeding up of the like-for-like growth for you from 3.2% of H1 to 4.5% now. So a strong acceleration in Q3. Could you elaborate and give us more details on the drivers behind this growth? And then the second thing I wanted to ask is you talked about uplift that are still there, not as strong as in 2024, but we still see uplift. So what do you see for the coming quarters? Could you elaborate that a bit give us some color on that as well for uplift? And then also early still, but I'd like to ask for some hints on dividends, maybe looked on the expectation the market consensus has so [indiscernible] and could you -- maybe you could elaborate on that? I'm just trying to see. Andrea Bonvicini: No, it's okay. It's always worth to give it to try. I'm an open book as Mr. Zoia, so they're trying to at least at on me here, cloudy and all the coworkers, but I'd like to be an open book for you anyway. There's indeed a very strong acceleration on the like-for-like side and it's driven by two main factors. First of all, the upside, we achieved a very meaningful one. And then it's the occupancy factor. When I give you a net rental income on a like-for-like basis, I have two levers. First one is the revenue growth. And the second one is that I occupy if I have occupancy in certain spaces. I no longer have to share common expenses for the property. So from -- if in 2026, we can cover another extra 1% of vacancy, that indeed will an immediate impact on the like-for-like growth. It's clear that 4% is a lot, but let me remind you that in our business plan, we gave you 16%. So it's somehow it's the objective, the goal, the 4% on a yearly basis, which is driven by revenue growth and also occupancy growth. So for 2026, we are all super committed to retain that 4% to get to add up to 16% in 2020. The upside is really paying off. We made sacrifices for Prime and Action to having anchor tenants. It often means making investments, but we've seen that most retailers, when they are close to attractive tenants they are willing to somehow pay something extra. And I'm very happy. We had a peak in Q3 similar to the Q3 2024. But having this 3% above inflation in a year in which macroeconomic tensions that did play a role, as we all know, on everything. So I think that was an excellent result we achieved. Last but not least, on dividend, it's clear that as we are EUR 17 million group net profit, that is mainly driven by Italy and a CQ part. It's true that in the last quarter, we have to expense ancillary charges for the last bond. So ancillary charges for the early repayment, we will have to expense them for the early redemption. So the profit is going to be slightly less than what you saw for the quarter. But should it be EUR 20 million, I'm just saying figures to say something, 70% of whatever is mandate or 14 divided by 110, would be around 13%, so not far from 15%, which would be a magic figure would be -- would be 50% more than the 10% and we had last year. So Federico, unless there are any specific situations or holdups, it's clear that the mandatory is very close to 15 because 15x 110% is EUR 16.5 million. So EUR 16.5 million and roughly, we are in that space already. So today, as I said before, I really hope, and I am confident that our FFO will be higher going forward. And so above and beyond the dividend policy, you know that I have mandatory, 70% mandatory on the exam operation. Italian net rental income and some write-ups if there be. And we also have to bear in mind that we have Loan to Value to refer to. And I keep saying that, and I'm reiterating it today. I don't want to waste money indeed. In the past, probably to generous when there were no conditions to be so generous. Of course, we want to pay out the highest possible dividend, but also bearing LTV always in mind. That's why we are saying the objective for 2027 is getting to 40%, and that would put us in a comfort zone. If we get to 40% of LTV in that case, of course, we can have a dividend policy on FFOs and therefore, have a different approach. I'm not saying that we can -- well, we would be willing to increase our dividend by 50%, but we have to bear in mind what LTV is like, of course, if there is -- there will be nice surprises in Romania between now and year-end or the 2 months before the new year. In case we cash in some money, we would further reduce debt. We would be better off and therefore more prone to paying out dividends. But be assured, rest assured that the company, the shareholders have a common shared goal going back to paying a sustainable dividend, good dividend. But now going from making an effort to reduce our LTV of one point and then pay out 2 more points on dividends that you have -- you then have to recover with a lot, lot of effort. So it will very much depend, and here, I'm going back to Simonetta's question as well, it will very much depend on finding good year-end valuations and good prospects for -- a good outlook for 2026 valuations, and that will give us better room for dividend payout. When you say 0.15, indeed, we are somehow in sync. This is something I have in my DNA as well because it's more or less 70% of what we have our mandatory figures. Operator: The next question comes from the line of [indiscernible] with Banca Akros. Unknown Analyst: I'm referring to the last question you asked. And this year we got to 44%. What would be the ideal level? Roberto Zoia: Sorry, I could not hear whether it was FFO or -- and there, it's a question about getting to EUR 20 million. And looking at tenants, could you elaborate on the trends that you are witnessing as far as the tenant sales are concerned? Well, the question was for LTV. In our business plan, we gave a target for 40% for IGD, and also, if I look at our peers, European peers as well, it's a figure that keeps us in the market in a comfortable way. So to this -- how do we get to 40%, we have disposals. I can confirm that we are at EUR 14 million, we put in EUR 20 million in our business plan -- that means we need to have a similar -- another similar transaction, EUR 5 million, EUR 6 million roughly within this year and therefore, hitting the target of EUR 20 million. And there too, I am very confident because I see a very lively market, buoyant market. So I confirm the goal to get to EUR 20 million, we've already done EUR 14 million , LTV 40% going to product categories. For the first time, in this presentation, we are on Page 25 of our slide because I got a lot of questions on, for instance, apparel clothing. You see we broke down the merchandising mix with cloth, everything was put together. Instead here, we break it down better. If we look at clothing in general. So with average surface not specialized, we are below 30%. It's clothing on the right-hand side, it's 28.3%. And IGD's portfolio is not made up of 300 stores where we're having 30% of clothing is a lot. We have a lot less. Our biggest shopping centers have 120, 130 stores. So clothing, we try to reduce it over the years to the benefit, for instance, of sportswear, why is that? Because today, if I think of JD Sports, for instance, [indiscernible]. And they're not the [indiscernible] because it's really, really only sport, but it's sportswear. JD Sport more specifically, they have appealing turnovers, revenues, and we're working on that with them as well. What is really working is perfumes and health and beauty, so to say, because they are really doing well, electronics -- consumer electronics is finally picking up again. We have 2 resizing Actions so forth, but electronics, we've resized, but they are really promoting physical sales, and that can be seen in the figures they make and also they tell us the [indiscernible] MediaWorld, and they tend to really focus on physical sales. Considering that the cost -- considering the delivery cost they apply on online sales. The service is provided. And so electronics is doing really well. You've seen with the new openings. Of course, we have to be -- always have to be cautious because food courts should not be done everywhere with too much offering, but while we have shopping centers with a very big catchment area where you have lots of houses, offices that have evening entertainment. So we're really focusing on that. And the big chains such as Piadineria and KFC. And you know that funds took [indiscernible] upstakes are also Piadineria these players, funds took up stakes in them, so they're really focusing on their business and then health and beauty, jewelries as well we've seen very interesting results with jewelries as well. And jewelries, normally, at year-end, they help when there's variable revenues that they sell a lot during the last quarter of the year. And then services, we are also strengthening them, enhancing them. What's also interesting is that they are working a lot on the leading side on entertainment, other than movie theaters and cinemas because for -- if you go out in the evening, normally would only go to the cinema, but we've really seen that in Livorno, where it's open until 11:00 p.m. we have McDonald's, they have a sizable revenues. And there are different types of entertainment that is not necessarily a cinema or a movie theater. And they have the same level of attraction somehow and combining restaurants and entertainment. And it could be 2 meals or 1 meal and 3/4, if you're not work in the evening, then they cannot somehow keep the area retaining. I hope that's the color you were expecting. And if it would be the right mix between local and international tenant. You see in key tenants, you go from Iniditex for instance, international tenant. We have 10 stores data, for instance, Unieuro is between Italy and France, somehow. And then the big ones also in the light of the piece of info we got last night is OVS, which has everything now OVS -- means OVS, Open, Golden Point, Casanova, Sasha, you name it, Piombo. So it's a lot too. And for us, they are a partner. They are also performing really well. So we have to try and find the right balance with them as well. They were talking about OVS. OVS, we have a preferred relationship. In all of our shopping malls, we are super happy to have them. And they are doing really well because the OVS format managed to somehow be placed halfway between Primark and Zara, which somehow is already seen as medium high versus H&M or [indiscernible]. OVS is an excellent brand because they found the right balance and with their different lines such as Piombo and Golden Point? And then [indiscernible]. So within OVS, you get to have the average clothing bracket, and we have some shopping centers with OVS delivering very interesting tenant sales. Operator: [Operator Instructions] Mr. Zoia for the time being, there are no more questions in the queue. Roberto Zoia: Very well. I would like to thank you all for joining us today. And for any question or doubt or meeting or insight, I'm available 24 hours a day, 7 days a week. So if you need to have more info, please do not hesitate to contact me. Thank you very much, and have a good afternoon. Operator: This is the chorus call operator. The conference call has come to an end. You may disconnect your phones. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

146天前Insight Analytics约5分钟阅读

BZQIY 2025 Q3 财报电话会议

Yochai Benita: Welcome, everyone, and thank you for joining us on Bezeq's 2025 Third Quarter Earnings Call. I'm Yochai Benita, CFO of the Bezeq Group. Joining us from the senior management team today, we have Mr. Tomer Raved, Bezeq's Chairman; Mr. Nir David, Bezeq's Fixed-line CEO; and Mr. Ilan Sigal, CEO of Pelephone and yes. Before we start the call, I would like to direct your attention to the safe harbor statement on Slide 2 of our presentation, which also applies to any statement made during today's call. We would like to inform you that this event is being recorded. Following the presentation of our results, we will have a Q&A session. With that said, let me now turn the call over to Tomer for his opening remarks. After his introduction, I will continue the presentation of our group's financial highlights, followed by Nir, who will discuss Bezeq Fixed-Line results; and Ilan, who will cover the results from Pelephone and yes. I will conclude the presentation with Bezeq International results. Tomer, please? Tomer Raved: Thank you, Yochai, and good afternoon, good morning, everyone. Let's start on Slide 3. We continue to record stable and healthy growth across all of the group's strategic business segments, consistently meeting and beating our forecast. I am proud to announce that we have reached our 2.9 million home passed target and have completed our network deployment across the vast majority of Israel. Accordingly, starting 2026, we expect to see a gradual decrease in CapEx. This is a historic milestone that will enable us to be fully prepared ahead of the AI revolution that will transform the economy, society and the quality of life of every Israeli citizen. During this quarter, we continued to deliver significant growth in core revenues and double-digit growth in adjusted EBITDA and adjusted net profit that were also positively impacted by the yes, improved valuation. Excluding the yes valuation impact, adjusted EBITDA still grew by a healthy 4% this quarter. We continue to focus on new strategic initiatives in Bezeq Fixed-line, Pelephone and yes, which further strengthened the Group's core pillars. On the regulatory side, there was further progress in the process for the removal of structural separation with the MOC publication of a call for public comments. We are hopeful that the MOC will complete its process by year-end as planned and that we can start merging yes into Bezeq Fixed line and further enhance value to customers, operational efficiency and leverage our NIS 1.2 billion significant tax asset. Moving to the next slide. Our tech and business road map is on track to reach our midterm KPI, including at least 40% fiber take-up and consistent ARPU growth across all verticals, while leveraging our leading position in 5G and TV. On Slide 5, you can see a good snapshot of our financial highlights for this quarter, both in top line as well as in profitability metrics. Core revenues grew by almost 2% and now represent 93% of our total revenue. After adjusting for the change in yes valuation, adjusted EBITDA grew 4%, in line and actually slightly above the group's targets. Turning to Slide 6. Let me point out that even in a year with a volatile geopolitical situation, our core business continued to perform well with outstanding growth in every KPI this quarter. Total fiber subscribers as of today reached 969,000. 5G subscriber plans reached 1.36 million and cellular ARPU grew over 4%. Yes, ARPU is actually a highlight for this quarter, up 1% year-over-year and stable ARPU at NIS 189. We are pleased to see the improvement in the macroeconomic environment, the ceasefire in the region and the return of our hostages. These tailwinds, together with the group's strong performance are generating growing interest from investors in the Israeli, European and U.S. capital markets. We will continue to work to create significant value for our customers, employees and shareholders. I will now turn the call over to Yochai, who will elaborate further on the group results. Yochai Benita: Thank you, Tomer. Moving to Slide 7. We show a 1.7% increase in core revenues due to higher core revenues across all key group segments. Adjusted EBITDA grew 13.8% and adjusted net profit grew 56% due to the increase in the valuation of -- after excluding the impact of the updated valuation, adjusted EBITDA increased 3.9% and adjusted net profit was up by 0.1%. Turning to the next slide, we show the 9 months trends, which were similar to Q3 revenues and profitability. Free cash flow was impacted by Bezeq Fixed Line assessment -- tax assessment paid in the first quarter of 2025 and tax refund received in the corresponding period. Moving to the next slide, we show our operating expenses. Salary expenses decreased 8.9% due to the sale of Bezeq Online and its deconsolidation as of Q2 2025. We recorded decreases in operating expenses and depreciation expenses, mainly due to the change in yes valuation. Other expenses were impacted by higher provision for legal claims and employee retirement at Bezeq Fixed line. The next slide shows our quarterly operational metrics. Broadband retail ARPU continued to grow year-over-year. In addition, we recorded increases in telephone ARPU as well as in yes ARPU year-over-year due to fiber growth. Compared to the previous quarter, cellular subscribers grew by 16,000 and TV subscriber grew by 3,000, representing the second consecutive quarter of growth. Slide 11 highlights our balanced capital structure with net debt at NIS 4.6 billion and a coverage ratio of 1.3x. The decrease in coverage ratio was due to the increase in adjusted EBITDA as a result of the change in yes valuation. We remain committed to maintaining our high credit rating. Moving to the next slide on our 2025 outlook remains unchanged, and we are forecasting adjusted EBITDA of NIS 3.85 billion, adjusted net profit of NIS 1.45 billion and CapEx of NIS 1.75 billion. I will now turn the call over to Nir, who will share more detailed results from our Fixed line operation. Nir? Nir David: Thank you, Yochai. We continue to deliver strong results in the third quarter, reflecting the successful implementation of our multiyear strategy focused on the core actives and the acceleration, infrastructure -- acceleration, investment in advanced infrastructure nationwide. Turning to Slide 13. Fixed line core revenues increased 2.2% to NIS 991 million, driven by higher revenues from transmission and data communication, broadband and cloud and digital services. Broadband fiber customers reached 969,000 today and ARPU rose 3.8% year-over-year to NIS 136. We recently expanded our IRU agreements with Gilat Telecom. Together with partner agreements, this represent another significant milestone in our growth strategy, enabling us to better leverage the potential of our fiber networks and to expand our customer base nationwide. On the following slide, we show Q3 financial highlights. Adjusted EBITDA rose 0.5% due to higher core revenues, partially offset by lower telephony revenues. Adjusted net profit was down 10.5% to NIS 214 million, mainly due to higher depreciation and financing expenses. Free cash flow was down 3.1%, mainly due to timing differences in working capital. Turning to the next slide, we show continuous fiber deployment reaching out targets of 2.9 million homes passed with over 969,000 active subscribers in our fiber network today, representing 65% of total broadband subscribers and resulting in a take-up rate of 34%. Moving to the next slide, we show the take-up trends. Retail subscriber take-ups reached 616,000 and also fiber take-up reached 355,000 today. Fiber subscriber representing 62% of total retail subscribers. Turning to the next slide. Broadband revenues were up 1.6%, driven by growth in ARPU and fiber subscriber. Transmission and data revenues grew 4.7% to NIS 310 million and cloud and digital revenues grew 5.7%, driven by higher revenues from virtual exchange and cloud services. With that, I will now turn the call over to Ilan to discuss Pelephone and yes. Ilan Sigal: Thank you, Nir. Moving to Slides 18 and 19. Pelephone delivered strong quarterly financial results together with sustained growth across key performance indicators. Service revenues grew 4.4%, reaching NIS 381 million for the highest service revenues in a decade. Adjusted EBITDA grew approximately 6% to NIS 202 million for the highest adjusted EBITDA in 2 years. Revenue and profitability growth were driven by continued growth in postpaid subscribers, including 5G subscriber plans as well as high roaming revenues. 5G postpaid subs plans grew by 33,000, reaching 1.36 million subscribers today. 5G Max subscribers reached 115,000 today. Moving to the next slide, we show 5G postpaid subscriber plans reaching 1.36 million subscribers as of today, representing 59% of postpaid subscribers and Q3 service revenues showing consistent growth over the last few years. The next slide shows Q3 key operational metrics. We posted the highest ARPU in 6 years, reaching NIS 48, up 4.3% of NIS 2 year-over-year. Turning to yes on Slide 22. Yes has demonstrated consistent increase in revenues and subscribers along with significant growth in all profitability metrics, which have been driven by comprehensive efficiency and renewal initiatives and the completion of strategic transactions and measures we undertook. Revenues increased 1.3% to NIS 321 million due to higher revenues from the TV and fiber bundle. Pro forma adjusted EBITDA rose 69% to NIS 59 million, driven by an improvement in operations, including growth in subscribers and revenues and the reduction in expenses resulting from the completion of transactions and strategic initiatives. Total TV subscribers increased by 3,000 this quarter, representing the highest quarterly increase in total subscribers since 2022. We posted quarterly growth with 12,000 net fiber subscribers, adds reaching 111,000 as of today. Moving to the next slide. Pro forma adjusted net loss improved by 97% due to higher revenues and streamlining of expenses -- streamlining of expenses. On the next slide, I would like to highlight that this is the second consecutive quarter with a sequential increase in total TV subscribers outrose NIS 2 year-over-year growth due to higher revenues from the fiber plans. We should continue growth in IP subscribers reaching 489,000 today, representing 86% of total subscribers. With that, let me now turn the call back to Yochai. Yochai Benita: Thanks, Ilan. Moving on to Bezeq International on Slide 25. ICT businesses revenues grew 8.7% to NIS 281 million, mainly due to higher revenue from the sale of business equipment as well as cloud activity. As a result, profitability metrics grew with adjusted EBITDA up to 2.6% and adjusted net profit up to 14.3% to NIS 16 million. We are continuing with our streamlining plan, including the implementation of the employee retirement agreement for the years 2025 through 2027. Finally, I would also like to mention that we will be attending the TMT conference this week in Barcelona. In addition, we will be attending the UBS Global Media and Communications Conference on December 9 in New York. For those attending, we look forward to meeting you there. With that, I will open the Q&A session. Yochai Benita: [Operator Instructions] Chris Reimer: Chris Reimer from Barclays. Yochai Benita: First question from Chris from Barclays. Chris Reimer: Yes. Yes. I wanted to ask about the guidance, the near-term 2% growth in adjusted EBITDA. How should we be looking at that in terms of the strong impact from the revaluation of yes. Tomer Raved: Yes. So the -- as I mentioned this quarter, the growth of the EBITDA of 14% if you exclude the yes impact, we're talking about 4% growth. We talked and we are targeting to be around the 2% EBITDA CAGR in our midterm targets. But given the successful growth in our core revenues and ongoing efforts driven by Bezeq, yes and Pelephone, we're obviously trying to overachieve these numbers. You saw this year, we upgraded our guidance twice and we are very confident of being at this number, maybe slightly above. But we are going to continue and push for at least 2% or more growth in EBITDA CAGR. And I would also share that in this coming March, we will share a revised midterm guidance as a result of our very successful business initiatives across the group. Chris Reimer: Yes. That's good color. And also just touching on, yes, you announced the extension of the satellite -- using their satellite. I'm just wondering how does that correspond to a positive impact on the segment? Yochai Benita: Okay. So as you mentioned, we did announce that we will keep some satellite business, but it will be very small compared to what we have today with lower cost structure. So what we communicated of a significant saving starting the first quarter of 2026, we still see it as part of our forecast. So there is no material change from our view in this respect. Next question is Siyi He from Citi. Siyi He: I have 2, please. The first one is really follow up on the topic on Yes. And we see that yes ARPU has stabilized this quarter. Just wondering if you can give us how do you think the yes ARPU could develop given that the fiber take-up continues to grow up? Should we expect this which the ARPU will trough from now on? And the second question, just if you could give us some updates on the HOT Mobile offer. I think the news said that you just raised the offer by like NIS 100 million. Just wondering if you can give us some update on how that's been progressing and your thoughts on the pricing. Tomer Raved: Yes. I'll touch quickly. Siyi, thanks for joining. The TV market is extremely competitive. Yes, has a very unique and premium offering. And while the TV stand-alone ARPU continued to go down as expected, slightly better -- slightly lower than expected, but still a very competitive market with fiber, the accompanied ARPU and now it's significant, has stabilized and growing gradually, as you can see. So with the growing take-up on fiber from yes, you would expect the offsetting the decline in TV stand-alone offerings to basically stay stable and slightly grow as a result of the fiber offering and additional offerings that yes has opened up like advertising and others that you'll hear about soon. Ilan Sigal: I'll add only one thing that, yes, second quarter that we are gaining more customers, 3,000 this quarter and last quarter, 1,000. In a competitive market, we are enabling to grow in our subscriber base. So also impacting the ARPU. Tomer Raved: And on the question of Hot Mobile, so we submitted an offer on the process, NIS 2 billion. We submitted a revised indication of NIS 2.1 billion. We are in touch with Altice and the representative as part of the process for the past 2 months. We did update the Street today on the revised offer, and we will update the Street on any other development there. We are focusing only on the mobile unit. We believe the value to the Israeli cellular market will be very significant, especially to the networks if this consolidation happens. Yochai Benita: Thank you. Siyi. Next question is from Christina Michael from UBS. Christina Michael: Can you hear me? Yochai Benita: Yes, we can hear you. Christina Michael: Following up from the previous question, how do you see the competitive dynamic in general in the market? And if there are any other specific actions you are taking in response to the competitive dynamics and increased competition in the market? Ilan Sigal: What market? Yochai Benita: Which market are you referring? Christina Michael: The mobile market. Yochai Benita: The mobile. Okay. Tomer Raved: Yes. I'll touch and Ilan, please further elaborate. The competitive -- the Israeli market in cellular is very competitive with very low ARPU compared to the world, given the reforms that happened 10 years ago. ARPU stand around the NIS 45 to NIS 50 across the street or in euros at EUR 12 to EUR 13, much lower than Europe. So we've seen a recovery in ARPU over the past 2, 3 years, thanks to the 5G offering. We expect to continue and see this trend happening. There are 4 MNOs and 20 MVNOs, very competitive market. We believe consolidation supports a better network development. Most markets are 2- or 3-player market. This is a 24-player market. So we are glad to see the market recovering, but Israel is still behind on cellular speed, #70-ish in the world, while it's #7 on Fixed line broadband. So we believe this type of transactions will support basically the country network and evolution into 5G and 6G. Ilan Sigal: I'll just add, the 5G network is still in the baby steps, we are around 33% of the antennas nationwide are 5G. And we believe that the nation needs to be 100% very fast. So -- and also, the market is very competitive, as Tomer said, 23, 24 players and a lot of MVNOs and the pricing is very down -- is very low. So that's the market and we believe it will be still very competitive in the next few years. Yochai Benita: Okay. Thank you. So if there are no further questions at this time, just a minute, we do have another question, Sabina. Sabina Levy: First of all, congratulations on the quarter. You've mentioned previously the long-term guidance. And I just was wondering whether it takes into the consideration also potential developments in the regulatory landscape, like you've mentioned that the Ministry of Communications might decide regarding the structural separation. So I was wondering if it's in the numbers. And also, maybe you can provide us some additional color regarding the potential impact of AI implementation considering the cost base and potential savings and maybe streamlining measures in the company. Tomer Raved: Yes. Touching quickly on AI, and I promise you, you'll hear a lot more both from Nir and Ilan very soon on AI initiatives. But we play de facto 3 roles basis the infrastructure for AI. So everything that's going on with higher bandwidth speed, data center connectivity locally and globally, we are part of, given we are the incumbent. We adopted a lot of AI tools. We are ahead of the world, both in Pelephone and especially in Bezeq Fixed line. And we see cost savings and better customer service as a result. And you will also see a lot of AI solution at the customer premise. We're already offering cyber solutions, device management solution and more to come. That's on AI. You'll hear a lot more about this from us in the coming weeks. Regarding the regulatory front, we've seen a lot of activity on the regulatory front. Earlier this year, they talked about the wholesale and the removal of structural separation happening later in this year. They have been very active in the past 2 months with hearings and RFIs across both. And they set a target date to decide on structural separation structure and removal by end of this year. We are in active conversation with them, and I think the rest of the Street is as well, and we expect them to make a decision by year-end. Sabina Levy: What about? I asked about if it's reflected maybe risk-adjusted in the long term -- in your long-term guidance or aspirations. Tomer Raved: We did not -- sorry, yes, Sabina, we did not take into account any of the regulatory impacts on the long term, especially not structural separation. It's not in our guidance. Sabina Levy: So can we assume that in case there will be developments in this front in the next coming months, you will provide us more color at the annual report? Tomer Raved: Yes. We will provide more color when we have better visibility. And as you know, the 3 main impact, of course, the significant value to the customers on the service and on the price. So while putting revenues aside, there is a NIS 1.2 billion tax asset that will be used over a course of 8 to 10 years, very significant free cash flow impact as well as potential cost savings as a result of the Bezeq & yes merger. But we will provide specific numbers, hopefully, during the annual statements. Yochai Benita: Next question is from Omri Lapidot from [indiscernible]. Omri Lapidot: Yes. [indiscernible] Omri Lapidot. I want to add on the previous questions regarding the company's forecast and whether or not you are taking into account in the forecast, yes, revaluation. If I look at the EBITDA margin for the medium term, in my eyes, it seems like it didn't take it into account. It seems like the yes, revaluation added like, I don't know, NIS 400 million in adjusted EBITDA yearly. How can we think about it? Tomer Raved: I'll respond and Yochai feel free to add. We did not take into account any impact from -- yes in our initial guidance when we issued it in March. As a result of company better performance and the yes revaluation in Q2, we revised guidance and then did it again because there were 2 impacts on the yes revaluation. So both were taken into account in the revised guidance or in the second revised guidance, and that's one of the primary reasons for the revised guidance. So it's already in there, but we are not taking into account any future revaluation of yes into the guidance. I hope that makes sense. Yochai Benita: Okay. Thank you, Omri. If there are no further questions at this time, I would like to thank you all for taking the time to join us today. Should you have any follow-up questions, please feel free to contact our Investor Relations department. We look forward to speaking to you on the year-end 2025 earnings call. Thank you.

146天前Insight Analytics约5分钟阅读

WKHS 2025 Q3 财报电话会议

Operator: Greetings, and welcome to the Workhorse Group Q3 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Stan March. Please go ahead, Stan. Stan March: Kevin, thank you. Good morning to all of you, and I'd like to welcome you to Workhorse's 2025 Third Quarter Results Call. Before we begin, I'd like to note that we posted our results for the third quarter, which ended on September 30, 2025, via press release and filed the associated 10-Q with the SEC last evening after the market closed. This morning, we posted the accompanying presentation so you can find the release and the accompanying presentation in the Investor Relations section of our website. We'll be tracking along with the presentation during this call. Joining me on today's call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. And for today's agenda, you can find that on Slide 3 in the presentation. Following my brief opening remarks, I'll hand it over to Rick, who'll give you an update on our Q3 performance and business operations as well as our proposed transaction with Motiv. Bob will then walk us through the financial results for the quarter, and Rick will then follow wrapping it up and then go to questions. On today's call, you can find in our presentation, our disclaimers found on Page 4 and 5. Some of the comments that are going to be made today are forward-looking and are subject to various provisions, risks and uncertainties. And you can find that full disclaimer in our 10-Q and in today's press release. You can -- on Slide 5, you can also find references about the proposed transaction with Motiv where you can find additional information related to that proposed transaction. And with that brief introduction, I'll now turn the call over to Rick. Rick? Richard Dauch: Thanks, Stan. Hello, and thank you for joining us on the call this morning, everyone. We're excited to be here with you today to discuss our third quarter results and provide an update on our proposed strategic transaction with Motiv. Let's start with our Q3 results on Slide 6. During the quarter, we made good progress executing on our product road map, scaling sales to targeted fleets with new orders and deployments and expanding our product portfolio. We completed the sale of 15 trucks in a combination of Class 4 and 5/6 versions. These results reflect the hard work and resilience of the Workhorse team in a challenging commercial electric vehicle environment and reinforces a strong operating performance and positive customer feedback of our W56 platform in the field. Growing customer demand for our W56 step van continues to advance our position as a segment leader in the EV Class 5/6 transition. We're building reliable, safe and capable trucks, proving the performance of winning business and earning customers' trust every day. During the quarter, we also maintained our financial discipline, taking continued decisive actions to reduce both operating and overhead costs and strengthening our near-term financial position. Despite continued challenging market conditions, we continue to make meaningful progress here at Workhorse and are focused on finishing 2025 on strong footing. We are actively engaging with logistics providers and service fleets to build additional order interest through our national dealer network. We announced the availability of the Utilimaster Aeromaster body on our all-electric W56 strip chassis. This new offering expands and brings new flexibility to the W56 platform, combining the trusted durability of the industry-standard Utilimaster step van body with the benefits of Workhorse's proven electric chassis. The W56 also remains fully eligible for the California hybrid and zero-emission truck and bus voucher incentive program, or HVIP vouchers, of $85,000 per truck and higher for medium-duty Class 6 vehicles. At the same time, we maintained our ongoing financial discipline, prioritizing cash conservation and expense reduction. In the third quarter, our operating expenses decreased $1.2 million on a year-over-year basis through disciplined cost management with even more impressive results year-to-date. I'm also excited to share that we showcased our W56 step van at the FedEx Forward Service Provider Summit in Orlando, Florida in September, marking Workhorse's third year participating in the event. Our W56 step vans and service with FedEx Express and FedEx Express independent service providers have collectively logged tens of thousands of miles on daily deliveries routes nationwide and are operating at a 97% or greater uptime availability. Lastly, we, of course, announced our proposed transaction with Motiv during the third quarter. Now let's turn to Slide 7 to touch on the proposed transaction. In August, we announced a definitive agreement to combine Workhorse with Motiv Electric Trucks, bringing together 2 veteran EV innovators to create a stronger force in North America's medium-duty electric truck market. This combination positions us to accelerate growth, expand our product lineup and capture greater share in the commercial EV space. For our shareholders, it represents a chance to participate in the upside of a unified, well-capitalized company built for long-term success. In addition, we also completed 2 transactions with entities affiliated with Motiv's controlling investor, including the sale-leaseback transaction of our Union City facility for $20 million and a secured convertible note financing for $5 million. These transactions have strengthened our near-term financial position and continue to support Workhorse's operations. Looking ahead, and as part of this transaction, the combined company is expected to be able to access up to $20 million in additional debt financing post close to fund our go-forward strategic execution. The transaction is expected to close in the fourth quarter of 2025, subject to Workhorse shareholder approval and other customary closing conditions, including the debt financing commitment. With our shareholders' approval at our annual meeting tomorrow on November 12, we will be positioned to drive sustainable growth and create long-term shareholder value. And now I'll turn it over to Bob to discuss our financial results and recent steps we have taken to strengthen our near- and long-term financial position. Bob? Robert Ginnan: Thanks, Rick. Turning now to Slide 8 for the highlights from the quarter. As a reminder, our financial statements have been adjusted to reflect the March 2025, 1 to 12.5 reverse stock split. Sales, net of returns and allowances, for the 3 months ended September 30, 2025 and 2024, were $2.4 million and $2.5 million, respectively. The decrease in sales of $100,000 was primarily due to lower sales of approximately $2.3 million related to delivery of fewer trucks in 2025 compared to the same period in 2024, offset by an increase of $2.2 million related to the recognition of 7 vehicles from deferred revenue. Cost of sales for the 3 months ended September 30, 2025 and 2024, were $10.1 million and $6.6 million, respectively. The increase in cost of sales of $3.5 million was primarily a result of an increase in inventory excess and obsolescence reserve of $3.3 million. Selling, general and administrative expenses for the 3 months ended September 30, 2025 and 2024, were $7.8 million and $7.7 million, respectively. The increase in SG&A of $100,000 was primarily driven by a $3.6 million increase in consulting and legal expenses due to the proposed Motiv merger, offset by a $2.9 million decrease in employee compensation and related expenses, a decrease of $200,000 in marketing and trade show related expenses and a decrease of $300,000 in IT-related expenses. Research and development expenses for 3 months ended September 30, 2025 and 2024, were $1.1 million and $2.3 million, respectively. Decrease in R&D expense of $1.2 million was primarily driven by $300,000 decrease in employee compensation and related expenses due to a lower headcount, a $500,000 decrease in prototype part expense and a $300,000 decrease in consulting and professional services expense. During the third quarter, we took additional steps to reduce costs and conserve cash, which resulted in operating expenses that decreased by $1.2 million year-over-year compared to the same time last year. We reduced operating expenses by $17.5 million. Net interest expense for the third quarter of 2025 was $200,000 compared to $3 million for the 3 months ended September 30, 2024. Difference was primarily driven by higher financing fees related to the 2024 notes recognized in the prior year period compared to the current period. Net loss was $7.8 million compared to $25.1 million in the same period last year. I also want to point out during the third quarter, the company recognized a gain on the sale of assets of $13.8 million, primarily related to the sale leaseback of our Union City, Indiana facility. Additionally, we recognized a gain of $4.8 million related to deferred revenue upon termination of the Tropos Assembly Services Agreement. Slide 9, balance sheet highlights. Now turning to Slide 9 to discuss our balance sheet. As of September 30, 2025, the company had $38.2 million in cash and cash equivalents as well as restricted cash compared to $4.6 million in the same period last year, primarily increased due to the benefits from funding totaling approximately $25 million for Motiv's controlling investor, including a $20 million sale leaseback transaction and a $5 million secured convertible note financing, both of which were completed at the execution of the merger agreement. As a reminder, at the closing of the merger, all remaining indebtedness and other obligations to Workhorse existing senior secured lender, including all warrants currently held by that lender, will be repaid and/or canceled with the only remaining secured indebtedness of the combined companies being the $5 million secured convertible note held by Motiv's controlling investor, which may convert to equity in connection with the post-closing financing. We will continue to strengthen our financial position by generating additional purchase orders and revenue from customers as well as maintaining our financial discipline. Looking ahead, we are focused on executing on our product road map and completing our transaction with Motiv and we are confident in our ability to continue to deliver value to our shareholders. With that, let me turn it back over to Rick. Richard Dauch: Thanks, Bob. Let me take a moment to outline our near-term priorities shown on Slide 10. A top priority for Workhorse, as we've emphasized on this call, is completing the proposed transaction with Motiv. Over the past few months, both teams have been working diligently to plan for and ensure the combined company is positioned to grow and succeed. The proposed transaction remains subject to shareholder approval. In parallel, we continue to focus on strengthening our financial position and driving greater operational efficiencies, including growing purchase orders and customer demand, prioritizing cash conversion and reducing our operating costs. We are also continuing to expand and enhance our product portfolio, including finalizing our plans for the W56 140-kilowatt production launch in 2026. This new vehicle has a range of around 120 miles and has about a 10% lower acquisition price. Looking ahead, the combination with Motiv will further broaden our product lineup and accelerate our shared product road map. And we're currently developing the plans to integrate our portfolios and R&D technology to deliver even greater value and a broader portfolio of vehicles to our customers over the next 2 to 3 years. Before we wrap up, we'd like to remind you that our 2025 Annual General Meeting -- Shareholder Meeting is tomorrow on November 12. In order for Workhorse to complete the proposed transaction with Motiv and for our shareholders to participate in the potential upside of the combined companies, we need Workhorse shareholders to vote for the transaction in addition to the other 8 proposals up to vote in connection with the meeting. We look forward to our future with Motiv and remain confident in our ability to deliver meaningful value to our shareholders. We hope you share our excitement for what lies ahead as we combine our strengths to capture new opportunities and lead in the commercial EV transition. That said, this call is to discuss our earnings results for the third quarter, so we won't be taking questions on the Motiv transaction at this time. Thank you all for joining today's call. Now I'll open it up for questions. And Kevin, I'll turn it back over to you. Operator: [Operator Instructions] Our first question is coming from Ben Sommers from BTIG. Benjamin Sommers: So kind of on the W56 step van and kind of being eligible for those state-level incentives in California, kind of curious just more broader market outlook. How you're seeing state-level incentives across the U.S. kind of panning out in different states and what you think the opportunities are beyond California for the step van? Richard Dauch: Great question. So we are -- we worked with the CAR group and a couple of other people in the EV space to make sure the HVIP vouchers are competitive. Out in California, that was successful, and we saw immediate pickup in orders from the FedEx ground guys out there. And right now, we're -- but every truck we're building between now and the year has already got a purchase order and HVIP voucher tied to it. We are seeing some good movement in the state of Washington and the State of New York in terms of vouchers, and we have turned our efforts to those 2 areas, those 2 states for sure. So -- and then I'd like to say, too, is that we talked about having our truck down the last 3 years at the FedEx conference for the ground operators. We have one site in California now that's operating more than 20 W56 step vans. Once we get a truck in the hands of a ground operator and they see the reliability of our truck averaging 97%, 98% uptime, we're seeing repeat orders from multiple FedEx ground operators. Benjamin Sommers: Awesome. And then just kind of curious on costs as we ramp closer towards production of this vehicle, how should we be thinking about that trending in '26 as we get prepared for the production launch there? Richard Dauch: I'm going to ask Bob to answer that question. Robert Ginnan: Okay. So I think if you look at the costs from 2 elements, there's obviously the bill of material cost, which we continue to focus on bringing that down through engineering and supply chain. But also as we -- as the production increases, you'll see an improvement in the labor cost as we get into a regular cadence on the lines there. So we look to see improvements in both areas as we go forward. Richard Dauch: Yes, and we're starting to see -- obviously, we haven't had a lot of volume so far. And so to get the manufacturing right, we built 3 or 4 trucks now perfectly. We had no post-production touch-ups and some of that. So our guys are starting to get a handle on how to build the chassis and more importantly, the cabin body. That's a pretty complex assembly operation there. We also have de-escalators in our purchase contracts when we hit certain volumes down the road. We're far from those volumes now, but they're built into the contracts, and that will lower the bill of material costs. We know we have to move closer and closer to be almost on parity with ICE. That's going to take a couple of years, and it's going to require us to get to certain levels of volume, especially on batteries to lower the cost. Yes, one thing I'd say, too, is that once we do get trucks in the field, based on the data we're having right now, both at FedEx and Ground, we're seeing somewhere between a 55% to 65% total cost of operation reduction. No fuel costs, obviously, new trucks, very -- no spare parts and uptime, again, 98%. So we think that's a good selling point when we're out there talking to fleets. Operator: We reached the end of our question-and-answer session. I'd like to turn the floor back over to Rick for any further closing comments. Richard Dauch: Appreciate your patience with us. It's been a tough 4 years in the electric vehicle transition market. Those things we can control, we're doing our best to do that. And we think the merger with Motiv gives us even a bigger opportunity to lower the operating cost of the company, expand the product portfolio, give us a better opportunity to be successful long term, and we think it's the right thing for shareholders. We appreciate your support, and have a great day. Thank you. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today. Richard Dauch: Thanks, Kevin. Operator: Take care, everyone.

