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Simon Pryce: Thanks very much, and good morning, everyone. Welcome to the RS Group Interim Results Call for the 6-month period ending 30th September 2025, and thank you all for joining us this morning. The presentation should take around 30 minutes, and then we'll have some time at the end for questions. But we'll try and make sure that we finish the call by no later than 10:00. I'm going to start by summarizing our pleasing first half performance. Kate will then run through our in-line financials and what's driving them, both at a group and a regional level. Then I'll conclude by sharing with you the good underlying progress that we're making as we make the business better at RS and position ourselves to accelerate growth, improve efficiency, and drive better operating leverage over time. But before we get into the details of this morning's presentation, we'd like to start our meetings, virtual or physical, at RS with a health and safety moment and a values highlight. So although we're virtual, please make sure you do take a safety moment to identify your nearest exit and safest evacuation route in the event of an emergency. For our values highlight, I would just like to call out and celebrate our new multi-year global partnership with SolarAid to support their mission to light up lives across rural Africa. As our new global charity partner, their and our purposes and values are completely aligned that is one team delivering brilliantly, doing the right thing and making every day better. We'll bring our people, our innovation, our technical expertise and our suppliers and partners together to help raise over GBP 1 million to partner with SolarAid to deliver clean, safe solar light and power to over 150,000 people living in rural communities without electricity. This is very much RS demonstrating our values in action and continuing to make amazing happen for a better world. So as you know, we're on a journey to create a better business here at RS, and I am really pleased with the progress that we have made in the first half. Against the background of a challenging geopolitical environment and uncertain markets, our data tells us that we're continuing to outperform. We're delivering financial outcomes that are in line with expectations. We're actively managing our business to reflect the trading environment we find ourselves in, but we're continuing to invest in the strategic and operational initiatives that are already beginning to deliver, which underpins our continued confidence in returning RS Group to growth and through focused investment and effective execution delivering on those medium-term financial targets and much improved value creation that we first talked about at our Capital Markets Day last September. So before Kate takes you through the financials, I think it's worth looking at what's going on in our markets, which remain uncertain, although I have to say a bit more stable. As we shared with you at our Capital Markets Day, high service industrial and MRO distribution markets are large, complex and multifaceted, and they are also generally fragmented as are the competitors who play in them. And it's for this reason that we have highlighted that the best way of thinking about our future direction of travel is to look at PMI data, and that our revenue growth is very closely correlated with trends in PMI data, typically lagged by between 3 and 6 months. And during the first half of the year, this remained true. As you can see from the chart on the left and in the red circle, PMI data, which is the gray bars, have been improving since the low point in our fiscal Q3 last year, but it still does remain below 50, suggesting modest contraction. And markets in the first half were probably a bit slower than we anticipated. But against this backdrop, our revenue, shown by the red line, has stabilized and indeed started to move in the right direction over the last couple of quarters, and we actually returned to marginal growth in Q2. As the chart of the regional PMI data on the right indicates, and as you'll hear from Kate in a minute, this was reflected in good growth in Americas and APAC, broadly offsetting a small decline in EMEA. Now whilst PMI data is a good indicator of the likely future direction of travel, we use other data sources to assess our relative performance, and probably the most relevant of these are web searches and supplier reported channel shares. We monitor Google traffic for relevant search terms, and these were down 6% in the first half versus our own group and indeed digital performance, which was only down 2%. And in the chart on the left, you can see that we've broken it down by product category across EMEA, where we have the most detailed data. And in all 4 of our major product categories, you can see that we are performing significantly better than the market. And on the right-hand side of the chart, on channel shares, supplier data continues to indicate that we're gaining share from other distributors across virtually all of our industrial product categories in Europe, and if anything, this has probably picked up a bit in the first half of this year, which is all indicative of our continued outperformance, which is enabled by our differentiated proposition. So with that market background, let me pass you over to Kate, who will take you through the numbers and the drivers behind them. Kate Ringrose: Thank you, Simon, and good morning, everyone. I'd like to echo what Simon has said, we've made considerable progress over the last couple of years. And although the market environment remains uncertain, RS Group is in a much better place today. There is plenty of evidence to support this in the first half. In Q2, we moved into growth for the group. We are actively demonstrating strong cost management, managing pricing and cash flow, alongside discipline in investment. Revenue decreased by 3% compared to last year on a reported basis. On a like-for-like, the decline is 1% after excluding impact of the weaker dollar and reduced trading days. EMEA performed relatively well in a weak industrial environment, and performance in the Americas and Asia Pacific was positive, and I will go through the revenue bridge on the next slide. Lower revenue and increased investment drove single-digit reductions in our adjusted profit and earnings measures, despite the benefit of a slightly higher gross margin. And cash flow conversion was very strong at 107%, with continued good working capital management and ROCE stable at 15%. In our unadjusted free cash flow, we also saw a GBP 10 million cash contribution following a successful legal challenge. We are increasing the interim dividend by 2% to 8.7p per share, in line with our progressive dividend policy and our expectation of low single-digit growth until cover grows back to historical levels. There are a few things to highlight on the progress we're making in our growth accelerators at the bottom right corner of this page. As Simon has illustrated, in current market conditions, the digital revenue decrease of 2% is indeed a resilient performance, supported by the investment in web conversion and a 9% growth in our e-procurement solution for higher value customers. This largely offset reduced revenue from typically lower value web-only customers, including the temporary impact of our U.S. digital platform upgrade. This growth in e-procurement was also reflected in a 7% increase in like-for-like service solutions revenue, alongside improved revenue and profit from RS Integrated Supply, following the strategic refocusing of that business under new leadership last year. And RS PRO grew sales by 4% with growth in all of our regions. We continue to develop our product offering and improve the marketing of our range, and RS PRO now accounts for 14% of Group revenues. So let us turn to look at revenue in a bit more detail. As I said, like-for-like revenue fell 1% compared with last year after excluding the impact of FX and working days, and in this chart, we also show the temporary impact on revenue of the U.S. digital platform upgrade. Most of that impact was in the first quarter, with steady recovery through Q2. And adding this back, like-for-like revenue would have been flat in the first half. We also saw a reduced average order frequency and a lower number of customers as demand fell in markets that were in contraction through the period, including some expected customer attrition in Distrelec as customers migrated to the RS proposition. However, this was offset by the benefit of active pricing management, including supplier pricing pass-through, and importantly, the increased revenue from our higher value corporate and managed key customer accounts. These factors resulted in a 3% increase in the average order value in the first half. At a product level, the more resilient categories of facilities and maintenance, mechanical and fluid power, PPE and site safety grew 3%. Automation and control and electrification was down 2%, but do show signs of recovery. Demand for semiconductors continues to be weak, with end markets remaining challenging. Turning to costs and cost management in the half year has been good, and I am really pleased with the discipline evidenced across the group. We have held costs flat half-on-half despite inflation and increased organic OpEx investment and the net impacts of inflation, a favorable FX impact on the weaker dollar, and a GBP 5 million increase in organic OpEx investment was largely offset by restructuring and integration benefits, including those in Distrelec, which was an additional GBP 9 million in the first half. We are on track to comfortably achieve our target of over GBP 15 million of benefits for the full year. Within our ongoing cost base, our efficiency and savings, which have also enabled us to absorb investments in people, capability and the migration of technology spend to the Software-as-a-Service model for solutions partners. This results in an ongoing cost base of GBP 482 million for the half, effectively flat on last year. Minor benefits relates to a GBP 3 million profit on the disposal of part of the Distrelec Nordic business to our existing export partners, and the cost to deliver the restructuring and integration savings in the half was GBP 4 million. Underlying operating margin, excluding the elevated organic investment OpEx, was flat through the effective management of pricing and costs. The net impact of lowering revenue and cost inflation reduced margin by 100 basis points. However, this was offset by restructuring and integration benefits alongside a reduced cost to deliver these. In addition, we have been delivering an increasing OpEx investment spend through the transition period, with the year-on-year increase reducing margin by 40 basis points, shown to the right of the chart. These investments will drive improved margins over time from our strengthened differentiated proposition and improved operating leverage. So moving on to the regions now and starting with EMEA, which delivered a resilient revenue and operating profit performance in weak economic conditions. PMIs were below 50 in our main markets for the period, indicating market contraction, and like-for-like revenue was down 2%, which includes the anticipated Distrelec customer attrition post the closure of the Distrelec DC, which in and of itself saved us over EUR 10 million per year. Now let's drill down by markets. Business confidence remained weak in the U.K., but we relatively outperformed. Our performance in France continued to be strong, and our targeted products and sales offering to more resilient industry verticals were successful, for example, those connected to process manufacturing such as food and beverage. The DACH market remains challenging, with volumes remaining weak in the manufacturing and automotive industry. Gross margin was slightly up with early benefits of pricing coming through. Operating costs increased by less than inflation through active cost management and strong synergy delivery. Largely reflected the reduction in revenue on a like-for-like operating profit was down 11% to GBP 86 million, and most of the increased organic OpEx investment resides in EMEA, which was the main factor in the operating margin decline to 10%. Moving to Americas, which on a like-for-like basis, grew by 1%. On a reported dollar basis, it was down 5%, which is largely a function of a weaker U.S. dollar. You can see the recovery in digital sales since May, which were impacted following the upgrade of our digital platform in Q1. And if we adjust Americas' like-for-like revenue for the temporary impact, H1 revenue would have been up around 5%. Growth rates accelerated through Q2 in the U.S. and Canada against a backdrop of resilient economic sentiment. Markets in Mexico remain more volatile, with persistent concerns over tariffs and their impact on the wider Mexican economy, and this has led to a number of larger customers deferring capital expenditure which was the significant factor in a decrease in like-for-like revenue in Mexico. Gross margin for the region was slightly up, with a strong performance in the U.S. against the tariff backdrop, more than offsetting increased cost of sales in Mexico due to unfavorable dollar to peso movement. Inflation and strategic investment in digital and pricing optimization were reflected in operating costs. And like-for-like operating profit was down 9%. Profit was down in Mexico, which reflected reduced revenue and gross margin. However, profit was slightly up in U.S. and Canada from improved revenue and gross margin. Let's move on to Asia Pacific. We have been seeing positive momentum here since the final quarter of last year, and revenue was up 4% on a like-for-like basis. We delivered growth in Australia and New Zealand, with last year's Trident acquisition performing ahead of expectations. We also delivered growth in Southeast Asia and Japan and Korea. Greater China was impacted by very weak performance in Hong Kong, reflecting significantly lower spend from a few large state-owned customers linked to government budgetary constraints. Gross margin benefited from favorable pricing and lower inventory provisions. And with costs broadly stable, we saw a strong increase in operating profit, reflecting improved operational leverage. All right. Let's move on to cash. This is where our continued focus has delivered strong cash conversion. Our adjusted free cash flow was broadly flat, with our working capital metrics stable. This resulted in cash flow conversion of 107%, well in excess of our target of over 80%, and this was largely a function of disciplined inventory management in response to revenue demand. Stable CapEx of GBP 25 million translated to 1.1x depreciation as we continue to invest in our physical and system infrastructure. And our well-funded pension obligations mean we don't anticipate any further additional company contributions for these schemes. Net debt decreased to GBP 333 million, continuing a downward trend over the last 12 months, and is now equivalent to 1x net-debt-to-EBITDA at the low end of our 1 to 2x range. Our cash-generative business model, strong balance sheet, and debt facility headroom provide us with plenty of capacity for continued investment and selective M&A. And there is no change to our capital allocation policy. Firstly, we prioritize organic investments in order to significantly improve our efficiency and our market position. Secondly, financially disciplined acquisitions in this global fragmented market can accelerate our strategy, especially small bolt-ons. And third, we believe in sharing cash generated with our shareholders through a progressive dividend policy. And if we cannot productively invest excess capital over a reasonable period of time, we will seek to return this to shareholders. Finally, from me, our full year outlook, which is pretty consistent with what we indicated at the start of the year. There are a few points of emphasis for the second half. We now expect our gross margin to be a bit above 43%, so higher than last year. Our organic investment to deliver our strategic initiatives in OpEx is still likely to be at the lower half of the guided range of GBP 35 million to GBP 45 million per annum. And depreciation and employee incentives are expected to be weighted to the second half. We have demonstrated our active cost management in relation to the market environment, and we will continue to do so. There are further guidance points, including trading days and ForEx, and a summary of our restructuring benefits to-date, which are included in Slide 29 of the presentation. I will now hand you back to Simon. Simon Pryce: Thanks, Kate. And I think you can tell, there is a huge amount going on at RS. But I do recognize that in challenging markets, it is difficult to see this in our financial performance. So over the next few slides, I am going to highlight a number of the areas where I see the changes and the strategic improvement investments that we are making already beginning to deliver. Because it's this that I'm pleased about and it's real evidence of the progress we're making in repositioning RS to drive better growth, improve efficiency, deliver better operating leverage, and much improved sustainable shareholder value over time. So just a quick reminder that we set out our ambitious strategy to improve RS at our Capital MarketS Day just over a year ago, and we continue to execute to that multi-year plan. Our aim is to deliver sustainable outcomes and to be first choice for all of our stakeholders, particularly our customers and suppliers. And we have detailed actions in each of the areas of our strategic wheel set out on this slide. Whilst it's still relatively early in our change journey, in the First half, we executed effectively, and we've set that out in a fair bit of detail in the RNS. But what I'd like to do here is just highlight a few areas where we're making real tangible progress, delivering increased resilience today, improving some of our key underlying operational metrics and supporting accelerated growth that are all early indicators of us beginning to realize some of the exciting RS opportunity. Core to delivering our strategy is, of course, our people, and we have significantly strengthened our leadership over the past 2 years and we continue to do so, while investing in training and upskilling across the group. Our people buy into this strategic journey that we are on with our engagement score well into the mid-70s, despite the challenging markets and the level of change going on within the group today. Our people are doing a fantastic job, and they remain the lifeblood of this business as they embrace and drive change to create greater agility and efficiency. But it's probably in customers where our biggest opportunity lies and where I'm most excited about the progress that we've made over the last 6 months. There is huge potential here through the more effective use of our unique data to target the right type of high potential value customers and to increase our share of wallet with them through delivering a tailored value proposition and a personalized experience, but with an optimized cost to serve. This requires consistent and ultimately connected customer data engagement and management platforms coordinated across the channels globally. We've now reconfigured, cleansed and uploaded and matched over 90% of our customer data across EMEA and APAC, with Americas to follow. And we are already starting to use this data to develop highly targeted and potential-based segmentation models, which will allow us to prioritize customer targeting with both human and digital marketing and to more effectively deploy our sales efforts next year, particularly in EMEA. We've also completed in the first half the development of our customer data platform, which we're now using to develop opportunity-based personalized experiences, both online and offline, to better attract, nurture and gain a larger share of customers' wallet. Our CRM system, which we completed the rollout of last year, has now recorded over 340,000 customer interactions. And to date, this has enabled our sales team to identify more than 50,000 new sales opportunities. And levering this richer data insight, we've seen materially higher win rates and bigger deal sizes, which is part of how we've achieved that 4% growth in revenue from our corporate customer segment in half 1 that Kate referred to earlier. This is all before we ultimately knit it all together and connect it to our enhanced digital commerce engine as we roll that out across the Group, all of which will accelerate customer and wallet capture through enhanced connected data platforms. I'm also pleased with the progress we're making to further strengthen our technical product offer. Our product management solution launched at the end of last year now has allowed us to more than triple our average new product introductions to over 30,000 a month in the first half of this year, and that's resulted in a nearly 30% increase in new product sales and great expansion of our curated product range. And initial Investment in more dynamic pricing has allowed us to process over 3x the normal number of pricing changes that we make in the Americas, which is part of how we've dealt so effectively with the impact of tariffs. But the real opportunity of dynamic pricing and the database margin optimization capability that comes with it is already supporting gross margin expansion in Americas, and we will be rolling this out across the group more widely over the next couple of years. And these investments are just examples of how we're better supporting both suppliers and customers and enhancing the value that we create for them. Kate shared with you a bit earlier the growth that upgrading our e-procurement solution is already delivering, and we continue to invest in our other digital procurement solutions for upgrade next year. Our investment in process and technology, as Kate alluded to, is also repositioning our integrated supply business, RSIS, which delivered strong growth in revenue and much improved profitability in the first half, which is all evidence that our solutions and services focus is driving much improved strategic engagement, and importantly, product pull-through and enhanced value. I'd also like to call out the investments that we've made in the first half to improve our digital experience, which is also contributing to our performance. Our investment in enhanced findability tools have driven a 2% improvement to more than 18% in our Add to Cart rate when a customer searches for product on our website. Our new basket and checkout functionality has resulted in a 5% improvement in basket to order conversion, which is now up to 41%. We've launched an upgraded version of our enhanced digital platform in North America in the first half, as you know, and we continue to tune that platform. Just an example of how much more effective it is, our website load times are now a third quicker compared to the old website. We also continue to tune our delivery promise solution that we launched last year. That's already resulting in fewer cancellations and returns, but is importantly now beginning to yield increasingly granular data, which will allow commercialization of artificial intelligence and machine learning optimized decisions, particularly in the areas of stock availability, inventory management and pricing. Kate's already talked about much of what we have achieved to enhance the efficiency of our physical, digital and process infrastructure across the group, and that is an ongoing initiative. But it's important to realize that we have now delivered sustainable restructuring and integration savings, totaling over GBP 47 million over the last 2 years, and that's more than we anticipated at the outset. We're also now well into the detailed plans that will deliver at least an additional 150 basis points of margin that we referred to as potential upside in our Capital Markets Day over a year ago. But it isn't just about cost reduction. As an example, our delivery to promise investment that I mentioned earlier is also allowing us to do things like optimize product flows through our distribution network. In the first half, we reduced the number of times we handled a product more than once from 52% to 40%, clearly reducing our cost to serve, and importantly, also reducing our carbon footprint. We see lots of opportunity to further optimize this with more data going forward. All of these efforts around improving our infrastructure is driving significant improvement in our future operating leverage. So notwithstanding a decent in-line financial performance despite the challenging, albeit, a bit more stable markets, I hope this presentation has highlighted for you the real reason why I'm pleased with the first half performance. The change in investment we're making is already delivering better revenue resilience and continued outperformance. It's delivering growth in our accelerators and areas of focus, such as our corporate customer segment, RS PRO and our solutions business. It's driving improvements in our gross margin, in part driven by our investments in new pricing technology and capability, and we're also exercising good cost control and improved efficiency. And always more importantly for me, it confirms that RS is uniquely positioned in fragmented markets with attractive through-cycle growth characteristics. We have an increasingly differentiated technical and digital product and service solutions offer, which positions us to continue to drive market share gains. We are improving the efficiency of our global infrastructure, which will drive operating leverage and significant margin expansion over time. And we can deliver value-creative growth through disciplined acquisitions. And although we've not made any in the first half, this was a result of value discipline, not a lack of opportunity, and we have a good pipeline going into the second half. Most importantly, it's further evidence to me that our medium-term financial targets to grow revenues at twice the market with mid-teens adjusted operating margins, over 80% cash conversion and over 20% return on invested capital are more than achievable, and this will all deliver exciting sustainable value creation for all of our stakeholders over time. That's the end of the formal presentation. Thank you for listening. And I'd now like to open the call up to any questions you might have. Operator: [Operator Instructions] Our first question comes from David Brockton from Deutsche Numis. David Brockton: Can I ask 3 quick ones, please? Firstly, on the U.S. I guess that's a region where you have a little bit more visibility, or at least historically have done. Can you just touch on what the book-to-bill looks like there? The second question relates to Germany. Clearly, that's still been a tough region for you. Can you maybe give any insight as to whether you're seeing any signs of improvement in that region? And then the final question relates to some of the improvements that you've touched on, the share gains as well, that you clearly set out. The one sort of lagging indicator or indicator that's still off a little bit looks like the net promoter score, which is down year-on-year. Can you maybe just give any insight into what you think is happening there, please? Simon Pryce: Thanks, David. Yes, U.S. book-to-bill rates stable to slightly positive in North America; in Mexico, stable-ish. I think what we are seeing in Mexico is a continued deferral of some quite big capital projects. So although the book-to-bill rate looks okay, we do see pretty consistent deferral. We haven't seen that capital investment spend loosen up yet, but generally pretty solid. In Germany, yes, it remains difficult. There is the hope that stimulus will eventually feed through both to industrial confidence and to investment. I mean the one thing about Germany is that lapping means the pace of decline is slowing. We have new leadership in Germany, and I'm very confident that we're positioned to recover or to benefit from recovery in Germany when it happens. But no major signs of that happening yet, but equally, Germany is a lot more stable than it was even 6 months ago. Then lastly, the NPS score that you referred to, David. The way we report NPS is on a rolling lagging basis -- 12-month basis. We did anticipate internally a decline in our NPS score, both in Europe and in North America, firstly with the launch of DTP, and secondly with the introduction of our new digital commercial -- commerce engine. I think, pleasingly, the monthly recovery in NPS has actually followed or slightly exceeded, if I am honest, our own expectations. So whilst the externally reported number still looks a bit weak, if you look at the movement that we can see internally month-on-month, we're on a very good trajectory on NPS. Operator: [Operator Instructions] Our next question comes from Michael Donnelly from Investec. Michael Donnelly: Just a couple from me, please, and they're both about RS PRO. Now that it's 14% of group, and we've seen great strength in the US, albeit from a low base, should we be thinking about a sustained mid-single-digit growth trajectory for that product in the medium term, or is it more likely to moderate to group growth at some point? And related to that, I think you've mentioned the potential in the past for RS to reach about 1/5 of group revenues. Could you comment on that potential, given the recent performance of the period? Simon Pryce: Thanks, Michael. So we have seen a good performance for RS PRO in the first half. Given the very low base we're starting from in America, I am not sure that we're celebrating victory there quite yet. There's a lot of work to do to build both recognition and understanding of the RS PRO brand to make sure we've got the right products stocked for our U.S. customer base and are actively selling and promoting the brand in the right way. I do think you should expect RS -- I mean it will be a little choppy, but I do expect, or I do think you should expect to continue to see RS PRO growth outperform the broader group growth over time. And with reference to sort of medium and long-term targets, I'm not sure we've gone out there with a formal position on where our RS PRO brand should get to. But if you look at world-class distributors, I think your comments about between 20% and 25% of revenue being about the right level for a private label products. I don't think we're necessarily disagreeing with that. It takes time to get there, and we're on a journey with RS PRO that's not yet finished. Operator: We currently have no further questions. And with that, this concludes today's call. We thank everyone for joining, and you may now disconnect your lines. Simon Pryce: Thanks, everybody.
Max Westmeyer: Thank you very much. And welcome to all of you to our Q3 2025 results presentation. Today's call is hosted by our CEO, Nikolai Setzer; and our CFO, Roland Welzbacher. Both the press release and the presentation of today's call are available for download on our Investor Relations website. And I'd like to remind everyone that this conference call is for investors and analysts only. So if you do not belong to either of these groups, please disconnect now. Following the presentation, we will conduct a Q&A session for sell-side analysts. [Operator Instructions] And before handing over, I want to briefly highlight some extraordinary effects that impacted our Q3 figures. As you're already used to it from the former AUMOVIO reporting, the signing of the sale of our original Equipment Solutions business within ContiTech has resulted in some accounting technicalities. Here, too, IFRS 5 applies and the assets and liabilities attributable to OESL were reclassified to assets and liabilities held for sale. Furthermore, the sale has resulted in a write-down of the assets, which reduced the basis for depreciation. The depreciation of the new book values of the OESL assets has stopped. Without the signing, there would have been no impairment trigger and the depreciation would have been roughly EUR 6.5 million higher in Q3. With this upfront, let me now hand you over to Niko. Nikolai Setzer: Thanks, Max. Very welcome to the call of an, again, eventful third quarter. Our quarters have been in the last time, always eventful, but this time with 2 major events and 2 major milestones, as already mentioned. On the one hand, the AUMOVIO spin-off with a fantastic ring the bell event on September 18. So this was very impressive going forward for sure. And you could see already that it started quite well as well in terms of market cap. So just in that day, EUR 700 million in market cap was additionally created and success story continues. I should say, as of today or better yesterday, it's in the meantime, greater than EUR 2 billion -- EUR 2.4 billion roughly or 15% in 7 weeks. And if you look the underlying indices they are definitely not 15% up. So we clearly outperformed. With that measure, the market, not just that this measure has been greatly but looking as well how it was executed, speed and precision from announcement, August, we started last year, December decision and September 18, then the listing with the final transaction, I should say. So that shows how focused and determined the Conti team was and is once we decide on strategic realignment and all hands on deck, and I'm really grateful that the team has achieved this on time and on budget, I should say, in particular, or even more because the OESL sale has been signed basically in parallel. So it was August 27 when the signing took place with the industrial holding company regions, which is, and that's why we were pursuing the strategic move from our point of view, clear better strategic owner for that asset to develop its value accretive going forward and -- on the one hand, on the other hand, we see for ContiTech, this is a clear strategic move to focus even more on the industry business, on industry customers, getting now to an 80% industry business. And therefore, our strategy, which we announced 3 plus 1 champions, 3 sectors plus the one, the one is OESL. We see us following suit with those 2, focusing now on the last 2, which are within the group. And just to finalize this one, expected closing is until first quarter 2026. And then OESL is done. And at the same time, we fully focus then on the ContiTech independence. So with those strategic milestones coming now to our performance and it's a good operational performance. But first of all, those strategic moves have had as well strong impacts, in particular on the Near base. You see on the special effects on the right side that combined both had an impact of greater than EUR 1 billion, EUR 1.1 billion negative impact. Roland will give more details in his part. However, I want to highlight right now already, those have been all noncash effect of one-offs means as we did it as well in previous years, we -- our dividend policy allows for adjusting such events means they would be out of the dividend base, which we will then look into for next year's dividend. Secondly, leverage ratio. So now on a pro forma base means we have excluded out of the 12 months EBITDA, the automotive deconsolidation effect, EUR 680 million, so very substantial, which is getting us right now to 2.2%. So we said we believe to be at around 2-ish. This is now September until year-end. We are working further to -- with our cash as well to deleverage. So we are on target, and we have expected such a ratio. So from the more strategic part now to the operational part, you see organic growth, 2.6%, which is a decent growth given that the last quarters have been more shy, very strongly driven by tires, tires 3.7%, which you would see on the next chart, why I mentioned it already because that tells you immediately that the growth was very much driven or all driven by tires. ContiTech still slightly improving, but slightly negative organically with 0.6% and responsible clearly, replacement tire business and there, the regions, North America and APAC and PAT helped as well overall good operational performance. And you could see that channel mix, regional mix, our measures all contributed to a strong price/mix on the sales part. And you see that the negative impacts, which we had still lower volumes in line with the year-to-date, so at a minus 1 percentage points roughly. Strong exchange rate effects with drop-throughs and the tariff effects, they have been almost completely offset by all the mitigation measures which we took in place, which we started more or less at the beginning of the year and which are now unfolding. So the adjusted EBIT margin is with a strong comp of last year, basically close to be stable. On ContiTech, as mentioned before, slight sales down. However, earnings are significantly up. That is a proof that our measures or safeguarding measures, which we have initiated, they clearly pay off. And the environment -- in an environment which is still weak on the industry as well as on the OE side. However, we can admit that the third quarter already shown some signs, in particular, September of improvement. So industry business, our business areas have been in at least a positive territory with regard to growth, whereas OE is still down. I already mentioned, OESL results in a stop of depreciation, EUR 6.5 million. Already now I can mention ContiTech would be as well up in terms of earnings even without that effect. And we have excluded it, which you see in the middle from the group result where it has only a minor effect. Looking on the adjusted free cash flow, here, a slight operational improvement, EUR 157 million to EUR 169 million, so EUR 12 million. But you have to consider that last year, we had the one-off payment from Vitesco EUR 125 million. If you adjust for that, you see that operationally, we are going in the right direction. And this holds as well true for the adjusted EBIT of the group, which you see on the upper there, if you deduct the EUR 125 million, you see that our EBIT has improved there as well based on the 2 stronger sectors -- 2 strong factors. And looking on the group operational holding costs, you see like-for-like that we are trending. If you do the math, you see that we are trending as well downwards on those costs, and we have elaborated on that. This is expected, and we are further working in order to get further to the pure play of tires, now combined with ContiTech to lower holding costs, which are in line with our businesses. So looking into the figures. All in all, you see a challenging quarter, but with the strong September ending, so the second half of September was on the stronger upper side, it helped with solid performances. On tires, you see 3.6%, which I already mentioned. Again, sales in replacement PAT up, whereas the OE part and in parts as well truck tire was down, still is overall with the strong price/mix in organic sales growth. And the result, you see on the right side, 14.6% to 14.3%, flattish, again, strong comp last year. It was a strong quarter with the EUR 508 million, only slightly down with the EUR 501 million based on our mitigation measures, which took place. ContiTech, again, 0.6% industry up, OE down, both trending as well the OE side trending a bit better in the year-to-date trend. So that is a positive. And you see on the right side, even if you deduct from the EUR 97 million, the EUR 6.5 million Max mentioned, gets you to EUR 91 million, you see we are up from EUR 44 million to EUR 61 million. So in a difficult environment with organic sales slightly down, particularly the industry business contributed and the safeguarding measures we managed quite well on the ContiTech side to mitigate the impact. And with that, I hand over to Roland. Roland Welzbacher: Yes. Thank you, Niko, and a warm welcome also from my side. My pleasure today to join my first earnings call as a speaker, not just for Q&A as last time. Before we start looking at the entire Q3 figures, let me start with a brief look at the Q3 developments in our key markets and regions based on the latest available information. So due to some delay in the data on imports, you will see some retroactive changes in the database moving forward. On this page, you see the market dynamics in which we operate with our passenger and light truck tires business. Light vehicle production overall improved, but we're coming from a very low level, so rather easy comps year-over-year. The strong performance of the Chinese market continues, also driven by government subsidies and exports and Europe, while being slightly positive, flagging compared with the other market dynamics due to weaker demand and declining vehicle exports, while North America seems to normalize a little bit in a still difficult macroeconomic environment. Now over to the tires market. PLT replacement sell-in was slightly down in Europe and North America. However, you have to consider the solid comparison base Q3 '24 and looking at the single quarters, it can be clearly seen that the impact of imports to Europe that were partly driven by the anticipation of potential antidumping measures by the European Commission is normalizing. On Chart 7, coming now to the trends for our truck tires business. As far as commercial vehicle production is concerned, there are still only slight signs of recovery in Europe, even though we're coming from a very low level already in Q3 '24. The North American volume trend is even worsening sequentially. Truck tire replacement business continues to show modest positive momentum. In EMEA, demand remained muted due to ongoing economic uncertainty, while in North America, it's been lately fueled by pre-tariff import activity. However, this trend is already slowing down. And how these market dynamics translate now into the performance of the Tires Group sector, you can see on the next Slide #8. Tires is significantly impacted by the highly volatile environment. Once more, we had to deal with substantial headwinds from FX and tariffs. Overall, as Niko said, volumes slightly declined on the same level as in the first half, mainly due to the continuing weak PLT OE market and softer truck tires replacement demand for local manufacturers business. However, demand for our tires in PLT replacement was healthy in North America and APAC during Q3. The sell-in for the winter tire season was also comparatively strong with a promising order book also from a mix perspective. And despite all challenges, we managed to perform in line with the market or even slightly better in our key regions. The strong price/mix of plus 4.8%, predominantly driven by product, channel and country mix more than compensated for the negative impact from FX and lower volumes in the top line. We benefited from regional trends, positive effects in sales channels and the continuing trend towards premium and ultra-high performance tires in our product portfolio. In terms of profitability, price/mix helped us to almost completely compensate for lower volumes, the drop-through on FX and the mid-double-digit million euro cross burden still from tariffs. Raw material costs provided a slight tailwind versus prior year in Q3 with more positive effects now expected in Q4. And while we're talking about tariffs, the timing for the tariff reimbursements from the U.S. government and whether we still receive it in '25 or in '26 is still unclear. However, this will not have any impact on our ability to reach our cash flow guidance for the full year. This brings us to Chart #9. So we shed some more light on our regional performance. Let's take a look at the trends and drivers in Americas, EMEA and APAC. Starting with the Americas. We achieved strong organic sales growth of plus 5.1%. While we faced a slightly negative volume effect due to a very weak truck tires OE market, robust performance in both PLT and truck tires replacement volumes helped us to offset this. Favorable price/mix largely compensated for FX and volume effects, whereby mix was also strongly influenced by channel mix effect. Moving on to EMEA. Here we saw an organic growth of plus 2.7%. The negative volume effects were mainly driven by weak PLT OE and truck tire replacement business. Truck OE, however, that's the difference to the Americas recovered strongly, and the PLT replacement business was supported by a healthy start into the winter business. In addition to that, sequentially improved price/mix fully compensated for FX and volume headwinds. Finally, on the right side, APAC. On the sales side, we delivered plus 3.2% organic growth. Our PLT business showed solid growth in both channels, OE and replacement. On the truck side, however, Q3 was impacted by the closure of the APAC truck tires business in Modipuram, India. Price/mix performance was largely flat sequentially. So all in all, we demonstrated healthy organic growth across all regions despite the challenging market conditions. This brings us now to Chart 10 over to ContiTech. Despite continuing weak volumes in the automotive and industry sectors, there are slight signs of improvement as evidenced by sequentially increasing volumes in our industry business and the automotive business showed a slightly positive development in September too. FX effects on sales were again negative, though with limited drop-through to earnings for ContiTech. Other than tires, raw material impact overall was still slightly negative in Q3 due to some offsetting effects caused by some ContiTech-specific materials. However, the negative effects of lower volumes and exchange rate losses were more than offset by price/mix, the safeguarding measures we implemented, such as our measures to compensate for the impact of tariffs and by positive effects related to our transformation, resulting in adjusted EBIT significantly above the prior year level. Those are onetime effects associated with the planned separation between AUMOVIO and ContiTech and Technical as we stopped depreciation in OESL, which increased the adjusted EBIT, as Niko said, from a pro forma 6.1% to 6.6%. Excluding OESL, the ContiTech margin in Q3 would have been at 8.5% with sales amounting to EUR 1 billion. With that healthy underlying performance and an expected sequential improvement in Q4, mainly because of a seasonally stronger industrial business as well as continuous cost-saving measures, we're confident to achieve the lower end of the guidance corridor for ContiTech. With that, let's talk about cash flow on Page 11. The Q3 free cash flow generation operationally slightly improved compared to Q3 2024. For prior year, however, you need to consider that Q3 '24 was positively affected by a one-off effect from the reimbursement from Vitesco that Niko already touched upon earlier. The other changes in the operating free cash flow mainly relate to changes in employee benefits and some other changes in other assets and liabilities. Capital expenditures increased compared to the previous year, mainly due to our continued investment in respective intension -- extension projects such as our plant in Rayong, Thailand, ongoing construction of our new tire distribution center in Texas, for example, as well as a more balanced quarterly phasing of our CapEx spend compared to the last year. So much to the operational part. Let's move on to Slide 12. I would like to briefly address the more technical implications concerning our balance sheet resulting from the spin-off of AUMOVIO. The left side shows how our net debt has developed over the last few quarters. You can see the influence of the spin-off in Q3 '25. All figures up to June 30, '25 are presented as reported for the entire group as it existed back then. That means for continuing and discontinued operations. The figures as of September 30, '25 refer only to continuing operations. EBITDA for the pro forma leverage ratio was adjusted for the deconsolidation effect resulting from the spin-off. As expected, we came in at around 2x leverage, which is a level that we will now continuously drive downwards in the upcoming quarters. On the right side, you can see how the total equity as well as the net debt was particularly affected by the cash contribution to AUMOVIO. At the same time, the total assets were reduced by the disposal of the associated net assets. All in all, this led to an improvement of the equity ratio from 14.6% as per the end of June to 22.2% as per the end of September, just as we already expected in H1. All KPI targets mentioned on our CMD do, of course, remain valid. That means we will continue to operationally strengthen our balance sheet. With that being said, let's move on to our market outlook on Page 13. After a very negative picture of light vehicle production expectations, especially in Europe and North America, S&P Global has raised their expectations for financial year '25. However, we see in this forecast certain risk related to supply chain disruptions, such as the situation around Nexperia, for example, so we remain cautious. The latest S&P Global figures on commercial vehicle production show that the situation has further deteriorated. Although the negative trend in Europe is gradually reversing, it is still far from sufficient to achieve growth for the year as a whole and the outlook for North America has also deteriorated significantly once again. Our assumptions regarding the passenger car tire replacement markets did not change materially, while we increased the outlook for the commercial vehicle replacement business on the back of a healthy year-to-date performance. And for the Eurozone, we slightly increased our assumptions for overall industrial production following the latest developments in this area. However, this is a very broad picture of industrial activities for the Eurozone. Unfortunately, we have not yet seen that positive momentum in the important areas for the ContiTech Industrial business. Let's now turn to our guidance. As already announced in our prerelease in October, we are confirming the guidance for sales, EBIT and cash flow. However, some changes had been made because of the impact of Continental's transformation, the noncash one-offs are affecting our earnings before tax, which leads to a distortion of our regular tax rate since we, of course, still have to pay taxes in the countries where we are doing business. This is leading to an expectation of a low triple-digit percentage tax rate for the full year. Without the spin-off, without the transformation, there would have been no adjustment for the tax rate, meaning it would have still been at around 27%. In addition, we have also adjusted the value for expected special effects from EUR 350 million to EUR 1.5 billion for the same reasons, meaning this adjustment is solely attributable to the transformation-related special effects that we have already explained. Please keep in mind, we are mainly giving you the guidance for special effects and tax rate, so we can model a net income. Our dividend policy does, however, as mentioned in the introduction by Niko and previously done in the past, allow us to exclude those noncash one-offs for the basis of our dividend proposal in 2026. In other words, the changes in the guidance will presumably not impact the dividend this year. Furthermore, we've also adjusted our CapEx guidance from 6% to 6.5%, mainly due to the ongoing plant expansion in Asia. With this, we come to the end of our presentation. I would like to hand over the rest of the time to you now. Operator, could you please open the line for the Q&A? Operator: [Operator Instructions] And the first question is from Akshat Kacker, JPMorgan. Akshat Kacker: Akshat from JPMorgan. I have 3 questions, please. The first one on the market outlook for the passenger car replacement business. I see that you've talked about a slight decline in demand in the second half of the year versus the first half. And when we think about the inventory situation, I think something that has been very well flagged is the high inventories of [indiscernible] tires in Europe and the U.S. So how do you assess the current inventory levels in these markets? And are you cautious on sell-in volumes when we head into this year? That's the first question. The second question is on the winter tire market, which I think mainly underpins the very strong price mix that you've had in the quarter. And it's a more structural question on the evolution of this market, given that we have had 2 very strong sell-in seasons in 2024 and '25. How do you expect this market to evolve going forward, please, given the discussions we've always had on a structural declining winter tire market due to all-season tires, but also global warming? The last question is on the cost actions that you have talked about and the fixed cost measures that you have taken in response to tariffs. Are there any structural cost savings that you can carry into 2026? Or are most of these measures onetime in nature, please? Roland Welzbacher: Let's start with the market outlook on the PLT side, and I would like to refer to your comment on the inventories level. So overall, I think the inventories, specifically in Europe on the [indiscernible] side were driven by imports and the imports, again, were driven by the expectation with regard to antidumping measures. Whether they come not and to what extent and when is still unclear. So if it would not come, then stocks obviously would normalize pretty fast, I guess. It had a dampening effect on the sell-in. Whether this now continues into the first half of '26 remains to be seen. In U.S., of course, we also have seen raised imports, but the dynamic was due to the tariffs. There was a lot of preload on the inventory side with regard to the tariffs. This is now also normalizing to some extent. It also takes time. It also muted to some extent the demand. But overall, in general, for volumes in Q4, as Niko pointed out in the beginning, we are rather on the cautious side. So we expect a slight decrease, flattish at this. Nikolai Setzer: With the winter tire market, this is, as you pointed out, a strategic question. So, so far, we've seen in the last years, still a solid business there. I mean, in those markets where still there is the winter tire regulations. So we assume that this will drag for a certain time, and this will still support the tire business strongly as well as our position strongly. On the other hand, we see as well that those which are changing due to climate situations, they are going into our season business. And on the all-season side, we are well positioned. So it's a one-for-one change to that. How this will play out remains to be seen. Still, what we said on the Capital Markets say that overall tires is not a strong growth business, but in the area of 1% CAGR. So you should see a switch, but moves then strongly over time from the winter side will move towards season and then as well to summer. On the fixed cost measures, you asked what is structural. On the tire side, we have announced the restructuring measures in Malaysia, [indiscernible] truck tire in Modipuram, India. I mean they are -- all those actions are getting as well into next year and helping on ContiTech, we have announced as well as several plant closures and structural measures. So there is a certain amount of those which are executed this year, which are in execution, which will bring positive fixed cost savings then for the next year. However, with the one or the other part, like the truck tire, Modipuram, there's obviously as well business, not from high enough quality in terms of value creation. That's why we are pursuing this, but there's a certain kind of business which is as well then phasing out, which you have to keep in mind. Operator: And the next question is from Christoph Laskawi, Deutsche Bank. Christoph Laskawi: The first one, please, on essentially competitive situation in tires. And one of your main competitors talked about portfolio repositioning to rebalance volume and market share. Do you see any increasing commercial or competitive pressure in Q3, Q4 right now or so far, no major impact? And then the second question, just if you could provide -- I know it's quite early, but the main building blocks that we should think about on volume price mix, potentially FX and cost for tires and ContiTech into '26. And then remind us of the onetime cash effects that you had in '25 and what to expect in '26, please? Nikolai Setzer: Yes. First of all, as you know, we don't comment competitors. So no comment from our side to that. At the end of your question, you referred to market situations. I think Roland already mentioned how we currently see the markets. Right now, we should say from the trending point, similar to where we have been in the 9 months. That's what Roland has as well referred to. So we are minus 1% in volume so far. So we managed quite well the balances between our cost situation, the market and the different dynamics. And we assume for the fourth quarter that this is unchanged. Obviously, we're always striving to be better. That's why Roland mentioned as well and to be flattish at best. We had a stronger second half last year, so higher comps overall. So this is the market dynamics in which we are operating right now. Going to the second part for the fourth quarter, the other important metrics. FX, assuming that it continues on the FX rate, then right now, FX should be the same because it was relatively stable last year. In Q2 this year, it changed. So it should be relatively stable for the fourth. And then looking even into the first quarter, you should see similar effects as then second quarter, really the exchange rate on the globe versus the euro have changed overall. Cost situation, we have seen on the indices and the spot prices since the second quarter into the third quarter already that they were downwards. We had only limited effects in the third quarter based on inventory and consumption. We assume that this gets a larger effect in Q4, still being certain shy due to how we currently see the inventories and the markets and the different parts and then would drag as well into 2026. On the price mix or I should call it quality business -- the quality of our business because it depends on sales channel mix, where we've been relatively rich in the third quarter. As mentioned, North America, larger tires, larger mix. That is pure math. Similar to Asia Pacific, we see that certain trends should persist. However, as mentioned, we had a really strong quality of our business in the third quarter. Certain parts will continue for sure. How it all plays out remains to be seen. We have seen the question on the winter tire business, strong order book so far. Sell-in was good. Now we are hoping November, December to see as well a strong sellout. So winter weather in Germany right now is not so winterish. So we hope that we see some snowflakes and some predictions, then obviously, this helps as well the quality and the price mix to be more supportive in the fourth quarter. Roland Welzbacher: Yes, I can take the free cash flow question. So going back 2024, we forecasted that total expected onetime effects for '25 are expected to be in a high triple-digit million euro area, more or less evenly split between restructuring, separation costs and taxes. So restructuring cash outs are mostly borne by AUMOVIO. Spin-off cash outs have been specified in the prospectus, EUR 279 million, thereof over EUR 200 million will ultimately be borne by AUMOVIO. Tax cash outs will mostly be covered by Continental. This should lead to one-offs on the Continental side amounting to roughly 1/3 of the originally anticipated volume. Christoph Laskawi: And for '26 that should be gone, right? Roland Welzbacher: Well, from the -- let's say, from the first 2 steps of the transformation that is AUMOVIO and OESL, we do not expect any big effects for '26. Max Westmeyer: On the tax side, we announced that we are looking into plant measures as well, which is also dragging into 2026. So there will be some one-offs associated to that, special effects also will be there, but it's minor compared to what you've historically seen, yes. Operator: The next question is from Horst Schneider, Bank of America. Horst Schneider: The first one that I have relates to ContiTech and the disposals. So on OESL, you have, of course, not quantified the purchase price, but what effects can we expect basically on debt when the OESL disposal gets executed? And in that context as well, do you expect closure of that this year or it's more in January, if I remember right? And in that context, maybe also you can give an update on the disposal process of the remainder of ContiTech. So when that is really kicking off and when you expect basically closure of that? And in that context, again, when we think about net debt to EBITDA and your