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After a bruising couple of weeks in the market, many popular stocks have been beaten down to attractive levels creating potential opportunities for those eyeing a rebound.
CNBC's "Closing Bell" team discusses market volatility with Chris Verrone, head of technical and macro research at Strategas.
CNBC's "Closing Bell" team discusses market volatility with Chris Verrone, head of technical and macro research at Strategas.
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Toy maker Hasbro and other consumer stocks have lofty gross profit margins. So, unsurprisingly, do many big tech firms.
The stock market faces heightened risk as Bitcoin, meme stocks, and AI stocks experience sharp declines, signaling a potential end to the bull market. Recent plunges in Bitcoin and meme stocks, along with deteriorating economic data and stalled Fed rate cuts, point to increased market vulnerability.
The stock market faces heightened risk as Bitcoin, meme stocks, and AI stocks experience sharp declines, signaling a potential end to the bull market. Recent plunges in Bitcoin and meme stocks, along with deteriorating economic data and stalled Fed rate cuts, point to increased market vulnerability.
A. Mobley: Well, good afternoon, everyone. My name is Scott Mobley, and I'm President and CEO of Noble Roman's. Also here with me is Paul Mobley, our Executive Chairman and CFO. Before we begin, I want to refer you to the safe harbor statement contained in the summary press release that came out Friday. This conference call will contain forward-looking statements and business assessments of the kind referred to in that statement. So those provisions applied to this conference call as well. Okay. Well, I assume all of you have studied the press release that went out Friday afternoon and that you've absorbed all of those details. Keep in mind that we're holding on releasing the 10-Q for the new auditors to finish with the delay at the moment being the evaluation of that warrant liability. That's sort of a black box calculation that has to do with warrant and derivative valuation modeling. And so that's a valuation firm specializing in those complex formularies. So we'll get the Q out just as soon as we can. In case you did miss the release or you need a refresher, here are a few of the highlights. Net income before taxes was $578,918 for the quarter versus $193,314 in 2024. And keep in mind that income before tax is an important metric because we have that $3.2 million deferred tax asset, which means, of course, that we'll not be paying income tax for quite some time. Total revenue was up 6.8% for the quarter versus last year. Same-store sales in the Craft Pizza & Pub were up 4.2%, and that's despite continuing concerns with consumer sentiment. Margins at the CPPs also increased 12.8% from 7.9% a year ago. The margin contribution from our convenience store program was up 14.8% over 2024 to about $1.1 million. And the margin rate for that segment increased to 73.4% from 65.2% chiefly because expenses in that segment remain relatively stable over a long period of time. A key data trend outlined in the press release is also worth repeating this time around today, and that relates to the trailing 12-month adjusted EBITDA at the year-end 2024, it was a little over $3 million, at the end of Q1 2025 is $3,135,000, at the end of Q2, it was $3,501,000. And now at the end of Q3, it is up to approximately $3,825,000. Our convenience store program continues to build on our backlog franchises sold but not yet open. Our current expectations call for about 27 additional new units during the entirety of the fourth quarter. Of course, that's always hard to predict with exactness as those time lines depend on a number of factors with the underlying convenience store business rather than with us. The psychology around some of the tariff negotiations, particularly with India, as well as the government shutdown had an impact on openings for a while, but things moving along very well at the moment. In fact, we have three brand new locations opening this week. Muncie, Indiana, Lawrence, Michigan, and Harrogate, Tennessee. Some of the same challenges impacted the Craft Pizza & Pubs, mostly as it relates to consumer spending and consumer sentiment. As I'm sure you heard a few days ago according to the recent University of Michigan survey, consumer sentiment has dropped to a 3-year low down 29.9% versus last year. We've had to maintain a value-oriented marketing approach most of the year particularly recently, which is obviously not our preference. For the same reasons, we've not taken a price increase this year. And I don't see doing so in the fourth quarter either. We'll see what the manufacturers have in store at the beginning of the year as far as price escalations, and we'll evaluate consumer sentiment at that time as well. For now, as was mentioned in the press release, we have two products waiting for introduction. One is another value-oriented play off our successful XL pizza launch, and the other is a premium-priced product, a spicy Buffalo Chicken Pizza. I see both running simultaneously at some point here soon with the 2XL party pizza being our primary value promotion and the Buffalo Chicken Pizza being passively marketed in-store and online to grease up margins. Finally, as we noted in the release, the refinancing efforts are proceeding with some accelerating and hopeful developments, but not yet anything we can announce or discuss, conversations and negotiations are ongoing. I know everyone would like to hear more on that, but that is really all we can say at the moment until such time as we have something definitive now. Okay. Well, with that brief review, we're concluding our introductory comments, and we'll now take your questions. A. Mobley: [Operator Instructions] Roger, go ahead. Unknown Analyst: Good afternoon. Very nice quarter. You can't really finance -- talk about the refinancing, but can you tell us how much still owned to Corbel? Paul Mobley: Approximately $6,000. A. Mobley: $6 million. Unknown Analyst: I'm sorry, how much? A. Mobley: $6 million approximately. Unknown Analyst: And you say in the press release that you opened an additional 9 more franchise units this year so far than you did last year, but what is the actual number opened? A. Mobley: No, that was actually saying that our backlog, Roger, had increased by 9. So we're anticipating opening about 57 to maybe 60 on the high end for the year with maybe, what, 14 more yet for the rest of the quarter. Paul Mobley: We've already 15 in this quarter. A. Mobley: Yes. We've already -- I don't know if you caught that, Roger, but we've opened 13 already this quarter. Unknown Analyst: Right. And can you update us with those franchise numbers. Can you tie that in and update us on the status of the Majors agreement to open 100 units and also have the been any more follow-up agreements for additional units with Majors? A. Mobley: We've not entered into any agreement to add to their development plan yet. I wouldn't foresee that happening for a while. We have been opening additional units. We opened a couple more for them here recently, and they're continuing to put more in the line, and they -- well, progression. So they're done here next year. Unknown Analyst: And last, can you comment on cheese and commodity prices? A. Mobley: Sure. So good news is cheese right now is about at the 10-year long-term average. So that's better than some of the high prices we had, especially through a lot of last year and into the first part of this year. How long that will last? I don't know, but we did just receive some -- forgot what it was, 22,500 pounds at a pretty good price. So that will carry us through for a good month. Other prices have been fluctuating up and down Meat prices obviously have not been favorable. It's impacted a couple of our different toppings but nothing extraordinary. There continues to be spot shortages with chicken products due to calling it the avian flu. And it's the avian flu that's actually been causing a lot of the beef pricing problems in addition to some of the tariffs. Mark, go ahead. Unknown Analyst: Congratulations on a great quarter. My question, it seems like you've done a really good job navigating the current environment. We've seen a lot of like fast casual kind of get hit. And I don't know, it seems as if the value promotion is -- I don't know how much that has affected it. And if so, it's kind of exciting, you're kind of adding on to that. But I guess with the numbers, it appears to not really -- we haven't seen the cost of goods for the month, but it doesn't really seem to be affecting that too badly. And just kind of add some color on that. Are you seeing add-on sales things like that? And how much of the XL is being purchased? A. Mobley: So we've taken kind of a double track on that. I try to -- I don't try, follow the numbers very closely every single day, and I try to parse out what we're seeing in terms of guest counts, average check add-ons. And our strategy, first of all, with the consumer sentiment, the way that it's been. Obviously, we have to be value-oriented not our preferred playing field, but that's the playing field we're on. So rather than trying to discount our existing products, we created a whole new product that we could offer at a value price and have a reason for offering it at that price, and that's sort of how the XL pizza evolved. But simultaneous with that, we've been running product specials that have higher margins. For example, I mentioned the Spicy Buffalo Chicken Pizza that we'll probably be launching here yet this quarter. Previously, we launched the Stuffed Crust Pizza. All of those are done at regular menu pricing. And most of those are being marketed on site at the restaurant passively. So as people come in, we're working on upselling to exciting products like that. So all that is to say that we try to bring in the value-oriented customer and at the same time, offer exciting new products that are premium priced for those that are willing to pay that price. Paul Mobley: Your question about cost of sales was 20.8% third quarter this year compared to 21.4% third quarter last year and 20.7% for the 9 months ended September 30 compared to 21.1% for the same 9 months last year. So we're ahead in cost of sales by a good half percent. Unknown Analyst: Yes. That's excellent considering the environment. How are you seeing same-store sales for the first, like, say, six weeks of Q4? A. Mobley: Well, Q4 started off with a little bit of a roller coaster here and there because of the -- oddly enough, the Charlie Kirk assassination had an impact for a few days on sales and then the government shutdown had an impact on sales here and there with various announcements. But then outside of those periods, we've had some good same-store sales increases. So if the market trends back now that the government is back open and all that pessimism is past us, then hopefully, I know Sunday we are up quite a lot. I don't have all the numbers handy here, but it's -- we're hoping for a return to normality here. Unknown Analyst: Okay. I know you can't really -- don't want to talk too much about refinancing. But just you're doing -- being very aggressive in paying down the debt. It just seems like even in the current terms, you'd almost have it paid off in 3 to 4 years if you wanted to. And we never have to hear the word refinance ever again. But with you -- I'm sure you'd be sorry to hear that. But is that kind of what you would prefer? Would you continue? It seems like you're able to handle that $91,000 payment, especially with over the last quarter fairly easily? Are you still looking to pay it off aggressively like that? A. Mobley: Well, if I never heard the term refi again, I would be very, very happy. But yes, our goal is to secure refinancing that obviously, we can continue to pay down on rapidly likely have been. Paul Mobley: We have those terms already signed until June of '26. A. Mobley: With our current finance. Paul Mobley: With our current loan. So we'll continue that. And we're doing that without losing any cash flow. We're gaining a little cash all the time. So that's -- we're handling that just fine, and we could continue to handle it. The situation is that Corbel, while they're happy and they go along with us and we have a good relationship with them. They have closed -- or they're trying to close out that fund that has financed us and we've agreed that we will continue to aggressively try to find an acceptable financing source to pay them off. But the bottom line is we have an agreement for their current deal until June '26, end of June '26. Unknown Analyst: Yes. And like I said, that's -- I think each quarter, you're knocking off like 5% of the principal. So just working -- right. Okay. Thank you very much. A. Mobley: All right. Any additional questions? I'll give it just a second here. All right. Well, I don't see any additional questions. So we'll go ahead and call it an afternoon. And we'll be back in touch very soon and talk to you then. Thanks very much for participating today.