146天前Insight Analytics约5分钟阅读

NTCO3.SA 2025 Q3 财报电话会议

Operator: Good morning, ladies and gentlemen, and thank you for joining us today. Welcome to Natura's Third Quarter 2025 Earnings Call. [Operator Instructions] Joining us today are Mr. Joao Paulo Ferreira, our CEO; and Silvia Vilas Boas, our CFO. The presentation we'll be referring to during today's call is already available on our Investor Relations website. I'll now hand things over to Mr. Joao Paulo Ferreira. Mr. Ferreira, you may proceed, sir. João Paulo Brotto Ferreira: Good morning, everyone. I'd like to start today's call by acknowledging our weak performance this quarter. The results were disappointing, falling short of expectations, both in sales and profitability, even though part of the challenges we faced were deliberate and planned. The main challenges we faced this quarter were: first, G&A. The drop in revenue put pressure on our margins. And while selling expenses were down, total G&A spending stayed above last year's level, driven by the structural investments we have been making. We decided to keep these strategic investments moving forward, including the new consultant network online store as the benefits expected in 2026 are significant. The second challenge was the macroeconomic slowdown, especially in Brazil, where consumer spending was hit harder than we had anticipated. We are not satisfied with our revenue performance in the region. The adjustments we made to our portfolio weren't enough to capture emerging demand trends, largely because the Avon brand wasn't yet ready to respond. That brand could have benefited from the current scenario. And speaking of Avon, I'd like to mention the third challenge. We've continued to see revenue decline for the brand, driven by a slow pace of innovation and new product launches. In the meantime, while we are preparing for its relaunch in the first half of 2026. Finally, challenge #4, they have to do with the final impacts of Wave 2, especially in Argentina. This quarter, the main operational challenges came from Argentina as the major commercial changes affected consultants coming from the Avon network more than we had anticipated. This led to a real drop in revenue in the country made worse by the unfavorable FX movements. Mexico also saw a decline in revenue, though it continued to show steady month-over-month improvements. Finally, in Brazil, the closure of the Interlagos plant caused temporary disruptions in Avon product availability, impacting sales. Despite these challenges, we are confident we'll see progress in the coming quarters. Our business in Mexico is already showing signs of recovery, and Argentina is on track to stabilize by early 2026. In addition, we're moving ahead with structural efficiency initiatives made possible by the post Wave 2 simplifications and harmonization. As a result, we reaffirm our commitment to expanding recurring EBITDA margin in full year or fiscal year '25 versus a full fiscal year 2024, which should translate into stronger profitability as early as Q4 2025. Lastly, our corporate streamlining efforts advanced with the sale of Avon Central America and Dominican Republic and the signing of the agreement of the sale of Avon International. Starting in 2026, once the transformation cycle is complete, our focus will shift towards sustainable growth and delivering returns to our shareholders. I'll now hand things over to Ms. Silvia Vilas Boas, who will walk you through the details of our financial performance for the quarter. Silvia Vilas Boas: Thank you, JP. Good morning, everyone, and thank you for coming. Before going into the detailed financial results, I'd like to emphasize 2 essential points that JP has already mentioned. First, this quarter has disappointed and frustrated our expectations. Later on, I'll give you more details about it, why? Second, the point regarding corporate simplifications. They are extremely relevant to the company, but they do end up making the comparability of our financial statements very difficult. For that reason, we have included a pro forma in the earnings release to facilitate the analysis. In this presentation as well as in the release and the supporting Excel available in the Investor Relations website, we have already provided adjusted and comparable basis. This means that we show the numbers for 2024 and 2025 already excluding Avon International and Avon CARD. In addition, we consider the results reported by the holding company, both in 2024 as well as in the first half of 2025. Only the third quarter of this year already fully reflects the results of Natura Cosmetics after the merger of the holding on July 1. We know that these adjustments have been recurrent and make the analysis more challenging. But as I said, they are important steps in simplifying and they're close to the end. With the conclusion of Wave 2, we're only missing now the sale of Avon International in Russia. Another important point, as agreed this quarter, the release contains a new disclosure of information we presented during Natura Day. This includes the opening of the operational income statement for Brazil and Hispana in addition to other indicators that will facilitate the understanding of the business and the monitoring of the execution of strategy. After analyzing the new openings, we rely on your feedback to continue evolving. Now let's move on to Slide #5 to detail our revenue performance in Brazil. In the third quarter, Brazil, in the consolidated period, had a revenue drop of 3.7% year-over-year. When we look at the brands, Natura Brazil posted a flat revenue versus the same period last year, but it's important to note the sharp slowdown from the low double-digit growth we recorded in Q2 this year in the Natura brand. This movement mainly reflects the slowdown in consumption that affected the region from June onwards, as we have mentioned before, impacting our performance. Avon Brazil recorded a drop of 17.3% in the quarter. This result was influenced by 3 main factors: the adverse macroeconomic scenario impacting purchasing power, the absence of recent innovations in portfolio, a point we have reiterated as the brand prepares for the relaunch scheduled for the first half of 2026, which will bring a renewed portfolio aligned with the new positioning. And due to temporary operational impacts resulting from the closure of the Interlagos plant completed in October. All production was migrated to Cajamar, which impacted the availability of products. Our inventories are in the process of being rebalanced to reverse the last operational impact, which impacted the Avon brand in Brazil. The Home & Style category fell 9%, in line with Q1 '25, but below Q2 '25, which had been driven by an optimistic campaign in the opportunistic campaign in the category. Regarding the channel's performance, it's important to emphasize the reduction in the number of consultants and their productivity is concentrated in the less productive consultants who are more sensitive to credit restrictions. The most productive consultants continue to grow year-over-year. Finally, regarding the non-VD channels, both the digital channel and the retail channel continue to grow at a healthy pace, but still with low penetration in total revenue, emphasizing the role as important levers for the future growth. Moving on now to Slide #6, which details Brazil's profitability. We can see in the left column of the chart that we went from a recurring EBITDA margin of 23.1% in Q3 '24 to 16.2% in this third quarter. The decline is mainly explained by the deleveraging of G&A impacted by the market slowdown and the maintenance of strategic investments. These investments include the project of new integrated planning, which we mentioned frequently on Natura Day, very important project, which will allow from greater demand accuracy to inventory efficiency. Digitization tools to improve the journey, both for customers as well as consultants and investments in innovation, which includes the relaunch of the Avon brand, which will take place in the first half of '26, which brings us exactly to JP's point. These investments that were already underway are fundamental levers to support growth and results from 2026 on. And therefore, we made the decision not to stop these projects. It's worth mentioning that the initial setup and cost for these projects are concentrated in our main market, which is Brazil, impacting G&A. These very same projects will subsequently be implemented in Hispana at a substantially lower cost than in Brazil. In addition, we had a drop in gross margin of 300 bps year-over-year, as shown in the second column on the slide. This margin, however, remains at a healthy level, and the drop is mostly explained by the strong basis for comparison. As evidence that this gross margin is healthy, figures for the first half of 2025 in Brazil showed a gross margin at levels close to this quarter, but with an EBITDA margin around 21%, reflecting a greater expense efficiency in a period of strong revenue growth. However, we are displeased with this quarter's results, and we need to make our company simpler and more efficient. The sharp slowdown we have experienced has made it even more urgent to anticipate structural actions to reduce expenses, which will lead us to less dependency on the macro scenario and a more agile and efficient organization. Now moving on to Slide #7. Let's analyze Hispana's performance. The region posted a revenue drop of 3.9% in constant currency and 24.9% in BRL. Excluding Argentina, the drop in constant currency was 1.6%, which measures the impact we had in the region due to integration made in July. The Natura brand in the region grew 12.3% in constant currency, but showed a drop of 12.2% in BRL, greatly impacted by the adjustment of hyperinflation. In addition, Wave 2 and general slowdown in consumption in the country brought more pressure to revenue. However, when we look at the performance of Hispana, excluding Argentina, we see the Natura brand growing in high single digits in constant currency. This represents an acceleration when compared to the low digits we had presented in the second quarter of '25. This acceleration is explained by Mexico's performance, which showed sequential operational improvements each month in Q3 until revenue stabilization year-on-year in September. Other countries maintained the good performance presented in the first half of the year. Moving on to the Avon brand. Revenue fell 27.2% in constant currency and 41.9% in BRL, also impacted by hyper and Natura impacted by the integration in Argentina in July and slowdown in consumption in the country. In addition, Avon has also been pressured by the total migration of the physical magazine to hard cover to digital distribution. This, which happened in June impacted the third quarter of '25. Although to a lesser extent than Natura, Avon showed a sign of recovery in performance, excluding Argentina, reducing its decline in the quarter to 15.4% in constant currency versus 20.5% decline recorded in Q2 '25. Finally, the Home & Style category also had strong impact from integration in Argentina and continues to be under pressure by the integration in Mexico, but it's more relevant. The category recorded a drop of 35.9% in constant currency, 48.7%, BRL. The channel's decline after Wave 2, along with the trade adjustments in the integration process led to this sharp decline. Now moving on to Slide #8. In terms of profitability, Hispana presented an EBITDA margin of 4.5% in the third quarter of this year, implying a drop of 100 bps year-over-year, as shown in the chart. This performance is the result of opposing forces. The gross margin benefited from the accounting effect of hyperinflation in Argentina, which, on the other hand, significantly pressured our revenue as we detailed in the previous slide. In addition, the start of capturing efficiencies unlocked in our expenses in the region's integration process was still preliminary and not enough to offset the drop in revenue, leading to a deleveraging of SG&A. Looking specifically at G&A in this quarter, there was an impact from expenses with terminations. It is important to note that they are not included in the transformation costs as they're not related to the Wave 2 process, although they also aim at organizational efficiency for the company. Excluding this impact, general and admin expenses at Hispana would have shown a similar drop to revenue, even with part of these expenses linked to the BRL, which appreciated against Hispanic currencies during the period. Finally, it's worth noting that excluding Argentina, the EBITDA margin improved year-on-year, reflecting the recovery in revenue in Mexico and good performance of the more mature integrated countries. Moving now to Slide #9. Now we're going to look at our results in a consolidated way. We see revenue declining 3.8% in constant currency and 13.1% in BRL, reflecting the slowdown in Brazil, temporary challenges of Wave 2 in Hispana as well as the appreciation of BRL against Hispanic currencies and strong impact of hyperinflation accounting on our Argentina revenue. In terms of profitability, we presented a drop of 350 bps year-over-year on a consolidated basis or 360 bps when we look only at the Latam operation. The 10 bps difference between the 2 performances is explained by corporate expenses, which we previously called holding expenses, which decreased 27.7% year-on-year and therefore, accounted for 60 bps for the consolidated revenue versus 70 bps in Q3 '24. Looking at Latam's profitability here, once again, the G&A issue stands out, which explains all the variation in the EBITDA margin year-over-year and forces the urgency of concluding the setups of our restructuring investments and taking structural actions to unlock efficiencies throughout the organization. Now moving on to quarter's total net income on Slide #10. Our last line was once again impacted by noncash and nonrecurring accounting effects related to our discontinued operations, which are available for sale. This quarter, we recorded a loss of BRL 1.8 billion. This figure mainly reflects the impairment of BRL 2.8 billion in the book value of Avon International, excluding Russia. This loss was partially offset by a gain of BRL 1 billion due to the maintenance of Avon's trademarking and the rights in Latin America as detailed in the material fact dated September 18. It is important to note that the impairment of BRL 2.8 billion is explained by the intention to sell the operation for [ GBP 1 ] and its book value, as shown in the second quarter was BRL 2.8 billion. Regarding net income from continued operations, we posted a loss of BRL 119 million in the third quarter. This represents a worsening when compared to the profit of BRL 301 million recorded in the same period last year. This change is the result of revenues and profitability under pressure. As I have already commented, a worsening of the financial results explained by the unfavorable effect of the exchange rate hedge of our debts in dollars. However, these effects were partially offset by lower tax expenses given the reduction of our EBT in the quarter. In Slide 11, we look at our firm cash flow the 9 months of 2025, it totaled BRL 301 million, which represents a reduction of BRL 81 million when compared to the same period of the previous year. This reduction was driven by 2 main factors. First, operational worsening of results, which, however, was almost entirely offset by the tax line. And second, the deterioration of our working capital, which worsened by BRL 37 million. Analyzing the working capital dynamics, we see a significant improvement in receivables, reflecting the tighter credit we have implemented. This, however, is offset by the worsening in the line of payments and other assets and liabilities. Finally, it's worth noting that our inventory line worsened by BRL 65 million year-on-year, explained by revenue that was lower than expected in this third quarter. Regarding free cash flow, the year-on-year worsening was BRL 172 million. This difference is explained by the BRL 81 million reduction in the firm's cash flow. And the remainder is mostly attributed to currency effects on our cash position. Moving on to Slide 12. My last slide, the one on indebtedness. In this quarter, our net debt was practically stable, BRL 4 billion which reflects the firm's cash flow -- neutral cash flow. In the quarter, the payment of debt interest around BRL 90 million. However, our leverage goes from 2.18x in the second quarter of '25 to 2.53x this quarter. Why is this happening mainly due to the deterioration of EBITDA reported in this quarter in the year-on-year comparison. Finally, it's worth remembering that EBITDA for the fourth quarter of 2024, which is used in the calculation basis for EBITDA for the last 12 months, had a negative impact of BRL 564 million from these strategic projects previously led by the holding, mainly related to Chapter 11 of API. So excluding this effect, the net debt EBITDA metric would be 1.87x in the third quarter of 2025. This is our adjusted leverage number. By the end of the year, we expect to end the 12-month period within our optimal capital structure position between [ 1 and 1.0x ] leverage. Before giving the floor back to JP, I want to highlight that the continued recovery in Mexico, the gradual improvement in Argentina's performance and the capture of benefits from the tactical reductions that we implemented in the third quarter will be the factors that will make it possible to an improvement in margin already in the fourth quarter. And finally, the expansion of the recurring EBITDA margin for the whole of '25 versus fiscal year '24, which reiterates our commitment, which we made to the market at the beginning of the year. I give the floor to JP and then I'll turn -- come back for the questions-and-answer session. João Paulo Brotto Ferreira: Thank you, Silvia. Before we move on to the Q&A session. I'd like to wrap up the presentation with my closing remarks. As to 2025, I'd like to echo Silvia's comments and reaffirm the expansion of our recurring EBITDA margin for the year. I'd also like to reiterate that this was the last year we reported transformation costs and adjusted EBITDA. We remain confident that we are well positioned to deliver on the ambitions outlined at Natura Day starting next year. Mainly strengthening and expanding our leadership in Brazil and Argentina, driven by the modernization of our direct selling model, strengthening our business in Mexico, accelerating our growth in D2C channels and in the hair care category, reigniting the Avon brand, implementing a more agile business model designed to capture the new strategic opportunities I just mentioned. And finally, realizing the returns from the structural investments we discussed today driven -- or driving gains in efficiency, profitability and cash conversion. That concludes my remarks. Thank you very much. We will now move on to the Q&A session. We'll now begin the Q&A session. Operator: [Operator Instructions] Danni Eiger, sell side analyst from XP, asks the first question. Danniela Eiger: I'm just going to ask this one. We see a very challenging macro context, especially in Brazil, but you also mentioned Argentina. And we see other players going through similar situations, that it seems there's not a lot of room to handle all of that. And it looks like that you've taken the initiative to move in terms of expenses efficiency a bit more tactical, but evolving into structural adjustments. Actually, I'd like to explore what else can be done? So first, in terms of structural initiatives, if you can provide some order of magnitude in the key areas would be nice. And when the structural project will be concluded. And on the other hand, what else can be done? I don't remember if it who -- which of the 2 of you mentioned the adjustment on the offers that was not enough. JP, I think you were the one who mentioned. Are you looking at other possible adjustments in portfolio or pricing or somehow in your product offer for a more challenging reality for a longer challenging time? I think Avon is being rebuilt sort of say, but in Natura itself, what are you still looking in terms of opportunities? And also in terms of credit, you talk about credit restriction, it makes sense given the default contact at more elevated levels. Maybe you could use Emana Pay, maybe a bit -- overall the leaders kind of fostering Emana Pay. And if you have some kind of flexibility of using that as a driver or others that I haven't thought about what's in your hand to deal with a more challenging scenario besides expenses. João Paulo Brotto Ferreira: Let me start by addressing your question about the revenue consumption and then Silvia will field the question about expenses adjustments. Well, we do not foresee any major changes in consumption. We don't detect any trends that will shift the current scenario. Well, having said that, there's always something we can do the first lever credit. We used to be more restrictive as far as credit goes. That's why delinquency is under control, that will impact the work that our consultants do. But in reality, credits, payments and collection we have in our pay system are top quality. So once you migrate the portfolio to the pay gradually, we'll be able to provide credit more efficiently. That's why we're speeding up the migration. The portfolio to the pay, which in turn, will improve the efficiency of our consultants, and there's more. There are regional opportunities. The consumption behavior we have in the Northeast and in the state of Rio Grande do Sul, and we are monitoring that management at the micro level, at the regional level to determine what's more interesting in each one of these markets and then adjusting the portfolio. And the categories that are more profitable at this time of the year, and we are focusing on those segments. Well, having said that, Avon could be a very important lever for this -- at this point in time, but the portfolio is not appropriate unfortunately. In summary, yes, we can make adjustments to try to boost capture at this point in time, especially in Brazil, as well as in Argentina. Over to you now, Silvia. Silvia Vilas Boas: Danni, thank you for the question. Let me address G&A that was the problem we had in profitability. I'd like to give you more color. As to what we've done so far and what we will still do. Well, this G&A level is not going to be the standard level for the company. This is key. Well, having said that, the book value of G&A dropped quarter-on-quarter. As a percentage of the revenue, we don't see that progress. The slowdown in Brazil was above what we expected. Here's what we started to do when we detected that slowdown. We reviewed our portfolio to shutdown projects that would start this year, we froze all vacancies. We cut on discretionary expenses but that was not enough. That's why we are taking structural measures that are relevant to simplify the organization even further. These measures will bring benefits as of 2026. When we look at G&A in Brazil, we see important impact on projects. As I said and JP said, we decided not to stop. These are projects that had already been going on and they are very important to enable future growth and future returns as of 2026 and they still impact G&A. One of them is integrated planning. We've talked about this project on our Investors Day. It's a complete review that will bring benefits. Efficiency gains in inventory, a very important project that is supposed to -- that we expect to conclude later this year. Other projects related to the digitalization of the consultants journey and the customer's journey, it's also a very important project because the consultant digitalization will allow us to promote direct sales, the non-VD channels and finally, innovation. Innovation impacted G&A this quarter. These are important investments especially when we consider the new Avon portfolio. The kickoff will take place in the first half of 2026. Well, in Minas Gerais, our G&A level has been high. We've had that nominal improvement when compared to Q3 and Q2. We expect to capture additional benefits based on the technical measures that were implemented in Q4 and that urgency to make those structural changes so that we can be prepared for the market. Danniela Eiger: Let me just ask you a follow-up as far as pricing. Do you consider reviewing prices because of those giftable category? There's a tough competition for pricing, not only comparing cosmetics and cosmetics, but maybe jewelry, chocolates, now considering about the seasonality, is there room to maybe make some price adjustments? João Paulo Brotto Ferreira: We always look at the price dynamic comparing the market overall competition. As you said, competition is not always in the same category, but we try to make adjustments and we will make some adjustments, but they are marginal ones, even though they're absolutely relevant. Operator: Our question comes from Luiz Guanais from BTG. Luiz Guanais: It's Luiz, here. I think 2 questions on my side segueing piggybacking on the previous answer, JP, if you could further explore the top down scenario in the market in different segments where Natura does business. How do you see the trend for the end of the year and early next year, if there's any sign, even if it's a small sign for some inflection in categories, consumer categories? And the second question also segueing to Danni's question is how much room we have for price forwarding or -- thinking about next year, if we could expect some room for price increase for the categories that you do business in? João Paulo Brotto Ferreira: Well, let me address the market. The market has been slowing down throughout the year, and it's been growing a little lower inflation. The market used to be growing well above inflation rates. And basically, the main driver is the price. Volumes are flat, slightly negative in the beauty category, the more discretionary categories. These are important categories for us. We haven't seen any major inflection signs. I think the slowdown has been halted. That's the impression we get. But these categories are very elastic to available income and prices. So we have to keep on monitoring what will happen to available income. The government is planning to boost income especially for next year and that -- if that happens, that will be helpful. We'll have to wait and see. We've always tried to adjust prices to work on our margins. And we don't see any problems in doing that, especially when you have a leading brand like we do. We have to determine what the price adjustments are not only list prices, but also through innovation. Our pipeline is very strong for next year, a very innovative one for that matter. So I'm confident we'll be able to implement habits to recover margins through prices as well. Operator: The next question comes from Ruben Couto from Santander. Ruben Couto: Can you elaborate on your expectations on your consultants network. I think there's the journey effect of those less productive consultants in Hispana, is at a different stage in Wave 2? What can you expect from your consultants base, not only at year's end, but also for next year? Are you trying to increase the number of consultants maybe by benefiting from the macro situation in Brazil, the macroeconomics, but do you remain focused on productivity? There's no room for boosting the number of consultants to offset that slowdown. João Paulo Brotto Ferreira: Yes, there is room for growth in the number of consultants. The number was indeed affected by the churn of small consultants, which was also affected by credit restrictions. We see a lot of room to restructure our number of consultants in Hispana as well as Brazil. This is one of the growth vectors for the coming years, for sure. Operator: Our next question is from Rodrigo Gastim, analyst for Itaú BBA. Rodrigo Gastim: Major question that remain for me was what, in your opinion, was this diagnostics for a gross margin in Brazil. JP made a few comments in the beginning, but I would like to explore. We see the macro slowed down, but the growth of the quarter was a bit below the market growth. You mentioned it yourself that you were displeased with the results JP. Question is, if you could go back in time 3 months, would there have been something you could have done differently in terms of revenue. How much in terms of gross margin? I would like explore and understand that a bit more. But now on the micro side, the initiatives for revenue and gross margin were this combo fall short on the third quarter? And the second question in line with the first one. When you look at Brazil margin, the year-over-year drop when you look at a more stable operation in top line in terms of -- with a more stabilized macro condition. What is the ambition in terms of profitability for Brazil, looking at EBITDA margin? Those are the 2 questions. João Paulo Brotto Ferreira: You know we want to defend our leadership and even expand our market share. Year-to-date, the Natura brand has been performing well despite being under our expectations even in Q3 but we keep on working to get to that goal. We won't be able to expand share this year for the Avon brand. In the short term, the levers I mentioned before, could have been moved even more substantially to bring in even more revenue, mostly credit we've been speeding up that migration to pay, which will give us more credit alternatives. If we were to -- if we had moved more quickly, we'd be able to adjust the activity in the channel. And assortment by region, as I said, they have different effects . But looking back I think we could have done little bit better. Silvia will address profitability. Silvia Vilas Boas: Rodrigo, thank you for your question. Let me start with gross margins in Brazil. Gross margin was down when compared to last year. Q3 2024 was very strong, but the gross margin was healthy for Brazil despite this drop when compared to last year. What do I mean? It's healthy. When you look at the first half of the year, our gross margins were at the same level and profitability was around 21% in Brazil. That margin can yield good profitability for Brazil. Looking ahead as far as profitability goes, this is what we said during Investors Day. Profitability has always been strong in Brazil, and we are going to keep delivering on those track record. There are no reasons for the contrary. When we look at 2026, despite all the efficiencies of the structural transitions, you'll be completing the projects this year will allow us to have additional gains in that sense. Rodrigo Gastim: That was very clear, Silvia. Let me just double check on it. Let me make sure I understand it. Margins for Brazil last year, you have a strong comparable basis. If you could explain why? What pushed that margin up last year when compared to Q3 and revenue was used for operational leverage. What would be a reasonable level for Brazil, just to make sure I understand that right? Silvia Vilas Boas: Rodrigo, when we look at Q3 last year, the impact was very favorable because of FX movements in a business that had been growing extensively in categories that had higher contribution margins. Operator: Vinicius Strano from UBS asks the next question. Vinicius Strano: I have 2 questions. Let me focus on to Natura Brazil. What are the categories that are impacted the most? To better understand what the mix importance is down the road. Looking at Avon now, how are you going to invest in to revitalize the brand? What type of repositioning is? What are the main KPIs are expected results or any expected deliveries, that would lead you to discontinue the brand in the long run. And the last question, it's about Avon International. What's the visibility we have in terms of cash evolution? Do you expect closing it for early next year with no need for additional cash inflows? João Paulo Brotto Ferreira: The market has been shrinking basically in all its categories, mildly, slightly in the beauty categories. So makeup, facial products and perfumes, it's not a big difference, but daily use segments and beauty segment have been shrinking considering that beauty slightly a bit higher contraction and our business has a bit more items of beauty rather than daily use. In terms of Avon, I can't reveal all the details of the relaunch of Avon, but I can confirm there's a lot of room in the market where this brand really fits in a very well-defined audience. But to that end, the brand has to be repositioned and the portfolio has to be redesigned. I unfortunately cannot share any more details. But of course, we expect to start growing again. The profitability has improved significantly after integration. So the Avon brand has positive contribution margin in all of the reports after Wave 2. So we want to go back to growing even more profitably. If that does not happen, we'll assess possible scenarios at the right time. Okay. So Silvia, Avon International? Silvia Vilas Boas: Vinicius, Avon International, the plan moves forward as planned. The expectation is to conclude the sale in the first quarter of '26. Now regarding the cash situation, the Avon International team is executing the plan and capturing benefits from the restructuring movements of the first quarter. So there's no expectation of additional cash inflow for Avon International. Operator: Our next question is from João Pedro, Citibank analyst. João, I have sent you a comment so that you can open your microphone. Our next question comes from [ Luiz Guanais ], Goldman Sachs analyst. Irma Sgarz: I have 2 more quick questions. Based on the comments of the release, it looks like you see room for greater growth in Mexico. Obviously, there's a whole issue on recovery after Wave 2. But in terms of market share, do you see that maybe there, there's greater room than in other markets. If you could go into detail a bit more, which categories and how you intend to grab this market share in Mexico and especially? And if you could just explain a bit more what you're thinking in terms of innovation, which was a topic that you highlighted significantly in Natura Day, June, July, I guess. If you could speak to how you are protecting this area, shielding this area during this moment where you're seeking greater efficiencies throughout the organization as a whole. João Paulo Brotto Ferreira: Well, yes, it's true. Mexico is the geography in which we have the largest market share upside because we are the most under-indexed when compared to other countries. There's a very direct and simple driver that starts now, and that's the Natura penetration on the inherited direct sales channel from Avon, a very large channel compared to what we had. And now we have direct access with the Natura brand. So the brand can now go to many more households. That can be translated into an important productivity gain. And on top of that, there is investment to make the brand even more known in that region, just like it is in other countries. And once there's more awareness, we can invest in the brand, and that's a virtuous cycle. And finally, direct sales is not that important in the country. That's why we are expanding our online as well as the store chain using franchises even. So there's a lot of room for growth in the coming years. As to innovation, mostly products that can be innovation, can be commercialization or digitalization, but I would like to focus on product innovation. We have analyzed our pipeline for launches in the coming 3 years. It's been very well defined for '26 and '27, we're very positive about these products, and there's room for some minor changes in 2028 portfolio. And we reviewed the entire innovation pipeline, focusing on those items that can bring in more revenue. And we want to make sure that these high-return launches receive all the necessary resources so that they can perform well. Irma Sgarz: So it's only fair to conclude that you are focused on fewer SKUs and rather focusing on those that can generate more impact, right? So you're focusing on those products? João Paulo Brotto Ferreira: Yes, that's right. Yes, you are correct. We're focusing on high-return launches and reducing the total number of launches. Operator: Alexandre Namioka from Morgan Stanley asks the next question. Alexandre Namioka: Let me just follow up on Avon. The one to the last slide you mentioned the resumption of the Avon brand as of 2026. Back on the Investors Day, I had the impression you were not that confident about this new relaunch of the brand. What makes you more confident now? Do you believe that these structural investments will be enough? Or do you have to invest in marketing even more maybe to reignite that brand as of next year? João Paulo Brotto Ferreira: Alexandre, we have a team working on this launch and in the weekly reviews we have for this project, I see greater and greater enthusiasm. The work that's being done is innovative and even refreshing to say. It is a highly promising path, and I'm stoked. It's fair to say that we have not been able, have not managed to do this up until now. The -- so this confidence does not come from extrapolating concrete results. It's fair for us to wait for this to come into reality, but I am very enthusiastic about it. The necessary investments are the regular business investments, but allocated in a completely different way they are today. So the necessary resources are not excessive. They're in line with the size of the business. But in our opinion, they'll be much more efficient and much more productive. In this case, different than in other topics, we'll have to wait and see if our enthusiasm will come to fruition. Operator: Our next question is João Pedro, Citi analyst. Joao Pedro Soares: Can you hear me now? João Paulo Brotto Ferreira: Yes, loud and clear. Joao Pedro Soares: I do apologize for the tech issue. JP, the point is when I look at the company's top line in Brazil, it looks -- it doesn't look mismatched or disaligned with the Investor Day proposal back to Alexandre's question. The Natura brand apparently gaining market share and Avon is truly reflecting our investments. But when we look below these lines, we see a misalignment or seemingly disalignment between costs and expenses. I'd like to explore and exploit a bit more to understand when you are back to investing in the Avon brand, this will suffer a penalty. There should be some increase in the R&D expenses. There's a phasing seasonality in expenses, which is somewhat challenging to understand. So how do you see this better alignment of the cost and expense structure to reflect the strategy that you yourselves have designed to focus more on the Natura brand. Is that point clear, I hope. And the cash conversion for next year, whether EBITDA or some other operating metric for us to understand the sustainable level of cash conversion for the Latam operation. Silvia Vilas Boas: João, thank you for your question. And you're right, our income state is not balanced due to that G&A impact. As I said, it has to do with different drivers, be it them from Wave 2 or the fact that we are concluding the project this year that will only yield results next year or the deleveraging. I'm certain that G&A level will be significantly lower next year than the one we had this year. They may come from the capture of the results of the projects or the benefits of this organizational simplification. G&A is misaligned, and we expect it will go back to the right level as of next year. On top of that, in profitability, there are some opportunities to be captured in selling coming from the combination of Mexico and Argentina businesses as well as from other countries. Marketing, as you said, we're not considering investing more in marketing than what the business can absorb. JP mentioned or talked about Avon specifically. Investments will be gradual once we see progress in those plans implemented in 2026. Profitability, of course, we want to expand profitability in 2026 when compared to 2025, just like we've done in the past 3 years. On to cash conversion. On the Investors Day, I showed you that we had above 50% cash conversion in 2024. Historically, before those acquisitions, the company had above 60%. With the end of that transformation cycle and the simplification cycle, we're going back to having a company that is very similar to the company we had before the acquisitions. That is to say we expect to go back to the same cash conversion level we had before. Operator: This concludes the Q&A session. Natura's third quarter 2025 earnings call is now concluded. The Investor Relations team remains available to address any additional questions. Thank you. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