long-term guidance, 1x, but I think that is more for 2029. How should we think about net debt to EBITDA when the ContiTech disposal gets executed because that determines then, of course, the potential special dividend. So when this decision is made, do you want to be exactly at 1x net debt to EBITDA or you can be also above because you just want to trend towards end of the decade towards 1? That would be the other question. Roland Welzbacher: All right. So let me take the first one. We agreed not to announce any details of the transaction with the buyer of OESL. So I cannot be too specific, but all the debt associated with the business will transfer to the buyer. This is mainly expected for the pensions. Nikolai Setzer: Pensions [indiscernible] items. Roland Welzbacher: Exactly. And then [indiscernible], I think you mentioned that already early in Q1 2026 to be expected for OESL and then for the entire sales process for ContiTech, we more or less stay on track what we already announced. So we are in the final stages of preparation that should be finalized before Christmas, and then we're basically ready to approach the market, and we want to complete the transaction in the second half of '26. So there is no news because we're still on track. And long term, with regard to capital allocation and net debt-EBITDA ratios, we always said midterm, that is '27 to '29, we want to get to a leverage ratio of 1 or below, whereas we have certainly some flexibility with regard to the timing. Nikolai Setzer: So when we will -- that depends on the market conditions, how is our business situation at that point of time. And obviously, what does the preferences overall to be evaluated. Horst Schneider: Okay. Just a quick follow-up. This ContiTech disposal, basically, the remainder can be initiated already before the OESL transaction is completed or it only starts when OESL is completed? Nikolai Setzer: No, it starts already. As Roland mentioned, we are in the preparation. We are going into the market already in parallel than in the first quarter in 2026. And OESL is itself carved out as its own business. The one is independent from the other. Operator: And the next question is from Monica Bosio with Intesa Sanpaolo. Monica Bosio: The first one is a flavor between the passenger car tires and the truck tires. I know that the company does not split between the 2 areas, but can you give us a flavor on the -- of the underlying margins in trucks? And can you imagine that the margins in trucks could be in the mid-single-digit zone or maybe better? Any color on this would be really appreciated. My second question is more on the strategic side. As you mentioned that the tariff impact for 2026 is still not very visible. But more in general, in the long, medium term, what could be your strategic response to tariffs? And the very last is on the margins for the fourth quarter for the truck tires. So on back of the favorable winter tire season and on the back of the sound results achieved in the third quarter, should we expect margins for the full year closer to the upper part of the [indiscernible] range because at this moment, the consensus is not accounting this. Just to check from you. Nikolai Setzer: I will take the first one. So we are not splitting the margins between PAT and truck tire. But in general, each businesses which we have has to create value, so at least create or give the returns on the cost of capital. This must be -- this is true for truck tire as well for PAT. You saw us in India getting out of a certain business where this was not the case. [indiscernible] we've seen the same. So we act once we are getting into it and truck tire has as well a different cost of capital. It's a different business model. It's different cost base. That's why you cannot compare it. But again, we don't publish the different margins. However, as we have a strong position in Europe and Americas, you can believe that we have -- we are creating as well value over there. Otherwise, we wouldn't be in that business supporting and further investing into it. Strategic response to tariffs. First of all, our strategic response were mitigation measures as much as we could. Obviously, we explore our EMEA and Americas manufacturing sites or the North American manufacturing sites, which we have to the MAX. We are doing debottlenecking measures and so on. For further more long term, we have to wait until really the dust settles. So we have right now a certain tariff, which is in place. We have to see how the dynamics as well on the cost side will go further out. And then as typically, we take further measures with regards to our sourcing and where we produce those tariffs. Keep in mind that building a tire plant is a very strategic long-term decision. We have to be sure that the environment and the framework and the market is in line for a longer period of time to justify such a decision. Roland Welzbacher: And with regard to your third question, Monica, I expect that you're asking about the guidance, right? So that was my understanding. So we feel totally comfortable with the current guidance in place for ContiTech 6% to 7% and Antares 12.5% to 14%. So right now, we're remaining cautious for Q4. We're slightly optimistic, but we remain cautious. There's no need to change this. We just confirmed it, and we want to stay with this. Operator: The next question is from Harry Martin, Bernstein. Harry Martin: The first one that I have is on the CapEx increase. It sounds like this is for capacity increase in tires primarily. So can I just ask about the motivation here? Is this effectively shifting capacity out of higher cost locations or an attempt to win more volume share in total? The second question, I have a few really on ContiTech. The first one, just on the Q3 performance. Is the industrial business now back to double-digit margins in Q3? And how far away from the midterm target, the industrial business specifically now? And then finally, on the industrial separation process. Now that you've been working through that for a few more months, can I ask what you found out about potential dissynergies between the separation? What proportion of the group's purchasing volume of rubber or some shared raw materials go to the tire business versus the industrial business? And what is your current thinking about how the segment margins may be impacted by that dissynergy on the separation? Roland Welzbacher: I can take the first one, Harry, on the CapEx side. But what we've seen this year and what was the course for the slight increase in the ratio is, first of all, our investments into 2 regions, that is Americas and Asia for the tires business. So we're continuing to invest in our [indiscernible] plant in China. And in the second phase of expansion for our Thailand plant in [indiscernible]. This was basically driving the ratio up. There's a little bit of a phasing element, as I already said in the beginning. So the motivation is explicitly not what you said, shift to best costs or it is more expansion into the 2 regions where we want to get stronger. Nikolai Setzer: Yes. Looking forward the industrial margins, so we don't publish the full industrial margins. Keep in mind that ContiTech without the OESL still includes the Surface Solutions parts, which has as well automotive business. For that, we published that we reached in the third quarter, 8.5%. Looking for 2024, we have shown this on the Capital Markets, we have been at 8.0%. So we improved by 0.5 percentage point, and this mainly comes from the industrial business now. With 80% industrial business, you can do the math and somehow see that this business is in a better shape than before. However, we are not where we are targeting to be. The 11% to 13% is the midterm target for this parameter, including SSL. And the market itself is not where it should be. It's still a weak market environment. When I mentioned that September has shown some positive signs, it's still on a low base and the minus 0.6% organic growth was as well versus last year, already reduced sales. So we are still in a trough, which shows that slowly, but surely, we see some light of better trends, let's put it that way. Disysenergies rubber, what we can say, so we are not there yet. So we have now separated our purchasing. We built up our purchasing on the ContiTech side. But with the very small part only of same rubber materials from the same suppliers, this is really a minor part. We don't assume any larger dissynergies from the material side. We even believe on the material side, we should have opportunities by having a ContiTech purchasing team, which fully focuses on a very, very complex purchasing part with a high variety of materials and the tire side with a lower complexity, however, higher volume, those 2 parts, and that's why we are doing as well the independence. That's why we are convinced that both parties are better off in the separation. We clearly believe that we can eliminate the synergies and even create momentum and better purchasing conditions for the individual companies. Operator: The next question is from Thomas Besson, Kepler Cheuvreux. Thomas Besson: It's Thomas at Kepler Cheuvreux. I have 3 questions as well, please. First, could you tell us whether you've decided yet what you intend to disclose in the future for the car business as we get closer to the target of having Continental [indiscernible] business. I've noticed you're giving us revenues and organic growth for 3 regions, but you're not giving profitability, you're not giving passenger or truck tires. What's the plan there, please? Second question, when I look at Q2 '24 versus Q2 '25, Q3 '24 versus Q3 '25, I'm a bit surprised by the margin evolution. There was a strong decline in Q2, a much greater resilience in Q3 with relatively similar volumes, worse effect and a delta in price/mix that's not sufficient to explain the substantially greater resilience in Q3. Could you explain what I'm missing, please? And thirdly, just to be fully clear on the base for the dividend you're going to give -- propose to shareholders for 2025. Could you tell us what is the clean net income base over 9 months on which you're going to base your reflection, please? Roland Welzbacher: Yes, I can take the first one, the tires reporting structure. I think we wanted to already point out in which direction we want to report in the future by providing now a regional sales split. So we believe this is the best way of creating transparency into the tires business by splitting it by region, not by product segment. At some point in time next year, probably between signing and closing, we will have to change our reporting and provide more details also by region than in the tires business still to be decided what the right moment in time will be, but we cannot do that before that because otherwise, that would trigger then probably backward split and we get into problems with the auditors. Nikolai Setzer: So with the sequential improvement on the tire side, Q2, Q3. I mean, in Q2, we have mentioned that we had all the negative effects already started. We had the tariffs, which have been higher at the beginning, where you've seen now as well the lower base and then certain reimbursements which were coming then within the third quarter, all our mitigation measures, which we implied due to the tariffs only unfolded in the third quarter, as I mentioned. On the material side, we mentioned before, there was a certain tailwind has been small, but there was sequentially, there was an improvement. And overall, the third quarter volume, so it's as well at a minus 1% versus prior year, but the third quarter volumes are a bit higher than in the second quarter. So those are all the reasons, the positives, which were the negatives in the second quarter were reversing then in the third quarter. That's the reason why our margin is substantially better than we have been there. Roland Welzbacher: And then the last one basis for dividend and clean net income. I mean you've seen our net income, it's minus EUR 756 million negative. If you now would adjust this for the special effects, we also showed on one of the first charts in our presentation, already EUR 1.1 billion is due to the OTI recycling driven by the spin-off of AUMOVIO and then the second portion EUR 680 million, sorry, EUR 680 million. Nikolai Setzer: And the other part is the U.S.A. Roland Welzbacher: And EUR 454 million is then driven by OESL. And this together would already most likely bring us to positive territory. So we did not do the math because it's a technical question, but it's certainly not negative. Max Westmeyer: And there's the fourth quarter to come? Nikolai Setzer: Sure. Yes. You should get us at a reasonable net income, let's put it that way. Operator: And the next question is from Ross MacDonald with Citi. Ross MacDonald: My first question is just coming back to tires. And you mentioned the second half of September, in particular, was accelerating. Can you maybe give some commentary around whether that trend has continued into the fourth quarter? And obviously, we're tracking at the sort of midpoint of the tire margin range. So just keen to understand if you feel like we're tracking in the upper half now for the full year guidance on the tires margin. My second question also again on tires. Given the weakness that we see in truck original equipment, could you potentially update on factory load or factory capacity utilization rates, please? And maybe comment on how big a benefit to group margins it would be if we see, let's say, the truck cycle at a normal level? And then my final question is coming back to Christoph's comment on the U.S. market. Obviously, Michelin have reduced their exposure to ATD. Could you comment on your exposure to ATD? I understand you sell to ATD. So just curious in the third quarter, if there was any additional potentially one-off volume benefits as you took additional share with ATD, it'd be very interesting in understanding the volume dynamics in the U.S. there. Roland Welzbacher: Ross, thank you very much. So let me take the first one on Q4 trends in general. We already commented a little bit on it. So raw mat slightly up versus Q3, maybe mid-double-digit million euro amount. FX more or less in line with Q3. Volume also in line, potentially even flattish year-over-year, as we said, price/mix slightly below Q3 because the quality of business in Q3 was really very good, rather towards Q2 this year. And then fixed costs slightly worse than Q3. That's more or less the comment, our expectations going into Q4. We don't want to be more specific at this point in time with regard to the guidance for tires. Nikolai Setzer: Yes. And there's the Q4 to come. So obviously, many things can happen on the sales channel and so on with regard to the sales quality of our business. Let's see how that ends, and we referred already to the winter, which is not a winter yet so much. On the truck tire plant utilization, the OE part, we are largely exposed to replacement to the aftermarket than to the OE part. So obviously, lower OE affects our plant utilization, which is a bit lower at that point of time. However, we can replace it with -- in a certain part with the replacement business. We have as well some factories where we share PLT with truck tires. So we manage this quite well going through, which means on the other side, if truck obviously comes back, that helps to how much remains to be seen difficult to quantify. Roland Welzbacher: Yes. And on individual customers, sorry, we don't want to comment on individual customers. Obviously, ATD is an important customer for us and will remain an important customer for us, but that's all we can say on this one. Nikolai Setzer: As in other markets, and we have a substantial share overall in the U.S. market means we have several -- many customers where we are balancing our businesses carefully in order to balance as well as risks and opportunities. Ross MacDonald: That's helpful. Maybe if I could phrase that final question just slightly differently then. Obviously, versus some of your peers, you're clearly gaining share, let's say, in the U.S. market. Is that a trend you expect to continue? And would that trend be at a similar level to the third quarter? Obviously, just removing the individual wholesaler names, but just keen to understand the momentum on market share gains in the U.S. that you expect into '26. Nikolai Setzer: So we don't comment on gaining share, that's not the important part anyhow. So looking on how our business continues, we are confident and also Roland said that we continue as well on North America and the Asian PLT replacement business, where we have clearly seen positive momentum in the third quarter, and we assume this going on. What our position is afterwards in the market, that is the result of what we are doing and not vice versa. Operator: And the next question is from Michael Punzet, DZ Bank. Michael Punzet: I have 2 questions. Maybe first one on your statements in the pre-close call. Can you maybe explain the difference between the statements in the pre-close call and the final margin development for both divisions, especially since this must be result related to the development in September? And the second one is on the special items. Can you give us any kind of guidance what we should expect for special items related to the transformation process besides the stopped depreciation on OESL? Nikolai Setzer: So the first part, I will do. So what was the difference? I already referred at the beginning, the second half of September was very strong. We came out of the July, August, which were kind of muted. First half of September took over momentum. And then in particular, at the end, we have seen the markets much better. This -- in terms of volume, there was more volume coming in. There was more favorable quality of business, so price mix. So clearly, in the different regions, which are contributing as well to the better results, we have seen unexpectedly better ones. We had -- we came out at lower cost -- lower fixed cost as we have predicted the tariff relief, which was then in September then published where we had to do the math back. So what have we paid before, how much, how do we reconcile and book for it this effect has been larger. And then we had as well transitional service agreements with AUMOVIO, which came in positive on the cost side on the IT license allocation. So you see it was a month ending with many positives, which has resulted in a more positive result than we have foreseen it in the pre-close call. So good news came relatively late. Roland Welzbacher: Yes. That leads us to the second one. So special items of the transformation, let me refer back to Chart 4 of the presentation where we tried to list all of the effects in Q3. We already touched upon the most important one. So the impairment impact, EUR 455 million and the EUR 680 million coming from the auto spin. And then there is some other carve-out related project costs for ContiTech as well as auto and also some tax-related special effects coming from the carve-out and from the spin-off. And then the only thing left is then the restructuring, EUR 22 million in Q3, EUR 111 million in total for year-to-date. There is more or less all the special effects, which we explained on Page 4. Michael Punzet: So that means there will not be any major part or the major additional special items in Q4 related to the transformation? Roland Welzbacher: Well, that could well be that there is a little bit still in terms of FX change related and there probably some [indiscernible] related project costs still coming in Q4, but it's not as big as you've seen here in Q3. Q3 was the major impact of everything to do with the spin-off and the large portion of the current preparation for OESL and also for ContiTech. Operator: And the next question is from Michael Aspinall, Jefferies. Michael Aspinall: Michael from Jefferies. Just one, you might not comment, but it's being discussed a lot, so I thought I asked directly. Wondering if you can give us any thoughts as to the value of ContiTech. Nikolai Setzer: Yes, your assumption is right. We get value, we believe in the strong value of ContiTech, which is then underpinned by strong interest in this asset, which we believe is a great one. A valuation asset, we will not comment yet. This will come then later in the process. Sorry for that. Roland Welzbacher: We're getting basically calls every week from potential buyers saying when are we going to start the process, and we want to be part of it. So we believe it's going to be an attractive purchase price, but of course, we don't want to be specific. Operator: And the last question is from Horst Schneider, Bank of America. Horst Schneider: Maybe we get it done in 30 seconds. I'm glad that I can ask a follow-up. Briefly on price/mix because that seems to come down again, normalize in Q4. Ronald, I think you said also at the Munich Auto Show that going forward, you would expect that 3% to 4%. So the 3% is a minimum number we can assume going forward, not for Q4, it more refers maybe '26 and thereafter. And on cost savings specifically in ContiTech, can you maybe quantify to what extent cost savings have driven the ContiTech results year-to-date? And what specifically, not just on cost savings, but in general, any statement on ContiTech Q4? Because I think Q4 is always the strongest quarter usually for ContiTech also in terms of margin. Is that going to be the case also this year? Nikolai Setzer: So I do it very fast. I start with the back in Q4. I mean, if you do the math, Q4 must be stronger than the year-to-date must be the best quarter. Otherwise, to get into the margin corridor. We said as well before, it will be for ContiTech more at the lower part depending on how the Q4 will end. So yes, and most of the improvement versus prior year was clearly from the cost side. If you take this as a comparison, a bit we worked obviously as well on the quality of our business, repositioning and more focus on the higher quality business, let's put it that way, but really a large portion of that is coming from our safeguarding measures. as obviously, the sales part has not contributed a lot. To the price/mix part, I mean, how Q4 will end remains to be seen. It depends on all sales channel mixes and so on, which we assume rather stable, and we already referred to that Q3 was on a high level. Everything was coming in, larger markets, larger customers with larger tires contributed, which is great. Going forward, as mentioned at the Capital Market Day, historically, a mix in the range of 2% to 3%, 2%, 2.5% has been shown. Looking at the trends in the market, EV, the new car park and the new cars which are registered with larger higher tires suggest that such a trend should extrapolate for the future. And then it all depends the additional one, how we perform in the different markets. Our main growth markets are the Americas as well as Asia Pacific. Truck tire might come back, which adds then to that on top. Max Westmeyer: And with that, we have come to the end of the time. So thank you, everyone, for participating today. As always, we, the Conti IR team are happily available if you have any remaining questions. And with that, we would like to conclude for today. Thank you very much, and goodbye.
Operator: Good morning, ladies and gentlemen, and a warm welcome to the 9 Months 2025 Conference Call of the DEUTZ AG. Please note that this call is being recorded, and a replay will be available on deutz.com later today. Your participation in this call implies a consent to this. I'm pleased to welcome DEUTZ's CEO, Sebastian Schulte; and CFO, Oliver Neu. So Sebastian will begin the presentation with the key figures of the 9 months 2025 and then walk you through the progress made in the business units. Oliver then will provide you with the financial details of the 9 months financials 2025, and Sebastian again will conclude the presentation with a look on the guidance, after which we will move over to our Q&A session. And as always, please note the disclaimer, especially regarding forward-looking statements. And having said this, Sebastian, I hand over to you. Sebastian Schulte: Yes. Thank you very much, Zara, and also good morning, everyone, and thanks a lot for joining us for this 9 months earnings call here. So let me say -- let me start actually with a lot of confidence and optimism because our numbers show clearly that we, as DEUTZ continue to deliver. Double-digit growth in revenue and new orders, rising profitability, EBIT margin now year-to-date at 5%, and I will show later quarter-by-quarter improving. And most importantly, a business that's proving more resilient and dynamic again quarter-by-quarter. Our broader portfolio is paying off and the transformation towards really innovative and sustainable mobility and energy solutions is clearly gaining momentum. As I said right now, we went through this first 3 quarters of the year and quite actually following the second half of last year, every quarter, an improvement. Let's bear in mind, we came out of a very strong '23, driven at that point by the strong demand in our sort of heritage core markets, construction, agricultural equipment. But then there was the slowdown in demand, which helped -- which brought -- which made our numbers in the second half of '24, in particular, going down. But since then, we are on an upward trend. First quarter, 4.3% margin, second quarter, 5% margin and third quarter now 5.8% margin, which is actually even more impressive given the fact that typically the summer quarter, the Q3 is seasonally a little difficult because most of our customers have at least 2, 3, 4 weeks of vacation, and so do we in our engine factories in Cologne and Ulm. So clearly, year-on-year improvement and continuous momentum in margin uptake. If you look at the markets, and I mentioned earlier our sort of previous core markets now we've been broader, we're becoming broader. So we're talking about construction, agriculture, material handling, defense as the most recent addition, but also energy for our gensets. And what we see here is in construction equipment in Europe, well, the activity is still somehow muted. In the U.S., the infrastructure demand is stable. But overall, here the outlook, let me put it that way, is resilient. Agri, still in the short term, fairly weak outlook because inventories have been high. Financing costs have been slightly negative on the customer side, but structurally, it's very, very solid. Material handling, this megatrend is helping us. Commercial logistics, e-commerce that demands here quite stable activity in the material handling. Forklift CapEx remains robust. So that's why we see also on the left-hand side, a positive projection going forward. And defense, of course, very strong momentum in Europe, driven by the increasing budgets and also the NATO programs in the European Union. And energy, the gensets, I mean, this is another megatrend growth in data centers, backup power application, and we here see a supporting expansion in all regions, but particularly the regions which are relevant for us in this segment as of now, the United States with our Blue Star business and also going forward, Europe. So in total, we see that 9 months year-over-year, we've been growing at 15%. That's growing above all relevant markets here given that we are also entering into these new markets, defense and energy. If we look at -- let me start with defense. I mean, here, really the headline is that we have been strengthening our footprint in the defense tech ecosystem. When we talk about defense tech ecosystem, I mean, particular military drones. I mean, military autonomous land vehicles. You will all remember our most recent acquisition of SOBEK Group. SOBEK is a leading manufacturer of electric drives, very high-performance electric drives for not only military drones, but obviously, that is the -- that is the factor which is growing most significantly right now. We signed and closed that transaction at the beginning of September and the purchase price we financed by a capital increase using the 10% ABB procedure, which Oliver will elaborate on later. And the business has been developing pretty well since then. So all expectations that we placed into SOBEK so far have been fulfilled. The momentum continues to be strong. Then we entered into a strategic partnership with Arx Robotics. That's a Munich-based defense tech scale up. Here, we're not talking about drones, we're talking about vehicles, autonomous vehicles on the ground, as you see on the picture also on that page. And the idea of that partnership is that going forward, we will, on the one hand, supply drive systems for these vehicles and also made our mobile energy infrastructure products and of course, the global production network available because assembly of those products, I mean, that's something where we have with our facilities in this case, in Ulm, in Southern Germany, where we've got actually a competency, which help Arx Robotics in the scale-up of their production. And almost -- well, as a nice side effect, we're also intending to participate as one of the lead investors in the next Arx funding round that's going to happen over the next weeks. If you move on to engines, we are quite proud to be able to announce that we extended our product portfolio. We entered -- we brought a new product to the market. It's the DEUTZ TCD 24.0 V12 GDUL engine. That's a large engine. It's the largest engine we now have in our portfolio. It delivers some 780 kilowatts, so really on the upper end of the portfolio. It's optimized for use in gensets. That's why it's future-proof in a way that the power-gen market is expected to grow very, very strongly in the next years. And obviously, the diesel engine for backup power is a very crucial component in such gensets. And we were able to develop that product very, very quickly using our international partnerships, our international supply chains. And currently, this -- the first product is being tested in a pilot customer, by a pilot customer in Italy in a genset operation. And we also already received the first small series order very, very recently. We have planned a broader market launch of that 24-liter engine in the beginning of 2026. On top of that, partnerships becoming more important for us on a broader scale as well because we have, over the last years, engines -- industrial engines also developed together with joint venture partners in Asia, and we're currently undergoing or these engines currently undergoing the testing in our test benches, our test center in Cologne in order for us to allow these engines to be offered in the future on a global scale with a very strong focus on price and performance as well. And we want to develop or we will develop a new 6-liter engine, the DEUTZ TCD 6.0, and we will launch sort of the premier of this very, very powerful 6-cylinder engine in the Agritechnica. The leading trade fair for agricultural equipment, which is starting this Sunday in Hannover and then being there for the coming next week. So we're pretty excited about this expansion of our engine portfolio, where we are broadening the portfolio. We're bringing, particularly on the upper end, more powerful engines to the market. And of course, also sort of in the mid-end, we're utilizing our global footprint to become also more cost competitive on a global scale. If you look at service, a very important backbone for our growth, for our very profitable growth. And here, we can also proudly announce that we continue or we have continuously been growing our global service network over the last weeks and months as well. We concluded 3 acquisitions, our long-lasting Turkish service partner, Catalkaya Makina. We closed that acquisition beginning of October. And on top of that, we widened our service network and also the capabilities in the United States, most recently by achieving 2 mergers or 2 acquisitions. One is a company called OnSite Diesel and it's a Texas acquisition happened in October 2025. With OnSite Diesel, we are offering or we're broadening our offering to mobile and stationary full services, where the customer focus here is on waste management, construction and rail. So all segments where the combustion engine, the diesel engine in particular, will, particularly in the United States, be relevant for quite some time to come going forward. So that's why that was the rationale behind the acquisition of OnSite. More recently, just a couple of days ago, we acquired a company with a fantastic name of DoubleDown Heavy Repairs it's in Nevada, and it's a service company, which is extremely experienced and well positioned in the repair and maintenance of heavy equipment and engines in the mining, really gold mines and other mines in Nevada, also railway, construction and transport industries. And then on top of that, we complement these inorganic growth with also our strong organic United States growth path, where we opened 2 new DEUTZ power centers in 2025. And the plan, which is totally on track is to open another 4 new DPCs throughout 2026. On top of that, I mean, that's the footprint in the market. But on top of that, obviously, we need to really work on our backbone as well because all the parts that we deliver through our footprint to the customers, they have to come in time and in the right quantity and quality out of our very, very modern global logistics center in Cologne. We modernized that with an out-of-store system, AI-driven out-of-store system, which helped us really increasing the efficiency in the management of these parts. So we're talking about more than 25,000 parts and increasing the efficiency of up to 50%. So that means not only are we going to be faster, but we also have more space in order to grow and to really support our global footprint out of our global logistics center of Cologne. Let me continue then with our Solutions business, particular Energy continues with a very, very strong and solid performance. The business unit Energy, driven by Blue Star Power Systems in the North American market. Market is continuing to be extremely favorable and there are more and more growth opportunities. So order intake is strong, sales strong, bottom line, most importantly, with a very high cash conversion is strong that is continued to be strong at Blue Star. We also are beginning to realize more and more synergies with our U.S. business. So the service operations, that's what ties it into what I said just a couple of minutes ago on our DPC growth path in the United States. So obviously, with Blue Star, we're bringing products into the market with our service center throughout the nation, we are serving them when they are in operation. And on top of that, our North African business, which operates under the name of MagiDEUTZ, got a new Managing Director in play, a new team, and they're working quite successfully on really restructuring it and repositioning for MagiDEUTZ to be really one of the backbones for Europe. And on top of that, we're looking -- we're continuously looking here also at inorganic growth within energy. NewTech is increasing traction. UMS, a company we acquired earlier this year. The onboarding of the company is progressing pretty well. Last call, the former owner and one of the guys leading the business operationally. It's also been named as Head of Technology at NewTech. We merged now the existing sort of the formerly known as DEUTZ product portfolio with the product lines of UMS. So we've got a very, very clearly defined product portfolio now, and we're following literally dozens of promising leads with very, very relevant customers also throughout the world. So the momentum is increasing here is improving here. So there is more to come in terms of positive news throughout the remainder of the year and of course, particularly the next year as well. And with that highlights on our operational and strategic developments, I would hand over to Oliver before I come back later to give an outlook for the rest of the year. Oliver Neu: Good morning. Welcome also from my side to our investor call. And let me start with the capital increase we recently conducted. So as Sebastian said, we are in the execution phase on our strategy. We successfully conducted a capital increase to finance further growth. We have an exciting M&A pipeline. So we decided to do that capital increase even though additional debt level would have been possible as well. But considering the exciting M&A growth and keeping strategic flexibility, we conducted a capital increase. We saw strong demand, very strong demand, investors from Europe, but also from the U.S. that shows that the equity story is convincing and investors are trusting in DEUTZ, and our continuously improving performance. Books were filled after a few minutes. The take a capital increase was several times oversubscribed, and it really was a successful event that made a lot of fun from a CFO perspective as well. Talking about execution, our Future Fit program is absolutely well on track. Just to remind you, we are intending here to achieve at least EUR 50 million savings 2026 compared to 2024 based on structural cost reduction savings we are talking about. We are absolutely well on track with a good measure pipeline, more than EUR 50 million in terms of ideas. So we are expecting even an overachievement here of 10% or 20% in terms of savings, and that also applies to the current year 2025, where we will end up more than EUR 25 million rather towards EUR 30 million on the savings side. Measures are implemented, measures are on track. negotiations with the works council have been successfully conducted around 180 people already left the company. So that is a good sign and it was a good example of a positive execution. Going a bit more to the details of the figures, we see an increase in the order intake, 11.8% year-over-year. So that is basically driven due to the portfolio development. Book-to-bill ratio is around 1. Order backlog remains at EUR 470 million. On the revenue side, even EUR 15 million -- sorry, 15% increase there. So we see that application areas like construction and agriculture and a slight increase. That's, of course, also driven by the fact that we have the Daimler Truck engines, which we acquired last year, which are mainly in those areas. So the M&A activity is driving up revenue compared to the previous year. On the earnings side, cost savings are paying off. We are at EUR 75.5 million or 5.0% adjusted EBIT margin year-to-date. We see that the third quarter was the strongest of the quarters. And typically, third quarter is driven by cyclicity rather than weak quarter. So that was very good and shows and proves that our portfolio measures, but also our cost reduction measures are really paying off and that we see that continuously in our results. Talking about the different segments covering here, firstly, the segment Engines and Services. So we see here order intake increasing, revenue increasing and especially a good signaling that the margin is increasing from 6.1% last year to 6.6% this year. We need to keep in mind that last year, beginning of the year, we still were in a stronger market situation with the 3 shift operations. So overall, we see that volumes on the engine side, purely driven by market effects went down a bit, 8% compared to last year. Production almost 10%. But nevertheless, we managed to increase the margin, which is a very positive sign because it means that our measures, our strategic measures, our cost measures are overcompensating the negative economies of scale resulting from a weaker production due to weaker market conditions. Also HJS, the emission after treatment producer, which we acquired beginning of the year, successfully managed the turnaround, is profitable, is contributing positive EBIT as well. On the service side, revenue is year-to-date at EUR 406.6 million that is a 9.4% increase compared to last year. So even in the current market environment, we are continuously growing both organically, but especially, of course, also inorganically via the acquisitions we recently saw. Coming to the segment DEUTZ Solutions, we see overall an increase in the revenue. This is due to the fact that we acquired Blue Star Power Systems last year in August, but also the adjusted EBIT improved significantly. In order to understand the segment, the figures, we need to keep in mind that we combine 2 business units with a different financial profile. On the one hand, we have the business unit Energy. So especially Blue Star, MagiDEUTZ, our smaller entity in China as well. We see here the business is absolutely well on track. Order intake is on track. It's not totally like linear over the year, but it's absolutely on track. We just recently received another big order, which is not reflected in the figures here yet. Also, revenue is organically growing, a little bit offset by the U.S. dollar development compared to the former year, but organically with a strong growth rate and also the adjusted EBIT of the segment at EUR 11 million or almost 10%. With that, and you see that in a little bit hidden in the footnote, but there is purchase price allocation effect, if I take that out, right EBIT would even be at 18.8% at a margin level of 15%. So operationally, the margin is even better than what we show you on the figures driven by the technical accounting purchase price allocation effect. On the business unit, new technology, we are making progress as well. So new orders at EUR 15 million, first time consolidating the subsidiary UMS in the Netherlands. In June 2025, revenue is at EUR 9 million, so still on a low level, but we are about to start and consolidating the product portfolio and good talks with customers. So we are expecting some increase going forward there, of course. And the EBIT improved. It's still negative, mainly driven by R&D expenses, but the run rate is getting better here as well. Coming to a few more KPIs. R&D spending, we are at 4.3% of revenue. So that's a direct consequence, improvement as a direct consequence of the Future Fit measures, where R&D people are continuously getting out as part of the agreements we conducted with the works council. So that is showing a very positive trend here. Same for CapEx, we remain on a low CapEx level of 3.3%, more or less as in the year before. That is showing that we are investing where necessary. But of course, we're also structurally targeting for continuously improved CapEx ratios, considering that the business profile of our group is changing towards less CapEx-intensive businesses. Working capital, we see a slight improvement there. We are at 19.9%, so 1.2 percentage points better than in the year before. We are not overdoing it on the inventory side here. We are pushing, but we are not overly pushing inventories down just to be prepared because we are convinced that the market in this engines part of our business is picking up at one point in time, and then we want to be prepared without restrictions on the supply chain. So that is why we are still on a 20% inventory or working capital level. Talking about cash flow. Operating cash flow improved as well. So also here, good signals, direct development of a better cash generation capability, better operational performance, also a lower increase in working capital compared to the increase we saw in the year before. That is positive on the free cash flow before M&A, we guide a mid-double-digit million euro amount. That's absolutely on track here. We are -- even though the Q4 -- Q3 is typically the weakest quarter in terms of cash flow due to summer breaks and so on, we are here at EUR 2.4 million year-to-date. So that's a EUR 31 million better development than the year before, also showing the positive impacts of our transformation. And net debt slightly increased, among others, due to the M&A financing. Last but not least, balance sheet that remains strong, 49% equity ratio and also solidly financed. Our leverage is at 1.4x. That gives us sufficient headroom for the further M&A transactions we are working on. So only positive signals from this end of balancing balance sheet and financing figures. With that, I hand over to Sebastian. Sebastian Schulte: Yes. Thanks, Oliver, for the update on the financial part. Let me give you an update on the outlook of the rest of the year. So first of all, we confirm with a small specification, we confirm our guidance for 2025. So just to bear in mind what we -- what was our guidance or what has our guidance been so far. We provided so far a range between EUR 2.1 billion and EUR 2.3 billion revenue. We were always assuming a bit of an earlier recovery of the market in the fourth quarter. So that's not yet kicking in. So that's why we are specifying to arrive at roughly EUR 2.1 million or at EUR 2.1 million at the lower end of that guidance. Good thing is we confirmed the adjusted EBIT margin range as well. We confirm here to arrive in the middle of that guidance range. And I think we've been showing clearly earlier that the path on profitability increase is well on way quarter-by-quarter. And we also confirm the free cash flow prognosis mid-double-digit million euro amount. As Oliver said, particularly, the margin is supported strongly by our cost savings for Future Fit by the Service business and of course, by this ever strong Energy business as well as the portfolio measures. So we're showing that we're actually very well on track and quite happy with the progress here. We also currently do not foresee any sort of significant impact from the semiconductor crisis because that's one of the things we're pretty good at. Bottleneck management when there are issues with supply chain, I mean, '22, '21, '22, we've been training quite hard on that, how to deal with difficulties in supply chain, particularly when it comes to semiconductors. So all these activities, which guided us back in days well through these -- the problems is also helping us a lot so that we can actually say that there's no issue to be foreseen at this point in time. All right. With that, yes, this is a confident outlook for the fourth quarter and of course, also for beyond because I said it earlier, when I talked about the outlook on revenue, it's true. There is no tangible recovery in the engine demand in construction and the material handling. However, we are able to -- or we have been able and will continuously to be able to steadily increase our profitability from quarter-to-quarter. Now the 5.8% in the third quarter is a preliminary high point, but we expect to arrive at a higher level in the fourth quarter as well. And that's, of course, due to the Future Fit program, as we just heard from Oliver, the savings -- further savings to materialize in the coming quarters, EUR 50 million. We announced this EUR 50 million a bit more than a year ago. And we just heard it from Oliver, we're very well on track, and that's an important thing. We promised and we deliver the promises. And of course, DEUTZ is now more than just an engine company. The engine remains to be important, but we manage, we guide this transformation towards a much, much broader business model quite successfully. And that's why we are now in a position that despite still struggles in the former core markets, construction, agri and material handling were actually developing so well, particularly, of course, due to the business unit service and energy in particular, demand for gensets is extremely high and strong. So a good start into Q4 that we can already say. I mean we are at 6th of November. So we know already what's happening in the first month. So that's been very good and continues to support our expectation for a very strong last quarter of the year. Revenue growth, which we expect to happen in the fourth quarter compared to the third quarter, supported by the latest portfolio additions in defense and services as well. Margin increase I mentioned already, and our strategic transformation, we continue to implement going forward. With that in mind, 9 months in the books, 3 months to go. And thanks for your attention. And obviously, now, as usual, we are open for questions. Operator: Thank you so much for your presentation, Sebastian and Oliver. So we will now move over to the Q&A session. [Operator Instructions] We move on with the virtual hand we received from Stefan Augustin. Stefan Augustin: Can you hear me? Operator: Yes. Stefan Augustin: Great. Okay. That was a couple of buttons to press. So I would like to then dive already quickly into the Q4 projections. So I don't want to be really nitty-gritty, but we're looking for around EUR 100 million in higher sales versus Q3. And could you help us a little bit of how much of these EUR 100 million we roughly look for would be the additions from SOBEK and the purchased service businesses> And where does in the fourth quarter then otherwise come the demand in the verticals from? So where -- into what vertical do you sell some more engines? Who gets more interesting? And from that would be then the conclusion, can we keep this level going into 2026 roughly on the same level? So let's say, having -- or is there a onetime effect in sales in Q4? Sebastian Schulte: Stefan, thanks for the question. So first of all, when I go through, let's say, the verticals when I talk about verticals, I mean, that's sort of our business units. So obviously, the business unit engines, that will make quite a significant contribution in that fourth quarter. Typically, the fourth quarter is always a little stronger than the third quarter for 2 reasons. First of all, in the third quarter, we have that summer break mainly in August, end of July, beginning of August. So that's why we're always lagging behind a little bit. And when it comes to the verticals within engines, it's pretty much across the 3 verticals, construction, agri and material handling. So there's nothing -- there's no vertical, which particularly stands out. Then as you rightfully said, I mean, the service -- the service is developing quite nicely. We obviously track that on a monthly basis. So the last month is indicated that we're going -- we're getting better month by month as well and then the 2 acquisitions support as well. We don't disclose like the very details of the acquisitions. They're sort of too small to provide like exact million euro numbers for that, but obviously, they add up as well. Energy business, Blue Star is expected to be a bit stronger in the fourth quarter than in the third quarter as well. And then, of course, the most recent acquisition, SOBEK as well, but that's not like we -- we don't talk about like tens of millions. In short, it all adds up together, and that's how we arrived at that outlook for the fourth quarter. Sorry, I forgot to answer. And then, of course, you asked, which is sort of the million-dollar question for 2026. We are currently putting the plans together for 2026. And the fourth quarter right now, I don't expect to be a one-off to make that clear. However, to be able to arrive at a guidance for 2026, that's too early. Stefan Augustin: So sure. I understand that one, but that was already giving me an idea. Second is then this larger order at Energy that has been hinted. Is that something we should look for in the scope of something like between EUR 5 million to EUR 10 million? Or is that rather an annual big order of EUR 20 million, EUR 30 million, EUR 40 million or something like that? That would be the second question. Sebastian Schulte: This order, which Oliver hinted to is the first, sort of, let's say, the first third of the year order from our major customer in the United States. So it came expected because they don't order on a weekly or monthly basis. They order, let's say, 3 times per year, 2 times per year. And I believe Oliver will talk about something -- EUR 20 million to EUR 30 million, yes. Stefan Augustin: All right. That's quite some scope here then. All right. And lastly, maybe on the tax rate in the third quarter. This has been a bit unusually high, but is there -- is this something that has to do with the structural changes from where we generate the profits? Or is it rather a onetime effect? Oliver Neu: No, that are typical onetime effects. I mean, overall, the tax rate on a group level is at around 17%. That is mainly -- in general, that's mainly driven because we have a significant amount of tax loss carryforward from the past from the 1990s basically, but we are benefiting from that still. And so that in Germany itself, we are rather on 11% minimum taxation. So there are no structural changes to that and the tax loss carryforward is going to last some years in the future. Operator: So Mr. Ringel was a bit surprised that I muted him, but he sent me his questions. So I'm happy to ask the questions for him. So his first question is, is the adjusted EBIT margin level now achieved a sustainable cruise level that can be assumed going forward? Sebastian Schulte: Well, we want to improve it further. So I mean, very clearly, we want to get better. And obviously, with the current structure of the company, with the current demand in engines, you may consider that as a cruise level, but we are not up for cruising, we're up for speed. So that's why, obviously, with further expectation in market recovery in the next year in the engines business and further growth in the verticals, which we entered into. Yes, we want to clearly depart from that cruise level towards a bit of more of a full throttle way of traveling. Operator: All right. So has [indiscernible] 2 further questions. [Operator Instructions] And his second question is, what is your view on the expected recovery of the markets in the coming months also with regards to the German infrastructure package? Sebastian Schulte: Yes. I mean that's what I tried to say earlier when Stefan asked a similar question. We don't see it -- still, we don't see it in the incoming orders as you saw it here in our numbers yet. We're still like book-to-bill around or slightly above 1. But yes, we will see. We cannot say yet. That brings me back to what you just said before. It's good to have such a high cruise level now on this low occupation in the engine business. But the good news is, obviously, we're bringing also some new products into the market. We're bringing this 3.9 liter engines into the market. The demand from our customers is quite strong. So one thing is how is the general market developing in the engine business. And that's again the million-dollar question for next year. We do expect a recovery, but everyone expects a recovery, but it's just not materializing. However, we're working also quite strongly on winning market share with the new products that we bring into the market, 3.9, as I just mentioned, but also the 24-liter engine in energy and utilizing also our JV partner engines from Asia in particular. So we're actually quite positive looking forward. Operator: All right. And his last question is, when will you be in a position to carry out larger M&A transactions again? Will the focus remain on the energy sector? Or are they currently concentrating in particular, on the defense tech sector? Sebastian Schulte: Both verticals are extremely interesting for us. And you will understand that there's not much more to say in a public earnings call on M&A strategy, but both energy and defense are very interesting verticals. And we are observing and pursuing a lot of different avenues. But as we have shown very clearly in the last 2.5, 3 years, if we do M&A, we want to do it very successfully. And I think the acquisition of Blue Star and the Daimler Truck Engine business and all the others have shown that we're actually pretty good at it now. So that's why we are very picky, and we will only do the things which make a lot of sense. But in order to arrive there, you need to follow lots of opportunities, but we're pretty confident that we continue to work on that track. Operator: All right. And then we have next question or raised virtual hand from Klaus Soer. [Operator Instructions] Then in the meantime, we will move on with Mr. Jansen. So same for you, Mr. Jansen. [Operator Instructions] Unknown Analyst: Okay. Just one question regarding Arx Robotics. You spoke about the investment round. And just for clarification, you don't plan to have a major stake afterwards, right, because there are so many other investors. And with SOBEK, you already had a big investment in the defense market, right? Sebastian Schulte: Yes, that's correct. I mean we plan to participate in an investment round, but that does not -- that would not turn us into a major investor. That's absolutely correct, yes. This is an investment which is rather underlining our ambition or our strategic partnership, but we do not plan to takeover or anything like that. Unknown Analyst: And is there an indication on how big the round overall could be? Sebastian Schulte: Of course, there is an indication, but that's in the court of Arx Robotics. So you will understand that I can and do not want to comment on an investment round of another company, right? Operator: And now Mr. Soer, I'm not sure if you're able to speak. Klaus Soer: I hope so. Operator: Great. Then we're happy to take your questions. Klaus Soer: Just coming back to the announcement that you are introducing the large 24-liter engine into the market. Could you be a bit more specific what your expectation is in terms of sales or market entry in '26? Is this material or small size, big-size units? Any indication what type of impact this might have? Sebastian Schulte: Yes. First of all, we don't talk about huge unit sizes here because it doesn't go into sort of serial mobile equipment such as, let's say, material handling, where sometimes we sell 5,000, 6,000, 7,000 engines to one customer a year. But we also talk about a significantly larger engine. So the unit price is a multiple of the unit -- of the average unit price of what we typically bring into the market. So we do not talk about thousands per year. We talk about after the ramp-up, probably hundreds per year -- per year at least in the next year. But from a revenue and especially also from a profitability point of view, there is sort of a rule of thumb in the engine business, the larger the engine, the more the financial attractiveness as well. Klaus Soer: Okay. And if I may add one question on Arx. In your statements and in the presentation, it always says you intend to participate. Is there still an open question, if you participate in the financing round? Sebastian Schulte: No, we have decided to participate, but this is a cautiously legally checked wording because we are one party to participate. And as in the financing rounds, there are also other parties to participate. And typically, in these sort of investment rounds, the financing round is concluded when every investor who wants to participate signed sort of the legal agreements. And that's currently, as far as I understand, being negotiated with many investors. So it's more like a process point of view. So that's why we have this very cautious statement, but we are very clearly committed to do so because we are very convinced of the outlook of the company and also of the areas of cooperation between Arx and DEUTZ. It's an amazing opportunity, where DEUTZ can bring the industrialization expertise, scaling expertise, management of supply chain expertise to the fantastic technology expertise coming from dev tech company. Operator: And then we have a follow-up question from Mr. Augustin. So please ask your question. Stefan Augustin: Yes. Just 2 smaller ones. I recall that you mentioned you had a new customer with comparatively higher amounts of unit volumes. Can you just remind me, if there is the expectation that this customer should ramp-up the business in '26? Or will that be a bit later? And the other one would be, when do you expect the LOIs of UMS to materialize into orders? Is that also expected maybe for the year-end already or rather going into '26? Sebastian Schulte: Yes. For the first question, that larger, I believe you referred to the larger order for our 3.9 engine in construction. And yes, for confidentiality reasons, we were -- we're still not allowed by the customer to announce who it is, but it's a very relevant construction equipment company. The ramp-up is expected to kick in at '27, not in '26. So that's the following the ramp-up of their respective products. With UMS, we expect first orders or we are already gaining orders yes, but first larger orders potentially to be -- to kick in, in '26 already. We're still at the sort of smaller pre-series orders right now, but we're having very promising conversations also, particularly in the field of multinational construction equipment companies. And I'm pretty hopeful or pretty positive on good developments and news already early '26. Operator: And in the meantime, we did not receive any further questions. So I see no further virtual hands. And that means we will come to the end of today's earnings call. And thank you very much for attending and to shown interest in the DEUTZ AG. And also a big thank you to you. Sebastian and Oliver, we appreciate the time you took and for guiding us through your presentation and for answering all the questions. So yes, from my side, I wish you all a lovely remaining week. All the best for you for the remaining quarter. And Sebastian, as always, some final remarks from your side. Sebastian Schulte: Yes. Thank you very much also from my side. Again, still in some areas difficult market environment, but we're doing well. Transformation is on track and the results clearly show that this is the case. We're looking forward to be in touch with all of you in the next touch points, financial calendar here is very clear, 2025 annual results end of March, Q1, May 7 and so on and so forth. But on the road to there, we'll be around at many investors conference and hosting a couple of roadshows. So looking forward to be in touch with all of you, and thanks for your interest, for your confidence in DEUTZ. And yes, it's happy -- we're happy to continue rocking this thing here. Thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to the TC Energy Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. I would now like to turn the conference over to Gavin Wylie, Vice President, Investor Relations. Please go ahead. Gavin Wylie: Thanks very much, and good morning. I'd like to welcome you to TC Energy's Third Quarter 2025 Conference Call. Joining me are Francois Poirier, President and Chief Executive Officer; Sean O'Donnell, Executive Vice President and Chief Financial Officer; Tina Faraca, Executive Vice President and Chief Operating Officer, Natural Gas Pipelines; and Greg Grant, Executive Vice President and President, Power and Energy Solutions. Our agenda for today will start with Francois and our strategic update. Tina and Greg will walk you through our business in more detail, and we'll wrap up with Sean's quarterly update and financial outlook before moving to Q&A. A copy of the slide presentation is also available on our website under the Investors section. Following opening remarks, we'll take questions from the investment community. Please limit yourself to two questions. And if you're a member of the media, please contact our media team. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see the reports filed by TC Energy with Canadian securities regulators and with the U.S. Securities and Exchange Commission. Finally, we'll refer to certain non-GAAP measures that may not be comparable to similar measures presented by other companies. A reconciliation of these measures is contained in the appendix of the presentation. With that, I'll turn the call to Francois. Francois Poirier: Thanks, Gavin, and good morning, everyone. I want to begin by expressing my sincere appreciation for our team's unwavering commitment to safety and operational excellence. These are the cornerstones of how we operate and the reason we continue to deliver strong results quarter after quarter. I'm proud to report that our safety incident rates continue to trend at 5-year lows. And through the first 9 months of the year, comparable EBITDA has increased 8% year-over-year. We've successfully placed $8 billion of assets into service on schedule, and we're tracking approximately 15% under budget for those projects with 2025 in-service dates. Today, I'm also pleased to announce an additional $700 million in new growth projects at a weighted average build multiple of 5.9x. This takes our total sanctioned projects up to $5.1 billion over the last 12 months, largely capitalizing on the extensive demand we're seeing for power generation and data centers. Driven by exceptional project execution and capital optimization, we now expect 2025 net capital expenditures to be at the low end of our $5.5 billion to $6 billion range. When you combine that with our expected growth in comparable EBITDA, we have clear line of sight to achieving our long-term target of 4.75x debt-to-EBITDA, ensuring continued financial flexibility for future growth. These strong results continue to demonstrate that our focused strategy is delivering solid growth, low risk and repeatable performance. Across North America, the policy environment is becoming increasingly supportive, enabling more timely and cost-effective delivery of our projects to further ensure our infrastructure projects can meet the unprecedented growth in demand. In Canada, recent developments are improving the regulatory environment for projects of national interest. This includes LNG Canada Phase 2, which is directly enabled by our Coastal GasLink pipeline. In the U.S., recent actions to clarify NEPA's scope, accelerate agency review processes and implement FERC and Department of Energy permitting reforms are all supportive of streamlining the process and reducing delays, driving further demand for natural gas as a reliable, dispatchable power source. To be clear, this can be achieved without compromising core principles of safety, reliability and environmental protection. And in Mexico, the economy is poised for significant expansion, driven by strong fundamentals and President Scheinbaum's plan Mexico 2030, which aims to attract over $270 billion in investment through public-private partnerships. By 2030, the Mexican government plans to bring 8 gigawatts of new installed natural gas capacity online, and our assets are strategically positioned to support this necessary build-out. So when you look across all three countries, policy tailwinds are enabling growth initiatives that reinforce the value of our incumbent network. Over the past 12 months, our natural gas forecast has been revised 5 Bcf a day higher, now calling for 45 Bcf a day increase in natural gas demand by 2035. This is driven by electrification, LNG exports and the rapid expansion of data centers. Meeting the increase in demand, we've set 14 new natural gas pipeline flow records across our systems in 2025, further reflecting our focus on operational excellence. Looking beyond North American demand and driven largely by global electrification, we are the only operator capable of delivering natural gas to every major LNG export shore line in Canada, the U.S. and Mexico. And today, as a result of that, we move approximately 30% of all feed gas bound for LNG export. Now additionally, TC Energy is the only midstream peer with a significant interest in nuclear power generation. In Ontario, nuclear capacity requirements are expected to nearly triple by 2050, highlighting the long-term potential opportunity for Bruce Power and our power portfolio. As the outlook for natural gas and power demand continues to trend higher, TC Energy's extensive footprint is uniquely positioned to capture this growth. The robust fundamentals we're seeing in energy demand has generated over $5 billion in new high-quality executable projects that we have sanctioned over the last 12 months without moving up the risk curve. We remain focused on predominantly brownfield in-corridor expansions that leverage our existing footprint, minimize execution risk and are underpinned by long-term contracts with utility and investment-grade customers. The three new projects announced today are prime examples of how our strategy is working. Strategically located along our network, these investments are directly responding to accelerating incremental load growth, especially from data centers and power generation demand. Looking ahead, we expect the steady cadence of similarly high-quality project announcements to continue into 2026 with attractive EBITDA build multiples in the 5x to 7x range, further demonstrating our disciplined value-driven approach. This next chart highlights the consistent upward trend in returns from our sanctioned capital program since 2020, all without compromising contract duration or taking on additional market risk. With the addition of the three new projects announced today, our sanctioned portfolio for the year now stands at an implied weighted average unlevered after-tax IRR of approximately 12.5%, a meaningful increase from 8.5% just a few years ago. Looking ahead, we remain committed to our disciplined approach to capital allocation, ensuring that every dollar we invest is focused on maximizing returns and long-term value for our shareholders. So over the next decade, natural gas and electricity are expected to account for about 75% of the increase in final energy consumption, highlighting our role in the energy mix of the future. We believe our portfolio is of one amongst our peers and highly aligned with the fastest-growing segments of the energy market. We are over 85% long-haul natural gas pipelines, almost entirely take-or-pay or cost of service commercial frameworks. We're one of the largest operators of natural gas storage, providing our customers with integrated pipe and storage solutions, which is a key competitive advantage. And we have over 30 years in the power business across multiple fuel types, including our ownership in one of the world's largest operating nuclear facilities, Bruce Power. So these assets, combined with our low-risk business model and the momentum from powerful market and policy tailwinds position us to continue to capture accretive opportunities. After adjusting for company size, we are leading our peers in sanctioned natural gas and power capital opportunities, converting these into our project backlog that is further extending our growth visibility through the end of the decade and beyond. And with that, I'll turn it over to Tina to speak in more detail on this opportunity set. Tina Faraca: Thanks, Francois. With over 94,000 kilometers of pipelines across North America, TC Energy's network is delivering reliable supply at scale. The competitiveness of our footprint and our extensive customer relationships position us to win our fair share of this growing market. Natural gas demand from power generation continues to accelerate, propelled by widespread electrification, coal-to-gas conversions and the rapid expansion of data centers and AI infrastructure. In Alberta, our systems have seen an 80% increase in gas for power volumes over the past 5 years. And with the queue of data center interconnections tripling over the last year, we are working closely with customers to ensure our assets can meet the market's evolving demands. In the U.S., approximately 40 gigawatts of coal-fired generation is expected to retire over the next decade with the majority of that capacity anticipated to be replaced by natural gas generation. Across the full landscape, the 170 gigawatts of current operational coal capacity equates to over 20 Bcf per day of potential natural gas demand. Additionally, our assets are strategically positioned in key power growth markets like PJM and MISO, where forecast for natural gas power capacity additions through the end of the decade have doubled compared to last year. Nearly 60% of U.S. data center growth is expected within reach of our asset footprint, and we're collaborating across the entire value chain to deliver the natural gas that powers this transformation. And finally, in Mexico, our assets supply 20% of the nation's gas to power plants and will feed 80% of the new public tender natural gas generation projects entering service over the next 5 years. We have a 30-year relationship with the CFE, Mexico's national electricity provider. CFE is the primary driver behind the country's generation capacity expansion initiatives that we support through assets such as Southeast Gateway. Our connectivity to low-cost supply, extensive footprint and market reach is the foundation for cost competitive system expansions. Additionally, our ability to deliver innovative commercial offerings is fundamentally rooted in the long-term customer relationships we've built across our footprint. It is these relationships that allow us to anticipate market opportunities and move quickly, bringing new projects into service and optimize capacity. Our ability to sanction over $5 billion of high-quality executable projects in the last 12 months is a direct result of this collaborative approach. Today's announcements demonstrate our ongoing ability to capitalize on gas for power demand within our footprint. And what we are seeing today and the evolution over the past 18 months gives me confidence that our development queue will continue to grow with high-quality, low-risk and executable projects. We are at the forefront of natural gas pipeline growth. Within our development portfolio, we are originating growth opportunities representing $17 billion of potential value. Our strategy is anchored by 4 growth pillars. First, power generation is the greatest source of North American natural gas demand, and it is accelerating, thanks to electrification, coal conversions and the surging energy needs of data centers. Our footprint along expanding power markets and our long-standing relationships with our utility customers has resulted in a pipeline of origination opportunities that exceeds 7 billion cubic feet per day that have not been sanctioned to date. North American LNG is entering a new era with over 60 million tons per annum of U.S. export capacity reaching FID in 2025. And over the next decade, we expect more than 10 new facilities to come online. Our existing assets enable us to efficiently serve this expanding market through brownfield developments. Local Distribution Companies, or LDCs, account for 20% of our average daily demand, supplying energy to 80 million homes. And during peak periods such as extreme cold, demand can triple. Our sizable natural gas storage portfolio and projects like our Southeast Virginia energy storage project, a template for future reliability initiatives play a critical role in ensuring reliable supply and resilience for our customers. By 2035, we expect that 60% of North American gas production will move through TC Energy connected basins, providing our pipeline long-term abundant low-cost supply. This strategic advantage allows us to respond swiftly to market shifts, supply migration and support the evolving needs of our customers. We are growing our capabilities, harnessing technology and innovation to meet safety, reliability and regulatory standards while unlocking new commercial and operational potential. Every day, our teams process vast amounts of information, quickly draw insights and then make smart decisions that can translate into higher EBITDA contribution while mitigating risk. Our approach to AI adoption is to break it down into focused initiatives to ensure faster execution. We have developed an integrity-focused AI platform that automates document verification and compliance workflows, cutting review times from hours to minutes and reducing risk across our asset base. And recent breakthroughs in the ability to reliably train AI with large volumes of data are allowing us to enhance safety and sustainability. Our pipeline blowdown emissions reduction program uses advanced methods and automation to minimize emissions during maintenance, supporting our environmental commitments and regulatory compliance. Commercially, we are driving smarter decisions across capacity optimization and short-term marketing by using Agentic AI. We are also using advanced algorithms to recommend optimal pipeline configurations and available capacity on our U.S. assets in real time, improving throughput and reliability while maintaining safety and compliance. And we have developed a commercial intelligence platform to simplify access to external and third-party commercial information, overlaying it with our own data and capacity modeling to understand our customer needs and market conditions. This means we can respond to customer needs more quickly, optimize asset utilization and capture incremental revenue opportunities while maintaining transparency and governance. We are identifying opportunities to implement innovation and technology at scale across our organization, and we see a significant potential for our systems to be smarter and drive even stronger performance. For projects being placed into service this year, I'm extremely pleased to report that our teams have delivered, and we are currently trending approximately 15% under budget. Over the past few years, we have developed a series of enhancements that have fundamentally improved our capital allocation and project development rigor, increasing capital efficiency and cost management across our capital programs. We have enhanced our project risk reviews prior to sanctioning, enabling capital allocation decisions to be grounded in robust validated project fundamentals, ensuring that risk funding is precisely targeted, estimates are more accurate and overall capital efficiency is significantly enhanced. We have also strengthened our front-end project development discipline, allowing for deeper rights holder and stakeholder engagement and more thorough project analysis. This has resulted in high-quality estimates and risk assessments, driving more reliable cost projections and enabling us to manage risks with greater confidence and precision. The result, we have delivered 23 out of 25 of our sanctioned projects on or ahead of schedule while tracking 15% under budget for the year, fully aligned with our strategic priorities. Again, an exceptional job by all the respective teams. With that, I'll pass to Greg to update you on our Power and Energy Solutions business. Greg Grant: Thank you, Tina. As Francois noted, our portfolio is one of a kind, highly aligned with the fastest-growing segment of the energy market. Anchored by our position in nuclear power, our Power and Energy Solutions business is designed to deliver complementary solutions that drive incremental shareholder value. Importantly, this portfolio is built for scalability. We can grow with market demand, adapt to evolving energy needs and capitalize on opportunities that allow us to deliver solid growth, low risk that are repeatable for decades to come. In the near term, our focus is on maximizing the value of our existing assets. At the core of this effort is the on-time, on-budget execution of our Major Component Replacement program, or MCR at Bruce Power. These extend reactor life until at least 2064, while improving the availability of our nuclear fleet. As realized prices continue to rise and availability improves, with the completion of each unit's MCR, this performance is translating into incremental revenue and stronger financial results. By leveraging our expertise across natural gas and power, we're also capturing value through commercial marketing, system optimization while maximizing availability of our cogeneration fleet. Our 118 Bcf of nonregulated natural gas storage in Canada is a prime example of where we have the ability to generate incremental EBITDA in a highly dynamic market. Looking ahead, we're positioned to build on the incumbency of our North American footprint, deep customer relationships core capabilities in natural gas transmission, storage and nuclear power. We have a strong foundation to scale our operations and deliver complementary solutions at the intersection of the molecule and the electron that will unlock incremental value across the energy chain. The proposed Ontario pump storage project is a great example of the optionality we have in our portfolio. The 1,000-megawatt storage project will provide critical fast response reliability to the grid and complements our nuclear position in Ontario. By utilizing long-duration storage, we can store excess electricity during low demand periods and help meet peak needs. This reduces overall the capacity requirements across the province. Looking to the next decade, Bruce Power is uniquely positioned for growth, in a market where electricity demand is expected to grow by 75% through 2050. With a brownfield site, greater than 90% Canadian-based supply chain and strong alignment from all levels of government, Bruce Power is uniquely positioned to support the required baseload expansion in the province. While a decision to advance a new build is still years away, we have initiated a federal impact assessment for the potential 4,800-megawatt Bruce C Project. This early work creates the optionality for long-term expansion backed by Bruce Power's prudent management team and execution capabilities. At the same time, we're building low-carbon capabilities to ensure that we're prepared to respond to market shifts and capitalize on strategic growth opportunities when market signals and customer demand emerges. These strategic investments in technologies and innovation not only create new opportunities, but have application in supporting emissions reduction in our natural gas infrastructure, enhancing the long-term value of our systems. There are many attributes that make Bruce Power exceptional and unique. The Bruce Power team is best-in-class, and we're seeing that in project execution. The team continues to deliver on time, on budget across our replacement program. The MCR program replaces critical reactor components, extending operational life by at least 35 years per unit while simultaneously increasing availability. With a focus on enhancing both refurbishment efficiency and ongoing reliability, Bruce Power has been a pioneer in automation technologies. The team deployed the world's first robotic tooling machine on a reactor face, enabling skilled tradespeople to perform complex maintenance tasks safely, successfully and on schedule, all while minimizing radiation exposure. As shown on the left-hand side, these innovations have transformed Bruce Power's operational performance. Units refurbished under the MCR will see increased availability, like Unit 6, which achieved over 99% availability in 2024 after the completion of its MCR. That's compared to a historical average of 84% before the program began and the financial impact is clear. More megawatt hours made available, combined with increased realized prices that reflect our capital investment, inflation and some other factors will drive stronger financial performance for decades. Through innovation and disciplined execution, Bruce Power continues to be a leader in this space. Today, we're investing approximately $1 billion annually in Bruce Power. This is expected to increase site capacity to over 7 gigawatts by 2033. All of this output is secured under a long-term power purchase agreement with Ontario's ISO through 2064. This provides visibility to predictable cash flows and long-term revenue. As shown on the chart, the financial upside is very compelling. Equity income is expected to double from $750 million today to $1.6 billion by 2035. Over the same period, free cash flow is projected to grow substantially, generating nearly $8 billion in net distributions. This growing free cash flow gives us the flexibility to deploy capital where it creates the most value. Whether that's capturing growth opportunities across the natural gas system, expanding our nuclear footprint, accelerating low-carbon initiatives or capitalizing on opportunities that enhance the complementary service offering across our footprint. We can leverage our scalable, differentiated portfolio to invest in areas aligned with long-term market trends and deliver repeatable performance. I'll pass to Sean now to walk through the numbers. Sean O'Donnell: Thanks, Greg. Good morning, everybody. I'll start with a few of the operational and financial highlights achieved in the third quarter. Most notably, each pipeline business increased its average daily flows on their way to setting the 14 all-time high delivery records that Francois mentioned. I would highlight our U.S. natural gas business in particular, which saw LNG flows increase 15% this quarter as well as setting a new peak delivery record of 4 Bcf per day. In Mexico, our network is tracking towards 100% availability year-to-date at the same time that Mexico's daily gas imports are averaging 4% higher in 2025 than 2024. Mexico also saw its highest peak import day of record in August for over 8 Bcf a day. We also had our first full quarter of EBITDA contribution from Southeast Gateway, driving our comparable results up 57% in the quarter. In our Power and Energy Solutions business, Bruce Power achieved 94% availability, which includes the planned outages on Units 3 and 4 and is in line with our expected annual availability in the low 90% range for full year 2025. Turning to the top of the EBITDA bridge on the right-hand side. You'll see that we generated $2.7 billion in comparable EBITDA in the quarter, which was a 10% increase year-over-year. The 10% growth reflects a 13% increase in our natural gas pipelines network, partially offset by an 18% reduction in our Power and Energy Solutions segment. Let me walk you through the components of those changes, starting with Canada Gas, where EBITDA increased by $68 million due to higher incentive earnings, higher depreciation, higher income taxes on the NGTL System, partially offset by lower flow-through financial charges. In the U.S., EBITDA increased by $60 million, primarily from our Columbia gas settlement, partially offset by higher O&M costs. We also continue to see incremental earnings from new customers and commercial innovations and monetizing available capacity on existing pipelines and the nine new projects that our teams placed into service this year. Our Mexico business EBITDA increased primarily due to Southeast Gateway, which was partially offset by lower equity earnings from certain payoffs as a result of the strengthening peso. Lastly, in our Power and Energy Solutions business, equity income from Bruce Power was lower quarter-over-quarter as we began the 2-unit MCR outage program earlier this year versus only a single unit being in its planned MCR outage in the third quarter of 2024. That said, execution of the dual MCR program is going very well, slightly ahead of schedule, as Greg mentioned. And our unregulated natural gas storage portfolio's EBITDA is benefiting from the increased volatility in storage spreads in Alberta. Turning to our financial outlook. We are reaffirming our 2025 outlook for comparable EBITDA that we revised higher last quarter. As a reminder, we delivered year-over-year growth of 6% from 2023 to '24, and we remain on track to achieve 7% to 9% growth from 2024 to '25. Looking ahead to 2026, we anticipate delivering another year of strong performance with year-over-year growth of 6% to 8%. This sustained performance underscores the strength and repeatability of our base business. With the inventory of growth projects over the next 3 years that Francois and Tina highlighted, we are positioned to deliver EBITDA growth of 5% to 7% with a 2028 comparable outlook of $12.6 billion to $13.1 billion of EBITDA. On the right-hand side of the page, we're recapping some of the tailwinds that have been mentioned this morning that we're working on. We have several items supporting our 3-year outlook. We have multiple revenue-enhancing rate case outcomes in process and several more pending. We have increasingly supportive regulatory frameworks that could accelerate our project delivery time lines. We have multiple strategies for increasing asset availability, and we're working on technological and commercial innovations that each improve our capital efficiency across operations and project development. Any combination of those drivers will position us to maximize the value of our existing assets and our financial results. Shifting to our investment outlook. We introduced this capital allocation dashboard at last year's Investor Day to demonstrate that TC has uniquely clear visibility on its growth drivers through the end of the decade. Over the past year, we sanctioned an additional $5.1 billion of primarily in-corridor brownfield projects, predominantly in the U.S. natural gas pipeline business unit. The steady momentum of project approvals, particularly in the U.S., demonstrates the attractiveness of our assets to utility, LNG and data center customers, which will position us for steady growth through the end of the decade and beyond. By the end of next year, we expect to FID a series of projects that will fill out our $6 billion net annual investment allocation target through 2030, all with build multiples in the 5 to 7x range. This will be achieved through sanctioning the $6 billion of late-stage opportunities currently pending approval shown in the gray bars on the slide. And allocating the remaining only $3.5 billion of white space from a large portfolio of earlier-stage projects that are currently competing for internal capital. Given the level of advanced activity in gas origination and the overall $17 billion of projects under review, we feel confident in our ability to fill this chart to the annual $6 billion level through the end of the decade. Our disciplined capital allocation framework enables growth by underwriting projects that deliver the highest possible risk-adjusted returns while also ensuring we preserve our financial strength and flexibility and our long-term leverage target of 4.75x. From a sources and uses perspective, our 3-year plan requires approximately $31 billion in aggregate funding. About 80% of that funding is expected to come from operating cash flows, which is an improvement from last year's internal funding ratio of only 77%. The remaining 20% of our funding is expected to come from a combination of bond and hybrid issuances. The $6 billion in external funding is supported by the incremental annual EBITDA growth we expect to generate by 2028, which will create additional balance sheet capacity at or below our 4.75x leverage target. The key takeaway is that our strong operating cash flows and balance sheet capacity result in no equity issuance required to deliver this plan. With that update, I'll pass the call back to Francois. Francois Poirier: Thanks, Sean. In summary, our strategy is working. As we look ahead, our focus remains squarely on the priorities that have proven successful. First, maximizing the value of our assets through safety and operational excellence while leveraging commercial and technological innovation. Second, prioritizing low-risk, high-return growth, including placing projects in service on time and on budget or better and allocating our remaining net annual investment capacity through 2030 within our targeted build multiples range of 5 to 7x without moving up the risk curve. And third, maintaining that financial strength and agility to support long-term value creation through capital discipline and efficiency. With our asset base and strong momentum, I am confident we can deliver low-risk, repeatable growth into the next decade. Operator, we're now ready to take questions. Operator: [Operator Instructions] Our first question comes from Praneeth Satish with Wells Fargo. Praneeth Satish: I think if we just zoom out for a second and think about EBITDA growth on a longer time frame than 2028, it would seem to me like the current mid-single-digit CAGR guidance can be sustained for a long time past 2028. The backlog is very large on the gas side, ROIC is increasing. And then when you get out to 2030, there's at least $1 billion to $2 billion per year of CapEx capacity that opens up with Bruce Power. So I know you aren't formally guiding past 2028, but can you maybe walk us through the puts and takes that shape your long-term EBITDA growth trajectory and how long that 5% to 7% CAGR can be maintained? Sean O'Donnell: Praneeth, it's Sean. I'll take that question. Great question. You highlighted on Francois's Page 9, those IRRs going to kind of 12.5% right now, that is that's critical, right, for us to continue to see those types of return levels to be able to allocate capital in that '29 and '30 period. And I'll tell you a little bit of what's happening. Small to midsized projects were taking down very quickly, but projects are getting bigger and more complex. And that just -- that's where we want to wait to see. Can we continue to push returns and capital allocation up in the '29 to '30 time frame. So if these returns remain true, then I do think you'll see the same kind of midpoint of growth, if not potentially better, but the projects are just taking a little bit longer for us to have that degree of clarity. Praneeth Satish: Got it. That's helpful. And maybe if I could follow up on that. line of questioning here. So as leverage trends lower over the next few years, it seems like there's a lot of balance sheet capacity that opens up, especially as you get out to 2028. So I know you kind of reiterated the $6 billion per year of CapEx, but is there room to scale towards $7 billion or even $8 billion at some point over the next few years? Or should we kind of assume a more conservative leverage targets over time? Any update on kind of how you're thinking about that longer-term CapEx cadence? Francois Poirier: Praneeth, it's Francois. I'll take this one. our goal is that 12 months from now, we've essentially filled up the project backlog at the $6 billion level through 2030 inclusively. I think the opportunity set we have will give us the opportunity at that point to consider going above that $6 billion level. A couple of really important criteria, which we are not going to lose sight of, however. First one is human capital. It's the most important consideration. We've made the progress we've made because we've executed our projects with excellence. So wanting to make sure that if and when we consider going above $6 billion, we can continue to execute with the performance that we've demonstrated over the last 2 or 3 years. Second is the 4.75 is going to continue to be a targeted cap for us irrespective of the size of our capital program. So we could make excellent progress on efficiencies, on technological innovation and commercial innovation that could allow us to go above $6 billion without looking to rotate capital or any other sources of funds. I would say though, as I said before, the opportunity set will absolutely allow us to go there. But I would say it's within those two caveats. And then when you look at the lead time for projects, realistically, that's probably 2028 or 2029 before we could go there just with the time it takes to develop projects and then the time it takes to get them permitted. Operator: And the next question comes from Robert Hope with Scotiabank. Robert Hope: Maybe to follow up on your commentary that the projects are becoming larger and more complex. Can you maybe add a little bit more color on what size of projects that you are now seeing and why they're more complex? And are you more willing to go for larger projects given the increasingly more favorable regulatory outlook in the U.S.? Tina Faraca: Thanks, Rob. This is Tina. We are really encouraged by the development pipeline that we have, primarily related to the growth in the power generation sector. Along our entire footprint, we see opportunities in scale of volumes that could be anywhere from just 0.5 Bcf all the way up to more than 1 Bcf, depending on the type a project we're pursuing. The value of our footprint is such that it allows us to capture all of these opportunities, whether they're on a smaller scale or the larger scale. The hyperscalers that we're working with behind the utilities do take more time just because of the supply chain constraints. But certainly, we continue to see those opportunities progress, and we'll pursue those as we see them advance. So the larger ones are taking a little bit more time, but we're able to capture some of the more single, doubles, triples along the way. Francois Poirier: Yes. And I'll add a little bit to that, Rob. I appreciate the question. When we talk about increased size and complexity, we're not talking about SGP or CGL like multi-jurisdictional multibillion-dollar projects. These are still in-corridor expansions. The average size of our projects in our backlog right now is about $0.5 billion. You might see projects announced over the next year, creep up around that $1 billion level or maybe still a little bit north of that, but they are still in corridor in -- with existing customers and very straightforward from a construction execution standpoint. So we don't view, despite the larger size, any execution complexity increase. Simply, we've had a number of projects this year that we -- 6 months ago, we would have expected to have announced by now, but they're getting pushed out into next year because they're getting upsized. Demand is increasing so quickly that our utility customers are looking to increase the scope of our projects, and we just have to go back to the drawing board a little bit. Robert Hope: Appreciate that color. And then maybe continuing on the theme of the project backlog. So you have $17 billion of projects in the backlog, $6 billion are in advanced development. How do you expect that kind of overall size to progress over the next year as you're seeing increasing demand for your system? Are you seeing projects -- are you having to turn away projects just given the organizational requirements? Or could we see that backlog expand a little bit further over the next, we'll call it, 12 to 24 months? Francois Poirier: Yes. We have -- just to be very clear, Rob, thank you for the question because it gives me the opportunity to point out that we have not turned down a single project because of balance sheet or capital. We still have even with our expectation of bringing in all of the pending projects to full sanctioning, we still have $3.5 billion of room under the $6 billion level. And as we talked about, with careful consideration of our human capital, we think we can go beyond that. So we're not capital constrained in that we're turning away projects. We simply want to make sure that we maintain our 4.75 level and that we're continuing to execute projects with excellence. So the great thing, for example, if you look at our guidance for 2028 of $12.5 billion to $13.1 billion, with EBITDA growing the way it is, it's natural that our backlog and annual capital spend can grow along with it. So as I said, the opportunity set is definitely there for us to go there if we choose to. And based on the cadence of projects we expect to be announced regularly through 2026, I think at this time next year, we're going to be thinking long and hard about increasing that $6 billion level, starting in maybe '28 or '29. Operator: And the next question comes from Theresa Chen with Barclays. Theresa Chen: On the theme of gas to power for data centers, you've clearly chosen to stay focused on transmission, supporting your customers rather than competing with them in power generation despite your deep expertise in that space. What drove this strategic decision? And what are the key considerations behind it? Tina Faraca: Thanks, Theresa. This is Tina. I'll focus on the U.S. because that's where we're seeing the majority of our data center growth right now. And the attractiveness and depth of our portfolio of data center projects, primarily accessed through our interconnections with key utility customers provides us with a low-risk, compelling return approach to capturing that data center growth. We're actually not seeing a big pull from customers to develop behind-the-meter projects in the U.S. And in instances where we have seen those requested, there have been limiting factors, including contract term or requirements to procure long lead time items, just inconsistent with our risk preferences. And we have a deep pipeline now of those opportunities with our long-standing relationships with our key utility customers. Additionally, when we're working with those utility customers, we're not just solving the needs for their data center growth. It's all of the other electrification needs that they have, whether it's coal to gas conversion or economic development. Theresa Chen: Got it. And in regards to Bruce C, can you walk us through the current status on the path to FID, the next key milestones, how you plan to manage cost and execution risk if the project proceeds? And on the heels of Greg's comments related to the technological advancements and use of robotics for the NCR program, it seems that you're incorporating additional efficiencies and innovative solutions in general here. But what are the key lessons from the NCR process that you'll be applying to Bruce C if FID-ed? Greg Grant: Sure. Thanks, Theresa. Appreciate the question. It's Greg. We do continue to progress Bruce C. We actually just received the notice of commencement from the IAC here in August. As we talked about in the last quarter, there's still a lot of work to do when you think about moving towards FID in the early 2030s. But what the next step for us is we're actually working with the ISO and our next tranche of funding. As a reminder, we're currently using federal funding through Enercan and the next tranche will help provide us the funding as we move towards FID towards the end of the decade. Nice for you to point out the Slide 19. I think there's many innovations that Bruce have been using both operationally and through the MCR program with the robotics that I talked about earlier. You'll see successive efficiencies being taken through all those lessons learned when you think about -- this is almost a decade-long plan. And the reason that we actually put robotics and other things in as we progress through Unit 3 was to be able to continue that over through all the success of MCR programs. So the team have been doing a great job on time and on budget. And what you'll continue to see is that time shrinking in terms of how long it's taken us to do the MCR program and get these units back online. Operator: And the next question comes from Aaron MacNeil with TD Cowen. Aaron MacNeil: The negotiated settlement on the Canadian Mainline expires in 2026. You mentioned several rate cases over the next several years. So I guess, just very simply, have toll increases or rate cases been contemplated in the 2028 guide? Or could we think about that as potential upside very much like we saw with Columbia earlier this year? Tina Faraca: Yes. Thanks for the question, Aaron. We do have several rate cases in flight. As you're familiar, we have the ANR, the Great Lakes rate cases that we have just recently filed and are in settlement discussions. We had a successful settlement on the Columbia Gas system. We have a cadence going forward on other U.S. pipes. Specific to Canada Gas, we have the mainline settlement, which goes through the end of 2026. in our NGTL settlement that ends at the end of 2029. The projections for those rate cases or rate settlements include conservative estimates in our budgeting and forecasting. And each rate case is very different depending on the rate base, the capital investment, but you will see the proposed uplift on those rate cases already embedded into our forecast. Aaron MacNeil: Okay. Understood. And then I wanted to dig in on the cost savings that you've realized on capital. As we look to the future and just given the broader investment in energy infrastructure across North America, are you starting to run into challenges or bottlenecks with contractors? Or can you speak to any other pressure points that we should be aware of or risks that you're actively mitigating? And ultimately, I guess I'm just wondering if this level of outperformance can be sustained. Tina Faraca: Yes, thanks. Market pressures haven't really had a material impact yet, but we do see industry backlogs building, and we're continuously monitoring our suppliers and our contractors. Francois earlier highlighted our human capital, and that's one of our also top considerations when we're sanctioning and executing projects. This applies also to our contractors and skilled labor workforces. We've been through these cycles before. We learn when it gets busy. It's increasingly important to retain top-tier suppliers, contractors, crews. And we're able to attract some of those top suppliers and contractors in two ways: one, through our long-term relationships and our contracting strategies that we deploy; and two, our portfolio. Our contractors like this long-term portfolio that we have, whether it's small, medium-sized in quarter projects and all of our maintenance capital, we're able to develop long-term relationships with them for that long-term backlog. Francois Poirier: Yes. And I'll add to that, Aaron, it's Francois. With respect to outperforming plan going forward. Remember that the risk of our portfolio is decreasing. If you look over the last 2 or 3 years, we had CGL and Southeast Gateway in there. The small- to medium-sized projects are much more straightforward to execute. The predictability of cost estimates is very high because we know the right of way, we know the terrain. The time lines are quite predictable. So we do tend to take a more conservative approach in an inflationary environment to our costs. Projects we're putting into service now were sanctioned in 2022 and 2023. Remember, we were in a much higher inflationary environment back then. But I'm optimistic that we can continue that execution excellence with a recognition that we're in a generational time in terms of allowed rates of return or rates of returns on projects we sanction. And to some extent, we might be a little bit more aggressive in terms of our estimation simply because we want to be able to allocate more capital to growth. Over the last few years, as we've been deleveraging any outperformance on projects, the proceeds have gone to accelerating our deleveraging. Going forward, the balance sheet is in good shape right now. We're more focused on growth. So we're going to want to allocate more capital. There are some great examples that our team, our supply chain team have been working with some of our key suppliers on long-term contracts, things like turbine maintenance, things like delivery of new equipment for new projects with the long backlog that Tina mentioned, we are a preferred customer that our contractors very much like to deal with. That means we get the A teams on our projects. And project execution is always about people and our human capital. And our team is very strong, and we get the strongest teams from our contractors, which leads to the results we've been getting, and we hope to continue those. Operator: And the next question comes from Jeremy Tonet with JPMorgan. Jeremy Tonet: Just wanted to turn to Slide 23, if I could revisit that. On the right-hand side, piling up tailwinds and headwinds for the guide here, if I recall correctly, it seems like there's a lot more tailwinds than headwinds at this point. So just wondering, is it fair to think that, that is the balance when you're thinking about the guide period? Sean O'Donnell: Jeremy, it's Sean. I'll take that question. Candidly, I think you're right. We are feeling more tailwinds than headwinds at the moment, whether that be the jurisdiction regulatory reforms that Francois mentioned, the customer kind of demand pull on our systems, we're being asked to do more than we ever have been. And to Francois's point, we're able to drive kind of project IRRs up, and we're able to drive rate case outcomes higher than we've ever seen before. So it is a bit of an imbalance towards the tailwinds for the first time in a long time. But towards that -- outside of that [ '29 and '30 ], we've been asked a few times about why not 5 years guidance. We just want to maintain a few -- another year to make sure that all of these tailwinds remain durable through the end of the decade. But so far, so good. Jeremy Tonet: Got it. That's helpful. So the 3-year guide looks really conservative here given that backdrop. So that's helpful to understand. And then just wanted to go to Mexico, I guess, there have been comments in the past with regards to potential for monetization there. I'm just wondering any updated thoughts you might be able to provide there? Sean O'Donnell: Yes. I'll take that one as well, Jeremy. No updated thoughts, but just let us recap kind of where we've been on that one. Look, Mexico is a phenomenal business for us, right, putting SGP into service this year and kind of demonstrating the commercial viability of that. CFE has a major campaign underway, right, with their $20-some billion kind of power and transmission build-out and given that a couple of quarters to continue to develop. So we're still committed to looking at alternatives in 2026. We'll have USMCA, some clarity there by hopefully, June or July. We'll have progress on the CFE side with connecting a number of different power plants that will be served primarily by SGP and other assets. And we'll look at capital market and partnership opportunities starting in 2026 and hopefully have an update by mid to fall of 2026. Operator: And the next question comes from Maurice Choy wit RBC. Maurice Choy: I just want to come back to a comment earlier that Francois, you made about your ability to go above $6 billion without rotating capital. It doesn't sound like you need this program. But from everything you shared today, you're also not short of opportunities. So how do you see the company being more engaged on an active capital rotation program just from a financial discipline perspective, particularly for mature or derisked projects? Francois Poirier: Thanks for the question, Maurice, and it gives me an opportunity to maybe be a bit clearer based on my prior response. What I wanted to indicate is that the first source of deleveraging is always growing your EBITDA. And before we consider capital rotation or any outside form of equity, we always look to improve the ROIC on our existing assets. So through commercial innovations and increasingly interesting technological innovation, the use of AI more specifically, we see an opportunity to accelerate EBITDA growth through optimization and efficiencies in our system. And I would like to see those carried out and run through before we consider any outside capital or deleveraging. Obviously, we hold share count dearly. Our bias to the extent we need -- to the extent we want to grow our capital program above $6 billion and we decide that we do need some equity the bias will always be the capital rotation first. But first, let's see what we can do with the EBITDA. We've had some really good successes here in improving the efficiency of our systems, getting our OM&A down and getting the ROIC on our existing assets up. And that's what I meant by that comment. Maurice Choy: That makes sense. And if I could just finish on the question about returns. On a forward-looking basis, you mentioned that you are expecting 5 to 7x build multiple. Compared to the Investor Day last year, has there been certain assets or project types that you're seeing evolving returns? Or have they broadly been quite steady over the past 12 months? Sean O'Donnell: Maurice, it's Sean. The answer is the latter. We have seen the 5% to 7% guidance from Investor Day last year to this year, we have executed right in the middle of that range. So it is steady. The proof points are there, and they are why we're extending that guidance through '28 at this point. Francois Poirier: Yes. And just to add to that, as we talked about our priorities for 2026 and our goal of filling out the slate of growth projects at the $6 billion level through 2030, along with that is at a 5 to 7x EBITDA build multiple. As you can imagine, our $17 billion BD pipeline, we have pretty good visibility on the returns of those projects. And so we think that, that outcome is very achievable. And the clear implication there is that we expect the build multiples to hold at the levels that you just referred to. Maurice Choy: So just a quick follow-up. I think earlier, there was a mention, I believe, by Tina that just we've not seen a whole lot of cost pressures, but perhaps there may be some on the horizon if all the resources are directed towards data centers, for example. What you're saying is that even if costs globally goes up, your returns should hold. Is that fair? Francois Poirier: Yes. Look, I think we compete with our peer company pipelines for projects, particularly in the U.S. My presumption is that if all competitors are impacted by the same inflationary environment, we're competing on a level playing field, and those costs will be reflected in all of our bids, and we expect to be able to hold our returns to deliver that 5 to 7x EBITDA build multiple. Operator: And the next question comes from Manav Gupta with UBS. Manav Gupta: You recently got an upgrade from S&P rate. They finally moved you to stable outlook versus negative. I know you had been working with them. Help us understand what that process was and finally, what pushed them to acknowledge that the outlook is actually stable and not negative. Sean O'Donnell: Manav, it's Sean. I'll take that one. Look, without speaking to any particular agency, we've simply delivered on the plan that we introduced at Investor Day last year, right? Obviously, getting SGP done on time and on service and living within our $6 billion to $7 billion capital raise. Those were commitments that we made to the market. And to be fair, the agencies held us accountable and wanted to see a couple of quarters of performance under that new strategy. So we've delivered and better. So yes, we're grateful for recognition of that, but it was always kind of part of our plan and expectation to get to this point. Manav Gupta: A number of question we are getting from investors is when you look at 2026, your guide is 6% to 8% and people feel it's slightly conservative. Help us understand what can get us closer to 8% versus the 6%, if you could talk a little bit about that? Sean O'Donnell: Yes. Happy to take that one again, Manav, it's Sean. Look, we have a little over $8 billion going into service kind of driving that. So these are new assets. And as it relates to the optionality that we have with all of our assets, right, customer-driven events, weather-driven events, outperformance. It's -- we need a little bit of time with our new assets in particular, but we are seeing new counterparties come across all of our systems with really kind of commercially innovative strategies to express hedging across molecules to electrons. So with these new assets, in particular, we'll be conservative in how much more we can do from a new customer standpoint, but we look forward to having all the new inventory kind of up and running here by the end of the year. Operator: And the next question comes from Olivia Foster with Goldman Sachs. Olivia Halferty: I wanted to go back to some of the comments which were made on improving IRRs across the footprint. Could you talk about specific drivers of the improved project returns we are seeing versus earlier this decade? And specifically, are there insights you can share on customer willingness to sign up for rates underpinning these improved project returns? And on the other hand, any balancing factors from project competition in regions where TC operates? Tina Faraca: Olivia, this is Tina. I'll take that question. There are various factors that are driving our higher returns and our strong build multiples. One is our project execution capabilities. We've really have advanced our skill set, our governance are the way we advance our projects on early development. And so I feel like our project development and execution experience has really driven us a long way in executing on time and under budget at returns that are continuing to increase. Second is the capacity in the market on the pipeline side continues to be more and more utilized. And so as we're working with our customers, the optionality in our systems requires expanding. And as we're working with them, they are highly valuing the new capacity as well as the security of supply. So we are able to negotiate, in some cases, returns that are providing us stronger options there. In addition, just the amount of growth across North America is really providing a big landscape for us to be able to select projects that have the highest return and strong build multiples. That's really the value of our footprint. Our footprint is a strategic advantage for us to find those low-risk, high-return opportunities that we can filter into our $6 billion to $7 billion capital. Olivia Halferty: Got it. That's clear. And for my second question, I wanted to ask a follow-up on one of Praneeth's questions, specifically on the leverage build and annual CapEx outlay. How much cushion specifically would you like to build under the 4.75 target on a run rate basis before we could see annual CapEx trend towards the higher end of the range? And then maybe this is a clarifying question as well, I'll tag on. But is TC contemplating moving towards the higher end of the $6 billion to $7 billion range or eventually moving above the upper end of the range over time? Sean O'Donnell: Yes, Olivia, it's Sean. I'll take the first part of that question. Look, as it relates to having a specific target below 4.75, our objective is really capital efficiency. And as Francois mentioned, our per share metrics at 4.75 or below are really how we kind of triangulate balance of total shareholder return. So -- and we are being below $6 billion here for the next kind of couple of years, we are giving the balance sheet time to breathe. We could have gone to $6 billion, but we have chosen not to. We're not chasing projects in favor of giving -- lower return projects in favor of giving the balance sheet time to breathe. That's a critical takeaway. As it relates to going from $6 billion to $7 billion or $7 billion to $8 billion, if the project returns are there, and it works within our -- that 12.5%, that glide path up that we're seeing, if that continues to be true and our teams can deliver on time and on budget, and it works at 4.75 or lower, those are the ingredients for both growth and continued preservation of balance sheet strength. Operator: And the next question comes from Robert Catellier with CIBC. Robert Catellier: Rob Catellier from CIBC. First of all, congratulations on your ongoing safety record. I just wanted to follow up a little bit with Tina, just on the project execution we've seen recently. You gave a whole host of reasons on how you got there. But I wondered if you could maybe highlight the one or two top reasons why you -- the projects are coming in on time and on budget recently? Tina Faraca: Thanks for the question, Rob. I'd love to talk about our project execution teams because they have been delivering time and time again. Our human capital there is really the #1 driver, in my opinion, of why we're executing on time and on budget. We've really advanced our internal leadership execution skills, more due diligence on risk we are engaging our stakeholders much earlier in the process, in the development cycle. We are negotiating strong contractors with our third-party constructors to provide the A teams. All of that allows us to execute on time and on budget and drive that increasing returns on our invested capital. Francois Poirier: And just to add to that, Rob, I really appreciate the question. We don't talk about culture enough on these types of calls and having a one-team approach to project execution, creating a psychologically safe environment where our teams feel comfortable identifying challenges early on so that we can manage them and manage risk. Is critical to the high-quality execution on projects. So we've worked really hard on creating a strong culture with strong psychological safety, and it's definitely benefited us. Robert Catellier: Yes. It sounds like you put in a really sustainable framework there that should benefit you for years to come. My second question was for Greg Grant on the power side. On Slide 18, there's a comment in the midterm bucket about exploring complementary services in high-demand power and energy solution markets. I wondered if you could give us a flavor of what you think the highest likelihood opportunities are there, in your opinion, as we stand here today? And whether or not you're contemplating any behind-the-meter power in that bucket. Greg Grant: Sure. Yes. Thanks, Robert. Happy to talk a bit about that. We've talked about areas where we do have some of the complementary gas and power solutions. Obviously, we have to be quite strategic with our footprint on both the gas and power side. We've talked about we're not just trying to build out the power business on its own. Certainly, Alberta has been the one area that I've talked about in the past, just given we have that energy supply chain footprint, whether it goes from the gas storage all the way to the end of power. So that's a natural area where we would be looking to potentially look to colocation and/or power solution. The one thing I just want to highlight, and I think Tina highlighted it earlier, we have a great pipeline of growth. And so we're going to be very selective. Some of the projects that we have seen are probably taking on a bit more risk than we would like to, especially given the footprint and the pipeline that we have. But certainly, in Alberta, when you see over 20 gigawatt queue on the data center front, whether we're developing it or we see other developers come in and build out some more demand, that's great for our existing footprint on the gas and power side. Operator: And the next question comes from Sam Burwell with Jefferies. George Burwell: Given the LNG build-out on the Gulf Coast, it seems like there's at least some opportunity to send more Canadian gas south. So are possible brownfield expansions on your system something that might make sense for you to pursue? And if so, how would those projects rank within your opportunity set? Tina Faraca: Yes. Thanks for the question, Sam. This is Tina. Yes, LNG opportunities are continuing to evolve. It is a large market, as you know, from a demand perspective. If you think about it across our portfolio, we've placed 8 LNG projects into service over the last few years, primarily related to Gulf Coast projects. Recently, you're familiar, we have built our Coastal GasLink project to the West Coast, and we think there's great opportunity to continue to provide egress out of the WCSB to the West Coast for LNG exports there. As you think about coming down into the U.S., we certainly have a corridor there through our ANR pipeline system and other systems where we have had some expansions in the past to bring gas from Western Canada down to the Gulf Coast, and we'll continue to evaluate those as necessary. There are about 10 more LNG projects proposed along the Gulf Coast that we'll be looking for additional supply. But again, I think the West Coast of Canada and building that out is going to be an incredible opportunity for us to move that gas west. George Burwell: Okay. Understood. So I guess on that point, I mean, any updates you can share on Coastal GasLink expansion? Tina Faraca: Sure. We're excited to have Coastal GasLink in service and flowing gas, Train 1 and Train 2 now moving forward. We are working really closely with LNG Canada right now to evaluate the Phase 2, and we're supporting them in the development related to what would be necessary on the pipeline. So the FID does rest with them, but we are working jointly to evaluate what would be necessary to expand Coastal to get to the Phase 2. Francois Poirier: And recall, Sam, that LNG Canada Phase 2 is part of the projects and the national interest that the federal government has identified. So from a permitting standpoint, I think that process is well underway with the major projects office. And really, the decision now rests with the proponent for the LNG facility. Operator: And the next question comes from Ben Pham with BMO. Benjamin Pham: I appreciate the update. A couple of maintenance questions from me on the 5% to 7% EBITDA growth guidance. So there's a couple of questions earlier on this topic. But I'm wondering, could you provide the building blocks on that CAGR, that 5%? Like what amounts growth? What is rate cases? What is the efficiencies? And then what takes you to the 6% and the 7% or beyond? Sean O'Donnell: Ben, it's Sean. Thanks for the question. Look, we maybe do a better job on that kind of offline, but just to give you a sense for it. there's another big chunk of that with capital coming into service kind of over the next 2 years, right? That's always our baseline, capital kind of coming into service. We could have up to a half a dozen rate cases kind of in flight during this plan. So that's probably the biggest driver of the range and what has to be true over the course of the next kind of couple of years. And then the smaller kind of bucket, but things that we've had real kind of demonstrable experience and results from asset availability, commercial and technology. Those -- it's a small but kind of growing kind of influence on the growth. And you heard both Tina and Greg kind of mentioned we've got active robotics. We've got AI, we've got preventative maintenance that are all showing early signs of kind of cash flow productivity and contribution. So those are really the three big buckets, but happy to take that offline in more detail. Benjamin Pham: Okay. That's great. And maybe the other maintenance question that I had is on the dividend growth side, are you still expecting the ranges you've highlighted in the past on dividend growth? Sean O'Donnell: Yes. So just to be clear for all the listeners, our 3% to 5% range is consistent. We are just given the returns that we're seeing in our new projects, right, well above our cost of capital, we are going to direct as much capital as we can into new projects, which implies we will keep the dividend growth at the low end of that range for the foreseeable future because the projects just warrant as much growth at 12.5% or better. That's the highest and best use of capital we see across the entire system. Operator: Ladies and gentlemen, this concludes the question-and-answer session. If there are any further questions, please contact Investor Relations at TC Energy. I will now turn the call over to Gavin Wylie for any closing remarks. Gavin Wylie: I just wanted to say once again, thank you for attending the call this morning and for the great questions. As the operator stated, if we didn't get to your question or if there was anything that was outstanding, please feel free to contact us in the Investor Relations team. We're always happy to help. And of course, we look forward to providing you our next update likely in mid-February. Thank you. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good afternoon, everyone, and thank you for standing by. Welcome to Evolus' Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded and webcast live. [Operator Instructions] I would now like to turn the conference over to Nareg Sagherian, Vice President and Head of Global Investor Relations and Corporate Communications. Please go ahead. Nareg Sagherian: Thank you, operator, and welcome to everyone joining us on today's call to review Evolus' third quarter financial results. Our third quarter press release is now on our website at evolus.com. With me today are David Moatazedi, President and Chief Executive Officer; Tatjana Mitchell, Chief Financial Officer; and Rui Avelar, Chief Medical Officer and Head of R&D. Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filings. These forward-looking statements are based on current assumptions, and we undertake no obligation to update them. Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our GAAP results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release. As a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investor Relations website. Following the conclusion of today's call, a replay will be available on our website at investors.evolus.com. With that, I'll turn the call over to our CEO, David Moatazedi. David Moatazedi: Thank you, Nareg, and good afternoon, everyone. Before we begin, I'd like to take a moment to welcome Tatjana Mitchell as our new Chief Financial Officer. Tatjana brings deep financial and operational expertise to Evolus, and she's made an immediate impact as we strengthen our focus on efficiency and long-term growth. The third quarter marks an important transition for Evolus. And before I discuss the results, I want to take a moment to recognize the outstanding efforts of our team. Over the past year, we successfully created or expanded a number of capabilities, solidifying the foundation for long-term growth. Most notably, our medical education platform has evolved into a comprehensive training ecosystem, working with world-renowned experts in the field of aesthetics to engage more than 17,000 injectors year-to-date through cadaver labs, in-office hands-on sessions, mobile training with our Evolus bots across 100 events and digital webcasts. Our Evolus consumer loyalty program has now grown to more than 1.3 million members, up 34% year-on-year, with nearly 70% returning customers, underscoring the strength of our consumer engagement. Our first-in-class Evolux co-branded media program has reached over 1,400 accounts year-to-date and generated over 300 million media impressions to digital, billboard and streaming campaigns, further amplifying awareness of the Evolus brand. Our Evolysse launch is off to an incredible start. To date, more than 4,000 customers have completed hands-on training and the majority have purchased Evolysse. One of the key insights we've learned is that first training builds familiarity and comfort with the product, while the second training is what drives meaningful adoption. In fact, 75% of Evolysse revenue comes from accounts that have participated in hands-on training, and we've seen a 100% increase in purchasing volume when an account is trained the second time. This clearly underscores the value of continued education in building product confidence and driving consistent use. Internationally, we entered 2 new markets this year, and our mature markets are continuing to grow at a very high rate. In the U.K., our most mature direct market, we estimate that our market share closely mirrors the share uptake we experienced in the U.S. following launch. Lastly, despite the headwinds in the U.S. aesthetic market Jeuveau continues to outperform the category with unit volume growing year-to-date and on track to continue that trajectory in a market that remains down single digits this year. Our above-market performance and disciplined expense management have positioned us to enter the next phase of our growth trajectory. Achieving profitability in the fourth quarter of 2025 and positioning us for sustainable annual profitability beginning in 2026. We've rebased our expenses with the benefits reflected in our third quarter results and remain well positioned to deliver sustainable profitability. While the aesthetic market continues to face near-term challenges related to consumer spending, we're encouraged by early signs of stabilization and expect demand for injectables to continue to improve sequentially. Against this backdrop, Evolus continues to deliver results that demonstrate the strength of our strategy and the resilience of our brand. In the third quarter, our revenue increased 13% due to strong global Jeuveau demand and meaningful early contribution from Evolysse in the U.S. Following a challenging second quarter, global Jeuveau performance in the third quarter reflected healthy demand as the business experienced sequential revenue growth in what is typically a seasonally lower quarter. Jeuveau sales benefited from positive unit growth, both in the U.S. and internationally, supported by record consumer demand through our Evolus Rewards program. As the market strengthens and the overall toxin category returns to growth, Jeuveau is poised to regain healthy momentum. We strengthened our 14% share of the U.S. market year-to-date, reinforcing the synergy within our portfolio and our differentiated positioning as a leader in performance beauty. With Evolysse, we continue to lay the foundation for adoption and scale, delivering $5.7 million revenue in the third quarter and $15.5 million since launch, marking the strongest HA filler debut in over a decade. Demand for Evolysse increased sequentially over the run rate of approximately $5 million after factoring for initial stocking by accounts in our launch quarter. We're particularly excited about the performance of Evolysse as feedback from customers has been exceptional, highlighting the product handling, results and seamless integration in their practice. This further validates our Beauty First strategy to build a full facial aesthetics portfolio under a single trusted brand. Through this launch, we targeted our highest volume Jeuveau accounts and gained valuable insights that will aid us as we now expand our focus to a broader customer base in the fourth quarter. Our launch-to-date strategy was focused on establishing Evolysse as a differentiated product independent from Jeuveau. And we intentionally avoided bundling during this initial phase. As we approach 6 months of experience with Evolysse on the market and as practices are now planning for the new year, the fourth quarter is the right time to bring the value of our 2 portfolio products together. This quarter, we have introduced our first Evolus portfolio bundle designed to reward practices that grow across both Jeuveau and Evolysse. This initiative enables us to compete more directly against competitive bundles and drive market share gains across the portfolio. In the third quarter, we expanded our customer base by adding nearly 500 new purchasing accounts, bringing our total to more than 17,000, 2,000 of which are now also purchasing Evolysse. Our Evolus Rewards consumer loyalty program remains a central growth driver, fueling both repeat use and brand engagement. Total redemptions grew 34% compared to the prior year quarter. New redemptions for the quarter were a record 244,000, of which approximately 68% came from existing consumers. Jeuveau and Evolysse are building lasting consumer loyalty, which fuels a sustainable growth and profitability of our portfolio. In parallel with our commercial execution, we achieved a key regulatory milestone with the submission of our PMA to the U.S. FDA for Evolysse Sculpt, our advanced injectable HA sculpt for mid-face volume restoration. We expect the FDA review to follow the standard PMA pathway with potential approval anticipated in the second half of 2026. We also remain on track for a broader launch of a steam in Europe in the first half of 2026. Before I close, I'd like to address the recent developments related to tariffs. We've taken proactive measures to mitigate potential tariff impact on pharmaceuticals, including Jeuveau. We will provide additional clarity once the trade agreement with South Korea and pharmaceutical tariffs are finalized. But the current time line gives us a valuable window to strategically plan and prepare for any changes. We remain confident in our ability to navigate these dynamics effectively without disruption to our customers or our financial performance. In summary, our third quarter results reflect above-market growth, financial discipline and the early benefits of our expanding portfolio. With Jeuveau performing steadily, Evolysse building scale, as team on track for launch in 2026 and the resetting of our expense base, Evolus remains well positioned to achieve sustainable profitability and long-term growth. With that, I'll turn it over to Rui for an update on Evolysse and our recent Sculpt submission. Rui Avelar: Thank you, David. Since the launch of Form and Smooth here in the U.S., the feedback continues to be consistent. This line of gels are described as being efficient in that a given amount of product goes a long way. They have a low inflammatory profile and are very versatile. On the development side, Evolysse Sculpt is our HA injectable that targets the premium mid-face volume market and is currently making its way through the FDA process. In August, the first disclosure of the data was presented. The study compared Sculpt to Restylane Lyft in a prospective double-blind randomized trial and enrolled 304 patients in a 3:1 ratio. Using a validated 5-point scale, patients with moderate, severe or extreme mid-face volume deficit were eligible for treatment, then followed for 24 months. The primary endpoint was non-inferiority design measured at 6 months and looked at the difference in mean change in mid-face volume deficit scores after treatment. Patients were treated in the cheek area and the mean volume of HA product used was 1.8 mls per cheek or 3.7 mls per patient. The primary endpoint of non-inferiority was met with the difference in favor of Evolysse Sculpt. The confidence intervals demonstrated both non-inferiority and statistical superiority. The corresponding p-value also demonstrated statistical superiority at less than 0.001. The secondary endpoint looked at responder rates of each treated cheek, defined as at least a 1-point improvement on the scale. At 6 months, 83% of cheeks treated with Restylane Lyft were responders compared to 91% in the Evolysse Sculpt Group, with the p value that reached the level of statistical significance at 0.015. Following the patients over the course of 2 years, there was a pattern of increasing separation across the efficacy metrics over time between the 2 groups, favoring Evolysse Sculpt over the control. A 1 point change on the validated volume deficit scale represents a clinically meaningful improvement. Looking at patients with at least a 1-point change as assessed by the blinded evaluator at 24 months or the study's end, 8% of Lyft patients were responders compared to 29% of Sculpt patients over a threefold difference at the end of 2 years. The pattern was similar when looking at the global aesthetic improvement scale as assessed by the patients themselves. At 24 months, 13% of Lyft patients were responders compared to 29% of Sculpt patients. Treatment-related adverse events between the 2 groups were similar, 18.7% for Lyft and 19.7% for Sculpt, and there were no treatment-related serious adverse events in either of the groups during the trial. As mentioned, the PMA for Sculpt was submitted in the third quarter of this year, and we anticipate FDA approval in the second half of 2026. Lastly, the Lyft HA injectable trial is fully enrolled, ongoing, and we anticipate its approval and launch in 2027. With that, I'll turn it over to Tatjana to walk you through the financial details. Tatjana Mitchell: Thank you, Rui, and thank you, David, for the warm welcome. Over the past 60 days, I have had the opportunity to get to know the Evolus team and spend time with some of our customers. It's been energizing to see firsthand what makes this company unique. And I wanted to share a few observations before we move into the results. First, Evolus has a highly differentiated business model. As a cash pay-focused company in a multibillion dollar aesthetics market, we have built meaningful relationships with both customers and consumers. Our ability to connect with both groups driving customer growth and retention while deepening consumer loyalty gives us a multitude of levers to drive performance. Based on my experience and scale consumer businesses, Evolus is still in the early stages of realizing our full potential. Second, the fundamentals of our business are strong. We have built productive long-term partnerships with Daewoong and Symatese, and our expense base has been successfully rebased following the second quarter, all while continuing to deliver on our revenue targets. This positions us well to drive operating leverage and profitability going forward. Third, we operate in a high-growth category with long-term secular tailwinds. Our strategy of building a facial aesthetics portfolio under one trusted brand provides a strong foundation for continued expansion and innovation. We are confident in delivering profitability with our current portfolio while actively pursuing strategic business development opportunities to expand our pipeline. And finally, I've been impressed by the strength of the Evolus culture. The grit and focus on impact that I've seen across the organization are what makes me confident in our ability to deliver on our long-term goals. I'm joining Evolus at a pivotal moment, one where the foundation is strong, the opportunity is clear and the team is focused on execution. I look forward to partnering with David and the leadership team to drive profitable growth and long-term value for our shareholders. With that, I'm pleased to share our third quarter financial results. Global net revenue for the third quarter was $69 million, a 13% increase over the third quarter of 2024. Sales growth in the third quarter was driven by a combination of the introduction of Evolysse and growth in global Jeuveau. And on a sequential basis, sales growth in the third quarter was driven by accelerating demand for Jeuveau, increasing underlying demand for Evolysse and continued strength in the international business. Net revenue for the third quarter of 2025 included $63.2 million of global Jeuveau revenue and $5.7 million of Evolysse revenue. Our reported gross margin for the third quarter was 66.5% and adjusted gross margin was 67.6%, which excludes the amortization of intangibles. Earlier, we touched on the topic of tariffs. There have been recent announcements related to potential tariffs on pharmaceutical products. At this time, the impact on Jeuveau is still being evaluated, pending additional guidance by the administration. Current inventory levels will sustain us through the first quarter of 2026, and therefore, Jeuveau will not be subject to any near-term tariff impact. Separately, under the recently announced trade agreement with the European Union, Evolysse is subject to a 15% tariff that began August 7. This star has been fully incorporated into our outlook and has a minimal impact on our financials. We continue to actively monitor global trade agreements and remain focused on mitigating any potential future exposure while ensuring stable supply for our customers. Moving now to operating expenses. GAAP operating expenses for the third quarter were $57.3 million, up from $55.5 million in the second quarter. As a note, on the sequential comparison, Q2 2025 GAAP operating expenses benefited from a $3.9 million reduction related to the revaluation of the contingent royalty obligation. Non-GAAP operating expenses for the third quarter were $49.7 million compared to $54 million in the second quarter. As a reminder, non-GAAP operating expenses exclude stock-based compensation, revaluation of the contingent royalty obligation and depreciation and amortization. This quarter, non-GAAP operating expenses also exclude $1.4 million in restructuring charges, primarily consisting of onetime severance benefits for inactive employees. These restructuring expenses are related to the strategic cost structure optimization announced in August. Within operating expenses, selling, general and administrative expenses for the third quarter were $52.8 million compared to $56.7 million in the second quarter. This included $5 million of noncash stock-based compensation compared to $4.3 million in the prior quarter. Non-GAAP operating loss in the third quarter was $3.1 million compared to non-GAAP operating loss of $6.7 million in Q3 of 2024. The better-than-expected third quarter results was due to operating expense reduction and in part to the timing of our largest customer event of the year, which moves from Q3 to Q4. As a result of this timing shift, the associated costs of the customer rent will be recognized in the fourth quarter rather than the third while the full year impact remains unchanged. Lowest non-GAAP operating expenses and non-GAAP operating income excludes stock-based compensation expense, revaluation of the contingent royalty obligation, depreciation and amortization and restructuring charges. Non-GAAP operating income also excludes amortization of intangible assets. Turning to the balance sheet. We ended the third quarter with $43.5 million in cash as compared with $61.7 million at the end of the second quarter. The decrease in cash during the quarter was primarily driven by our decision to pull forward inventory purchases ahead of potential tariffs on pharmaceuticals. Looking ahead, underpinned by our strong third quarter performance, our outlook for 2025 remains unchanged and includes the following. Reiterating total net revenue between $295 million and $305 million, representing 11% to 15% growth over 2024 results. We continue to expect Evolysse revenue contribution to be between 10% and 12% of total revenue for the full year 2025. Full year non-GAAP operating expenses to remain between $208 million and $213 million. Non-GAAP operating income between $5 million and $7 million in Q4 2025, which includes the timing of costs related to our customer events that shifted from the third quarter to the fourth quarter. In addition to our continued expectation to achieve profitability in the fourth quarter of 2025, we also remain on track to achieve sustainable annual profitability beginning in 2026. With that, I will now turn the call back to David for closing comments. David Moatazedi: Thank you, Tatjana. Amid a challenging macro backdrop, our double-digit growth reflects the strength of our business fundamentals and the consistency of our execution. We're a company operating with focus and efficiency, maintaining financial discipline while advancing on one of the most differentiated injectable pipeline in aesthetics. As we move into the fourth quarter, we're deepening customer engagement with the introduction of our Evolysse portfolio bundle, which aligns incentives and drives growth across our injectable portfolio. With Jeuveau in the #3 share position and gaming on the market leader, Evolysse in the early stages of scaling and a theme set to launch in Europe in the first half of 2026, we are well positioned to deliver sustainable growth, profitability and long-term shareholder value. Operator, you may now begin the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Annabel Samimy with Stifel. Annabel Samimy: A great recovery on the quarter. I just wanted to ask you some questions about, I guess, the solar dynamic on Evolysse, how much of what you're seeing for Evolysse includes a headwind for stocking versus seasonality versus, say, market sentiment? I guess maybe some macro commentary could be useful here. Like, for example, has sentiment shifted? Is sentiment still poor for fillers? Or are you seeing meaningful headwind from free product for injectors to trial? And could you potentially quantify any of this? And I guess from here, can you sort of give us a better sense of what we can expect of the cadence? And then just -- that was a lot of questions, but one more on this. I guess you mentioned there were about 4,000 trained and 2,000 have adopted Evolysse. Do you have any metrics for the time that it takes to go from like, say, first training to second training into adoption? How should we think about the conversion of those patients -- those physicians who have initially trained? David Moatazedi: Great. All really good questions, Annabel, around Evolysse. And I'll try to maybe dimensionalize for you for just a minute. If we take a couple of steps back, the one thing I'd say is when we launched, we focused initially on our core Evolus customers. And I'm really proud that in our first 6 months, when we look at our Jeuveau revenue, half of our revenue for Jeuveau has purchased Evolysse. So I think our focus on that, Evolysse customer set has been very productive for us. To your point, the recipe that we've uncovered, that has been effective, is to expose them to the product through our sales force, bring them in for training. One live hands-on training is very useful for them to have enough confidence to start trialing the product in their patients. But it really is consistently that second training that changes from trialing the product or dabbling with it to turning into an adopter. And that is really the key insight that we gained over the last couple of quarters with this product. We see a significant inflection point in those clinics when they get through that second training. As you can imagine, the first quarter that we launched, we had very few that actually had the opportunity to get trained 2 times. And so we started to see that more in the third quarter. And you could expect a number of those trainings. Second trainings are booked in the fourth quarter. That's a very significant part of the uptick within our core group. The second is in the fourth quarter, now that we've learned this product, and keep in mind, the U.S. is the first market that's launched Evolysse. So we're relying on our learnings here in the U.S. to continue to adapt our launch. We've now opened the door for Evolysse to go wider beyond our current Evolus customer base. And so you'll see the results from us being able to replicate what we've done over the first 6 months with our core customer group to a broader audience of customers. That's the second. And then lastly, as you pointed out, on the full year, the HA market, as we've read reports from our peers in the space, the market is down double digits. It continues to be relatively challenged, partly due to the macro environment. At the same time, Q3 is the seasonally low period for injectables as well. So you sort of have a compounding effect, if you will, and that's unique to the third quarter. Whereas in contrast, the fourth quarter, we expect will be the strongest quarter of the year, and will be now 3 quarters into our launch. So as we think about our guide for the full year, it reflects those market dynamics of those -- the fourth quarter being sort of the culmination now of 6 months of experience, our key learnings on the product and the benefit of the seasonality working favorably for us. Operator: Our next question comes from the line of Marc Goodman with Leerink Partners. Alyssa Larios: This is Alyssa Larios on for Marc Goodman. Just a few questions from us. Could you comment on the usage trends between Evolysse Smooth and Form and how those 2 different product lines are being used across the consumer base? And then can you give us an update on the advertising campaign and remind us exactly what channels you're using, whether it's DTC or going directly to the clinics themselves? And then finally, you mentioned that you intentionally avoided bundling the filler and toxin in the initial phase. Just curious what the rationale was for doing that. If you can walk us through your thought process? That's it. David Moatazedi: Great. Why don't I start with bundling the advertising, and then I'll comment on the usage of Smooth and Form. I'd like to Rui to add his color. Both Rui and I spent a lot of time with customers, trying to understand how they do position it, and there are some interesting insights there. So just on the bundling piece, it became very clear to us as we're preparing for the launch of Evolysse that customers weren't looking for us to bring in new product to market and sort of force it on them because there are customers that use our primary product, Jeuveau. And instead, following a number of advisory board meetings and looking at prior product launches, we chose to take a different route, which has let the product stand on its own and allow these customers a period of multiple quarters to learn through the product before we start to think about bringing our portfolio together. So it was very deliberate in the first quarter that we launched. The product was entirely independent. In the second quarter, we introduced consumer loyalty. We didn't want to introduce that too early. We wanted accounts to get comfort with the usage of the product before we expose consumers to the loyalty benefit. And now in our third quarter following launch, it's not the right time where customers are asking us about what the future of our portfolio is. As you can imagine, they are currently partnered with the larger companies, and they commit to these larger portfolio of purchases as part of their ongoing commitment to gain better pricing. Today, by keeping them independent, there's no advantage to bringing the full portfolio under Evolus. And so we provided this growth portfolio bundle offering in the fourth quarter as our first test of how we'll bring the portfolios together. And this will carry through into next year. And so this is our first attempt of doing that. And I can tell you that we tested it in one of our larger customer meetings that Tatiana mentioned, that was a result of the phasing of spend in and it was very, very successful in terms of the reception we got to it. On the DTC side, look, our strategy is more focused around co-branded media. So all of the advertising we do is surrounding each clinic individually. And we've been able to build a model with Evolus where we do personalization at scale. And part of that personalization is around our co-branded media in the form of streaming TV spots, billboards within local markets. And the heaviest portion of it is digital media. That could be social, it could be search and it does vary by market. And as I said, there are over 1,400 accounts that have participated in our co-branded media benefits. So it's not an insignificant portion of our customer base, but they have to meet certain purchasing criteria to gain those benefits. And so -- and then lastly, on the usage of Smooth and Form, both products have the same indication, which is the nasolabial fold, but the properties of the gels are very different. And we're learning more and more about their personalities as injectors are generally purchasing both. We have very few that are entirely using one or the other, mainly because the property is a smoother, that's a softer gel, whereas the Form product provides more structure. And so our label may be limited nasolabial fold, but of course, the usage expands beyond that. And so what we're hearing consistently is whether looking for a product to fill in areas more -- to create more of a smoothing effect, that's where they're leaning towards smooth. And when they're looking for greater structure in a product, that's where they're reaching for the Form. But I'll ask to share his part, Rui? Rui Avelar: Sure. I'm going to paraphrase a little bit. The indication is actually broader. The indication is medium to deep wrinkles and folds. And the nasolabial fold is one example of that. You can also go into the marionette lines. And if you look under that lower lip, sometimes there's a deep fold in there, it's called the submental fold. And there's a lot of versatility with these products. And when a clinician looks at a wrinkle or a fold, for example, nasolabial fold is one example, they can look at it strategically and think I'm taking all the attributes of this patient. Are they thin? Are they heavy? Skin quality, all these different things. And if their strategy is to try to use something more superficially, then they'll reach for Smooth. It's got a rheological profile that's very soft and you can bring it up very superficial. If the strategy is different and you want to create a little bit more lift and you need some more lifting power, your strategy is going to be deeper. So you go into Form. And sometimes you combine the 2, you layer them. You want something with more lift underneath and you want to smooth that out. So that's one group. And then in Europe, Smooth is actually approved for perioral fine lines and off-label here in the United States. But we're living in a global environment and people understand that, that product can be used so superficially that it will be used in parallel lines. And the other thing that's come in that's been very interesting is a recurrent comment that these gels are incredibly efficient. And what they typically say is I reach for a gel and I may go for something that needs more lift such as a Form. And I get done, and I still have product left over. And this product is so forgiving that I can continue through different parts of the area or even go superficial in the area that typically couldn't with the gel that has these properties. So that's been the feedback so far. For us, that was kind of reassuring because it was very consistent with the feedback we got before we brought the product on, and that's always nice to see that confirmation. Operator: Our next question comes from the line of Navann Ty with BNP Paribas. Navann Ty Dietschi: First, can you discuss in more detail the Q3 action underlying the sequential growth for Jeuveau despite the seasonality, including that Evolus Day event and practices support and potential promotional activities and whether you expect similar actions in Q4 such as the 11th day? And then second, we know that AbbVie commented on the Q3 call that their middle income customers for BOTOX are on the sidelines. So can you discuss the early signs of consumer stabilization that you are seeing? David Moatazedi: Sure. Thanks for the question, Navann. I think what we saw in the second quarter, as we commented before, was a unique point at the end of the quarter where we saw a pullback in customer purchasing that was really unique to the second quarter that we hadn't observed before. We did not see that dynamic in the third. We maintained a consistent promotional effort and we always do, both on the consumer side, through our loyalty platform where we did engage consumers that we saw stretching their intervals between treatment with a way to bring them back into their normal routine. We also were able to do some things in the market around the clinics with partnerships. We did have a partnership with consumer magazine, Allure, where there was a gift with purchase that consumers were able to partner with us on that did drive a lot of interest in our product. And then, of course, now as we enter the fourth quarter, as you pointed out, this is our annual 11th day, which kicked off towards the end of October. And it's we're in the middle of it now, and it's a very important phase for us as our customers look at that annually. Operator: Our next question comes from the line of Uy Ear with Mizuho Securities. Uy Ear: Congrats on the positive quarter here. So maybe a question on, well, could you maybe just tell us the split between U.S. and ex U.S. sales for Jeuveau? And maybe you can also kind of help us understand, I think you indicated that you strengthened your 14% market share. Maybe just help us understand what you mean by that as well as what are you kind of seeing, I guess, in terms of your customer base who are -- who could be different from what AbbVie -- the customer base that AbbVie or Galderma have? David Moatazedi: Yes. Let's start with what we're seeing in terms of just overall in the market. Obviously, the only 2 companies that report down the revenue and break out that level of detail is both us and AbbVie. So through that, what we see is a market that in the third quarter, likely decline by some small degree and we continue to outpace when you look at our year-to-date Jeuveau in the declining market, we've grown in terms of units. What's probably most promising is you see our consumer rewards data where the overall redemption, that's consumers going in, getting treated and earning their $40 off, it's up over 30% year-on-year. So we continue to see very healthy demand for the product in these clinics and we're continuing to, we believe, improve our presence there. Now that all at the same time, we're establishing Evolysse in these clinics. So overall, we feel very good about how Jeuveau has performed out of the third quarter. And we hope to see that momentum continue. The second part was, yes, that was the 14%. Yes. As far as the -- we don't do segment reporting on the toxin business, Uy. So unfortunately, we won't be able to give you that color. But we did in the script make the comment that both the U.S. and the international business are growing positive in terms of units year-to-date. So I think it gives you some color around there is growth happening on both sides on top of that, Uy. Uy Ear: Okay. Can I sneak in another question. You're now going to bundle the product. Maybe just help us understand the potential synergies that you could get from this? Do you expect in some of the accounts, I think you're heavily penetrated. In terms of Jeuveau, do you expect greater -- significantly greater penetration there? Or do you think the synergies will work -- sort of will be greater synergies in terms of Evolysse? Just help us understand the dynamic and the potential and the magnitude. David Moatazedi: Yes. I think my view is the portfolio bundle is a long play for us. This is a very early innings. We've been operating as a single product company and without a bundle for 7 years, and you've seen us establish. Jeuveau is the fastest-growing brand for the majority of those years since we entered the market. And we're the first company to break through the double-digit mark outside of the initial 2 players to enter the space. We do believe this is a meaningful opportunity for Jeuveau. There are countless conversations that we've had with clinics where their Jeuveau usage is limited by the downside risk they have by moving over more of their share to us on their total purchasing with some of the competitive products. The idea of a bundle unlocks and alleviate some of that pressure. And I think the reason I say it's a longer-term endeavor is because Sculpt further unlocks it because it further expands our portfolio within the HA space, which is an important part of continuing to move more of their business over. So I view the fourth quarter as the first of many quarters to come where we'll start talking a little bit more about the advantage of the portfolio. Operator: Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Douglas Tsao: Congrats on the progress. David, I guess, I'm just curious, have you seen that effect yet in the marketplace, meaning sort of accounts that were perhaps not purchasing Jeuveau because they were very defensive around sort of the bundle with Allergan or AbbVie and now are beginning to be able to purchase Jeuveau as well as Evolysse? Or is that more of the sort of a conversation that you're starting to have? David Moatazedi: Yes. We have had a combination of both inbound interest from accounts that weren't working with us on Jeuveau and they're interested in Evolysse and that opens the door for us to begin partnering with them. Now keep in mind, Evolysse is still early. So I think some of those could be dabblers that will continue to expand their presence. And as a result of that, they've started to dabble with Jeuveau. So that's one group of customers. Another group are customers that have been somewhat moderate users of Jeuveau. And now with Evolysse, they're looking at us differently. And consistently in the conversation is the idea of having a mid-face product, that bringing in a differentiated mid-face product, which is a big gap in a lot of portfolios in our industry is going to be a significant point in time to do that. So we've used this, if you will, in 3 stages, right? The first 6 months was establishing Evolysse. The next 6 months is starting to establish our portfolio value proposition and then opening the doors to follow as Sculpt gets to approval, and then we can really use that entire bundle to start to take advantage of it. So we've been deliberate about how we've tried to roll these out, especially to support our customers who've helped us get here. Douglas Tsao: And as a follow-up, David, I'm just curious, on the co-branded marketing side, is Jeuveau remaining the focal point? Or have you had accounts inquire or begin to actually do co-branded marketing where Evolysse is the focus? David Moatazedi: Yes. So the third quarter, we started to put out co-branded media on Evolysse. Some of those co-branded media ads had mentioned the weight loss. As you know, we're the only hyaluronic acid that has mention of weight loss in our label. There's a lot of interest. Some of those in our billboards now sitting around the U.S., some of them are digital media. And that was one that many [Technical Difficulty]. Douglas Tsao: Hello? David Moatazedi: Yes. We're back, Doug. Douglas Tsao: I think, David, we lost you midstream about the co-branded marketing. David Moatazedi: Yes. My only comment there was, we are seeing co-branded marketing on Evolysse in the form of billboards as well as digital with a number of them having the mention of weight loss, which is unique to our product. And as we mentioned on the prior call, the more you purchase from Evolysse, the more co-branded media dollars you earn. And then our team works with those clinics to choose which products they want to highlight between the 2, Jeuveau and Evolysse. And we started to introduce it in the third quarter in the market, and it's going to continue to rise as we enter the fourth quarter. Operator: Our next question comes from the line of Serge Belanger with Needham & Company. Serge Belanger: David, first question is on ordering patterns. Like you mentioned earlier, volumes and size of orders kind of dropped off at the end of the second quarter. Just curious what impact that had on inventory levels and the overall ordering pattern throughout 3Q? And maybe what you've seen in the early part of 4Q right now? Secondly, I think Tatjana mentioned that the customer event was moved from 3Q to 4Q. I imagine that's the 11-day promotion. What impact did that have on OpEx? And could that be another tailwind for 4Q Jeuveau sales? Operator: Apologies. The speakers are experiencing more technical difficulties. Tatjana Mitchell: Serge, can you let me know where we cut off? Can you let me know where my response cut off? Serge Belanger: I don't think we heard your response at all. Tatjana Mitchell: Okay. Apologies. We are dealing with some technical difficulties, but we are back on. So the question was around the customer event that moved from Q3 to Q4. That was the summit that we have for our largest customers. It was not the 11th-day promotion. So the 11th-day promotion, as David said, kicked off at the end of October and is currently underway. And so there's no change in promotional cadence or any impact on revenue. David Moatazedi: Okay. And to your -- second part of your question around purchasing pattern, Serge. A couple of things that we pointed out coming out of the Q2 earnings call. One is that accounts were drawing down their inventory. We expected that to continue through the third quarter. And so what we're seeing were accounts that are carrying less inventory and purchasing more on an on-demand basis versus placing sort of the larger volume orders that they had been placing before. But collectively, we saw them coming through strong just with over the course of more orders rather than the bigger volume ones. Now the fourth quarter is at the busiest season. So we do expect that the purchase volumes are generally higher. They will be higher than they have been over the past 2 quarters. But we do expect that inventory levels will continue to be managed carefully in the space as the overall volumes year-on-year. We expect the fourth quarter hopefully to be relatively flat coming off of a depressed base. So we expect it to be relatively stable. Operator: Our next question comes from the line of Sam Eiber with BTIG. Sam Eiber: Maybe I can move to the tariff mitigation strategies that you called out in the prepared remarks. So I'd love to hear any more details. I guess you could provide on potential offsets if we do get tariffs. I know it's a fluid situation, but would love your thoughts there. And maybe as a follow-up, if we do get potentially material rates, what's your ability to, I guess, build in the U.S., manufacture in the U.S.? How long something like that could take to build out? Any thoughts there would be great. David Moatazedi: Yes, Sam, it's a great question on tariffs. Like you, we've also been watching this very closely. And I want to be careful not to get into too much detail here because it's harder to lay out plans when it's not entirely clear yet. The Korean trade agreement is nearing a close. So we're looking forward to seeing that agreement finalized, but the pharmaceutical tariffs and whether those continue to hold are still not yet clear. I can tell you that we have an incredible partnership with our partner, Daewoong in Korea. They're very well aware of the impact of tariffs, the conversations we've had with them. And they've also been very supportive. As you see, on one hand, there's been a higher impact on our cash burn as a result of pulling forward inventory into the U.S. That allows us and affords us the luxury of time to be able to get more clarity on some of these unknown items. But as you can imagine, we're working through it in scenario planning. So rather than going through each of those scenarios, I can tell you that we have a partner that's committed. We have the luxury of time to work through this. And it's still unclear within that range of options, I would just say that we are open to exploring... Operator: Apologies. Looks like we lost him again. There are no further questions at this time. I'd like to pass the call back over to Nareg Sagherian for details on an upcoming IR event. Nareg? Nareg Sagherian: We hope to see many of you there. Thank you for joining us today. Operator: This concludes today's teleconference. You may now disconnect your lines.
Operator: Ladies and gentlemen, welcome to the SES 9 Months and Third Quarter 2025 Results Conference Call. [Operator Instructions] Now I will hand over the conference to Christian Kern, Head of Investor Relations. Please go ahead. Christian Kern: Thank you, Gaya. Good morning, everyone, and thank you for joining us today. It is my pleasure to welcome you to SES Q3 2025 Results Call on behalf of our management team. Before proceeding with the management presentation, we would like to inform you that the financial information contained in this document has been prepared under International Financial Reporting Standards. As usual, this presentation may contain announcements that constitute forward-looking statements, which are no guarantees for future business performance and involve risks as well as uncertainties. Also, certain results may materially differ from those in these forward-looking statements due to several factors. We invite you to read the detailed disclaimer on Page 2 of the presentation, which is also available on our company web page. Today, I'm joined by our CEO, Adel Al-Saleh; and our CFO, Lisa Pataki, who will take you through the presentation followed by a Q&A session. Adel, without further ado, over to you. Adel Al-Saleh: Thank you, Christian. Good morning, everyone. I'd like to start on Page #4 with The New SES. Now fully consolidated with Intelsat after transaction closed on 17th of July 2025, it has been a very extremely and very busy and extremely difficult period for us, bringing the 2 companies together, creating a heavy weight in our industry. So first of all, let me briefly recap the rationale behind this transformational deal. We brought together 2 industry leaders beyond scale through a value-accretive acquisition with more than 60% of revenues in high-growth segments and a total net present value of EUR 2.4 billion in synergies. We have started executing on these synergies from day 1 of closing. In fact, this transformational combination was not just about bringing SES and Intelsat together. It was about redefining who we are as a company. We have created a new SES, a global multi-orbit connectivity powerhouse and a true space solutions company, empowering businesses and governments worldwide with integrated purpose-built satellite network and connectivity solutions. We have brought together a powerful mix of talented people, market-leading engineering capabilities, network infrastructure, spectrum, innovation and global relationships. We're expanding beyond satellite connectivity and exploring adjacent capabilities to grow and compete more effectively in space based on our network, such as hosted payloads, space situational awareness and direct-to-device services. All of this is focused on shareholder value creation and returns. For our customers, we have created a more capable and forward-looking space solutions company, one that combines a compelling value proposition backed by strong underlying capabilities and a continued commitment to innovation focused on solving our customers' challenges. For our shareholders, we are driving value creation and shareholder returns through our focus on profitable growth in combination with disciplined capital management and allocation. Let's move to Page #5. With the combination of SES and Intelsat, we have significantly strengthened our portfolio. Our 4 verticals, how we manage the business, if you will, are now media, government, aviation and fixed and maritime. With the combination, we have created an undisputed leader in satellite-based communication solutions. Let's start with media. Media is our largest and most cash-generative segment, now operating at even greater scale, delivering nearly 11,000 channels to 2.3 billion viewers worldwide. We're securing long-term renewals well into the next decade. And despite industry headwinds, our strategy is clear: defend and optimize high-value neighborhoods by leveraging our industry-leading reach while expanding into new segments like sports and events, free-to-air and free-to-view. In our network segments, government, aviation and fixed and Maritime, capacity and resources are precious, and we're purposely allocated to the right opportunities as we scale for the future. With our expanded scale and capabilities, we're well positioned in our new growth segments, particularly government and aviation. In government, we're supporting over 60 global government organizations, including European governments, U.S. government, NATO allies and Five Eye nations. We will continue to focus on growing and expanding on both sides of the Atlantic, especially as the geopolitical environment drives increases in global government budgets by capturing sovereign demand and expanding into new space-based solutions. We're not only offering government capacity, but truly space partner, allowing governments to diversify and expand their space architecture. In aviation, where we have gained substantial scale through the acquisition, we now provide in-flight connectivity to 30 leading commercial airlines, supporting around 3,000 tails. Powered by our multi-orbit electronically steered antenna technology known as ESA, we offer global coverage, multi-orbit, low latency and flexible business models that enable airlines to meet their ever-rising bandwidth demand, especially with the rapid rollout of in-flight Wi-Fi. Our strategy here is simple: accelerate growth by scaling our multi-orbit, multi-band solutions to stay ahead of this fast-growing market. And as our MEO network grows, we will make it available at scale to our airline clients across the world, providing truly unique multi-orbit multi-band flexibility. In maritime, SES is also well positioned, serving 5 of the 6 major cruise lines and leveraging our scale up in commercial shipping. We are the leading provider of connectivity at sea, keeping passengers and cruise connected informed and competitive in the fast-moving world. We're confident in our maritime platforms, which position us well despite facing pressures from some partners moving to LEO solutions. Our strategy is to focus, defend and rationalize, supported by selective investments. Last but not least, our fixed business remains very tough and highly competitive. We're serving important customers with 8 out of the world's 10 mobile network -- sorry, with 8 of the world's top 10 mobile network operators as well as major energy companies and drive digital inclusion across the world. Our strategy here is to rationalize and focus on green zones, where we have the right to win. We pursue higher yield opportunities, streamline operations and leverage digitization to improve efficiency and performance. Let's go to Page #6. Here, we show you the combined assets supporting our new business. We're now a multi-orbit space solutions provider at scale. We operate a powerful fleet of around 120 state-of-the-art GEO and MEO satellites in a multi-orbit multiband network supported by over 150 teleports well spread across the globe and an extensive ground network with over 600,000 kilometers of fiber, covering 99% of the world's populated regions. In combination with strategic access to LEO capabilities, this unmatched scale and flexibility position us well to meet our customers' most demanding connectivity needs with unified solutions and accelerate profitable growth. Let's move to Page #8. Discussing our 9-month business highlights and financial performance. The third quarter 2025 was the first quarter of the combined company with Intelsat contributing roughly 10 weeks to the stand-alone business performance. Therefore, the following financial performance is shown on a reported basis with Intelsat fully consolidated from 17th of July 2025. In the 9 months of 2025, we showed a solid financial performance with revenue of around EUR 1.75 billion, up 19.8% year-on-year with growth in all verticals. Adjusted EBITDA for the 9 months was EUR 849 million, with 11% growth year-on-year and a margin of 48.6%. In the first 9 months of the year, we secured EUR 1.4 billion of renewals. and new customer contracts with the majority coming from our growth segments, supporting our gross backlog of EUR 7.1 billion, which has been impacted by the weaker U.S. dollar and intercompany eliminations. We have just combined 2 companies with multiple platforms. We have been working on various scope changes, intercompany eliminations and some different accounting conversions. So this has been a rather complex reporting quarter. In terms of like-for-like underlying trends, revenue was down minus 1.8% year-on-year and adjusted EBITDA declined around minus 10% year-on-year. These year-on-year trends can be mainly attributed to a few key business factors. Number one, in aviation, we're working through the backlog of ESA antenna implementations, which come with equipment revenue diluting profitability before enabling higher-margin service revenue. There are also some timing differences between onboarding new customers, new planes and decommissioning some of the airline customers. In government, we have seen timing impacts, mainly due to the U.S. budget delays at the start of the year, contract rationalization by the U.S. Department of Government Efficiency and postponement of large contracts in part due to the U.S. government shutdown. These deals remain highly accretive and underpin our confidence in the future growth. In media, we continue to see expected structural decline with SD channel switch-offs and the drag from the Brazilian customer bankruptcy. This combined business is now over EUR 1 billion in revenue and remains highly cash generative. Going forward, we see the underlying decline unchanged in the mid-single digits while having signed renewals well into the next decade. Fixed remains our most challenged business in a highly competitive environment. We face difficult market conditions and are focused on securing value-accretive deals supported by disciplined capacity allocation. And finally, just a reminder of the third-party capacity utilization after the failure of IS-33e as well as intercompany eliminations that we had to adjust. Turning to Page #9. Let's talk about our notable wins that support our growing segments. We're a trusted partner to customers worldwide in over 130 countries as evidenced by our strong customer base. In our high cash-generative media segment, we continue to see momentum driven by the strength of our managed services offerings and the global reach of our network. As media evolves, satellite broadcasting remains the most cost-efficient and reliable way to reach global audiences. SES continues to be a trusted partner to leading media companies such as Warner Bros. Discovery, having signed this year a long-term capacity agreement to deliver high-quality content to millions of TV users on 19.2 degree East, our most valued TV neighborhood in Europe. In Q3, we renewed a business with major media customer in the Americas, including a multi-transponder. We also had a long-term extension with a major U.S. program and have broadened our agreement with a long-time customer, Dish Mexico. In addition, we expanded our partnership with Telekom Srbija, adding 2 additional transponders and extending our capacity agreements through 2032. We also renewed a multiyear multimillion euro agreement with Arqiva for satellite capacity and our prime video neighborhood at 28.2 degrees East. Under this agreement, SES will enable Arqiva to deliver a wide range of television channels as well as radio services to audiences in the U.K. and the Republic of Ireland. In Africa, we continue to build momentum with long-term renewals with our customers in East Africa specifically. We also extended important direct-to-home contracts in Asia and secured 2 new blue-chip broadcasters on our key orbital location for C-band distribution across Asia Pacific. Many of our large customers are now talking to us about extending our partnership well into the next decade. More to come on this in the future as we renew these contracts and are able to talk about them. Let me now shift to our government business. We continue to see