Operator: Good morning, ladies and gentlemen, and welcome to the Elite Pharmaceuticals Second Quarter of Fiscal Year 2026 Conference Call. [Operator Instructions] Before management begins speaking, the conference has the following statement. Elite would like to remind the listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties that are subject to change at any time, including, but not limited to, statement about Elite's expectations regarding forward operating results. Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws and represent management's current expectations. Actual results may differ materially. Elite disclaims any obligation to update or revise its forward-looking statements, except as required by law. More complete information regarding forward-looking statements, risks and uncertainties can be found in the reports Elite files with the SEC, which is available on Elite's website at elitepharma.com under the Investor Relations section. Elite encourages you to review these documents carefully. With that covered, it is now my pleasure to turn the floor over to your host, Mr. Nasrat Hakim, President and Chief Executive Officer of Elite Pharmaceuticals. Sir, the floor is yours. Nasrat Hakim: Thank you, Matthew, and good morning, ladies and gentlemen, and thank you for joining us today. My name is Nasrat Hakim. I am Elite's Chairman and CEO, and this is our earnings call. Our CFO, Carter Ward, will give you a summary of the company's financials, after which I'll give you an update and answer some of the questions you've submitted to Dianne. Carter, you are on. Carter Ward: Thank you, Nasrat, and good morning, everybody. We filed our 10-Q last Friday. It was for the quarter ended September 30, 2025. That is the second quarter of our fiscal year ending March 31, 2026. And the 10-Q is available. If you haven't seen it yet, it's available at elitepharma.com under our Investor Relations section. So please take a look if you haven't already done so. As always, I'm going to go over the financials, provide some context, some color to the financial statements, and we received a bunch of questions since Friday over the weekend. Thank you very much for sending those questions. I always appreciate that as well. So I'll do my best to answer those questions as I go through my presentation. Let me start with the P&L. Our total revenues for the quarter September 2025 quarter was $36.3 million, and that's compared to $18.8 million for the September 2024 quarter. That's a $17.5 million or 92% increase. And then total revenues for the 6 months ended September 2025 were $76.5 million. You can compare that to $37.7 million for the 6 months ended September 2024. That's a $38.8 million increase or 103% increase. So the revenue rate has more than doubled over last year. Also note that our revenues for the entire fiscal year -- entire last fiscal year 2025 were $84 million. So in the first 6 months of this fiscal year, we are almost as much as the full 12 months of last year. And last year was a good year. Last year actually was our best ever. So I think pretty soon, I'll be saying that last year was our second best ever year. The increase is attributed to 2 main factors. These are the same factors that I mentioned in our last call back in August. First, the Elite label has become well established in our niche markets. The 2024 fiscal year, we're in 2026 fiscal year. The 2024 fiscal year is when we launched our Elite label, we were unknown then. That initial launch included our generic Adderall and a few other products. Now we've been in the market for those products for 2.5 years. We're a known entity. The product lines from that initial launch, they have a secure and growing market share and revenue streams. So Elite continues to distinguish ourselves as a reliable supplier of quality product. That's one of the -- that's contributed to our growth in revenues. The second main factor is the Lisdexamfetamine product line. That's Lisdexamfetamine is generic to Vyvanse. It's a very large market with high demand. That was not part of the initial launch from 2 years ago. And it was also not launched until the last quarter of last fiscal year. So that's earlier this year, March 2025 quarter, earlier this calendar year. So that's why Lisdex is not reflected in year-on-year numbers. September is the second quarter of our fiscal year. Lisdex wasn't launched until the middle of the fourth quarter of the last year. So this September quarter is only the third quarter of substantial commercial operations. So keep that in mind when comparing September '25 with September '24. 2025 has Lisdex, 2024 does not. So that's a big difference, a huge difference. Moving down the P&L, we had a gross profit of $14.1 million, compare that to $8.2 million for the September 2024 quarter. That's $5 million or 72% increase. Gross profit for the 6 months ended September of 2025 this year was $41.3 million. You can compare that to $16.7 million for the 6 months ended last September 2024. It's a $24.6 million increase or 148%, well more than double. So now I received a few questions on revenues, margins, quota and direct versus indirect sales. So I'll address all of those here because they're all very much related. So a few shareholders noticed that revenues were down from the June quarter, and they wanted to know if it was quota related. Well, the short answer is whenever you're selling controlled substances like generic Vyvanse and generic Adderall quota is always a factor, although what I'm going to say is probably not what the shareholder had in mind when he was saying the question. So -- but with regards to the September quarter, as compared to the June quarter, we've noticed an increase in quota for generic Vyvanse, which served to increase supply in the market. We also got quota. Result was that we increased our volumes, but we sold at lower prices as compared to prior periods. I mentioned this a few times in our last call in August, there's more than 10 suppliers that we compete with for generic Vyvanse and that creates downward pressure on prices. Whenever you increase supply, there's a downward pressure on your prices. This is typical generic business model with higher prices at first and they eventually stabilize. And that's what's happened with the generic Adderall, which we've been selling for years, and a similar track is being followed by the generic Vyvanse, which is still a relatively new product for us. We've seen stabilized price levels for quite a while now, but generic pharma is a very competitive business. So don't ever forget that. We don't. With regards to direct and indirect sales, let me first explain the difference between them. First of all, direct sales or when we sell directly to a pharmaceutical chain and that customer handles the complex supply chain logistics, ensuring that their retail locations are properly stocked. The logistics are complex. There is a high infrastructure investment that's required by the customer. Few customers do this, makes sense for them, but many do not. Indirect sales are when we sell to a customer, but this complex supply chain is handled by a third-party wholesaler such as the big 3, we call it Cardinal, McKesson or Cencora, everybody knows those names. The wholesaler has the infrastructure and the expertise to handle these complex and sophisticated supply chain requirements. quite a bit of investment is required to do that. And there's much greater volume and market share available through the indirect sales model, but at lower margins since the wholesaler, they charge for their services. So the takeaway here is that in order to achieve larger market share within a more stable and reliable business model, you will almost always end up with an indirect sales bias in your revenue streams. The customer wants not just a reliable supplier, which Elite is, we are definitely that, but they also have a complex supply chain that requires the resources and expertise of these large third-party wholesalers. So this is just how the generic market works in the U.S. And also, when you first stock up a new product with a wholesaler, like we did with Lisdex this quarter, there's onetime stocking fees that they charge you. And that results in higher COGS, cost of sales and lower margins. So that happened with Lisdex, and it is also a contributing factor to the lower margins as compared to the prior quarter, but those are onetime stocking fees. So we're past that now. Moving down the P&L. Our operating profits for the quarter ended September 30, 2025, were $8.2 million. You compare that to $4.7 million for the September 2024 quarter. It's a $4.7 million or 136% increase. The operating profits for the 6 months ended September of this year were $29.9 million, and you can compare that to $7.3 million for the 6 months ended September 30, 2024. Last year, that's a $22.5 million or 307% increase, both very substantial. Now to the cash flow statement. Operating cash flow for the 6 months ended September of 2025 this year was $19.9 million as compared to operating cash flow of $4.6 million for the 6 months ended last year, September 2024. That's a $15.3 million increase, 333% increase in operating cash flow. On to the balance sheet, which continues to strengthen. Working capital as of September 30 this year was $75 million. You can compare that to $46 million as of the beginning of this fiscal year, March 2025. That's a $29 million or 63% increase. I always like to drill a little further into the working capital, and you see the current assets increased from $58 million to $86 million, while current liabilities decreased from $11.8 million to $10.7 million. So current assets continue to increase with current liabilities decreasing. Assets gone up $28 million. liabilities have dropped by $1 million. This is not something we see that often, and it's happened several quarters in a row for us now. It's a very positive trend. But just know that liabilities can't decrease forever as you grow, just your accounts payable and things like that also grow. That's just how it works. So eventually, liability is going to hit some -- it's going to hit a floor at some point in time as we continue to grow. So they'll hit a floor as far as dollar value and go up in dollar value. But the thing to keep in mind, what's most important is the ratio between the assets and the liabilities. So as long as the growth in the current assets is greater than the growth in the current liabilities, that's what we want to see happen. That's the trend that's been always happening, and we expect that to continue, and our balance sheet will strengthen as that continues. The reduction in liabilities is not just limited to current liabilities. When I talk about working capital, I'm just talking about current liabilities, but we also have noncurrent liabilities. They are also reducing. So if you exclude the derivatives, the noncurrent liabilities were $5.2 million in September of this year. You can compare that to $5.6 million in June of 2025 and $5.8 million