146天前Insight Analytics约5分钟阅读

SBS.DE 2025 Q3 财报电话会议

Jan Keppeler: Thank you, Sandra, and welcome, everyone, to our 9 months 2025 financial results conference call. With me today are, as always, Marcus Wolfinger, CEO of Stratec as well as our new CFO, Tanja Bucherl. Be aware that this conference is being webcast live, and you can download this presentation either from the webcast or from our website. And of course, following the presentation, we will have a question-and-answer session as usual. Finally, please allow me to draw your attention to the safe harbor statement, which we have on Page 3 of that presentation. And with this, it's now my pleasure to hand over to Marcus. Marcus Wolfinger: Yes. Thanks, Jan. Good morning in the United States, and good afternoon in Europe. Before we start, ladies and gentlemen, I'm truly excited to welcome Tanja Bucherl, our new CFO. From minute 1 on, it was clear that she brings not only a super strong financial background, but also the energy and team spirit that defines who we are. With her expertise, she will play a key role in future strengthening our financial stability and setting the course for future growth. We are thrilled to have her on board. Welcome, Tanja. A big thank you goes out to Oliver Albrecht, our Interim CFO until last week, who very professionally bridged the gap until Tanja joins the senior management team. So with no further ado, let's dive into the agenda. I'll try to walk you through the first 9 months at a glance. Then Tanja will give you the financial review and some further financial details, followed by the outlook and focus and the two of us then will try to answer your questions thereafter. We had a positive sales growth despite supply chain interruptions, which already kicked in, in Q3, not material, but already very visible. What we definitely see is a stabilization in the market. Like during the past two or three crisis, we had, say, the dot-com crisis after -- financial crisis and after that COVID, certainly, only a few months after this kind of hits we took in this industry, it was very visible that the end of the crisis is in sight. In this very case, I would like to remind you that after COVID, we had the supply crisis and then certainly geopolitics and war and the tail end of COVID. So as a matter of fact, I think it's a well-accepted fact that this crisis took longer. If we are looking into those signals between the lines sent by end customer by our customers, I think we really dipped out at this moment in time, and I think the worst is over. I only returned back from the United States, where we met key customers. And I already mentioned that a couple of times that particularly after Q4 last year, they started to grow again. And please allow me to remind you that in our industry, us as an enabler. We build infrastructure from the perspective of our customer. This is CapEx. They place the instruments. They use the consumables as soon as they, let's say, bring new tests on instruments, they can actually grow with the fleet, they already placed years and months ago, whereas we are coming at the very tail end of things, which means only if the market grows to the extent that our customers are investing into their own growth, into their own future, growth for Stratec comes in. And I think this is actually the inflection point where this is coming back. So we see that the testing volume stabilizes. It was already very stable. And if you look into the statements made by the quarter reports of our customers, you definitely see that they are very positive in terms of testing volume despite geopolitics. And some of them, particularly in immunoassay and some other areas like in complex sample prep, the growth already came back, but it actually could not yet offset the declined volume after COVID-19 with molecular tests where the saturation took place during COVID-19. And after that, everybody took advantage of those instruments, which were launched and placed during COVID-19 and haven't been forced to buy new ones. We see that the discussion started into the investment of new platforms, into keeping those platforms young. But on the other side, even for those instruments, which are, in the meantime, worn down after COVID-19 and the years thereafter, that our customers are openly starting to discuss that even those instruments will have to be replaced. So I think we are really through to growth. We had a fairly good margin development. However, the margin development held back by the product mix. So at this moment in time, a little bit unfavorable. Our products with high gross margin are still weaker. Those ones with the weaker gross margin are stronger, as always [indiscernible]. And then certainly, particularly towards the year end, we have a number of development activities, which will be accounted, which will then drive the margin. That's factored in -- into our guidance and into our financial guidance, and I'll touch base on that. On the other side, I think like everyone, the headwinds we experienced in H1 got a little bit better, but are still material. All that is leading to the margin as is. We have confirmed our margin guidance, but I think it's important to again reiterate that as last year, 2024, we could make the statement at this point that we will probably end up at the upper edge of the guidance given. And actually last year, we even exceeded this. I think this year has to be understood that this is closer to the lower end of the guidance. We made material progress in the development of partnerships. Actually, we got a new customer in with finalizing development work, which was actually done mostly in-house and the transfer is ongoing. So we got a new partner. We see a significant upturn in development activities and in talks. Still highly fragmented. I think it's unrealistic to expect that -- such development work where the partner commits from the very get-go to a $40 million development investment and a $200 million downstream procurement commitment. I think this is some limitations at this point. Things are getting more fragmented. However, our business model fits that very well. And we definitely see that the demand not only in system development goes up, this affects product life cycle management, which is very margin heavy and certainly, instrumentation picks up as well. I think it is worth mentioning that in the budget round, we are finalizing these days, we see a development resource allocation of 105% across the group. And I think this nicely mimics what's going on. I think demand for development activities coming back and development activities is the leading indicator for downstream manufacturing activities, and this is where we make the money. So as already mentioned, lower end of 2025 margin guidance confirmed despite a lower sales outlook. I think it's a good signal that we had these issues with the magnet. I don't want to go too deep into details. We have almost sorted out the supply issue. So we just need to catch up. We'll certainly not catch up entirely by the end of the year, but I think we are showing good trajectories with the measures established. Talking about efficiencies and measures established, I think the fact that we had to slightly cut the top end of our top line guidance and still can maintain margin. I think this shows the efficiency measures are really tangible, are really showing efficiency. And I think this is a good point to start from growth here again. And I think we'll talk about growth as soon as we show our guidance for 2026, which will not happen here. That only happens when we talk about full year's results. So that gets me to the point where I would like to hand over to Tanja. Tanja Bucherl: Thank you very much, Marcus. Good day, everyone. Also from my side, a warm welcome. My name is Tanja Bucherl. As you have heard, as of November 1, I joined Stratec as the new Group CFO. And I can tell you already after my first week that this is a company with a really great potential and a remarkable team spirit. So I'm really looking forward to actively shaping our continued development and supporting the next steps on our path of a sustainable growth. But with that, let me now take you through our financial performance for the first 9 months of 2025. As you can see on the chart, the sales increased by 2.5% at a constant exchange rate. It's reaching to EUR 175.6 million versus EUR 173 million in the prior year period. As you also know, we had a very positive momentum in the first half year. The sales in the third quarter declined by 3.4% at a constant exchange rate. It was mainly impacted by the already mentioned supply chain disruptions as well as, let's call it, a softer momentum in the Service parts and Consumable business. But more to that later on in my presentation. Let's have a look to the adjusted EBIT margin. So for the first 9 months, we stand at 7.3% versus the 8.8% in the prior year. Also, as a consequence and driven by the temporarily increased tax rate in the third quarter and despite an improved financial result, our adjusted net income for the first 9 months decreased by 15.8% year-over-year to the EUR 7.1 million that you can see also on that chart. This leads also to a corresponding adjusted earnings per share of EUR 0.58. But maybe let me take also a note here regarding the outlook. So we expect a significantly improved earnings dynamic in the fourth quarter. And given the implied regional mix, a notable better tax rate in the final quarter of the year 2025. And as a result, the full year tax rate should be significantly below the 26.5% that we showed in our report for the first 9 months. Coming now to the adjustments with a closer look in our adjusted EBIT and adjusted net profit. There is not too much to say on that slide because nothing unusual in the adjustments for the first 9 months happened. For the period, we adjusted EUR 2.3 million in the PPA amortization as well as EUR 1.7 million in other adjustments. They are mainly attributable to the so-called one-off, and its advisory expenses that we have already recognized in the first half year of 2025. Therefore, we are going straight to the next page, the sales. We will have now a bit more deep dive on our sales development. In the first 9 months, the sales increased by 2.5% year-over-year at a constant currency to the already mentioned EUR 175.6 million. This was mainly driven by a double-digit increase in the development and in the service sales. And thanks to the ongoing high development activities and large numbers of active customer projects we are having. The system sales was more or less flat year-over-year. The ramp-up curves of the newly launched systems continued to be flatter than actually expected. Already mentioned supply chain disruptions, they impacted us negatively already in Q3, causing especially some delivery shortfalls in the immunoassay franchise, and this was hitting us actually a lot in the Q3, but we are looking for coming back in the next quarters or in the Q1 next year 2026. In Molecular Systems, we observed a promising and actually ongoing stabilization in customer orders following demand disruptions that the industry faced after the post pandemic. The service parts and consumables, last but not least, for the 9 months of 2025, they were slightly down year-over-year as volatile global trade restrictions, as you all know, led to some logistics optimizations at our customers. And therefore, we actually have seen order volatility, especially in Q3 2025. Coming from the sales now to the earnings. Closer look now to the adjusted EBIT and our EBIT margin on that slide. you see that the adjusted EBIT margin declined by 150 basis points year-over-year to 7.3%. I told you already, this is mainly due to the decrease in the gross margin from 27.4% last year to 25.8% in the first 9 months. Yes, the decline results from the still, let me call it, less unfavorable product mix in the System business, and a reduced share of our high-margin service parts and consumable sales in Q3 as well for sure also the unfavorable FX rate environment that we are in compared to last year. However, a good sign also here, the progress was made in the functional cost areas. So we have done, we have started early our homework. So we are confirming the strict cost discipline and also initiated efficiency measures to have the countermeasures in place for all of these negative environments that we are facing currently. Coming now to the cash flow and our net debt development. So the operating cash flow remained negative for the first 9 months, mainly due to high tax cash out that we have recognized in the first half year and as well reduced trade payables compared to last year. However, the operating cash flow improved in Q3 and amounted to positive EUR 4.4 million. As of September 30, also the investment ratio continues to be slightly below our initial budget. And for the full year, we expect a total investment in tangible and intangible assets to remain slightly below the predicted range of 8% to 10% of sales. Our leverage, you see as well here on that chart, means the ratio of net debt at the EBITDA LTM is currently at 2.4, up from 1.9 at the end of the fiscal year 2024, but it is still on a very solid level. Last but not least, I would like to highlight the successful closing of a EUR 125 million syndicated loan during the third quarter. This facility replaces the bridge financing related to the Natech Plastics acquisition back in 2023. And I'm really, really happy with that move because with that transaction, we were able to further optimize our financing structure. And at the same time, it is providing us the sufficient flexibility to support our future development. And therefore, I really would like to take the opportunity to thank all of the Stratec colleagues that were involved in that process and especially also my predecessor, Oliver Albrecht. This brings us also to the end of my part of the presentation. For the full year outlook 2025, I will hand over back to my colleague, Marc. Marcus Wolfinger: Thank you. Financial guidance, we already touched base several times already during the presentation. So as mentioned, we confirm to go flat top line. So we are expecting approximately to match previous year's top line figures on a constant currency basis. Adjusted EBIT margin, we have forecasted at the beginning of the year financial guidance between 10% and 12% after 13% last year. We confirm that we will match the guidance, but clearly mentioned that we'll most likely end up towards the lower end of this guidance. In order to achieve that, we are certainly tracking a number of KPIs very closely, as Tanja already mentioned. So there is a high earnings contribution of high-margin development and service sales expected in the fourth quarter in order to achieve it and certainly better scaling effects by the utilization under the System business and upcoming supply chain interruptions is really that we are keeping a very close monitor on that. Again, as Tanja, already mentioned, we will most likely end up a little bit south of the investments intangible and intangible assets, so even better than expected, which was already good after last year's 7.1% most likely end up like in between the 7.1% and the 8%, so better than expected. Let me try to walk you through our activities over, let's say, the next 3 quarters and give you an outlook. So as already mentioned, we are maintaining cost discipline. I think we found the ideal balance over the past 2.5, 3 years to, on the one hand side, make sure that everybody understands that we are really looking into the details and are trying to be super disciplined, but still not saving costs for the sake of saving costs, but still being very potential oriented, invest where investment makes sense and still be disciplined. And I think that's the right thing to do. We didn't oversave. We see a lot of companies who oversave and now are really struggling. We didn't do that. Let me remind you that just one example, looking into development activities, it doesn't make too much sense to cut into activities, which will lead to growth and earnings in 2, 3, 4 years from now, particularly considering that we have existing agreements with our customers. So we want to make sure that we are delivering on milestones. So we continued a nice investment policy into future, into our colleagues, into the education and training of our colleagues. So we are very proud that we didn't only try hardly to find this very narrow balance. I think we managed that fairly well. Then we want to execute on the deal pipeline. That was actually an area where we focused a lot over the past 6 months. A lot of things are ongoing. We mentioned that from a couple of times though. From here and then, we did new feasibility work. We brought a couple of new things on board, which a couple of them will replace our own instruments in -- after the development, like just as an example, we do the LIAISON XL 2.0 for DiaSorin, where we do the predecessor. We do the successor instrument for other instruments we have in the field. So we are very proud that our customers are coming back. And on the other hand side, we really managed to bring new customers or new programs within existing customers on board. So this is not just saving legacy. This is actually investing into growth and the likelihood that growth returns is getting closer and closer. And again, allow me to remind you that during the discussions at the tail end of COVID-19, we were very keen on the fact that during COVID-19 and right after, we launched a number of new platforms, and we thought that we could offset the dip. I think it was everyone very clear that particularly the molecular market will dip after COVID-19. And we said we can most likely offset this dip with the three instruments which were launched during COVID-19 or thereafter. Unfortunately, the growth rate and the ramp-up curve is and used to be slightly flatter than expected. We can report that one of those instruments is starting to show nice traction, and we are expecting the same thing to happen with the other two instruments. Then certainly, we continue to grow our footprint in selected markets like in areas where we believe that we find this, again, narrow balance between not doing the Spearhead, Spearhead Technology, but being the second one. So when markets are starting to get more mature, like in high-sensitivity immunoassays, where we were together with our partners, the first one here where we have nice development programs ongoing. Same applies for advanced imaging and cell & gene therapy where we have started to try to build our footprint as well. Then certainly, we want to manage our well-filled M&A pipeline, as always. And allow me to remind you, this is very binary. We continue to look into opportunities. At this moment in time, we have a handful of opportunities, nothing super concrete. It's the full spread. We are typically looking into technologies. We are looking into markets, and we are looking into geographies. Again, it has to be understood that probably the next decade in this industry will be dominated by local-for-local. So we'll definitely have to do more in the United States. We'll definitely have to do more in China and continue to have high investment in activities in Europe. Local-for-local is probably the thing in order to overcome geopolitics and other activities, which are limiting abilities to do business with goods across the continent these days. Then I already mentioned the localization, very important, certainly cash flow in order to make sure that we can do investments. We want to continue to improve our cash flow dynamics. Here, we already achieved good results over the last quarters and over the last years. However, there is still room for improvement and getting closer from a cash flow perspective, more closer to the earnings situation. I think that's the actual goal here. And definitely, we have to put a strong focus on inventory management for you who continue to have these discussions with us at this moment in time, still our inventory levels is too high. We still have a number of products where the products are very young. We have high inventories, low run rates. So -- although we nicely work down inventory levels already in 2025, we continue to sit on an elevated level of inventories. For those products which have high turnover rates, obviously, the inventory levels are highly optimized. So without a solid recovery of the market in those areas where we are really sitting on a high inventory level, it will definitely continue to be a challenge to materially reduce the inventory levels. But if we think about where we used to be in the past and offset that by last time buys we had to do on the procurement side, I think there is still a room of EUR 20 million to EUR 30 million on inventory level, which could be reduced over the next couple of years, and that will certainly lead to the equivalent cash release. So this gets me to the end of the focus. And now I would like to hand back the word to Sandra, who will explain us how to do Q&A. Thank you so far. Operator: [Operator Instructions]. Our first question comes from Jan Koch from Deutsche Bank. Jan Koch: I would like to take them one by one. The first one is on your guidance for 2025. Is there any risk that development sales that you plan to recognize in Q4 will only be booked in Q1 2026? Marcus Wolfinger: Yes, thank you for the question. As always, this is forward-looking. So there is always a certain risk associated, but I would really see this as minor. So obviously, we know that in this tight situation that we have to monitor things very closely and that we are in continuous communication, not only with the project -- with the internal project teams and the internal project management, but they certainly keep communication up with their counterparts within the customers if approvals are required. So we are definitely very confident that this is not going to get an issue. However, this is forward-looking. Things can happen, although we don't expect. And again, allow me to remind you that certainly things continue to be extremely back-end loaded. So I think you see what has to be achieved top line and bottom line-wise in the third quarter. We have already asked the teams, the manufacturing teams and the associated development teams to work like between Christmas and New Year. So allow me to, first of all, thank them again and secondly, make that very clear that this is super back-end loaded, therefore, inherently risky, although I don't see any risk to fail. Jan Koch: Okay. Great. And then secondly, your largest customer is in the process of being acquired by private equity. Do you believe that this could have any kind of implications on your business? Marcus Wolfinger: No, Jan, thank you for bringing that up. So we shouldn't get that into a situation where we are talking about gut feeling and things like that. I think on a professional level. And actually, I only returned back from this very customer on a -- I was there on a scheduled trip, but certainly this was one of the topics we discussed. So they made it very clear that their communication with private equity is about growth. We have ongoing programs where we are a supplier, a key supplier supplying with our products, our products, which bear our own IP. So the risk of walking away is very, very small. We have ongoing development programs where we are not only a contributor in terms of development work, we are a contributor in terms of know-how and finalizing things and getting things done and getting things done right. So I think the level of contribution we have within this customer is key. And I think that private equity invested in this company to return the company into higher growth rates to take advantage of the synergy, which exists here and there in order to focus on what makes them strong. And I think if we see the position of, in this very case, the Panther instrument, although an instrument being in the market for a couple of years, still the gold standard, still the instrument, which provides the benchmarking for every competitor to Hologic and on the other side, with a quality which is unprecedented. So if we put that all together, I think our position within this company is very, very strong. I think they understand our contribution to their future success. So I'm not worried about that. Jan Koch: Understood. And then finally, you mentioned in the press release that you recently initiated a partnership for well-established high throughput product in the molecular diagnostics area. What does that exactly mean? Are you going to produce in that system for the customer or develop the next generation? And how big is the installed base is? And when do you expect to receive the first revenue? And what is the potential for you here going forward? Marcus Wolfinger: Yes. Please forgive me, it's way too early to talk about that, particularly those elements where you are trying to get your hands around is actually something which is still under discussion. So definitely, it requires a lot of development work. The tail end manufacturing is very lucrative. It's one of the bigger ones. It's most likely one of the biggest programs, which has been outsourced over the past years. So we are very proud to get in touch with this partner. But I think it's important to understand that this is just the initiation. This is everything else, but in a status where we can disclose details about duration of development work, when this extension will go to the market and how big the manufacturing volume might be. So I think it is important to -- for us, it was important to show internally and externally that the momentum comes back on the one hand side, but definitely with the activities ongoing, the big chunk of manufacturing will only be 3, 4, 5 years downstream. Operator: And next question comes from Oliver Reinberg from Kepler Cheuvreux. Oliver Reinberg: Three questions also from my side. First, I just wanted to come back also to Jan's question on Q4. I mean you need basically EUR 20 million incremental sales. So can you just unpack that a bit in terms of providing some kind of color how much of that is development, how much is equipment just to get a better feeling for that? And along these kind of lines, when you have this kind of volatility now in terms of consumables, in terms of timing disruptions from tariffs, I mean is it not also a risk factor when there's now the kind of Supreme Court challenging the kind of whole tariff setup that people just say like we're going to pause and see if there will be chances to order excluding any kind of tariffs? That would be question number one, please. Marcus Wolfinger: Tanja, can you answer the first part, like breakdown of revenues expected for Q4 because I don't have it in front of me. Tanja Bucherl: So -- yes, sure. The biggest chunk comes from the systems actually followed with the development service, yes. So those are the two main pillars for the increase in Q4. Marcus Wolfinger: And Oliver, obviously, we were trying to kind of look into the relevant -- risk exposure of the relevant positions. So actually, when we updated the guidance certainly -- this was only after when we looked several times and went through each business, each program, each contributor and we're actually trying to find out if there is any residual risk, and that was actually already factored in. So I think the answer should be no. With those supply chain interruptions, as mentioned before, we cannot say it's all over, but those elements, which are affected in the meantime, we have access to those products, respectively, they are in transfer. Obviously, it needs some time to get them through the supply chain and to get them in. So there is a likelihood that we can slightly recover. Please don't expect that to happen and please don't factor it in, leave it as we gave the guidance. However, I think the message should be that this was a temporary interruption and that we have sorted out the issue. And kindly allow me to remind you that this actually happened entirely unexpected. So obviously, we saw with the discussion about rare earth that some of our products are affected and we found alternative sources of workarounds. This very magnet we are now talking about is actually a magnet where the specification actually don't foresee the usage of rare earth in the magnet. They got -- contamination got in. And the contamination is exactly of the threshold when the export rules are kicking in for rare earth. So the contamination is 0.1%. And that actually led to the fact that we couldn't get those magnets out of China. That was really kind of a surprise to us. We reacted immediately. So people from procurement, our Head of Procurement was actually in China during that time, and a big thank you to her. She sorted that out very nicely. And I think we are back on track. However, things like that can always come up, and I think these kind of issues are here to stay for the next couple of years. We have to deal with them. We have to factor those things in when talking about supply chains and lead times and guidance. So certainly, we have to learn from that, but particularly talking about Q4, Oliver, even with the Supreme Court activities regarding tariffs, we -- those things which have to be supplied by the end of the year, we already have our hands on or they are in Europe and our suppliers have their hands on. So I don't expect anything from this side. Oliver Reinberg: Okay. Understood. And second question, obviously, there's a lot of weakness in the industry from China. Can you just remind us what exposure you have to China? I mean I guess it's all indirectly, but how much is that? And do you see that the demand for the systems that are being used in China is also further incrementally deteriorating? Marcus Wolfinger: I think it's extremely complicated to describe that. I think if you talk to our customers, they are definitely trying to maneuver around statements regarding China. Our exposure, so first of all, we don't have any material substantial customer in China. We have a couple of important customers in Asia, but definitely our top 10 customers are sitting either in Europe or the United States. Then we can see literally only two behavior pattern within our customers. Some of them are actively trying to reduce their exposure in China. Some of them are actually trying to see this as a chance and are trying to certainly on an as high as possible risk-free approach to take advantage of that there is demand for certain products of our customers, and we are supporting exactly that. So if they need products made in China, we definitely help them to manufacture, in our case, assemble those products in China. So do assembly, final assembly and final testing according to Chinese rules in order to support their activities. However, we are trying to reduce our exposure. So top line exposure is neglectable. Looking into our customers, we see a couple of our customers, which entertain nice sales in China. I think with this indirect exposure, we are south of 5% of revenues. When I say indirect, we are selling to our customers and our customers are selling products into China. There are limitations. So if, say, Chinese suppliers -- sorry, Chinese customers want to include our customers into tenders, that's a huge effort for them. That's why that doesn't happen that often anymore. So there are secondary markets, which are served by some of our customers. That's why their exposure is fairly minor. We have to see that particularly with our Hematology business, we are seeing strong competition out of China, particularly in those areas where commodities are concerned, systems of lower complexities are concerned, definitely, the competition out of China is getting stronger and stronger, particularly when pricing plays a material role. However, that actually shows how important our strategy, and execution in our strategy is that, as mentioned before, we definitely want to develop and supply spearhead technologies, not spearhead, spearhead. This has to be handled by the research organization. But as soon as this initial dust settles, we want to be there. We want to be the immediate follow. We have nice technologies. These days, we have huge investments into things which are concerning workflow, things which are concerning safety and security in providing the results, development in IoT, cybersecurity. So everything which concerns haptics, ease of use, safety of the instrument. This is where investments in the Western world and in Europe are actually taking place. And here, we feel it's excellently positioned. Oliver Reinberg: Super. And last question, if I may, just on the molecular diagnostic market. I mean what kind of signs of recovery do you see? And can you just remind us where are you in terms of equipment sales compared to, let's say, the kind of pre-pandemic baseline? Marcus Wolfinger: Yes, Oliver. Let me answer the second question first. We have -- we are in a very special situation. The main contributor to our molecular franchise are mainly three instruments. With DiaSorin, we are in a generation change. With BD, we are in a ramp-up situation. And only with Hologic, we have something where we really have comparable pre-COVID data. And I think I'm not telling you any secret here because the data points are disclosed that Hologic is about on a run rate, which represents between 1/2 and 2/3 depends on the relevant instrument between half and 2/3 of pre-COVID level, but picking up, and that's a nice thing. What we definitely see as a behavior pattern across all our customers is that they are trying to [ prelaunch ] the product life cycle. And I don't -- do not necessarily mean that we develop an instrument in year 1 through 5 and then launch it and then we sell it from year 5 through year 20. What I mean is that when an instrument gets sold to the end customer or placed in an end customer lab, and it runs there for 4 years, 5 years, 6 years and so on, there is a moment in time where the instrument gets worn down and typically gets replaced. And during the last 2 years, we definitely saw that our customers were trying to [ prelaunch ] those life cycles in the laboratory with the relevant instrument to the extent possible. But as mentioned, this is a means to an end. You can only do that so and so long, and we definitely see that these discussions, which are actually reflecting the fact that typically an instrument of a certain age causes higher service costs and that probably the amortization of a newly placed instrument is actually positively offsetting the service costs. So I think that the decision-making processes and the ongoing discussions are actually showing that our customers are at this point where they say, okay, we take this instrument out and we place a new one and that's exactly when the growth comes back. So I'm actually particularly within some customers expecting even a catch-up effect here. Operator: [Operator Instructions] The next question comes from Michael Heider from Berenberg Bank. Michael Heider: I have a couple of questions, less detailed questions here. So when I start with the sales development in your Systems business in the third quarter. You actually said -- I mean there obviously were supply issues, and I believe that was on the immunoassay side. I think you have said that. And yet your sales were flat versus previous year. So is my assumption correct that this shortfall then was made up by the molecular systems side? Or is there something else that has been growing? Marcus Wolfinger: Affirmative, molecular and to a certain degree, immunohematology as well. So affirmative. Michael Heider: Okay. And then on the margin side, yes, we have seen a lower margin in the third quarter versus the previous year due to a negative mix and also due to the negative mix in the instruments business, but also due to the lower share of consumable sales. Yet again, here, your quarter-on-quarter margin has improved. And I would assume now because you're only talking about the Lower Consumer business now in the third quarter that the mix overall in the second quarter must have been better, the product mix, yet your margin is higher in the third quarter. So is this all a result of your cost-saving measures? Or what is the story behind that here? Marcus Wolfinger: Yes, efficiency measures are coming in nicely. So certainly, this is a lot about product mix and scalability. And Michael allow me to say that the forecasting our Consumables and particularly Maintenance parts and Spare parts business is way more complicated than complicating Instrumentation business. So certainly, on the instrumentation and high-volume consumables, certainly, we have established forecast systems, and we should know where we end up over the next 3 months, 6 months, 9 months. On the consumables and maintenance part side, that's a little bit different. What we definitely saw with tariffs kicking in that there was a change in behavior pattern of our customers. Actually, we had a deep analysis about the behavior and some of the business was actually already pulled in, in the first 6 months, which led to fairly well-established results then. We actually -- at this moment in time, we typically got the last orders of the year, particularly for consumables and spare parts, and that was actually weaker than we forecasted initially. It's factored in our amended guidance, but it was weaker than expected. So not only that the business is more short term and therefore, doesn't allow for high predictabilities and high transparency, even the change in behavior patterns came on top here. So deriving something from the past doesn't make too much sense. Like margin drivers in Q3, definitely slight recovery in the Molecular business, some development programs ongoing. So it's actually across the border. And certainly, in some areas, the better economies of scale are helping us very much as well, and so we have performed price increases. We are trying to apply discipline in terms of procurement activities. So all-in-all, I think things are lining up nicely. However, we are not really satisfied. I think as soon as scalability and the right product mix comes back, we can easily get closer to our historical margin. However, I want to make sure that even when I say that I believe the market comes back and the momentum comes back, that all sounds very bullish. I want to make sure that you understand that particularly timing is super unpredictable. So I think that if we finalize our budget cycle and if we are coming out with our new guidance that we will already show this slightly positive momentum, but definitely, 2026 will not be this year of the great relief. What I wanted to get across is that I think there is a chain of things, which have to happen. So the positive mood of our customers, the return of the number of their sales when they get new tests on the instruments when they are actually continue to grow. I think in immunoassay, they grew all the time. But in molecular growth comes back, in sample prep growth comes back, in proteomics growth comes back. So all-in-all, a super nice lineup here. However, this has to go through this pipelines of development activities, market launch, regulatory will take some time. I wanted to get across that we believe that we are through the worst. That's the thing we want to get across. Michael Heider: Okay. And then another question on the supply issue. Do you think that there will be a structural change to your supply situation? I mean are you considering maybe in more times to have a dual supply or supply that is more diversified? And this then, in turn, will maybe result in a more costly supply side for you? Or what is the reaction to the situation? And also in that context, how did your customer react to this? I mean are they obviously not thinking about cancellations, you're expecting to just deliver the instruments then a little bit later. But I mean, what was the reaction on that side? Marcus Wolfinger: Yes, Michael, thanks for bringing it up. Actually, a complex question requiring a complex answer. So first of all -- and please allow me to get to that point first. So definitely, whenever possible, we already have dual sources for suppliers. But there are certain things where either economically dual sourcing makes no sense at all or where it actually provides risk. So that certainly, there are some key suppliers which have their own IP, which would mean trying to find a second source would actually mean that most likely the source material would not be compatible, which means you would have to branch from day 1, which is extremely risky from a regulatory perspective and should be avoided from our customers. So I think, obviously, trying to derisk supply chain is one of the core challenges, which means when, where and how to source. So definitely -- and that's something we are trying to get our customers on board is that in some areas, we can only address that properly by going into high inventory levels by highly risky and single source parts. We already reacted over the past 15 years towards that, that we are trying to particularly develop the complex materials ourselves, so which means that we can easily move manufacturing from A to B to C if we don't get our hands on things and that we control those suppliers at the very tail end, which have their own IP. However, there will be materials, just think about microcontrollers. You cannot just walk away from a microcontroller supply and you see the issues [ VW ] has these days. I think this is certainly something no one actually expected. But I think we will have to accept that we are living in a world that supply chain interruptions like this can happen that in a globalized world where raw materials are sent 10x back and forth between Asia and only -- if one step gets interrupted, the entire supply chain gets interrupted. I think this is something -- these are problems which came to stay and probably in a deglobalized world, they will still stay for longer than everyone expects. And the result of that, like particularly sourcing more locally and manufacturing local-for-local will definitely have an impact on pricing. So I think this is an assessment each of our customers have to take either to accept that they will have to live with supply chain interruptions on the one hand side or something we can handle for them, but they definitely will find its input to the price tag attached to the instruments and attached to spare parts. However, I think we are not the only one facing that problem. I think this will actually pop through the surface in a couple of industries over the next years. I hope that helps. Michael Heider: Okay. And then last question here really on your inventory situation and operating cash flow for the full year. What do you think you can achieve in the full year on the operating cash flow side? And a detailed question here on the inventory because you mentioned that you have higher inventories in one particular area where it requires an upturn in the end demand -- end market demand. Are we talking about molecular here? Or is this something else? Marcus Wolfinger: It's allocated in our Molecular business, right? And it's particularly affected by the lower-than-expected or flatter than expected ramp-up curve. Definitely, that is our biggest [indiscernible] as mentioned, and we stick to that guidance at the very beginning of the year said that we will most likely manage to reduce our inventories by the end of the year in the area of EUR 5 million to EUR 10 million. And I think we are on a good track here. And that actually leads to the equivalent cash release coming from inventory levels. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Jan Keppeler for any closing remarks. Jan Keppeler: Thank you all. That concludes the conference call. Thank you, and goodbye.