strong and growing demand for our resilient secure communication solutions from government customers around the world. Together, we built a government solution business of scale on both sides of the Atlantic, being true space partner to over 60 government organizations, including European and U.S. agencies. We're well positioned to tackle the sovereign capabilities governments now demand with multi-orbit networks, with space and defense budget increasing both in the U.S. and amongst NATO allies as we view the government vertical as one of the strongest growth levers over the next few years. In Q3, the French Navy aircraft carrier, Charles de Gaulle, utilized SES' O3b mPOWER SatCom service during the Clemenceau 25 mission. This high throughput, low-latency MEO connectivity supported all operational needs on board, enabled seamless collaboration with mission partners and ensured uninterrupted availability for mission-critical applications. Our IRIS2 program is also progressing well ahead of the 1W1 early next year. In the U.S., as mentioned, we're experiencing timing delays in some contract awards due to the continuing resolution and subsequent government shutdown. Despite this, our business is growing, and we remain well positioned for long-term growth. Notably, in Q3, the U.S. Space Force awarded 5 companies, including SES, positions on a 5-year $4 billion contract under the Protected Tactical Satellite Communications Global program, known as PTHG. SES is now competing for a prime contractor position going forward. This initiative focuses on the design and demonstration of resilient satellite architectures with the potential for future delivery orders. The goal is to provide anti-jam secure communications for tactical military operations by leveraging both commercial innovation and defense expertise. Also in Q3, SES Space & Defense joined the Defense Innovation Unit's Hybrid Space Architecture Network initiative with our secure integrated multi-orbit networking platform known as SIMON. This program is building a secure, integrated multi-orbit network that connects commercial and government systems to deliver assured, low-latency, multipath communications across a scalable and resilient multi-domain architecture. These strategic wins highlight our commitment to innovation and growth in the government sector. With regards to aviation, this segment continues to be a growth engine for the company. Over the last 3 months, we have won 200 new tails from various airlines. We're winning new airline customers around the world who are choosing SES because of our clear differentiators. These include our ESA solution, which uniquely enables access to GEO and LEO orbits, delivering broad coverage, low latency and unmatched resilience. We also offer multi-band flexibility across both Ku and Ka bands and solutions tailored for both narrow-body and wide-body aircraft. Our flexible commercial models further strengthen our value proposition. All of this is underpinned by ongoing investments in our global network, enhancing the passenger experience down to the seat level and expanding our footprint globally to meet rising demand. While competition from LEO-only providers remains very strong, the market is large and diverse enough to support multiplayers offering solutions tailored to the specific needs of airlines. In Q3, our ESA multi-orbit solution was selected by new airline customers across Latin America and Asia Pacific, spanning both narrow-body and wide-body fleets. Today, it is flying on over 300 aircraft and has received consistently positive feedback from customers and analysts. In total, 16 airlines have committed to deploy our ESA across 1,000 aircraft globally, underscoring the growing momentum behind our offering. We also continue to make great progress with our open orbit solutions, including wins with Thai Airways, Turkish Airlines and Uzbekistan Airways earlier this year. Our maritime business remains solid, fueled by strong demand from both customers such as MSC, Princess and Virgin. Our leadership in ocean ships and gate segment is powered by our end-to-end multi-orbit connectivity anchored by our managed MEO network that enhances the onboard passenger experience. In Q3, we secured renewals from multiple major cruise lines, reinforcing the critical role of our solution play in this market. Today, we serve 5 of the 6 leading cruise lines at sea. Additionally, SES completed the largest cruise ship transition of the year, helping a major customer migrate from GEO to SES Cruise mPOWERED service. With SES Cruise mPOWERED, we're redefining the onboard experience. Our real-time network optimization dynamically synchronizes space and ground systems across multiple orbits, enabling the cruise operators to deliver consistent, high-quality connectivity at all times. Further to the cruises, SES is supporting over 14,000 vessels on the Flex Maritime global network exclusively through our major solution partners, serving commercial shipping, oil and gas and fishing vessels. While our fixed segment continues to face competitive pressures from NGSO players, we remain focused on offering differentiated solutions to our clients. We're doing this by leveraging the strength of our multi-orbit GEO, MEO, LEO offerings, along with robust cell backhaul and trunking services. These capabilities are supported by our extensive ground infrastructure, which enables us to deliver reliable connectivity across these diverse geographies. We're serving 8 of the world's top 10 mobile network operators and a multiple of energy companies across the world. For example, we support Orange across Africa with services in Mali and Burkina Faso and most recently expanding into Liberia. And additionally, in Q3, we secured business with major mobile network operators in the Americas and expanded our digital inclusion services in Brazil with Telebras. This further strengthens our position in that region. As you can see, we are creating stronger, more agile, more competitive SES, one built on lead across orbits, across markets and across technologies. Let's turn to Page #10. This page highlights our synergy progress and integration efforts. I'm pleased to report that the integration is progressing well. In the first 90 days, we have successfully established our new organization from the leadership team through every level of the company. We have also implemented our new operating model, which defines how we manage the business on a day-to-day basis and ensures alignment across the combined organization. I'm proud to share that we have launched our new SES brand, a new purpose that capture the essence of who we are, space to make a difference and a new tagline, Solve, Empower, Soar. Our synergy delivery plan is strong, and we're crystallizing synergies more rapidly. What we have communicated is that we expect to deliver synergies with a total net present value of EUR 2.4 billion, representing an annual run rate of approximately EUR 370 million, with 70% of these efficiencies expected to be executed within 3 years. We're moving fast and delivering ahead of plan. We're moving fast and delivering ahead of our plan on our synergy commitments as we began identifying and capturing synergy opportunities across multiple areas. Our annual run rate of OpEx synergies of EUR 210 million are being fast tracked. We have already executed key labor and nonlabor synergies, including overlapping contracts, office footprint consolidation, third-party capacity optimization, procurement savings, IT consolidations and license optimization with longing IT systems such as ERP and CRMs are all progressing to plan. We're approaching this process with the utmost care and respect, ensuring we support our people while aligning our workforce to the needs of the new organization. On the CapEx side, we're fast tracking the annual run rate of EUR 160 million savings through smarter asset use, non-replacement of certain satellites and the rationalization of networks and ground infrastructure. These efficiencies will flow through in 2026 and 2027, reflecting our determination to deliver what we promised. We're executing with discipline and precision. And with our financial year 2025 results, we plan to share further details on our synergy progress. With this, I'd like to hand over to our CFO, Lisa, who will share with you more details of our financial performance. Elisabeth Pataki: Thank you, Adel. Good morning, everyone. Before I begin my remarks on the financial performance of the combined company, I would like to inform you that in the Q3 results press release available on our company website, you will also find supplementary financial information with like-for-like revenue per vertical and adjusted EBITDA at the group level as if the Intelsat transaction had consolidated from the 1st of January 2024. This additional disclosure should help you better understand the underlying performance of the combined business and complements your financial modeling going forward. As usual, our Investor Relations team is available to help you with any questions that may arise after this earnings call. Now let's turn to Page 12 for our financial highlights. I will start with our financial performance for Q3 and 9 months, which is shown throughout this presentation on a reported basis with Intelsat fully consolidated from 17th of July 2025. This is equal to about 10 weeks of Intelsat performance, which we did not have in the prior comparative period. Revenue for SES was EUR 769 million in Q3 2025 and EUR 1.747 billion for the first 9 months of 2025, showing growth of 19.8% compared to the same period last year at constant foreign exchange rates. On a like-for-like basis, 9 months revenue was down 1.8% year-over-year, with strong growth in aviation and government outpacing lower revenues in fixed in which we are navigating a challenging competitive environment and media, which declined as expected due to structural headwinds and the effects of our Brazilian customer bankruptcy. On a year-to-date 9-month basis, our revenue was negatively impacted by EUR 52 million, of which EUR 17 million were attributable to the weaker U.S. dollar and the remainder to intercompany eliminations and alignment to IFRS accounting rules. Q3 2025 adjusted EBITDA was EUR 328 million and EUR 849 million for the first 9 months of 2025, showing growth of 11% year-over-year, driven by volume with margins of 42.7% for Q3 and 48.6% for 9 months. In the first 9 months, our adjusted EBITDA was negatively impacted by EUR 10 million attributable to the weaker U.S. dollar. On a like-for-like basis, 9 months adjusted EBITDA was down 10.2% year-over-year, with near-term margin headwinds driven by profitability diluting equipment sales from the electronically steered antenna, ESA installations in our aviation business in combination with some timing differences between onboarding and decommissioning airline customers. The Intelsat IS-33e anomaly, which occurred in October 2024, which required higher third-party capacity; and finally, mix and timing impacts on government revenue. In addition, as Adel mentioned, we have introduced more discipline to pass on tactical opportunities that are outside of our green zones and not margin accretive to our business. Moving now to Page 13. I would like to discuss in more detail the top line financial performance of our vertical segments. Media's 9-month revenue was EUR 686 million and accounted for close to 40% of group revenue. Total revenue remained stable year-over-year as inorganic growth effectively offset anticipated segment contraction in the media business. On a like-for-like basis, Media was down low teens year-over-year, driven by structural declines with capacity optimization in mature markets, standard definition channel switch-offs and the full Q2 and Q3 impact of a Brazilian customer bankruptcy. Media continues to operate as a highly accretive cash-generating business for SES. Year-to-date, we have signed EUR 440 million in long-term renewals spanning well into the next decade and new business reiterating customer confidence. Year-to-date, the media business gross backlog stands at EUR 3.3 billion. SES' media business serves close to 2.3 billion viewers worldwide, ensuring sustained reach and future revenue visibility, underpinning the cash-generative nature of this business. While the world's TV viewing trends are changing and are in structural decline, we expect the curve to flatten as free-to-air, free-to-view and sports and events become more prominent and remote regions continue receiving TV access most efficiently via satellite. Now moving to Page 14. Our Networks business comprises around 60% of total group revenues for the first 9 months of 2025. Networks revenue increased 36% year-over-year, driven by growth in government and aviation. The same trend is also valid on a like-for-like basis with growth in networks driven by the same 2 segments. Government in the first 9 months of 2025 has seen strong demand and growth in both the U.S. and global markets with revenues of EUR 491 million for the first 9 months of 2025, a 33% growth year-over-year. On a like-for-like basis, government is also growing double digits despite the timing impacts that Adel mentioned. Growth was driven by demand of European and global governments, completion of project milestones in the period and managed services in the U.S. We expect this vertical to drive continued growth as we see increased demand for our secure multi-orbit resilient and sovereign solutions. Amid the ongoing geopolitical shifts and rising global tensions, we are seeing governments prioritizing sovereign capabilities and robust communications infrastructure, particularly in Europe, where defense spending is increasing. SES is well positioned to meet these needs with our proven multi-orbit solutions and growing track record of trusted partnerships of serving the European and U.S. governments as well as allied governments. Our Aviation business continues to be a strong growth business for the company, now at a bigger scale, thanks to the Intelsat acquisition, supporting over 3,000 aircraft tails. The first 9 months revenue stood at EUR 223 million, showing 112% growth year-over-year with continued momentum in securing global airline customers. On a like-for-like basis, this segment has seen a double-digit growth year-over-year, thanks to increased commercial traction around our multi-orbit ESA antennas. This strong commercial momentum and these new installs are a key driver for future revenue growth and showcase our strong value proposition in a competitive market. The Fixed & Maritime business achieved EUR 339 million in the first 9 months, showing 13% growth year-over-year. On a like-for-like basis, revenue was declining year-over-year due to the competitive headwinds, primarily in our fixed data business, in combination with our rationalization and prioritization of capacity to our growth segment. We continue to hold our footing in our maritime business, where demand for MEO capacity remains high. Finally, Networks combined gross backlog stood at EUR 3.8 billion, having secured close to EUR 1 billion of new business and renewals this quarter with a strong aviation and government pipeline. Our strong growth backlog and robust pipeline support our forecast and future growth momentum, reflecting the market's demand for our strategy and multi-orbit solutions as being essential to meeting evolving connectivity needs. Now let's turn to Page 15 to share with you a more detailed view of our capital allocation priorities and our debt maturity profile as of the 30th of September 2025. Our combined like-for-like adjusted net debt to adjusted EBITDA ratio stood at 3.7x after closing the Intelsat transaction. This includes cash and cash equivalents of EUR 965 million, excluding EUR 266 million of restricted cash related to the SES-led consortium's involvement in the IRIS2 program. We remain firmly committed to deleveraging and meeting our near-term debt obligations. Our debt maturity profile is well distributed. The current debt portfolio carries a weighted average cost of 3.9% with 84% of SES debt at fixed interest rates. Furthermore, the weighted average maturity of our debt facilities stands at approximately 5 years, providing a solid foundation for financial flexibility and long-term planning. In terms of capital allocation priorities, our objective is to pay down debt to at least 3.0x adjusted net leverage. With existing liquidity and our undrawn committed facilities, SES is well positioned to meet near-term obligations, including the debt falling due in Q4 2025. We continue to make solid progress in our insurance settlement discussions related to the first mPOWER satellites. To date, we have successfully collected approximately USD 87 million. We will provide further updates as settlement negotiations progress. We continue to invest in innovation with discipline to drive sustainable growth with a focus on new space technologies and transforming our approach to capital deployment. This shift aims to reduce reliance on large-scale CapEx cycles. Capital expenditures in the first 9 months totaled EUR 335 million, primarily reflecting milestone achievements in the mPOWER satellite program. With respect to shareholder returns, SES continues to be sector leading. We paid the interim 2025 dividend of EUR 0.25 per A share and EUR 0.10 per B share on the 16th of October. Subject to shareholder approval, this is expected to be followed by a final FY '25 dividend of at least EUR 0.25 per A share and EUR 0.10 per B share to be paid to shareholders in April 2026. Once the company meets its net leverage target, at least a majority of future exceptional cash flows of the combined company will be prioritized for shareholder returns. SES remains focused on improving its financial metrics. Our priority is deleveraging while selectively investing in growth where returns are clear and accretive. Capital allocation remains disciplined. Slide 16 outlines our disciplined financial management strategy, underscoring our commitment to driving long-term value for shareholders. We are focused on the seamless integration of Intelsat, implementing best-in-class processes, policies and combining enterprise resource planning systems while maintaining operational excellence. As part of the acquisition, we are implementing SEC compliance measures to align with regulatory requirements supporting the combined entities' governance framework. We continue to exercise prudent capital deployment with strict capital discipline, aligning investments with our strategic priorities and applying strong business case rigor. Finally, cash flow remains a central focus of our value creation strategy. We are actively implementing initiatives to enhance cash generation across the business from disciplined capital allocation to optimizing working capital. Cost control and optimization remain top priorities, managing discretionary spend, leveraging automation and driving synergies. We are committed to a strong balance sheet and healthy cash flows, supported by targeted working capital initiatives and disciplined investments to drive sustainable growth. Lastly, I would like to thank all of our teams at SES for their hard work and precision through a complex integration. With this, I'd like to hand it back to Adel for his closing remarks. Adel Al-Saleh: Thank you, Lisa. On Page 18, I'd like to set out our company's full year 2025 outlook on a reported basis with Intelsat fully consolidated from 17th of July 2025. Based on our solid first 9 months results and at an assumed average euro versus U.S. dollar exchange of $1.12 for the full year 2025, we expect the following: revenue to be in the range of EUR 2.6 billion to EUR 2.7 billion, adjusted EBITDA to be in the range of EUR 1.17 billion to EUR 1.21 billion. Capital expenditures to be in the range of EUR 600 million to EUR 700 million. This is a -- this is reduced from our previous communicated 2025 CapEx guidance of around EUR 1 billion for the combined company on a full 12-month basis, and it's comparable to around EUR 800 million to EUR 900 million on a reported basis. Also in light of FCC's recent press release with regards to the C-band process, it's worth adding that we're now with our combined asset base even better positioned to continue working collaboratively with the commission and our customers throughout the upper C-band process. The draft notice of proposed rulemaking, also known as NPRM, will see comments on a range of options, including auctioning up to 180 megahertz of the upper spectrum and is scheduled to vote at the next open commission meeting on 20th of November. The One Big Beautiful Bill requires the FCC to complete a system of competitive bidding for at least 100 megahertz in the upper C-band no later than July 2025. I would like to conclude our presentation today with Page #19, highlighting some of the key takeaways. This year, 2025 is very much about laying the foundation for the new company. It's also a period of transformation and transition of the 2 companies with quite different systems and scopes coming together. 2025 is all about getting the basics right. Next year, integration activities will continue as we tackle enterprise systems and processes, focus on optimizing our structure, driving operational efficiency and excellence and of course, delivering the synergies. Our near-term priorities are clear: integrate the new SES, execute synergies, delever, focus on innovation and multi-orbit solutions, operational excellence and disciplined capital allocation. Our key management objective remains to drive profitable growth. To achieve this goal, we're rationalizing our portfolio and allocating capacity and resources in a disciplined manner into businesses that are aligned with SES' strategy and provide us with the best returns. We are on an exciting journey building a leader in space. As we move forward together, we'll provide greater clarity and insight into the combined potential of the new SES with our full year 2025 results. With this, we're now ready to take your questions. Operator, please open up the floor. Operator: [Operator Instructions] The first question comes from Paul Sidney from Berenberg. Paul Sidney: I had 2 questions, please. Firstly, just following up on the Q3 EBITDA headwind remarks that you made during the presentation. Could you expand on how profitability expectations for the second half of this year have changed since the Q2 results compared to previous stand-alone expectations of SES and Intelsat and maybe try and quantify these headwinds for us, please? And then secondly, looking beyond 2025 with reference to the new '25 guidance, are the medium-term targets for the combined revenue growth and EBITDA growth for the targets, are they still relevant, i.e., is SES just resetting to a lower 2025 starting point, but when the synergies come through, we can expect those growth rates sent to -- still be very much relevant for the business? Elisabeth Pataki: All right. Yes. Thanks, Paul, for the question. So let me first start off then with talking a little bit more about Q3 EBITDA and then also what to expect going into Q4. So if we think about what the combined company looks like, we had always expected that the Intelsat combination would have a lower EBITDA performance in the second half. And that's really attributed to some of the things that we had already known. So the first is in the aviation business, the electronically steered antennas, they're effectively at cost. We're installing a significant number of those antennas we started in Q3. So you can almost expect that we didn't have that at this time last year. They're all being installed in Q3, and then that ramp is even going to occur even further in Q4. So those are at cost. And then when you start to see those aircraft go into service, that's when you're going to see more meaningful EBITDA performance out of the aviation group, which you can expect then into 2026. But in terms of aviation and how to think about that, you are going to see the headwinds going into Q4. The second thing is on the Intelsat side, the IS-33 satellite failure did occur at this exact same time last year. So while the company did a great job retaining almost 90% of their customers, they did so through the use of third-party capacity. So you're seeing a lot of that headwind occur throughout the second half as well. And then just to kind of follow up on what Adel had mentioned with respect to our government. The U.S. government is a very good profitable customer for us. But with timing delays, we are seeing certain awards and renewals push out into 2026. We may see a little bit of pickup in Q4 with the U.S. government, but it really depends a little bit about when the government shutdown resolve itself. So those are kind of the major things to think about in terms of Q3, Q4. On the exchange rate topic, we're kind of planning with an exchange rate of $1.16 when you think about the fourth quarter. Obviously, we've had quite a bit of headwind with the weakened U.S. dollar. The other thing, I think, just kind of when we look at how we're putting these 2 companies together, we do have U.S. GAAP to IFRS conversions. That has started to filter through some of the results. I do want to make sure that you're all cautioned that the guidance that we've given and the results to date do not include the effects of purchase price accounting. So we'll be going through those -- that activity throughout the fourth quarter. We hope to have the majority of those impacts included in the results for the full year. We've got intercompany eliminations. We did report on that in the F-4 filings. They're more or less holding constant with what we had expected. But that just gives you a little bit of a flavor on Q3. On your second question related to the medium-term targets, I'll start off and then Adel can fill in. We're in the middle right now of going through our planning cycle. We're about -- gosh, we're almost 4 months into this acquisition. We've spent a lot of our initial time focused on synergies, and that's been related to a lot of headcount actions that we've had to take. We've been combining the 2 plants. We have been converting accounting standards. So we're putting those plans together right now, and we're looking forward to communicating as early as we can at the start of 2026 on the updated midterm guidance. Adel Al-Saleh: Thank you, Lisa. Just a little bit more on beyond 2025. There's nothing today that would change our perspective on this business going forward. The portfolio is well balanced. We have growth businesses. We have some businesses that do have structural decline, but generate a lot of cash, and we have a business that is facing quite significant competition. But all of that is known to us. This is -- none of it is new, right? We all knew that. We understood it. Our portfolio was very similar in a stand-alone basis. So there is nothing on a go-forward basis that would be different from our earlier assumptions on how the profile -- growth profile of the business should be. I hope that answers Paul your questions. Paul Sidney: Yes, obviously, it does. So we're looking at the longer we look forward, shape of how the business progresses hasn't changed, but clearly some headwinds that we brought into 2025. Is that a good summary? Adel Al-Saleh: That's a good summar. Elisabeth Pataki: Yes, that's a good summary. Operator: The next question comes from Terence Tsui from Morgan Stanley. Terence Tsui: I just wanted to explore the previous topic in a bit more detail just around the financial performance. So when I look at the guidance published today, it implies a pro forma EBITDA, i.e., if SES owned Intelsat since the start of 2025 of around EUR 1.5 billion of 2025 compared to EBITDA of EUR 1.8 billion delivered in 2024. Is the deterioration of EUR 300 million all due to these near-term headwinds that you just mentioned in your previous answer? Or is there something else going on? And then I just wanted to ask briefly around IRIS2. A quick update on that topic would be great, especially as we're nearing the 1-year anniversary. Are you happy with the process so far? And given the geopolitical tensions, do you see any scope for adjustments to the existing agreement? Elisabeth Pataki: Yes, sure. Thanks for the question. So I'll start off with the guidance and then your second question on IRIS2, Adel has a lot more of what's happening there. So on the guidance side, on a like-for-like basis, you're right that at the upper end of that guide would be EUR 1.5 billion on a like-for-like basis for adjusted EBITDA. That is down from the prior year. If we look at what the stand-alone guidance was, the guidance that legacy Intelsat had given out into the market did indicate that there would be close to a double-digit decline in EBITDA. So we're starting from that basis. We did discuss the headwinds, so I don't want to repeat those. On the government side, it is largely timing. The one thing I would just add to the commentary that we gave in the last answer is related to the fixed data business. So that business is more challenged than what we had expected. But as we did say in our prepared remarks, we are really critiquing that business. We're prioritizing where we're going to take deals, and we're starting to incorporate a lot more rigor into the bid process that we have here at the new SES. Adel Al-Saleh: And the same dynamics apply, right, so to the full year guidance. So there's nothing else new in there besides what we shared with you, right? So it just works itself through to the end of the year. Also intercompany eliminations and exchange rate changes and all those things are things that some of them we knew very, very well, and they're within the boundaries kind of where we thought they would be. So that's all in terms of that, Terence. And then on IRIS2, look, the program is in full swing. I actually spent a day yesterday at the Commission -- European Commission, met with the Commissioner of Defense, Space & Defense, and there were a forum that talks about European Commission's determination to build European sovereignty and capabilities. And IRIS2 is right at the core of that. because there is huge commitment behind it. We're working through all of the engineering activities that are required to get us now to one to make the final decision, how do we proceed? Are we able to meet the specifications, the timing, the budgets and all that stuff as planned, right? So that's progressing very, very well. And the commitment from Europe remains very, very strong to make sure that, that program continues going forward. So that's -- I think that's the update. Is that -- Terence, is that helpful? Operator: The next question comes from Ben Rickett from New Street Research. Ben Rickett: I have 2, please. Firstly, so leverage is obviously a bit higher than you'd initially expected following the transaction close. I just wanted to check, are you still committed to staying investment grade? And what sort of options could you look at if you didn't delever naturally as quickly as you had expected? And then second question, just around the C-band process. And specifically, I was interested in what tax rate you're expecting to pay on any incentive proceeds from the C-band and the extent to which you can use the tax losses? Elisabeth Pataki: All right. Yes. So on the leverage, so we're very committed to delevering. That is our -- one of our primary pillars of our financial policy. So we're very committed to that. Again, as we're kind of turning through the process of putting together our 2026 plan, which we will share at the beginning of next year, I'll be able to give more concrete guidance on how we're thinking about the debt maturity profile and deleveraging. Right now, if all things are unchanged, we will pay back what's due in Q4 of 2025 with existing cash. So let's table more of that discussion until we get through the 2026 planning cycle. With respect to the C-band process, Adel, do you want to give an update on that? Adel Al-Saleh: Yes. And just to add on that one, clearly, as a company and as always, we've always had other measures that we always look at, right, and make sure that we have backup to the backup. We're a space company. So we're used to having backup to the backup to the backup. Those things we don't talk -- we don't disclose them publicly, but we're very confident of where we are, right? So as Lisa said, right, there's good confidence in our liquidity and what we'll be able to do going forward. And it's a priority. Delevering is a priority for us for sure. Look, on C-band, look, good news, right? I mean, overall, we're working hard with our clients, number one, make sure that we have solutions for our clients as we progress through the clearings. And clearly, the ambition of FCC is very, very clear. Now regarding what the tax rate, I'm going to let the IR team get with you then just individually and walk through it. But you got to keep in mind, we have a lot of knows, tax knows and a lot of tax assets that we have in this company that is hugely valuable for us as a company. But let's not speculate and talk about them here publicly. We can follow up with any analysts that would like to get a better understanding of what the tax rate may look like. Ben Rickett: Okay. And just -- sorry, just to follow up on the first question. So I mean, you're not necessarily committed to remaining investment grade. Elisabeth Pataki: We're committed to delevering, and we're committed to -- our objective is to remain consistent with the financial policy that we have laid out. But again, we have to work through the process of going through our 2026 plan. We are -- there's a lot of initiatives that we also have on the table that we're actively working. So for example, working capital management, thinking through rationalization of our existing CapEx profile, so that we can funnel the money that we have allocated over to lower cost new space initiatives that we think are going to help propel our growth going into the future. So it's really hard to give you a concrete answer on anything with respect to how we're trying to concretely get to numbers in 2026 at this point in time, but that's just to give you a little bit of flavor of what we're doing. Adel Al-Saleh: Yes. And Lisa, just to add to that, Ben. I mean, I know you want just a black and white answer. So the fact that we're focused on delevering, that tells you a lot. There are many other factors that we don't control of what the credit agencies do. So very hard for us to say how do we get there, right? But we are exactly on the same plan we were before. We got to get to the 3.0 and below, and that's what we're working towards, right? And we -- as Lisa explained it and I explained it, there are multiple levers that we have in the company in addition to operational rigor and operational cash generation that this company is known for. Operator: The next question comes from Roshan Ranjit from Deutsche Bank. Roshan Ranjit: I've got 3 questions, please, and I think broadly touching on the earlier topics. Adel, you mentioned the ESA revenues, and I appreciate that whilst they are lumpy, we have seen a slowdown in the, I guess, aviation growth rate this quarter on a like-for-like basis versus Q2. Now this is in the context of, I guess, capacity ramping up on mPOWER 7 and 8. So are you seeing new contracts coming through as that capacity is ramping up? And I guess, 9 and 10 has been launched. How should we expect the ramp-up of that capacity and I guess, contracts coming through in the coming quarters? Secondly, and I guess, more on the margin side, the third-party capacity being used because of IS-33. When can we expect that third-party capacity to be moved on to essentially on net? When will that all wash out? And just quickly on the CapEx, you saw a material reduction in the '25 outlook. Is that coming from savings? Or is that a timing effect and we should expect kind of that delta to be spread out over the next couple of years? Adel Al-Saleh: Roshan, just the last question was about CapEx, right? Why is the CapEx reduced, right? Roshan Ranjit: Exactly. If it's a push out or if it's the driver of the synergies. Adel Al-Saleh: Yes, very good. Look, let me start, and then Lisa will complement as we go forward. Look, first of all, on a like-for-like basis, our aero business is growing double digit. So it has not slowed down, right? And it's significant double-digit growth. And actually, we will see that ramp in revenue driven by the equipment continue in the fourth quarter. And as Lisa explained, I mean, this is all leading to then services revenue that is going to be accelerating going forward. And this was in our press release. So in our press release, you see that the third quarter like-for-like growth in aviation is 36.3% growth year-on-year, right? So it has not slowed down. It's accelerated actually this year. Now that will slow down in the beginning of the year despite the fact we do have 1,000 tails orders to transition to the terminals, but they are spread, right? In aviation, it's a quite delicate planning process, right, to getting planes out of service and making sure we do them in the maintenance windows, et cetera. But it will be spread more than what it is concentrated this year because the ramp-up really happened in third quarter. There was a little bit in the beginning of first half of the year. Fourth quarter, as Lisa said, is a major ramp-up, especially with American with them really eager to get to their Wi-Fi offerings in the beginning of next year. Now remember, your question related to 9 and 10 coming into service, today, it's very limited usage of MEO in the aero business. In the future, we expect to be a game changer when we put MEO in air. I mean there's a little bit of MEO usage in one of the Middle East, Asia Pacific airlines. We will be announcing that quite soon. They're going live very, very quickly, and they love it. It's a game changer. It's no big difference between a LEO or MEO on an airplane. And by the way, they're using standard antennas, right? So not even an optimized antenna for MEO, which our goal is to have an optimized antenna that is easy to install, that's cheaper than what we have today on airlines as our MEO capabilities ramp. Now on the 9 and 10 capacity, which benefits government benefits our maritime business, that is expected to go into use by beginning of 2026. Those 2 satellites have been launched. They're making their way to their orbits. There is some in orbit testing that needs to be done, et cetera. So beginning of 2026, that's where the capacity comes on board. And then we have 3 other satellites that we'll be launching in 2026 to get us to 3x of the capacity we have, right? And that capacity comes on to service in 2027. So that's all progressing. And look, we -- when we have all these healthy satellites up, we will have a lot of other options to consider how do we configure that constellation because we will have a lot more flexibility to be able to drive that mPOWER constellation, which continues to be oversubscribed today. Look, on that third-party capacity for IS-33e. So first of all, the Intelsat team did a great job securing customers, right? Because those customers have long-term contracts and long longevity in our business. It was important to secure them despite the fact that your cost dramatically goes up. We are working through figuring out how much of that capacity we can move over to on fleet. Our problem, of course, is it's not like we have dramatically excess capacity everywhere, right? That's our biggest challenge, right? We're quite highly utilized, including our GEO satellites. So we're working through that. And that's the thing that's going to be tough. I mean, Lisa talked about this discipline because we're going to be rationalizing what's the best return for our shareholders in using that capacity. And it means trade-ups. It's not easy as we have the -- if we had capacity, we have moved that already, right? Everything that we could have moved will move. Now it's about rationalizing what's the better return for the company, when do we do it, how do we not lose trust with our customers as we transition some of that capacity. But that's all going to happen during -- it's happening. And during 2026, as other contracts come to an end, we'll be able to rationalize it. I have no doubt we will manage that throughout 2026, beginning of 2027. And look, then the final question on reduction of 2025 CapEx. Look, this is the benefit. A big part of it is the benefit of this integrated company. Now for example, we decided we're not going to go for some of the satellite replacements. We're able to move some of the satellites to pick up some of the loads in areas where it was highly utilized. So the result of that is not just delays of CapEx, it's actually rationalizing. There were some delays, but it's not material if you look at the overall CapEx envelope. And part of it was not only saying, well, there is an overlap. Part of it was our decision to say, we're not going to do that. It doesn't have the return that we would like to do. Our teams would like to do it, but we said, look, let's rationalize the business case and came back to the conclusion that is not a good capital deployment approach for us. So that's how it kind of come together for now. Hopefully, we answered your question. Lisa, anything to add to that? Elisabeth Pataki: No. Maybe the only thing just to add is we're continuing to look at the CapEx. We've already taken decisions to stop some things. So I think we're in a good shape with where we're at with our integration process. Roshan Ranjit: That's great. And sorry, I should have clarified. When I said slowdown, I meant slowdown versus the growth rate in Q2. So as you said, 36% growth aviation in Q3 like-for-like. But my point was it was a slight slowdown versus the 45% in Q2 despite the ESA terminals installs. Adel Al-Saleh: So, very good comment. I mean, look, part of it also is we mentioned it is we did lose some airlines, right? So we're winning and we're losing and the balance is still quite good in our favor, right? So that is just part of the offboarding and onboarding timing differences and all that. That's why you see those dynamics change a little bit, but still quite healthy growth, right, if you look at it. Operator: The next question comes from Nick Dempsey from Barclays. Nick Dempsey: I've got 3 left. So first of all, just on that -- coming back to that midterm guidance point, will you give us numerical midterm guidance for revenue and adjusted EBITDA growth in February at your full year '24 results? The first question. Second question, am I right in calculating that at the midpoint of your adjusted EBITDA guidance, you will be -- you're roughly on track to be at about 4.0x net debt EBITDA at the end of this year, including leases and including only 50% of the hybrids and perpetuals the way you're showing it today? And the third question, inside that combined constant FX growth of minus 19.5% for fixed and maritime, did you see cruise revenues showing positive year-on-year growth? You've got more capacity coming through from mPOWER there's a demand in cruise. So did cruise grow within that implying the rest was down quite a lot? Elisabeth Pataki: Yes. So I'll take the first question on the midterm guidance. So at the start of next year, we'll certainly give quantitative guidance for 2026. And I think it's very fair to assume that we'll give ranges of the updated midterm at that point. In terms of the net leverage and how we see that towards the end of the year, again, a lot of it depends on still working through a little bit of the planning, but also from a cash flow perspective, there's things that we can do. So it's hard for me to speculate right now for you where we're going to land on net leverage by the end of this particular year. But again, we're doing everything that we can to control cash going out the door, accelerate cash payments coming in, all the working capital things that you would expect. Adel Al-Saleh: And paying down debt, right? We're going to be paying down significant amount in fourth quarter. So it's too early, Nick, to look at it. Look, let me take the last question and then see if we can -- if we have answered it. So look, cruise continues to be quite stable for us. I mean there's some noise in the numbers in cruise because you remember, we had periodic in the revenue both in 2023 and 2024. So the compares are -- 2024 and 2025, I have to say, right? So compares are a little bit different. But on a stable basis, if you look at our ships and what we have and who we serve, that is quite stable. I mean there was a big transition for a very large customer that just came across, right, and put a bunch of stuff. We have new vessels that we're winning. When you look at the build profile of the vessels, we continue to win much more than our fair share of the new vessels. So it just proves you that customers want to have multi-orbit on the ships, right? They have LEO capable solutions. Starlink is a very, very strong competitor there. But our value proposition continues to resonate with these guys, right? And they continue to extend contracts with us. As I said, 2 major cruise lines just extended contracts with us just last quarter going forward. So it remains a very stable business. Look, the problem we have, Nick, and I've talked about this multiple times, if I can give more gigabytes to our crew guys, they will consume it. They will consume, right? So we're eagerly waiting for 2026. And when we get the additional capacity, we're looking at can we optimize the network even further to be able to get to because it's not lack of demand. It is really our optimization of where the capacity is being used. And as I said, we have a big government customer base across the world that want a lot of that capacity and have booked a lot of that MEO capacity. And it's a tricky dribble for us, right? How do you optimize it without losing customer confidence and trust because we are a trusted partner. when we provide a solution to our customers, they can count on us, right? So it's not so easy for us to just move stuff around. But yes, it remains quite stable and the growth is going to come when we give them more capacity. Is that okay, Nick? Did that answer your question? Operator: The next question comes from Aleksander Peterc from Bernstein. Aleksander Peterc: I have a few. The first one will be on the actual momentum when I look at your year-on-year margin evolution in EBITDA for the pro forma entity. I see a 3% decline in Q1, Q2 and then that deepens to 7% in Q3. And at guidance midpoint, your implied Q4 is down 10.5 percentage points on the margin front. So I'd just like to understand if I understand correctly that you're going to be at roughly 38% EBITDA margin in the fourth quarter. And I'd like to understand if this is the worst point of the year and then momentum will improve from here? I mean why should we assume that this negative trend should stop now? And I think it would be helpful if you could quantify those one-off in the current quarter, the things that you outlined on Slide 12, all of those negative elements, how much are they contributing to this margin erosion? And I have a couple of follow-ups as well. Adel Al-Saleh: Lisa, do you want me to start and then you... Elisabeth Pataki: Yes, yes. Go for it. Adel Al-Saleh: Look, so you are right, Aleksander, you're absolutely right. I mean the headwinds that we talked about, I'm not going to repeat them, right? These are the headwinds that are contributing to that margin impact. They are not forever headwinds, right? So for example, our -- the content of the equipment, there's a large portion -- large content of the revenue is the equipment this year. By the way, not only in aviation, we also have equipment sales that a lot of our customers, big customers are buying the equipment that they need in order to turn up and light up some of the capacity that they bought for us that are already paying for it, but they need the equipment in order to do it. So that is -- it happens to us as it's a forecast for the future profitable revenue basically, right? If you have a lot of equipment, it means that you are getting new customers on board and they are going to be using. And that accelerates in the year, right? So it started ramping up in the first half of the year. It's accelerating in second quarter, third quarter. And fourth quarter will be high volume of that equipment, especially in aviation, plus some of the eliminations that we talked about, et cetera that have an impact. And IS-33e, you have the full impact of IS-33e in the fourth quarter, if you look at it year-on-year, right, when we've had to go and get the third capacity. So that in 2026 is not going to have the same profile. It will come down. That equipment sales will come down. And by the way, again, it's not that we're avoiding equipment sales. We actually like those equipment sales because we're very particular and very disciplined. We don't do equipment sales for the sake of equipment sales. We're doing equipment sales to turn on the volume on very high profitable capacity solutions that the customers are looking for. So that's the -- now I can't -- maybe, Lisa, you can comment. I can't make the math on the call on how many points it is and where do we end up with the margin overall. But you can see -- maybe, Lisa, you can add something to it or... Elisabeth Pataki: Yes. So I think there's a bit of a mix effect happening in the fourth quarter. So if you look on a like-for-like basis, which luckily the fourth quarter is going to be, you're going to have a lot of revenue growth that's coming from 0 to low-margin activities, primarily in aviation, which we just talked about. So the ESA installations, the kits are probably -- if you want to quantify that, it's probably 30% more installs coming in the fourth quarter than what we saw in the third quarter. And then on the government side, a lot of our higher-margin business is pushing out to the right. And that's just mainly due to timing effects that we're seeing on the U.S. side, and that's being supplemented by revenue that's more on the NATO and the European side. We do have some contracts that have a bit of lumpiness as they're percent complete type contracts, and we're seeing some of those material and subcontractors coming into the fourth quarter at very, very low margins. So that's what's driving the revenue growth from Q3 into Q4 because you will see that there's a bit of growth on a pro forma basis. And then on the EBITDA, again, it is largely being driven by the mix effect on the government side and on the ESA terminals. And you can -- if you want to quantify the ESA, you can think about that EUR 6 million to EUR 10 million. Aleksander Peterc: Okay. That's very helpful. So on the basis of what you just said, will we see, therefore, next year, a headwind from lower equipment sales because they're so high in the current year. And if my math is right, you have -- you're flat for revenue year-on-year in the fourth quarter at the midpoint of your guidance. So -- but this includes a lot of equipment sales. So as we go into 2026, you're going to see probably a headwind from that. So will we actually be able to grow next year like-for-like on ops? Adel Al-Saleh: So Alex, you're asking us to build a forecast for next year already, right? Look, we will give full guidance for 2026 and even beyond when we sit down with all of you guys in February, right? But I'd say one thing, right? So clearly, the equipment profile will change, right, both for aviation, but also for the government. It's not means 0 equipment. It will be other contracts we're signing that we're competing for that will drive early revenue driven by equipment and some of them have better margin than others, followed by a high-margin revenue business when we get to the solution and turn on the capacity and deliver the services. But as I said earlier, nothing has changed to date that would change our view of the company going forward. Nothing has changed, right? So therefore, we are prioritizing growth, right? But with a disciplined approach into revenue growth, we're prioritizing profitable growth going forward. And we continue to see the business that way, right? We haven't changed our view on this business despite some of these adjustments that we have to make in 2025 based on what you heard. That's as much as I can say right now without giving you more forward-looking forecast, which will come in February 2026. I apologize, Alex, I can't be more precise, but hopefully, you understand where we are. Aleksander Peterc: Can I just have a quick follow-up on the band. Are you striving towards a higher than 100 megahertz transaction there because that will be obviously your strong interest given that there's no CDRs on anything above 100 megahertz. Can we go to 180? Adel Al-Saleh: Excellent. And now I remember conversations we had with you guys the year before where we talked about 100 and how the CDR plays out. And you -- Alex, you're absolutely right, the CDRs only applies to the first 100 megahertz. Look, it's very clear the FCC wants to do more, right? It's clear, right? I mean you've seen the releases, press releases and we're in the middle of it. I do expect -- all the cards tell you that it will be more than 100 megahertz, but it's very hard to predict. By the way, you don't have to wait that long anymore because it's -- the ruling should come out on the 20th of November, right? So it's about 10 days from now, right, a little bit more 2 weeks from now, right, and so on. So that is really good news for us, right? And for our investors at the end of the day, right? So that's where it is, and we'll see where -- and like I said, given the scale that this company has and the usage we have of the C-band, we are really well positioned, right? And not only well positioned with the FCC and the commission and help them accomplish what they're trying to do, but also with our customers because we have a much bigger scaled network that we can think of solutions that keep the customers and not lose them as we clear that C-band going forward. And that's really good news, Alex, for us. So I will leave it at that, right? And then we'll see the news coming in and we'll all then reflect when we talk to you guys in February. Christian Kern: Operator, we've got time for one final question, which is in the line there. Operator: Yes. The final question comes from Stéphane Beyazian from ODDO BHF. Stéphane Beyazian: I've got 3 follow-ups, if that's possible. Just on the spectrum clearance on which you spent some time recently. Can you tell us a little more on the difficulties, how long that could take? And what could be the associated cost? I understand it's pretty early, but that'd be interesting to have your views on that. Second follow-up on IRIS2. I was just wondering if you think the final plans will be very much in line with the initial plan. I'm talking about the total cost of the project and the capacity, which looks relatively small in total, in my opinion, when it was announced. And finally, just a follow-up on the airline contracts. I was just wondering if there is anything you can share on the economics of the contract from an airline point of view, how your pricing is comparing, for instance, to Starlink? Is the pricing flat per aircraft or quite volume-based? Anything could be interesting there on the economics. Adel Al-Saleh: Very good. Thank you, Stéphane. Look, I don't want to get ahead of myself here on the clearing, right, and how long it will take. You can use the proxy of the prior clearance that we had, right, and so on. But it's not years and years, right? I mean -- and we've recommended a certain approach to FCC that I'm not able to share until FCC decides to publish it themselves where it could be accelerated, right, and moved quite fast. But this is FCC's decision, right? I mean they, at the end, will set the pace on where we do. We know the technical requirements and what it takes to do it. And the more you do, the longer it takes, right, which is not such a bad news. In terms of cost, to be very clear, we expect full cost reimbursement, right? There is no cost that we will have to cover without FCC covering the cost. And of course, we also expect that the rules will be very similar to the prior clearance, i.e., how the financials were set up for the clearance. Look, on the IRIS2, as I said, Stéphane, we're right in the middle of it, right? And we have a budget that we shared with the market in terms of what our investment is going to be. We have not changed it, and that is our ceiling. We're not thinking of going beyond that. The question we're all trying to solve for is, do we still get the return that we require in order to make this an accretive project. And that's what we're working, and it's too early to speculate whether or not. It does not meet our requirements, financial requirements, we will make the right decision for our company and for our shareholders. And our customer knows that, right? They know the importance. And this is a private-public partnership. So everybody understands in clarity what is expected. We know what the customer wants. They know what we need to do in order to be able to deliver. So we need to have a little bit of patience as we get through it. But you got to keep in mind, I mean, we announced -- Stéphane, I didn't major on it this time because I want to major on this discussion in February. We announced our ambitions for the next-generation meeting. I announced it in the Paris show, and we call it meoSphere, which is the next generation of our MEO capabilities that we desperately need as we go forward. IRIS is absolutely part of that. It's the foundation of that meoSphere. It's not another project, right? It's the beginning of the meoSphere, if you will, the core elements of meoSphere as we scale it and we grow it. So for us, we have a very clear plan as a company, how we're going to do meoSphere going forward. And the objective is to make IRIS a component of that, a foundation of it, but it has to meet certain criteria for us to make it work. So that's what we're working on. And by the way, it's important and significant in the future. It's not a rounding error. I'm not talking about the capital investment required. I'm talking about the revenue upside. We want to bring a massive MEO network into airlines. It changes the game of the airlines. The governments desperately want us to keep scaling that MEO network. We want to bring much more capacity into the government business. So it is a significant opportunity for us as we go forward. But we must do it right, in order to have the right capital returns. And look, on the airlines, and we can take it offline. Look, one of the biggest differentiators we have as a business is our flexible business models. We can do it per plane. We can do it per seat. We can do it for usage and the customers love that. That is a differentiator. And we have a very strict guidance on how we do the mechanics and how does the business case work, et cetera. But it's very flexible for the customer adoption. So customers -- some customers want to pay for investment upfront. Others want to recoup it over time, right? And et cetera. So each business model is adapted to what the customer needs are and as they adopt the Wi-Fi solution on the plane, which, as I said, makes it differentiating from our competition. Stéphane Beyazian: Interesting. And if I can just follow -- can you hear me? Christian Kern: Yes, we can, Stéphane. Stéphane Beyazian: Yes. And just to follow up on that, in general, in the recent contract, the aircraft prefer pricing per seat, per usage or per aircraft in general. Adel Al-Saleh: It varies, Stéphane. It's interestingly, it varies. Customers who have experience with Wi-Fi and have enough capital capability to do it, they want to pay a lot of things upfront. Customers who are experimenting and rolling out for the first time, they want to see it based on passenger usage. And for us, it works, right? I mean both -- all of these variations, they work for us and so on. So it really is different, and it's not one dominating versus the other. Operator: There are no more questions at this time, sorry. So I hand the conference back to Christian Kern for any closing remarks. Christian Kern: Thank you so much, Gaya, and really thank you to everyone joining this call. I hope you found these answers helpful and to assess the Q3, 9-month results. Any follow-up questions, please contact Investor Relations at any time. We're here to help. Thank you so much, and have a good day. Adel Al-Saleh: Thank you, everybody. Operator: Thanks for participating in today's call. You may now disconnect.