at March of 2025, beginning of the fiscal year. So we went from $5.8 million down to $5.2 million. The takeaway here is that Elite has low debt. And it's not just low debt, it's debt that continues to decrease while working capital increases. Both of these are hallmarks of a strong balance sheet, and we certainly have that. I got a few more questions over the weekend. going to add to my presentation here, and I'll like to address now. One of the questions was, please explain why the R&D expenses have declined. They were $1.4 million this year, September 25 for the quarter versus $2 million for the September 2024 quarter. Just know that R&D costs, they don't flow in a straight line, and they really depend on what we're doing at any point in time. Last year, 2024, we were in the final stages of getting the Lisdexamfetamine approval. There were more resources expended, more activities going on last year as compared to the most recent quarter, and we see how well that worked out when we launched the Lisdexamfetamine in January of 2025. So really, we're just talking about a timing difference here. R&D continues as always. It's just something that it's not a flat line type of expense. Some quarters will be more than others, especially when we are in the final stages of approval for a major product. Another question was discuss the increase in G&A, general and administrative costs. The G&A cost for September of this year -- this quarter, September 2025 was $4 million and against $2.3 million for September 2024. G&A cost for last quarter, the June 2025 quarter was also $3.4 million. So this quarter, we're even more than the June quarter. So the answer lies in 2 areas. First, sales administration and secondly, compliance. or let me talk about sales administration. With a business that has more than doubled in size, the back-end side of the business has become not just larger, but more complex. We're processing more purchase orders, more shipments, returns, collections, managing quotas, forecasts, et cetera, all of those types of back-end activities. That requires increased resources, both in-house and third party. We have third-party people that help us as well in this area, and that has costs. On the compliance side, rapid growth of Elite also creates complexities that require increased resources, and this is part of the G&A cost. We have registrations in all 50 states in Puerto Rico in order to do business there. And many, many of those states also require separate tax filings. So we have to comply with that as well. That takes consultants and in-house and third-party resources. We have to hire people in-house, plus there's a lot of consultants and subject matter experts in those areas, which are quite specific and specialized. And so the cost of compliance has risen with the size of the business. Another question is, what is the current headcount at Elite? Well, we have 65 employees currently. It's really amazing though, when you look at our results and our performance, having only 65 employees is quite remarkable. Last question. Inventory has fallen since last quarter. Does that signal a decrease in future demand? Very good question. The inventory was $19.4 million on June of this year, 2025. It's down $18.2 million in September 2025. That's a $1.2 million decrease. There is no signal here. This is more really just some timing differences. We have an arbitrary cutoff date, September 30. There are shipments that may have just been delivered to customers at that date, and we have a bunch of raw materials that are on the way, but not yet received. So the inventory goes down on the finished goods and the inventory not yet coming up on the raw material side of things, it's all just business as usual. It's really the ebbs and flows, nothing other than timing at the quarter date and no real signal there. So to sum up the financials, we had strong revenues, more than $36 million for the quarter. We have 6 months revenue of $76 million. Elite continues to perform well in the market. Margins are down due to generic market competition, but the balance sheet is strengthening. Cash flow is solid. Working capital is increasing and debt is decreasing. A really good trends and metrics. So halfway through our 2026 fiscal year, we are well on our pace for our best year ever. Our next quarterly report is due in February 2026, and I look forward to speaking with everybody then. Now I'd like to introduce our Chairman and CEO, Mr. Nasrat Hakim. Nasrat Hakim: Thank you, Carter. It was another good quarter for Elite. Generic Vyvanse, generic Adderall, both IR and ER and Elite's new product launches all contributed to Elite's substantial growth compared to the previous year. Lisdexamfetamine, which is generic Vyvanse, a central nervous system stimulus used for the treatment of ADHD was launched early this year. And we have maintained an 8% market share according to our internal data. IQVIA have not caught up yet with our internal sales and marketing. We are at about 8% market shares. Lisdex is a big reason for why positive quarter and the previous quarter comparing to the previous quarter of the same year are so far apart. Last year, we would not have Lisdex and this year, we do. And that is an testament to our continuous growth. Comparing this quarter's sales of Lisdex to the previous quarter, we picked up volume as the market volume grew and the brand to generic conversion continues. And I could see that trend still goes on for a little while longer. Lisdex volume grew 6% this quarter compared to last quarter according to IQVIA. Price competition, though, did increase. And as Carter indicated, that's what led to the situation we're in. excellent financials, but doesn't compare to last quarter due to the factors that Carter just explained, and we talked about in the last actually meeting as well in August. When comparing our second quarter fiscal year to the most recent quarter, we see reduced revenues and profits from Lisdex. This is to be expected as we discussed. This is nothing to worry about. We expected this phenomenon. We expect this coming quarter to be as solid and things stabilize by now. For now, though, as I stated, the pricing for the next quarter should be steady, and we expect the generic market to continue to grow as the brand to generic conversion and as doctors start to prescribe it more because now it costs less as insurance companies start to accept it more. IQVIA shows Elite a market share of amphetamine IR averaging 19%. Compared to last quarter, actually, Elite even grew our volume of sales, maintaining very attractive margins. So in IR, we're a very small company compared to the competition, but we command 19% of amphetamine IR. For amphetamine ER, our market share is about 12% according to IQVIA. Elite target continues to have attractive margins. We're not selling at any prices. Kirko is looking for attractive margins and selling exclusively under our Elite label. Isladepine and trimipramine are smaller market, but each with only one other competitor. Each has a strong market share percentage-wise, and these products have high margins. Loxapine and phendimetrazine are also small markets with 2 competitors and good margins. For phendimetrazine, we command 30% of the market share. Naltrexone and phentermine are now being sold exclusively under the Elite label. Precision dose license for those products ended in September. Phentermine and naltrexone markets both have competitors that command about 90% of this market. We will target building sales under the Elite label for both, and we're doing very well already for naltrexone very well. Elite recently launched Oxy/APAP, Percocet, Hydro-APAP, NORCO, generic APAP with Codeine and Methotrexate. Each market has 2 to 4 primary competitors. Elite currently has a minor but growing share for each of these products. We are not aggressively pursuing these because they are high volume and low-profit products, and we do not want to prioritize them over the 3 main products I just spoke about, Lisdex, Amphetamine IR, Amphetamine ER. So we're staying in the market. We're continuing to get shares that suits our manufacturing needs and sales and marketing needs. And when we have larger capacity, we can be more aggressive with these products. We have a couple of in-process launches. We received approval for Ropinirole ER that we plan to launch in Q2 most likely. We're going to prepare for the launch in Q1. We'll end up launching end of Q1, early Q2. In addition we have methadone, a generic product that's already approved that we are planning on launching once we can prioritize it accordingly. Our partner, Dexcel in Israel launched Amphetamine IR. There is only one other competitor in Israel, and we expect this to be an attractive market. Good potential for other business opportunities with them. In our development pipeline, we continue to progress. We have right now pending under review after FDA review, Oxy ER, which is the generic for OxyContin. This is a Paragraph IV filing, and the patent lawsuit is on a stay right now. We have submitted our answer. We are waiting for Purdue and the court what to do next. This is as far as Elite is concerned. We're not talking about the lawsuit that was just settled with the Sackler family for $7-plus billion and now the states most likely will own Purdue. We're talking about the lawsuit as a Paragraph IV for Elite filed product. We responded to the courts. We wait for to see what Purdue and the court want to do, and we'll update you accordingly. We previously announced a successful BE study for an undisclosed anticoagulant generic. We expect to submit an ANDA for this product most likely in Q1 of next year. The brand has an unexpired patent listed in the Orange Book. And so commercialization of this generic product requires that we address the and expired patent. We'll determine our approach for this patent closer to the time of filing. We will definitely have to notify them, of course. We have other generic products in the pipeline that we'll update you on and announce once a material event occurs. As Carter indicated and I said at every single conference call, R&D continues to be a priority. Regarding merger and acquisition and uplisting, Elite continues to actively pursue M&A and other alternatives such as uplisting. M&A is our primary focus. As I indicated before, I gave the team until the end of the year to show me that this is a viable option. Well, it is looking like it is. We have had a company unsolicited asked to visit the site. The President and the -- of the U.S. division and the Global Head of Manufacturing requested a site visit, we granted it. We accommodated them, and that is concluded. Our consultant presented us with a list of companies that they approach. Several showed interest in M&A with Elite. I expect at least one of them to visit this year. Our primary focus is M&A for the foreseeable future. I get a lot of questions about that. We are focused on M&A. If we determine that that's not working, we'll consider other alternatives. To