146天前Insight Analytics约5分钟阅读

VOD.L 2026 Q2 财报电话会议

Margherita Della Valle: Good morning, everyone, and thank you for joining us today. Before moving to Q&A, I will briefly provide an update on our transformation progress and financial performance. I want to specifically talk you through our operational execution in the first half in Germany and the U.K. In Germany, our turnaround continues. And in the U.K., we are now driving the integration of Vodafone and Three, both of which remain top priorities. But first, a quick recap on our position as a group. As you know, over the past 2.5 years, we have changed both where we operate and how we operate. In the last 6 months, we have completed the reshaping of the group that I announced in May '23. We have completed the merger of Vodafone and Three in the U.K. and the acquisition of Telekom Romania's assets. All of Vodafone's operations are now in a strong position, at scale in all our markets. And importantly, all these markets have sustainable structures. Our capital structure has also been reset with appropriate investment levels, a stronger balance sheet and over EUR 5 billion returned to shareholders via buybacks and dividends over the last 18 months, with a further EUR 1 billion of buybacks to come over the next 6 months. But most importantly, we have also delivered a step change in our operational transformation. Whilst we still have more to do in our drive to operational excellence, we have boosted customer satisfaction, we have simplified our operations and powered growth beyond traditional connectivity by expanding our digital and financial services. Now, mentioning growth leads me on well to our financial results. We performed well in the first half, in line with our expectations. Our group service revenue growth has accelerated to 5.8% in Q2, supported by growth across Europe and Africa. On the profitability front, group EBITDAaL grew by 6.8% in the first half, with nearly all our markets posting EBITDAaL growth. With this solid performance across the group and a positive outlook, we have confirmed today that we now expect to close the year at the upper end of the growth guidance that we set out in May. Alongside solid financial results, we have also made good operational progress in Germany and the U.K. Our 2 largest markets have different starting points and different competitive landscapes, but both markets are demonstrating the impact of our strategic priorities, customer, simplicity and growth. Taking it to market in turn. Germany is the largest telecom market in Europe, and we operate at scale across both mobile and fixed. In mobile, our 5G stand-alone network covers over 90% of the population, and now, serves over 40 million customers, including 1&1 as well as almost 60 million IoT SIMs. And on fixed broadband, we can offer gigabit connectivity to 3 out of 4 German households, more than any other operator in the country. Our gigabit broadband reach has indeed continued to expand during the quarter. We are now marketing OXG fiber to 1 million homes. Our brand is strong, and customer satisfaction in Germany has stepped up in the last 2 years. We have simplified customer journeys. We have introduced GenAI in customer care across chatbots and agent assistance. And our improvements across all call center KPIs are being recognized by independent testers. And in terms of growth, we have followed a disciplined execution focused on value. We have introduced new propositions in mobile, driving differentiation and upselling, and we have continued to increase front book ARPUs in fixed. We also continue to expand our capabilities to satisfy the growing demand for digital services. Just 2 weeks ago, we announced the acquisition of an established cloud service specialist, active across Germany and Europe. Looking at Germany as a whole, we are well positioned to drive structural growth, as we have the right assets and the right team in place, a team that is fully focused on becoming the market leader in customer experience, a one-stop shop provider for fixed, mobile and TV and a trusted B2B partner of choice. And now, on to the U.K., we are the largest mobile operator in the country, serving almost 30 million mobile customers, and we are also the fastest-growing broadband provider, with the largest gigabit footprint of any operator just like in Germany, as we are able to sell fiber to about 22 million U.K. households. Vodafone U.K. is already the market leader in customer satisfaction, and we are now extending our customer experience standards to Three customers. And all of our customers are set to benefit from our GBP 11 billion network investment, as we build the best-in-class 5G network for the U.K. We have made a very fast start. Independent tests are already confirming noticeably better speeds and coverage in less than 6 months. In terms of growth, as you know, we have good commercial momentum in the U.K., which is now being supported by our cross-selling opportunities, with Vodafone broadband offers now open to Three customers and FWA open to Vodafone customers. And our multi-brand approach is proving effective in making the most of the market demand opportunities. The combination of these revenue synergies with our GBP 700 million cost and CapEx synergies gives us a strong growth trajectory in the U.K. We will leverage our unique assets in the market to extend our customer experience leadership, monetize our improved mobile network quality and continue to drive fixed service growth. And this is just our 2 largest markets. We hold leadership positions across our African markets, where yesterday, the team reported another strong set of results, in line with their medium-term double-digit EBITDAaL growth guidance. We are excited about the future in Africa, as it combines structural opportunities across all our services, from core connectivity to financial services to B2B. Coming back to group in closing, our objectives continue to be the same, to improve our customer experience across our markets, further simplify our business and deliver sustainable cash flow growth in FY '26 and beyond. The turnaround of Germany, the U.K. integration and our strong positions in growing markets across Europe and Africa, all give me confidence in our growth outlook. With the reshaping of the group behind us, now is the right time to deliver on our ambition to grow our dividend over time. We announced today that we are moving to a progressive dividend policy. And now Luka and I are looking forward to your questions. Operator: [Operator Instructions] The first question this morning comes from Maurice Patrick at Barclays. Maurice Patrick: If I could ask a little bit about the EBITDA run rate for the second half and also next year, so you've delivered 6.8% organic year-on-year growth, you tightened the guidance towards the upper end of the range. I think if I look at the full-year guidance, it implies 4%, 5% growth for the full year. So your guidance, even at the high end, seems to imply a slowdown versus the first half, despite Germany probably having easier comps. As you exit the MDU drag, maybe you could help us understand some of the EBITDA sort of levers in second half. I know you called out higher SAC in the U.K., for example. And it's probably a bit early to talk about FY '27, but if you could give us some indications of some of those building blocks, that would be very helpful. Margherita Della Valle: Sure. Luka, all over to you. Luka Mucic: Excellent. Well, first of all, of course, we are very, very pleased with our performance in H1 on the EBITDA front. This was really a combination of very strong emerging markets growth, in the U.K., doing very well. And then Germany, improving as well over the last year, given that the MDU impact is now dissipating and we had a benefit of wholesale. If you look forward to the second half, yes, our outlook at the high end of the range implies a slowdown. And there are 3 factors that I would call out for that. On the positive front, we absolutely expect Germany to continue to improve in H2 because then we have 0 MDU impact, and we will reach the full run rate of our wholesale migration of 1&1 this quarter. So from Q4, we will then be at full run rate, just standing at around EUR 11 million. So we're almost done with the migration there. So this will help, of course. But on the flip side, first of all, we continue to expect that our emerging markets' growth contribution will trend down given that inflation moderates. You have seen some of that already in the first half year. I think that trend can be expected to continue. And also the U.K., which had a very good first half, we'll see a slowdown in EBITDA growth, first, because -- I know I've talked about that already on the last earnings, but there should be a slowdown in topline growth, in particular, in Q3, as we are facing very tough compares in particular in our B2B business, where we had a positive one-off last year, which should then sequentially increase and improve going into Q4 and beyond into FY '27, but it will dampen the performance. We also had some phasing impact in the strong performance in the first half year in the sense that the marketing expenses that are planned for this fiscal year in the U.K. are more back-end loaded to the second half year. So if you pair that up with the emerging market slowdown, that's driving the expectations. Now, FY '27 is in particular, for me, very far out. Obviously, I'm sure Margherita and Pilar will be back to give you a precise outlook going into FY '27. From my perspective, perhaps just some high level puts and takes. First of all, we would expect the U.K. to be a very positive contributor and have a strong EBITDA performance based on the fact that we expect, for the first time, more sizable synergies from the merger coming together for this year, that was really basically no contribution from synergies, but it will start to step up in the next year. And in Germany, we will face puts and takes, obviously, in the first half, the benefit from the MDUs being fully out of the numbers, and in Q1, still a ramp-up effect from the wholesale migrations. But then for the remainder of the year, they will be out of the numbers in terms of year-over-year help. So then, we will have to see what the market conditions do to see what that means for the German performance. And then, also in FY '27, I would continue to see a year-over-year challenge from an emerging markets growth perspective. On the positive note, I think what we are seeing is that the mix in our EBITDA contribution continues to shift back more favorably to Europe now in the balance between emerging markets and Europe, and that obviously drives also good predictability, which should be a net positive. Operator: The next question this morning comes from Akhil Dattani at JPMorgan. Akhil Dattani: I've got a question around Germany, just to unpack a bit of what you mentioned, Margherita, around the turnaround initiatives that you've taken so far, and how we see the fruits of that bearing into the numbers. You talked just to a lot of different things that you've done in Germany. But if we look at the moment and we strip out the MDU effect and the 1&1 impact, the German revenue trends are still declining 2% to 3%. So I'd love to understand what you think it takes in the timeline to see the underlying momentum starting to improve. And then, if we layer on to that, the scale effect of 1&1, how should we think about the H2 outlook for Germany for revenue and EBITDA? Margherita Della Valle: I will maybe ask Luka to take the last part of your question on 1&1, and then, I'll talk to the actions that we are taking. We seem to have a mic to fix, apologies for the... Luka Mucic: I hope I was still able to be heard in my first answer. Operator: Yes, you were. Please go ahead, Luka. Margherita Della Valle: 1&1 first. Luka Mucic: Okay. Sure. So first of all, in terms of our expectations for Germany overall, we certainly expect that Germany will continue to grow in the second half year. The wholesale support will obviously be a factor, in that I would also expect that towards the end of the year, our B2B performance will start to move upwards because we had very good success of contracting new digital services business that always takes a while to come into the numbers, but that should be helping also the year-end performance there. In terms of the impact that it has had, I really prefer always to talk about wholesale as a whole because in conjunction with the 1&1 win, so to say, we had also then a subsequent loss of another smaller MVNO, Lyca, which went the other way around. If you make the math out of those, the contribution of both in the quarter was just above EUR 80 million as a whole. And then, in the second half year, we would expect that the contribution from 1&1 will also be around EUR 100 million. In Q4, we are lapping then the loss of Lyca. So those are kind of the puts and takes to take into account in terms of wholesale momentum. Yes. Margherita Della Valle: In terms of underlying performance, so if we exclude wholesale, Akhil, you are absolutely right, it's broadly stable. And if I look at the second half of the year, you shouldn't expect to see big step-ups quarter-on-quarter. But over time, the actions I was referring to in my introduction, which are all speaking to the long-term health of the business, will actually support our topline performance. It's a bit early to talk about '27, as Luka was mentioning before because, I mean, also in Germany, we will obviously have to see what the environment will be, both from a macro and from a competitive perspective. But whilst we should expect the headwind in TV to continue, and equally, we don't have full control of the dynamics in mobile, the topline will benefit from these actions. And let me maybe bring this to life a little bit. So first of all, we have talked about customer experience improving. With customer experience improving, we are seeing churn reducing. It's coming through in our numbers. Clearly, the customer experience is improving because of the investments in our networks, because the changes to our approach to customer service. Overall, net-net, the NPS is going up. We are continuing to beat record levels for us in fixed and stepping up in mobile. In some subsegments, we are now actually leading in the market. Clearly, there is more to do, but all this is playing in our numbers to churn. I talk to the work we are doing on ARPU and supporting value in the market. We're really focused there on all what is in our control, and this is going to, again, help us. In fixed, you will have seen, for example, us gradually moving up front book ARPU in the last 6 months. The last moves were only 3 weeks ago, and we are seeing the benefits of that in mobile. We have upselling. And finally, actually, Luka mentioned B2B. B2B is perhaps one of our biggest growth opportunities in Germany. We are investing in digital services. Again, you've heard the Skaylink acquisition. It's growing double digit. We see this as supporting growth going forward. So all this, as a package, is really the result of the actions we have taken supporting our long-term health of the business as we go into FY '27. Operator: The next question this morning comes from Carl Murdock-Smith at Citigroup. Carl Murdock-Smith: That's great. I wanted to ask about the U.K. You touched in the presentation on making a fast start on integration. Can you provide a bit more color on your early actions and synergy delivery? And also comments on in what ways the commercial performance in Q2 and revenue has been a bit better than the decline you had suggested we could expect when you spoke at last quarter's results. Margherita Della Valle: Maybe, again, I will let Luka start with the outperformance on the revenue front, and then, I will pick up on the integration. Luka Mucic: Yes, happy to. I mean, normally, CFOs don't like surprises, but in this case, I will make an exception because, indeed, we saw obviously coming into the merger a combination of a slowdown in Three that we have discussed at our last earnings call, plus we had the underlying challenge in our own business, so to say, before the merger with the B2B managed services terminations that we had to fight against. So that was underpinning, I would say, a cautious stance. Also, if you take into account that the team, of course, was to be very busy on all of the integration steps. But I have to say -- the teams together and driving for very, very positive actions in terms of rolling out our base management practices to Three, making early wins on the network quality and improvement front with the sharing of spectrum and now increasingly the activation of MOCN, which obviously is positive, in particular, also helping performance on the Three network. So in that sense, we have seen a combination of improving churn trends, very good consumer performance, in particular, in home broadband, which I think had the biggest net adds jump in the quarter that we have ever seen in Q2 in the U.K. Then also initial cross-selling benefits and successes. FWA was a very positive story for us. And that in combination has outweighed the underlying decline in B2B legacy managed services to an extent that, frankly, was a bit better than what we would have expected. So very positive. I should perhaps add as a last point that the good actual current commercial trading performance was not only in consumer, but we had actually also a good performance in B2B, not enough, of course, to change the trends from the managed services side for this year, but of course, encouraging if we move further beyond that. Margherita Della Valle: Just a bit more color on the actions, I'd say and reiterate, as Luka said, the team is doing a really great job. I think we are progressing at a pace that has not seen before in U.K. telcos in terms of bringing the 2 companies together. Just to give you a sense, we're only a few months in, and we are already completing the integration of the third levels in the organization. And on networks and on other operations, what are the things we are seeing? On the network front, we talked in Q1 about higher speeds for Three customers, the whole customer base of Three, because of how we are using the spectrum together. I'd say Q2 was all about rolling out our multi-operator core network to allow customers to use seamlessly both networks. You may remember me saying that we had a target of 8,000 sites upgraded for MOCN by year-end. Well, actually, it will be, I think, by tomorrow, is the latest. We will get there this week. And this obviously talks to the reduction of not spots for our base. You know that we are targeting a surface of 10x the size of London. And it's actually really visible today. You don't need to take my word for it. Opensignal has already published the report, saying it's noticeable and measurable. I can't wait to tell you more about this in the coming quarters, as we will also see the customer reactions. But it's a very strong pace. Operationally, beyond the networks and the teams coming together, what is also coming together really well now is what I would call our multi-brand strategy. We now have a single team, for example, in consumer, managing across all our brands. And these brands allow us to cover all market needs, and do this in a consistent, coherent ways is quite powerful. And then, as Luka mentioned, we have been opening cross-selling. So that's obviously supporting our commercial momentum. We were already the market leader in growth in broadband. We are now offering our broadband offers to the whole Three base and the FWA offers to the Vodafone base. As you can see, almost -- the first things we are excited about at the moment are the revenue synergies, and this come, of course, on top of the GBP 700 million cost and CapEx synergies that are, of course, part of our business case. So good momentum in the U.K., and you will see this continuing ahead of us. Operator: The next question comes from Polo Tang at UBS. Polo Tang: It's a question on Germany. So there are proposed changes to legislation that will make it easier for operators such as Deutsche Telekom to access MDUs and deploy fiber. So what's your view on the impact of these potential changes? And can you also talk to the economics for the OXG fiber JV? From memory, it's about EUR 7 billion of CapEx to build a footprint to 7 million homes. But can you remind us what the equity injections that are required for the JV? And how should we think about the wholesale costs that the German unit has to pay to OXG JV longer term? Margherita Della Valle: Thank you, Polo. I think I will take both sides of your questions, maybe starting from the draft Telco Act, which is being discussed in Germany. And there are a lot of measures as part of this that are all geared towards simplifying and accelerating high-speed network builds in Germany, for example, by simplifying permits processes. And this is actually really good. It's good for the fiber build-out. It's good for the 5G build-out. So I think the government is really pushing in the right direction in the country. Now, as part of all the discussions going on, there are some elements, and you referred into the in-building wiring debate that we feel are unnecessary, and we're openly sharing our -- what I would call, our real-life insights on what's happening on the fiber building. And I think it's very clear to everyone that the bottleneck in fiber building in Germany has nothing to do with housing association and has more to do with other factors such as construction capacity limits. But beyond that, today, these are discussions. There is no draft law to really comment upon. But just to take your point, even if all the discussions that are going on were translating into law, for the reasons I've just described, actually, the impact is going to be just a marginal, maybe acceleration of the fiber building towards the housing associations. And that will benefit all players in the market, including OXG. It's unclear whether this discussion will ever become a draft law, and it's unclear at this point when this draft law will become law. But assuming it happens, if it happens at some point in 2026, you need to keep in mind, and I'm going to the next part of your question, that by then, OXG will be already marketing anyway to millions of customers in the housing associations. So, standing back, I don't see this as a major impact on whatever speculation is going on, definitely. And the other point I would say is that actually, if you take all the discussions that are going on in Germany across the Telco Act and across the copper switch off, again, I think it's moving in the right direction overall, and it will be supportive for telecoms overall. You asked about OXG economics, I think. And so on the equity injections, these are very small. I mean, obviously, Luka could add any detail. But I think we said this when we were setting up the JV because of the, I would call it, self-financing over time. It's really at the margin in terms of equity requirements, very, very small. On the front of the wholesale costs and revenues, depending on which side of the equation you look at, I think -- I know that there has been some work going on, on trying to, from an analytics perspective, get to this calculation. I think it's really important that you keep in mind that it's a very -- let me say, there are 3 nuances to the calculations that maybe are worth sharing, and IR can help you sort of bringing them to life more precisely than I can do in a call. The first point is that there is no commitment or obligation whatsoever for Vodafone cable customers to be migrated to fiber into OXG. That just is not there. The second aspect is that 20% of the OXG footprint will be actually outside the cable areas. And then, finally, obviously, penetration into the OXG households will build over time. So it will be during the 6 years of rollout, which are exactly planned, as you were describing, but it will also obviously continue to build after that. So all this is very gradual, and I think brings to, I would say, a different conclusion than some of the calculations we have seen, but I would let really the IR team to help you out on where to go. I would just say that we are really happy with the progress now with OXG. You know that the first year, 1.5 years, obviously, were challenging to set things up. But we have now already built to 350,000 households. We are opening the -- we have opened the sales to 1 million households. We have connected the first customers. We have also opened wholesale, 1&1 and a regional operator are already connected. And 3 million households are already, let's say, committed in the construction orders. We have more than 30 construction partners. I mean, it's a big building site across many, many cities in Germany, and we now look forward to see this coming through in our numbers. Luka Mucic: Just very quickly on the equity. So in 3 years, the equity contribution and injection was just above EUR 70 million. So it's really to underscore the point for Margherita, very, very small. Operator: The next question this morning comes from Emmet Kelly at Morgan Stanley. Emmet Kelly: My question, yet again this quarter, is on Vodafone Turkey. On my numbers, it represents, I think, almost half of the organic EBITDA growth that we've seen since last year. I guess, most notable is the EBITDA margin uptick at your Turkish business. So could you talk a little bit about the topline trends you're seeing there and expect to see? And on your cost management program, if you could say a few words on that. Luka Mucic: Perhaps I can take this because indeed -- I mean, Türkiye has been a tremendous success story in the last couple of years, not only in terms of the financial success, which has been clearly there, just to give you some absolute numbers, which are perhaps not so easily visible, just in the last 2 years, they have increased both EBITDA as well as cash flow back close to EUR 300 million each, which for the size of the business is obviously a tremendous improvement, and that's in hard currency, so not in local currency. And while that growth, of course, inevitably, as we had already indicated, has started to come down because of the lowering in inflation. It's still significantly outperforming inflation. And in absolute terms in euros, it has still been in mid-teens on the service revenue front in the last quarter and was more than 20% up in hard currency for the half year. So where is this coming from? It's coming from a set of unique capabilities. Yes, the team has always been very prudent and forward-looking and leaning into the inflation environment by managing costs very successfully, but there is more to it from my perspective. Türkiye is probably among the best digital capabilities that we have across the group. They have a very high proportion of digital sales. They have a very agile base management model, like a very targeted micro-segment-related calls to provide them access to targeted upsell offerings, post-to-post migrations. So the team has really built a machine there around a set of digital capabilities that are very unique and that we are partially exporting also to other countries, such as the loyalty app, for example, the happy app that we're now also rolling out in other countries. So it's not only a story of cost-cutting and riding an inflation wave, not at all, it's actually based on a very proven and successful management model. And while I've shared before that, as we think forward, certainly, the inflationary trends will continue to recede, and therefore, growth may come down. I think they have been increasing also their relative competitive position in the market. And I think that based on the strength of the management team will certainly continue. Margherita Della Valle: If I can just build on that, Emmet, for a second, looking at the group as a whole, we are extremely proud of Turkey, but I need to say, we're equally happy about all our countries. We regularly publish in our reports the service revenue growth ex-Turkey given the hyperinflation environment, and you have seen this growing to 3% in the quarter. And this is a reflection of the strength of the portfolio. We have Africa, of course, also growing strongly, double-digit EBITDA growth, which is in line with our upgraded guidance there. And then, overall, taking on the opportunities in the U.K. that we have just described, and the turnaround in Germany, where we have now turned the corner with the topline, but obviously are looking forward to the profitability improvement, all these taken in aggregate is, I would say, where we wanted to be through the group transformation. And it's the reason why you hear us talking about an outlook of midterm free cash flow growth. Yes, every part of the group is contributing. Operator: The next question this morning comes from Joshua Mills at BNP Paribas Exane. Joshua Mills: I wanted to come back to the U.K. market and focus on your FWA proposition in particular. So following the Three U.K. merger, you had a very strong spectrum position. You mentioned in your comments earlier that you're happy with how the FWA business is developing. Could you give us a bit more detail about the net adds on that business? And what your longer-term ambition with FWA might be? How you balance that against the desire to grow on the fixed broadband base as well? And just one short clarification, when you have your FWA customers, are they included in your broadband numbers or your mobile customer numbers? Luka Mucic: Yes. Margherita Della Valle: Yes. I'll start from -- I'll cover it all in one go. The net adds are in mobile because that's the supporting technology. And if I'm not mistaken, it's 17,000 in the quarter. They have accelerated, but let me talk to you about how we look at FWA more broadly. It's obviously a great opportunity for us to leverage, what I would describe, as our overall asset superiority in the market. We have -- I was talking earlier, the largest fiber footprint available to our customers with 22 million households, but obviously, fiber in the U.K., is not everywhere yet, whilst we will be offering FWA to all the population in the U.K., thanks to the capabilities that we have today. And we see it as an opportunity because it allows us to bridge the time until fiber comes and maybe cover areas also where fiber may not come at all in the most rural areas. If fiber comes, it's great to get our customers first on FWA, and then, moving them on as the time progresses. So we really see it as an opportunity in the market. As I said before, it's now open to everybody, whether they are in Three brands, or I would say, ex-Three brands, ex-Vodafone brands, and we look forward to see this support our growth. Operator: Now to the next question from David Wright at Bank of America Merrill Lynch. David, we cannot currently hear you. David Wright: Sorry. I'm on the -- I do apologize and apologize for no video or lower -- maybe not a bad thing. But just a technical question, I suspect, just for yourself, Luka, super straightforward. In the first half, adjusted EBITDAaL common functions was maybe a little surprisingly negative. It shows minus EUR 14 million. It's been running a fairly consistent clip of EUR 22 million, EUR 23 million in the last couple of halves. So just any explanation there and just how we should think about that full year number and maybe even into 2027? That's it from me. Margherita Della Valle: It reminds me of the old days because when I was CFO that it was a recurring question, ultimately. It's actually quite structural. Maybe you want to go to that? Luka Mucic: Yes. Exactly. So if I go back in the history, to Margherita's days, before I arrived, I think, historically, common functions EBITDA was actually always negative. And then, in the last 2 years, it turned positive as a result of some of the M&A activity that was going on, which created one-time effects. And last year, it was also helped through a quite sizable central provision release, and that is obviously creating headwinds in the year-over-year. But structurally, from a go-forward perspective, should actually expect common functions EBITDA to rather be negative than neutral to positive. And the reason for that is just simply that the help from kind of the M&A transition to also above the line EBITDA recognition essentially is dissipating. Margherita Della Valle: Just to come back to why it's been structurally negative. It's a very simple thing, David. It's because -- you know that our shared operations' costs are paid for in the markets, but that's not the case for what we call corporate services. So just the HQ cost, I mean, if I take ourselves and the IR team supporting this core, right? This stay at the central EBITDA level, which is a cost, but don't see this as big movements. David Wright: Okay. Can I take that H1 number and just double it for the full year? Is that reasonable just to get a proxy? Margherita Della Valle: Well, it's an area that, again, because we are talking about small numbers, can have variations. So I think we wouldn't be very specific at that level of detail, to be honest. Operator: The next question this morning comes from James Ratzer at New Street Research. James Ratzer: So we haven't yet had a question on the dividend, I think. So it would be great just to get a kind of updated kind of thinking on cash return for kind of next year and beyond. Because I think in the past, you've set out you had a kind of ambition to grow the dividend and to be progressive. You've now been more quantitative. But just for this year, I think, you've just set out the 2.5% for this year, but really kind of not beyond FY '26. I mean, it looks to me like leverage is going to end up right at the bottom end of your 2.25x to 2.75x guidance. So, going beyond FY '26, how are you then thinking about what progressive dividend could look like and potential scope for any share buybacks going into next year? Margherita Della Valle: Sure, James. I have to take this one in this round given that this is going to be the last call from Luka. Let me give you a little bit the broader picture now how we think about returns as you're saying. So first of all, we have given you good visibility on one component, which is dividends. We are talking about a progressive dividend policy, which means that we expect growth year after year going forward. The first year is expected to be 2.5%. So we've been quite detailed. Of course, we will have to assess this every year from now on. Why progressive dividend policy? It's simply because you have heard us say, when we reshaped the group, and we rightsized the dividend according to the new shape, we were very clear from the beginning that our ambition was to grow the dividend over time. In this half year, we have completed the reshaping with the U.K. And so the time is now. You know that we have an outlook supportive in terms of midterm free cash flow growth. So it was appropriate to bring the ambition into reality. As far as buybacks, clearly, these are also a component of our toolbox for shareholder returns. We are EUR 3 billion in the EUR 4 billion that we had communicated at the time of the various transactions. And starting today, the penultimate tranche, so in the next 6 months, we will be busy on delivering another EUR 1 billion. Beyond that, we will have to assess our position. We will assess our position depending on -- and I think you are spot on, depending on where we will be as a company, where the market environment will be at that point. And we will clearly assess it through the lens of our capital allocation policy that you were referring to earlier, which I think is very well known. So, full visibility on the dividend decisions on the buyback when the time is right. Operator: The next question this morning comes from Paul Sidney at Berenberg. Paul Sidney: I just had a question around the Skaylink acquisition. We've seen a lot of excitement in the sector around data centers, AI, cloud services, cybersecurity, you name it, obviously, Deutsche Telekom, announcing a pretty high-profile partnership with NVIDIA to build a data center and Telecom Italia having a recent event, looking at their AI capabilities. So just a very broad question about is this really a material revenue driver for your business looking forward? And could we expect more similar acquisitions to Skaylink in some of your other geographies? Margherita Della Valle: Sure. Paul, let me try and give you a bit of an overview on how I look at this. So first of all, digital services are now over 1/4 of our B2B revenues. So it starts to become quite material. And it's going really well. We continue to use the word double-digit. It's basically double-digit everywhere. It's double-digit in Germany. And overall, I think there is a lot of potential for us to grow in B2B in these domains. And that's why we have, even before the acquisition of Skaylink, continued to invest. I mean, 2 years ago, for those of you who remember, I was talking about, again, for the long-term health of the business, stepping up the investment in B2B in these areas, and it's all been about building capabilities to essentially respond to the demand of our customers. Now, in terms of all the points that you have raised, I think it's really important for us to assess where there is demand, where this demand is best served by Vodafone as opposed to other areas, and where there are also good returns. We certainly see big opportunities to continue to grow on IoT. We could go on and talk for hours about IoT. We see equally very good growth for us already today in cloud, where Skaylink operates. Cloud is a big contributor to our double-digit growth, and also, security with cyber in mind. We also think that our, I would say, most biggest opportunity segment-wise are in the SME space on all these services, so middle-sized company. Why? Because these are the companies that are used to buy technology from Vodafone. We have been serving connectivity to them. We have strong partnership. They look at us to help them. In these days, for example, sovereign cloud is a super big topic of conversations. We are well placed to help them with that. The more you go in the value chain, especially in Europe towards things like gigafactories and other areas, I think you will see us sort of prioritizing in a very clear way because in some areas, the economics are still to be proven, the capacity utilization needs to be proven, and therefore, we are very rigorous in the way we go about the opportunity to serve the demands by starting to address the areas which really, for us, are low-hanging fruits. And to your question, yes, there will be more activity in this space in terms of building capabilities, and sometimes, this may continue to involve small bolt-on M&A. Operator: We have time for one last question this morning to allow all participants to observe the 2-minute silence at 11:00 a.m. for Remembrance Day here in the U.K. This last question comes from Robert Grindle at Deutsche Numis. Robert Grindle: Great to see your stock get its mojo back. I hope that translates to Italy and Germany, especially before Luka moves on. Margherita, the footprints reshaped, you've merged the U.K., not to mention all the operational stuff. This was a large entrée. So what do you look forward to spending more time on with your new CFO colleague? We have the capital allocation question. You addressed that. More capabilities in digital seem to be underway. Do you see any footprint infill need? Any more consolidation opportunity? And conversely, do you see that the Vodafone balance sheet needs further simplification? Margherita Della Valle: As you indicated, we are really pleased to have, I call it, completed the building site after the last couple of years and get the group we wanted and see our position today being at scale with strong brands in all the markets in which we operate, and these markets being markets where we have sustainable structure. This is all the foundations we needed for good growth. Looking forward, there is obviously much more to go for, but you should expect that not to make the headlines through M&A. You should expect that to be our continued execution of our transformation. And really, all we need today to make the most of our growth opportunities, be it in Germany, be it in the U.K., be it in Africa, is disciplined execution, focused on operational excellence to make the most of what we have. And I mentioned earlier, customer simplicity and growth. Our priorities have not changed. Our opportunities have not changed. It's great that today, we are in a completely different position on customer experience, but lead and colead in 11 out of 15 markets is not enough. So my #1 priority will continue to be to push on that. Group simplification, we have made lots of inroads. I mean, we are completing this year the, for example, roles reduction that we talked about to simplify the group when we announced the strategy. But there is always more to do, and we have the opportunity to become much more simpler. I mean, one of the slides, by the way, in our PowerPoint today is about AI because there is a lot to go for to make us faster, more agile. And then, you mentioned B2B. And it's been a feature of this call, which I really appreciate because I believe it's a strong opportunity for us. If you think about it, we have a really strong competitive position there. We are trusted by businesses and governments across Europe and Africa. And so it's a fantastic growth opportunity. In all the areas we operate in, we have strong demand for our services. So it's about really bringing -- accelerating the growth in the years ahead now, and it's in our hands. Robert Grindle: Great to hear. Good luck, Luka. Luka Mucic: Thank you. Margherita Della Valle: Thank you. We're on time. Operator: This concludes the Q&A session. And I would now like to hand it back to Margherita for any closing remarks. Margherita Della Valle: I would really like to take the opportunity to thank Luka, last call. Luka has been great support on -- well, all the things we've talked about in this call. And thank you for your time, as always, today, and look forward to see you all in the next quarters. Thank you.

146天前Insight Analytics约5分钟阅读

WPRT.TO 2025 Q3 财报电话会议

Operator: Good day, and welcome to Westport's Q3 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Ashley Nuell, Vice President of Investor Relations. Please go ahead. Ashley Nuell: Good morning, everyone. Welcome to Westport Fuel Systems conference call regarding its third quarter 2025 financial and operational results. This call is being held to coincide with the press release containing Westport's financial results that was issued yesterday after markets closed. On today's call, speaking on behalf of Westport will be Chief Operating -- or Chief Executive Officer and Director, Dan Sceli; and Chief Financial Officer, Elizabeth Owens. Attendance on this call is open to the public, but questions will be restricted to the analyst and an institutional investor community. You are reminded that certain statements made on this call and our responses to certain questions may constitute forward-looking statements within the meaning of U.S. and applicable Canadian securities laws. And as such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. With that, I'll turn the call over to you, Dan. Daniel Sceli: Thank you, Ashley, and good morning, everyone. To start, I want to welcome Elizabeth Owens to her first conference call following her appointment as CFO at Westport. We are thrilled to have her at the helm. And for her first CFO conference call, I'm happy to have Elizabeth run through some financial details first, and then I'll cover some of our business and strategy updates afterwards. Over to you, Elizabeth. Elizabeth Owens: Thank you, Dan. First, I want to say thank you for welcoming me to my first conference call as CFO of Westport. It's an honor to serve shareholders in this new capacity. Now getting into the details of our Q3 results. Westport reported revenue of $1.6 million for the quarter. Our reported revenue this quarter reflects the expected decline from the $4.9 million reported in the same quarter of last year based on some changes I'll address in a moment. On an upward trend, however, it was great to see Cespira increased its revenue by 19% over the same period last year to $19.3 million in the quarter. As you know, our heavy-duty segment was utilized to capture revenue generated by a transitional service agreement, or TSA, in place to facilitate the transition of Cespira to a stand-alone organization. As intended, the TSA concluded in the second quarter of this year, and we, therefore, did not record any revenue related to it this quarter. Revenue this quarter was representative of our continuing High-Pressure Controls & Systems segment, which produced $1.6 million in comparison to $1.8 million in the same quarter last year. Our adjusted EBITDA for the quarter was negative $5.9 million as compared to the negative $0.8 million reported for the same quarter of last year. The change was primarily driven by lower gross profit related to the divestiture of the light-duty business, partially offset by lower operating expenditures. Our net loss from continuing operations included some extraneous items. The net loss from continuing operations of $10.4 million for the quarter is compared to a net loss from continuing operations of $6 million for the same quarter last year. This was primarily the result of an increase in operating expenditures in research and development and SG&A, a decrease in profit of $0.2 million compared to the prior year and a negative impact from a swing in foreign exchange impact by $3 million. Further on this topic, for the 3 months ended September 30, 2025, we recognized foreign exchange losses of $1.3 million as compared to a foreign exchange gain of $1.7 million for the 3 months ended September 30, 2024. The loss recognized in the current period primarily relates to unrealized foreign exchange losses resulting from the translation of previous U.S. dollar-denominated debt in our Canadian legal entities. Additionally, this quarter, we incurred onetime costs of approximately $1 million for severance and restructuring. Looking ahead, we expect more cost reductions on a relative basis in the near future as we adjust to become a smaller organization after the divestiture of the light-duty segment. Looking at our specific business units, High-Pressure Control Systems -- High-Pressure Controls & Systems revenue for Q3 of 2025 was $1.6 million, a slight decrease over Q3 of 2024. As Dan mentioned, we are in the process of moving these production lines in the facility in Italy that was part of the divestiture of the light-duty business to sites in Canada and China. Prior to the move, our team worked to increase inventories to ensure our customers experience minimal impact from the move. Construction at these facilities is ongoing through the fourth quarter with the majority of the capital spending to be wrapped up by the end of this year. The facilities in China as well as our Canadian site are anticipated to be producing initial product late this year. Gross profit for this business was largely unchanged, increasing slightly as a percent of revenue was driven by the higher margin with respect to engineering services revenue. Moving on to Cespira. It generated $19.3 million in Q3 2025, up 19% from the same period last year, driven by higher volumes. Gross profit was negative $1.1 million for Q3 2025 as compared to negative $0.2 million in Q3 2024. Gross profit continues to be negative as Cespira needs higher volumes to achieve a positive margin on a per unit basis for its systems sold. Regarding liquidity, as of September 30, 2025, our cash and cash equivalents totaled $33.1 million with only the EDC term loan remaining and reflects a significant increase in cash from the sale of our light-duty business. Net cash used in operating activities from continuing operations was $4.5 million, a significant improvement over $11.7 million used in operations in the same quarter last year. The improvement is primarily a result of decreases in working capital partially offset by an increase in operating losses. Proceeds from the sale of the Light-Duty business drove improvements in net cash provided by investing activities of continuing operations. We recorded $14.5 million in Q3 2025 as compared to $9.4 million in Q3 2024. Capital contributions to the Cespira joint venture of $11 million were also made in the quarter. As a reminder, in Q4 2024, we received proceeds of $9.6 million from the sale of shares to Volvo related to the formation of the Cespira joint venture and on the sale of our investment in Weichai Westport Inc. Net cash used in financing activities of continuing operations was $1 million compared to $4.4 million in Q3 2024. Our outstanding debt currently sits at $3.9 million with a maturity date of September 2026. To date, in 2025, we have reduced our debt and have strengthened our balance sheet and helped to reduce the complexity of our corporate structure. Our business is focused on the right markets for us, and we are continually looking at ways to streamline our operations. With that, I will pass the call back to Dan. Daniel Sceli: Thank you, Elizabeth. As our CFO noted, our third quarter results reflect the continued execution of the transformation we began earlier this year, anchored by our commitment to sharpen Westport's focus, strengthen our financial foundation and position the company for growth. The successful completion of the Light-Duty segment divestiture marked an important milestone in simplifying our business and concentrating on our core heavy-duty and alternative fuel systems. Operationally, our third quarter performance highlights the early benefits of our disciplined approach. While revenue declined as an expected outcome to the Light-Duty divestiture, we achieved a stronger gross margin of 31% in Q3 2025 compared to 14% in Q3 2024, driven by higher margin engineering services revenue, and we demonstrated tighter cost management year-to-date versus the prior year. As noted by Elizabeth, adjusted EBITDA results were impacted by the Light-Duty divestiture, partly offset by decreased operating expenditures, providing a more efficient and focused underlying business. We also remain disciplined in strengthening our balance sheet, ending the quarter with $33.1 million in cash and less than $4 million in debt while keeping cost efficiency and operational agility at the forefront. This solid financial position enables us to execute our strategic priorities and engage more proactively with OEM and fleet partners who are increasingly seeking affordable, low-carbon solutions. The Cespira joint venture continues to play a central role in Westport's growth strategy during the quarter. Deliveries increased year-over-year, supported by aftermarket sales growth as supply chain constraints continue to ease. This progress reinforces our belief that Cespira provides a scalable, high-impact platform to accelerate the adoption of the HPDI systems in the key markets worldwide. We continue to make progress on Westport's strategic transformation. Westport is taking the necessary steps to execute on a new focused and integrated competitive strategy. The divestiture strengthened our balance sheet and provided liquidity to begin to fund our growth through new system and related market expansions, including North America and our recently announced CNG solution when combined with the on-engine HPDI fuel system. We are in the process of evolving a new, more focused Westport that we can support and drive into more sustainable transportation industry. We recognize that we're operating within an evolving macroeconomic environment, which is enabling us to capitalize on renewed market momentum, especially as it relates to the use of natural gas as a transport fuel in the North American market. CNG has gained acceptance as an alternative to diesel fuel for long-haul trucking in North America, driven by its affordability and abundant supply. Westport's innovative and proprietary CNG solution hope to set a new standard for high-efficiency performance while delivering superior economics. As I mentioned last quarter, Westport will be focused on the following key drivers. On-engine, Cespira is pursuing strategic market expansion via technological leadership in heavy-duty transportation and truck OEMs. Off-engine, high-pressure controls and systems complement the energy transition regardless of the powertrain and a variety of financial initiatives. Westport's goal for Cespira is to deliver demonstrated volume growth over the coming year, driven by expanding into new geographies and adding new OEM customers. Cespira is seeing success here, delivering revenue growth of almost 20% in the third quarter and recently adding a second OEM customer in the form of a customer truck trial with a leading OEM utilizing Cespira's-HPDI components. The trial will include several hundred sets of key components and is designed to assess the [Technical Difficulty] is also expected to form the basis upon which the OEM will decide whether to make a further investment toward commercializing the system. Regarding our High-Pressure Controls & Systems business, we are currently developing components that are critical to performance and reliability. As a reminder, we are selling into 3 primary markets: China, Europe and North America. Following the close of the Light-Duty transaction, we have focused on moving our manufacturing to Canada and China. Both facilities are in the final stages before start of production, and we anticipate both to be online at the end of the year. The global truck market continues to expand and is expected to reach 1.95 million units in 2025. The long-haul truck market has historically struggled to decarbonize. Fleets around the world are focused beyond just reducing emissions and now prioritizing the total cost of ownership, natural gas is affordable, infrastructure is ample, and RNG production is growing at a fast pace. We are ideally positioned for this. What sets Westport apart from our competitors is our ability. We have solutions that can meet growing demand, delivering a total cost of ownership that is compelling to customers. We are optimistic about the company's future as well as that of Cespira. We have strengthened our balance sheet through the sale of our light-duty business and made a strategic return to our roots by developing innovative new technology to transform the Heavy-Duty market. In addition to new growth opportunities, we are making difficult economic decisions to enhance future shareholder value through planned reductions of 60% in CapEx and 15% in SG&A in 2026. Regardless of the unknowns or uncertainties ahead, we are paving our own path in the transportation industry that we believe will truly make a difference. Thank you to everyone who joined the call today. Your continued support is important to us. We continue to move through 2025 with purpose to create value for our shareholders. Thank you again. Operator: [Operator Instructions] And our first question will come from the line of Eric Stine with Craig Hallum. Eric Stine: Just wondering, can we start on the new OEM development with Cespira. I mean, just if you could provide a little more detail there? I know that, that OEM needs to go through a number of steps to make the decision about moving towards the development agreement and then beyond that, a commercial agreement. But what are kind of the signposts that we should look for over -- whether it's over 2026 and beyond? And how do you kind of envision this playing out as Volvo obviously wants more OEMs than just their use of HPDI? Daniel Sceli: Yes, absolutely. And I'll just remind everybody listening that in this industry, the OEMs are very, very protective of their commercial strategies. And so we are completely unable to talk about the who and any specifics and that's not going to change, unfortunately. We'd love to be able to talk about it, but that's the business we're in. This is a typical development, not unlike what we went through with Volvo originally, trialing the technology on trucks. The development programs going forward, to be more [indiscernible] we're almost 10,000 trucks in 31 countries. But it is a development cycle that will follow their standard path in the industry. And -- so we think we're going to start to get some feedback from that OEM probably mid-'25. And we'll be talking about it at that point, I hope that we're in a position to communicate that we're moving to the next phase. Eric Stine: Got it. And yes, that's what I was getting at. Is this typical, but also because you've got Volvo in the market, is it something that potentially is shorter than what you've seen in the past? And it sounds like, yes. Okay. Maybe sticking with the joint venture, any -- I mean, any thoughts on additional OEMs? And again, I know that the nature of this business is you can't give details, names, et cetera, but just maybe what that pipeline looks like. And I also know that Volvo is looking at growth with their HPDI truck in other markets? I think you mentioned India, South America last quarter. So maybe an update on that as well. Daniel Sceli: Sure. Well, we continue we continue to talk to all the OEMs about HPDI through Cespira. And clearly, volume is the key to getting this business to the place where we all want it to be. We've got the interest of many OEMs. I think we're at a point where we don't have to prove the technology anymore. And simply, when does the timing fit for the OEM in terms of their specific markets and their business cases. So the technology is proven, the performance is proven and Volvo continues to expand its reach where they want these trucks. I did mention India and South America. Those are beachheads that are being opened up. And we expect continued volume increases, at least that's what we're hoping for. One of the big tickets will be in Europe, the legislative changes to the system. And biogas being credited for the emissions standards in Europe is a really big deal that we're hoping will come in the next year. Operator: One moment for our next question. And that will come from the line of Rob Brown with Lake Street Capital Markets. Robert Brown: On the Cespira joint venture, you made a capital contribution in the quarter. Does that sort of set you for a while? Or what's the capital needs over the next sort of 12 months there? Daniel Sceli: Yes. So I think we've talked about this a number of times over the last at least 18 months here. There was -- there's always been a 3-year build-out setting this business up to be completely stand-alone. So the joint venture was always structured to have about a 3-year build-in of capital contributions to get it set to stand-alone. And obviously, we're in year 2 of that now. So yes, there's additional capital will be needed next year. Robert Brown: Okay. I guess -- and then on the High-Pressure Controls business, when do you expect to have that fully -- the manufacturing fully moved out of Italy and under your operations? Daniel Sceli: Sure. Well, it's all out of Italy now completely. We're in the process now of installing the equipment in both our Cambridge site and our Chinese plant site [Changzhou] and expect to have both those facilities up and running by year-end. . Robert Brown: Okay. Great. And will you have a, I guess, lower revenue run rate during that period? Or do you have a stock that can carry through? Daniel Sceli: No, it will be a bit lower revenue. And I mean there is some stock, but there's -- it will be a bit lower revenue. And then I mean the underlying theme here is that we want further -- the Chinese market is the biggest market for hydrogen components today. And it was very important for us to manufacture it locally for a couple of reasons. One, geopolitically, it's just a lot easier to make it there and for that market than it is to ship it in from Europe. Two, cost, right? We can be a lot more competitive out of a Chinese plant. And then of course, the North American market is starting to turn on natural gases, as we've talked about. It's a pendulum swing that we're very excited about. And we want to be in a position to take advantage of that market from a Canadian site. Operator: Our next question will come from the line of Chris Dendrinos with RBC Capital Markets. Christopher Dendrinos: I wanted to ask on the CNG solution announcement here. I think it was last week at this point. What's the timing look like for potential deployment there? And does your partners, Cespira, need to, I guess, move trucks over to the United States? Or I guess, how does that sort of, I guess, time line look for potential development? Daniel Sceli: Yes, sure. The intention isn't for trucks to come from Europe to North America at all. We're developing a CNG solution that is what we call the off-engine side of the thing. The on-engine, the Cespira's HPDI on-engine stuff is fully developed and ready to go. And so what this CNG strategy in North America will do for Cespira is bring additional volume. What it does for Westport, the -- what we call the back of cab system, the storage system for CNG combined with our high-pressure controls and our AFS engine control system is -- it's a full package that can be deployed into North America. The initial steps are going to be demonstration fleets. We're going to have trucks built with the CNG systems that fleets are going to run and trial. And certainly, our anticipation is that they'll be screaming for commercialization. Once we're through the demonstrations and have it proven out, we'll be working with the OEM to build out a commercialization plan. Again, the on-engine side is fully developed with HPDI. It's just a matter now of certifying a back of cap and doing the EPA certification, which is just simply miles on trucks. Christopher Dendrinos: Got it. And then maybe just shifting gears a little bit to the engineering revenue that you all recognized in the quarter. I mean, is that sort of an ongoing, I guess, revenue stream? Or was this sort of a onetime, I guess, recognition this quarter? Daniel Sceli: Well, yes. So in our High-Pressure Controls business, we are paid for a lot of development work for the hydrogen systems from our OEM customers. And so that's an ongoing thing. And we'll be spending R&D money over the next 3 years and the customer pays for it at start of production. So we have a bit of a run here of cash out for R&D before we get the customers' payment to cover it. But it's an ongoing part of this business. These are very complex components that the customers, the OEMs look to us to develop the technology for them. Operator: I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Dan Sceli for any closing remarks. Daniel Sceli: Thank you. Well, it's a pleasure always to share our story with our investors and the market. Thank you for your participation, and have a great day. Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