Robin John Harries: Good morning, everyone, and welcome to our Q3 earnings call. I'm very pleased with the development of our last quarter and with the opportunities ahead of us both in mobile and with waipu.tv. In mobile, we see strong opportunities for efficient customer growth through optimized marketing mix, through optimized web shops, through a reduction in churn and through the acquisition of mobilezone. And with waipu.tv we also believe that there is huge potential for further customer growth and even more profitability. I'm very excited about the final sprint of The Year and an initiative-rich '26, which will mark our transformation into an AI-first telco. There's a lot to do, and we are on it and looking forward to it. I would like to thank our entire team for their hard work and their courage to discover new paths. I'm truly enjoying this. And I'm -- and we are just getting started. I also want to thank our CFO, Ingo Arnold, working with him is a real pleasure. We have rolled up our sleeves and he has been a tremendous support. Let's dive into the presentation and our key messages. We can confirm our '25 guidance. We are on track. We can show strong key financials. Our most important postpaid and TV service revenues are growing and our adjusted EBITDA grew nicely 1.6% for the first 9 months and for the last quarter, even 4%, Waipu.tv IPTV has been a driver in our EBITDA, contributes nicely. It's a fantastic product, not only growing in terms of customers but also getting more and more profitable. Our free cash flow in the first 9 months is growing nicely with 2.8%. And yes, so we are on track in Q3, impacted by the communicated tax one-off, but fully on track. We are also very pleased with our customer growth. Postpaid net adds even exceeded our expectations. Waipu.tv growth recovers, and we are here on a strong path, and we will continue. freenet TV is declining, but this was also expected. We are focusing on waipu.tv by continuing to monetize our user base at freenet TV. We can confirm our '25 guidance. And when you look into our strategic initiatives in the Mobile segment for our organic growth, we are focusing on 3 pillars. It's optimization of our marketing mix and optimization of our web shops and reducing churn. In terms of marketing mix, we are shifting budgets. We look at the return on ad spend. We don't do just pure brand marketing. We always connect it with direct performance impact, clear messages. And yes, so we improved the transparency of our campaigns. We improved the reporting. We really put the money where we see a direct impact. Conversion rates, I mentioned it last time, the conversion rates on our web shops, they are not there yet where we want to have them. They're not great yet, but we are getting better and better, and we see strong improvements in the last quarter. The page speed improved drastically. We have a better user experience. We create kind of urgencies on our website. All of this helps. And there's still a lot of stuff to do, but we can already see that it's working. And the third pillar is that we are working on churn reduction. If you look at the top 2 reasons why users change their mobile provider, it's either they get a better offer somewhere or because they are not happy about the network connection. So this does not make sense when you look at freenet because we are really offering great deals. We are able to match the most aggressive offers, and we provide all networks. So there's obviously no reason for users to leave us. And so therefore, we are working on it. We see a huge potential in reducing our churn. We have created more than or developed more than 50 initiatives to reduce the churn to bring it down, and we are working on it. And yes, so this is, I think, one of our drivers -- success drivers also for next year. When we look into our customer value management, we also try to use AI wherever we can use it. So whether we look at the customer service, if you look at telesales, if you look at smart pricing, so we try to apply it everywhere, do smart tests, don't do crazy things, but there's -- we believe there's huge potential and we are on it. And besides all of these 3 pillars, of course, we are also constantly trying to improve our other channels. We are very happy about our stable retail business with our almost 500 stores, our strong online and off-line partners, and we are optimizing this as well. In September, we started our first performance-based brand marketing campaign with klarmobil. So we produced a new TV spot. We changed the website, improved the UX. And there was a clear message. So when you look at the TV spot, you can see that there was clear branding, but also clear messaging, a clear offer, and this was reflected in the successful numbers. We could increase the visits significantly and also the conversions and sales. This was a very successful campaign. We have the next campaign in October. We see and also the team see that it's working. It's driving sales on one hand. And on the other hand, it will also create more brand awareness. And klarmobil is one of our top brands. Together with freenet, it's important that we increase the unaided brand awareness and performance-based marketing campaigns will help to reach this goal. We are very happy about the mobile subscriber growth in the first 9 months and also the last quarter. Within the first 9 months, we could increase our customer base, 190,000 postpaid customers. If you look at our historic data numbers, you can see that this is quite a lot, also the last quarter, very successful also when you compare it to last year. So we can see that the initiatives, the things that we changed that they are working. We also are very happy about the renewal of our -- about the 5-year renewal of our strong partnership with the MediaMarktSaturn, it's important channel for us. And yes, next steps, so we will keep doing what we have started in the last quarter, looks promising. And besides this, there's also one big thing that's coming at the moment when you look at our -- I mean, the strongest brand that we have is freenet and we do advertising with freenet. So there, you can see our strongest product, mobile phones, mobile plans. But at the moment, it's on the domain freenet-mobilfunk.de. And if you, for example, go to freenet.de, you can find the news and e-mail portal. So -- and this is not ideal, yes. So you cannot do marketing efficiently with freenet if people or if users then search on Google and end up on freenet.de where they don't find the offers that you do advertising for. So this is something that we changed, we made the decision to change it, and this will be in place beginning of next year. And then we will do advertising for mobile phones and mobile plans on freenet.de. And then we will also start marketing campaigns, performance-based marketing campaigns for freenet.de. So this will increase the conversion. This will be much more efficient than in the past. And so then we believe that this will be a nice potential for the next year to really increase numbers for freenet and increase the unaided brand awareness for freenet as well. And besides this, one big thing is you heard about it, we already disclosed it, we bought mobilezone. This is a strategic acquisition. mobilezone, it's a really strong company. It's a sales machine. So they -- every year, they generate over -- they close over 1 million contracts. It's one of our strongest competitors. They are very successful, they have many nice brands like sparhandy, deinhandy. And yes, so we acquired them. Yesterday, there was also news that the antitrust approved the acquisition. So we are in the process of closing the deal. And this will give us much more -- even more sales power. So consolidation in the market, I think it's healthy, makes a lot of sense if you look at allocating resources about the offerings, so makes us even stronger. We'll -- and I think it's also good for the entire industry, for our partners. We have really healthy relationships to Vodafone, Telefonica, Telecom also to 1&1. And so we believe that this makes us even stronger and that will enable us to further support them. Waipu.tv, I mentioned it. We believe it's a fantastic company. We could show in Q3 subscriber growth again and also nice profitability. It's -- for us, it's important that we have a company that's not only growing, but also getting more and more profitable. I think we proved both of this with waipu.tv, very happy about it, it's developing as expected. So -- and we also believe that in Q4, we will see even stronger growth and that we are on track to reach our guidance for '25. Waipu.tv has started -- has just started a new campaign which is promising it's -- they offer a start-up package with a TV stick and a no-frills product for just not so much money. It's an entry product and which will help to -- for people to experience IPTV and this great product. And so afterwards, we believe that there will be upselling opportunities. And besides this, we also started to do marketing with bundles where we bundle mobile plans together with waipu. And all of this, we believe, is really is -- makes a lot of sense and will bring us or leads us into the right direction. Yes, with this, I hand over to Ingo. Ingo Arnold: Thank you, Robin. So I start as normal with the group financials. I think we are -- and Robin already commented, I think from my side, there's nothing to add. We are really, really happy with what we generated during the first 9 months of the year 2025. We are totally on track to reach our guidance. So in terms of revenues, you see in the quarter, a slight decrease of revenues, I think, main reason, and we will -- I think you will hear the name of the company, The Cloud more often than in the years when we owned the company today. But I think it is important to show the deviations what we do have in -- on the group level, but also on the mobile level. So here, I think what we lost here in revenues with the sale of The Cloud is something like EUR 10 million. So without it, also in Q3, there would be a small increase of revenues. So all in, it's a confirmation of the guidance where we promised moderate growth for the gross profit. I think, much more positive than the revenue development. We see an increase of the gross profit in the quarter by even 7% on a 9-year base, 4.3%. It is definitely driven by the IPTV. I think we are so happy that this is the first year where we do not only generate growth in the base of waipu.tv but where it is also possible to make the business much, much more profitable. And you see the effect here even on a group level. Moving to the adjusted EBITDA, strong quarter, 130 -- nearly EUR 138 million, which brings us to EUR 395 million up to the end of September. And I think I did the calculation in August. I do the calculation again what is necessary to reach the full year guidance. I think it is relatively clear that from EUR 395 million you need a quarter and you need an EBITDA of something between EUR 125 million and EUR 145 million to reach the guidance. And compared to the performance in the third quarter, I think this looks totally doable. And I'm even more convinced now than I was in August to reach it. So moving to the Mobile business. I think, yes, definitely, the revenue looks a little bit disappointing. But on the one hand, again here, there is the reason from the missing revenues of The Cloud in the full quarter. And if you would add the EUR 10.3 million, the difference would be much smaller. On the other hand, we -- and this is something what we already commented in after Q2, we had some no-frills, some prepaid revenues where we could not generate any profit. And to make administration easier, we cut some -- we terminated some of these contracts. This makes a lot of sense from our side. It has a few negative effects on revenue. But as you see, moving to gross profit, this does not have any profit effect. The gross profit in Q3 slightly decreasing. Also here, it was something like EUR 3.5 million, which was missing from The Cloud. If you would add it, I would say it is something like a stable development, Q3 to Q3 and the Q3 '24 was a strong one. So all in, there is an increase in gross profit to nearly EUR 527 million. Moving to the adjusted EBITDA. Also here, we are near to what we had last year. It's a stable development and making the same math, what I did on the group level, what we can see here is that we need an EBITDA of something like between EUR 100 million to EUR 120 million in the fourth quarter, and then we would reach the guidance. Maybe a small comment to marketing spending because we discussed it intensively after the second quarter. And the good news is that even with all the campaigns, what Robin was talking about and all the action and the big growth in the customer base, it was possible to decrease the marketing spending in Q3. So I think in the first half of the year, we spent something like EUR 6 million more in '25 than in '24. But in Q3, we spent less than last year. I think we have some long-running contracts with some brand marketing partners, which does not make that much sense. But I think it is not easy to terminate these contracts. Some of them are still running. So I think there will be a full saving effect from stopping these contracts in 2026 but also in Q3 and in Q4, we will see something comparable. Marketing spendings are down. And I think the results are still affected from the negative first half spending what we saw. Moving to some KPIs of the -- in the mobile business. Yes, Robin already commented. I'm really surprised how strong we are in terms of postpaid net adds. I think we discussed during the year to reach something like 200,000 net adds for the full year time. I think definitely, it will be far above 200,000, what we will reach I think it is still a surprising quarter as ever, the fourth quarter because of Black Week and so on. But I think we are more than on track here to grow the postpaid customer base. Well, we are not that good on track, but I think this is a market problem what the whole market does have is still that the ARPU is decreasing. So what we see at the moment with the growth, what we generate, it is possible to overcompensate the ARPU effect and I'm positive and optimistic that this will also continue in the next quarters. But I think it is a pity and it is market driven. I think we discussed it already in the other quarters. It's not a freenet problem. The market is slightly aggressive. Still, we hope we can come back to a rational, a more rational behavior in the mobile market here. So we are not that unhappy that there will be a CEO change at Telefonica because we saw them very aggressive in the last quarter. So I think this could help to repair the market here. So we are basically optimistic for the following quarters, but -- and this is clearly shown on this chart here. At the moment, the negative trend for the ARPU is continuing. But clear message service revenues are slightly increasing. So it's possible for us to compensate it. Digital Lifestyle revenues, the last picture here on this chart, I think you all know that we were behind plans at the beginning of the year. We could close the gap now. So we are totally on track compared to last year. And yes, I'm even positive for the fourth quarter to see a slight increase here. Moving to the successful TV business, revenues and all financials are mainly driven by the positive waipu.tv developments. What we do see in revenues is in the quarter and even an increase by 10% for the full year, it increased by 7.5%. I think the fourth quarter was a little bit influenced by a media barter deal. What is a media barter deal? It is that we have these deals, these contracts with the private channels. And therefore, we get on a -- at the end of the day, we get some marketing to place -- some channel plays there for free but we have to show it in our figures. So on the one hand, you see it on the revenue. But on the other hand, you see it on the marketing cost. So at the end of the day, these marketing campaigns are for free. But you show it on every level here. And so therefore, we made it clear or we try to make it clear and we wanted to make it clear because especially the development in revenues and in gross profit is slightly exaggerated from these deals, and we want to have positive figures, but we want to have honest figures. And therefore, we mentioned it here that there is an effect of EUR 5 million even in revenues and in gross profit. On the adjusted EBITDA level, you see that we have an increase compared to last year. Waipu.tv EBITDA year-to-date is something like EUR 25 million. So it's a perfect confirmation that the business cannot only grow but that the business can also generate EBITDA. And I think this is -- I think we discussed it earlier times that we expect something between EUR 30 million and EUR 35 million of EBITDA from the business. And I think we are totally on track here. We have lower marketing spending. This is something what we discussed earlier together. This definitely helps in the fourth quarter. Yes, I think we need some marketing campaigns. We need and we want to generate some growth in the fourth quarter. But I think we are also on an EBITDA level, we are very optimistic to reach the goals what we do have. Last page from my side is the free cash flow bridge. I think -- most of you should not be surprised that we have the negative tax effect. I think we -- to be honest, we expect it for years. And now we really got it. So we had to pay something like EUR 20 million for the period 2015 to 2018. I think we are not at the end of the road here because we also took legal action because we -- I think we had a -- we built provision years ago, and -- but we took legal action now. And -- but the legal proceedings will take years to find an end, but we paid the EUR 20 million now because we have high interest rates to pay here in the meantime. And I think there are good chances to win the case. But for now, we paid the EUR 20 million. And I think let's wait and see. I think I do not expect a decision as long as I am here, as CFO. So -- that could be quite open. But there is a good chance to get the money back. But for now, the tax expenses are higher as expected. On the other hand, change in net working capital. It is a negative of EUR 32 million. I think those of you who are familiar with our working capital figures, know that EUR 26 million out of it is a liability or a reduction of a liability where we have to pay a monthly fee to Media Saturn. So out of it, it is more or less stable. Then the CapEx figure, EUR 26.8 million. It's near to what we saw last year. Lease payments. It's easy to calculate EUR 45 million now. So no surprises and interest payments, EUR 15 million. So I'm quite fine here. I'm also fine with the free cash flow for the guidance for the full year because what do I expect from change in net working capital, maybe some more investments in the fourth quarter into the business. So I expect something like EUR 45 million for the full year. I expect EUR 60 million for taxes, EUR 35 million for CapEx. Lease is easy to calculate, something like EUR 60 million and interest payments nearly to EUR 20 million. So this is also in -- the sum is the same what we expected or what we forecasted at the beginning of the year. And so I think at the end of the day, no surprises for all of us. And therefore, I think the guidance could be reached. So therefore, the overview from my side for the financials. So I would hand over to the operator again to start the Q&A session. Operator: [Operator Instructions] And the first question comes from Sofija Rakicevic, Goldman Sachs. Sofija Rakicevic: I have 3 questions, please. The first one is on the guidance. What are the main 4Q drivers that could push results to the low or high end of the guided range? The second one is on mobile. Can you please give us more color on your net adds mix? How many come from the lower end of the market? And how do you perceive quality of your customer base in general? And the last one is on the marketing. So I'm just wondering, can you compete effectively in 4Q without a big marketing increase for both waipu.tv and mobile because we are heading towards Black Friday and Christmas. Ingo Arnold: Yes, Sofija. Thanks for your questions. From my side for the guidance. I think if I would have a clear plan where we would end, I would already have told you. I think there is good chances to end on an EBITDA level between EUR 520 million and EUR 540 million. I think it is correct that we have to look, and it's -- I think the question to the guidance is linked to your last question about the marketing spending. I think we want to grow the business. And therefore, if we see chances, especially during Black Week to increase our customer base in both segments, then we would -- then we have to decide what we would like to invest. So it's difficult to say from today's point of view. So I cannot -- and this is something I think we have not published a guidance which is -- which narrow band because it is still open. I think we will watch the market. And if there will be chances to grow and to have a profitable growth, we will use the chances. And -- but I think this is the main reason why we are not more concrete on the guidance now because as typical during Black Week and during Christmas business, there could be so many chances. And we do not want to miss chances and opportunities. And therefore, I think it is still open. But basically, I would not expect a big increase in marketing expenses compared to last year because also last year, we had the Black Week and we had a Christmas business where we were. And last year, we were very aggressive. So I would even expect that even with a strong and growth-oriented philosophy in the fourth quarter, I would expect marketing expenses to be lower than last year. Robin John Harries: And related to your question regarding the mix, we have different brands. We have brands like Mega SIM, Dr. SIM, Happy SIM, where we have aggressive offers and then we have klarmobil, it's something in between. And then we have our premium brand, which is freenet. And at the moment, we -- freenet is not ready yet. I mentioned this. It does not make too much sense to do advertising with freenet if it's not on the freenet.de domain, yes. So therefore, we don't invest into brand marketing campaigns, we rather focus our activities on the other brands like klarmobil and the other brands where we have better conversions. So this is what we are doing at the moment. And so therefore, the -- it will be, I think, relatively similar to the last quarter. But if we look into the next year, I mentioned it that we want to scale the performance based brand marketing investments for freenet as well, and this is an opportunity for us because with freenet, this is our premium brand. We will be able to also sell for more -- for healthier prices with higher ARPUs. We will focus on mobile phones. We will position freenet as a premium brand. And I think this is a nice opportunity for us next year. And then ideally, we have a freenet as our premium brand for mobile phones with nice brand marketing campaigns but based on performance, so we want to sell. Then we have klarmobil our brand for mobile plans for good prices that make a lot of sense. And then we still have our -- where we -- more aggressive brands like Dr. SIM, Happy SIM, Mega SIM where we try to get users in a more aggressive environment and compete against those brands who think they can be more aggressive. Operator: And the next question is from Ulrich Rathe, Bernstein. Ulrich Rathe: I have 2 questions, please, if I may. The first one is on the service revenue situation. I think you highlighted that this is owing to the market backdrop at this point in time and that is not necessarily a big concern from a managerial perspective at this point. Could you talk about how you see this unfold. I mean what's your base case here for the market backdrop and the service revenue performance in 2026. And related to that, this sort of slight compression on the service revenues, how does this affect your gross margin? I mean that's ultimately a question how the cost to the MNO hosts scales with service revenue performance? And my second question is on the Media Saturn renewal economics. That's more technicality, I suppose. But you talked about this EUR 5 million incremental barter deal in -- sorry, in the third quarter. Is that related to the renewal, should we add that to the renewal? And have you agreed to a different cost compared to the prior contract with a multiyear contract with Media Saturn in the current renewal which explain the economics of that another EUR 5 million sort of fits into this. Robin John Harries: This is Robin. Thanks for the question. Regarding the service revenue, as you -- I mean when you look into the Q3 numbers, you can see the ARPU, but you can also see strong mobile growth. Overall, the effect of both is positive, and we expect that also, if we look into the future, we -- as I just said, we want to also more marketing with freenet. We believe there's a fair chance to sell products with higher prices to increase the ARPU, this might have a positive effect as well. Yes, that -- I mean the market is -- the competition in the market was tough in the last month. I think, is what's driven by Telefonica. So there are some changes. There were -- they announced that there will be some changes. Hopefully, this will be healthy for the market, for the industry, but we are prepared. We have many opportunities to grow our subscribers -- our marketing channels through our website, through performance marketing, through performance-based marketing, to not lose so many users by optimizing our churn. So there's really a lot of potential for us to grow. And so therefore, it also will put us in a situation that we will hopefully also be able to sell for better prices, which are more healthy for us. So therefore, we are quite confident. Ingo Arnold: Yes. From my side, Ulrich, I think you also asked what effect does the service revenue has on our MNO contract. And yes, definitely, this is very relevant. I think in earlier times, when I started in the business, all were only focused on growth of customers, but this changed during the year. So the contracts, what we do have with the MNOs are mainly based on revenue, on service revenue. And so yes, it is important to generate service revenues, but I can only confirm what Robin said. I think that there are -- and I work in this company for a long time, I never saw so many initiatives here to increase the number of customers. And therefore, if we could combine it with a stabilization of the ARPU, I think, and you asked about '26, I have no -- I'm not afraid of '26. I think -- I'm more afraid of the fourth quarter now because this will be difficult to -- and this is what we saw during the year. But with all the initiatives, what we saw -- what we see and what we have here, we are much, much more optimistic for '26 in terms of service revenue than based on '25. Then you asked about the Media-Saturn one-off of EUR 5 million, I think this is, is it linked to the contract? Or it is not linked to the contract? My official answer is not linked to the contract. But I think it's definitely only -- it's only a one-off and it is not by accident that the one-off happens in the same year when we renewed the contract. So -- but this is something that will not happen again in the next years. And what happened -- what has not happened again in the last years. So therefore, it's a typical one-off. It is not typical. I think we have other payments what we do pay -- what we do grant to Media Saturn, but this is definitely a one-off. Ulrich Rathe: Ingo, can I just sort of follow on this comment, which you put into a sub-clause that maybe you're afraid of Q4. Could you just for clarity, explain what you meant by your afraid of Q4? Ingo Arnold: Yes. I think what we see at the moment that is that the service revenues are growing, and we are happy that they are growing, but they are only growing by small euro effect. And so -- can I be 100% sure that in the fourth quarter, it is plus EUR 3 million or minus EUR 3 million? No, I cannot be 100% sure because the effect, the positive effect is not that big that I do have a lot of headroom. So -- and this is the -- I do expect stable service revenue for the fourth quarter to make it very clear here and to clarify it. So thanks for your question. But what I do expect for '26 is that we are not only see a stable service revenue but a growing service revenue. Operator: And the next question is Siyi He from Citi. Siyi He: I just have a question on this redefinition that you put through on the adjusted EBITDA. I think now your adjusted EBITDA is including [indiscernible] sales and restructuring. I'm wondering if you can talk us through the thinking behind that. And also, it seems that the adjustments led to around EUR 10 million uplift on your 2014 EBITDA, but you decided to not change the full year guidance of '25. I want to understand the thinking behind that as well. And finally, just on the free cash flow bridge, you have kept the free cash flow guidance unchanged. But it seems that the CapEx guidance is now reduced from EUR 55 million to EUR 35 million. I want to check if that is a sustainable reduction on CapEx. Ingo Arnold: Yes. So thanks for your questions. I think the -- what is the reason why we started to report an adjusted EBITDA at the beginning of '25 or -- in '24. What we saw were from the sale of the IP addresses. We saw a very positive effect, and it was the idea to show an adjusted EBITDA, which is really based on the ongoing business. So then this year, we had a similar effect from the sale of these IP accounts. And in addition, we had the sale of The Cloud. And so this was also a positive effect in the EBITDA, which we wanted to correct. So I think we were -- we were very open here, and we were very transparent and corrected the EUR 25 million of positive effects this year. On the other hand, what we saw were that, and you all know that we reduced the number of board members here. And we saw a -- and the restructuring, the amount of EUR 6 million is more or less only the payments, the severance payments, what we had to do to the leaving Board members here. So this is definitely also a one-off. And in the thinking, what I was describing before to only show the ongoing business. Therefore, we decided that we use the adjusted EBITDA to correct the EBITDA by the effects in both directions. And so therefore, I think we changed it. Then you had a question about the full year guidance. And yes, you are correct that there was a -- that with starting putting all the effects in the -- on the adjustment list we had also to adjust the year 2024. And you asked if, therefore, the guidance should be increased. My answer is that we do not guide a delta to the year before. What we guide is an absolute EBITDA amount for the year, and we calculated the EBITDA for the year, which was from the beginning, something between EUR 520 million and EUR 540 million. So with a change of EUR 24 million, we do not change our guidance. Your question to the cash flow bridge. Yes, you are correct. To reach the full amount of the bridge and to have a comparable amount to what we forecasted at the beginning of the year, we had to reduce the CapEx compared to what we forecasted at the beginning of the year. I think we expect, especially from the radio business -- from the digital radio business we expected more spending during the year. This has not happened. It is not -- it was not necessary during the year, and it will not be possible to catch up here in the fourth quarter. So from my point of view, the EUR 35 million, what I said is I think this is a strong figure, and I do not see any big risks here. Operator: The next question is from Florian Treisch, Kepler Cheuvreux. Florian Treisch: I have 2 questions. The first one is for Robin, I mean in the Q2 -- sorry. In the Q2 call, you made very clear that you want to change the marketing strategy, the customer journey. I mean, this is what you have underpinned today with the presentation. So my question would be a bit when do you really expect, let's call it, first tangible impact. I mean you mentioned in the presentation that they are first positive signs. But to really make a difference, is it fair to assume that this will only happen over the course of '26 and how relevant is the closing of the mobilezone transaction to support that journey. The second question is on waipu.tv. I mean you have seen an improving momentum in Q3. So the first question would be how much of that is driven by lower headwinds from the O2 shift. And you flagged high confidence in a good finish to the year. Can you also quantify your expectations here? And do you expect this momentum to stay as strong as in Q4 entering 2026? Robin John Harries: Yes. Thanks for your question. Regarding the impact, so we could already experience the impact in Q3. So far, in Q3, we only did 1 campaign. It was a short campaign, was 2 weeks brand campaign. So I mean, it's just like 1 month out of 3 months. So therefore, the impact is not so big. But if you just isolate this campaign, and if you look at the visit uplift, it was very strong. The conversion rates were very strong. We improved the user experience on the website for klarmobil and also the sales numbers. This was a very successful campaign. And we just started the second test in October. And also, again, a small test. That's how we do it. Yes. First, we shoot with bullets. And then with cannonball balls. At the moment, we are still in the stage of shooting with bullets. So we do small tests, but they are already very promising. And yes, so also for the plan for next year, we then scale their investments, but they are performance based. That means that it's not that we are burning money. If we scale the investments, this will be also lead directly to more sales, so positive impact. And at the moment, we just do the first test with klarmobil. As I mentioned, we are preparing the freenet.de domain, will be done beginning of next year. And then we will also scale and freenet together with klarmobil. So most of the impact will come next year and also this year, but also for Q4, we are -- I mean, if you improve the conversion rates on the website, you'll see directly a positive impact because visits are rather going up. End of the year, we have some nice campaigns. And then it's -- at the moment, it's a little bit, but most of it, you will see in the -- over the course of next year. This was your first question then you asked for mobilezone. I mean, mobilezone, they -- it's still not closed. I haven't checked their conversion rates. And so their return on ad spend, how they do it. If you look at top line numbers, you can see that they are very successful. They have strong brands, Sparhandy is a strong brand, Deinhandy is a strong brand. They -- I think they do a very good job. They have good -- they have a good performance. And yes, after closing, we will look into how we can benefit from it. I'm sure that there are synergies. If you look at allocating resources, if you look at positioning of brands and all that stuff, this will be, I think, healthy for us and for the market. Regarding waipu.tv, there was -- still impacted by the end of the partnership with O2, yes -- old O2 users are churning. But even though we are growing and if you look into Q4, we anticipate that there will be a much stronger growth than in Q3. This will, I think, a strong quarter. There is -- I mentioned that they just started campaign for the strong starter package, then we have some campaigns where we bundle it together with mobile plans. This also makes a lot of sense. Then there's a Black Week. We are quite confident that we will see a nice subscriber uplift in Q4. Operator: And for the moment, the last question is from Simon Stippig, Warburg Research. Simon Stippig: First one would be, I wonder about your long-term guidance, 2028 or your long-term aspiration in 2028. Because certainly, by your acquisition of mobilezone and Germany segment, you should get a bump in growth. And you also mentioned the marketing contracts. Longer term, you could cancel in 2026 as I understood it. And then additionally, you expect from your campaigns quite some growth in the next year and beyond, hopefully. But on your presentation, you kept your longer-term aspiration in 2028 unchanged. So can we deduct anything from that? Or will you review that in due course? And then secondly, tied to that is the financing of the transaction. You mentioned you will or you will debt finance it and you have a bridge loan in place. But then you will receive around EUR 150 million in H1 2026 from the CECONOMY sale of your stake. And will you then lever up a little bit from your 0.5x net debt to EBITDA currently? Or do you intend to use that cash for financing the transaction. And lastly, I saw until the end of October, you bought back EUR 60 million in shares. Will you continue to buy back shares until the end of the year and then you stop or will you continue to purchase back shares until you have fulfilled the full volume of your EUR 100 million. Ingo Arnold: Yes. Thanks a lot for your questions. I think, yes, I think maybe in all levels, the long-term guidance could be different, and this is normal during the years. But I think what is important for us at the moment is that we stick to the whole amount to the EUR 600 million of EBITDA, for example. So we stick to the guidance 2028. I think we -- earlier or later, yes, we have to recalculate the levels and have to decide if it could be even more than EUR 600 million or if there could be changes between the levels and between the effects. But from our point of view, the most important thing is at the moment that we stick to the guidance. And yes, definitely, we will recalculate it during 2026. And then we -- maybe I think we have not decided when we give an update to the guidance 2028, but I do expect it for 2026, whenever in 2026. And then I think we -- all your points are correct. But I think this does not change the big picture for now or this does not make it less probable that we reach the guidance, it makes it even more easier to reach the guidance. So therefore, I think during 2026, we have to think about it internally. We have to -- have our discussions and then we will come back to you and to the market definitely. Then you asked about financing of the transaction. We use a bridge loan, which has a duration of 12 plus 6 plus 6 months. So we are not in the hurry to refinance it at the moment. But we do also have some promissory notes due in November. So what I would expect for the first quarter is a transaction with promissory notes where we refinance our debt. And yes, there's the chance that we partly repay the debt by the EUR 150 million. What we could get from CECONOMY, and we hope that we will get it during the first half of the year, and this will only change the volume of promissory notes, what we would do. So at the end of the day, there will be a slight up on the leverage. This is what I would expect. If we spend EUR 230 million on the one hand and if we do get EUR 150 million on the other, there is a slight increase, but I think this will not change the world. Concerning the share buyback, yes, you are correct. We spent something like EUR 59 million at the moment. So nearly EUR 60 million. And we announced during the year that we will pay at least the EUR 60 million, which was the cash overhang from 2024. So we spend it now. I think we will look into the cash flow development during -- until the end of the year. If there will be some room then we would invest more. If there is no room, then we would stop the program at EUR 60 million. But I think this is not clear. We have no final decision. We will decide based on the cash development in the fourth quarter. But I think we have done the EUR 60 million. So from today's point of view, I would not expect any additional share buybacks during the year. Simon Stippig: Okay. Great. And maybe if I can one follow-up on the bridge loan. Could you tell me the conditions of the bridge loan, like what you're paying there and interest costs? Ingo Arnold: I think they are relatively lower than what we pay in other instruments at the moment, but this is -- it is difficult to say what the margin on a bridge loan is because I think this is typical for a bridge loan that in the first 6 months, you pay much lower rate than an average market rate. And if you use it for longer, then it's getting more expensive. So I think the main information is that at the moment, it's much cheaper than what we pay on our outstanding promissory notes. Operator: And the last question is from Dhruva Shah, UBS. Dhruva Shah: Just a couple on waipu.tv. So it's clear that you expect an acceleration into Q4 of around 180,000 net adds to meet the EUR 2.2 million guidance for the end of the year. But one bigger picture question is just how do you see the competitive environment in the IPTV market? And then perhaps more specifically, if a large part of the growth you expect is going to be driven by the lower ARPU entry-level products or the bundling with klarmobil, how do you weigh up the balance between financials or ARPUs and volume in that unit going forward? Robin John Harries: Thanks for your question. And the competitive environment, so we believe that the product is superior. So when you look into ratings, reviews, when you test the product, it's really a fantastic product that makes a lot of sense, yes. And I think it's one of the best, maybe the best product in the market. Also, when you look at growth rates, I think it's outgrowing competition. It's really strong, yes. So therefore, I'm not afraid of any competition in the German market. I believe if we do our job, so there is no reason why we should not grow. And in terms of -- the offers at the moment is a start-up package. So -- but there is also a clear path for upselling. That means that we want to make it easier for people to switch from the old world to the new world, to experience the product, make it easy. And so therefore, it's also a product where you don't have or the channels is something where you can get to know the product. And then later, after a certain time, we will show you the -- like the entire world, the entire product you can experience it. And if you like it, you would have to pay more. So -- and I mean, I think it's normal for advertising for and promotions that you go out with reduced pricing. That's the same in the mobile world, but then you need smart upselling. I think we are quite good in it. And then there are also convincing arguments why you should do the upselling. So therefore, yes, it's -- and this is something that we have been doing throughout the year. There were always promotions and campaigns. Nevertheless, you can see that profitability went up quite nicely. And this is something that we are -- that we believe will also happen during the course of next year. We will further grow the customer base. We will further grow profitability and generate more EBITDA. So there, we are fully on track and absolutely convinced about the product and don't fear any competition in the market. Operator: And if there are no further questions from the audience, I would like to hand back for closing remarks. Robin John Harries: Yes. Thanks for attending our earnings call. So as we've said, we are very pleased about the quarter. We are confident about the outlook for '25. We are excited about '26, many, many initiatives. We have a very motivated team, open mindset. They show a lot of courage, they want to explore new opportunities. It's really -- it's a lot of fun. It's a very good vibe, good spirit here. And I'm very confident that we will keep delivering. So therefore, thanks for your time and looking forward to the next call.
Operator: Dear participants, we warmly welcome you to today's conference call of the SUSS MicroTec SE following the publication of the 9-month results of 2025 earlier this morning. SUSS is represented by the CEO, Burkhardt Frick; CFO, Dr. Cornelia Ballwießer; and COO, Dr. Thomas Rohe. The Management Board will speak shortly and guide us through the presentation followed by a Q&A session. But before we start the presentation, let me hand over to Sven Kopsel from Investor Relations. Sven Kopsel: Thank you, Sarah. Yes, and many thanks. Welcome to our Q3 conference call. As you probably know from earlier calls, this call is again being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on Page 2 of the slide deck. It applies throughout the conference call. And now I hand over to our CEO, Burkhardt, for some opening remarks, followed by our CFO, Dr. Cornelia Ballwießer, presenting the financial development. Burkhardt, please. Burkhardt Frick: Thank you, Sven, and many thanks, and welcome, everyone, to this call. I will go a bit faster over the next few slides to have more time to focus on the margin analysis you guys are all interested in, I'm sure. We showed the next page, we showed this exactly this page already 9 days ago in the extraordinary call. So nothing new here. The changes -- there are no changes to the figures since then. We also mentioned the low level of EUR 70 million in orders received in Q3. After various customer meetings in Korea and Taiwan last week, I'm very happy to report that activities are picking up in the fourth quarter. Orders exceeding EUR 100 million are likely. We do see quite some momentum here. We already communicated last week about the pressure on margins and the fact that we had to adjust our guidance for the gross profit and EBIT margins once again. I will go into details of margin development in a moment. However, I would like to state that the current margin pressure does not impact our 2030 ambitions. We will present our new midterm expectations at our CMD on November 17. Last week, the development of our 2 segments was not yet included. So I'd like to highlight a few things here. First, Advanced Backend Solutions. The order intake remains strong for coaters, but this was not quite enough to offset the decline for bonders. The demand for our UV scanners remain intact. Imaging and Coating Systems showed year-on-year sales growth of larger than 50% each. Bonders still showing slight growth after 9 months. Gross profit margin significantly impacted, more on this shortly. Photomask Solutions, we have a very low order intake again. Orders from China now down EUR 32 million versus previous year but more significant orders expected in this Q4. Still high year-on-year sales growth, but Q3 sales was lower than expected. Unfavorable product mix is the main reason for low gross profit margin of 31.7%. Now we have prepared 3 pages where we compare our initial 2025 guidance for sales, gross profit margin and EBIT margin with the actual year-to-date 9 months figures. Firstly, on sales. After 3 quarters, we reached EUR 384 million or 78% of the midpoint of our sales forecast and therefore, are on track and achieved what we expected to do. Q3 sales, as expected, was EUR 118 million, lower than previous quarters. Reason here lower order intake in the first half of 2025. In the fourth quarter, we need sales of EUR 85 million to EUR 125 million to meet our forecast. EUR 105 million would, therefore, leads to the midpoint, which is EUR 490 million. The product mix is different as planned at the beginning of the year with more coaters and fewer bonders based on orders received in the first half of the year. The recent postponement of 2 high-margin projects to 2026 will have a negative impact on gross profit margin in Q4. Now we'd like to provide more transparency on our negative gross profit development. Let me first explain the methodology we applied here. The table on the left shows our actual figures for the first 3 quarters. These are the left columns and a projection of what our gross profit would have been if actual sales had a gross profit margin of 40%, which is the midpoint of our original forecast of 39% to 41%. Our analysis shows we have a gap of EUR 16 million, which we like to explain. On the right-hand side, we allocate these EUR 16 million to special effects, quantify them, specify the timing and if these effects can be considered as one-offs or not. From top to bottom, first, the UV scanner in Taiwan, the ramp we performed there in the first half of the year. We had extra expenses for training and supply chain efforts amounting to EUR 3.2 million, and that's a one-off. Secondly, we had a write-down on discontinued technology projects amounting to EUR 2.2 million that affected Q2. Also, that is a one-off. Expenses for our new site in Zhubei, EUR 1.2 million for double rent relocation and utilities, they affected us only from Q3 onwards. And they will have -- this will have an impact on expenses in Q4 as well as in Q1 2026. Rework during assembly and customer ramp-up support amounting to EUR 2.4 million since Q1 were necessary to support customers to improve performance of recently installed multiple lines and maximize the output and availability of these in the field. This was really important and is an ongoing effort and it also will open the door for follow-up business, which we are, of course, looking forward to expect. The last point is the unexpected product and customer mix changes, which we often use also to explain deviations in our margin. This is for more coaters, less bonders, many low-margin photomask tools for key customers, and that results in also lower fixed cost coverage due to lower sales and overall business activity. That amounts to EUR 7 million in Q3. In total, EUR 16 million of which slightly less than half can be characterized as one-offs. Now on this page, we focus on the EBIT. We applied the same methodology. Left column shows the actual development of first 3 quarters, right column, the projection with midpoints of initial gross profit and EBIT margin targets, which was 15% to 17%. The gap here is EUR 7.2 million, which means that more than half of the gross profit gap of EUR 16 million was offset by stricter cost management and a positive balance in other operating income expenses. According to the original guidance, we allowed for OpEx of EUR 92.3 million after 3 quarters and would still be on track to achieve the original EBIT margin targets. The actual OpEx, that is expenditure on R&D, sales and administration amounted to EUR 86.8 million. This shows our short-term cost-cutting measures are having an effect, savings of more than EUR 5 million compared to Q2. In Q4, OpEx is expected to be below EUR 30 million. However, most likely above Q2 level based on increased expenses on IT and digitalization projects as well as rising R&D costs also to support scheduled product launches. I think I said above Q2, I should have said above Q3, right? Yes. We will correct this, and you will see it also in the tables. Now after all these numbers, here are a few impressions from last week's opening of our new site in Zhubei, Taiwan. It was an amazing day with a great atmosphere. We welcomed over 100 guests, including Taiwan's Vice Minister of Economic Affairs, a C-level representation from a leading HBM manufacturer and management from the top foundry in Taiwan. We got a broad confirmation that it's important to increase our presence close to the heart of the semi industry sector. We introduced our large clean rooms and made it clear that we are set for future growth. First modules and tools are already being built in Zhubei and will be delivered to our customers in early 2026. Leases for all old locations will terminate by the end of Q1 2026. The financial double burden will also end at this point. And with this, I'd like to hand over to Cornelia to provide some more insights on our financial performance. Cornelia Ballwießer: Thank you, Burkhardt. After we've already discussed Q3 in detail, I will just summarize some additional developments on the next slides. We already talked about the slow order intake, which leaves us with an order book of EUR 276.1 million as of end of September. This is 35.9% below the level of the first 9 months of last year. Tool orders with roughly EUR 140 million are scheduled for delivery in '26. The visibility for '26 is improving. Our free cash flow from continuing operations came in at minus EUR 0.7 million in the third quarter with operating cash flow of EUR 5.9 million and cash flow from investing of minus EUR 6.6 million. After 3 quarters, free cash flow is now at minus EUR 28.2 million. For the full year, we still see potential to generate around EUR 28 million of free cash flow so that we could end up at end '25 in slightly positive territory. Total CapEx for the 9 months is EUR 17.8 million, mainly driven by our new fab in Taiwan. At the end of the year, we expect to land at CapEx level of EUR 25 million. In '26, we will return to a level of clearly below EUR 20 million. Without additional projects, the level will be approximately at EUR 10 million. On this slide, you see the development of our most important key performance indicators for the last 7 quarters. You can very clearly see the margin development, especially in the last quarter due to the effects we already talked about today. On this slide, you see the two segments. In the Advanced Backend Solutions segment, margins in the third quarter were roughly at the same level as in the previous quarter. Burkhardt already mentioned the most important drivers. In Photomask Solutions, the margin level is in the first 2 quarters of the year higher. Overall, we're still at 38.4% gross profit margin for the 9-month period. However, the third quarter was weak, mainly due to an unfavorable customer mix, as already explained. Here, you see our order intake by segment and regions. The book-to-bill ratio continued to remain at a very low level of 0.62 for the 9-month period. This is, of course, far too low for a company with growth ambitions as we do have. But as already discussed, we expect increasing orders in Q4. Demand from China continues to be very low. The China share of total order intake in the first 9 months of '25 is now 18.5%. In '24, also after the third quarter, the share was at roughly 30%. But generally speaking, we do not have major shifts in the order intake by region. Finally, let's go over the main developments of the balance sheet. Total assets increased by EUR 22 million. For the noncurrent assets, the main driver was the Taiwan expansion with the right-of-use asset for the site and further installations at the site as well as CapEx in Germany, which we already showed in our half year report. Current assets, we have a decrease by EUR 29 million to a total volume of EUR 413.3 million. Inventories declined and are now EUR 12.9 million below the value of end of December '24. Contract assets and trade receivables increased by EUR 22.7 million. Cash and cash equivalent decreased by EUR 41.8 million due to free cash flow in total of minus EUR 31.5 million and the dividend payment as well as repayments of financial debt, including the leasing liabilities. On the liability side, the main changes also happened in the first half of the year with the inclusion of the leasing liability from the Taiwan site. In noncurrent liabilities, the major driver in the 9-month period was also the inclusion of the lease liability for the Zhubei site, which already happened in the second quarter. Current liabilities decreased. Here, the major drivers are still lower advanced payments from our customers who supported last year's ramps and less orders from customers, which have prepayments. After the 9 months, the equity ratio is at 58.2%, which means we improved the equity ratio while we had our ambitious investments. Burkhardt? Burkhardt Frick: Now let's turn to the outlook for 2025 as a whole. First, here is a page that was already shown last week with the reduced guidance ranges for gross profit margin and EBIT margin. Everything stays the same as communicated last week. Last week, we already explained that we are discussing possible measures to sustainably improve the cost structure. However, I ask for your understanding that all decisions will be carefully considered. I do not currently expect that we will be able to communicate these possible measures already in 2025. For now, our full attention lies on Q4 to bring in the anticipated new business and set the stage for 2026. We are now opening the floor for your questions. Thank you. Operator: [Operator Instructions] We will start with the first raised hand with Janardan Menon. Janardan Menon: I just want to go back to the order increase that you're expecting in Q4. 9 days ago, you had said that you would see an increase in orders. You said above EUR 100 million is possible. But at that point in time, you had also just commented that your Q4 is always typically quite strong. You've seen a very healthy double-digit increase in quarter-on-quarter in your Q4 orders in both 2024 and 2023. So my question is, this increase that you are expecting in Q4, is it purely a seasonal thing? Or do you see an underlying trend of improving orders amongst your customer base? And -- especially, you have been seeing quite low orders on the temporary bonding side. And one of your big customers looks like he's -- they're getting qualified or have got qualified, who knows. And so is there a clear upswing that you see in that market? Also on the UV scanner, are you seeing an upswing? What I'm trying to get at is the sustainability of this order. I mean it may not be huge, but does Q3 mark the bottom and then more than the seasonal, are we getting a more improvement into next year? Whatever your current thoughts are? Second question is just on the margin. Just trying to piece together the whole thing. You'll end up at about 36% gross margin this year based on your guidance. Are you -- do you think that as some of those one-offs go away in the first couple of quarters of next year? You're likely to get to a higher margin than that? Any kind of color on where we could expect based on current expectations? Where you assume your sales are down in line with consensus for next year? Where would your gross margin end up for next year? Any thoughts there would be great. Burkhardt Frick: Yes. Of course, we have to be careful in forward guidance, but let me start with the order intake. Yes, there has been some seasonality in the past years. But of course, customers order when they really have demand. And so therefore, I would not really call it seasonality at all. I would rather see it as a consequence of activity in the AI space picking up again. And that has been, of course, communicated for the frontline AI players already a quarter earlier, but it takes a while until this goes through the entire equipment chain and also leads to orders. So there's not an immediate effect at the moment a big memory supplier gets qualified or post their future plans, it will not immediately trigger orders. This is more a question of how utilized are your lines, how much throughput can you get on the existing lines and when is the next window to increase? And that seems to now nearer than before. And that's also why we are confident that we get AI-related orders in the first quarter and especially after those discussions we had with our lead customers. Now this will be a mix, of course. So there will be, of course, HBM-related orders, but also CoWoS or packaging-related orders requiring multiple systems, but we see a clear upward trend. How big this one is, as I said, well, I feel confident that it will be larger than EUR 100 million that -- I stick to that number. How large we have to see because we also have to make sure we can also deliver and build these machines on short notice because the demand is required on short notice. On the second question on the margin expectations, I can hand over to Cornelia. But of course, we want to improve our margin performance. There's no doubt in that. But even in line of potentially declining top line, we have to make sure that we do this with good sense. Cornelia Ballwießer: In terms of margin, of course, our ambition is to have a better margin or to achieve a better gross margin in '25. What I can say is it is probably lower as '24. Currently, we are preparing our budget. And as you see and as explained, the margin depends on the customer and product mix, and we are working on this. And that's all I can say for the moment. Regarding your one-offs, yes, there are, of course, one-offs that will not occur again in '26. For example, the write-down of the discontinued technology project, then our double rent relocation and utilities costs in Zhubei, in Taiwan will end, end of the first quarter '26. And yes, the rework, we will see. It depends how we can satisfy our customer or what is needed. But that's what I can say regarding the margin for the next year. Operator: So -- and then we move on with [indiscernible]. I can see that you're unmuted, unfortunately, we cannot hear you. Unknown Analyst: Can you hear me now? Operator: Yes. Unknown Analyst: Yes. Great. Sorry for the background noise. A few questions. On the order backlog, can you give a little bit the split in ABS segment? What is the CoWoS, the scanner part in the order backlog? And then in the cleaning equipment market, what is the part of the China business in the PS segment? In the backlog, right, not for order entry. Burkhardt Frick: Yes, we are not being specific on the individual products on our backlog. Please accept that because we do give this granularity. The China portion, of course, is declining, as already previously mentioned. We see it in both in sales, but order intake significantly. We have for China, for example, only 18.4% of the order intake are China bound. For Taiwan, for example, in contrast, it's close to 40%, that's usually what we can disclose. In terms of further information on the backlog, we have, of course, also announced that EUR 140 million of the current backlog is already bound for 2026. And we can also safely state that we have about EUR 20 million in service and upgrade business also for '26 already slated. Unknown Analyst: Okay. Maybe let me ask a little bit differently. On your CoWoS, I think the scanner is a little bit older technology generation, right, if I understood that correctly. And the question would be, what are your lead times? I mean when the customer places an order with your scanner business until you ship and final acceptance, what is the time lag there for the scanner business? Burkhardt Frick: Yes. For scanners, of course, it's around 6 months. But of course, as we stated also in previous calls, we tripled our output capability this year. That means also we are pretty full in that sense. So that's also why we concentrate on our main application field, which you rightly state is CoWoS. Now of course, we also get inquiries, how quickly can you top this up. And that's exactly the discussions we are currently having with those lead customers because they expect basically deliveries already as early as in Q1 next year. So right now, we have very active engagements with these customers who also realize that our lead times reduced, but I think they are waiting really until the last second how to place orders. And then we also have to make sure that we can react very quickly, and that keeps us busy. But that's also causing a bit positive momentum of the last days. Unknown Analyst: Okay. And would it be fair to assume that the gross margin, the product mix impact was also due to this, yes, high volume ramp in scanner business and that this is a little bit more service intense for you in order to have the machines up and running with your lead customer, and that might change with the second generation of the scanner tool you are planning to introduce next year? Burkhardt Frick: Yes, it definitely will change with the next generation of scanners. But we need to distinguish between product margin and supporting efforts. So I think the supporting efforts of our scanner are not higher than other 2.5D or HBM type products. So you need to account for that. For some of our products, our support efforts were higher than anticipated, which I explained earlier, which caused the extra cost. But I mean, you're absolutely right that the scanner is not our highest margin product. Unknown Analyst: Got it. And then final one. If you look at your product mix or backlog, what you have right now and the EUR 140 million for 2026, do you expect that the share delivered from your Asia business will be substantially different from this year? I mean that you have much higher shipments in your Asia locations than here in Europe? And if so, what would be the incremental there, the incremental shipments? Burkhardt Frick: You mean shipments from or to. Unknown Analyst: No, from your Asian manufacturing footprint, right, your fabs in Asia. Burkhardt Frick: Yes. Thank you. So first of all, our regional mix will not change, except what we explained, the decline of the China portion. In terms of the products we manufacture out of Asia, they are the same products we are currently manufacturing. But of course, this can change if we are introducing new products. As you know, we are launching up to 5 new products next year. And we have to see also where we will produce those products. So there's a fair assessment, a fair judgment that the amount of products will increase, which we are going to produce in Asia. Unknown Analyst: But you cannot quantify like EUR 50 million more sales from your China -- Asia footprint and versus this year, it's not possible right now from your backlog? Thomas Rohe: No, that's -- I can answer this. We use both sides really pretty flexible in terms of where we do have rich capacity. So we try to leverage our load of factories in both sides as well as in Asia as well as in Germany. Operator: So by now, we have 4 participants left who raised the virtual hand. So please be patient. And the next one who is able to ask his question is Michael Kuhn. Michael Kuhn: I'll start with one on the guidance once more. If I just use the midpoint of your sales and gross margin guidance and then combine it with the midpoint of your EBIT margin guidance, I'm ending up at Q4 OpEx of EUR 34 million, which is clearly above the less than EUR 30 million you're envisaging for the final quarter. So let's assume you do midpoint sales, midpoint gross margin, is it fair to assume that you would rather end up at the upper end of the EBIT margin range, excluding obviously any one-offs you might book in the fourth quarter? Cornelia Ballwießer: We calculated various scenarios over the last past days. And if we achieve the gross profit margin in the middle of the range, let's say, 36%, it is likely that the EBIT margin will end up above the middle. Yes, could be. Michael Kuhn: That is good to hear. Then one more in the context of OpEx. So we are obviously in the upper 20s run rate-wise right now. This is still including some double costs. At the same time, I guess, IT costs will rise into next year. From today's point of view, what would you think is a realistic OpEx run rate to assume for next year, maybe from the second quarter onwards when you don't incur the double cost in Taiwan anymore? Cornelia Ballwießer: Yes, good question. Our ambition is that we have a run rate, let's say, EUR 30 million. Michael Kuhn: Around EUR 30 million. Okay. And last but not least, you mentioned product launches already. Obviously, those include new products in the Photomask area, including the mid-range product. Do you think part of the softness you see from Chinese customers right now is due to those customers waiting for those products? And that said, is there a chance of, let's say, a little China revival at some point next year once the new product range is available for orders? Burkhardt Frick: China revival sounds like the rolling stones in concert. But I -- obviously, the mid-end range of the mask cleaner is really geared for nodes between 30, 90 nanometers, which are the predominant nodes China is running on. In the past years, they bought very high-end equipment, which was basically overspecced because they don't have EUV equipment in China. So the mid-end range is a better fit for the Chinese market. So yes, we do expect that, that business will pick up once that system is in mass production. And we already have several reservations and quite some are out of China. But also, of course, this mid-end product is interesting enough to replace the aging fleet of old mid-end mask cleaners. Therefore, there is also quite some replacement need lining up. Operator: And then we will move on with Madeleine Jenkins. Madeleine Jenkins: I just have one clarification. The customer that is pushing for kind of expedited deliveries in Q1, I think you said. Is that memory or logic? Burkhardt Frick: It's fair to say both. It's not a single customer who is pushing. Madeleine Jenkins: Okay. And then in terms of -- on the kind of HBM side specifically, are you still running at like underutilization at your big Korean customer? Or is that kind of back to the levels where you'd expect incremental orders? Burkhardt Frick: Well, I think one -- we have 2 out of 3 HBM players. And one is really running at full swing. And then, of course, that's also the one which kind of further scales up. The other one, of course, is just about to accelerate again, and they still have, I would say, headroom left. So we don't see short-term excess business coming up there because I think they're not running at peak utilization. Madeleine Jenkins: Okay. So the kind of Q4 orders isn't necessarily driven out of Korea. Is that fair? Burkhardt Frick: Correct. Madeleine Jenkins: Okay. And then I just had a -- you've got a high-NA cleaning tool, Photomask cleaning tool coming out. Could you just give us a sense of kind of when you expect the first orders for that? And also what sort of ASP uplift versus the low-NA version? Burkhardt Frick: Yes. Madeleine, you're referring to the MaskTrack Smart cleaning platform, which is launching pretty much as we speak. So we are working with some lead customers who want to position this system in kind of -- it's more than just evaluation. It's kind of early production state. So we do expect that we get the first orders still this quarter for this first system. But we are, of course, in the middle of the negotiations, and it's important that we get this first volume customer order for that system, but we anticipate it this quarter. Madeleine Jenkins: And just on the ASP... Burkhardt Frick: Sorry, say again? Madeleine Jenkins: Just on the ASP, is it kind of significant uplift versus the last generation? Burkhardt Frick: It is somewhat more expensive than a MaskTrack Pro. But as you know, it highly depends on the configuration. So this is a tool which can be configurated to a larger extent and therefore, will be also more expensive than the existing platform. Operator: And then we move on with the questions from Johannes Ries. Johannes Ries: Also some follow-on questions to the cost side first. Maybe first, what -- the leasing cost for the old production side, which will fall away at the end of Q1, how high is this maybe regarding to the full year or for the remaining 9 months. Therefore, what is maybe the positive impact? Then maybe on the bonders, if the bonders recover, will they have the same margin like in the past, there have been maybe some special high prices regarding the shortage or maybe the urgency at the customer side to cut the products in the past. So are you achieving the same pricing at the temporary bonding side like in the past? And on the coaters, is anything possible also to increase the margins there because it seems that they have comparable low margins. I know there is more competition from Tokyo Electron, for example, but maybe also an update there. And you talked a little bit now on mask cleaners. How is the ramp for all the new products with better margins, the scanners? I have also something like you have a new coater coming on the market for next year. That's maybe all impacting a little bit the cost and the margin side. Therefore, I took all these questions in one. Burkhardt Frick: Yes. Thanks, Johannes. That's a lot of questions. Let me try to start taking them down one by one. So the bonder orders, of course, we had at the very early phase of the ramp, they did have somewhat better margins because we were -- these were rush orders. We had to expedite things. So once we got into real volume phase, also we had more volume prices applied to that. So the initial systems were more profitable than the volume systems. But this has stabilized now, so we don't anticipate unusual things there. So they are above average compared to the rest of the portfolio. On coaters, we have -- we keep getting stable repeat orders from existing OSAT customers. And that is a very stable business and also this customer continues to place these orders. There was also one of the customers I visited early last week. So we can also expect a good solid business there. You are absolutely right. The competitive situation is very strong. But when you're a tool of record, you at least can retain your seat, but you have to price competitively. And that's why coaters usually are more on the average spectrum of our margin. For the Photomask tools, we are launching, so the new systems, they are completely redesigned. They do have a different margin structure, but you cannot just increase margin without offering new features. So it's always a mix of both. Then I think you had a question on the rental cost, right? Cornelia Ballwießer: Yes. The impact of the additional rental cost for the old site rental cost that turns out in a positive impact next year is EUR 600,000 per quarter. Johannes Ries: Per quarter, okay. And when will the scanners be launched this new scanner generation, will it happen in the first half next year? Burkhardt Frick: No, I think that's a bit too early, but we will deliver the first system around, yes, mid next year to the first customer. And that's, of course, we get more feedback. The broad launch of the system is more towards the end of next year. Johannes Ries: Okay. Super. And also maybe there's definitely much more but not to go in too much details. The wafer cleaning product will also not launch next year or will it come over the next year? Burkhardt Frick: They will launch next year. And we kind of -- we get the first hardware at the turn of the year. And then, of course, we need to refine the processes. We have one lead customer who will start evaluating. And then we will have not only the volume tool because the first one is a 200-millimeter wafer cleaner, low volume, there will be high-volume tools coming shortly after. And we have -- since we kind of got quite some customer traction, we have now 300-millimeter customers interested in that tool as well. So we are also now checking how fast can we launch a 300-millimeter tool. So wafer cleaning will be a family of tools, the first one coming next year. Johannes Ries: Super. Great. Maybe also on our calculation for next year, you mentioned you have on top of the EUR 140 million in product backlog for next year, you have also 20-point something on service and spare parts. What is the normal number for service and spare parts for the whole year? I think it's more than EUR 20 million. Burkhardt Frick: Yes. Johannes, usually, it's about 15% of the total revenue. I think the numbers, I think we stated before were, of course, the first 9 months and then the portion of 26 out of those first 9 months. But I think it's -- you can roughly assume 15% of the total revenue is the service-related part. Johannes Ries: Only maybe a follow-on. You mentioned it already in the comments. The recovery you see maybe in the pipeline coming on maybe the whole back-end market and also driven also partly by the strong business with AI. It's not only the OEMs, it's also the OSATs you see a recovery. Burkhardt Frick: Yes. And they -- of course, they are somewhat connected because the 2.5D players, they are closely linked to OSATs as well. And you have all these new sites evolving based -- driven by CHIPS Act projects, which are also starting ramping. I mean all the big news were, of course, for the front-end fabs, but you also need the back-end operations somewhat close by, and that's starting to evolve as we speak. Operator: So before we move over to Martin Marandon, who is waiting for such a long time in the queue, please be reminded that it's still possible to ask questions if you may have. And with this, Martin, please go ahead with your questions. Martin Marandon-Carlhian: The first one is on temporary bonders. I was wondering there if you mentioned the AI demand picking up. There is also the qualification of one of your customers. But I was wondering if the transition to HBM4 is already a factor here because we know that the number of layers are increasing -- the average number of layers. So it should demand more equipment. So do you think it has started now? Or will we see these effects maybe a bit later? And I have some follow-ups. Burkhardt Frick: Yes, it's a good question. Of course, our -- at least one of our lead customers is in active pursuit of also planning the ramp for HBM4. And we received the good news last week that we are qualified with our temporary bonder for the HBM4 process. And that is good news because the ramp of that will start from late Q1 or starting Q2 next year onwards. Martin Marandon-Carlhian: Okay. That's very clear. And maybe still on temporary bonders. I mean, Johannes mentioned some competition with Tokyo Electron, but I was wondering about new entrants as well. So like EVG, for instance, if that's something that you see at some point, multi-sourcing in that market or you do not see it at the moment? Burkhardt Frick: Yes, we do see, of course, our competition. There are no new entrants. They are the same. They have been the same in the past years. And indeed, EVG and TEL are our main contenders there. And yes, they are actively pursuing our base. So yes, so this is happening to some extent. But I think for now, we have the majority of our equipment at those existing customers of ours. Martin Marandon-Carlhian: Okay. That's clear. And the last one is on the EBIT margin for next year. I mean, I know it's too soon to give a guidance. But I'm just wondering with the backlog that we see at the moment, it probably implies a down year next year, and you have the consensus down by about 15%. And I'm just wondering in that context, let's say, of a double-digit decrease of sales, how much space do you have to reduce cost on the OpEx side next year? Do you think that, for instance, mid-single digit could be a credible scenario if you have such a down year? Or is it too aggressive? Burkhardt Frick: You mean mid-single digit for what, which... Martin Marandon-Carlhian: For decrease of OpEx. Burkhardt Frick: Yes. I think that's a reasonable assumption. I think we need to stay below EUR 30 million. I think this was mentioned before. We also said that we will not reach gross margins of the heydays like '24. So we will be also there, I think, definitely below 40%, but above the numbers we are currently seeing. So because we have to compensate this with a lower top line. Operator: And now we have a further virtual hand from a person who has dialed in with the phone ending 847. [Operator Instructions] I can see that you are unmuted, but unfortunately, we cannot hear you. Malte Schaumann: Can you hear me now? Operator: Yes. Now we can hear you. So if you can please introduce yourself to us. Malte Schaumann: It's Malte Schaumann, Warburg Research. First question is a follow-up to the former question of -- related to Chinese waiting for the new tools and the environment of the demand. I would broaden that to the overall customer base. Do you see potentially among other customers kind of holding back because you're about to introduce new product generations? I mean you indicated a pickup in activity and in the pipeline. But do you see generally some customers holding back in light of the upcoming product workovers? Or is that not really the case? Burkhardt Frick: Yes, Malte, that's very hard to say because we cannot judge if they're waiting for new products, but some of these new products are only launching late next year. So if there is a demand and we don't have the right product, I'm pretty sure customers will order elsewhere. So if they wait, of course, good for us. But we -- where we see a kind of more wait behavior that's on the mid-end cleaner because that is the right tool for that market. There, we get a lot of inquiries. But of course, we have to get the first tool out first before we can be bullish about that. But other than that, we, I think, see customers simply wait till the last moment until they order and then they are rushing and then we have to see how we can, even with our reduced lead time to make it happen. That's the current discussions we have also with our -- among our sites. Malte Schaumann: Okay. Then on the rework on some tools that impacted the gross margin. What caused that basically? I mean that this happens from time to time, but what caused it this time? Was it kind of design flow? Was it new customer demand? Was it the extreme -- potentially extreme ramp? And do you think that you more or less sorted these out? I mean you indicated that this is kind of mixed effect so might reoccur next year. So maybe you can expand a little bit more on that topic. Thomas Rohe: Well, Malte, Thomas speaking here. So the question cannot be easily answered, to be honest, because it's a lot of facts which really come into this point here. On the one side, for sure, our customers are also very demanding with the request for support there because they also ramped up in a pretty short time and really they already have by themselves a very demanding customer. So the support was really requested by customers to be there on site, sometimes even 24/7 to support this ramp-up of our customers, and this was really partially -- only partially anticipated, and we were really a little bit overwhelmed by the request and also the hard request from customers. Nevertheless, we supported them pretty good, I guess, and this is also why we still have really very good relations with these customers because they are taking us into account also for our next-generation HBM4, as Burkhardt already said. And also, if you go really in this steep ramp-up, we see sometimes also some topics which we did not see if we use our tools in a normal way or 2-shift way. So this is some, let's say, improvements, which we also did also because customers changed the process chemistry partially, where we also had some learnings together with our customers. And this is -- these are the main reasons why we had to support more than we anticipated before. Malte Schaumann: Okay. And the reason why you indicated that this is a mixed effect that you think you're not fully through, so that might reoccur? Thomas Rohe: I don't think that it might reoccur. We learned a lot and we learned together with customers and they let us learn together with them. So from that point of view, the learning curve also for us should go down so that we really reduce it. It will not go away completely, but it should really be reduced significantly. Operator: And we have further virtual hand from Nicole Winkler. Nicole Winkler: So basically, I have one left regarding operating cash flow development. So basically, in Q3, you turned positive again. Can you give us an indication what we should expect for Q4 and where we could end up for full year 2025? Cornelia Ballwießer: Yes. As you said, in Q3, we turned in terms of operating cash flow into a positive number. And we think that there is a good chance that we can end up at EUR 25 million in a positive territory. So this means in Q4, we will have or there are a good chance to have the EUR 28 million cash inflow that we need to get in a positive number. Sven Kopsel: That's for free cash flow, Cornelia, right? Cornelia Ballwießer: Free cash flow, yes. Sven Kopsel: And for operating cash flow, for sure, this would mean that this number should be a bit higher because we also still have CapEx ongoing. Cornelia Ballwießer: Yes, that's right. It's around -- yes, I would say, EUR 30 million, EUR 35 million we need in terms of operating cash flow. Operator: And then we have a follow-up from [indiscernible]. So you should be able to speak now. Unknown Analyst: A brief question on your next-generation scanner tool. If I remember correctly from your previous calls, this is also enabling panel level packaging, right? If so, if -- can you give a little bit color around -- I mean, what we hear panel level packaging could bring cost advantages to TSMC, et cetera, well above 30%. So the technology seems to make sense. But then can you elaborate a little bit, are you covering different parts of the manufacturing process? And can you give a little bit color on the competition part of the business? So are you working with one lead customer and you're exclusive there? Or are other companies in the qualification process as well? A little bit color would be great. Burkhardt Frick: Yes, [indiscernible], thanks for the question. I mean, obviously, yes, this is really for panel level packaging. This new UV scanner can handle both wafers and panel-level package applications. There will be several versions of that also with a path to 1 micron resolution. So it's also a more accurate system, but this will not be launched from the get-go. The first focus is indeed panel level packaging for that one lead customer whom we develop this closely together. So this is the launching platform. This will be applied in similar applications as spaces as the current ones, but we have access to more layers and more process layers than before. And also, it will open the door for more other customers because this is a very interesting field to be. So we will be able to broaden our exposure there. Unknown Analyst: And competition part? Burkhardt Frick: Well, competition is the same as we have now, which are I-line steppers and scanners, you have already in the market, but we currently have a lead over them in cost of ownership and throughput. And we, of course, want to maintain that lead. Operator: And in view of the time, we will come to the end of today's earnings call. So thank you to the Management Board for your presentation and the time you took and also to you, dear participants, for joining and your shown interest. So should further questions arise, yes, Sven Kopsel from Investor Relations will be happy to assist you. And on that point, it was -- yes, it was our pleasure to be your host. And Sven, final sentence belongs to you. Sven Kopsel: Yes. Thank you so much. Just one remark. You know that we are going to have this CMD on Monday, the 17th of November. If you have not registered yet or if you are unsure, maybe please just contact me or Florian Mangold as soon as possible. We are still accepting registrations. So take care. Goodbye.