sum it up, Elite is executing its strategy of developing and filing new ANDAs, growing sales, supporting working capital growth, maintaining a strong cash position and Elite's stock price reflects the company's growth. Elite maintains a strong reputation of a dependable supplier. And that's going to help us tremendously when we launch new products because they see and have seen what we can do with controlled substances. We never overpromised. We've always delivered, and we established credibility. So now everything else that we launch in the future, we have already established a good reputation for companies to be with us on it. Lisdex is expected to continue as a key product for Elite with attractive margins. Amphetamine IR is a mature market, and we expect to defend our strong market share. For Amphetamine ER, we are targeting additional volume while maintaining pricing as our previous partner, Presco phases out. They still have some product that they're still selling. Elite has a history of robust growth for several years in a row now. I'm not going to recite the numbers from $7.5 million till today, where we're going to way go over $100 million this coming year. We're 2/3 of the way through, 75% of the way through. That is a huge achievement from $7.5 million to almost $75 million now in 2 quarters only. Elite is positioned as an attractive midsized generic pharmaceutical company with consistent profits, steady growth and a low debt. Our stock price remains strong, and we continue to evaluate M&A and other options. All right. Let's go to Q&A. Before that, let me say a word regarding Q&A. If you ask intelligent relevant questions, we will do our best to accommodate you. Buffoonery questions and comments will be ignored. Nasrat Hakim: All right. Please provide an update on the pipeline and the status of the various drugs in the pipeline. Do you anticipate additional ANDAs to be filed by the end of this year or half of 2026? Are we still on target for the Q1 submission to the FDA of the $27 billion drug? That's the anticoagulant blood thinner. Is the anticoagulant product still planned to be filed in the first quarter of 2026? The answer is yes. And because there are a lot of questions of interest about this group of subjects, so let me combine them all together and start with R&D. Commercialization is the final stage of R&D, okay? So everything we have in the market at one time was an R&D product. Whether you buy it, acquire it, build it in-house, it's now the end stage of R&D. We have a very solid portfolio that you have seen how it took us from $7.5 million to where we are today. We have a couple of small products that are approved but have not launched yet, okay? So first, you have the products in the market, then you have the products that you're going to send to the market. Then we have OxyContin ER, which is under review by FDA. So now you have the pipeline populated by something the FDA is reviewing that's going to become in the market. Then we have the anticoagulant that test the and will be filed next year. It will be filed next year, Q1 or Q2, most likely Q1. And in addition to all of that, we also have generic formulations that are going to go into clinical trials, and that's what Carter was talking about. Sometimes the cost is very high because you have things that are happening at the same time and sometimes you're preparing for them. So sometimes the R&D cost is much higher than others because certain events have taken place. So the next step we had, we're going to go into clinical trials. Clinical trials cost a lot of money. And we have others that are in the early stage that have not reached the point of clinical trials. We are fully populated from early stage to clinical trials to already past clinical trials to already filed with FDA to already approved to already in the market. It doesn't get better than that. We are on solid grounds. Next set of questions is List ex capsules by Elite are doing very well. Is there any chance Elite will expand its product line to include Lisdex chewable tablets in the near future? Does Elite have the capability to manufacture chewable tablets? Okay, not today, but it's very easy to modify our equipment to do that. That is an excellent question, by the way, an excellent comment. I explored it before, and we decided to stick with Lisdex because it was where all the money and most of the money is. I will go back and take another look at this because we were actually looking at that at one time because not too many people are in it, but Lisdex is too huge for us to ignore the actual product and go after a little niche. It's something to take -- go back and revisit. Would there be any consideration to breaking off SequestOx into a separate subsidiary of Elite to potentially be sold off as a stand-alone. I don't think so. It would not add a lot of value. When are methadone and [indiscernible] launches planned? And honestly, I've already given the answer in my presentation, but I'll give you a more accurate answer. As soon as operations and sales and marketing make them priority. We have a lot of other priorities that are bringing more money. These products are in there. We're ready to launch them as soon as we get green light that operations think they can fit them in without impacting our main products and sales and marketing says people are screaming out for them. Is Elite considering purchasing any additional ANDAs like we did when we repurchased the stuff from Nordstrom? That's a very good question, actually, yes. This is one way for us to enhance the pipeline, and I'm always on the lookout. And it's not really an easy task to find the right fit for your company. And there are other ways to also do that, that I will not discuss today, but maybe we'll talk about in the future. It's a very good question. DEA quota. Could you please also speak about the increased quota for Lists as of September 25. Does Elite expect to capture some of the increased quota? If so, how much? We saw 2 articles involving the increase in quota for Adderall and Vyvanse in September and October by the DEA. Did Elite benefit from these quota increases? Yes. Does Elite expect to receive more quota given the recent limit increases on both Vyvanse and Adderall by the DEA? Or has Elite already received more? We have. So just to answer them all together, yes, that is true. The DEA relaxed their quota requirements. We received our allocated portion what we requested of our full quota this year without any issues. for all 3 products. That's the good news. The not so good news is that they are doing this with everybody else. So now everybody else has got them. I like it better when they were tight because we were experts at navigating through the DEA. I'll digress for a second and give you a real-life example of something that happened. We were looking for sales and marketing group to buy before we hired Kirko and about the time we were with Lannett. And we found a company in Florida that had the sales and marketing portion and they lost their products. So this is great, great fit. We have products one thing when I met with them, the product they could not sell was amphetamine. And when they said this was Adderall and they couldn't sell it, I immediately walked away and we hired Kirko. So one company went bankrupt because they could not get the quota to sell for Adderall and other company became a superstar because of the same issue. It's knowing how to navigate around regulatory agencies and your relationship in the industry. Question on legal, meaning SequestOx. Any update on the patent litigation for SequestOx? And then concerning generic OxyContin -- sorry, OxyER, SequestOx. Concerning generic OxyContin, on [ 9 2 25, ] Purdue filed a cross motion to extend the 30-day -- 30-month stay. When would that stay expire, if not extended, okay? So as to the first part, any update on patent litigation for Oxy ER, the answer is we really responded to the court, okay? We await Purdue and the court's decision, what are they going to do next? Is the court going to say, no, proceed with discovery? Are they going to narrow it? Whatever happens, we will hear about it. And once we do, we'll make it public. I don't know what will happen with the [indiscernible] stay. Now that the court ruled just a couple of days ago that the Sackler family is no longer in charge, they accepted the settlement for $7-point-some billion. Now the government is going to take charge of Purdue, and they're going to be in charge of OxyContin. Are they going to open the door for all the generic companies to get in? Or are they going to insist on 3Month stay? I don't know. This is an uncharted territory. I've never seen the government take over a company before in the pharmaceuticals. So we'll see what they're going to do. If they do away with it, then everybody gets in. If they don't, we'll all have to wait 3 months. Potential sale of the company. All right. Questions on potential sale of the company. On the merger and acquisition front, was the company valuation done? Listen, yes, any consulting firm task to selling a company will do evaluation to establish a range for many reasons, including knowing who to approach to buy the company. They need to know who has the balance sheet to buy the company without looking at the company and seeing what you're worth, they cannot do that. This is one of many reasons. But they never tell you you're worth X. It's always a range, you worth between X and Y. Has the M&A firm identified potential buyers? Yes, several. Has Elite received any offers to sell the company? We are not at that stage yet. What is the current impact of SequestOx technology and IP on ELTP's valuation as it pertains to the potential sale of ELTP? It doesn't really contribute that much because we are being evaluated on our profits and revenues, okay? This will be the sexy stuff. The fact that we have low debt is a huge thing. The fact that we have the our technology. these are extra factors. But the main driver is how much profit do you have and how much revenues, what's your pipeline and what's your R&D status. 20 years ago, 15 years ago, 10 years ago, our technology [indiscernible] was really sexy. Today, it's not as sexy. Can you share any information on valuation done on the lead by a third party? No. That is counterproductive. So again, if somebody and the company does, they'll say your company is worth between X and Y. If I make that public, I am doing you and the company this service because somebody who signed to buy us that uses different model will immediately revert to the model that produces the least amount of money and they start negotiating from the lowest number down. This information is confidential for a reason. We keep it confidential because we don't want anybody to know because there are multiple ways of calculating the value of a company. If you calculate it on a [ PE ] of 20, okay, you will get a different number than going EBITDA times 12. And both of them are valid ways to evaluate the company. there are other factors that come into that. So no, we cannot share that. Is uplifting the more likely scenario now? No. We are preparing for all contingencies. M&A is still in the lead. A question about the facilities. Can you please give us an update on retrofitting the old packaging space with the new manufacturing suit? Has any manufacturing space been designated for a pilot scale manufacturing suite? We already have a pilot scale facility in building 165, so we don't need to do that, okay? The space for the old packaging line will be utilized for encapsulators, among other things. But to that end, the new packaging line and the old packaging line in the new facility are working out very well. Packaging and sales and marketing are the 2 parts of the business that I am comfortable they'll serve us for years to come from the standpoint of expansion, okay? The packaging line is fully functional, sufficient for our needs and ready to support us for years to come. That was the last question. That concludes our conference call for today. We'll talk to you again in February. Thank you all, and thank you, Matthew. Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