146天前Insight Analytics约5分钟阅读

2357.TW 2025 Q3 财报电话会议

Operator: Hello. Welcome to the ASUS Quarter 3 2025 Online Investor Conference. Today's conference will be held by ASUS Computer Co-CEO, Samsung Hu, S.Y. Hsu, alongside CFO, Nick Wu. The conference will be divided into 2 parts. In the first part, CFO, Nick Wu, will start by outlining our quarter 3 financial results. Next, our 2 co-CEOs will go over the operational strategies and business outlooks. For the second part, we will be conducting a Q&A session. You are welcome to raise any questions you might have in the panel on the left side of the web page. Questions will be collected and answered. Let us start with the presentation from CFO, Mr. Nick Wu. Nick Wu: Good afternoon, everyone. First, I'd like to apologize because due to internal meeting delays, we've also had to delay the beginning of our earnings call today. I'm deeply sorry for this delay. Let us quickly enter the presentation proper. Starting from Page 5 of the PowerPoint. For Page 5, it shows the consolidated income statement for ASUS. For brand revenue, ASUS reached TWD 189.9 billion, which is a 21% year-over-year growth. This is, in fact, all-time high for the ASUS brand revenue in a given single quarter. The growth behind this driver was mainly consisted of enterprise-related segments such as servers and commercial PCs. For operating income, it was around TWD 8.4 billion and net income reached TWD 10.5 billion, translating to a quarterly EPS of TWD 14.2. Gross margin for the brand came to 12.9% and operating margin was 4.4%. Compared with quarter 2, we saw that gross margin had improved meaningfully. This is thanks in large part to a more stable operational environment, both in terms of tariffs and exchange rates stabilizing by quarter 3. At the same time, we also saw that product shipments and sales performance either met or even slightly exceeded our internal target, which is why we have been able to achieve such impressive results for quarter 3. Turning to Slide 6. It summarizes our nonoperating income items. In quarter 3, our interest income came to TWD 600 million with investment gains at TWD 1.06 billion, FX gains at TWD 1.2 billion and dividend income, TWD 960 million. So altogether, the total nonoperating income was TWD 3.7 billion. Turning to Slide 7. This shows the balance sheet. The points to note here would be the cash and cash equivalents, which stood at roughly TWD 62 billion at the end of quarter 3. Now given the record high revenue we have achieved this quarter, as mentioned before, we have also had to increase our working capital in terms of inventory, receivables and payables to support these larger operating scale. As a result, we are now seeing that the inventory turnover is now averaging at 98 days, and the cash conversion cycle would be around 102 days, both remaining stable compared to the previous quarter. Turning to Slide 8. We have the revenue mix. By business segment, we see that the Systems business unit accounted for 53% Open Platform, 45%; and IoT, 2%. In terms of breakdown by region, Asia accounted for 46%; Europe, 32%; and the Americas, 22%. Now turning to Slide 9, which covers our outlook for quarter 4 2025. Now it is important to point out that historically, quarter 4 is typically considered a flatter season. This is partly because our main product lines such as motherboards and graphics cards and our leading markets in Asia Pacific, they typically see that shipment will peak in quarter 3 and then flatten afterwards, which is to say that quarter 4 is typically a slower period compared to previous quarters. In addition, since quarter 2, we have seen factors such as tariffs and macroeconomic uncertainty leading to demand distortions. This has included early pull-ins as well as front-loaded spending, which may have weighed on the potential for quarter 4 in terms of consumer sentiment. From a product life cycle perspective, our core gaming product lines entered its new cycle in the first half of 2025, which is to say that at the same time, the AI PC life cycle is also likely to begin in the first half of 2026, resulting in quarter 4 becoming a sort of transitional phase between our 2 main product lines and their product life cycles. Considering these factors, we expect that quarter 4 PC shipments to decline 10% to 15% quarter-over-quarter, but remain roughly flat year-on-year. For components and servers, shipments may fall 5% to 10% quarter-on-quarter, but grow 40% to 50% year-on-year. Overall, ASUS expects to maintain strong annual growth momentum in quarter 4 as we continue to implement strategic and product initiatives to support continued growth going forward. And looking ahead, we expect that we will be able to capture growth opportunities from upcoming cycles in AI PCs, in the gaming market, in the commercial segment and servers. And so for the following product life cycles, we expect that we will be able to achieve further growth. This concludes our financial presentation. Now I'll hand it over to our co-CEOs to share ASUS' business outlook and strategic direction going forward. Thank you. Hsien-Yuen Hsu: Good afternoon, everyone, friends from the institutional investment community and the media. Thank you for joining the ASUS Quarter 3 2025 Earnings Call. I'm Co-CEO, S.Y. Hsu, and I will be sharing our strategies and outlook for the future. Now we saw that quarter 3 was a volatile market with many external headwinds. Nonetheless, our team's dedication and hard work was able to deliver another strong performance. In quarter 3 2025, ASUS brand revenue reached TWD 189.9 billion, which is up 21% year-over-year and a record high for a single quarter. I'd like to once again thank all our colleagues for their efforts and our customers for their continued trust and support. Looking ahead, ASUS' growth will be anchored by 3 pillars: the gaming market, the consumer market and the enterprise market, which, of course, includes the very fast-growing AI server business. As can be seen on this slide, the gaming market accounts for roughly 41% of our business for the consumer market, 29% and the enterprise market, 30%. We believe that this balanced mix supports both short-term growth and long-term diversification. We also see that all 3 segments delivered strong year-over-year growth with the enterprise business doubling from last year and gaming also posting positive annual growth. This gives us strong confidence in achieving full year revenue growth in 2025. It is also worth mentioning that while each product line is managed by a different business unit, these 3 pillars work synergistically to help ASUS strengthen its brand positioning while expanding our market share. Among them, gaming remains our most important business segment, enhancing our brand reputation and also yielding higher profitability on average, while the consumer market focuses on maintaining healthy margins while broadening overall market coverage. As for the enterprise segment, it is our fastest-growing segment and has been the key focus for our investments in recent years, driven by solid execution and robust demand for AI servers and edge computing solutions. We will continue to drive growth through innovation and customer commitments. In summary, ASUS will remain user-centric, leveraging our excellence in products, services and integrated solutions to deepen our presence in gaming, consumer and enterprise markets. We strive to be a trusted global technology partner that consistently creates value for customers, partners and shareholders. Next, let's talk about our AI product strategy. Our current strategy is ubiquitous AI incredible possibilities. ASUS is committed to building high-performance and reliable AI solutions in the ecosystem that supports industries rapidly adopt AI. We provide a full stack AI offering from cloud infrastructure to edge devices to end user applications allowing us to deliver on flexibility, speed, cost efficiency and resource integration, ensuring customers achieve maximum benefit across all possible use cases. Our AI lineup also span from large-scale AI servers to personal Copilot+ PCs and IoT edge devices, covering applications across creative workspaces, healthcare, industrial automation and everyday AI scenarios. I believe that this reflects on our determination to help enterprises and consumers deploy AI technologies quickly and effectively. Through our solid AI expertise and our broad product portfolio that bridges cloud, edge, software and physical AI, we believe we are building a complete AI ecosystem. And speaking of physical AI, it has been a hot topic in recent years. Now we are going to put forth the idea that the rapid advances in AI will drive significant growth in AI-empowered physical devices in the coming years. And ASUS was among the first companies to identify this trend early and began investing. For example, back in 2016, we launched the Zenbo Home Robot. And later in 2024, we announced our collaboration with Meta on developing smart glasses. Nonetheless, commercialization of these AI products will take time, and we will begin to share more details and updates in future sessions once we believe they are ready to be announced. Next slide. Here, we share a real-world example of how ASUS has applied AI internally and the tangible results it has produced. On our official e-commerce website, we launched a 24/7 AI-powered assistant. This AI assistant provides instant intelligence support and embodies our user-first philosophy. We believe that this will help enhance customer engagement while reducing overall operational costs and improving sales conversion. And since the implementation of this assistant, we have seen measurable outcomes such as increased personalized interactions. We have seen a sevenfold increase in product recommendation effectiveness and an 11-fold rise in order conversion. At the same time, automation reduced service and maintenance costs dramatically. Customer service cost per case dropped by 95% compared to human support. And overall, we're also seeing that page views have also increased sevenfold and user engagement time has risen eightfold. And so we will continue to expand this AI assistant to additional regional sites over the coming quarters to deliver even better service worldwide. Next slide. As the leader in gaming ecosystems and the world's #1 gaming brand, ASUS ROG continues to refine its products and cultivate a vibrant gaming community. Recently, ASUS partnered with Xbox to bring the console gaming experience seamlessly into the Windows handheld category, launching the ROG Xbox Ally. The product was named one of Time Magazine's best inventions of 2025 and has been widely praised by media outlets. Based on feedback from early and first-gen Ally users, we increased battery capacity, refined the form factor, enhanced cooling and revamped the user interface in collaboration with Xbox to bring the handheld experience closer to that of a dedicated console. The new model's powerful performance and smooth experience have earned rave reviews from consumers, medias and KOLs, achieving strong sales and further solidifying ROG's leadership in the premium gaming ecosystem. Beyond new products, we have deepened community engagement globally. At Gamescom in Cologne, we showcased the latest innovations and hosted on-site activities celebrating both handheld gaming and the 30th anniversary of ROG graphics cards. We saw that fans were thrilled by the creative exhibits and interactive experiences, both off-line and online, reinforcing ROG's player-first philosophy and our spirit of innovation. Throughout Gamescom, ROG has successfully reignited global excitement, strengthened emotional ties with gamers and highlighted our leadership in gaming innovation. Next slide. This year marks the 30th anniversary of ASUS' graphics card business. Since launching our first card in 1996, we have continually led advancements in GPU technology, selling over 130 million units worldwide, enough to circle the earth once. Each card embraces ASUS' passion for innovation and commitment to gamers around the globe. And to celebrate this feat, we have unveiled the ROG matrix GeForce RTX 1590 30th anniversary Limited edition at Gamescom in Cologne. The card features a record-breaking 2,730 megahertz boost clock. It showcases our engineering prowess and our deep collaboration with NVIDIA. Media and enthusiasts alike praised its design and performance. John Miller, NVIDIA's Global Head of GeForce Sales, joined us at Gamescom to commemorate our 30-year partnership, a relationship built on co-developing high-end GPUs, joint marketing and collaborative design and community efforts that strengthen both brands. We believe that this is the secret to our long-term success. We have co-developed these GPUs. We have developed joint marketing efforts, and that has allowed us to create integrated cooling solutions and host joint marketing events to help promote the brand and the card together. Some of the pictures you see on the slide capture our efforts effectively. And that concludes my presentation on the graphics cards business milestone. Now I'll hand it over to Samson for more details. Samson Hu: Okay. Thank you. Hello, everyone, and greetings to everyone. I am Co-CEO, Samson Hu, and I will be sharing key strategic directions for ASUS and the highlights of our quarter 3 performance. Let us begin with our core growth strategies. First, ASUS continues to maintain a strong leadership position in the consumer market. Both our consumer PCs and motherboards remain key contributors to the company's stable revenue and profitability. Second, in the gaming segment, we continue to dominate the market as the world's #1 gaming brand. Through our comprehensive product portfolio, continuous innovation and immersive user experiences alongside active community engagement, we have been able to further solidify our leadership position in the global gaming ecosystem. And as Co-CEO, Hsu mentioned earlier, we are aggressively expanding our enterprise business, including servers and commercial PCs, providing end-to-end integrated solutions that cover everything from commercial PCs to cloud-based AI servers and on-prem AI workstations supported by both hardware and software platforms. We are confident that this will become a major new growth engine for the company. Through these 3 pillars, we will enable ASUS to sustain steady growth and profitability while capturing the structural opportunities brought about by the AI era. Next slide. So now let us review the performance of each business group and our key strategic initiatives. Starting with the Systems business group we see that their performance in quarter 3 was quite solid. In the consumer PC segment, growth momentum came from rapid adoption of Copilot+ PCs, which saw over 80% quarter-on-quarter revenue growth. Copilot+ PCs now also account for over 25% of the non-gaming consumer notebook revenue. And this clearly underscores the leadership position and momentum that ASUS has been able to achieve in this emerging category. In gaming PCs, ASUS now holds over 30% market share in the high-end segment, maintaining our dominant position. Turning to commercial PCs. We continue to strengthen our product offerings and technology innovations while expanding our enterprise channel footprint. Shipments in quarter 3 grew more than 50% year-on-year, setting the stage for commercial computing and to become another key growth driver for ASUS in the coming years. Overall, we will continue to leverage our innovative products, complete solutions and our powerful brand image to keep advancing our leadership in the consumer, gaming and commercial market. Next slide. The open platform business group also delivered impressive results in quarter 3 with revenue up 50% to 60% quarter-on-quarter. Growth was driven primarily by the server and motherboard and graphics card businesses. Server revenue, in particular, more than doubled quarter-on-quarter, reflecting exceptional performances. ASUS was also among the first to launch the B300 and GB300 AI servers, showcasing our superior design capability and fast execution in early adoption. We also secured major orders from several global CSPs, significantly expanding our presence and competitiveness in the server market space. In the motherboards and graphics cards market, we continue to maintain our #1 global market share position. Graphics card revenue rose over 30% quarter-on-quarter with the RTX 50 series now making up over 80% of our product mix, driving market upgrades and delivering unparalleled gaming performance for gamers around the globe. Next, our monitor business also saw more than 20% quarter-on-quarter in terms of revenue growth. This was led by strong demand for high-end OLED gaming monitors, while we saw that shipments for this high-end market doubling. And this reinforces ASUS' leadership in both premium display and gaming markets. And additionally, gaming accessories, which is an integral part of the ROG ecosystem, achieved 20% quarter-on-quarter growth, demonstrating robust demand from our player community and the strength of the overall brand ecosystem. Next slide. Moving to the AIoT business group. Revenue grew 10% to 15% in quarter 3. And a key highlight for this group was the launch of the Ascent GX10 compact AI supercomputer, delivering petaFLOP level performances and marking ASUS' leadership in hybrid AI computer. As one of the first OEM partners to roll out NVIDIAs DGX Spark system, the GX10 provides a powerful and cost-effective local AI development and testing platform for customers requiring high-performance, low-latency on-prem solutions. And this product really embodies the vision that ASUS has of AI everywhere. And this really showcases our leading position. And also, I would like to point out that at the Taipei Automation Exhibition this year, ASUS IoT showcased its end-to-end AI hardware and software integration under the theme "AI Everywhere: Empowering Industries." We co-exhibited with 9 global partners, including close collaboration with Japan's industrial robotics leader, Epson. We also highlighted solutions for smart retail and smart cities, achieving dozens of tangible partnerships and commercial opportunities, proving ASUS' successful real-world AI ecosystem deployment. Last slide. Finally, I would like to share that ASUS has received multiple international recognitions for corporate excellence in quarter 3. For example, we were named one of Time Magazine's World Best Companies, one of Newsweek's most Trustworthy Companies and one of Forbes Best Employers recognition. And I believe that these honors reflect ASUS' strong brand reputation. Our continued innovation and people-first corporate culture affirms that our standing in the global market and among consumers worldwide is without question. Thank you. Operator: Thank you to our 2 co-CEOs and CFO. We will now open the floor for Q&A. [Operator Instructions] The first question comes from KGI Asia. Unknown Analyst: Given the recent surge in memory and solid-state drive prices, how is the company managing its inventory levels? And what impact might this have on gross margins? Also, will these cost increments be passed on to the consumers? Unknown Executive: Okay. I think this is a highly pointant issue in the entire PC industry right now. Fundamentally, it stems from a demand-supply imbalance. On the demand side, as many of you might know, the need for DRAM capacity in servers, particularly AI servers has risen sharply. And on the supply side, the major DRAM suppliers have not significantly expanded their production capacity over the past few years, and that's what's driving the current situation. And we began noticing this trend early in the year, including the tightening of DRAM supply and the upward price trajectory. And as a result, we started lengthening our component inventory cycle well in advance. In fact, by the end of, I believe, the third quarter, we had roughly 2 months of component inventory and close to 2 months of finished goods inventory and distributed among the retail channels. So around 4 months in total. And so this level of preparation means that the short-term impact, especially on quarter 4 operations should be quite limited. But we will continue to maintain close coordination with DRAM and NAND suppliers, and we'll continue to respond flexibly, including by further increasing inventory if needed. As for channel pricing, we will take into account the increased costs the situation of our retail channel partners and the end user demand. We will adjust both our product mix and, where appropriate, product pricing, if needed. But of course, this will all be a dynamic and highly flexible process. Operator: Thank you. And the next question comes from Morgan Stanley and several other institutional investors. Unknown Analyst: Could you share the proportion of AI server revenue in the third quarter and whether shipments of GB200 or GB300 are proceeding as planned. Unknown Executive: Okay. Let me address that. For those of you who have joined our previous earnings call, you may recall our earlier projections for AI servers, which was around 10% to 15% of our total revenue. However, given how strong the entire AI server market has spooned and how that demand has been very consistent, you can see that our AI server revenue in quarter 3 grew by over 100% year-on-year. And so as of now, AI servers actually account for close to 20% of ASUS' total revenue. And of that, over 80% is directly related to AI server products. But Again, we are still seeing that the GB300 and B300 shipments that many of you are concerned about is part -- is in a situation -- we're in a situation where we are among the first wave of suppliers. And so shipments to our customers already began in September. And so far, everything has gone quite smoothly. So looking ahead, we have set an aggressive internal target for continued growth in this area. Our base in the AI service market is still relatively small. So we see plenty of room for rapid expansion, and we'll continue to strengthen our presence in the market going forward. The next question also is from Morgan Stanley. Could you share the expected revenue contribution from the newly launched ROG Ally this quarter as well as your shipments and revenue outlook for this product line throughout 2026. I'll take this one. As many of you know, we introduced the first-generation ROG Ally 2 to 3 years ago as a market pioneer. And over the past couple of years, this new category, especially within the Windows ecosystem and creating this particular new category has proven itself to be highly successful. We believe that we have achieved our original goals in terms of premium positioning and creating a new growth driver in the gaming segment. And that's why we launched the third-generation ROG Ally last month. It featured deeper collaboration with Xbox. And so since its launch, we see that the market response for it has been extremely positive. And particularly, there has been an appetite for the premium higher-end models exceeding our expectations. In fact, these high-end variants are currently in short supply, and we are working closely with key component suppliers to ramp up production and fill the demand gap that currently exists. So our goal for the ROG Ally to remain a core pillar within the ASUS gaming portfolio while also driving tangible revenue and profit growth for the company. For this quarter, currently, we are expecting the sales contribution of the Ally to come in at around TWD 3 billion to TWD 5 billion. And given the strong demand for the high-end models, we are confident that quarterly revenue could move toward the TWD 4 billion to TWD 5 billion range going forward. Operator: Okay. The next question comes from JPMorgan. Unknown Analyst: Could we have the CEO share his outlook for the PC market in 2026 as well as ASUS' expectations for AI PC segments next year? Since AI PCs have been positioned as a key strategic focus for ASUS, could you also elaborate on your strategy and execution plans in this area? Unknown Executive: Okay. Well, in terms of the overall PC market, we expect that the total market volume in 2026 will be more or less flat if perhaps we think plus or minus 2% to 3%. And as for the question directed towards AI PCs, I think it's worth mentioning that there are actually a few predictions that we're making because right now, we have 2 different definitions under Microsoft stricter Copilot+ PC definition, it requires that the device has an MPU capable of 40 tops or more. And we estimate that such systems will account for about 8% to 10% of total shipments this year and should exceed 20% next year. But under a broader definition from Intel, where any PC equipped with an MPU qualifies as an AI PCs, then under that broader definition, the ratio is higher, close to 30% already this year and expect it to reach 50% to 60% next year. And initially, many in the market actually expected that AI PCs will be likely to trigger a major growth wave for the PC industry. But right now, we're seeing that adoption of AI-driven applications on PCs has been slower than anticipated. So the growth trajectory is on the moderate side of things, though it's worth mentioning that moving from 30% to 50% in a single year is still a healthy pace. For ASUS, AI PCs remain a top strategic priority. And based on cumulative data from quarter 1 to quarter 3 this year, ASUS holds over 25% share of the global AI PC market, meaning that we currently rank #1 in this segment. And having said that, -- we believe that the key to enabling AI PCs going forward is not just about hardware. The real differentiator and value add is in the software, how AI-empowered applications can deliver a fundamentally different user experience. That's why -- that's what's going to ultimately push the market forward. And it's certainly not something that ASUS can do alone, which is why we are working closely with upstream and downstream software partners and in some cases, bundling quality AI software within our systems. And -- so that's really what we're hoping to achieve. We're hoping that our in-house developed AI applications for AI PC lineups can further enhance the usability and appeal of the AI PCs and accelerate the growth of the overall AI PC market. Operator: The next question comes from East Spring. Unknown Analyst: Could you share the company's view on tariffs and their impact on profitability as well as your outlook for operating margin going forward? Unknown Executive: Okay. I'm going to take that question. In the third quarter, we have not only just achieved a record high in brand revenue, we've also made 2 improvements in what we view as strategically -- structurally positive changes in the long term. First, in terms of business mix, aside from our already strong consumer and gaming segments, we have successfully built up a third pillar in the enterprise market. This makes our overall business structure more balanced and resilient over time. And second, supported by our record high operating scale in quarter 3, our operating margin has already returned ahead of schedule to our target range of 4% to 5%, and we are very pleased to see this achievement achieved this early. As for the impact from tariffs, we see that most electronic products are still covered under the existing exemption rules. So the impact of U.S. import tariffs has so far been quite limited. We are continuing to monitor developments surrounding the Section 232 semiconductor tariffs to see how future decisions and enforcement may unfold. Having said that, given the current political and economic climate and with ongoing efforts from Taiwan's industry and government, we are cautiously optimistic that tariff pressure on Taiwanese companies should remain manageable in the grand scheme of things. And once short-term factors such as tariffs and currency fluctuations are absorbed, we expect ASUS to maintain a sustainable operating margin in the 4% to 5% range over the long term. Of course, this may naturally fluctuate within a reasonable band depending on product and market cycles. But on a multiyear basis, say, over 1- to 10-year time scale, we aim to consistently deliver an annual operating margin in the 4% to 5% range, which we consider to be reasonable. Operator: Okay. Now we have a question from TransGlobe Life Insurance. Unknown Analyst: The company just shared its shipment outlook for quarter 4. But if we look specifically at graphics cards and motherboards, what is the quarter-on-quarter target for that segment? Unknown Executive: Okay. Let me clarify that. In our earlier presentation, we discussed graphics cards together with AI server products, which may have caused some confusion since AI servers were growing much faster. So looking purely at stand-alone graphics cards, which seems to be what the question was about, we expect that quarter 4 shipments would be roughly flat quarter-on-quarter. And given the current market environment, we view that as a solid performance. Operator: The next question comes from TFB. Unknown Analyst: For ASUS's server products, which countries are your main shipment destinations? Are your clients mainly Tier 2 global CSPs? Also, do you have plans for additional investments or capacity expansion in the U.S. by 2026? Unknown Executive: Okay. I'll take that one. historically, most of our server customers have been second-tier CSPs or NCPs based in Southeast Asia. And this year, our strong server growth came from new orders from Tier 1 CSPs in Europe and the United States. Those orders are larger in scale, which explains the over 100% growth we achieved. As for U.S. production, that's definitely something that we are going to plan in response to policy requirements under the Trump administration. That is definitely for U.S. customers. Now we will be manufacturing servers locally in the U.S., but whether we will expand that capacity will depend on order volume. If customer demand continues to rise, we will adjust accordingly. But for now, it's too early to provide a definitive answer here and now. Unknown Executive: Now we have a question about GPUs. As with each new GPU generation, what's the market share that ASUS has achieved in the new RTX 50 Series graphics card? Unknown Executive: Okay. And as mentioned previously, ASUS works very closely with NVIDIA and that relationship has lasted for a very long amount of time, particularly for new product launches. That's something that ASUS takes very seriously and invest a lot of resource into in order to differentiate ourselves from other partners, which is why our market share has been shrunk following launches for each new GPU generation. For the newly released 50 Series graphics card, our latest market data shows ASUS holding over 30% share, maintaining our #1 position globally. This is also why our year-on-year graphics card revenue growth in quarter 3 exceeded 30%. Okay. The next question asks whether ASUS is seeing demand for AI inference servers on the enterprise side and what the shipment outlook and competitive strategy are for the new GX10 product mentioned earlier. And as we shared previously, the GX10 is a very high price to performance supercomputer with petaFLOP levels of computing power. For example, as many of you know, we are currently offering a configuration with 1 terabyte of memory priced at under USD 3,000. I think overall, this positions the GX10 as an exceptionally cost-effective system. Based on our current order visibility, most demand comes from organizations developing AI workloads locally. And so that would include entities like new start-ups, research labs at major tech companies, academic AI institutions as well as smart manufacturing vendors. So it's fair to say that the customer base for the unit is very diverse and quite broad. Given the current order momentum, we believe that annual shipments could reach several tens of thousands of units next year, anywhere from around 30,000 to 40,000 -- the number can really range. It may be as high up to 80,000 to 90,000 systems year-wide depending on market conditions. So that's our current preliminary outlook. Operator: Thank you. The next question comes from Nanshan Life Insurance and several other institutional investors. Unknown Analyst: You mentioned that graphics card shipments and motherboards for quarter 4 are expected to be roughly flat quarter-on-quarter, which implies that server shipments may decline sequentially. Could you explain the reasoning behind that and share your preliminary visibility or targets for the AI server shipments in 2026? Unknown Executive: I think it's fair to say that's very good and very detailed observation. Thank you. So right now, server sales are largely business to business. And every enterprise customer has its own deployment time line for an AI server center because building AI server infrastructure is complicated. It involves not just the installation of the server, but also data center readiness, power capacity and cooling systems. So our shipment schedule would vary depending heavily on whether each customer's environment is ready for delivery or not. As for 2026, the AI server market remains extremely strong. In fact, with the recent DRAM and memory shortages in the second half of this year, all of that is linked in part to the aggressive investment for AI servers from CSPs. The surge in high-bandwidth memory demand has taken up significant share of DRAM manufacturers production capacity, leading to tighter PC DRAM supply. And so with that in mind, we have set an aggressive internal growth target for AI servers in 2026, and we will continue to drive expansion in this segment. And given the company's current capabilities and track record historically, we are confident that we can deliver a strong performance in 2026. Operator: Thank you. After reviewing all the questions, it seems that we have covered most of the topics everyone is interested in. Since we are out of time, we will now conclude today's earnings call. Let us invite our 2 co-CEOs to share a few closing remarks. Unknown Executive: Okay. I think it's fair to say that this year has been a very turbulent year. Early on, there were tariff announcements from the Trump administration, followed by significant currency fluctuations in the second quarter. As a result, our various business units have all been operating under significant pressure. Fortunately, we delivered very strong results in the third quarter. In the past, ASUS was often viewed primarily as a consumer-focused company. However, over the past 2 years, we have made meaningful adjustments to the company. And you can now see that in quarter 3, our commercial business has grown significantly as a share of total revenue. And at the same time, AI servers remain one of our key focus areas, and we will continue to allocate more resources aggressively to both segments to sustain our momentum and live up to expectations from our shareholders. Okay. And thank you to our media friends and partners for joining us today and for your continued attention, feedback and support. Unknown Executive: As mentioned earlier, the impact of tariffs and exchange rate fluctuations on our operations has now been largely mitigated and brought under control. As we noted in previous briefings, ASUS has 2 major growth pillars in gaming and AI-related products, such as AI PCs and AI servers. As today's results show, we achieved outstanding performance in the third quarter, and we are confident that this momentum will carry over to the next year. For our commercial business line, it is something that we have been building for several years and also began showing strong results this year. And so this will remain another major growth driver for the company in the coming years. Looking ahead to 2026, as our CFO mentioned, we will be closely monitoring remaining tariff developments particularly the Section 232 semiconductor clause and the supply situation for key PC components, which may introduce some uncertainty. We will stay agile and resilient in responding to these changes while leveraging innovation and product leadership to expand our share in both consumer and AI gaming segments. Lastly, as a preview, at the upcoming CES early in January, ASUS will be unveiling a new lineup of products that will add fresh momentum to our 2026 growth. Thank you all once again for your participation and support today. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