Operator: Good morning, ladies and gentlemen. Welcome to Saturn's Third Quarter 2025 Results Conference Call. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. I will now turn the meeting over to Ms. Cindy Gray, Vice President, Investor Relations. Please go ahead, Cindy. Cindy Gray: Good morning, everyone, and thanks for attending Saturn's Third Quarter 2025 Earnings Conference Call. Please note that our financial statements, MD&A and press release have been filed on SEDAR+ and are available on Saturn's website. Some of the statements on today's call may contain forward-looking information, references to non-IFRS and other financial measures, and as such, listeners are encouraged to review the disclaimers outlined in our most recent MD&A. Listeners are also cautioned not to place undue reliance on these forward-looking statements since a number of factors could cause the actual future results to differ materially from the targets and expectations expressed. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless expressly required by applicable securities laws. For further information on risk factors, please view the company's AIF filed on SEDAR+ and on our website. Also note, all amounts discussed today are Canadian dollars unless otherwise stated. Today's call will include comments from John Jeffrey, Saturn's CEO; Justin Kaufmann, our Chief Development Officer; and Scott Sanborn, our Chief Financial Officer. I'll now hand the call over to John. John Jeffrey: Thank you, Cindy. Good morning, everyone, and thank you for taking the time to join us today. I'm pleased to share some additional context around our third quarter results, which reflects another consecutive quarter of outperformance as we continue to execute on our Blueprint strategy. The Q3 production averaged over 41,100 barrels a day and exceeded our previous guidance as well as analyst consensus, which had us just over 40,000 barrels a day. We also beat guidance on a BOE operating cost in Q3, which came in at $19.24, below the $20 per BOE annual target. This past quarter also showcased Saturn's ability to be nimble, our commitment to allocating capital to the highest potential return opportunities. Given the uncertainty and volatile commodity price environment that prevailed in the quarter, we elected to reduce our original $300 million development capital budget by 18% to approximately $255 million and pivot our focus towards opportunistic tuck-in opportunities. These tuck-ins offered more attractive capital efficiencies than drilling, having a combined production addition cost of under $16,000 per flowing barrel. Reallocating capital to M&A allowed us to increase production while preserving the value of our existing assets by not drilling them at a time when prices were weak. How we view this is when prices are stronger, we can always go back and drill those wells, but we won't be able to execute on these deals at this pricing level. Further, by coring up in areas where Saturn has strong development success, we can leverage our size, scale and existing infrastructure. which allows us to optimize production, reduce costs and enhance the performance of the assets. Our first tuck-in acquisition included an asset package in Southeast Saskatchewan that was approximately 4,100 BOE a day, comprising just under 70% liquids for a total consideration of $63 million. These acquired assets have an estimated 255 gross company identified locations, including open hole multilateral development potential in the Midale and Torquay. The asset features high working interest, optimization and cost reduction potential, along with extensive opportunities to consolidate facilities and batteries. As Justin will expand on, this package is strategic for Saturn. It expands our runway of open hole multi-leg drilling locations, which are among the highest rate of return wells in our development program today. With the second tuck-in, which closed in October, we acquired a private company operating in Central Alberta, located within Saturn's greater Pembina Cardium area for total consideration of approximately $22 million. In addition to its 1,300 barrels a day of low decline current production, Saturn gained over 80 internally identified drilling locations in the Cardium, Glauconite and Bluesky development, enhancing our operation in the area. Our operations team has already started digging into these assets to identify cost synergies, optimization opportunities and streamlining potential. The nature of our conventional asset base has allowed us to be very opportunistic by being able to stay nimble and pivot quickly when market conditions require. We are unique from other peers who are developing resource plays where they can cost tens of millions of dollars with lead times that can take several quarters or even years to plan and execute. With our assets, we can respond and adapt quickly to a dynamic market condition. As a result of production adds from the acquisitions, along with our strong drilling results to date in 2025, Saturn remains on target to exit the year with a production range of 43,000 to 44,000 BOE a day, which will represent a new production record for the company. We are committed to value creation and continue to use share buybacks as an effective way to return capital to shareholders and drive equity value over time. Our team believes the combination of ongoing share buybacks, coupled with tuck-in acquisitions contributes to growing production per share, adjusted funds flow per share and free funds flow per share. For example, August 2024 to today, we have bought back nearly 16 million shares in the open market through the NCIB and SIB, returning approximately $36 million to shareholders. Over a similar time frame, we have also increased our production per share by 22%. I'm extremely proud of the team who continue to give 110%, putting in the hard work needed to advance Saturn's goals and deliver compelling value for our shareholders while prioritizing safety to ensure that every one of our employees makes it home safe at the end of every night. I'll now pass it over to Justin to expand on our capital program and development highlights in the quarter. JK, over to you. Justin Kaufmann: Thanks, John, and good morning, everyone. As John mentioned, Saturn made the decision to shift a portion of our 2025 drilling capital to M&A during Q3 as we identified 2 tuck-in opportunities that would compete for capital in the prevailing commodity price environment and which we could acquire for attractive metrics. Our Q3 production does include new volumes from the Southeast Saskatchewan tuck-in acquisition, but it also showcases our ongoing type curve outperformance, plus the start of our drilling program after spring breakup, which supported the guidance beat. Our Bakken open hole multi-leg program and conventional Spearfish development wells coming online in Q3 contributed to another quarter of strong results. Saturn invested $87 million of capital in Q3, with $58 million of that directed to drilling and completion activities, including 29 gross wells, 23 of which were in Southeast Saskatchewan and 6 in Central Alberta. We also directed $17 million to purchase 2 strategic parcels of undeveloped land, which we believe will unlock 60 new open hole multilateral locations, representing 5 years of drilling inventory to an additional rig in Southeast Saskatchewan. Our open hole multilateral locations in Southeast Saskatchewan offer some of the shortest payouts and highest potential returns among our undeveloped locations, even in a softening oil price environment. Several of our open hole Bakken wells ranked in Saskatchewan's top 10 best performing wells over the last year. Most recently, our 16-21 wells was ranked as a top 10 well in the province in September for monthly oil volume and daily oil rate. This is a testament to how prolific these wells continue to be. We are excited about the potential we see with this program and our open hole inventory currently represents about 15% of the 2,500 total identified locations in our portfolio. The open hole multi-leg portion of this portfolio has essentially doubled every year for the last 3 years as we continue to progress this exploitation technique to other plays. Most recently, we continued this expansion into the Spearfish play, where we became the first and only operator in Canada to have drilled in an open hole multilateral Spearfish well, and now we have drilled 3 of them. Our third Spearfish well at 1605 came online during the quarter with an IP30 rate of 330 barrels a day. This is about 3x our internal estimate type curve of 110 barrels a day. These initial strong results support our plans to drill 4 additional Spearfish open-hole multilateral wells next year. Building on this success, we are planning 2 open hole multilateral reentries into the Midale in Q4 with up to 6 legs each. This would represent the first ever Midale open-hole multilateral reentry wells ever drilled. These wells are expected to be drilled on land acquired through the Southeast Saskatchewan tuck-in we completed in Q3. More broadly, we expect to allocate up to 35% of our 2026 development capital to our open hole multilateral program, including plans to drill our first of 2 Torquay open hole multilateral wells. With this, we expect to be the most active open hole multilateral driller in Saskatchewan next year. And if oil prices further weaken, we can shift more capital to this program, positioning us to generate compelling returns and robust economics even in very weak price environments. In addition to our open hole multilateral development, we continue to advance the Creelman waterflood in Saskatchewan, where we currently have 5 active injectors. In late October, we received regulatory approval to convert another 2 producers into injectors, which not only support base production, but also fuels future repressurized development locations. Investing in waterflood is a part of Saturn's ongoing strategy to mitigate declines and enhance our long-term sustainability. In Alberta, we finalized the drilling and completion of our 3-well Montney pad featuring 3-mile extended reach laterals. These wells are the longest laterals on record to ever be drilled in the Kaybob area. The North well on this pad has the most productive days and is already exceeding type curve expectations. The South 2 are still cleaning up, but based on reservoir quality observed while drilling, we do expect similar results once they've reached peak production. Finally, I'm proud to share that Saturn drilled the fastest extended reach horizontal Cardium well ever on record during the quarter, drilling to 5,090 meters measured depth on a single draw, achieving well completion from surface casing to full depth in only 4.8 days. These best-in-class results are another example of Saturn's commitment to enhancing efficiencies while operating safely and responsibly. With that, I'll hand things over to Scott for an overview of our financial results. Scott Sanborn: Thanks, Justin. Saturn demonstrated continued resilience this quarter despite a challenging price environment with WTI prices falling 14% over the comparative 2024 period. Operationally, the company continued with its success, producing over 41,100 BOE per day touring revenue over $235 million, driving adjusted funds flow of $103 million or $0.54 per share compared to $94 million or $0.46 per share in the third quarter of 2024, a 17% increase on a per share basis. The integration of the company's most recent tuck-in in South Saskatchewan, which closed on July 31, has been seamless with our production mix remaining consistent at 81% oil and liquids compared to 83% in previous quarters, reflecting the 67% oil and liquids weighting from the acquired asset. Our team continued to focus on operating cost reduction initiatives, realizing year-to-date net operating expense per BOE of $19.04, down from $19.30 on a year-to-date basis prior year. Our third quarter net operating expense per BOE of $19.24 reflects the increased field activity following a seasonal low period due to spring breakup in prior quarters, consistent with increased capital expenditures and associated workover costs. Saturn maintains its annual net operating expense target between $19.50 and $20 per BOE. During the quarter, we returned $12 million to shareholders through a normal course issuer bid and substantial issuer bid. Subsequent to Q3, we returned an additional $4.6 million via the NCIB. As John mentioned earlier, we successfully bought back nearly 16 million shares, representing approximately 8% of the shares that were outstanding at the time we launched the first NCIB in August of 2024. With the combination of tuck-in acquisition activity in Q3, the restart of our drilling program in July after spring breakup and movement in foreign exchange rates, net debt at September 30 was $783 million. Over the past 5 quarters, Saturn has repaid just under CAD 135 million or USD 95 million on the principal outstanding balance of our notes by making our regular 2.5% quarterly amortization payments as well as the open market purchases we did at a discount earlier this year. To drive a more meaningful leverage ratio, we are presenting our net debt to adjusted funds flow on a pro forma figure that incorporates the impact from our Southeast Saskatchewan tuck-in assets, resulting in net debt to pro forma annualized cash flow to 1.6x or 1.4x net debt for EBITDA in line with guidance. Saturn maintains strong liquidity and financial flexibility with $34 million of cash on hand at quarter end, plus an undrawn $150 million credit facility and an uncommitted accordion feature that allows for the expansion of additional $100 million, giving us up to approximately $250 million in total. Looking out to year-end, we are expecting Q4 capital expenditures to range between $60 million and $70 million with average production between 42,000 and 43,000 BOE per day, while our December exit approaching 44,000 BOE per day. This reflects our fourth quarter drilling program and new production from the Central Alberta tuck-ins, which closed October 20 through the end of the year. Saturn anticipates releasing our full 2026 budget and guidance mid-December. That concludes our formal remarks. So I'll thank everyone for joining us and hand the call back to the operator to begin Q&A. Operator: [Operator Instructions]. Our first question comes from Adam Gill at Ventum Financial. Adam Gill: One question for me. As we go into 2026 in a bit of a softer oil price environment, how are you thinking about prioritizing production maintenance versus buybacks versus net debt reduction? John Jeffrey: Yes. Thank you, Adam. So it's a constant kind of battle. So we're always looking to deploy our capital at whatever can get us the highest rate of return. So we're going to go into the year, most likely when we do set guidance, most likely just to maintain flat production. Meanwhile, the NCIB is likely to continue. However, should we find M&A opportunities that pose a higher return than drilling our own land, as you've seen us do in Q3, I think what we'll do is likely reduce our CapEx to fund those acquisitions. We really like that strategy in that not only does it leave our reserves in the ground, but if we're able to acquire some of these assets, at a discounted price due to this commodity. That's something we like. We get all those reserves. So generally, we get production online that's a lower decline at a better capital efficiency than drilling our lands. And again, we can save our locations for that -- for a higher oil price. So that's just something that we're always watching. And again, if we can monitor that and get the highest price, the highest return on our capital, that's where you're going to see us continue to do. Adam Gill: Sounds good. One quick follow-up. Just on terms of declines, what do you think your decline would have been through a 100% organic drilling program coming into 2026 versus doing the tuck-in acquisitions that you disclosed in Q3? John Jeffrey: Yes. That's a great point as well. So again, by acquiring mid-life cycle assets as is a Blueprint, you're getting assets with a much lower decline. Obviously, a new well has a much higher decline. So should we have spent all that capital on CapEx instead of doing the M&A, I think we would have been around the 23%, 24%. However, we get -- this will be closer to that 20%, 21% now with these 2 acquisitions and the reduction in CapEx. Operator: And our next question today comes from Jamie Somerville at ROTH Canada. James Somerville: How does the 330 barrels a day from this Spearfish multilateral compared to the previous 2 wells that you drilled? And why was your type curve only 110 barrels a day? So like what I'm trying to get at is, what are the chances that this is just a fluke rather than a significant technological breakthrough. John Jeffrey: Well, I will pass it over to Sylvester Zdonczyk to elaborate a little more on that. But I will say, I think generally so I will agree that, that was more of a risk type curve. But I'll pass it over to [ Sylvester ] to comment. Sylvester Zdonczyk: Yes. Thank you, John, and thank you for the question. Absolutely for us, this is a new concept, a new play. So our type curve was risked. So while we're pleasantly surprised with 330 barrels a day, the 110 barrel a day type curve was a risk number. So we've done modeling. We've looked at analogs, but we do have limited data coming into the Spearfish in this specific zone for the first time. So this is better than our 2 previous wells. The type curve would have been closer average to the 2 previous wells. So while we can't expect 330 barrels a day every time for IP30, we do expect strong and consistent results. So this result may result in us writing up that type curve, but we wouldn't consider it a fluke. We knew what we were going after. We saw good signs when we were drilling. So we're expecting to see strong results go forward. Again, it might result in a slight write-up in our type curve. But again, that type curve represents an average. And as we learn more about this play, as we drill more wells, we'll refine that as we go. But we're confident in our inventory for 2026 and beyond. James Somerville: That's helpful. Can I follow up as we think about potential reserve bookings from everything you've been doing, both organically and acquisitions, but in particular with regards to multilaterals, can you maybe talk around the reserve booking potential? I'm not clear as to the extent to which your -- the locations. I think you're indicating like 375 multilateral locations currently, but I don't think all of those were booked at year-end 2024. And I don't know to what extent that number -- that estimate has increased since year-end 2024. John Jeffrey: So corporately, we try and be conservative in that we only book what we have strong confidence in. And as we've expanded our overall multi-leg drilling, that will allow us to further increase our bookings. We definitely did not have those booked, but we are lucky because Sylvester actually does our reserves as well. So can you give a little color on what we had booked going into last year, going into this year and what we could expect going into next year? Sylvester Zdonczyk: Absolutely. It's a well-timed question as we're going through our 2025 year-end reserves process right now. And as John said, we were a bit conservative, but also not knowing to the extent, which we'd be drilling in the next 5 years, which remember, with reserves, you need to maintain that line of sight to development and also balance the inventory that you can drill. We have close to 2,500 locations internally that are viable and that we like. But unfortunately, we just won't drill them in a 5-year development plan. And so for reserves, we must honor that. So that's why last year, we only had 1,115 booked locations. Looking ahead to this year, we will see growth in that number, and we will see growth in our open hole multi-lats as we drill more and have line of sight to drilling those in the coming year and within the next 5 years. So I can't give you a number of what 2025 year-end will be. We were only in the 20s last year for open hole multi-lats, so quite conservative, but it did honor our pace of development. Now as we drill more and have multiple rigs drilling open hole multi-lats, we will see an increase in that number. And as we go through this process, that will become apparent in the next couple of months. James Somerville: Sorry, really quickly, I missed the number that -- of multi-lats that you had booked last year. Did you say in the 20s? Sylvester Zdonczyk: Yes. Last year, we were in the 20s in the Bakken, and we only had 3 booked in the Spearfish. So again, we had only drilled at that time last year. So us and the reserve auditors weren't prepared to book tens or hundreds of those Spearfish. But now that we've drilled 2 more and have line of sight to 4 this year and beyond, we'll see that number grow. Operator: And our next question comes from Abhi Patwardhan with Sculptor Capital. Abhishek Patwardhan: Congratulations on another strong quarter. With regards to your reserve report since we are already in November, have you been talking to your auditors around getting better credit for a slightly higher or above type curve performance? John Jeffrey: Yes. Again, I'll hand it over to [ Sylvester ] here in a minute, but what we don't want to do and what we've been successful in doing thus far is we've never had to take a write-down on our reserves. Again, maybe we are a little conservative in our approach. But what we'd rather do is have them come in a little more on the conservative side, beat expectations and grow our reserves instead of getting a position where you're overbooking and then having to take write-downs. But I will pass it over to Sylvester to comment further. Sylvester Zdonczyk: Yes. The other thing to add to that, John, is that the type curve represents a field-wide average. So we're not just looking at a localized pool, especially in Southeast Saskatchewan. We're taking our results from the past year as well as recent years as well as our peers and competitors in the area. So our outperformance speaks to our technical team's ability to deliver on those results as well as the quality of our reservoir and inventory. So while there is potential, and we do look at this year-over-year. So I shouldn't say that it doesn't happen because every year, our type curves are reviewed. We look at the well results, we look at our remaining land base, and we do reflect our remaining inventory. So the fact that we've outperformed speaks well to our technical team and to the quality of assets and reservoir that we do have, but we are honoring the field and pool averages. So we will look at that. We do look at that every year. It's not stagnant. They get looked at year-over-year, and you might see some changes to reflect the most recent performance, but we also want to honor what our remaining inventory is, not just within the next year, but again, within that 5-year book period on our proved reserves. John Jeffrey: And I think the best example of that is one of the fields we've been in the longest would be the Viking. And the Viking for almost 5 or 6 years in a row, I believe, that type curve has increased because we've had such great results in that field. So again, it's -- the more time we spend this field, the more data points we have, the more confidence we get, and that allows us to take higher estimates on those wells. Again, the Viking is the best case because we were beating type curves consistently for 6 years in a row. And each one of those 6 years, you've seen that type curve come up. So again, something that hopefully, we can continue these great results in our other fields, and you'll see that similar trend. Abhishek Patwardhan: And John, remind me for Viking, how much above the type curve are you right now? I mean when I say type curve, I mean the type curve that you got credit for in your reserve report last year? John Jeffrey: So this year, we have actually deferred a Viking program. Again, in favor of with this commodity price and the relatively higher declines you get in the Viking, we deferred that in favor of some of these tuck-in acquisitions. The last Viking program that we executed on was last year. I think we're 22% ahead of type curve there. So strong consistent results, which is what we like. But again, as the type curve comes up, year-over-year, your beat on that will eventually decline until you're at type curve. And that's the point is not just to beat the type curve, but eventually land on it. So you're booking properly, you're executing accordingly. But yes, so no Viking results so far this year. But in the past, we have managed to beat our expectations even with those expectations rising year-over-year. Abhishek Patwardhan: Got it. Would you mind sharing some color on hedging? I'm curious how hedged you are right now and if there is any changes to the hedging philosophy internally? John Jeffrey: Yes. So I'll pass that over to Scott to have a couple of comments. I will say, I think this will make this part of our corporate presentation moving forward. We have been really lucky this year in that the 3 times we have added hedges were the 3 highest oil prices we've seen in the last 10 months. But as far as the amount hedged and where we're at with that hedge book, I'll pass it over to Scott. Scott Sanborn: Abhi, Scott here. Yes. So currently, right now, we're 50% hedged on a 12-month basis on oil and liquid volumes. We've been pretty active on the gas front as well. So we're between 50% and 70% of gas between 280 and 350 makes up a small proportion of our production, but still there, nonetheless. Thereafter, we're about 20% for the following 6 months. So we're pretty active in the market. As John mentioned, we did take the opportunity this year to hedge at the peaks of oil in early January and again in August. And we layered on some subsequent hedges in our financial statements as noted yesterday. Abhishek Patwardhan: Got it. And one last one for me. What's the base decline across all the assets, the entire portfolio right now? John Jeffrey: Yes. So I think going into '26, you should see a decline right around, I would think that 21%, 22% kind of depends on if it's an annual average or specific to, say, January 1. But I think we're going to be somewhere in that low 20s would be a great number to use. Operator: Thank you. And that's all the time we have questions for today. So this concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Daniel Fairclough: Hi. Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress during the third quarter of 2025. Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which was published this morning on our website. However, I do want to draw your attention to the disclaimers on Slide 20 of that presentation. As usual, Genuino will make some opening remarks before we move directly to the Q&A session. [Operator Instructions] Over to you, Genuino. Genuino Christino: Thanks, Daniel, and welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief, beginning with safety, a core value for our company. The company is completing the first year of its 3-year transformation program, supporting ArcelorMittal's journey to be a zero fatality and serious injury company. The first year has focused on building the foundations for improvement across the business, and I'm encouraged by the progress we are making. We are already observing an improvement in the frequency of serious injuries and fatalities compared to last year. But there is more to be done, and there is clear determination across the entire company to implement the bespoke safety road maps that have been developed to drive lasting change. Now I want to focus this quarter on 3 key points. First and foremost, our results continue to demonstrate structural improvements. Third quarter EBITDA per tonne was $111. This is 25% above our historical average margin. To be achieving such improved margins at what we believe to be the bottom of the cycle demonstrates the positive impact that our asset optimization and growth strategy is having. Our strategic projects, together with the impacts of recently completed M&A will support structurally higher margins and returns on capital employed through the cycle. We remain on track to capture $0.7 billion structural EBITDA improvement this year, and the expected medium-term impact of $2.1 billion remains unchanged. My second point is on free cash flow. Our underlying business continues to generate healthy cash flows. Excluding working capital, 9 months free cash flow was approximately $0.5 billion positive. Remember, this is after having invested close to $1 billion in our strategic growth projects. As we head into year-end, I expect that working capital investment will unwind as it normally does. This supports the positive outlook for free cash flow and lower net debt. And then my final point is on the positive outlook for our business. Relative to where we were 3 months ago, the outlook for our business has clearly improved. We welcome the new trade tool proposed by the European Commission. They will support a more sustainable European steel sector, returning the industry to healthier capacity utilization levels. The proposal must now be transposed into legislation as fast as possible. And together with an effective CBAM, this can provide a solid foundation for our European business to earn its cost of capital as we have been achieving in other regions. With our advanced product offering and strong market franchises, we are well equipped to seize new structural opportunities and translate them into profitable growth. As a company, ArcelorMittal is actively enabling the energy transition. We are supplying the steel required for new energy and mobility systems and the steel required for infrastructure development. We are investing in high-quality, high-margin electrical steels and building a competitive renewable energy portfolio. Putting this all together, ArcelorMittal is in a strong position, both operationally and financially. We have a unique diversified asset base across geographies and end markets. We are delivering structurally higher margins, supported by an optimized asset portfolio and execution of our strategic growth projects. We have momentum and our growth will continue. We will continue to implement our clearly defined capital return policies. It is working well, allowing us over the past 5 years to grow our dividend at a compound rate of 16% as well as repurchase 38% of our equity. Each ArcelorMittal share now represents a greater proportion of our capacity, a bigger share of our leading franchise businesses, a larger stake in our growth projects and a greater ownership of our unique business in India. With that, Daniel, let's move to Q&As. Daniel Fairclough: Great. Thank you, Genuino. We have a good queue of questions in front of us. [Operator Instructions] But we will take the first question, please, from Alain at Morgan Stanley. Alain Gabriel: Genuino, I have two questions. I'll ask them one at a time. So the first one is looking forward to 2026 and before we take into account any impact from CBAM or the new safeguard, what are the unusual or exceptional costs that we need to consider while building our EBITDA bridge into next year? And I'm thinking here more the incurred U.S. tariff costs year-to-date, the stoppages in Mexico, et cetera. That's my first question. Genuino Christino: Okay. Sure, Alain. Well, thinking about 2023 in terms of exceptionals. So right now, I cannot really point to you when it comes to tariffs that we are seeing change, right? We will see, of course, in 2026, as we know, we have the USMCA. And I'm sure the negotiations between Canada, U.S., Mexico will continue. But of course, we have to wait and see how -- what comes out of the negotiations, right? Then clearly, we have the losses in Mexico, and we do expect that they will not reoccur in 2026. And that's really in terms of exceptionals, that's what I see. Of course, when you think about the bridge for 2026, there are many positives that we could potentially talk about, right? One is the contribution from our projects. So we have another about $800 million coming in 2026. We just saw also the first forecast of the World Steel Association in terms of demand for next year. I think we will start to see some of the benefits of the lower interest rates impacting the economies. We are seeing PMIs in Europe recovering. As we know, demand has been just moving sideways in most of our core regions. And I think there is hope that we might see a better picture next year also in terms of demand. I don't know, Daniel, if I'm missing something, if you want to complement? Daniel Fairclough: Thanks Genuino. So all I was going to do is perhaps just adding the numbers for Mexico. So if you recall back to the Q2 conference call, at Q2 results, we talked about a $40 million impact from costs and operational costs in Q2. In our release today, you will see a number for Mexico of $90 million. And then in Q4, things should improve, but there will still be a cost in Q4 of maybe $60 million, $65 million. So as Genuino said, that shouldn't recur in 2026. So then when you think about the bridge from 2025 to 2026, that is close to about $200 million there from nonrecurrence of Mexico. Alain Gabriel: That's very clear. And the second question is in Europe, you currently ship around 30 million tonnes of finished steel. If the safeguards work next year as intended or designed and imports dramatically reduce, how much can you flex your production in the near and medium term after taking into account the restart costs, the purchase of CO2 allowances, et cetera? So in other words, what is your achievable Blue Sky shipments in Europe if we go into that scenario where imports decline dramatically? Genuino Christino: Well, the way we see it, I mean, we do expect to be able to supply the market. I mean, as we all know, the expectation looking at the numbers, I mean there is an expectation that imports will come down by about 40% and flat as we saw, right? And it's not a secret that our market, it's about 30%. So we don't see any problems to make sure that we can capture that part of our market share. And you know, I mean, you have that also in our back book. So our capacity in Europe is way in excess of 31 -- 30 million tonnes that we are currently producing. So we feel very comfortable here to be in a position to supply the market when these new measures are in place. Daniel Fairclough: Great. So we will move now to the next question, which we're going to take from Tom at Barclays. Tom Zhang: Two for me as well. The first one, just the usual one on the kind of moving parts, maybe, please, into Q4 by division? And any color around realized pricing, volumes, that kind of stuff. Genuino Christino: Do you want to take it, Daniel? Daniel Fairclough: Yes, sure, Genuino. So when we look at the bridge from the third quarter to the fourth quarter, I think it's pretty simple. I think there are really 3 key building blocks for you to be thinking about. The first, of course, is the normal seasonal improvement in European volumes. The second factor or the second building block would be higher iron ore shipments. So as Genuino was talking about, we have good momentum in our strategic projects. So we're well on track to achieve the targeted 10 million tonnes of shipments in Liberia. And so that will be a nice increment in the fourth quarter. And then the third building block would be North America. So we would expect normal seasonality in volumes. So we do have 2 holidays in the fourth quarter. So normally, volumes are seasonally weaker in the NAFTA segment. If you look at pricing and if you just purely on a sort of a 2-month lagged basis, pricing should be lower in the fourth quarter than the third quarter, but that's going to be slightly offset by the improvement in our Mexican operations, which we just talked about in Alain's question. So those would be the 3 key building blocks: seasonally higher volumes in Europe, higher shipments in mining from the Liberia expansion and seasonally lower volumes and lower lag prices in the North America segment. Tom Zhang: Great. And then maybe just following up on North America. I mean, is there anything else that you guys would call out for the print in Q3, which I guess was very strong despite the sort of additional Mexico outages. I know you've added Calvert, but I guess, on the consolidation numbers you've given before, that was maybe sort of $60 million a quarter of incremental EBITDA contribution. So maybe that offsets the hit from Mexico, but U.S. spot pricing has been drifting. There's obviously extra tariff costs. Was there anything on either the cost side, the mix side that you flagged for North America? Genuino Christino: Yes, Tom. So first of all, we had a record level of shipments at Calvert. Calvert doing extremely well. So I would suggest that the contribution was a bit higher than what you referred to. Our Canadian team is also doing a very good job in managing what they can. Costs, there is a very high focus on making sure that we take cost out. So that is also supporting the results in quarter 3. So you have the strong operations in Calvert, you have strong operations in Canada in both of the facilities in the [ Long ] facility as well. So we have also a good contribution from some of the other business, our HBI DRI plant in Texas also performing well. So I think we have -- except for, of course, the problems in Mexico, we have our franchise business in North America operating quite, quite well. Daniel Fairclough: So we will move now to the next question, which we're going to take from Cole at Jefferies. Cole Hathorn: I'd just like to ask on the CapEx profile medium term and the envelope that you're thinking about because you do have a number of strategic projects in the pipeline. How should we think about broad buckets for CapEx '25, '26, '27? Any broad-based guidance you can provide? And then following up on working capital, it's a strong improvement into the fourth quarter coming back, but I imagine as you look into 2026, hopefully, we will benefit from a stronger pricing environment. And I'm just wondering how you're thinking about working capital into 2026. Are you hoping for kind of working capital outflows and stronger pricing and demand environment for 2026? Genuino Christino: So in terms of CapEx, what we have been saying is -- and then, of course, we are now -- we're going to be actually just -- we're going to be starting our budget discussions for 2026 and beyond. But what we have been saying is that the range that you have -- that we have been using over the last couple of years between $4.5 billion and $5 billion, including strategic sustaining maintenance, that is a good reference for now. So I would encourage you to keep that as your reference. And then I'm sure in Q4, we will be updating you with more details, but it's a good reference. In terms of working capital, I hope you're right. I mean I hope that in 2026, we have to deploy working capital because then it means that the business is strong. It's performing well. Prices are moving in the right direction, volumes as well. What we try to encourage is you should think about working capital moving in line with our EBITDA, right? So if you believe that if you have for 2026 high EBITDA numbers, then it would be fair to expect that there will be potential investments in working capital, which is something that we would see as positive. Cole Hathorn: And then maybe just as a follow-up, have you seen any changes in order books? Or how are you managing your order book for the start of 2026? Are you keeping some availability for higher prices? Or how are you seeing your order book develop into 2026? Genuino Christino: Well, as we talked about, the demand has been moving sideways, right? So we -- and our order book remains relatively stable, right? So we have segments doing better than others. The order books are relatively stable across the group. We are not doing anything special to try to anticipate a stronger 2026 other than making sure that we allow the business to keep the working capital that they need so that they can benefit from a stronger 2026 that we hope will materialize. So that's really how we are planning. And yes, that's how we are seeing it so far. Daniel Fairclough: Great. So we're going to move to the next question, which we'll take from Reinhardt at Bank of America. Reinhardt van der Walt: Can you hear me? Daniel Fairclough: Yes, we can. Go ahead. Reinhardt van der Walt: I just want to ask on capital allocation. So if the safeguard replacements in Europe come through in their proposed form, how would you think about Europe from a capital allocation point of view? And I don't want to necessarily draw into discussion about sort of decarbonization investment in CBAM. But just from a purely economic perspective, you talk about organic growth. Do you think Europe could be a home for capital in the future if we get this framework? Genuino Christino: I think you touched on it. I mean this is an important framework, right? And then what we are talking about is that this framework should allow the industry to be sustainable, to earn its cost of capital. And when you achieve that, then you are in a position to consider then investments. And that's exactly where we are. And so we are encouraged by these new measures. Of course, still waiting for the implementation. We still need to hear more about CBAM as we all know. And then the last piece of the equation is, of course, energy, energy cost. So I think once we have that framework very clear, then we're going to be in a position to move forward. And as we discussed before, this will happen gradually, right? So you should not expect ArcelorMittal launch a number of simultaneous projects. It will happen gradually. This is going to be a multiyear journey. Reinhardt van der Walt: Understood. That's very helpful. And could you just remind me, I mean, you mentioned the business in Europe could potentially return to its cost of capital. Could you just remind us what exactly is the installed capital base of the European business? Genuino Christino: Well, I don't think this is something that we are very specifically disclosing, Daniel? Daniel Fairclough: No, you're right, Genuino. It's not something that's broken out in our financials. Reinhardt van der Walt: Okay. No, that's fine. Maybe just one last quick one, Genuino. You mentioned that you've got the capacity to be able to deliver effectively your share of the 10 million tonnes. Can I just see what kind of costs you might need to incur in order to bring that capacity to market? I mean I appreciate it's there, but could you just maybe talk through some of the costs that you need to incur to actually get that utilization up? Genuino Christino: Yes. Well, it's a good point. And I would break it down into 2 components or 2 parts, right? First is, so you have the fixed cost part. So in a number of facilities, we're going to be able to leverage the fixed cost that we have, right? So you're just going to be running at a higher capacity. So you benefit on the fixed cost side. But then in such cases, normally, what you're going to see also, it's an increase in your variable costs, including then CO2 cost, right? If you want to improve your productivity, you might need to charge higher quality materials, pellets, more pellets. So that will be -- you should expect that to have an impact as well. So I would just encourage you to think about the 2 components. Daniel Fairclough: So we'll move now to a question from Timna at Wells Fargo. Timna Tanners: I wanted to ask two things. One, just kind of probing a little bit more your efforts to mitigate the tariff costs and specifically how you're approaching the annual contract negotiations with automakers at Dofasco? And then a separate question, just if I missed it, I apologize. I was just wondering if you commented on why not -- why there weren't any buybacks in the quarter. Genuino Christino: Yes. So we continue to renew our contracts, our OEM contracts. So we just -- we're basically almost done now for part of first half of next year. So signing even more than a 1-year contract. So I think fundamentally, our customers, so they like the product. They like what they get from Dofasco. So I think there is very good cooperation between us and our customers there. So we don't expect really here significant change in terms of -- looking at our North America business in terms of volumes going to automotive, of course, other than if we have lower production next year, which we are not talking about, but just because of renegotiations, we are not really expecting significant change in the overall volumes going to automotive. And in terms of buybacks, there is not really much more I have to say. And as you know, we have a very clear policy, and we believe that is a differential. I mean not all of our competitors will have a very clear policy. And I think we were in a way, lucky. We did a lot of buybacks at the very beginning of the year when the share price was still low. And all I would say is that you should expect that the company will -- on that policy, that 50% of the free cash after paying dividends will be distributed to shareholders. I would just also add that the policy is working quite well. I mean we talked about 38%. So we did 9 million shares this year already. And we have a very low average price. So we are really creating a lot of value to our shareholders. Daniel, if you want to complement? Daniel Fairclough: Yes. Thanks, Genuino. I think that was very complete. So we will move to the next question, which we will take from Tristan at BNP. Tristan Gresser: First one is on working capital. Just wanted to see how confident you are on the almost $2 billion of release that you expect in Q4? And what should be driving that? Is there any impact from outages at Fos or Mexico? And isn't there a risk of reducing inventories a bit too much and missing the recovery in Q1? And if you can discuss that as well. Is that not your base case that notably in Europe, you'll see a bit of a pickup in Q1? And also if you can comment on the CBAM uncertainty. And does that have any impact on your order book in Europe and pushing more buyers towards local producer? That's my first question. Genuino Christino: Yes. So we -- the working capital release in Q4 to some extent, it's seasonal, right? I mean, as we know, we have just less working days in December. So that will have an impact on how much receivables we carry at the end of the year, right? And then if you look also, we had a reduction in payables. So as we prepare actually for potentially a stronger 2026, so we start also increasing, and that should also start to normalize. And you're right. So there are a couple of one-offs such as the fact that we are not able -- we are not producing as standard in Mexico, some accumulation of raw materials that should also start to normalize, right? We have the reline of our Dunkirk blast furnace, which is also then in the process for now. We are normalizing the inventory of slabs. So yes, we are very confident that you're going to see a significant release of working capital as was also the case last year. So if you go back to 2024, you're going to see something very, very similar. And you're right. So we have a concern here not to squeeze the working capital that is available to the business. And that's why what you're going to really see is more on the receivables side and payable side, not so much in terms of inventories. Tristan Gresser: Okay. No, that's clear. And just following up then on Europe and with the steel action plan, do you believe that there is a possibility of seeing the new quotas implemented before July next year? And to come back to my earlier question, what kind of environment do you see in Q1? If the quotas are not implemented in January, April, but in July, do you see a risk of import surging? Yes, and if you could comment a little bit on your order books in Europe, if you're starting to see a bit more activity there, that would be helpful. Genuino Christino: Yes. Well, in terms of timing of implementation, so when we discuss internally, I think there is still hope that we might actually see it earlier. And I think that's quite important, and that's really the efforts in terms of making sure that the parliament and the council, they understand the urgency of having these measures implemented as soon as possible. So even though it's challenging, I think there is still hope that we may see this implemented earlier. But of course, we have to wait and see. One thing is for sure, though, I mean, of course, we don't even don't yet know for sure all the details of CBAM. But CBAM for sure is effective already from 1st of Jan, right? And then we will see what are the final terms. But that alone should already at least bring the -- make the imports less competitive. And then in terms of order book, I think we discussed, I mean, order books are at -- they are not higher than normal. I think it's just as we are seeing demand for now at least kind of moving sideways, demand -- the order book is relatively stable. Daniel Fairclough: Great. So we'll move now to take a question from Max at ODDO. Maxime Kogge: So my first question is on Mexico. So this is an asset where you have had a number of issues over the recent past. So there was this illegal blockade last year. There was the outage on the EAF earlier this year, and now there's this problem on the DRI plant. So how confident are you basically that the asset can return to a normalized productivity and performance and that on a recurring basis from next year? Genuino Christino: Yes. That's a fair question. And then, of course, we are not pleased. Some of the problems that we are facing this year, they are still a result of the legal blockade that happened last year. And what we are doing right now is really reviewing all of our SOPs. So we have our engineers, we have our CTO group going through all the procedures, making sure that we avoid repetition of some of these issues. So I'm very confident that with the support of the group, CTO and local team also very engaged, we're not going to have a repetition of some of these operational issues in Mexico. Maxime Kogge: Okay. And then a second question is on the import pressure in Brazil and India, which seems to be quite high at the moment, and it's reflected in very low prices. So it seems that the authorities there are not really willing to tackle the situation at this stage. So how are you confident that this will be the case? And would you be ready to scale back your investments in Brazil if that's not the case, given that I think one of your competitor has done such a move and Brazil is still the biggest region where you invest at the moment if we leave aside Liberia. Genuino Christino: Yes. Look, I mean, mid- to long term, we continue to be bullish on Brazil. We will continue to invest. You're right that we have seen imports rising in Brazil. And there is also a very close dialogue with the government showing what the governments are doing around the globe, right? And what is encouraging is we have a number of antidumping measures that should start to have an impact, we believe by end of this year or beginning of next year. So we have antidumping against China on cold rolled, which, of course, are products that we are selling domestically. So that should have a positive impact. I think the system, the way it is designed today, it also allows for -- if we see surges in other products that we can also then look to add them to the quota systems that we have in place today. We have seen a reduction of imports already in quarter 3 compared to quarter 2. So we'll see, but I think the fact that we have the antidumping is important, showing that the government is also concerned. Local mills, as we know, announced price increase as well beginning of the quarter, we'll see how it plays out. And India, I would say that demand continues to be extremely good, strong, rising, strong economic performance. You're right that prices are low, that the, I would say, -- there is also the impact of the new capacity that normally takes a while to be absorbed. So we are going through that process right now. But I think we can also be optimistic for the near term. Maxime Kogge: Okay. And just perhaps the last one is on Ukraine. It seems that the challenges there have gone bigger in recent months in terms of railways, in terms of electricity costs. So is there a point where you will consider shutting down production entirely? Or are you still committed to maintaining production as it is for the time being? Genuino Christino: Yes. The situation in Ukraine, you're right. So we are running today at basically at capacity that is available to us. So we are running 2 furnaces. So the trend is EBITDA positive. We are not yet free cash flow neutral as we discussed before, right? And the key issue for us remains the high energy costs. So again, here, we are trying to engage in discussions with the government to show the importance to bring that to levels that are -- that will allow the industry to be sustainable even in this very challenging conditions of the war. We'll see. But for now, the plan is to continue to produce. We have the mining operations that are also close to capacity. So we are able to sell the iron ore to our own mills either in Europe or to third parties outside. So yes, I think it's -- for now, we are managing through a very challenging situation. Daniel Fairclough: So we'll move now to take the next question, which is going to be from Bastian at Deutsche Bank. Bastian Synagowitz: My first one is on Europe, and can I please come back on the situation here in the context of the policy plans? So when you look at the European capacity landscape, do you believe that the current capacity, which is in operation, would be enough to pick up the additional market share, which the domestic industry would likely absorb from the imports? Or would this 10 million tonnes, which you referred to in the chart require idle capacity to restart? And then maybe just as a quick add-on to that, are you generally more positive on the volume or the price leverage for your business from the policy, which has been laid out? Those are my first questions. Genuino Christino: Yes. Well, I think in terms of -- as we know, I mean, and that was also made very clear by Europe, by the commission. As we know, the capacity utilization in Europe today is low. And that's the whole idea behind some of these trade actions to allow the industry to regain a level that is more sustainable, right? And I think, Bastian, it will depend on where you are in Europe, right? So there can be cases where you're going to need to bring some idle capacity. And then, of course, costs are going to be also higher because you're not going to have the benefit of the fixed cost, right? So it's difficult to be very precise on that. And for us, I think it's -- I guess what is important here is really to make sure that the industry can run at a decent level of capacity utilization, right? I think that's the whole idea because then, you can earn your cost of capital, you can optimize your fixed cost base, your cost base, et cetera, et cetera. So that's how we are seeing it. Bastian Synagowitz: Okay. And just in terms of the leverage for your own business, when you look at the gives and takes, are you more positive on the price effect? Or are you more positive on the volume impact on your earnings contribution? Genuino Christino: Well, I want to be drawn on that. I think for us, as I said, what is important is that we can run our facilities at a higher capacity utilization, right? And that should be then, if you