Operator: Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu.com Limited's Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu.com Limited. Please go ahead. Huang Pu: Thanks, Rebecca. Thank you for joining us to discuss Sohu.com Limited's third quarter 2025 results. On the call are Chairman and the Chief Executive Officer, Dr. Charles Zhang, CFO, and invest president of finance, Gemstone. Also, us, Chang will see with the Win Chen and the CFO Bin Wang. Before management begins their prepared remarks, I would like to remind you of the common safe harbor statement connection with today's conference call. Except for the information contained here, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore, should not place undue reliance on them. All risky statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed. Dr. Charles Zhang: Thanks, Huang Pu, and thank you, everyone, for joining our call. The 2025 marketing services revenues were in line with our guidance. Well, both our online game revenues and the bottom-line performance are benefiting from our continuous efforts in the gaming business and were well above our prior expectations. We recorded positive net income this quarter. For the social media platform, we continue to refine our products, integrate resources to better meet users' needs, and enhance their experiences. Meanwhile, leveraging our product metrics and distinctive events, we remain committed to generating and distributing diversified premium content and continuously energizing our platform. Our differentiated advantages and unique IP enabled us to further unlock monetization potential. For online games, both new and established titles delivered outstanding performance driven by our deep understanding of our needs and proven operational expertise. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. The 2025 total revenue is $180 million, up 19% year-over-year, and 43% quarter over quarter. Marketing services revenues are $14 million, down 27% year over year and 13% quarter over quarter. Online game revenues are $162 million, up 27% year-over-year and 53% quarter over quarter. GAAP net income attributable to Sohu.com Limited is $9 million, compared with a net loss of $60 million in 2024 and a net loss of $20 million in the second quarter of this year. Non-GAAP net income attributable to Sohu.com Limited was $9 million, compared to a net loss of $12 million in the third quarter of last year and a net loss of $20 million in the second quarter of this year. Now I'll go through our key businesses in more detail. For the Sohu platform, we continue to leverage cutting-edge technologies to optimize our products and promote deeper integration across our product metrics. This enabled us to further adapt to various narrows, improve operation efficiencies, and enhance users' experiences. At the same time, relying on the synergies between various online and offline events, we continue to stimulate the generation and dissemination of premium content and attract more users to our platform. In the quarter, we hosted a variety of events and activities to further build a vigorous social networking platform, providing users with abundant opportunities for online and offline communications. The 2025 autumn convention of social media influencers effectively promoted deeper communication among broadcasters across different verticals and significantly increased their vitality and retention on our platform. The ongoing 2025 Sohu Hip Hop Dancing Festival and other model competitions successfully ignited the passion of young people and further consolidated our influence in these areas. All these activities gained widespread recognition and popularity, continuously infusing a large amount of content and traffic into our platform. As a result, we were able to further expand the influence of Sohu and fostered a prosperous platform ecosystem. Additionally, we also held special theme activities like the Halloween American TV series party. Not only did we engage users with innovative content forms, but it also became a highlight of our social media's American TV series month, which brought audiences classic dramas such as Westworld and The Mandalorian. Meanwhile, we also launched multiple TV dramas, original drama, and short dramas during this quarter to attract and retain users. The original drama, The Rebirth, was well-received by audiences, attracting more users to our platform. Through our flagship IP, the physics class, and Charles's physics class, we continue to strengthen our differentiated competitive advantages and create monetization opportunities. With trust, we were able to reach a wider audience through discussions on popular science topics and hot events, bringing physics knowledge closer to the general public. This not only helped us generate unique and premium content, but also consistently unlocked monetization potentials. Together with the resources of Sohu's product metrics and our marketing capabilities, we actively adapted to market trends and provided advertisers with customized marketing solutions through a series of innovative campaigns and events, which are highly recognized by both audiences and advertisers. Next, turning to our gaming business, in 2025, we launched a new PC game, TLBB Return, based on a beloved early version of TLBB PC. The game features reduced grinding and pay-to-win pressure, offering players a lighter gaming experience. It helped us attract many former players, and its revenue performance has so far exceeded our expectations. For TLBB PC, we also launched game content for TLBB Vantage that recreated the classic design of the game, which evoked nostalgia among players. Players' enthusiasm was far beyond our expectations. With regular TLBB PC updates, we offered new gear and rewards for our promotional events and redesigned the cross-server clan wall gameplay, which boosted willingness to pay among higher-paying players. For mobile games, we launched an expansion pack for Legacy TLBB Mobile, which brought enhancements to the OEN clan's skills alongside a new storyline and engaging activities. Revenue for this game remained stable on a sequential basis. For the mobile TLBB Mobile, next quarter, we will continue to launch expansion packs and content updates for the TLBB series and other titles to further keep players engaged. Amid an increasingly competitive market, we remain committed to our top game strategy. We follow a user-centric philosophy and adhere to sound methodologies and a systematic R&D process to enhance efficiency and product success rates. As part of this strategy, we are taking concrete steps to unlock the potential of our TLBB IP. Meanwhile, building upon our core strengths in MMORPGs, we are working to diversify into new types of games, including card-based RPGs, sports games, and casual games, as well as expand our offerings for global markets. Now I'd like to give an update on the ongoing share repurchase program. As of November 13, 2025, Sohu.com Limited had repurchased 7.6 million ADS for an aggregate cost of approximately $97 million, accounting for two-thirds of the $150 million program. With that, I will now turn the call over to Joanna. Joanna Lv: Thank you, Charles. I will now walk you through the key financials of our major segments for 2025. All numbers are on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our website. For the social media platform, quarterly revenues were $70 million, compared with $73 million in the same quarter last year. Quarterly operating loss was $71 million, compared with an operating loss of $72 million in the same quarter last year. For Changyou, quarterly revenue was $163 million, compared with $129 million in the same quarter last year. Quarterly operating profit was $88 million compared with operating profit of $62 million in the same quarter last year. For 2025, we expect marketing service revenues to be between $50 million and $60 million. This implies an annual decrease of 15% to 20% and a sequential increase of 10% to 18%. Online game revenue is expected to be between $130 million and $123 million. This implies an annual increase of 3% to 12% and a sequential decrease of 24% to 30%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited are expected to be between $25 million and $35 million. This reflects management's current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions. Operator: Thank you. We will now begin the question and answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now take our first question from the line of Thomas Chong at Jefferies. Please go ahead. Thomas Chong: Hi. Good evening. Thanks, management, for taking my question. My first question is about the online game business. Given our online games performed very strongly in Q3, I'm just wondering how the quarter-to-date performance is so far? In particular, when I look into the guidance, it basically implies a sequential decline. So I'm not sure if we are a bit conservative in giving out Q4 gaming guidance. And on the other hand, when I look into our portal business, when I look into the advertising side, we are actually seeing quite a sequential rebound in terms of the advertising revenue. Can Charles, may I ask about how you think about the macro sentiment coming into Q4, as well as the trend for different categories? And based on the current visibility, how should we think about the brand advertising outlook in 2026? If there's any color on that? Thank you. Huang Pu: The performance of the fourth quarter so far is in line with our expectation. The strong third quarter results are primarily driven by the successful launch of a new game, TLBB Return. Meanwhile, the new servers of TLBB Vantage also performed very well, achieving historic highs. So the actual revenue of the third quarter exceeded our expectation a lot. The performance of the fourth quarter depends