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OXY 2025 Q3 财报电话会议

Operator: Good afternoon, and welcome to Occidental's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to Jordan Tanner, Vice President of Investor Relations. Please go ahead. Jordan Tanner: Thank you, Rocco. Good afternoon, everyone, and thank you for participating in Occidental's Third Quarter 2025 Earnings Conference Call. On the call with us today are Vicki Hollub, President and Chief Executive Officer; Sunil Mathew, Senior Vice President and Chief Financial Officer; Richard Jackson, Senior Vice President and Chief Operating Officer; and Ken Dillon, Senior Vice President and President, International Oil and Gas Operations. This afternoon, we will refer to slides available on the Investors section of our website. The presentation includes a cautionary statement on Slide 2 regarding forward-looking statements that will be made on the call this afternoon. We'll also reference a few non-GAAP financial measures today. Reconciliations to the nearest corresponding GAAP measure can be found in the schedules to our earnings release and on our website. I'll now turn the call over to Vicki. Vicki Hollub: Thank you, Jordan, and good afternoon, everyone. I want to take a moment to recognize Veterans Day and express our deep gratitude to all veterans and their families for their service. Today, I will address our recently announced sale of OxyChem, outline the strategic rationale and highlight our third quarter performance. Richard will provide details on our oil and gas operations, and Sunil will review our third quarter financials, fourth quarter guidance and considerations for the year ahead. The sale of OxyChem is a pivotal step in our transformation. The decision was driven by the scale, quality and diversity of the oil and gas portfolio we have built over the last decade. Since 2015, we have more than doubled our total resource potential and our production, going from total resource of 8 billion barrels of oil equivalent to 16.5 billion barrels of oil equivalent and from production of 650,000 BOE per day to over 1.4 million BOE per day. We now have a higher-quality portfolio with Oxy's lowest-ever geopolitical risk as we have shifted the percentage of our oil and gas production from 50% domestic to 83% domestic. And our portfolio has a development runway of 30-plus years that includes high-return, short-cycle, higher-decline unconventional assets complemented by solid return, lower-decline mid-cycle development opportunities in our conventional oil and gas assets. Our substantial oil and gas runway, along with our demonstrated expertise in maximizing resource recovery, created the foundation for accelerating value to our shareholders through the divestiture of OxyChem. The proceeds will be used to immediately strengthen our balance sheet, allowing us to significantly deleverage and achieve our principal debt target of less than $15 billion. This will reinforce our financial resilience and agility to navigate changing market conditions. With greater financial flexibility, we can broaden our return of capital program and accelerate shareholder returns. This will enhance our approach to delivering value to our shareholders by increasing cash returns and continuing to rebalance enterprise value through net debt reduction. Our strengthened financial foundation will enable us to accelerate the development of our industry-leading oil and gas portfolio by focusing capital on our Permian unconventional assets, including unconventional CO2 floods, along with our Gulf of America waterfloods and in the future, our Baqiyah gas and condensate discovery in Oman. We're excited about all the opportunities ahead to apply our subsurface expertise for greater resource recovery and the opportunities to advance our various low-decline enhanced oil recovery projects, particularly our CO2 EOR projects. Now turning to the third quarter. Our teams delivered another strong quarter of operational performance, generating $3.2 billion in operating cash flow and $1.5 billion in free cash flow before working capital. Notably, we exceeded last year's third-quarter operating cash flow despite WTI prices that were more than $10 per barrel lower in the third quarter of this year. Our team's continued focus on cost management and efficiency improvements also led to our lowest quarterly lease operating expense per barrel across our full oil and gas segment since 2021. This ongoing improvement in portfolio and operational performance underscores the quality of our resources and the exceptional caliber of our teams who continue to bring forward value by delivering more with less. In the third quarter, our oil and gas business produced approximately 1.47 million barrels of oil equivalent per day, exceeding the high end of our guidance range. The Permian Basin contributed 800,000 BOE per day, which is the highest quarterly Permian production in Oxy's history. The Rockies also posted outstanding results, thanks to strong new well performance and stable base operations. Additionally, our Gulf of America assets outperformed the high end of guidance, benefiting from favorable weather and achieving the highest uptime in our operating history. Our Midstream and Marketing segment delivered another incredible quarter, generating positive adjusted earnings and surpassing the high end of guidance. Our teams expertly navigated market volatility to maximize margins through strategic gas marketing, helping to offset challenging gas price realizations. Higher sulfur prices in Al Hosn further contributed to the quarter's results. As shown in our third quarter results, we remain focused on generating free cash flow at lower oil prices and maintaining flexibility in our capital and development programs to support near- and long-term value creation. Richard will now provide more details on our third quarter operational highlights and how we are positioned to generate stronger returns and higher free cash flow. Richard Jackson: Thank you, Vicki. I appreciate the opportunity to share the progress we are making in our operations and how we are positioning our plans going into 2026. In all parts of our oil and gas business, we are making significant advancements through a focus on 3 key areas: resource improvement, cost efficiency and operating ability to generate free cash flow across a range of oil price scenarios. Today, I will focus on our Permian operations, where there have been several meaningful updates across these 3 areas. I look forward to sharing more from our other teams in future calls. First, let me begin by highlighting our strong third quarter results. As Vicki noted, domestic production exceeded guidance with strong contributions from all business units in the Permian, Rockies and Gulf of America. This strong performance and record results were achieved while sustaining our outlook for lower capital and improved operating costs for the year. Compared to our original 2025 guidance, we have reduced capital expenditures by $300 million and operating costs by $170 million. We appreciate our team's continued efforts to exceed expectations. Importantly, this performance is part of our continued track record of cost efficiency. We recently highlighted that since 2023, we have realized $2 billion in annualized cost savings across our U.S. onshore operations, driven by continuous operational improvements in drilling, completions and operating expense categories as well as a value-focused supply chain management approach. We are seeing similar improvements across all of our operating teams and look forward to these efficiencies continuing into 2026. Building more on Vicki's introductory comments, we have made important progress in our organic oil and gas resource improvement across the portfolio. Today, I will focus on the Permian as it plays an essential role in our near- and long-term results. We have recently expanded our Permian resource base by 2.5 billion BOE, which now represents approximately 70% of Oxy's total resources of approximately 16.5 billion BOE. We achieved this organic resource expansion through subsurface characterization and the application of advanced recovery and technologies. Our deep Permian resource is both low cost and provides operational flexibility to support free cash flow across a wide range of oil price scenarios. When combined with our ongoing cost efficiencies and technical recovery advancement, this places the Permian as a core value driver for Oxy's future. To start, in the Delaware Basin, we continue to be a leader in new well performance across both our primary and secondary benches. Importantly, our secondary bench wells outperformed the industry average by 10% when compared to all benches, primary and secondary in the basin. In addition to improving productivity, these secondary benches also enable us to efficiently utilize existing infrastructure that was built to support our primary development. As a result, we have extended our resources through increased secondary bench development while lowering our overall development costs, leading to a 16% lower capital intensity since 2022. Additionally, over the last few years, we have significantly transformed our position and performance in the Midland Basin. Today, these development projects are incredibly competitive in our Oxy portfolio. This process began with a basin-wide subsurface characterization initiative and targeted development program to more fully understand the resource potential in the basin. We then strengthened our acreage position and achieved the scale needed for operational efficiencies through the CrownRock acquisition. Today, the combined Oxy and legacy CrownRock teams are delivering industry-leading well costs and performance, driven by both continued operational improvements and refined subsurface designs. Since 2023, our new wells have shown a 22% increase in 6-month cumulative oil production per 1,000 feet, while the industry average has declined about 5% over the same period. We have also reduced well costs by 38% since 2023. These step changes have created an expanded deep bench opportunity, allowing us to organically add top-tier Barnett resources across 115,000 acres in our Midland and Central Basin Platform operating areas. Again, we highlight that our new well performance in the Barnett is outperforming the industry average by 18% since 2020. Another resource opportunity and key differentiator for Oxy is the expansion of enhanced oil recovery into our unconventional shale. As a leader in conventional CO2 EOR, we are leveraging our decades-long investment and expertise into these assets. Since 2017, we have advanced unconventional EOR in our Permian, U.S. Permian and Rockies business units, completing multiple demonstrations where we have achieved positive and consistent results. These projects have delivered over 45% oil uplift, but we believe with continued optimization, our commercial projects have the capability to deliver up to 100% production uplift. We are now moving into commercial development with 3 initial projects and a current pipeline of 30 more ready for development. These mid-cycle projects offer low decline rates and competitive returns. Our unique and sizable Permian Basin CO2 infrastructure gives us an advantage as we scale these developments over time. Today, this represents a resource opportunity of over 2 billion BOE. We also continue to advance our existing conventional EOR assets with approximately 2 billion BOEs of undeveloped resources with low development costs, these mid-cycle projects are also meaningful as part of our future resources. Recent improvements in cost structure, including $80 million of our 2025 domestic operating cost reductions continue to improve the returns and investment priority within our portfolio. Beyond CO2 EOR, we are progressing a suite of complementary recovery technologies, including infill drilling, precision well placement and spacing, next-generation frac and other methods of EOR. We believe our ability to organically expand our low-cost resource base through subsurface characterization, continued cost efficiency and advanced recovery technologies give us a competitive advantage to deliver long-term value. As we look ahead to 2026, we continue to actively manage our operational scenarios for a disciplined approach for resilient free cash flow even if in challenging oil price environment. Our approach begins with a focus on operational and cost efficiency over activity reductions to preserve future free cash flow and to maintain optimized activity across our assets. A key part of this approach is working closely with our service company partners to capture supply chain savings, improving value for both parties. Beyond that, we selectively defer multiyear facilities and construction projects, allowing us to invest opportunistically in these projects when conditions are more favorable. We also regularly review and optimize our operating expense activities to enable us to scale and time activities for maximum free cash flow. Finally, we evaluate capital and development activity adjustments, always with a focus on achieving the most efficient capital to cash flow outcome. At much lower oil prices, capital flexibility becomes critical, and we remain committed to investing wisely, preserving optionality and delivering value through efficient execution. As we enter 2026, we are targeting a $55 to $60 WTI plan with flexibility to adapt to market conditions while continuing to improve cost efficiency to deliver our free cash flow needs without impacting operational performance. Looking ahead, we have a deep portfolio of short-cycle, high-return and mid-cycle low-decline assets that can deliver strong cash flow. We are focused on sustaining momentum by driving cost efficiency, advancing recovery technologies and optimizing our operations. Lastly, I'd like to thank all of our teams for their continued performance and especially safety as we look to end the year strong. I also look forward to working closer with many of you for the first time or again in my new role. Thank you for your time today, and I'll now turn the call over to Sunil for the financial discussion. Sunil Mathew: Thank you, Richard. In the third quarter, we generated a reported profit of $0.65 per diluted share. Strong operational performance and a continued focus on capital efficiency enabled us to generate approximately $1.5 billion in free cash flow before working capital. We had a negative working capital change, primarily driven by the timing of semiannual interest payments on our debt and payments within our Oil and Gas segment. During the quarter, we repaid $1.3 billion of debt, bringing our total year-to-date debt repayment to $3.6 billion and reducing Occidental's principal debt balance to $20.8 billion. Our strong financial performance can largely be attributed to higher volumes across our U.S. portfolio, which more than offset slightly lower-than-expected production from our international assets. New well and base production outperformance in the Permian and Rockies as well as higher uptime and favorable weather in the Gulf of America enabled us to exceed the high end of guidance across all of our domestic oil and gas assets. This production outperformance and the continued focus on delivering operational cost efficiencies led to lower domestic lease operating expenses in the quarter, notably outperforming guidance at $8.11 per BOE. Part of the outperformance also reflected the timing of certain offshore production engineering activities, which shifted into the fourth quarter. In the Midstream and Marketing segment, we continue to capture value through optimizing our gas marketing positions out of the Permian Basin and higher sulfur pricing in Al Hosn. Both were significant catalysts in the segment, generating positive earnings on an adjusted basis of $153 million, above the midpoint of guidance. Looking ahead, we are increasing our full year guidance for our Oil and Gas and Midstream and Marketing segments as a result of our strong third quarter outperformance and improved expectations for the fourth quarter. In Oil and Gas, we are raising our fourth quarter total company production guidance from last quarter's implied guidance to a midpoint of 1.46 million BOE per day. This is driven by the expectation for continued strong performance across all 3 domestic assets, which should more than offset impacts from a scheduled turnaround at Al Hosn also in the fourth quarter. Other Midstream and Marketing pretax income guidance assumes that our teams will capture gas marketing optimization benefits from the wider Permian to Gulf Coast spread observed already in the fourth quarter. We expect full year pretax income from the segment to come in approximately $400 million above our original guidance, largely due to those gas marketing opportunities and stronger-than-anticipated sulfur pricing from Al Hosn. Due to continued softness in the global chlorovinyl market, our third quarter OxyChem pretax income came in below guidance at $197 million. We are guiding to $140 million for the next full quarter. Beginning in the fourth quarter, OxyChem will be classified as discontinued operations. We are in the process of evaluating the potential impact of OxyChem's classification on our fourth quarter adjusted effective tax rate, and we will provide a further update early next year. Total company capital spend, net of noncontrolling interest of approximately $1.7 billion was in line with our expectations for the third quarter, and we expect to remain within our previously guided range for 2025 capital. As Vicki shared, the OxyChem transaction marks a significant milestone for our company as it will strengthen our financial position and enhance our ability to return capital to our shareholders. The all-cash nature of this transaction will enable us to accelerate our debt reduction efforts and achieve our post-CrownRock principal debt target of less than $15 billion. Of the roughly $8 billion in transaction net proceeds, we plan to use approximately $6.5 billion to reduce debt. Our initial focus is on the $4 billion of debt maturing in the next 3 years. This includes $1.3 billion of term loans maturing in 2026, which we can call at par and for the remaining $2.7 billion, we may largely use make-whole provisions to ensure certainty. Beyond that, we will be opportunistic, taking into consideration redemption prices and the impact on our maturity profile. This will meaningfully improve our credit metrics and is expected to lower our annual interest expense by more than $350 million while providing a very manageable near-term debt maturity schedule. The remaining $1.5 billion in net proceeds will go to cash on the balance sheet. By significantly lowering our debt burden and building cash on hand, we will create a stronger, more resilient balance sheet. With the achievement of our post-CrownRock principal debt target, Oxy will be positioned to broaden our return of capital program and adopt a more flexible framework for delivering value to our shareholders. We will be opportunistic with the share repurchase program. Our decisions and priorities will be driven by a range of factors, including the macro conditions, commodity prices, market valuation relative to Oxy's intrinsic value, cash on the balance sheet and the timeline to August 2029. We plan to resume the redemption of the preferred in August 2029 when the preferred equity becomes callable with a lower redemption premium and does not have the $4 per share return of capital trigger. Now I would like to share how we are approaching our capital program for 2026. Last quarter, we discussed the potential to allocate capital to mid-cycle conventional oil assets. We are planning to increase investment in the Gulf of America waterflood projects and in Oman, given both projects' high oil weighting and favorable base decline rates, combined with the enhanced economics in Oman following our Mukhaizna contract extension. Approximately an additional $250 million could be allocated to these areas as capital rolls off in our LCV portfolio. Considering the recent commodity price volatility and oil market outlook, we are evaluating multiple capital scenarios across our U.S. onshore portfolio. With the OxyChem sale, our U.S. onshore capital will comprise an even greater proportion of the total company investment program, which provides flexibility should the macro environment deteriorate. As Richard mentioned, we have an incredible runway of high-quality oil and gas opportunities and sustained momentum in delivering value through greater capital efficiency. We plan to reallocate up to $400 million to these short-cycle, high-return projects, primarily in the Permian. Any additional allocation of capital next year will be undertaken in a thoughtful manner with an eye to the oil market, given oversupply concerns. The quantum of that reallocation will depend on the macroeconomic environment, and we plan to share more on our 2026 capital budget during our fourth quarter call, pending Board approval. I will now turn the call over to Vicki for closing remarks. Vicki Hollub: Thank you, Sunil. As we highlighted, the OxyChem sale represents more than just a business decision. It marks the final major milestone in the strategic transformation that we've been pursuing for years. With this step, we are accelerating opportunities to extend our advantaged low-cost resource position and leveraging integrated technologies to deliver differentiated recovery and superior value. We are confident that these actions will further strengthen our competitive position. With that, we'll now open the call for questions. And as Jordan mentioned, Ken Dillon is joining us today for the Q&A session. Operator: [Operator Instructions] And today's first question comes from Doug Leggate with Wolfe Research. Douglas George Blyth Leggate: Vicki, maybe the first question is for Sunil, actually. It's on the capital guidance that you just talked about there, the soft outlook. If I'm doing the math correctly, so you dropped about $300 million from the beginning of this year, so you $7.2 billion. But $900 million was chemicals, as I understand it for next year. And I believe this year was $450 million on DAC. So that's about $1.35 billion. I'm trying to kind of get to the range for next year. So if you add back the $650 million you talked about, are we in the ballpark to think that spending next year should be down about $700 million on your -- based on your remarks, Sunil? Sunil Mathew: Yes. So Doug, you're right on the way you're approaching it. Like you said, midpoint for CapEx guidance for this year is $7.2 billion. Chemicals was $900 million. So you back out that, you're at $6.3 billion. Like I mentioned, we are going to increase CapEx in the Gulf of America waterflood projects and Oman, which is around $250 million, which will be largely offset by the roll-off of capital in our low-carbon venture portfolio. So you're back to the $6.3 billion. And with respect to U.S. onshore, like I mentioned in my prepared remarks, we are looking at potentially investing up to $400 million. So you start with $6.3 billion, and it could be somewhere between $6.3 billion to $6.7 billion, depending on the macro environment. And the other thing I would highlight is, like I said, with this increased spending in U.S. onshore, a proportion of U.S. onshore CapEx as a percentage of the total CapEx will increase. What that means is a lot more flexibility if the macro is going to become more unfavorable. And so that is one important thing. And I think like Richard said in his prepared remarks, the way we think about capital allocation for U.S. onshore, if you were to adjust our capital program, I mean, first, we look at our efficiency, both operating efficiency and what we're seeing in the market. Second is potentially how we can defer some of our facility spending. And the last thing would be in terms of activity. So I think from a capital point of view, you're looking at somewhere between $6.3 billion to $6.7 billion with a larger proportion of U.S. onshore CapEx where we have a lot more flexibility. Douglas George Blyth Leggate: The Street is obviously very smart, Sunil, because it's sitting at $6.5 billion right now. So that's really helpful. My follow-up, if I may, is for Richard. I'll take advantage and also wish him congratulations for your new role, Richard. I'm thinking a Permian field trip might be in the offing, but we'll take that one offline. My question is, you did say you've added 2.5 billion barrels of resource mostly in the Permian. You've obviously got -- it looks like sector-leading drilling per lateral foot cost now. And clearly, the breakevens in the Barnett are coming down. So my question is you haven't given us a resource -- drilling backlog or a breakeven for the sustaining capital for the portfolio. So I wonder if you could address those. Where does this leave your drilling inventory? And what would you say is the sustaining capital breakeven at this point for the portfolio? Richard Jackson: Doug, this is Richard. Great to hear from you and appreciate that for sure. Always enjoy our Permian visits. Let me start just sort of addressing generally why resources. I think for a long time, we've been trying to characterize our strong unconventional resource base. And the way to do that was to talk about drilling inventory and think about breakevens against that. I think as we look forward, as we're explaining today, we're so much more than that. We have our big opportunities in our conventional assets and just felt like moving to more of a resource explanation was a better representation of what we are and the value that we have. If we sort of break down that 2.5-billion-barrel Permian add, most of that -- much of that is coming from continued unconventional shale improvements. And in our view, this is technology. This is using our subsurface characterization to continue to fine-tune our design, especially around the secondary benches, which we felt like was important to point out in this highlight. It includes things like the Barnett where we had an existing position. Much of that Barnett resource runs into our Central Basin platform where we've operated in our enhanced oil recovery business unit for a long time. And so much of that continues, and that would be a direct translation to the drilling inventory that we've disclosed previously. But the other piece is the EOR. And we highlight the unconventional EOR today, but also across our conventional position. And so in total, we just felt like that was the right way to think about it. In terms of the Barnett, obviously, a big piece of that becoming competitive in our portfolio is the drilling cost improvement and just very pleased with the progress by the teams in the Midland Basin for what they've been able to do, but we're seeing that across all of our basins. I think we highlight in one of the slides about a 14% total reduction in well cost across all of our unconventional drilling, same in the Rockies. So in general, that's improving our resource base. And so I think going forward to the breakeven, we'll continue to characterize that resource base with a breakeven. I think we've talked about our projects for the year, our annual programs are all less than $40 breakeven. And so on a project basis that we expect that to continue. And like we've shown in the past, it's always improving the resource, expanding it, yes, but improving is the most important component of it and cost is a big part of that. Operator: And our next question today comes from Arun Jayaram with JPMorgan. Arun Jayaram: My first question is maybe on Slide 16. Perhaps for Richard, I was wondered if you could maybe give us more details on the demonstration pilot. It looks like in this example, you're highlighting CO2 injection around 3 years after initial production from the well. But I was wondering if you could just talk about the applicability of this on older wells that may have been completed 6, 7 years ago. And maybe just a little bit about the math around the 2 billion BOE resource opportunity, that would be helpful. Richard Jackson: Yes. Great. I appreciate that question a lot. The example we're highlighting on that slide in the Midland Basin, it was with CO2. These wells were originally online in about mid-2015. So your question is perfect. While they apply to historic wells like we're showing here, they also apply to more recent vintage as well, and I'll walk through that math in a second. But just a little bit on that pilot. Again, that's about a 45% uplift. We had 5 injection cycles that were completed over those 3 years, we stopped and saw this 45% uplift. If we modeled out continued cycles of CO2 injection, this is where we get to the 60% and even 100% production uplift. And so that's where that comes from. If we look at the 2 billion barrels, if you think about recovery factors in the 8% to 12% with unconventional, if you look at this 45% to 100% uplift, now you're talking about reaching recovery factors in the 15% to 20%. So that is likely a little bit more for the oil and perhaps a little bit less for the gas in an oil reservoir. But if you look across the derisked unconventional acreage where we have this opportunity, that's how we began to account for the 2 billion barrels of unconventional EOR. As I mentioned, we've got 3 projects that we'll be working into commercial development over the next couple of years. Those are really spread between New Mexico, Texas, Delaware and the Midland Basin. So again, it's sort of an approach that can be applied to multiple areas. And then based on this technical work, we have another 30 development-ready projects across these basins that will be ready to develop. And so again, as we think about the role of mid-cycle low decline cash flow in our outlook, we believe these can be very meaningful as we look forward into future years. Arun Jayaram: Great. That's helpful. My follow-up is Sunil mentioned that you could redirect $250 million of capital from the reduction in LCV capital back into the Gulf of America for waterfloods in Oman. I was wondering if you could provide some thoughts on the -- what you believe these waterflood projects can do to your productive capacity in the Gulf of America. Maybe just thoughts on Gulf output as we think about 2026. Kenneth Dillon: We now have 2 waterflood projects, FID and GoA. These will result in improved recoveries of nearly 150 million BOE and significant reductions in decline rates over time. Potentially, these could lead to GoA declines going from 20% today to 10% in 2030 and 7% by 2035. So a significant impact on the base. First up is at the King Field, which is a tieback to Marlin. There will be a dump flood, which requires very limited facilities. That will be on stream in Q2 next year. This will lead to a potential extension in field life of around 10 years. At Horn Mountain, we've used the latest OBN seismic with our in-house developed tools to place the first injectors. 2 will be drilled in Q1 2027. And in parallel, facilities will be installed in Horn Mountain, leading to a target injection date of Q2 2027 and an expected response date during late summer 2027. We've been ready to go for some time and all the long lead items have now been placed. Returns expected to be in the 40% to 50% range for these projects. So overall, last time I talked about improving well performance, this time talking about lower decline. And as you can see, we've had improved reliability, both on rotating equipment and general facilities. We were aided by the weather a bit, including, I would say, being able to get through a lot of fabric maintenance work in this time period. So overall, still working on next year's plan. Part of that is tying the construction activities for the waterfloods to the planned maintenance required offshore so that we only take the platforms down once and have multiple staggered turnarounds. Operator: And our next question today comes from Neil Mehta with Goldman Sachs. Neil Mehta: This is an important time for STRATOS as you guys are ramping this project up. And so as the rubber hits the road, I just wanted to understand what the gating items are and early thoughts around start-up activities. Kenneth Dillon: Yes. Overall, the STRATOS Phase 1 start-up is proceeding well. Since we last talked, we've commissioned the central processing unit with water. Another major milestone was achieved that was starting up the process compression facilities, which are required for CO2 injection. Siemens Energy team, I have to say, including the CEO and the execs have been incredibly supportive of the project. This is a large complex machine, which basically started up first time. We've now started loading the first fills of pellets and chemicals and continue to start up the other unit operations. So the next up are the centrifuges and then after that is the calciner, and these are the 2 remaining unit operations before we export the CO2. We continue to optimize each of the units during start-up as we always do. And while that does cost us some time now, it will pay tremendous dividends going forward. Priorities are to learn for long-term capture efficiency and uptime. So overall, we expect to be circulating KOH this quarter and injecting CO2 in Q1. Neil Mehta: Okay. And I had a couple of questions around just return of capital as the follow-up. And so I think following the OxyChem sale, I think investors definitely recognize the value in improving the balance sheet, some of the concerns that we heard was about the legacy liability. So I guess this will be the first time you have an opportunity to maybe address that and help people get comfortable around that. And then while I know that you can't knock out the preferreds until August 2029, is there an opportunity to opportunistically repurchase shares before them to help alleviate some of those concerns. I just want to give you an opportunity to address both of those. Vicki Hollub: Okay. With respect to the return of capital, we definitely want to take out the -- all that we can, the $6.5 billion of debt first. And then beyond that, we are going to opportunistically buy back shares. And we -- and it has to make sense. It's a value calculation for us to determine whether to do that or whether it's best to take down some more debt or put more into the business. But one thing with respect to the use of cash, I want to make very clear to everybody, and that is that we're not going to aggressively put lots of extra barrels into an oversupplied market. So when we're talking about the possibilities here on the call, I want you to understand that we definitely have plans to be very flexible in that. And I think Richard may have an opportunity later to share more on what that's going to look like. But we are going to stay within our means in terms of using the cash that we have, but not taking down too much cash off the balance sheet. We'll try to maintain about $3 billion to $4 billion on the balance sheet as we go forward. And the legacy liabilities with respect to OxyChem, the bulk of those liabilities are outside the operating areas that were purchased. And there's very little cash being spent or any necessary activities beyond what's already happening within those assets -- operating assets that were bought. Everything else is outside. It made no sense to -- for those liabilities to go. And what they're costing us is right now somewhere in the neighborhood of $20 million or so on an annual basis. The liability that's the largest, of course, prosaic, but that prosaic it's going to be spread over 20 to 30 years. So this is going to take a lot of time to develop that and to work that. And so this really has minimal impact on us to maintain these. It's really not material to what we do. And the repo -- the Berkshire, you want to talk about the Berkshire, Sunil? Sunil Mathew: Sure. So Neil, like again, I mentioned in my prepared remarks, now that we've got a debt target below our goal of less than $15 billion. And as Vicki outlined, we're going to be opportunistic with respect to share repurchase. It's going to be driven by the macro conditions, where our stock price is trading, cash on balance sheet because our ultimate goal is to start or resume the redemption of the preferred once we get to August 2029. So what you're likely to see is as we get towards August of 29, we're going to start building up cash on our balance sheet. So there is no formula as such in terms of share repurchase, but we're just going to be opportunistic, considering or keeping in mind that by August 2029, we want to build cash on the balance sheet. Operator: And our next question today comes from Paul Cheng with Scotiabank. Paul Cheng: Sunil, can I just clarify that in your 2026 CapEx, you're saying that you're going to redirect, say, $250 million from the LCV into the Gulf of America and Oman? So that means that LCV we're not going to spend any money at all? And also that, I think for Richard, can you talk about the $400 million that on the quick payback onshore project, what kind of production contribution we should expect for 2026? The second question is exploration. With your resource, it seems like you are finding more ways to get resources from the onshore market. So if that means that exploration will remain sort of like not the most important aspect for your program over the next several years? Sunil Mathew: So Paul, with respect to LCV CapEx for next year, we think it's going to be around $100 million as we roll off capital with the completion of STRATOS. Richard Jackson: Yes. I'll pick up a bit of the scenarios with the potential $400 million that Sunil talked about. I mentioned in my remarks sort of a target initial plan of $55 to $60. And what that means is really, if you think about continuing activity this year, that would be up to that $400 million that Sunil talked about. So actually flat in terms of resources that we would go from this year into next year. In terms of what that makeup for next year might look like for EOR, it's actually -- it's light. It's about $100 million between EOR and unconventional EOR. And so it's fairly light next year. And it's actually pretty capital efficient as we look in the out years because we're not drilling wells, we're using CO2 in terms of the recovery. But I also want to highlight, we work scenarios below the $55 plan. And that's one of the advantages of the allocation of capital into the U.S. onshore. We have plans that go below $50 to be able to adjust to really carry Oxy in total in terms of cash flow to meet a breakeven and obviously cover our uses of cash. So we have that mapped out. We've done it in the past. That's why we wanted to go into some detail on the thought process of how we react to lower oil prices. Obviously, we like to work through efficiency first, but we do have that activity flexibility in our operations, especially in the U.S. to adjust in lower oil price scenarios. Kenneth Dillon: And then following up in GoA, we are -- we've already started deferring some exploration from next year into the following years. And in Oman, these are not really big exploration. These are step-out wells very close to our existing facilities, which can be brought online incredibly quickly. Operator: And our next question today comes from James West at Melius Research. James West: So Vicki, maybe a bigger picture question for you. A lot of moving parts the last several years with Oxy, lots of changes in the portfolio. You've been busy is the key here. With the OxyChem sale, are we going into now a quieter period, maybe a harvesting type of a period? Vicki Hollub: Absolutely. And I'm thankful to be at this point finally. Yes, we've gone through -- there was a lot, as you said, going on, but this is where we wanted to be, and this is where we needed to be. So we've done everything that we set out to do with respect to being mostly a U.S. company with very high-quality, high-margin assets and assets that can sustain over the long term. And we think that our portfolio is so much differentiated from anybody else because we not only have the high return but high decline shale, it's complemented and will be complemented in the future by the conventional assets and conventional EOR, along with unconventional EOR. And when we look at where our portfolio stands today of the -- our production, where we -- our total development, 45% is conventional and 55% is unconventional. Going into the future, we have a ratio of -- looks like about of the total $16.5 billion that we have in resource, about 65% is unconventional, 35% conventional. But the beauty of the unconventional is what Richard talked about, and that is the fact that in the unconventional, we are going to be able to do -- use CO2 for enhanced oil recovery in the unconventional. It's going to recover, we believe, up to the same amount as primary production. So we'll get 100% of what we got before. So we're doubling our total recovery from the unconventional. So that will be actually low decline as well over time. So we think that versus a pure shale player or versus those that have assets that are difficult to manage internationally and in foreign countries, we think that we're much better positioned with this portfolio. So yes, we're done with anything that's -- any big acquisitions or anything like that. Operator: And our next question today comes from Matt Portillo at TPH. Matthew Portillo: Maybe just a question to start out on the DJ. You highlighted in Q3 strong well performance drove upside to your production figures. I was curious if you could just maybe comment on in the Rockies, if you've changed anything on the completion or spacing design? Or what's really driving the outperformance there? Richard Jackson: Yes. Thanks. A big part of that beat really the last couple of quarters has been our base production. And so a lot of work we've talked about in the past, we've been doing around artificial lift, even using some analytics to improve our efficiency on that. So that was the biggest part of it. We have had better new well performance as well. I wouldn't call it major changes. We just continue to tweak sort of our subsurface designs and our flowback. The base actually -- the production operations that support the base also help our new well production. And so a lot of that new well beat is just better uptime on some of our processing facilities. Matthew Portillo: Great. And then maybe just a follow-up on the inventory. I was wondering if you might be able to comment on your views around your DJ inventory and how you might be able to flex capital in kind of a lower commodity price environment, just thinking through kind of the remaining locations left and obviously, some of the upside that you've highlighted here in the Permian, how you can flex capital between those 2 basins? Richard Jackson: Yes, that's great. Yes, we've been largely working in the DJ around an optimized activity set. We've had a couple of rigs and one frac core. And so that's been a big piece of it, continuing to show efficiencies, like I said, on well costs earlier. I think in the Rockies, as we look to the future, excited about the Powder River Basin. We continue to make progress there. We sort of have been working similar to the way I've described the Midland Basin, where we -- first, we're sort of proving out the productivity of the wells really in the '23, '24-time frame. And then in '25, we've had a partial rig year where we flexed the rig up to the Powder River Basin. We've had really drilling record after drilling record up there. We've improved about more than 25% versus the last year in terms of drilling performance. So that was a bigger part of it. And so now really, as we look to '26 and beyond, we have that opportunity to flex from the Rockies to the Powder River Basin. And so again, I don't really see an increase in capital, just more optimization in terms of that portfolio for the Rockies with that. Operator: And our next question today comes from Neal Dingmann at William Blair. Neal Dingmann: My question is just on the low Permian well cost that you all showed for maybe for Richard. Is the larger projects contribute to that? Or what was the main driver of that exceptionally low cost? Richard Jackson: Yes. Great question. We've been on this mission in the last couple of years to really relook at both the operational efficiency of our operations and working, like I mentioned earlier around our contracts and service contracts. And so it's really been a bit of both. I'd say the scale in the Midland Basin certainly helped. We were able to combine really the best of the best from Oxy and our CrownRock -- legacy CrownRock team and really just worked on that piece of it. But the scale certainly helped. So I do agree with that. But from an efficiency or from a contract standpoint, I think we were also entering a period where we made sure we were getting the right contracts for the right type of work. And so we've done a lot of work on that. We're fairly short right now in terms of contract term. And so we're working hard with our partners there to kind of think about how it looks going into 2026 and making sure we got those 2 pieces put together correctly. Neal Dingmann: Great point. And then just a follow-up, Richard, you talked a lot on the conventional EOR today and the amount of possible recoveries there. I'm curious, what type of returns? I assume the returns around some of that incremental upside would be very positive, I would think, correct? Richard Jackson: Yes. We highlighted 25% to 35% kind of where we're at today. And so if we're able to increase the uplift like we're talking about, those are only going to get better. So the goal, obviously, is to be competitive in our portfolio. And so the teams will be working on that. And that -- again, that's the beauty of the portfolio that we have. It's not so much the expansion, but it's the competition to make sure that we're putting capital where best placed for the returns that we want. Operator: And our final question today is coming from Leo Mariani with ROTH. Leo Mariani: I really appreciate all the details on '26. You certainly talked about the range of capital, $6.3 billion to $6.7 billion. Very helpful. Can you give us just some high-level indications of what would you kind of expect production to do in that range? Is that kind of a maintenance range for production maybe at the lower end and maybe you see a modest amount of growth at the high end? What can you kind of tell us about kind of associated production? Sunil Mathew: So in terms of production, you would be looking something close to flat to potentially up to 2% growth. Leo Mariani: Okay. That's very helpful. And I guess any specific areas that largely kind of unconventional that kind of provides the growth for next year? Is that kind of the flex piece is really that $400 million, which I guess is mostly unconventional Permian? Sunil Mathew: That's right. So the growth will be largely driven by unconventional Permian. Richard Jackson: Right. And as I mentioned, the flex down will go after efficiency first to maintain activity, but in position to be able to cut activity as required based on the macro. Operator: Thank you. And that concludes our question-and-answer session. I'd like to turn the conference back over to Vicki Hollub for any closing remarks. Vicki Hollub: Before we close, I want to express sincere appreciation to the entire OxyChem team for their steadfast commitment to safety and operational excellence. Their achievements have contributed significant value over the years, and we're confident that OxyChem will continue to thrive under new ownership. So thank you all for your questions and for joining our call today. Operator: Thank you. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

146天前Insight Analytics约5分钟阅读

MDAI 2025 Q3 财报电话会议

Operator: Good day, and welcome to the Spectral AI Inc. Q3 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Sara Prendergast, Assistant General Counsel. Please go ahead, ma'am. Sara Prendergast: Thank you, Nick. Good afternoon, everyone, and thank you for joining us for Spectral AI's 2025 Third Quarter Financial Results Conference Call. Our speakers for today will be Dr. DiMaio, the company's Chairman of the Board; and Vincent Capone, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, certain statements made are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives and financial outlook. When used in this call, the words estimates, projected, expects, anticipates, forecasts, plans, intends, believes, seeks, may, will, should, future, propose and variations of these words or similar expressions or the negative versions of such words or expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside companies control that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, listeners are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the Risk Factors section of the company's filings with the SEC, including the registration statement and the other documents filed by the company. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. With that, I would like to turn the call over to Dr. DiMaio, Spectral AI's chairman of the Board. John DiMaio: Sara, thank you very much, and good afternoon to everyone. We appreciate you joining us today for our third quarter financial results conference call. I am quite pleased to discuss with you our results of operations through the third quarter of 2025. As I've mentioned on previous earnings calls, I follow a mantra here at Spectral AI of Finance, Focus and finish. I believe we are moving forward in all three phases as we complete our 2025 calendar year. Following our FDA submission in the second quarter of 2025, we continue to work on developments in our DeepView system. I'd like to address additional developments in the third quarter of 2025 as following: number one, finance. Our cash balance has stayed flat at $10.5 million from the second quarter of 2025. We continue to monitor our operating efficiencies and had a number of stock option and warrant exercises that contributed to the continued high level of cash reserves at our company. On top of that, as announced in October, we completed an additional registered direct offering of our common stock adding $7.6 million of additional cash reserves to the company's balance sheet. With total cash on hand at the end of September 2025 of over $10 million, a closely managed spending rate and the additional funding from our registered direct offering, Spectral AI has a significant financing in hand for the foreseeable future that enables us to continue our work on our product commercialization efforts, including the planned U.S. launch of our DeepView system next year. Number two, focus, which is the FDA submission. Our FDA submission, which was submitted in June of this year was a very big milestone in our company's development. I am proud of our team for their hard work and dedication in meeting that very important time line. The submission is obviously a key driver in the evolution of our business. We continue to have further interactions with the FDA on our de novo application, albeit somewhat slowed with the current U.S. development -- U.S. government shutdown that we're all experiencing. We continue to move forward with the de novo application full speed ahead as we have stated. Number three, finish. Lastly, finish is what we continue to focus on as we look to our BARDA partners to bring the DeepView system and the device to the commercial marketplace. We continue to focus on releasing next year and preparing to launch the commercialization strategy that we have discussed and will continue to refine as we move to that milestone. We continue to have a very broad application and indications that we seek in addition to burns for which we have a CPT 3 code and additional indications that will broaden the marketplace. We've had outstanding support from the burn community and at burn conferences with our abstracts being presented at national forums and publications and international publications. This further solidifies what's happening with our system in addition to the support that is receiving from the burn and the wound community at large. I thank you again for your attention to our company. And with that, I will turn things over to our Chief Financial Officer, Vince Capone. Vince? Vincent Capone: Thank you, Dr. DiMaio. Thank you all for joining us this afternoon. We issued our earnings release this afternoon, which contains additional details of our operating results, and we will be filing our Form 10-Q with the SEC later this week as well. With that in mind, I will focus my remarks on select highlights and key items. Our research and development revenue in the third quarter of 2025 was reduced to $3.8 million from $8.2 million in the third quarter of last year. This reduction reflects our anticipated reduced reimbursements under the BARDA Project BioShield contract, which was awarded to the company in September of 2023. In the third quarter of 2025, following our FDA de novo submission, we have incurred less direct labor clinical trial and other reimbursed costs from the prior year's quarter. Gross margin decreased to 42.7% from 44.8% in the third quarter of last year due to a lower percentage of direct labor as a percentage of our total reimbursed costs under the BARDA Project BioShield contract from the prior year's quarter. General and administrative expenses for the third quarter of 2025 were $5 million as compared to $4.6 million in the third quarter of 2024. This increase reflects increased third-party adviser and consulting costs and an increase in non-billable work that is not related to the BARDA Project BioShield contract. The company reported a net loss in the third quarter of 2025 of $3.6 million as compared to a net loss of $1.5 million in the prior year's third quarter, again reflecting the reduced research and development revenue and the higher general and administrative expenses from the prior year third quarter. Even with a $2.1 million increase in the net loss for the third quarter of 2025 as compared to the third quarter of 2024, the company is reporting a net loss of $8.6 million for the first nine months of 2025 as compared to a net loss of $7.4 million for the first nine months of 2024, reflecting our focus on managing our overall cost structure. At September 2025, we had 27,251,034 shares outstanding. Moving to our balance sheet. As Dr. DiMaio has previously noted, as of September 30, 2025, cash and cash equivalents totaled $10.5 million up from $5.2 million on December 31, 2024. Our cash balance has remained consistent since June 30, 2025. This is primarily due to the exercise of stock options and warrants in the third quarter of 2025 and our continued management of our operating expenses through the third quarter of 2025. Please note that this cash balance does not include the gross proceeds of $7.6 million of additional funding the company received in connection with our registered direct offering in October 2025. With our large cash reserves, our focused approach on managing our operational costs and expenses, we believe this level of funding is sufficient to provide the company with the necessary capital for the foreseeable future. For 2025, we are reducing our revenue guidance from $21.5 million to $18.5 million. The reduced revenue guidance reflects the anticipated reduced work on our BARDA Project BioShield contract since the submission to the FDA and some timing effect from the U.S. government shutdown, which we believe will be largely made up within the first half of 2026. Also note that our guidance does not include the contribution of any sales of the DeepView system for the burn indication in the United Kingdom or in Australia. Thank you for your time and attention today. And with that, operator, let's open up the call for questions from our analysts. Operator: [Operator Instructions] And your first question today will come from Ryan Zimmerman with BTIG. Unknown Analyst: This is Izzy on for Ryan. So Vince, I heard your commentary about the impact of the government shutdown and how that played into timing. But I was hoping you could provide a little bit more color around exactly what has been impacted and just confirm that everything is still on track for that expected first half '26 approval? Vincent Capone: Sure. Izzy. Thanks for participating on the call. Yes, Izzy, we continue to see our FDA submission. We don't see any holdups in our FDA submission into 2026. Actually excited this week if we can get the government to lift the shutdown. But some of our conversations with BARDA, some of the conversations we have with their teams and the team involved with the continued development of our DeepView system, some of that has been delayed and ultimately, we just see it as a timing issue for the most part, understanding that nothing has changed with the delivery of what we hope and anticipate that we will get FDA clearance of our device in the first half of 2026 and also the continued work through the BARDA contract, which I'm sure you're aware, that runs through the end of the first quarter of 2026, at least the base phase. So no, other than that, I mean, it's just really a general slowdown in work with our BARDA partners. I hope that answered your question. Unknown Analyst: Yes, it does. It's helpful. And I know it's early to think about guidance for 2026, but you did mention the expectation that some of this revenue will be made up next year. So I was curious if you could provide even some qualitative commentary about the cadence or pacing of that for next year. Vincent Capone: Sure. As well, Izzy, ultimately, we have always projected that 2026 will be, in general, a down year on revenue from where we were in 2024 and in 2025. Our current forecast shows relatively flat between 2025 and 2026. There might be a small reduction in overall revenue. Still working through that and obviously, there's a number of assumptions built in there. But I would anticipate 2026 to look -- from a revenue standpoint, probably somewhat lower than it is in 2025, but I don't know that materially it will be much different. But that's a turn year for us as we look to commercialize the device and then we see '27 and obviously, '28 to be significant years for the company's growth. Unknown Analyst: That's helpful. And then last one for me. I know there are several units that are placed in international markets. I was curious what some of the feedback has been from those sites and how you're using that to inform your preparations for the U.S. launch? John DiMaio: Yes. If you mind, I'll take that question. Thanks for that question, which, of course, for me, as a clinician, is terribly important. The answer is the feedback we've gotten from the units in the -- outside the U.S. have been overwhelmingly positive. The comments include that it's easy to use, very helpful and even a number of papers and abstracts have been in publication or published to document this in addition to the verbal feedback that we've gotten as well. So the answer is you've also used some of that feedback in terms of certain changes or minor adjustments in the device that we plan to incorporate with the next iteration in our Phoenix device. So in summary, we have been -- the device has been very positively received. It's been easy to use with both physicians and nonphysician health care providers and has really facilitated the care burn patients outside the United States. Operator: And the next question today will come from Carl Byrnes with Northland Capital Markets. Carl Byrnes: Congratulations and thanks for the question. I'm just wondering how your communications with the FDA have been progressing? And has there been any additional requests or outstanding items with respect to the filing or has it been a relatively clean and clear exchange? And then I have one quick follow-on. John DiMaio: Yes. Thank you. This is Dr. DiMaio. Thanks for that question because as you say, this is the second part that I mentioned, the focus of FDA. And the answer is we've had very, very frequent and good communications with the FDA. There are obviously certain adjustments and questions that they have for us and additional matters. I would be -- probably couldn't or shouldn't discuss those publicly, that would probably violate some of the FDA's requirements. But suffice it to say, we've had very good communications One of the most important aspects is the statistical analysis plan or the SAP, which, of course, is the guts of the artificial intelligence algorithm, and that's been very favorably received. And so that was what I was personally most concerned about, and that seems to have gone very, very well. Our data science team has done an outstanding job. There's some other testing we'll be looking at, whether there's additional human factors studies or additional reliability testing that we're discussing with the FDA right now, and we're getting clearance and clarity on that. And once we complete that, we anticipate we'll move ahead forward. But in summary, we've got good interaction. We provided additional information, and we literally have calls scheduled in the next couple of weeks with the FDA for further clarification. Carl Byrnes: Great. Perfect. Excellent. That's -- and just one quick follow-up. With respect to Snapshot, is there any update on the development of the handheld module? John DiMaio: Good question. So thank you for that question as well, the handheld. And the answer is a big yes. Additional development is going on that. As you know, that's primarily a military project sponsored by the military, and we have got good feedback that they have like the preliminary design of the handheld device and is currently going through testing and environments that the military requires us to perform, including high temperatures and low temperatures as well. And so we have gotten and we are seeking additional support, which is -- we plan to be forthcoming from the U.S. military to continue to develop that device for military use. In a parallel fashion, we're having discussions to have the same form factor or simpler form factor for the military for civilian use, and that's active as well. So the answer is that we are moving forward with the military as the background of the basis to be able to develop a civilian application with a very similar device. But I want to emphasize to you as well as anybody else that we do anticipate at least in the short or midterm to have the cart-based device, because, of course, that's what BARDA has paid us to do. It's very easily used in the burn units. It's larger in the operating room, in the emergency room and so forth and we see the handheld unit as complementary or additive and not necessarily replacing the cart-based device. As well, please know that we plan for the cart-based device to be the basis for a 510(k) application for the handheld device. So there's similar technology, similar camera, et cetera. So it will simplify the progression of our technology from cart-based to hand based. Carl Byrnes: Great. Very helpful. And again, the handheld is funded through MTech and DHA. Correct? John DiMaio: That's correct. Yes, sir. I've been deemphasizing that not to deemphasize it because of the military per se, but also emphasize that we're looking at the civilian market as well. But yes, the current diversion is funded by division, the Department of Defense called MTech and DHA. That is correct. Operator: The next question will come from John Vandermosten with Zacks SCR. John Vandermosten: Great. I'd like to start out with just getting a sense of your commercialization preparation activities and ask if you're planning to hire perhaps a Chief Commercial Officer or Chief Operations Officer? And then also along that same line, what efforts are being made, I guess, in terms of market access, distribution, marketing and launch execution over the next few months coming up on the target action date? John DiMaio: John, that's a great question and I appreciate it. And of course, that's the third half, which is finished. So in no particular order, we already have a person who is a commercialization person right now on board, and he's working to process all this as well. We have in the budget for 2026, four more people, four more FTEs that we're talking about bringing on board shortly to be able to have Salesforce and other parts of what we call professional education as well. Please note as well that the BARDA budget includes some of those costs, which helps us defray some of the costs in the initial stages of commercialization. The next part of that, of course, is that we're talking about the burn community, which as you know from our research studies, there's 137 burn units in the United States, and there's a large number that are participating in our research trials so I would think or argue that we have got a very good leg up on the community for which we intend to do. The first sales are quite well aware of the technology and are quite excited about getting it in their hands as soon as it's federally clear from the FDA. And lastly, and maybe as importantly, is that the BARDA contract, once we get FDA clearance includes clauses to help begin the placement of these devices and the burn centers and beyond. So in answer, I think we have a very good foundation with people, funding in place to start the commercialization rollout, and we will be ramping up as well to make that happen. John Vandermosten: Okay. That's good. And you had several presentations at the European Burn Association. And I was wondering how they were received by the audience and who the audience was? I know it was in Europe. I think it was in Germany. Is this allowing you to push further east, I guess, from the U.K. to get more health groups interested in using the device? John DiMaio: Yes, sir, John. Again, another great question. Thanks for that. And so the answer is that there were burn meetings both in the U.K. and in Germany, of which members of the burn communities there as well as members from the U.S. burn community participated. We had presentations at all those meetings. And again, not because I'm prejudiced, we had outstanding reception from those presentations and a big, big request, how soon will they be in those areas. Again, we already have units placed in the U.K. And literally today, we had discussions about expanding into the European market, both Western and Eastern and those discussions are forthcoming. We plan to progress further with getting clearance from UKCA and CE Mark as well. The current device in the U.K. is going to be upgraded and based upon what we've learned in the U.S. market and from the FDA. So in summary, yes, we do plan to expand into the U.K. and parts of Europe and maybe even beyond that. But our primary focus for right now, of course, is the U.S. But yes, the secondary and tertiary focus will be outside the U.S. John Vandermosten: Okay. Got it. And last question for me is on the Spectral IP transaction. I know that has been announced, and I haven't seen anything and wanted to know if that was -- or what the status of that was? John DiMaio: Vince? Vincent Capone: Thank you, Dr. DiMaio. Yes, I'll take this one. John, good to hear from you. Thanks for participation today. Yes, the Spectral IP and the SIM IP transaction that's currently working through the SEC. And I would anticipate that those filings will be reviewed with an eye towards my understanding as of today is that I would expect that transaction to close probably in the first quarter of 2026. And I would expect that you'll see something in our financials probably in the first quarter of 2026, reflecting that transaction. Operator: That concludes our question-and-answer session. I would like to turn the conference back over to Dr. DiMaio for any closing remarks. John DiMaio: Thank you again for your participation and continued interest In Spectral AI. We are very pleased with the progress, as I described with the three Fs, and we continue to make remain optimistic about our prospects for growth. We continue to work hard on the three principles that I outlined, and we look to have further announcements on our progress with these goals in the very near term. I thank everyone on the call and wish you a very good evening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