have less imports, which as we know today, the cost or the price of imports is so low, right? Daniel, do you want to add anything to this question? Daniel Fairclough: Yes. So I think like you're saying, it's very difficult to isolate the sort of contribution of the fixed cost absorption, the sort of operating leverage or the impact of just higher industry utilization on spreads. But I think I'm sure you've analyzed this in the past that, Bastian, there's a good correlation between spreads and utilization. So there should be 2 factors, and those 2 factors should contribute to what Genuino is talking about, our business in Europe, the industry in Europe being in a position to covers cost of capital. And that's ultimately the objective here. Bastian Synagowitz: Okay. Sounds good. And my next question is on North America. And I guess one of your Canadian peers here is heavily loss-making. Could you maybe give us a bit of color on how Dofasco is actually performing on a single entity basis? And are you still making money there? Genuino Christino: Yes, absolutely. Dofasco is one of the best facilities in the world. And so it's still very much profitable. Bastian Synagowitz: Okay. Great. And then very last question, just on your expansion strategy in Hazira. Is that on track? And just, I guess, given what you discussed earlier in terms of the capacity, which has been brought on already this year. Do you think the market is ready for the ramp-up next year as you're planning it? Genuino Christino: Yes. I think, first of all, our projects are ongoing and going well. So we're going to be, as we discussed, commissioning some of the finishing lines still later this year, beginning of next year. And then during 2026, we're going to be completing the upstream, including coke batteries. And a lot of the new capacity has just come down. So I think we're going to be in a good position to ramp up our own capacity. So allowing some time so the market can absorb that. So I think in terms of timing, it looks good, Bastian. Daniel Fairclough: Great. So we still have a few more questions to take, Genuino. So the first of those we will take from Dominic at JPMorgan. Dominic O'Kane: Just a couple of quick questions on, again, sort of real-time indicators of demand. You obviously have a seasonal slowdown in the North American market. But are you seeing any visible signs of kind of new pockets of weakness in the U.S., particularly given the government shutdown? And then my second question relates to Europe and the auto segment. Do you have any insight you can share with regards to how you're approaching contracts moving into January? Genuino Christino: Yes. So starting with the U.S., you're right. So I think overall, we all know the numbers, right? So the demand moving sideways. But I would say that when I look at our business, Calvert is running absolutely full. We had record levels of production shipments, right? So the 2 segments where we are very much focused, the energy, automotive doing relatively well. And then when it comes to Canada and Mexico, I think that's where we also see some potential because, of course, the demand domestically, let's forget tariffs for a moment, also significantly impacted, right, with all the uncertainties created by the change in the relationship between the various governments within North America. So I think we see potential for stabilization there that should also support the shipments domestically in Canada and Mexico. Coming to the auto contracts, I mean, it's going to be just how it is. So I think we have a lot to offer to the automakers. In some cases, in North America, as we know, the negotiations will happen gradually during the year. And in Europe, there has weight to the beginning of the year. So this process is ongoing. And I expect that it will be -- as always is, we have an agreement that is -- that should be a win-win for both companies. Dominic O'Kane: Is there any sense that the price tension that we've seen over the last 2 years could alleviate this time around? Genuino Christino: Yes. As you know, I mean, we don't comment on -- specifically on prices, as you can imagine. So these negotiations, first of all, they are specific. And so we don't comment on prices. I would just -- of course, the spot price is always a reference, right, starting point. You see prices moving higher in Europe already. They are also coming up again in North America. We talked about prices in Brazil also, higher prices being announced. So I think the environment is, in that sense, it is positive. Daniel Fairclough: So we will move now to Andy at UBS. Andrew Jones: So just to go back to the European question about the CO2. Can you just remind us what your emissions are likely to finish at in 2025 if we assume the normal seasonal uptick in 4Q and how that compares to your free allocation levels this year? And going into 2026 with the reduction of the free allocations, and I guess at some of your sites, you produced less in recent years, so you may lose some free allocation because of lower production. Can you give us an idea by how much you expect your free allocation to change next year? And maybe as a follow-on to that, are there any assets which are kind of emitting less the reallocation where the uplift in production would have minimal cost on the CO2 side. Just to give us an idea for how much you could ramp production easily. Genuino Christino: Andy, I mean this is -- I mean, there are many, many moving parts, right, when it comes to DTS system, it is complex. I would just say that as we know, in Europe, most players, if not all players, they are short, right? So they don't meet the benchmarks. I would say a good rule of thumb, it's about -- you're paying CO2 costs for about 20% of your production, right? That's the ballpark to give you an idea. I think when we look at our -- and it's always based on an average, you have your how. So it's highly technical. So we don't really expect going forward in 2026 that we're going to be losing free emissions meaningfully because of levels of operation, right? But as we know, there are reductions, gradual reductions that will happen with the implementation of CBAM. You need to take that into account. And there are also revisions to the benchmarks, right? So that's the situation. Andrew Jones: But you don't have a number of credits reduction that you expect for next year? Genuino Christino: Well, I mean, we all know what's going to happen in terms of reductions. There is a 2% reduction in the DTS system, the 3 allowances, right? And then we have to see what happens now with the benchmarks. So it's too early to talk about it. I would just add that what is important here also is now with CBAM, right, and to the extent that CBAM is effective, then at least you are at par with imports. So they will be paying the same costs, right? I think I would encourage you also to see to the extent that costs increase in Europe, but you have at least the same cost being applied to imports, at least there is a level playing field in that regard, right, which is, I guess, what the whole industry in Europe has been advocating. Andrew Jones: Okay. That's clear. And just a second question on Canada. There was a recent document about medium and light -- medium and heavy vehicles, a proclamation on the auto industry from the White House, which have a paragraph in it talking about potential carve-outs for auto-grade steel from Canada where the tariff would drop by -- from 50% to 25%, conditional on some conditions around like investments in the U.S. and things like that. I was wondering how you interpreted that because it seems slightly unclear to me. But if you've got an asset in the U.S. that you're clearly investing in, do you see potential to use that recent proclamation to reduce the tariff from Dofasco into the U.S.? Genuino Christino: My understanding is that the negotiations at this point in time, as we all know, they are suspended, right? And we are hoping that they will resume the negotiations. And then we'll see finally what comes out of these discussions. I don't have anything else really to add. Daniel Fairclough: So two questions left. So we're going to take the first of those from Phil at KeyBanc. Philip Gibbs: Regarding North America, how is the Calvert EAF ramp going? And is that part of your incremental 2026 strategic EBITDA growth bridge as you look into next year as that comes up to the levels you expect? Genuino Christino: Yes. Well, we are ramping up. So our expectation now -- latest expectation is to end the year with a run rate between 40% and 50%. So it's progressing. We started also the qualification process. And you're right. So when you look at our bridge, that is on Slide 10 and the 800 million, then you're going to have contribution from Calvert in 2 buckets. One is, of course, we're going to be consolidating Calvert for the full year. And as you know, we started the consolidation in end of quarter 2. So you're going to have an extra contribution from Calvert consolidation, which is in our M&A bucket. And you're going to have the contribution from the EAF. Especially in this environment, right, when we are -- when Calvert is also paying for tariffs on the slabs. So that is also part of the 600 million that you see from projects. So Calvert next year, it's in the 2 buckets there. Philip Gibbs: And as a follow-up, you mentioned in your remarks in your analyst deck that Canada is beginning to address some of the unfairly traded steel or some level of reciprocity for the U.S. tariffs. What have they done specifically? And do you think they're doing enough? Genuino Christino: Well, as we know, we have a very large level of imports into Canada, right? So of course, they reduce the quotas for non-FTA countries. That's a good step, but it doesn't really address the problem. So we believe that Canada should be put in place a much stronger trade protection to make sure that the industry can again also regain market share vis-a-vis imports. As we know, a lot of the imports also come from the U.S., right? And there, we are hopeful, again, as we said, that Canada, U.S., Mexico, and maybe as part of the USMCA negotiations, they will also come to an agreement. And that would be very, very good, right, if you have the whole USMCA with similar rules, similar protection. So that would be extremely positive. And you would expect if you have a common trade block that the rules would be similar. Daniel Fairclough: So we'll take our final question, and we'll take that from Boris at Kepler Cheuvreux. Boris Bourdet: Two questions and one technical precision. The first is on Europe. I think you're quite close with politics in talks about those trade barriers to be implemented. What is your take on the fact that those proposals of the European Commission will be adopted in the current state they have been proposed or whether there could be some dilution? That would be my first question. Then on China, there is a lot of talks about the anti-involution measures. Do you see any chance that China might be moving towards a cut in production as some headlines were referring earlier this year? And lastly, just to confirm what you said earlier on the market share in Europe, is it 30% or 20% to 30%? Genuino Christino: Okay. So Boris, I will take your first question, and then I will comment on China. Well, I mean the dilution risk, I mean there is a process, right? So the proposal is now going through the parliament, it's going through the council. I think there is a desire expressed by a number of governments by the commission to have an accelerated approval process. And that is only possible if we don't have a significant change. So I think that's our request that we have these measures in place as soon as possible. And then on the market, that's -- I mean, that's -- I'm just giving you a reference. Okay. Daniel, do you want to talk about China? Daniel Fairclough: Yes, yes. So it's obviously a question that we receive on most of our calls around the theme of China excess capacity, when will they address it, when will they take measures to structurally reform the industry to balance domestic capacity with domestic demand and in an effort to restore the industry to health, to reasonable levels of profitability, reasonable margins, et cetera, et cetera. So to your question, there have, of course, been lots of headlines and suggestions that steel could be one of the beneficiaries of the anti-involution theme in China this year. But the reality is that we really haven't seen any changes in the impact that China is having in external markets. So they continue to have weak prices, very weak margins. Generally, there's a substantial proportion of the industry operating with -- on a loss-making basis. And they continue to export at extremely elevated levels, run rates of 120 million tonne, 130 million tonnes annualized. So those negative domestic dynamics are then being translated into other regions through those exports. So I guess my answer to your question is until we really see strong evidence of change, and that would be through improved prices, improved margins, improved profitability and most importantly, through reduced exports, then nothing is really changing. And that just puts even more emphasis on the requirement for governments to take appropriate actions to ring-fence those domestic industries from these negative impacts of excess capacity in China. So Genuino, he was just talking about the progress, the strong progress that we're making in Europe. We talked earlier about what's happening in Brazil. But it's clear that, that's the best way to deal with this issue is by putting appropriate protections in place. Great. So I think that's our last question, Genuino. So I'll hand back to you for any closing remarks. Genuino Christino: Thank you, everyone. Before we close, let me briefly reiterate the key messages from the start of the call. First, our results continue to demonstrate structural improvements. The fact that we are posting such improved results at what we believe to be the bottom of the cycle bodes well for when conditions normalize. Secondly, our underlying business continues to generate healthy cash flows. Looking behind seasonal working capital movements shows that we continue to generate good underlying free cash flow, and this is after having invested close to $1 billion in our strategic growth projects. These projects are delivering structurally high EBITDA, and this will continue in 2026. Finally, the outlook for our business has clearly improved over the past 3 months. The newly proposed trade tool, combined with an effective CBAM provides the foundation for our new business to earn its cost of capital. Together with the actions being taken in other regions like Brazil and Canada, this continues to point towards a more regionalized and better protected steel industry in which ArcelorMittal can thrive. With that, I will close today's call. And if you need anything further, please do reach out to Daniel and his team. I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you very much.
Operator: [Interpreted] Good morning. We will now begin NAVER's 2025 Q3 Earnings Conference Call. For the benefit of our investors joining from home and abroad, we will provide simultaneous interpretation service for the presentation and switch to consecutive interpretation for the Q&A. Unknown Executive: [Interpreted] Good morning. I am [indiscernible] from the Office of Capital Markets. I would like to thank the analysts and investors for joining NAVER's 2025 Q3 Earnings Presentation. On this call, we are joined by CEO, Soo-yeon Choi; and CFO, Hee-Cheol Kim, and they will walk you through NAVER's business highlights and strategies and financial results, after which, we will entertain your questions. Please note that the earnings results are K-IFRS based provided for timely communications and have not yet been audited by an independent auditor and hence, are subject to change after such review. With that, I will turn it over to our CEO to present on the business highlights. Soo-yeon Choi: [Interpreted] Good morning. I am Soo-yeon Choi, the CEO. In Q3, NAVER continued to strengthen its foundation for new growth by advancing its services and monetization through the integration of AI technology into content and data. In search, AI briefing has been expanded to 15% coverage, leading to a notable improvement in user satisfaction and delivery, delivering a positive user experience. At the same time, the revamped home screen, along with expanded content supply through Clip and Shopping Connect as well as personalized recommendations contributed to higher usability. As a result, the loyal user base strengthened both quantitatively and qualitatively during the quarter. Supported by these initiatives, together with NAVER's solid media influence and strong monetization capability, overall advertising revenue on the NAVER platform grew by 10.5% Y-o-Y. In commerce, NAVER strengthened a personalized experience optimized for exploration and discovery-based shopping by enhancing user benefits through services such as end delivery and membership. As a result, user engagement within the NAVER Plus Store app increased, surpassing 10 million downloads. In Q3, Smart Store GMV recorded accelerated growth with the full quarter reflection of the revised commission structure, serving as a key driver of overall performance. Going forward, NAVER will continue to enhance the customer experience through closer collaboration with Kurly and expanded application of AI-driven personalization. Let me begin with NAVER's differentiated AI-powered search services and the performance of the search platform. To strengthen competitiveness, informational search, AI briefing launched in March, expanded its coverage to 15% of integrated search queries as of September end. It continues to enhance our usability by providing information to reinforce with highly reliable sources and improving answer satisfaction for long-tail queries. AI briefing used by more than 30 million users offers a differentiated experience by enabling summarized information consumption as well as deeper exploration through research using related questions displayed at the bottom of the main text, thereby expanding content consumption. Since its launch, the number of clicks on related questions has increased by more than 5x compared to April, the early stage of the service. This allows users to explore more topics more deeply without entering new or complex queries by naturally engaging with a wider range of NAVER's UGC, creating a virtuous cycle of content consumption. Starting in November, NAVER will gradually test personalization in both the answer text and related question areas. In particular, for shopping and local queries, the company plans to strengthen contextual connections of businesses and explore monetization opportunities. Ultimately, NAVER aims to provide a differentiated search experience in which advertising and content are seamlessly integrated with the answer text while also exploring revenue models for the emerging AI agent environment. The home screen revamp in August, along with the expansion of high-quality content supply, including clip and the enhancement of personalized content recommendation logic led to higher feed engagement. As a result, in September, the average daily users of the home feed and clip stabilized at 10 million users each. With improvements in the usability and recommendation areas of the home feed, user activity indicators such as content impressions and clicks continue to increase. The resulting growth in feed consumption also translated into higher advertising revenue. The number of loyal users visiting NAVER home feed more than 20 days per month increased by over 2x Y-o-Y, while the proportion of such loyal users rose by 5 percentage points compared to the beginning of the year. This indicates that inactive users have been converted into active users, leading to the stable growth of the home feed. Also, NAVER's high-quality UGC and advertising content, together with its more advanced recommendation technology, are being effectively exposed in the right placement, thereby strengthening user engagement and lock-in. It is also expected to lead to further monetization opportunities, including advertising revenue growth. With a solid user base and stronger engagement, along with the expanded application of AI briefing, providing a differentiated search experience, NAVER achieved a 10.5% increase in total platform advertising revenue driven by improved AI-based advertising efficiency. In Q3, continued optimization of ad placements and services using NAVER's proprietary AI technology enabled more efficient ad exposure within the same inventory, resulting in higher advertising efficiency, steady growth across key metrics and an expanded advertiser base. NAVER is also seeking ways to further strengthen its response to commercial queries, one of the key competitive areas of its search business by delivering more satisfying search results for users while capturing additional advertising revenue. To this end, the company plans to expand efforts to identify new advertising services and optimize ad placements across its platforms, including commerce areas such as Plus store, the entertainment section, which is gradually being transitioned into a feed format. The automated advertising campaign at Boost has demonstrated proven advertising efficiency, contributing to both performance advertiser growth and overall advertising revenue expansion. Boost Shopping, which has successfully established itself recorded a conversion performance in September that was more than 100 percentage points higher than standard search ads. Supported by this momentum, the number of NAVER performance advertisers increased more than 2x Y-o-Y. Looking ahead, NAVER is building an environment that will allow Smart Store sellers to more easily experience ad Boost shopping within the seller center while continuing to incorporate advertiser feedback and expand exposure across various placements, including Plus Store. Furthermore, NAVER has integrated advertiser billing accounts to enable advertisers to manage campaigns under a single account and has launched a customized consulting program for advertisers that operate their campaigns directly. Next year, NAVER plans to introduce a new business agent that will design and execute growth strategies together with advertisers and business partners and evolve it into an integrated solution that analyzes business performance and competitiveness based on NAVER's high-quality data to propose practical solutions. Next, I will discuss the key achievements of the e-commerce business. In Q3, commerce focused on enhancing personalized experiences tailored for discovery and exploratory shopping, strengthening delivery competitiveness and expanding membership benefits. As a result of these efforts, Smart Store GMV grew by 12.3% Y-o-Y. NAVER Plus Store is rapidly evolving into a structure optimized for discovery and exploratory shopping through features such as Discovery Tab, AI shopping guide and content integration. By serving as a core channel that enables a brand experience-driven purchase journey supported by each brand's unique data and content assets, along with our proprietary promotions and campaigns, the platform has helped brands achieve 40% or higher growth for 5 consecutive quarters, firmly establishing itself as a key growth driver. NAVER plans to further refine its personalized recommendations and ranking algorithms within search to ensure that brand and SME product databases unique to NAVER are more effectively surfaced. The company will also significantly expand the application of AI personalization on the NAVER Plus Store home screen from 31% to 80%. These efforts are expected to enhance the discovery and exploration experience by connecting users with popular products and UGC while maximizing user lock-in and improving both time spent on the platform and purchase conversion rates. From a monetization perspective, GMV generated through AI recommendations within the Plus Store increased by 48% Q-o-Q, supported by enhanced personalization and service optimization. On some placements, conversion rates for personalized recommendations were more than 10x higher than those of standard formats. Going forward, NAVER plans to further expand the application and coverage of AI recommendations by accurately identifying user intent, thereby driving meaningful growth in both adoption and GMV. Thanks to these efforts, NAVER Plus store app surpassed 10 million downloads within 6 months of its launch. In-app activity also strengthened with page views increasing by 19.4% and average session duration rising by 9.7% Q-o-Q, reflecting higher user engagement. Membership has become a core element that not only provides shopping benefits, but also connects NAVER's broader ecosystem and encourages users to stay longer on the platform. Following the partnership with Netflix, NAVER expanded membership benefits in Q3 to include Microsoft Game Pass, Uber membership and free delivery on purchases over KRW 20,000 at Kurly N Mart. As a result, the number of active membership users increased by more than 20% Y-o-Y. In particular, the partnership with Microsoft Game Pass resulted in a 23% increase in male users in their teens and 20s compared to before its introduction, broadening NAVER's overall customer base. And in addition, fresh food purchases have also risen significantly, positioning membership as a key driver of commerce growth and a catalyst for greater content engagement across platforms. Following the partnership with Nexon in September, NAVER announced a new partnership with Spotify, global audio and subscription streaming platform, further expanding its content offerings. Through this partnership, NAVER plans to integrate Spotify's extensive library, including 100 million songs and more than 7 million podcasts across various NAVER services, enabling users to easily discover and enjoy audio content suited to their preferences and moods. NAVER will share more details on this collaboration in the near future. NAVER also continued its efforts to enhance user experience by strengthening delivery competitiveness. With the rebranding of N Delivery and the enhancement of free delivery and free return benefits for members, the purchase frequency of membership users increased by 13% Y-o-Y, while the membership purchase ratio rose by 1.3 percentage points Y-o-Y. These results show that stronger delivery competitiveness is driving higher purchase activity among our customers. Following the partnership with CJ Logistics in July, NAVER introduced an early morning delivery service with Kurly in September, resulting in a significant improvement in overall delivery lead time. In addition, the implementation of cold chain system has allowed NAVER to expand the share of low-temperature product listings, which were previously restricted, thereby strengthening its product assortment competitiveness. N Delivery GMV continued its strong growth with sellers that adopted N Delivery in the previous quarter, recording over 19 percentage points higher Q-o-Q GMV growth compared to those that had not. This clearly demonstrates that enhanced delivery competitiveness is driving both a stronger user lock-in and increased purchase activity. The C2C segment also delivered meaningful results. Cream and Soda achieved over 15% Y-o-Y GMV growth in Q3, driven by strong sales of exclusive brand products and growing demand for trading cards in Japan. In addition, both platforms are maximizing user experience and sales efficiency through content-driven planning and browsing enhancements aligned with evolving trends. Poshmark is expanding its app entry points through integration with the NAVER search engine while enhancing user experience by improving auto complete and search result layouts to deliver more accurate and relevant search experiences. Through the introduction of a new ad format and enhancement of ranking logic, NAVER continued to achieve growth in first-party advertising revenue, while efficient marketing execution led to improvements in both platform profitability and traffic quality, resulting in double-digit growth in GMV and revenue. Regarding Wallapop, whose acquisition was announced last quarter, the transaction process is proceeding as planned, and NAVER will provide a more detailed update on the global C2C business performance following the completion of the acquisition. In Q3, the core pillars of discovery and exploration-based app experience, brand membership, delivery and advertising were organically connected, creating strong synergies that reinforce the virtuous cycle from traffic inflow to purchase conversion and monetization, thereby advancing the overall growth of the platform. Going forward, NAVER will continue to leverage those organic synergies across the platform to further strengthen its solid position in the commerce market. Next, I will provide an update on the Fintech business. In Q3, NAVER Pay TPV reached KRW 22.7 trillion, representing a 21.7% Y-o-Y increase. Non-captive payments, which accounted for 55% of total TPV grew 31% Y-o-Y to reach KRW 13 trillion, driven by higher payment activity and continued merchant expansion. In addition, through the partnership with Nexon announced at the end of September, including account and payment integration, NAVER is continuing to expand its third-party ecosystem across both online and offline channels. In the platform business, NAVER completed the acquisition of Securities Plus Unlisted in September. In line with Korea's fintech policy direction, the company aims to evolve into an integrated platform that enhances accessibility and reliability for investors in the OTC market. Next, I will discuss Webtoon's results. In September, Webtoon Entertainment signed a global content partnership with Disney through which more than 35,000 titles from Marvel, Star Wars, Disney, Pixar and 20th Century Studios will be introduced for the first time on a new digital platform. The development and operation of this platform will be led by Webtoon Entertainment, and it will feature not only iconic titles from Disney portfolio spanning several decades, but also a selection of Webtoon original series. The new platform represents the results of an unprecedented collaboration that combining Webtoon's product and technological expertise with Disney's unrivaled IP portfolio, allowing users to enjoy Disney's iconic content all in one place. This initiative is expected to broaden Webtoon's reach beyond its existing user base, expand engagement with new global audiences and serve as an important stepping stone for global growth while also laying the foundation for an even deeper partnership with Disney in the future. Please note that Webtoon Entertainment is scheduled to announce its earnings on November 12, U.S. local time. For more detailed information, please refer to Webtoon's earnings release. Lastly, I will discuss the performance of the enterprise business. The B2B business within enterprise achieved new revenue generation through the monetization of GPU as a service contracts secured in the first half of the year. For LINE WORKS, the number of paid IDs continue to record double-digit growth Y-o-Y despite the high base effect from the same period last year. Services integrated with LINE WORKS such as AI node and Roger are also growing steadily as planned. In October, LINE WORKS launched its service in Taiwan and is now seeking to expand into global markets by leveraging its experience as the leading business platform in Japan. Leveraging its full stack AI capabilities, NAVER is building a stronger track record in Korea by providing AI transformation solutions and industry-specific products tailored to both the public sector and the private sector. The company's global sovereign AI initiatives are also progressing as planned. At the end of October, NAVER signed an MOU with NVIDIA to capture physical AI opportunities, which operates in real industrial environments and systems. Also, we secured an additional 60,000 latest GPUs and strengthened its AI capabilities. NAVER has been building industry-specific references, including the financial and energy sectors by providing neuro cloud and customized AI services to clients such as the Bank of Korea and KHNP. In a similar vein, the company is engaging discussions with multiple partners across the manufacturing industry, including the semiconductor, shipbuilding and defense to explore further collaboration opportunities. NAVER also plans to develop specialized AI models tailored to major industries and seek diverse use cases and additional business opportunities within the private cloud market, ensuring that optimized AI technologies can be swiftly adopted across sector. Following the launch of the new administration, large-scale national policy projects have been promoted to accelerate Korea's AI transformation, including initiatives for independent foundation model development, GPU leasing projects and the establishment of SPCs for AI data centers. And NAVER is actively participating in key projects under these initiatives. In Saudi Arabia, NAVER is finalizing the establishment of a joint venture with the Ministry of Housing, aiming to expand into super app, [indiscernible], data center and cloud businesses with the goal of commencing operations next year. The company is also pursuing various global collaborations and opportunities, including the development of an AI agent for tourism and a sovereign LLM in Thailand, participation in GPU as a Service and AI data center projects for Europe based in Morocco and human rights research collaboration with MIT to secure future robotics platforms and any plans to share further updates as these initiatives begin to take shape. Going forward, NAVER will continue to strengthen the competitiveness of its core businesses through AI, while also adding new growth drivers for mid- to long-term expansion and laying the groundwork for global growth. Now CFO, Hee-Cheol Kim, will discuss the financial performance. Hee-cheol Kim: [Interpreted] Good morning. This is CFO, Hee-Cheol Kim. I will now walk you through Q3 financial performance. Revenue in Q3 increased 15.6% Y-o-Y to KRW 3.1381 trillion, driven by solid growth across NAVER's core businesses, including advertising, commerce and fintech. Building on the previous quarter, AI-driven enhancement of advertising efficiency continued, resulting in advertising revenue growth outpacing the market rate. The full quarter impact of the revised commission structure in the commerce business further accelerated overall revenue growth, while seasonal effects from the triple holiday peak period also contributed to the increase. Operating profit increased 8.6% Y-o-Y to KRW 570.6 billion, maintaining a solid growth trend despite higher expenses related to mid- to long-term business expansion and competitiveness enhancement supported by accelerated top line growth. The operating profit margin reached 18.2%, a slight increase from the previous quarter. Next, I will explain the revenue by business segment. In Q3, search platform revenue increased 6.3% Y-o-Y to KRW 1.0602 trillion. Total NAVER platform advertising revenue, which includes search, display commerce, fintech and Webtoon ads grew 10.5% Y-o-Y. This reflects the combined impact of AI-based ad and service optimization, advancements in personalized ad recommendations and the continued expansion of the advertiser base. In Q4, along with along the -- although the long holidays in October may have some impact due to fewer business days, NAVER will continue to enhance advertising efficiency through AI, expand monetization of noncommercial queries and broaden ad inventory, thereby strengthening its competitive edge in the advertising market. Commerce revenue increased 35.9% Y-o-Y to KRW 985.5 billion. The enhanced discovery and exploration experience within the NAVER Plus Store app, expanded membership benefits and the revised commission structure all contributed positively, driving balanced Y-o-Y growth across all segments. Commission and sales revenue grew 39.7% Y-o-Y as the enhanced discovery and exploration experience within the NAVER Plus Store app led to brand purchase growth, driving an increase in Smart Store GMV. The full quarter impact of the revised commission structure also contributed with Smart Store revenue increasing 102% Y-o-Y. Commerce advertising revenue grew 31.2% Y-o-Y, driven by advancement in AI-based recommendation ads and the full rollout of ad boost shopping in Q3. Membership revenue increased 30.5% Y-o-Y, supported by a broader user base and higher active user numbers following the addition of new benefits such as partnerships with Microsoft Game Pass and Uber and free delivery at Kurly N Mart. Fintech revenue increased 12.5% Y-o-Y to KRW 433.1 billion. At the end of September, NAVER launched the beta service of the Connect terminal, which seamlessly links online and offline merchants. This enables NAVER to provide not only payment services within its ecosystem, but also data-driven customer management functions. Going forward, the company will focus on building an integrated online/offline ecosystem and creating new value for both users and merchants. Content revenue increased 10% Y-o-Y to KRW 509.3 billion. Within this, Webtoon revenue based on NAVER's consolidated results in Korean won terms grew 11.3% Y-o-Y. For more details, please refer to Webtoon Entertainment's earnings announcement scheduled for November 12 local time. SNOW Revenue increased 24.3% Y-o-Y, driven by the continued growth in paid subscribers of its camera app integrated with AI content features. Enterprise revenue increased 3.8% Y-o-Y to KRW 150 billion. The number of paid LINE WORKS IDs continued to record double-digit growth in Q3. And GPU as a Service contracts secured in the first half have begun generating revenue. The year-over-year comparison reflects the base effect from one-off revenue related to well-booked deliveries to the Jeonbuk Office of Education in the same period last year. Next, I will discuss the detailed cost items. Development and operations expenses increased 14.2% Y-o-Y, mainly due to higher headcount from new hires, increased stock-based compensation following the rise in share price and onetime severance payments related to Poshmark's workforce optimization initiatives. Partner expenses increased 17% Y-o-Y, while infrastructure costs rose 22.7% Y-o-Y, driven by higher depreciation expenses from the acquisition of new assets such as GPUs. Considering model training and inference for AI integration across all businesses as well as the expansion of new initiatives, including government projects, NAVER expects large-scale infrastructure investments to continue. Marketing expenses increased 20.3% Y-o-Y, driven by promotional activities in the commerce, fintech and Webtoon businesses. Through the end of the year, NAVER plans to efficiently execute various marketing initiatives aimed at enhancing competitiveness across business units and strengthening the foundation for top line growth, including content expansion to boost engagement with the NAVER app ecosystem and promotions for Kurly N Mart launched in September. Next, I will explain NAVER's operating profit by business segment. First, the Integrated Search Platform and Commerce segment maintained a stable profit margin of over 30% despite a slight year-over-year decline due to AI integration within services and shopping promotions while continuing to deliver solid top line growth. In the Fintech business, despite continued growth in payment revenue, profitability declined slightly Y-o-Y due to delayed purchase confirmations caused by summer vacation seasonality and expanded promotional activities. In content, operating losses widened due to increased production costs related to Webtoon IP business development and higher marketing expenses to strengthen global competitiveness. In the Enterprise business, losses also expanded, driven by increased infrastructure investments for AI model training and inference. Going forward, NAVER plans to continue investing to secure future growth drivers, including investments in global platform development for Webtoon, expanded infrastructure investment in the enterprise business to support project acquisition. In the mid- to long term, however, the company will work to narrow operating losses. Q3 consolidated net income increased 38.6% Y-o-Y to KRW 734.7 billion, driven by higher -- the overall increase in investment gains of affiliated companies, including higher equity method gains from A Holdings following the consolidation of LINE Man into LYC. Operating cash flow remained on a stable growth trend, while Q3 free cash flow decreased by KRW 185.2 billion Y-o-Y to KRW 201.9 billion due to increased infrastructure investments. Going forward, we will continue to make capital expenditures to strengthen the competitiveness of each business unit while maintaining financial soundness through stable operating cash flow driven by top line growth and disciplined debt management. This concludes the overview of our Q3 financial results. We will now move on to the Q&A session. Unknown Executive: Before we begin the Q&A session, let me make a brief announcement. Tomorrow, NAVER will unveil its detailed strategic direction at DAN25 Integrated Conference through both on-site participation and live online streaming. We invite everyone to join and tune in. Operator: [Foreign Language] [Operator Instructions] [Foreign Language] The first question will be provided by Stanley Yang from JPMorgan. Stanley Yang: [Interpreted] I have two questions. Number one is related mostly to CapEx. So I understand that GPU CapEx will be increasing this year. And so I'm curious about any guidance on GPU CapEx for this year and next year and also a guidance on the total CapEx that you forecast. And also, I'm curious whether the 60,000 GPUs in the partnership with NVIDIA is included in this GPU CapEx. And along these lines also, I'm curious about management's thoughts on the potential pressure on margin that the increased depreciation expenses can bring about. My number two question is largely about the vertical AI. I'm sure that you are engaging in a myriad of different strategies in terms of your AI verticals, especially on the B2C side in ads and shopping. I'm curious about how the extent to which AI is integrated into your services? And also along that lines, the revenue contribution. I know it's early days right now, but what do you expect for this year and in the future? Hee-cheol Kim: [Interpreted] To answer your first question, our AI integration efforts have resulted in very fruitful and meaningful outcomes in terms of boosting our revenue and monetization strategies with our AI briefing and also ad boost amongst other commitments and efforts. We have also communicated to investors and markets our commitment to keep on investing in the infrastructure and therefore, CapEx in terms of increasing the competitiveness of our services. And although I can't speak to the exact figures right now, as of this year, we expect our GPU CapEx to -- including GPU CapEx, our entire CapEx to stand around the KRW 1 trillion range. And from 2026 and onwards, considering our new business expansion strategies and plans, we expect about KRW 1 trillion in CapEx to go into GPU investments alone. And in terms of our GPU investments, although it is, of course, a proactive move on our part, this also includes our endeavors into increasing profitability as well as it includes GPU as a Service provided to the government and also public sectors as well. So with the review that we have, we will continue to actively invest in GPU with our CapEx. And also this figure will include the 50,000 NVIDIA GPUs that you mentioned. Soo-yeon Choi: [Interpreted] And to address your second question, when we first released the AI briefing service earlier this year, our initial goal for coverage was in the 10% range within the year closing out. However, as the business has progressed, we've come to realize that this has actually been very effective in boosting not only our loyal user base, but also our existing search business as well. And therefore, we'll be accelerating our efforts to bring this figure up to the 20% range. And you'll know if you compare with our global platform competitors that we at NAVER have all around a comprehensive understanding of our users, which we will lean into in terms of providing numerous vertical services, including payment services, reservations, shopping, so on and so forth, which will make sure that we can be a lot more flexible in terms of the AI services that we provide. You'll be able to hear more announcements about the exact timing and features at tomorrow's DAN event. However, by spring of next year, we plan on rolling out our AI shopping agent as well as the AI tab and integrated AI services that will be providing a lot more integrated approach to what we provide in terms of our services. The integrated AI agent is part of our omni service strategies, and we've begun to come to the realization that this has been a significant boost in our revenue with search ads, commerce and also the local business side as well. And so as you've mentioned, it is still early days in terms of revenue contribution, but we expect strong contributions to monetization and revenue moving forward. Operator: [Interpreted] The following question will be presented by Junhyun Kim from HSBC. Junhyun Kim: [Interpreted] I have two questions for you. Number one is about the enterprise side. I know that there has been some variability until now with WORKS and so on and so forth. However, it seems that you are really doubling down on your commercialization efforts with the commercial divisions for GPU as a Service, AI and also Digital Twins on the move. So I'm curious about how you expect revenue to pan out moving forward. It seems that physical AI and robots are one of your focus areas. What will be some of the major key monetization pillars moving forward? And number two, speaking to the commerce marketing expense, when can we expect these expenses to start going down until when do you think we will expect these expenses to be executed? And also on the GPU side, we talked about the GPU CapEx investments that will be going into infrastructure. When do you think that the GPU business will begin to turn a plus margin? Soo-yeon Choi: [Interpreted] I'll answer your first question first and speak a little bit more about the color on the R&D that we have for Digital Twins and robots. You know that in 2017, which was quite a while before the terminology or concept of physical AI really began to come to the fore, we established NAVER Labs to that end. And our core competitive, of course, we assess lies in not hardware, but on the software side. So our focus has really been on developing our software, ARC and ALIKE. ARC will be providing management services in an integrated and comprehensive manner that can bring together robots that are from various different manufacturers, playing a role like Windows or Android sorts. And ALIKE will be able to provide accurate location and delivery services. And we have continued to make endeavors to make sure that if you look at our technology through our efforts in R&D, our technology competitiveness and capabilities, competencies are truly global #1 and at the top. And 3 or 4 years ago, when we began the test bed at the 174 headquarters of NAVER, we were able to make sure that we can go ahead with more speed and also make sure that we can use and accelerate, compile more global references with those efforts. Although it is still early days to really speak to the entire global market size that we can forecast, as per our expectations, we expect that our market share in terms of global robots will stand at about at least 30% in the international arena. And we are making sure that this can serve as our next growth driver moving forward. And we are continuously working to make sure that we can create these technologies in-house and internalize these core competencies in terms of the technology that we have. And especially given that we are a full stack AI service provider based on our cloud competencies, we are working to make sure that the potential that we see in opening up new markets in Korea for tailored and customized cloud to manufacturers can really serve as a growth driver moving forward, and we will continue to focus our efforts in this area. With the Bank of Korea and also Korea Hydro KHNP, we are continuously in negotiations about these types of customized private cloud services that we can provide, and we will be coming to you with more details and color once we can provide them to you. Hee-cheol Kim: [Interpreted] And speaking to your second question on commerce, you'll know that we've revamped our commission structure, and we are planning on fully leaning into the changes that we have made. However, our focus on marketing in this arena is not just as a one-off initiative in order to boost GMV. It will be an all-around comprehensive strategy that focuses on increasing loyalty as well as other aspects, and management will continue to focus on this aspect. And we did touch upon this topic when we were talking about GPU CapEx guidances, but we will continue to make sure that our investments are very active and aggressive on the GPU side, and this will also lead into revenue contributions and growth as well. So we will be taking into consideration the growth in revenue as well as we decide upon our investment plans in GPU. And as is with all infrastructure investments, the direct revenue contribution in the early stages, especially is quite minimal. So this really is in the term of a long-term view with a long-term lens. And so maybe in the temporary time, there might be a slight dip in revenue because of this. However, in the mid- to long term, we are more than certain that this will be able to turn a plus. Sorry, just a revision about one of the interpretation that was provided. The market share of 39% when we're speaking about NAVER's robot initiative wasn't NAVER's market share. It is the OS control platform market within the robot market that is expected to account for about 39% of the global market moving forward. Operator: [Interpreted] The following question will be presented by Eric Cha from Goldman Sachs. Minuh Cha: [Interpreted] So I have two questions for you. Number one is about AI briefing. I know that you aren't into really pushing full monetization strategies yet with AI briefing, but I'm curious about the user behavior or pattern changes that you've seen after the release. And also any updates on the performance or results in a more detailed manner would be very much appreciated. And question number 2 is about the commerce side. I know that the uptick in take rate has really pushed up revenue this year. What do you expect for take rate next year and moving forward? Will there be some meaningful growth in take rate continuing on moving forward? And also, if you can provide us a little bit more update about any recent changes or any results regarding the Kurly partnership. Soo-yeon Choi: [Interpreted] First of all, to answer your question about AI briefing, when we launched AI briefing service, it really wasn't geared towards monetization side. It was more towards really ramping up our weaker side comparatively compared to our competitors that was pointed out in terms of the information-seeking queries in order to increase the quality. And in the initial stages, we were able to find that with the coverage on information-seeking queries as well as long-tail queries, which comprise of 15 words or more that the user satisfaction was very high, and we found that the duration time spent was going up as well as Y-o-Y increase in [indiscernible]. And the search result satisfaction is, of course, important, but also tying that in with the relevant information or relevant questions is extremely important. That's something that we continue to monitor. And if you compare the relevant questions that people click on at the bottom of the AI briefing service, compared to the initial launch days, it has expanded to about fivefold. So that is one of the changes that we have seen. And the fact that it's creating a virtuous cycle where it really is encouraging users and to use the search results, but also explore upon their search results and to build upon that and also to consume content as well. And with the increase in query coverage, I also mentioned about how we will be integrating more and more AI into the business queries as well as the commercial queries, and we're continuing to monitor very closely how this impacts our monetization strategies and also how this will impact the merchants and businesses as well. And at NAVER Place, which comprises of restaurants and other places to go out, we've integrated AI services. And as a result, we've seen our GPR go up 2.3 fold and conversion rates increased 15%. So these are some of the positives that we've seen throughout the release that has made us really have a much more stronger confidence in expanding these services moving forward, and these will be really panning out in our AI agent services that we will be rolling out such as AI tab and so on and so forth next year. And in terms of the shopping side, as you will know, the big boost to our revenue in terms of the shopping side has really been twofold. Number one is the increased shopping revenue that came after the release of Plus Shop and also the increase after we've integrated our services with AI. And with the change in our commission structure as well, that has been a big boost to our revenue. We can look on the GMV side where it's been a big boost for brand stores on shopping as well, as well as in delivery. And we will be leaning into these AI verticals and looking at the commission structure revamp, we are very certain that this will be a boost in terms of increasing take rate moving forward as well. And since the launch of the NAVER Plus Store app, we've been in talks with manufacturers about the ad inventory and placements of our stores that we have, and this will also be a meaningful contribution to revenue monetization as well. And next, speaking to the Kurly side, our shopping strategy has really been in leveraging the lead and edge we have in AI technology and also the shopping product listings that we have in order to provide more personalized recommendations, boosting this side as well as making sure that we make improvements on to the logistics side, which has been played out as one of our weaknesses. And in this area, Kurly will be able to provide more [indiscernible] It is still early days, so we can't talk to the exact figures. However, it is on par and progressing well as we have initially planned. Operator: [Interpreted] The last question will be presented by [indiscernible] from Bernstein. Unknown Analyst: [Interpreted] My question is related to the commerce side, especially the marketing expense. I am curious about the incremental increase on commerce that accounts for in the Y-o-Y increase in marketing expense. Hee-cheol Kim: [Interpreted] On a Y-o-Y basis as of Q3, our marketing expense has increased KRW 85 billion, and about half of that is commerce. And from that commerce marketing expense, which is half of KRW 85 billion, half of that, again, is from the increase in the provisions that came from the increase in GMV as on the backdrop of the increase in commissions as per the structure revamp. And another half will go to the strategic promotions that we provided. Unknown Executive: [Interpreted] Thank you very much for joining us, and we look forward to your continued... [Statements in English on this transcript were spoken by an interpreter present on the live call.]