mainly on the performance of new TLBB Return and the content and activities that we will launch during the first quarter for TLBB PC, Legacy TLBB Mobile, etc. Thomas Chong: Okay. So I think the Q4 rebound... Thomas, you... Is the same? Yes? Above the Q4? Yeah. Yeah. I think since the user... The whole ad base is not that big. Right? So it kind of oscillates a little bit. It depends on some, like, some, you know, a pact signed late and allocated to this quarter but went to the next quarter. Right? So it's... But we do have some... First of all, the macroeconomic situation is not that good, you know, under pressure. And different sectors like auto and IT services continue to deteriorate. But as our new innovative marketing campaigns or services are unique, we are still able to attract some advertising. So we are going against the trend and basically stabilizing the advertising revenue on a small basis. Because in Q4, we have some good events creating opportunities to advertise. Thomas Chong: I see. Thank you, Charles. May I ask a follow-up question about AI? Like, can you comment on how AI is integrated within Sohu.com right now? And are we seeing better productivity, cost savings, or enhanced advertising monetization so far? Thank you. Dr. Charles Zhang: I think AI has more impact and usefulness or improvement in productivity on the gaming business. Right? For Sohu.com, we are not developing a large language model. Instead, we are using AI to improve the user experience. Like for our social media platform, AI can summarize video content and provide subtitles. Also, in our news app, there are AI-enhanced search and question-answering features. So we are basically using AI and different models to improve our existing media and social network services, rather than investing heavily in the hardcore large language model. Yaobin Wang: The application of AI is mainly applied in art design, code generation, and game planning creation. Dr. Charles Zhang: Thank you. Operator: Thank you. We will now take our next question from Alicia Yap at Citi. Please go ahead, Alicia. Alicia Yap: Hi. Yeah. Thank you. Good evening, management. Thanks for taking my questions. I have a couple of follow-ups. First, on the gaming, can management share with us what are the biggest surprises you learned from the TLBB Return version? And which one is the bigger driver in terms of the outperformance for this quarter? Is it the TLBB Vintage new server or the new game TLBB Return? And I understand you gave out the Q4 guidance. You mentioned this reflects the current situation. I wanted to know, is the Vintage server seeing a drop-off in users, or are the new titles TLBB Returns seeing a sequential decline in users and revenue? Any color on that for Q3 and Q4 would be helpful. And then, a second question for Charles on the macro situation. I think you mentioned auto, IT services, and the ad sentiment seems to be deteriorating. Are there any industry verticals or subsectors you see either improving sentiment or it being about the same as the last few quarters? Thank you. Huang Pu: The first surprise from TLBB Return is that the user spending is beyond our expectation. Because it was positioned as a gameplay that's more relaxing and requires less time. And demand for spending is also less. So, originally, we thought the users' paying wouldn't be very good. Dr. Charles Zhang: Yeah. Huang Pu: Second, the retention is very stable, better than our expectations. As for the contribution to revenue increase of the quarter, we do not disclose the specific numbers for individual games. So far, the user base for both TLBB Return and TLBB Vintage are very steady, but their revenues are trending down. That's because TLBB Vintage performed very well in the third quarter. In the fourth quarter, we plan to roll out fewer promotional activities. For TLBB Return, as it was newly launched in the third quarter, it will experience natural decline compared to the initial launch period because users tend to have a stronger willingness to pay when the game was initially launched. Dr. Charles Zhang: Okay. So your second question is about the macro situation, the sectors? Yeah. Overall, the ad market is under pressure. For example, in the auto industry, there's fierce competition as there are too many car companies. They need to promote their brands and sales to stand out. However, the profit margins are very low for them, so the ad budgets are thinning. With this situation, we have unique campaigns like a physics class and social network distribution, allowing us to get ad budgets. The auto industry is flat but still declining. We are also looking at consumer electronics. China's manufacturing base is strong with many new products, but these need marketing for the domestic market. Our innovative offerings, such as live streaming and social media distribution, allow us to get consumer electronics advertisers. So, despite the deteriorating market situation, we can get some advertising. Huang Pu: Okay. Thank you, Charles. Operator: Thank you. I am showing no further questions. And with that, we conclude our conference call today. Thank you for your participation. You may now disconnect your lines.
Mona Qiao: Our business practices received recognition from mainstream media. In October, People's Daily online a special commentary noting that So-Young International Inc. is setting an example for the rational development of the industry through the supply operations, transparent pricing, and compliance management. We believe the industry landscape is shifting from marketing-driven to trust-driven. We will continue to uphold transparency, standardization, and inclusive access to build a service system that truly puts customers at ease. We continued to strengthen our medical aesthetic supply chain. In Q3, shipments of elasticity exceeded 59,800 units, up above 53% quarter over quarter. Due to the combined impact of seasonal factors and industry prosperity, in Q3, revenue of pulp declined by million quarter over quarter. GMV for verified medical aesthetic services was around RMB260 million, with per capita incentive GTV up 6% year over year. We continue to optimize the content recommendation and traffic distribution mechanisms to improve conversion efficiency. Looking ahead, we will continue pursuing our long-term goal of centers, expand build-out in core cities and commercial hubs while further elevating standardized and digital management to raise the bar for service delivery and user experience. We believe our durable competitive advantage comes from long-term commitment and accumulated trust. We will drive daylight medical aesthetic industry towards maturity with more measured case and more professional capabilities, creating long-term value for shareholders. Now I will hand over to our CFO, Nick Zhao, who will walk through the financial results followed by the Q&A session. Nick Zhao: Hello, this is Nick Zhao. Please note that all amounts are quoted in RMB. Please also refer to our earnings release for detailed information on our comparative financial performances. On a year-over-year basis, total revenues during the quarter were RMB386 million, up 4% year over year, primarily due to our business expansion of the branded aesthetic center. Aesthetic treatment services revenues reached RMB183.6 million, showing 304.6% year over year, once again exceeding the high end of our guidance. This was primarily driven by the robust business expansion of our branded aesthetic centers. Information on the reservation services revenues was RMB117.2 million, down 34.5% year over year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Revenues from sales of medical products and maintenance services were RMB67 million, down 25% year over year, primarily due to a decrease in order volume of Bangkok equipment. Revenues from other services were RMB18.9 million, down 67.6% year over year, primarily due to a decrease in revenues from So-Young Prime. Cost of revenues were RMB203.8 million, up 43.4% year over year, primarily due to the business expansion of our branded aesthetic centers. Within the cost of revenues, the cost of aesthetic treatment services was RMB100 million, up 333.2% year over year, primarily due to the business expansion of our branded aesthetic centers. The cost of information and reservation services was RMB12.9 million, down 44.7% year over year, in line with the decrease in revenue generated from information reservation services. The cost of medical products sold and maintenance services was RMB million, down 18.3% year over year, primarily due to a decrease in costs associated with the sales of medical equipment. The cost of other services was RMB15.2 million, down 64.6% year over year, primarily due to a decrease in costs associated with So-Young Prime. Total operating expenses were RMB255.6 million, up 13.6% year over year. Sales and marketing expenses were RMB130.7 million, up 13.8% year over year, primarily due to the increase in expenses associated with the branding and user acquisition activities for our aesthetic centers. G&A expenses were RMB88.6 million, up 26.7% year over year and 12.4% quarter over quarter, primarily due to the one-time accrual of approximately RMB5.8 million year-end bonuses, and the business expansion of our branded aesthetic centers. R&D expenses were RMB36.3 million, down 9.6% year over year and up 16.5% quarter over quarter. The year-over-year decrease was primarily due to improved staff efficiency, while the sequential increase was due to the one-time accrual of approximately RMB3.6 million year-end bonuses, and continued investment in Miracle Laser products, particularly in clinical trials. Income tax expenses were RMB1.1 million compared with RMB2.1 million in the same period of 2024. Net loss attributable to So-Young International Inc. was RMB64.3 million compared with a net income attributable to So-Young International Inc. of RMB20.5 million during the same period last year. Non-GAAP net loss attributable to So-Young International Inc. was RMB61.6 million compared with non-GAAP net income attributable to So-Young International Inc. of RMB22.2 million during the same period of 2024. Basic and diluted losses per ADS attributable to ordinary shareholders were RMB0.64 and RMB0.64, respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.2 and RMB0.2, respectively, during the same period of 2024. As of September 30, 2025, our cash and cash equivalents, restricted cash, term deposits, and short-term investments were RMB942.8 million, primarily due to an increase in investment in branded aesthetic centers. Looking ahead to 2025, we expect Treatment Services revenues to be between RMB216 million and RMB226 million, representing a 165.8% to 178.1% increase from the same period in 2024. This outlook reflects our confidence in the strong growth momentum of our branded aesthetic center business. As we near the 50-center milestone, we have also seen continued improvement in center-level profitability and operating cash flow, demonstrating our model's