146天前Insight Analytics约5分钟阅读

ATDRY 2026 Q2 财报电话会议

Nathan Coe: Good morning, everyone, and welcome to Auto Trader's results for the 6 months ending 30th of September 2025. I'm joined by our COO, Catherine; and our CFO, Jamie, who will both be presenting and joining me for Q&A. You will have seen the announcement regarding Catherine moving on to become CEO at Moonpig. We are very pleased with Catherine and wish her the best as she embarks on the next chapter of her career. Catherine has been a pleasure to work with and has had a real impact at Auto Trader. She will be missed, but she leaves behind a strong team with bench strength that is both broad and deep. So we have a little worry that we will carry on uninterrupted. Our disproportionate focus on internal development over external hiring serves us well at times like this. Catherine is still with us for some time, and we will announce her leaving day in due course once we have worked through a smooth transition plan. Now on to the results. Overall, we are pleased with the progress that we've made through the period. Our profit was marginally ahead of expectations, and we have made significant progress against our strategic priorities. As expected, we have been impacted by the fast speed of sale of vehicles, but the team has delivered well on those areas that are within our control. I'm confident that the actions we are taking today will underpin growth for many years to come. Our market position remains strong with record levels of buyers and retailers using Auto Trader. As we saw last year, there has been a further increase in the number of unique vehicles advertised on our platform and high levels of engagement with those vehicles. This underpins our core proposition for buyers as we provide full choice and transparency and clearly, retailers have benefited from more vehicles moving through a similar number of advertising slots. Our annual product and pricing event in April this year went well, underpinned by the first features under our Co-Driver AI umbrella. There is significant future potential in this area as we make more AI-powered solutions available and accessible to both retailers and car buyers. We are uniquely placed to do this due to our strong brand, deep integrations with the industry, and our real time proprietary data. The first features of Co-Driver have seen strong engagement with over 10,000 retailers already using the tools. It's important to note that AI doesn't just enable us to increase the richness of the car buying experience on Auto Trader, but it does extend the opportunity across all our retailer product areas which includes advertising, data, digital retailing and now Co-Driver. We've also dramatically accelerated the adoption of Deal Builder, growing customers, stock and deals since our change in approach earlier in the year. Deal Builder will no longer be an optional add-on product available on a selection of cars, it will be the default experience for retailers and car buyers on Auto Trader. Catherine will cover this in more detail later. With a car market that will grow over the long term, our strong market position, we're comfortable that we can continue to grow through delivering meaningful improvements to the buying and retailing of cars in the U.K. Auto Trader has never been short of growth opportunities, which remains as true today as it has ever been. I wanted to thank everyone at Auto Trader and our customers, shareholders and wider stakeholders for their continued trust and support. We'll start with some of the highlights during the period. Group revenue grew 5%, operating profit grew 6% and basic EPS grew double digit at 11%. Our largest revenue area, retailer revenue, grew at 6%. This is made up of strong forecourt numbers and a 5% increase in ARPR, mostly driven by the price and product event in April 2025. AI has been a big focus for many investors recently, given its potential to significantly alter consumers' online behaviors. I'll speak to this in more detail later. However, we are confident that on any platform, we are well placed to provide the best car buying experience for users. The transaction is high value, complex and occurs over a 3-month period, not one session. The reasons car buyers choose Auto Trader come from our singular focus on the U.K., our category-defining brand, well-invested technology and the rich tools we provide both car buyers and retailers, which are all made possible by retail -- by real-time data, pardon me, at a vehicle level that only we have access to. These unique characteristics are why our market position has been not only maintained but strengthened when new platforms have emerged such as Google, iOS and Android. Now to Deal Builder. I am very proud and pleased with the progress that we've made since we changed our approach midway through the year on Deal Builder. Adoption has dramatically accelerated as we make this journey the default experience on Auto Trader. We've added 4x as many retailers this half than we did in the previous 6 months. We know from years of development and live testing that Deal Builder deepens our engagement in car buying and selling. It delivers better conversion for retailers and a more connected and empowered journey for time-poor car buyers who want to do more online when it suits them with a brand they trust. At our full year results in May, we presented this slide for the first time to better show how market dynamics not previously seen before had impacted our financial results. We have 4 charts here, which I don't intend on going through in great detail, but it is a picture of a more stable market. The key points to note are, last year, demand or visits were strong. Supply was constrained, used car prices had come down, which all resulted in an acceleration in speed of sale. This meant more unique vehicles sold through roughly the same number of slots, which doesn't benefit our business model. This year, however, demand does remain healthy. Supply is gradually coming back and used car prices have been robust, even increasing from the levels seen last year. As a result, speed of sale has not accelerated as it did last year. So the headwinds we were facing have subsided somewhat. However, we would caution too much optimism in the near term as speed of sale was still one day quicker in October. I'll briefly cover the financial results, which Jamie will cover in more detail next. Group revenue increased by 5%, with core Auto Trader revenue also increasing by 5%. Group operating profit increased by 6%. Auto Trader operating profit increased by 5% to GBP 208 million. And Autorama halved its operating losses to GBP 1.4 million. Noncash acquisition-related costs was GBP 6.5 million. Group operating profit margin increased to 63% and Auto Trader's operating profit margin remained at 70%. Basic EPS, as mentioned earlier, grew double digit at 11% and cash generated from operations was up 7%. We returned GBP 162.2 million of cash to shareholders through GBP 100.2 million in share buybacks and GBP 62 million in dividends. Finally, we are declaring an interim dividend of 3.8p per share. Now on to our operational results. The average number of cross-platform visits was up 1% to 83.3 million per month, and we continue to account for over 75% of all time spent across our main competitor set. The average number of retailer forecourts advertising with us was up 1% to 14,080. Average revenue per retailer was up 5% to GBP 2,994, mainly due to our product and pricing event implemented on the 1st of April 2025, which was underpinned by Co-Driver. Live car stock was up 2% to GBP 457,000, with this increase being due to an offer, which ran at the beginning of the 6-month period, and we delivered 3,687 new lease vehicles. Finally, the average number of full-time equivalent employees in the group decreased slightly to 1,249. In previous years, we would have covered our cultural KPIs in half year results. However, we've decided to do this now at each full year results. The KPIs and initiatives that sit behind them remain as important as they've always been. However, covering them annually better aligns with our annual employee survey. The KPIs on gender, ethnicity and GHG emissions are all included in the press release and the appendix of this presentation. As it relates to culture, it is worth noting that we have entered a new lease and are halfway through investing significant capital in a new home campus for Auto Trader, which will provide a great environment for our people to do their very best work in a space that facilitates both how we work and the other elements of our culture. I'll now hand over to Jamie to talk us through the financials in more detail. Jamie Warner: Thanks, Nathan, and good morning, everyone. I'll start by focusing on the core Auto Trader financials. Starting with revenue. Total Auto Trader revenue increased 5% to GBP 296.3 million. Trade revenue increased by 6%, with the largest component of this being retailer revenue, which also grew by 6%. Also within trade revenue, we've seen an increase in both Home Trader and other trade revenue. Consumer Services revenue decreased by 9%. Within this, private revenue generated from individual sellers was down year-on-year due to a lower number of listings compared to a strong prior year, and Motoring Services revenue was flat. Revenue from Manufacturer and Agency customers increased 13% year-on-year due to manufacturers supporting their franchise networks on both new and used car advertising. As mentioned, Retailer revenue increased 6% year-on-year. The average number of Retailer forecourts on our platform increased to 14,080, a 1% year-on-year increase and average revenue per retailer increased by 5% to GBP 2,994 per month, with more detail given on the following slide. Here, the chart on the left shows the components that contribute to the movement in ARPR compared to the prior year. As you can see, ARPR growth was driven by the price and product levers with a small headwind from stock. We delivered our annual pricing event for all customers on the 1st of April 2025, which included additional products and a like-for-like price increase, which contributed GBP 89 to ARPR growth. Product contributed GBP 64. Most of this growth was from our Co-Driver product, which is included in retailer advertising packages in April 2025. Prominence, which includes upsell to our higher-level packages, was not a contributor to the product lever in the first half. We continue to review our package staircase and have recently created an offer to incentivize customers on to higher levels, which has had good levels of uptake. This offer converts throughout the second half and will inform how we evolve these packages in H1 of next financial year with the aim of returning prominence to long-term growth. Turning now to stock. You'll see on the right-hand side of the chart that the number of live cars advertised on Auto Trader increased 2% year-on-year. Used car stock also increased by 2%, although much of this was driven by a stock offer, which we ran at the beginning of the financial year. Excluding this stock offer and private listings, which do not impact ARPR, the live stock increase was just under 1%. The stock lever was marginally lower due to a slight reduction in underutilized slots, which typically occurs when we run this type of offer. Total Auto Trader costs increased 3% to GBP 90.4 million. Salary costs increased by 6% to GBP 42 million due to higher average salaries and a small increase in the number of Auto Trader FTEs. Share-based payments increased by 1% to GBP 6.9 million. Marketing spend decreased by 21% to GBP 8.9 million due to the timing of campaigns, and we expect a greater level of marketing in the second half of the year. Other costs, which include data services, property-related costs and other overheads, increased 6% to GBP 22.9 million, primarily due to property costs for our new head office and other IT-related expenses. Depreciation and amortization increased by 31%, again, related to the cost of our new head office. As a reminder, we fully expense our technology, research and development costs, hence, our low levels of CapEx and depreciation. In addition to our investment in cloud-based and AI services, we have around 400 people in product and technology who are continuously improving our platforms and developing new products for consumers and retailers. Operating profit increased by 5% to GBP 208 million during the period, and operating profit margins remained consistent at 70%. Our share of profit generated by Dealer Auction, the group's joint venture, increased 17% to GBP 2.1 million. Having covered Auto Trader, the main part of the group, we'll briefly cover Autorama results. As a reminder, the Autorama acquisition is part of our strategy to bring attractive new car offers to car buyers on Auto Trader and to make new cars a more important part of our proposition. Autorama revenue was GBP 21.4 million, with vehicle and accessory sales contributing GBP 16.5 million and commission and ancillary revenue contributing GBP 4.9 million. Vehicle and accessory revenue relates to vehicles that flow through our balance sheet, which is not our focus for future growth. Total deliveries grew 16% to 3,687 units. As can be seen from the chart, this growth was driven by cars and importantly, more of that growth was driven by the Auto Trader platform, which saw a 6x increase in delivery volumes. Average commission and ancillary revenue per delivery decreased to GBP 1,329, reflecting the changing vehicle mix during the period. We delivered around 750 vehicles, which were temporarily taken on balance sheet, the cost of which was taken through cost of goods sold. This was a year-on-year increase driven by just over 300 extra vans, which were taken to support van volumes as they were slightly lower in the first half. Excluding the cost of goods sold, cost of GBP 6.2 million represented a 25% year-on-year reduction with all lines seeing a decrease. The Autorama segment made an operating loss of GBP 1.4 million, which is a significant reduction on last year as a result of the accelerated integration into the main Auto Trader business and platform. With group revenue up 5% and a reduced Autorama loss, we saw group operating profit increased 6% to GBP 200.1 million and group operating profit margins increased to 63%. As we grow, the strong cash generation of our business leaves us well placed to return surplus cash to shareholders. Cash generated from operations was at GBP 215.4 million. Now to briefly review net bank debt and capital policy. During the period, the group drew down GBP 15 million of its revolving credit facility and held cash and cash equivalents of GBP 20.2 million. Cash generated from operations was largely used to pay tax or return to shareholders through a combination of dividends and share buybacks. The group's long-term capital allocation policy remains unchanged, continuing to invest in the business, enabling it to grow, while returning around 1/3 of net income to shareholders in the form of dividends. Following these activities, any surplus cash will be used to continue our share buyback program and to steadily reduce gross indebtedness. That concludes the financials. I'll now hand over to Catherine to talk through progress against our strategic priorities. Catherine Faiers: Thank you, Jamie, and good morning, everyone. We have made good progress against each of our 3 strategic focus areas. These areas are closely interconnected. Our platform and our digital retailing capabilities build on the strength of our marketplace and deepen our relationships with both retailers and car buyers. Our marketplace continues to grow, and we have seen a record number of car buyers and retailers using Auto Trader. This means we are also building our unique data advantages through the growth in observations and actions that we capture. Whether it is consumer behavior and interactions or retailer actions and pricing movements, we continue to extend our data lead in this area. We have successfully executed our annual pricing and product event, which included the Co-Driver product, a set of AI-enabled features designed to drive retailer performance and efficiencies in the advertising journey. This product has seen strong engagement from retailers and the features that surface on the Auto Trader app and website have been well used by buyers. We continue to scale Deal Builder, enabling consumers to do more of the car buying journey online. At the same time, we are launching the Buying Signals product for retailers, which will provide a greater level of actionable insight to drive their performance. This year, we launched Co-Driver, a suite of transformational AI tools that utilize our unparalleled vehicle data and consumer insights to significantly improve the consumer and retailer experience. Our first Co-Driver suite is available to all retailers and includes Smart Image Management, AI-generated descriptions and vehicle highlights. As of September, over 100 retailers have used Co-Drivers to create 1 million high-performing used car and van adverts to optimize over 12 million vehicle images, and we've seen over 85 million buyer interactions with the vehicles highlights on Auto Trader. Whilst Auto Trader has been working with and delivering AI products for over 10 years, Co-Driver is the first retailer product, which has leveraged generative AI. As detailed in our FY 2025 full year results at the end of May, we decided to make Deal Builder part of our core proposition to retailers and the consumer experience for car buyers. This will enable us to increase the speed of retailer onboarding, accelerate the level of buyer adoption, materially increase the number of deals being delivered through Auto Trader and strengthen the competitive moat for our core business. As can be seen on the right-hand side chart, this decision has enabled us to scale the product faster from June onwards than in previous periods. Retailer acquisition during the period was 4x greater than the preceding 6 months, resulting in 4,000 retailers live with the product at the end of September. We also saw a significant increase in the volume of listings with Deal Builder, ending September with 128,000 adverts live. This was over 160,000 live adverts at the end of October, a 25% increase in the month. Consumer engagement has also grown considerably with 52,000 deals in the period compared to 23,000 in the previous year. The feedback on the product continues to be positive from both retailers and car buyers with deals converting twice as effectively as a regular Auto Trader lead and over half of all deals being submitted outside of traditional working hours. We are also launching a new product called Buying Signals, which leverages our unique consumer data to surface both high-intent buyers and their preferences to our retailers. Across multiple inquiry types, we have used an AI-powered buyer propensity model to apply a flag for the retailer, indicating how likely the buyer is to buy the vehicle, how local the buyer is and the type of vehicles that they are interested in. This will enable retailers to prioritize the next best action with different car buyers. The goal of this product is to drive improved conversion for retailers and to close the gap between the journey on Auto Trader and the consumer experience that the retailer forecourt, complementing the Deal Builder journey. Over time, these buy propensity models will also inform our own marketing, remarketing and optimization activities for our products and experiences. I'll now hand back to Nathan to discuss the broader AI trends we are seeing and our outlook for the remainder of the year. Nathan Coe: Thank you, Catherine. The popularity of LLMs, chat-style interfaces and agents is at the forefront of investors' minds as it relates to most businesses, and that includes marketplaces. For years now, we have used AI technology in our in-house products and platform, which informs our perspectives on this technology shift. Before we talk about Auto Trader, it is worth saying that we believe top-of-funnel research and discovery for all products, including cars, will be disrupted by these new interfaces. AI platforms reduce the need to visit multiple websites and summarize what is essentially static content very effectively. Top-of-funnel content has never been a big focus for us. And when we have experimented with it, the direct benefit to our core was unclear. For this reason, it is not a risk that concerns us as we wholly focus on the point where people want to browse and purchase real available inventory. In terms of Auto Trader then, we have 4 observations to make. Firstly, the opportunity to use AI to enhance the car buying experience and the tools we provide retailers on Auto Trader is clear and something that we have been doing for a long time now. The recent developments in AI technology, particularly LLMs, provides even greater runway for this across our advertising, data, digital retailing and Co-Driver product streams as well as our consumer experience. Secondly, brands really matter. Car buying is an incredibly complex, high-value purchase. It is almost never online only, typically involves multiple transactions, is regulated and usually takes place over 3 months, during which the selection of vehicles changes constantly. To navigate this, people use Auto Trader. Over 75% of marketplace activity happens on our site and most people come directly to us. 49% from apps, 29% from our URL or searches for Auto Trader, 18% from organic search with only 4% being paid for web traffic. This brand position doesn't just come from a trademark, it comes from the deep and rich experience we provide car buyers. It's not just about a wide selection of vehicles, it's about making sure that selection is real, available, described to a high quality, easy to navigate, comparable and not fraudulent. But this is just the listings. People need a lot more than just listings. They need a lot of high-quality real images, comprehensive and accurate descriptions, price flags, dealer ratings, valuations, checks on the vehicle, part exchange quotes, finance and so on. This is why people seek out Auto Trader, and we believe these tools will continue to be important to a car buying transaction moving forward. Thirdly, as these platforms grow, we will ensure new and existing users of Auto Trader can reach us there. We've taken this high-level approach in similar situations in the past, and it has served us well, whether it was the rise of Google when fears of disintermediation were raised, iOS or Android. In all these cases, our market position strengthened and our audience grew. This is because these platforms grow by providing the best experience to their users. For the reasons mentioned earlier, when it comes to cars in the U.K., that is what we do. There will be a myriad of technical, commercial and strategic decisions along the way, including the depth of experience and protection of our data, but these are not new decisions to us. Finally, we are confident that our deep real-time vehicle data and rich tools for car buyers and retailers will remain essential to what is a large and complex transaction. The vast majority of that data is not available on the public Internet. Agents may, over time, provide users with automated or semi-automated assistance for carrying out varying tasks on the Internet, but they too will require sources of high-quality real-time data, where they'll face similar constraints to search engines. In fact, most of these interfaces for that sort of data use the search engines we know today. For that reason, we expect that AI agents, like other client technologies, will either remain top of funnel and generalized or they'll look to provide direct integrations using standard web technologies customized for their environments. Interestingly, this is exactly what ChatGPT recently announced with their Apps SDK, and we expect others will be soon to follow. These integrations allow greater control over the experience and data that we provide such that it can bring the best of what LLMs do together with what we do best, providing another way for users to find and engage with Auto Trader. Again, there will be many decisions to make along the way, but we feel very well placed to make those. Finally, we know the landscape will evolve, and you can have confidence that we will stay abreast of these changes. We'll continue to be fully engaged in the technology and we'll maintain the ability to move both strategically and quickly when required. Now on to the outlook or not. Right, on the outlook, there is actually not a great deal to say as those of you who have read the announcement are aware, other than that the first half has pretty much played out as we expected. So our outlook for the remainder of the financial year 2026 remains the same as it was at our full year results. All that for that short sentence. Right. We'll now move to the Q&A, which Jamie will manage, and we'll take questions from analysts in the room. Jamie Warner: Yes. So we'll wait the mic and start down the front and then work our way back as usual. William Packer: It's Will Packer from BNP Paribas. Three questions, please. Firstly, thank you for the very useful comments on AI and how you're positioning yourselves. Could you help us think through investment requirements in the next 12 to 24 months. Should we interpret your comments as you're well invested and you -- the kind of formula we've seen in recent times of flattish margins or slight expansion depending on the top line is the right formula? That's question one. Secondly, could you help us think through the dynamics around the integration risks and opportunities with ChatGPT? Am I right in thinking that you have a choice in that you do have a significant inventory lead versus your nearest competitor. Some of the classifieds don't, so you'd think the hand is more forced, you can choose. And in the event that you do decide to integrate, how should we think about the split of economics versus the current status quo? My take would be you're not paying very much to Google compared to some other segments. So is there a risk that the economics deteriorate in that environment? And then finally, you've got a prominence offer. That's something which is -- we haven't heard too much about in the past. Could you think us through -- could you help us think through what that means for the upside on prominence and how that will flow through in due course? Jamie Warner: I can take the first one. So as both Nathan and Catherine mentioned, we've been investing in much of this technology for a long period of time, previous product iterations and most recently, Co-Driver. So I think there's still much work that we can do from both retailer products, consumer experiences, tools internally to help us find greater levels of efficiency and productivity. But you're absolutely right, I think we feel like because these investments have been happening for a long period of time, there's no -- certainly in that 18- to 24-month window you mentioned, no change from a guidance on margin perspective, consistent margins in the Auto Trader segment. I still think we believe at a group level with Autorama, profitability or losses improving and hopefully into profitability, the group margins can actually continue to expand. Nathan Coe: And on the second question around the integration risks and opportunities, I think that there's probably a few things that I'd say. As I said, we think that they'll go for reasonably structured integrations. The idea we've heard and seen some notes about talk of them scraping the Internet to get real-time data. We just don't think that's going to happen. I mean that technology is very, very old and nonperforming. And indeed, ChatGPT's SDK suggests that they're going to go for something more structured. What comes with that structure is a pretty great deal of control and transparency about how your data is used, what depth of experience that you provide. So you're able to manage the risks and opportunities as it turned out when we've been with Google, we've made decisions to open up our site to a certain level, but not necessarily fully. There will be those sorts of decisions. When it comes to iOS, we open up everything, but it is within a native app. So when I talked about the strategic commercial tactical decisions, they tend to sound very, very technical, but they are quite important. The SDK has not launched in Europe yet. So we haven't had a detailed look at exactly what that looks like, but we would go for something more structured, and we suspect they would as well because those platforms, and I think this is where the opportunity is, and it relates to your economics point is Google only became really, really successful because it provided and prioritized the most relevant results for users. That's going to be the true for any interface. So we think we can do that for car buying. And we think for that reason, they'll want to work with us. If they were to compromise something like that for the sake of some form of rent that they collect, that would seem to be a bit inconsistent with the pattern that has played out with these platforms. But does that mean around an app that we do, there might not be -- might be paid positions or there will clearly need to be some economics. Yes, we would expect that to be the case. But again, that is no different to Google. And by and large, most people come directly to Auto Trader. I think that is also the point that we're not getting much of our traffic at all about what, 18% plus 4% paid. So around 20% of our traffic is coming through those more generalized search engines. Most people wanting to buy a car kind of know where they need to do that. And I suspect that will still be true in the future. What we hope though is as more and more users start to use these interfaces, actually the use case for Auto Trader can appeal to people that perhaps might not have otherwise found us, that might have found the search by make and model a little bit intimidating and ChatGPT and those other kind of tools can hand off into a structured search like us, which feels like an opportunity that we don't necessarily have today. Of course, we can do it on our own site, but that is only for people that are coming to Auto Trader. Catherine Faiers: Dominance and offer. So I think we talked at the full year results about how we were doing a lot of work and imagining that in the next year or so, we would look to evolve the packaged staircase. Again, typically, we've done that every 3 to 4 years. And we're coming to a time again where we think that is the right thing to do. So you're right, we are in market with a bigger and more attractive prominence offer than we would typically have run in the past. It's had good uptake from retailers. And over the coming months, we'll be in the process of converting those retailers through to fully paid. One of the reasons for making the offer a bit bigger and more attractive is really to learn and to test the value response uplift that we're seeing and the different levels of retailer adoption, all with the view that it will inform the structure and the makeup of the packages that we look to try and then roll retailers into at some point during next financial year. Gareth Davies: Gareth Davies from Deutsche Numis. Two from me. The first with a couple of parts on Deal Builder. 2,000 onboards since, I think Catherine emphasized, June. But just kind of understanding how that's built up, should we assume it was kind of pretty straight line through that period? Or were there any sort of stumbling blocks initially that you've got through? And has that ramped into August, September? And then I think you said 25% increase in adverts in October. I mean, can we be as simple as thinking that means we're up to 5,000 by the end of October? Or is that being too simplistic? And how are you feeling sort of overall in terms of getting everyone you need on Deal Builder by the sort of March, April time line you need? So that's question one. And then the second one, you confirmed guidance for the year just in terms of the minutia. Can you talk a little bit on stock and a little bit on dealer forecourts because I think stock feels that it's sort of stubbornly at 28, 29 days. How are you feeling on that at the moment? And then dealer forecourts feels like it's running a bit stronger than I certainly expected. Catherine Faiers: Yes, sure. So on Deal Builder, we have been talking on webinars and in the trade press about being around 6,000 retailers now and about 160,000 or so live adverts. So those numbers are -- they're out there. You talked about whether the growth has been linear or not, I think we've talked before about looking, particularly for the independent retailers that work through our portal system, we've been onboarding them in waves. So it's definitely not been a linear line from June through to October. There's been waves of retailers. We've defined cohort segments that have similar attributes or similar ways of working with us and then have been onboarding them in a more scaled way than we were able to do prior to June. We're getting to the point where we are a good way through all of the independent retailers that work through our portal system. And so growth from this point onwards will be more influenced by the technology API integrations that we're putting in place with the tech partners out there in the automotive industry. So we'll continue to see, I think, a slightly inconsistent patterns of waves when we complete a tech integration with a dealer management system partner, suddenly a new cohort of retailers will become addressable, and we'll look to get those onboarded pretty quickly. So I imagine it will continue to be quite lumpy between now and March. We're hopeful that we will have made really good progress by March. I imagine, as is typically the case with the integration work that we do, I imagine we will have a tail of retailers that will need to work to get over the line beyond March, driven principally by that tech integration work, not work on our side, but work for the third parties integrating with the API that they will need to do. Jamie Warner: And on the more detailed kind of guidance for stock and forecourts, I mean I think we've been pleased the stock has improved through the half. I think at full year results, we gave the April number for the stock lever, which is sort of materially down and then obviously only marginally down for the first half. We haven't quite got into positive territory. So September was still marginally negative. And I think we are -- don't -- are probably a little bit cautious on just what the outlook looks like for these remaining 5 months or so. The fourth quarter, the first quarter of the calendar year is always slightly volatile. January is generally a very strong sales month, and it's not always easy to source stock. So I think that's why we're sort of holding that guidance at marginally down for the year. Similarly, forecourts almost sort of shown an opposite trend where obviously, the stocks got better. And if you look at the growth rates on forecourts, it is -- I think we're pleased that it was as positive as it was in the first half, but the growth rates are trending down. So we've exited the half slightly lower than the 1% growth we delivered in the first half. And again, I think in the round, holding that guidance of flat forecourts seems reasonable. Joseph Barnet-Lamb: It's Jo Barnet-Lamb from UBS. Firstly, a couple on sort of product-driven ARPR into next year. So firstly, on Deal Builder, you've obviously giving it away for free at the moment. I think you'd articulated previously, you're then going to sort of do an upsell sort of thing through next year, and that sort of, therefore, becomes a tailwind for product. So could you talk a little bit about Deal Builder into '27? You've probably got a more formulated views as to how you're going to do that. So any more color you can give us there would be great. Then secondly, on Buying Signals, which you're sort of -- is sort of being rolled out at the moment. And I think you said you're going to start commercializing that in H2. Any more color you can give us on sort of the scale of tailwind that, that's going to give product in H2 would be great? And then a final one. There's something in the release relating to a property -- Autorama property sale. Is that right? Can you give us some color on what that's about? I presume it's just getting rid of an old Autorama building, but any color you can give us there would be great. Catherine Faiers: So Deal Builder and Buying Signals and how and when we'll look to monetize both of them. You will have seen how we've positioned and talked about the product is that the 2 very much come hand in hand. So as part of Deal Builder, we are evolving, I guess, the value currency that we use to talk to retailers and evolving that to very much be anchored around the deal. And the positioning for Buying Signals is that you get all of this insight, rich insight about the buyer, their intent to purchase that vehicle, their preferences that they've been looking at and engaging with on our platform. You get all of that rich data as part of the deal. So they have become really how -- the combination of the 2 products has become how Auto Trader works for retailers. We're looking to monetize certainly the first wave of both of them because I think they're both products that have multiple iterations and life cycles for the business as part of the rate event next year. And we have -- we've been pretty open when asked by retailers in forums and webinars and have been talking about that being the case. So first wave of monetization likely to be from April next year for both combined as a package for retailers. Joseph Barnet-Lamb: And that will be as part of the pricing, but it won't be tiered. It will be a sort of bundled. Catherine Faiers: Yes, very likely to be part of the overall rate event for all with no tiering. Jamie Warner: Yes. And just to add to that, because you're asking about the second half, whether there's any second half product. The second half product I think where consensus is slightly higher is really all coming from prominence and that conversion of the offer is where that kind of product lever growth comes from. So just on the building in Hemel Hempstead, I'm delighted someone's made it to the notes in the back of the account, which might be your first questions for me. So when we acquired Autorama, they owned the building in Hemel Hempstead. You will have noticed from the accounts and the FTEs that we report that as we've kind of integrated into the main Auto Trader business and platform, the FTE numbers come down. We weren't actually -- weren't actively looking to market the building at the time. Opportunistically, someone came and said through an agent that they were looking for property space and just made sense because the building is probably bigger than we require. So we've taken a space almost next door that's smaller and fits better for us. It's just on a lease basis, and we're obviously then disposing of that asset, which I think is likely to go through in the next couple of weeks. Unknown Analyst: It's [ Kieran Darling ] from Citi. Firstly, maybe just on -- could you give us your thoughts on kind of the pros and cons of the stock-based offering you guys have at the moment? Has there been any internal debate around rather moving to an all-you-can-eat model makes a lot of sense, particularly in the context of, I guess, underlying retailers are becoming more technologically efficient and innovative and therefore, maybe that's a headwind permanently? And two, I guess, just in terms of OpenAI and a potential launch of a competitive app or I mean, could you just break down in terms of your visits, how much comes through the app versus desktop and just how much of a moat that is for you guys? And then thirdly, I guess, just in terms of speed of sale, how should we think about it going into next year in terms of comps as it gets easier, how much of a potential tailwind could that be for you guys? Jamie Warner: Yes. I'll take the first one, and Nathan can manage the second one. So I mean I think we said this at the last set of results. Obviously, the slot-based model where speed of sales has been running quicker has generated this small sort of headwind. And I think we have been doing an exercise and looking at other charging models. And obviously, we're fortunate enough to have a number of peers and everyone seems to have slightly different variations and nuances. All you can eat is always a slightly more challenging one because the nature of retailer customers is you have some customers with 4 to 5 cars and up to the biggest customer on an individual site will have 4,000. So that -- not completely insurmountable, but that makes it a little bit more complex just to run pure all you can eat. But I think we have been doing an exercise of looking at unique listings and there are many different kind of variants that you can do. And so we have been doing that work. I think at the moment, especially as the kind of speed of sale and market headwinds are not as prominent right now as they were this time last year, we still think that if you get supply easing up a little bit or speed of sale staying flat year-on-year or slightly decelerating, that should be positive with the charging model that we've got. But it's not lost on us that, you don't just want to sit there and say, well, everything will be fine, it will come back. So we are doing the piece of work. And I think it's not something that we would never consider. But I think at this point in time, especially where we are in the sort of cycle, we're reasonably comfortable with the model that we've got. Nathan Coe: Kieran, I got the second bit of your question. The first bit around OpenAI and competitors, can you just, sorry, go through that one again. Unknown Analyst: I think it's a more general point around potential competitors coming in terms of utilizing OpenAI technology. Nathan Coe: Yes. Right. No problems at all. So if I take your first question, I think OpenAI is another window to the Internet that uses kind of a highly efficient text prediction to kind of summarize answers and give people the next step that they might want to go to. And when it was Google, it's all around a page rank algorithm. What we found with Google is that their desire is to provide high conversion rates to their users to satisfy them to give them relevant. So Auto Trader tends and over time as SEO and those new releases have gone in, Auto Trader has tended to just do better and better and better. And that's not really down to our own SEO activities, although that's clearly part of it. It's because they want to get around people being able to gain those systems to just give users what's the best answer for the task. So our biggest protection, I think, is the fact that with that depth of data, our brand, people look for us, but it's not -- it isn't about the trademark, it's actually around what people know that they can get there, and it's all founded on data. So I'd say that's probably our biggest defense is we don't see a world where we really feel like we'd be threatened in terms of providing the very best car buying experience. You've got to believe that people will be willing for some degradation to never ever come to Auto Trader. I think apps have always been a really big strength to us. And I think we've always said that most of our traffic, as I laid out, about 80% of it is coming direct to us. The difference between traffic coming direct to our URL and apps is it cannot be intercepted. It is literally a direct connection. So it is about half of our visits, probably an even bigger percentage of the activity that you see when you go a bit deeper into the funnel looking at vehicles. And yes, I mean, it's an area we're always going to invest in. Some people might say we always talked about 10% of marketing being -- 10% of our audience coming from marketing. And I mentioned before, the difference is actually marketing with apps. So we do that very actively because it's a different sort of marketing. So yes, we think it is a big strength. But at the end of the day, we've just got to be the best place to buy a car, and that's hard to do in the U.K. because it requires loads and loads of data, and we've got a lot of that and other people don't. Jamie Warner: We have a question down here, Giles. Giles Thorne: It's Giles Thorne from Jefferies. First question, I guess, for Catherine, Buying Signals, was that always part of the product road map for Deal Builder? Or is it something that was introduced or accelerated when you changed your commercial approach? Secondly, coming back to this idea of the April 2026 pricing event, how transformational would you describe Deal Builder and Buying Signals is for your customers, for retailers? And thirdly, maybe back to Nathan and perhaps you're going to reference again some of your prepared materials. But as you've seen this agentic AI debate suddenly materialize in a very quick and aggressive fashion, which elements of it do you think are most misrepresented, misunderstood? I don't know, you tell me. Catherine Faiers: I take the first one. So on Deal Builder and Buying Signals, Buying Signals is built, the product was enabled because we've, for many years, been investing in building a buyer propensity model, which takes all of the sales observations data that we get from retailers, takes all of the consumer interactions and observations that we see on Auto Trader and then looks at how you connect those 2 sets of observations to know what types of behaviors or patterns do you need to see from a consumer to mean that they're very likely to convert to a sale on a retailer's forecourt. So that model and that logic has been years in the building and creating. So I think definitely Buying Signals was always a product that we had in mind that we were planning to build and launch. The timing of us testing, piloting, really, really robustly testing that model, the connection with deals anyone that submitted a deal, any buyer is clearly very likely to be pretty high intent when we talk about levels of intent. So you've immediately got a very identifiable cohort of consumers that you know are going to be very high intent. What Buying Signals does is then for consumers that might just have submitted an e-mail lead or in time buyers that we might just have seen interacting on our platform, but that haven't left any digital footprint with a retailer, we're able to predict for retailers which of their stock units are more or less likely to sell and how fast they're likely to sell. So step one is the connection to Deal Builder and delivering up, serving up a level of intent and a greater level of understanding, which we're already seeing from retailers will change like the next best action they then take with that buyer. But in the future, the evolution of this product should be to enable retailers much more actively to manage their forecourt based on all of the observed leads and deals that they would have been getting in the old world, but also every interaction that's happening on our marketplace and giving them some sense of what that really means for their forecourt. So it makes sense, I think, and the timing is right to bring it together as part of Deal Builder and to make it part of that proposition for launch. But in the future, there's lots more we can do with the buyer propensity model and that buyer signal thinking and logic to deliver more value to retailers. Nathan Coe: On the AI, I mean, we do use the technology quite a bit, but I'm going to pretend that we're right at the center of OpenAI. We do work very closely with Google and Gemini. I think as it relates to -- the first thing I would say is that when you speak to -- listen to the people that are building this technology, you tend to get quite a balanced view. I personally think and whether it's the founder of OpenAI or one of the founders of OpenAI, they do tend to give a pretty balanced view about, this is about token prediction and text prediction. There's not really a semantic understanding of the content that the models are doing, but they work very effectively because they basically say, we don't really care how you get to it. But if you can predict an output very accurately, then that's a good thing. It doesn't matter so much how you get to it. I think like 2 observations of things that I think have been a bit oversimplified is, the first I would say in relation to agentic is that there is quite a big difference between general models and what general models can do and what agents might be able to do. And those agents need to be quite specialized in order to do jobs and someone needs to do the specialization. I'll give you a really simple example. We could not use an open model to do something as simple as categorize images and write descriptions on Auto Trader. We had to augment the model, train it ourselves. And that's not even really particularly agentic. That is still a generalized model. But even that task itself, using a general model wouldn't work for it. Now do we think agents can do lots of stuff for users over time? Yes, absolutely, but they'll need to be more and more specialized. And the idea of you just being -- these general models are going to solve the whole world's problem. I don't think anyone really believes that's possible. And agentic AI itself technically is still a bit of a way to go before you see that playing out, although in some fields, it is. The second thing I would say is actually all around the real-time aspect of things. The models are trained every 6 to 9 months. Maybe that increases and they do kind of hoover up the Internet, all the information it can get to on the Internet and use that to create better and better predictions. That is very compute heavy as we can see and NVIDIA's share price suggests is true. What they don't do and don't necessarily need to solve is accessing real-time information because in order to do that, well, what they do there is they partner with search engines, ChatGPT, with Bing, Google and Claude, with -- sorry, Gemini and Claude with Google. And that's because that's a job that has been done well and replicating that, you'll run into exactly the same issues there. So for real-time data, what they do is they use their big model that's very, very intelligent to make better queries of a search engine and then bring it back and summarize it. When you come to really granular data like even listings and the data that's on Auto Trader, you probably need a level deeper than that because you can't get that through a traditional search engine. So that is why we think ending up working with one of those platforms and allowing people to access Auto Trader there is probably the way that it will go. But we can't offer any guarantees around these things. But I think it's very easy to see it as a big blob and extrapolate out. But technically, a lot of the engineers will say, well, no, that scenario is just not going to play out. And there are a few examples of it. Giles Thorne: I want to get the transformation... Catherine Faiers: Transformation, do you want to take that, Deal Builder and Buying Signals. Giles Thorne: Are you going to do bigger than normal? Nathan Coe: So it is in relation to the event. Yes, something like that. I mean, I think 1st of April pricing event, it's obviously a very live conversation internally. As Catherine explained, I think we feel like the product set of Deal Builder in itself and buying signals should particularly over a longer period of time, generate a lot of value for customers. But we still haven't quite landed at what the -- what percentage we're not going to communicate to customers until January. I mean, historically or certainly in the last 3 or 4 years, we've done 3% to 4% on price, 2% to 3% contribution to the product lever. There's nothing here that suggests would be outside of those ranges. And generally, if you say the last 3 or 4 events that we've done have been -- I think we feel like they've been good ones, then hopefully, this is another good one. Lara Simpson: It's Lara Simpson from JPMorgan. Sorry, I just wanted to come back to stock. I know it's been a big talking point. Firstly, I suppose, on the speed of sale, you said it was still 1 day faster in October. Were you surprised by that acceleration? Because it feels like a lot of the forward indicators, it should start to stabilize because we're talking about slower demand, supply coming back, but then the speed of sale keeps disappointing. So were you surprised? And then you've obviously reiterated the guidance. Interested on the stock lever guidance. What are your assumptions of speed of sale? Because I feel like in October, we should be getting to easier comps. Are you assuming that speed of sale stabilizes or slows or the status quo maintains? And then just a quick question on Autorama actually. A bit of the top line beat was actually from the vehicle and accessory sales, up 20%, I think it was. Has there been any positive surprise there? Because I thought longer term, we should be scaling down that line from a P&L perspective. So just interested on that. And if what you've seen in H1 has changed any of your strategy for Autorama, particularly in terms of the top line moving parts and then the profitability of that business? Jamie Warner: Yes. I mean I can take all of them. So look, I think stock -- I mean, if you think about the stock lever specifically. So we've guided it to be marginally down for the full year and it really is marginally down in the first half, that's implying similar in the second half. I think generally, the assumption around speed of sale is certainly what was set out at the full year is that when you hit this point, it gets to be more consistent, and a day quicker. I think in the round, it does feel more stable generally. So I think we're not expecting speed of sale to accelerate in the second half. That would probably be contrary or a downside to that guidance, yes. And I think there still is slightly -- if you look more medium term or into next year, a hope and belief that supply does start to improve as you get better flow of vehicles, better registrations coming out the back of the pandemic. I think we're just being a little bit cautious on whether we're going to see that in the second half or not. And as I mentioned, that fourth quarter is always a slightly unpredictable one. From an Autorama perspective, I think you're absolutely right that the vehicle and accessory sales is not part of the long-term strategy, and we still have a belief that over time, that will reduce or disappear. It was really a tactical decision that there were -- like I said, we took extra 300 vans that passed through the balance sheet. They didn't sit there for very long. And just because the van volumes have been slightly lower, we felt that, that was a sensible thing to do. The long-term strategy is still 100% seeing more volume delivered from the Auto Trader platform for users that are already there. And we're seeing some positive signs of that, albeit off a low base, but the Auto Trader volumes are growing or have grown pretty strongly in this first half. It is, as you'd imagine, heavily skewed towards cars over vans. And so this is -- some of what you're seeing in the first half is -- we're wearing a bit of a yield hit from that changing mix, which I think will probably play out a little bit in the second half. But if we continue to grow those volumes, we're still very optimistic in terms of hitting profitability and then hopefully seeing good growth and getting to the 20% to 30% margins that we set out when we acquired the business. It's very much part of -- there are a number of products that fit into the new car suite. It's very much part of that. Thanks, everyone, for joining us.