scalability and operational efficiency. Going forward, we will pursue disciplined expansion while maintaining our focus on operational excellence and cost optimization to drive sustainable and quality growth. These efforts will reinforce the financial resilience of our aesthetic center business and create enduring value for our shareholders. This concludes our key remarks. I will now turn over the call to the operator and open the call for Q&A. Thank you. Operator: We will now begin the question and answer session. The first question comes from Hai Jingpang with Citec Securities. Please go ahead. Hai Jingpang: So, okay, let me briefly translate myself. Thank you for taking my question. This is He Jin Kai from Citi Securities. So first of all, congratulations on the company's continued rapid expansion of the chain clinics. So could you share more about the open plans for next year, including your regional strategy and expected pace for the new clinic openings by quarter? Thank you. Mona Qiao: By 2025, we will reach 50 centers. Our goal is to lay a solid foundation focusing on customer acquisition efficiency and growing the user base. As the business scales, we will enter a new stage of development, relying more on digitalization and AI capabilities to replicate service processes. This will drive breakthroughs in the bottlenecks the industry often faces, providing support for a broader build-out in the following stage. The number of new centers to be opened next year will remain consistent with previous plans and will not be less than thirty-five. We will keep the overall pace of center opening balanced, progressing on a quarterly basis to ensure every new center quickly enters the operational phase following its establishment. Our focus will remain on fourth-tier cities since they have strong demand and high repurchase rate potential, which will help us quickly build up regional density and amplify brand equity. At the same time, we will also systematically establish a presence in second-tier cities with a mature consumer base to validate our model and gain experience for long-term expansion. Thank you. The next question comes from Stacey Chen with Haitong International. Please go ahead. Stacey Chen: I will check with myself. First of all, congratulations to the management for achieving such rapid growth even during the off-season quarter. I noted that you have renewed the core member data this quarter. So could you explain more about the membership system for the aesthetic center business and how we conduct the membership operations? Thank you. Mona Qiao: The membership system is core to our aesthetic center's operations. Each time a user completes a visit, a record is created, which helps us build a clear, tiered membership from level one to eight and identify high-value users with more committed and ongoing engagement. Level three and above are defined as core members. They have higher center visit frequency and greater flexibility to select additional services, with annual spending 2.5 times higher than the average, making them the growth driver for the aesthetic center. During Q3, they contributed a high double-digit percentage of our aesthetic center business revenue with a repurchase rate of nearly 30%. We provide tiered benefits and service touchpoints based on individual user consumption patterns, which ensures they continuously perceive brand value and receive positive reinforcement for their boosting repeat purchase rates. In Q3, our membership operations made solid progress. Users with verified visits increased by nearly 40,000, 36% quarter over quarter, including over 10,000 new core members, up 40% quarter over quarter. Additionally, we have also enhanced repeat customer value operations. Specifically, repeat customer revenue reached RMB120 million in Q3, up 32% quarter over quarter, accounting for 65% of aesthetic treatment service revenues. Verified treatment leases from repeat customers surged over four times year over year to 50,000, while ARPU also increased. These metrics exceeded our targets. Going forward, we will continue to focus on the conversion of highly active users and extending the life cycle of high-value users. Thank you. The next question comes from Nelson Cheung with Citi. Please go ahead. Nelson, is your line muted? Nelson, do you want to check if your line is muted? We will move on to James Wong with GS Securities. Please go ahead, James. James Wong: And my question for the company is how is the Miracle PLA version 3.0 starting since its September launch? And what is new compared to the previous version? And what is the plan for promoting it? Mona Qiao: PLA version 3 was an important upgrade on the supply chain. In China's medical specialty market, PLA is still mostly used as an injectable for shaping. Before launching, we conducted research in South Korea and found that practitioners adopt a more standardized and safer bolster technique. After multiple rounds of testing, we launched Sutiem. In terms of products, its ultra MicroSphere comes with five key features, including ultra smooth, ultra solid, ultra fine, ultra pure, and ultra active across safety, results, and longevity. These features make each product the best fit for single use. Moreover, with its overall performance upgraded, Miracle PLA version 3 is also more competitively priced, offering consumers a high-quality, yet value-for-money experience. Regarding the promotion, we made upgrades based on the market's landscape and user pain points. To capture user mindshare, we adopted Sutiem, a miracle more suitable for skin boosters, and introduced the concept of ultra micro CS to take the lead in the segment. We also released two versions, Miracle PLLA version 3 and version 3 Pro, to address different users' needs and budgets, thereby lowering the decision threshold for users. The first batch of 5,000 units was fully sold out within a short time. The massive restock is expected in late November. We will continue to drive market penetration rates for Miracle PLLA version 3, converting users more efficiently and increasing ARPU and user loyalty. Market feedback shows that Miracle PLA version 3 is receiving high attention. We implemented an online purchase limit of one per purchase per user. From this purchase, we can see that about 56% of users paid the promotion price at RMB4,999, reflecting the trust we placed in our blockbuster product. In the next year or two, the PLA that we have been working on upstream is expected to receive approval for launch, which should reduce procurement costs by several times. Overall, Miracle PLA version 3 is not just a product upgrade. It is an important part of supply chain construction and blockbuster strategy. We will adopt the same approach for future categories. We will continue to deepen the vertical integration of our supply chain, further enhance safety, and continuously convert manufacturers into long-term supply partners. Simultaneously, we will leverage our growth stage in marketing products, doctors, and channels to build differentiated areas and solidify our brand moat. Thank you. The next question comes from Nelson Cheung with Citi. Please go ahead. Nelson Cheung: Congratulations on the solid quarter. With the expanding aesthetic center count, how do we ensure the safety and compliance of the entire chain system? And how does the internal quality control mechanism work? Thank you. Mona Qiao: This is our top priority. We have built a six-pillar compliance framework covering compliance, risk control, supervision, internal audit, medical service delivery, and information security departments, and we will continue to make this framework more refined and systematic. We adhere to high standards and resources. On the treatment side, we only offer three mature medical aesthetic treatments with clear mechanisms and solid user feedback to avoid potential risks. On the personnel side, we implement rigorous doctor's qualification assessments with an acceptance rate of around ten percent. All doctors are also required to complete pre-employment training and regular emergency drills to ensure the highest professional service and emergency response capabilities. In medical service delivery, we implement tiered diagnosis that matches treatments with doctors based on their qualification levels. We conduct regular online and offline sessions as part of our control, ensuring reliable medical service across all centers. If there is any user feedback or dispute, we handle it at headquarters with a crisis response team composed of key departments, including user experience, PR, GR, and legal. Currently, our average response time is under two hours, with issue resolution completed within two days. The compliance rate is below 1%. Going forward, we will continue to uphold the highest standards of safety and compliance. With digital and AI tools, we aim to maintain high-quality control efficiency and ensure consistent medical service quality and user safety across all centers as the business continues to grow rapidly. Thank you. The next question comes from Jenny Xu with CICC. Please go ahead. Let me repeat it in English. So how does the management view the potential for improving the profitability of the aesthetic center business in the future? Thank you. We believe it is paramount to demonstrate our user base spending, the improvements of operating profit as it scales. As the operating model gradually matures, we are confident profitability will improve. On the cost side, we continue to optimize the structure of our customer acquisition channels, including referrals from existing customers and both public and private domain traffic, continuously consolidating our advantage in customer acquisition costs. In addition, there is significant room to lower the consumable cost. For instance, we recently upgraded Miracle PLLA from version two to version three. As the new product gains volume, it will strengthen our bargaining power with upstream partners and further optimize our cost framework. In the future, with the gradual realization of digitalization, AI, and economies of scale, the fixed cost in data operations will be fully diluted. On the revenue side, as users increasingly prioritize resource and professionalism, they are willing to spend on premium treatments. Coupled with high-quality medical aesthetic products, leveraging our robust strategy, business volume has gradually concentrated on a number of SKUs with the value share of blockbuster products increasing. The top nine products contributed over 30% of revenue in Q3. This lays a solid foundation to further improve our margins through proprietary customized products. Once the number of aesthetic centers and verified treatment visits reach the center level, we will focus on enhancing LTV of core members, further driving profit margin. Therefore, we believe there is great potential for the profitability of the aesthetic center business to increase from its current base. Thank you, operator. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.