146天前Insight Analytics约5分钟阅读

WPRT 2025 Q3 财报电话会议

Operator: Good day, and welcome to Westport's Q3 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Ashley Nuell, Vice President of Investor Relations. Please go ahead. Ashley Nuell: Good morning, everyone. Welcome to Westport Fuel Systems conference call regarding its third quarter 2025 financial and operational results. This call is being held to coincide with the press release containing Westport's financial results that was issued yesterday after markets closed. On today's call, speaking on behalf of Westport will be Chief Operating -- or Chief Executive Officer and Director, Dan Sceli; and Chief Financial Officer, Elizabeth Owens. Attendance on this call is open to the public, but questions will be restricted to the analyst and an institutional investor community. You are reminded that certain statements made on this call and our responses to certain questions may constitute forward-looking statements within the meaning of U.S. and applicable Canadian securities laws. And as such, forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. With that, I'll turn the call over to you, Dan. Daniel Sceli: Thank you, Ashley, and good morning, everyone. To start, I want to welcome Elizabeth Owens to her first conference call following her appointment as CFO at Westport. We are thrilled to have her at the helm. And for her first CFO conference call, I'm happy to have Elizabeth run through some financial details first, and then I'll cover some of our business and strategy updates afterwards. Over to you, Elizabeth. Elizabeth Owens: Thank you, Dan. First, I want to say thank you for welcoming me to my first conference call as CFO of Westport. It's an honor to serve shareholders in this new capacity. Now getting into the details of our Q3 results. Westport reported revenue of $1.6 million for the quarter. Our reported revenue this quarter reflects the expected decline from the $4.9 million reported in the same quarter of last year based on some changes I'll address in a moment. On an upward trend, however, it was great to see Cespira increased its revenue by 19% over the same period last year to $19.3 million in the quarter. As you know, our heavy-duty segment was utilized to capture revenue generated by a transitional service agreement, or TSA, in place to facilitate the transition of Cespira to a stand-alone organization. As intended, the TSA concluded in the second quarter of this year, and we, therefore, did not record any revenue related to it this quarter. Revenue this quarter was representative of our continuing High-Pressure Controls & Systems segment, which produced $1.6 million in comparison to $1.8 million in the same quarter last year. Our adjusted EBITDA for the quarter was negative $5.9 million as compared to the negative $0.8 million reported for the same quarter of last year. The change was primarily driven by lower gross profit related to the divestiture of the light-duty business, partially offset by lower operating expenditures. Our net loss from continuing operations included some extraneous items. The net loss from continuing operations of $10.4 million for the quarter is compared to a net loss from continuing operations of $6 million for the same quarter last year. This was primarily the result of an increase in operating expenditures in research and development and SG&A, a decrease in profit of $0.2 million compared to the prior year and a negative impact from a swing in foreign exchange impact by $3 million. Further on this topic, for the 3 months ended September 30, 2025, we recognized foreign exchange losses of $1.3 million as compared to a foreign exchange gain of $1.7 million for the 3 months ended September 30, 2024. The loss recognized in the current period primarily relates to unrealized foreign exchange losses resulting from the translation of previous U.S. dollar-denominated debt in our Canadian legal entities. Additionally, this quarter, we incurred onetime costs of approximately $1 million for severance and restructuring. Looking ahead, we expect more cost reductions on a relative basis in the near future as we adjust to become a smaller organization after the divestiture of the light-duty segment. Looking at our specific business units, High-Pressure Control Systems -- High-Pressure Controls & Systems revenue for Q3 of 2025 was $1.6 million, a slight decrease over Q3 of 2024. As Dan mentioned, we are in the process of moving these production lines in the facility in Italy that was part of the divestiture of the light-duty business to sites in Canada and China. Prior to the move, our team worked to increase inventories to ensure our customers experience minimal impact from the move. Construction at these facilities is ongoing through the fourth quarter with the majority of the capital spending to be wrapped up by the end of this year. The facilities in China as well as our Canadian site are anticipated to be producing initial product late this year. Gross profit for this business was largely unchanged, increasing slightly as a percent of revenue was driven by the higher margin with respect to engineering services revenue. Moving on to Cespira. It generated $19.3 million in Q3 2025, up 19% from the same period last year, driven by higher volumes. Gross profit was negative $1.1 million for Q3 2025 as compared to negative $0.2 million in Q3 2024. Gross profit continues to be negative as Cespira needs higher volumes to achieve a positive margin on a per unit basis for its systems sold. Regarding liquidity, as of September 30, 2025, our cash and cash equivalents totaled $33.1 million with only the EDC term loan remaining and reflects a significant increase in cash from the sale of our light-duty business. Net cash used in operating activities from continuing operations was $4.5 million, a significant improvement over $11.7 million used in operations in the same quarter last year. The improvement is primarily a result of decreases in working capital partially offset by an increase in operating losses. Proceeds from the sale of the Light-Duty business drove improvements in net cash provided by investing activities of continuing operations. We recorded $14.5 million in Q3 2025 as compared to $9.4 million in Q3 2024. Capital contributions to the Cespira joint venture of $11 million were also made in the quarter. As a reminder, in Q4 2024, we received proceeds of $9.6 million from the sale of shares to Volvo related to the formation of the Cespira joint venture and on the sale of our investment in Weichai Westport Inc. Net cash used in financing activities of continuing operations was $1 million compared to $4.4 million in Q3 2024. Our outstanding debt currently sits at $3.9 million with a maturity date of September 2026. To date, in 2025, we have reduced our debt and have strengthened our balance sheet and helped to reduce the complexity of our corporate structure. Our business is focused on the right markets for us, and we are continually looking at ways to streamline our operations. With that, I will pass the call back to Dan. Daniel Sceli: Thank you, Elizabeth. As our CFO noted, our third quarter results reflect the continued execution of the transformation we began earlier this year, anchored by our commitment to sharpen Westport's focus, strengthen our financial foundation and position the company for growth. The successful completion of the Light-Duty segment divestiture marked an important milestone in simplifying our business and concentrating on our core heavy-duty and alternative fuel systems. Operationally, our third quarter performance highlights the early benefits of our disciplined approach. While revenue declined as an expected outcome to the Light-Duty divestiture, we achieved a stronger gross margin of 31% in Q3 2025 compared to 14% in Q3 2024, driven by higher margin engineering services revenue, and we demonstrated tighter cost management year-to-date versus the prior year. As noted by Elizabeth, adjusted EBITDA results were impacted by the Light-Duty divestiture, partly offset by decreased operating expenditures, providing a more efficient and focused underlying business. We also remain disciplined in strengthening our balance sheet, ending the quarter with $33.1 million in cash and less than $4 million in debt while keeping cost efficiency and operational agility at the forefront. This solid financial position enables us to execute our strategic priorities and engage more proactively with OEM and fleet partners who are increasingly seeking affordable, low-carbon solutions. The Cespira joint venture continues to play a central role in Westport's growth strategy during the quarter. Deliveries increased year-over-year, supported by aftermarket sales growth as supply chain constraints continue to ease. This progress reinforces our belief that Cespira provides a scalable, high-impact platform to accelerate the adoption of the HPDI systems in the key markets worldwide. We continue to make progress on Westport's strategic transformation. Westport is taking the necessary steps to execute on a new focused and integrated competitive strategy. The divestiture strengthened our balance sheet and provided liquidity to begin to fund our growth through new system and related market expansions, including North America and our recently announced CNG solution when combined with the on-engine HPDI fuel system. We are in the process of evolving a new, more focused Westport that we can support and drive into more sustainable transportation industry. We recognize that we're operating within an evolving macroeconomic environment, which is enabling us to capitalize on renewed market momentum, especially as it relates to the use of natural gas as a transport fuel in the North American market. CNG has gained acceptance as an alternative to diesel fuel for long-haul trucking in North America, driven by its affordability and abundant supply. Westport's innovative and proprietary CNG solution hope to set a new standard for high-efficiency performance while delivering superior economics. As I mentioned last quarter, Westport will be focused on the following key drivers. On-engine, Cespira is pursuing strategic market expansion via technological leadership in heavy-duty transportation and truck OEMs. Off-engine, high-pressure controls and systems complement the energy transition regardless of the powertrain and a variety of financial initiatives. Westport's goal for Cespira is to deliver demonstrated volume growth over the coming year, driven by expanding into new geographies and adding new OEM customers. Cespira is seeing success here, delivering revenue growth of almost 20% in the third quarter and recently adding a second OEM customer in the form of a customer truck trial with a leading OEM utilizing Cespira's-HPDI components. The trial will include several hundred sets of key components and is designed to assess the [Technical Difficulty] is also expected to form the basis upon which the OEM will decide whether to make a further investment toward commercializing the system. Regarding our High-Pressure Controls & Systems business, we are currently developing components that are critical to performance and reliability. As a reminder, we are selling into 3 primary markets: China, Europe and North America. Following the close of the Light-Duty transaction, we have focused on moving our manufacturing to Canada and China. Both facilities are in the final stages before start of production, and we anticipate both to be online at the end of the year. The global truck market continues to expand and is expected to reach 1.95 million units in 2025. The long-haul truck market has historically struggled to decarbonize. Fleets around the world are focused beyond just reducing emissions and now prioritizing the total cost of ownership, natural gas is affordable, infrastructure is ample, and RNG production is growing at a fast pace. We are ideally positioned for this. What sets Westport apart from our competitors is our ability. We have solutions that can meet growing demand, delivering a total cost of ownership that is compelling to customers. We are optimistic about the company's future as well as that of Cespira. We have strengthened our balance sheet through the sale of our light-duty business and made a strategic return to our roots by developing innovative new technology to transform the Heavy-Duty market. In addition to new growth opportunities, we are making difficult economic decisions to enhance future shareholder value through planned reductions of 60% in CapEx and 15% in SG&A in 2026. Regardless of the unknowns or uncertainties ahead, we are paving our own path in the transportation industry that we believe will truly make a difference. Thank you to everyone who joined the call today. Your continued support is important to us. We continue to move through 2025 with purpose to create value for our shareholders. Thank you again. Operator: [Operator Instructions] And our first question will come from the line of Eric Stine with Craig Hallum. Eric Stine: Just wondering, can we start on the new OEM development with Cespira. I mean, just if you could provide a little more detail there? I know that, that OEM needs to go through a number of steps to make the decision about moving towards the development agreement and then beyond that, a commercial agreement. But what are kind of the signposts that we should look for over -- whether it's over 2026 and beyond? And how do you kind of envision this playing out as Volvo obviously wants more OEMs than just their use of HPDI? Daniel Sceli: Yes, absolutely. And I'll just remind everybody listening that in this industry, the OEMs are very, very protective of their commercial strategies. And so we are completely unable to talk about the who and any specifics and that's not going to change, unfortunately. We'd love to be able to talk about it, but that's the business we're in. This is a typical development, not unlike what we went through with Volvo originally, trialing the technology on trucks. The development programs going forward, to be more [indiscernible] we're almost 10,000 trucks in 31 countries. But it is a development cycle that will follow their standard path in the industry. And -- so we think we're going to start to get some feedback from that OEM probably mid-'25. And we'll be talking about it at that point, I hope that we're in a position to communicate that we're moving to the next phase. Eric Stine: Got it. And yes, that's what I was getting at. Is this typical, but also because you've got Volvo in the market, is it something that potentially is shorter than what you've seen in the past? And it sounds like, yes. Okay. Maybe sticking with the joint venture, any -- I mean, any thoughts on additional OEMs? And again, I know that the nature of this business is you can't give details, names, et cetera, but just maybe what that pipeline looks like. And I also know that Volvo is looking at growth with their HPDI truck in other markets? I think you mentioned India, South America last quarter. So maybe an update on that as well. Daniel Sceli: Sure. Well, we continue we continue to talk to all the OEMs about HPDI through Cespira. And clearly, volume is the key to getting this business to the place where we all want it to be. We've got the interest of many OEMs. I think we're at a point where we don't have to prove the technology anymore. And simply, when does the timing fit for the OEM in terms of their specific markets and their business cases. So the technology is proven, the performance is proven and Volvo continues to expand its reach where they want these trucks. I did mention India and South America. Those are beachheads that are being opened up. And we expect continued volume increases, at least that's what we're hoping for. One of the big tickets will be in Europe, the legislative changes to the system. And biogas being credited for the emissions standards in Europe is a really big deal that we're hoping will come in the next year. Operator: One moment for our next question. And that will come from the line of Rob Brown with Lake Street Capital Markets. Robert Brown: On the Cespira joint venture, you made a capital contribution in the quarter. Does that sort of set you for a while? Or what's the capital needs over the next sort of 12 months there? Daniel Sceli: Yes. So I think we've talked about this a number of times over the last at least 18 months here. There was -- there's always been a 3-year build-out setting this business up to be completely stand-alone. So the joint venture was always structured to have about a 3-year build-in of capital contributions to get it set to stand-alone. And obviously, we're in year 2 of that now. So yes, there's additional capital will be needed next year. Robert Brown: Okay. I guess -- and then on the High-Pressure Controls business, when do you expect to have that fully -- the manufacturing fully moved out of Italy and under your operations? Daniel Sceli: Sure. Well, it's all out of Italy now completely. We're in the process now of installing the equipment in both our Cambridge site and our Chinese plant site [Changzhou] and expect to have both those facilities up and running by year-end. . Robert Brown: Okay. Great. And will you have a, I guess, lower revenue run rate during that period? Or do you have a stock that can carry through? Daniel Sceli: No, it will be a bit lower revenue. And I mean there is some stock, but there's -- it will be a bit lower revenue. And then I mean the underlying theme here is that we want further -- the Chinese market is the biggest market for hydrogen components today. And it was very important for us to manufacture it locally for a couple of reasons. One, geopolitically, it's just a lot easier to make it there and for that market than it is to ship it in from Europe. Two, cost, right? We can be a lot more competitive out of a Chinese plant. And then of course, the North American market is starting to turn on natural gases, as we've talked about. It's a pendulum swing that we're very excited about. And we want to be in a position to take advantage of that market from a Canadian site. Operator: Our next question will come from the line of Chris Dendrinos with RBC Capital Markets. Christopher Dendrinos: I wanted to ask on the CNG solution announcement here. I think it was last week at this point. What's the timing look like for potential deployment there? And does your partners, Cespira, need to, I guess, move trucks over to the United States? Or I guess, how does that sort of, I guess, time line look for potential development? Daniel Sceli: Yes, sure. The intention isn't for trucks to come from Europe to North America at all. We're developing a CNG solution that is what we call the off-engine side of the thing. The on-engine, the Cespira's HPDI on-engine stuff is fully developed and ready to go. And so what this CNG strategy in North America will do for Cespira is bring additional volume. What it does for Westport, the -- what we call the back of cab system, the storage system for CNG combined with our high-pressure controls and our AFS engine control system is -- it's a full package that can be deployed into North America. The initial steps are going to be demonstration fleets. We're going to have trucks built with the CNG systems that fleets are going to run and trial. And certainly, our anticipation is that they'll be screaming for commercialization. Once we're through the demonstrations and have it proven out, we'll be working with the OEM to build out a commercialization plan. Again, the on-engine side is fully developed with HPDI. It's just a matter now of certifying a back of cap and doing the EPA certification, which is just simply miles on trucks. Christopher Dendrinos: Got it. And then maybe just shifting gears a little bit to the engineering revenue that you all recognized in the quarter. I mean, is that sort of an ongoing, I guess, revenue stream? Or was this sort of a onetime, I guess, recognition this quarter? Daniel Sceli: Well, yes. So in our High-Pressure Controls business, we are paid for a lot of development work for the hydrogen systems from our OEM customers. And so that's an ongoing thing. And we'll be spending R&D money over the next 3 years and the customer pays for it at start of production. So we have a bit of a run here of cash out for R&D before we get the customers' payment to cover it. But it's an ongoing part of this business. These are very complex components that the customers, the OEMs look to us to develop the technology for them. Operator: I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Dan Sceli for any closing remarks. Daniel Sceli: Thank you. Well, it's a pleasure always to share our story with our investors and the market. Thank you for your participation, and have a great day. Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

146天前Insight Analytics约5分钟阅读

CNTY 2025 Q3 财报电话会议

Peter Hoetzinger: Good morning, everyone, and thank you for joining our earnings call. We would like to remind everyone that we will be discussing forward-looking information under the safe harbor provisions of the U.S. federal securities laws. The company undertakes no obligation to update or revise the forward-looking statements, and actual results may differ from those projected. Throughout our call, we will refer to several non-GAAP financial measures, including, but not limited to, adjusted EBITDA. Reconciliations of our non-GAAP measures to the appropriate GAAP measures can be found in our news releases and SEC filings available in the Investors section of our website at cmty.com. With me today are my co-CEO, Erwin Haitzmann; and our Chief Financial Officer, Margaret Stapleton. After our prepared remarks, we'll open the call for questions from analysts. We announced solid third quarter results yesterday afternoon. Net operating revenue was $154 million, driven by strength in the East and Midwest regions as well as in Canada, offset by weakness in the West region and in Poland. The quarter started out really well. EBITDAR in July was up 7%. August was even better with EBITDAR up 22%, but September saw a sharp year-over-year decline due to the following onetime effects. In September of last year, Colorado received a $1 million breakup fee from Tipico. Also in September of last year, Mountaineer had a bonus accrual for $0.5 million reversed. In this September, Poland had extra costs but no revenue from a closed casino. As such, you can attribute the EBITDAR decline in Q3 all to Poland and the onetime effects in September I just mentioned. Adjusting for those, Q3 EBITDAR would have increased by about 5%, beating consensus estimates and demonstrating the continued operating momentum across various segments of our business. Not bad at all, definitely better than it looks at first sight. During the third quarter, play from our high value and core customers continued its long-term growth trend, but we did not see further improvements from our low-end customers. The upper customer segments continued to perform well, showing 8% growth, helping to offset a 9% decline in the lower-end segments. Therefore, total rated GGR was essentially flat. Retail play increased by 4%, resulting in a 2% GGR increase across the U.S. portfolio. Visitation statistics show a similar picture, visits by high value and core customers increased 4%, while visits from low segment players declined. Before I hand it over to Irwin, let me come back to Poland for a second. From now on, no license expirations are coming up for at least 3 years. So Poland should be at its normalized EBITDAR run rate for many quarters to come. In any case, however, we remain committed to divesting our Poland operations and we'll provide updates on the divestment process in the coming months as appropriate. Now over to Erwin for more color on our individual properties and markets. Erwin Haitzmann: Thank you, Peter, and good morning, everyone. Let me start with our results for the third quarter beginning in Missouri. Our Century Casino and Hotel Caruthersville, which just celebrated its first anniversary, continues to exceed expectations. Gaming revenue grew strongly across all segments. High Value up 82%, core, up 29% and retail up 22%. In total, gaming revenue was 29% higher than last year, and EBITDA increased 35% to $6.1 million, up from $4.5 million. Rent expense rose about $1.1 million, reflecting the VICI lease that funded the new property and operating margins remain high. It is worth noting that with our new land-based facilities, we're now reaching new markets. This is particularly evident in the significant increase in customers leaving 75-plus miles from Colorado Springs. Colorado Springs has been an outstanding success, modern, efficient and exceptionally well received by our guests. Our thanks to the entire team for a fantastic first year. Now to Century Casino and Hotel Cape Girardeau. Cape delivered $6.1 million in EBITDA, only slightly below last year's record quarter. The property continues to perform very well against competition from Illinois. Sports betting launches in Missouri on December 1. And in partnership with BetMGM, we will open a BetMGM branded sportsbook-owned property and BetMGM will launch its online sportsbook using our skin. We expect sports betting to elevate Cape's profile and create new revenue streams for the property. Now moving to Colorado. At Cripple Creek, EBITDA was $1.8 million, flat year-over-year. In the quarter, our high-value and core segments grew while pace in retail declined. Retail play now represents about 30% of total gaming revenue. We believe that Chamonix may capture a larger share of the retail market still driven by the novelty effect. At Central City, rated play was up 6%, but total revenue was down 4%, again, due to fewer retail players. EBITDAR came in at $1.2 million, up 20% on a comparable basis as last year's EBITDA of $2 million included a $1 million onetime payment from Tipico. At both Colorado properties, we have replaced live table games with electronic table lounges, which generate about the same revenue at significantly lower cost. That's a solid win for both operations. Now to the East. At Mountaineer in West Virginia, EBITDAR was $4.4 million, flat to last year. Apples-to-apples, though, EBITDAR was up $0.5 million as last year's EBITDAR was inflated by the reversal of a $0.5 million bonus accrual. Performance across the board was steady and parimutuel handle rose 26%, driven by improved scheduling and race mix. At Rocky Gap in Maryland, EBITDAR increased 7% to $4.9 million as we expected our first clean quarter without weather disruptions since the beginning of the year. Growth came from high-value players, while other segments held steady. Now to the West and the Nugget Casino Resort in Reno Sparks. While the Nugget had a standout August, mainly due to our signature Best in the West Nugget Rip Cookoff, overall, the quarter was still challenging. We experienced a record EBITDAR for August of $4.1 million, the highest single month result in nearly 3 years, but that was offset by a weaker July and September. Throughout the quarter, we enhanced marketing programs to grow both local and destination play. We are also building out our 2026 concert season. Tickets for Brooks and Dan in April are already selling extremely well. We began converting unused space into an additional 11,000 square feet of convention space, a 10% increase in square footage to be completed by year-end. The additional space will first be used by a major group event that is booked for January 2026. At the Nugget, we're executing on a clear repositioning strategy, shifting away from low ADP players who are no longer profitable and focusing on core players in Reno Sparks and Northern California. In sync with the enhanced marketing to play in the core segment, we are working on further improving the F&B offerings. It takes time, but we are seeing -- we are starting to see the results already. Now to Canada and Europe. In Alberta, slot coining was up 5.8%, total revenue up 1.6% and EBITDA up 11.1% to $5.4 million. Growth was broad-based, supported by disciplined cost management. Century Downs in St. Albert led the way with St. Albert benefiting from this year's upgrade of the facade. In Poland, we're nearing the end of a challenging period marked by license delays and relocations. The main headwind this quarter was the closure of our Wrocław Hilton Casino, which contributed an EBITDA of $1.3 million last year versus a negative $0.5 million this quarter. Our relocated Wrocław Casino is ramping up well and the second Wrocław location will open in January 2026, further strengthening our position there. All current licenses, as said before, are valid through 2028, so we expect stable operations going forward. With that, back to you, Peter. Peter Hoetzinger: Thank you. And before we cover a few balance sheet and capital items, let me explain what led to the filing delay of a couple of days. As described in the 8-K we filed with the SEC yesterday, we discovered an error during impairment testing for goodwill and ROCE GAAP that required us to restate our 2024 10-K and the 10-Qs for the first 2 quarters of this year. The correction of the error will reduce our goodwill balance with an offsetting increase in net loss less the tax impact. The estimated impacts are described in the 8-K. This does not change our revenue or adjusted EBITDA for any of the periods being restated. We are finalizing our review of the amended financial statements and anticipate filing these with the SEC within the next 5 business days. All right. Now back to the balance sheet. Our cash and cash equivalents at the end of the quarter were $78 million compared to $85 million at the end of Q2. That includes $5 million we spent in CapEx and $1.5 million we spent on the share buyback program. We also paid the annual table games license fee of $2.5 million in West Virginia as well as about $1 million in closing costs in Poland. So all in, we were about flat in cash from operations. Total principal amount of debt outstanding was $339 million, resulting in net debt of $261 million. At the end of the quarter, our net debt-to-EBITDA ratio was 6.9x. On a lease-adjusted basis, the ratio was 7.6x. Let me also note here that we have no debt maturities until 2029. And there is no need for significant CapEx this year or next. This year, we'll spend a total of $18 million, of which we have spent $15 million already. As we look ahead, we are very confident in our business prospects. Last year was a transitory period for us, but now we see a clear path forward to higher EBITDAR and cash flow for 2026 and beyond. Now it's all about harvesting what we have invested last year. When you sort through the noise I mentioned at the beginning of the call, we are encouraged by the trends in our business. While we recognize the level of economic uncertainty, we are more confident in the long-term prospects of our company than we were at any point last year. While the fourth quarter has just started, it's worth noting that the positive customer trends have continued into October, including improved play from both core and retail customers. Preliminary results for October show EBITDAR up well over 20% compared to last year. And as we head into next year's tax season, we believe that our core customers around the country will benefit from the tax bill passed by Congress this summer, including new deductions for tips and overtime and an additional deduction for seniors as well as larger standard deduction for all taxpayers. As you know, we are in the midst of a comprehensive strategic review process. At this stage, no decisions have been made, and there can be no assurance that the review will result in any transactions or particular change. We do not intend to make further public comments on the process unless and until the company's Board of Directors approves a specific course of action, which we do not expect before Q1 of next year. With that, I ask for your understanding that we will not take questions on this topic in our Q&A session as we cannot share any incremental information at this time. All right. That concludes our prepared remarks. We'll now open the call for Q&A with the analysts. Operator, go ahead, please.[ id="-1" name="Operator" /> [Operator Instructions] And our first question will come from Jeff Stantial with Stifel. Daryl Young: This is Don Young on for Jeff Stantial. Maybe starting off on the strong results in your Canada portfolio. Can you sort of expand a bit on what's driving that broad-based growth? And as you continue to evaluate the broader portfolio, do you view these as more noncore with the increasing U.S. exposure? Or do you see real synergies with the broader portfolio? Erwin Haitzmann: Thank you. I think I'll take that question. Starting the other way around. With regard to your second question, we see a little bit of synergy, but it's more incremental. So it is probably to be seen as a stand-alone conglomerate of operations the Canadian properties that we have. Concerning the drivers, we have -- the one visible driver is that St. Albert, where we redid the facade outside completely, and that had a really good impact. And the rest of it is just, I think, very motivated management that's really continuing to sharpen the pencil, looks on the cost side, looks on the revenue side. And we have recently been up there. We have a very motivated crew that is really eager to perform well. It's good to see. And I think we have some more upside also given the macroeconomic situation in Canada, which seems quite far less impacted or has been impacted than in the United States. Daryl Young: Great. That's helpful. Turning to the Nugget. Can you give us an idea of how you're thinking about timing for the group and convention business to normalize? And to sort of put some numbers around it, how many more room nights can this add? And then on some of the new entertainment programming, can you help us think about how you're underwriting that uplift and how confident you are that this will attract those visits and corresponding gaming revenues that you're underwriting? And then that's all from us. Erwin Haitzmann: Okay. So you're asking about the timing of the improvements as we see it, the impact it will have on room nights and the impact and the progress of the consult, correct? Daryl Young: Yes. Erwin Haitzmann: Yes. Okay. With regard to the timing, it's hard to say. But as I mentioned earlier and Peter mentioned as well, we already see in October that a number of the things that we've been fine-tuning on the marketing side is starting to take effect. And we are confident that we should see the full impact of what we are continuing to refine -- I mean already now, but certainly going into 2026 as well. And we're looking on the one hand, on the revenue side of the casino -- but combined, but also independent from that, we are also focusing on the retail side of the hotel business as a separate exercise because there continue to be -- there's a market segment that comes to the Nugget just to stay in the hotel, and they may not -- may or may not be gambling at all. It's not necessarily connected. And in that same context, also, as mentioned earlier, we have decided that we continue to focus more intensely on the F&B side, possibly expand the offer, but certainly also continue to work on upgrading at least 1 or 2 of our outlets. It's hard to quantify with regard to room nights, but it's -- let's put it like that. We have 3 segments for the hotel. The one is the casino side, which is mainly comped and that is intertwined with what we do with our overall comping program and how much we give back to our customers. The second one is the convention and group business. And we said earlier that smaller groups, we can do short term, but the larger groups have quite a long lead time. We're now talking about as far as 2030, 2031 with some of the larger groups. As it looks now, we think that the group business in 2026 will be either the same or better than in 2025. And the third one is the retail business, which we market also separately, and we have seen an increase in the retail segment already in '25, and we believe that more can be done in 2026. Concerning the concerts, we have learned that to give you numbers last year in 2024, the concert stand-alone made a profit of around $850,000. This year, the concerts are making a loss of about $300,000. So the reason for that is twofold. First of all, we just couldn't book what we wanted to book. It's not so easy. It depends when you target an act. It depends on what their route is and whether they are in that part of the United States, whether you can book them at the price that one would be willing to pay. But oftentimes, it's not even a price question, they are just not there. And obviously, I'm not willing to travel east-west without intelligent planning. So we've not been very successful and lucky in that respect. The second thing is that -- so that led to the result that we couldn't get as many country acts as we wanted to. In 2026, we think that will be better. And the second thing that we have learned is that we thought in order to reduce the risk of the -- which is quite high in the concerts when you cannot sell the tickets, we rather book acts that cost a little bit less than, for example, Stew so. And that probably was not a good decision. So we are now turning back into trying to book maybe fewer acts, but very good acts like books and done. So with that, we think we can fix the concert side. And we see that -- our goal is that the concepts stand on their own. But from at least half of the concepts, we see a very positive overflow into the hotel, casino and F&B business. [ id="-1" name="Operator" /> Our next question today will come from Jordan Bender with Citizens. Jordan Bender: You're seeing -- it sounds like you're seeing some pretty good success from the ETGs that you put in Colorado. Do you think this strategy -- if a strategy you would look to implement across any of your other U.S. assets, just given the cost side helps margins at the end of the day? Erwin Haitzmann: Yes. However, not necessarily by replacing -- completely replacing table games with ETGs. So we do have ETGs in other casinos are parallel to those. We still keep the nice game. But in Colorado, it was just a question of the -- it was just so obvious that it's smaller operations, it wasn't worth keeping the few tables. But in the larger casinos, we do have ETGs on the one hand and table games on the other hand. And as we see it now, we'll keep that also. Jordan Bender: Great. And on the follow-up, I think you mentioned you bought shares back in the quarter. I'm just curious where your balance sheet sits today, where the cash balance sits, how do you kind of think about buying back shares here versus continuing to pay down debt as we head into '26? Erwin Haitzmann: Absolutely. Peggy, why don't you take that question, please? Margaret Stapleton: We're currently analyzing the stock buyback versus paying back debt and have not made any real decisions on how to proceed into 2026. [ id="-1" name="Operator" /> We'll take our next question from Ryan Sigdahl with Craig-Hallum Group. Ryan Sigdahl: 20% or greater than that EBITDAR growth in October, improved play from the core and retail players, if I caught that right in the prepared remarks. Can you elaborate, I guess, on specifically, is that pretty broad-based across the portfolio? And then as you look to November and December, are there any weird comps or anything to be aware of on the plans for this year where that's not a good assumption to kind of continue throughout the rest of the quarter? Erwin Haitzmann: We don't see anything that -- anything unusual that would impact the one or the other way the fourth quarter. But with regard to the customer trends that Peter mentioned that led to the 20% plus in October, we just hope that the consumer sentiment continues to improve because that has impacted us negatively in the lower end of the database in anybody's guess, but I think there is at least a hope that the consumer sentiment will improve during the next, hopefully, remaining 2 months of this year. Peter, would you like to add to that? Peter Hoetzinger: Yes. I think the one and only difference we'll see is that last year, in the first week of November, we did open the Caruthersville land-based -- the new land-based facility. So in the year-over-year comparison, that one property from the first week of November on will probably not have the same growth rates that we have seen over the last 12 months. But with all other properties, also I don't see any abnormalities. Ryan Sigdahl: Great. Then just on the Nugget, July, September were weaker. Curious, I guess, think going back year 2, it was the convention business was building. It was going to really be inflecting kind of middle to late this year into '26. I guess, is there a reason did you have any cancellations? Or curious, I guess, the weakness in July and September as my view, I guess, could have been partially incorrect, but was that the convention business was going to really start to ramp up here? Erwin Haitzmann: Yes. The weakness in September mainly came from the fact that we -- as I mentioned earlier also that in '24, we had 2 powerful, very good concepts. One of them was Chase and Eldion and in September, we didn't have any. Then also in September, we had what is called a bingo blow a large bingo event in September, which now -- which we didn't have this September. And with regard to the conference business, there was also less conference business in July and September of '25 as compared to '24. But that was -- that couldn't be changed in the short term. [ id="-1" name="Operator" /> And we'll move next to Chad Beynon with Macquarie Group. Chad Beynon: I wanted to ask about Caruthersville. You touched on the growth that you continue to see in the operating leverage of that property. Are you still on track to hit the returns that you originally laid out on the construction CapEx? And then secondarily, where do you expect most of the growth to come from? Will it be that further out customer in the neighboring states? Or are there still opportunities in the closer in catchment area? Erwin Haitzmann: Yes, we -- first question, yes, we are on track with regard to what we expected. And secondly, we think that growth will come both from the geographically closer and further away group of people with more potential in the 75-plus miles. We think that we can reach out even more into that segment than we did so far. So more growth from the more distant areas, but still growth from the closer areas as well. Chad Beynon: Okay. Great. And then going back to the weakness that you saw in the retail customer, which it appears based on the 20% growth in October, that's abated. Do you know why this -- is there any evidence in terms of that this will remain stable? Anything else to point to in terms of why it fell off during the period? Was it -- could it have been weather-related, comparable related, local CPI or unemployment? Just any evidence that will give us confidence that retail could improve here in Q4 and beyond? Erwin Haitzmann: Yes, it's hard to say, but we believe that it has to do with the insecurity around tariffs and the impacts that tariffs may possibly have to the consumers. And that is a worry that typically is more prevalent in the lower end of the database. And we see that also in places like Rocky Gap, for example, where the household income of the catchment area is significantly lower than in other markets that we are active in, that certainly has a strong effect. I'm not as good as others to speculate about the increasing consumer sentiment going forward. But if we had to say something, we would think it looks -- there is a friendly outlook, but you probably could make a better judgment on that. Chad Beynon: Okay. Great. And are there initiatives or cost improvements that you could make if this customer remains volatile? Erwin Haitzmann: There's always a possibility to look for more and tighten the be further. But I think if it's not -- I don't think that it will get any worse than it was in the worst month of this year. And we've maneuvered through them well. And I think if necessary, we could do that again. There is always, as I said, if you keep looking and then there's always a way to save more. The danger always is that you don't go too far in what you are doing. [ id="-1" name="Operator" /> Our next question comes from Connor Parks with CBRE. Connor Parks: Maybe another capital allocation one, maybe separate from the debt paydown versus share repo discussion. Just in the context of the cash on the balance sheet and some of the EBITDAR growth you've seen this year with all the CapEx rolling off to Missouri. I guess, how are you weighing the reinvestment plan at this point? Is there anything maybe outside of nugget you mentioned that you would like to build or reinvest in or any low-hanging fruit type projects in Missouri again that you're weighing at this point in time? Erwin Haitzmann: Yes. Let me start out and then hand over to Peter and Peggy. We will -- we're thinking about doing a little bit of facade upgrade also in the Canadian -- 2 of the Canadian properties. That is not a large CapEx item, but there is some CapEx. And as I said earlier in St. Albert, it was very beneficial for the revenues and for the business there. We may spend a little bit of money in connection with food and beverage at the Nugget. And that would be probably it apart from the routine upkeep and then investment into mainly slot products of our properties. Peter, can I hand over to you? Maybe you would continue want to expand on that some more. Peter Hoetzinger: Yes, sure. Connor. We don't expect any significant or large moves, not on the stock buyback front and also not on the paydown of the debt currently because, as you know, we are in the midst of the strategic review process. And it will depend on the outcome of that. We could sell something, then we would have significant amounts of money to pay down the debt. We could do some other transaction that is still up in the air. So until we have concluded that process, you won't -- you will not see any significant stock buybacks or pay down of debt. Connor Parks: Great. And then maybe as my follow-up, you've mentioned in this quarter and in prior quarters, the expected uplift potential in regional gaming around the benefits from the upcoming tax season. I guess have you provided any barriers or try to quantify any of these benefits around customer bases, spending habits or anything of that matter for any of the areas of which you operate in? Erwin Haitzmann: I wouldn't have to make a guess here. It's hard to say. Peter back over to you, do you think you could quantify? Peter Hoetzinger: No, not really see it. As Erwin said before, mostly the low ADT players, the lower segments of our database are impacted by that. And depending on which property, it's about maybe 15% to 20%, 25% of our customers are in that lower segment. But in general, we are making steps to move away from that and to move towards mid-tier and upper tier customers in our marketing approach and in everything we are doing. So that should lessen that impact. But I agree, we don't want to quantify that not enough hard facts that we have [ ever ]. [ id="-1" name="Operator" /> And that is all the time we have. If we did not get to your question, please reach out to the company using the Investor Relations page at cnty.com. I will now turn the call back to Mr. Hoetzinger for closing remarks. Peter Hoetzinger: Yes. Thanks, operator, and thanks, everybody. We appreciate you joining our call today. I will talk again when we present the 2025 full year results. Until then, thank you, and goodbye. [ id="-1" name="Operator" /> This does conclude today's conference. Thank you for attending.

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