Operator: Good day, everyone, and welcome to the Arbe Robotics Ltd. Third Quarter 2025 Results Conference Call. All participants will be in a listen-only mode. Following management's formal presentation, instructions will be given for the Q&A session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not, please check with the company's website at www.arberobotics.com or call EK Global Investor Relations. I would now like to turn the floor over to Mr. Kenny Green from EK Global Investor Relations. Mr. Green, would you like to begin? Kenny Green: Thank you, Operator. Good day to all of you, and welcome to Arbe Robotics Ltd.'s conference call to discuss the results of the third quarter of 2025. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the Safe Harbor statements outlined in today's press release also pertain to this call. If you have not received a copy of the release, please view it in the Investor Relations section of the company's website. Today, we are joined by Kobi Marenko, Arbe Robotics Ltd.'s Co-Founder and CEO, who will begin the call with a business update. Then we will turn the call over to Karine Pinto-Flomenboim, CFO, who will review the financials. Finally, we will open the call to our listeners for the question and answer session. And with that, I'd like to turn the call over to Kobi Marenko. Please go ahead. Kobi Marenko: Thank you, Kenny. Good morning, everyone, and thank you for joining us to discuss our results and recent business developments. I'll begin with an update on the most important aspect of our current activities: our strategic progress with OEMs. We are pleased with the solid strategic progress made in the third quarter. As you know, our main goal is to secure design wins with OEMs and become the radar technology provider and core enabler of their ADAS and autonomous driving programs. While it is a long process, we are moving forward and making solid progress each and every quarter. We believe that we are well-positioned and in the lead to be selected as the key enabler for an eyes-off, hands-off automated driving program for a serial retail vehicle by one of the major European OEMs in the near future, and we hope to share further information as soon as we hear. Additionally, another premium European OEM is conducting data collection for a Level 3 program using radars based on Arbe Robotics Ltd.'s chipset. We continue to make strong progress with other OEMs as well. A top Japanese OEM ordered our radar kit for its Level 4 development activities and approved the expansion of the project it initiated last year based on our chipset, including predevelopment activities. I also want to add that in terms of our highly strategic non-OEM collaborations, a global leader in artificial intelligence computing has ordered radar development kits for its full stack of autonomous driving software development, marking a strong validation from one of the most influential players shaping the future of autonomous driving technology as well as AI in general. Global economic shifts are causing some OEMs to postpone new model launches and lengthen their decision timelines for autonomous driving solutions. Despite this, Arbe Robotics Ltd.'s market position continues to grow stronger. We remain encouraged by the steady progress we have achieved throughout 2025, and as the year comes to a close. Based on what we see now, we believe we are well-positioned to secure the key European OEM program I discussed earlier in the short term and additional three program wins within the next three quarters. Our initiatives are aligned with the path to OEM selection, and we continue to expect that Arbe Robotics Ltd.'s radar technology will serve as a key enabler for 2028 passenger vehicle platforms. We expect the initial revenues will begin in 2027 with a ramp-up in 2028 as our chipsets are used in high-volume production. Thanks to our strong balance sheet, we delivered $52 million in net cash, and we have the runway to support all programs as our revenue reaches the ramp-up stage. With regard to our focus on non-automotive projects, we are seeing increasing global demand in the defense sector. We are currently supplying radar systems for defense pilot programs and evaluation projects. Last quarter, we announced a new defense client. In addition, in the third quarter, we expanded into the maritime domain since our Tier 1 supplier for non-automotive applications announced an order from Watches for radar systems powered by our chipset. These systems will support collision prevention for boats in all weather and lighting conditions. Boating represents another promising new vertical for our radar technology. During the quarter, we won two prestigious automotive technology industry awards: the JUST Auto Excellence Award for leading technology in the perception category and the Auto Tech Breakthrough Award for sensor technology solution of the year 2025. Both awards are proof of Arbe Robotics Ltd.'s contribution to the automotive industry and leading technological advantages, which are bringing unparalleled safety for drivers and advancing ADAS and autonomous driving. Before closing, I want to welcome Chris Van den Elzen to our Board of Directors. Chris brings over thirty years of experience in the automotive industry, working with both OEMs and Tier 1s as former Vice President of Magna International and Executive Vice President of Veoneer, and brings us strong business experience and deep technological expertise, and I'm sure he will be a very valuable asset. In closing, Arbe Robotics Ltd. is well-positioned to benefit from current industry trends as the market transitions to high-resolution radar. Now I would like to turn it over to our CFO, Karine, to go over the financials. Karine Pinto-Flomenboim: Thank you, Kobi, and hello, everyone. Let me review our financial results for the third quarter of 2025 in more detail. Revenue for the third quarter of 2025 totaled $300,000 compared to $100,000 in Q3 2024. As of September 30, 2025, backlog stood at $200,000. Gross profit for Q3 2025 was negative $200,000 compared to negative $300,000 in the same period last year. The improved change in profitability related to revenue mix. Turning to operating expenses, total operating expenses for Q3 2025 were $11.3 million, down from $12.2 million in Q3 2024. The decrease in operating expenses was primarily due to lower share-based compensation expenses resulting from the full vesting of prior grants and to the reduced volume of new grants, which was the result of new grants being in the form of bonus liability. The decrease in operating expenses was partially offset by an unfavorable foreign exchange impact and higher labor costs. Operating loss for the third quarter of 2025 was $11.5 million compared to a $12.4 million loss in 2024. Adjusted EBITDA, a non-GAAP measurement, which excludes expenses for non-cash share-based compensation and for non-recurring items, was a loss of $9.2 million in 2025 compared to a loss of $8.2 million in 2024. We believe that this non-GAAP measurement is important in management's evaluation of our use of cash and in planning and evaluating our cash requirements for the coming period. Net loss in the third quarter of 2025 was $11 million compared to a net loss of $12.6 million in 2024. As of September 30, 2025, Arbe Robotics Ltd. held $52.6 million in cash and cash equivalents and short-term bank deposits. Turning to our outlook, while global economic shifts are leading some OEMs to delay new model launches and extend decision timelines for advanced driver assistance systems, Arbe Robotics Ltd.'s market position continues to strengthen. We are actively expanding engagements with leading OEMs, progressing through advanced RFQ stages, and building a solid foundation for large-scale adoption. Our goal remains to secure four design wins with OEMs in the coming three quarters. For 2025, revenues are expected to be in the range of $1 million to $2 million. The change to our revenue expectation reflects shifts of certain NRE programs. However, adjusted EBITDA expectations remain unchanged at a loss of $29 million to $35 million. I want to stress that Arbe Robotics Ltd. enters 2026 with a significantly strengthened balance sheet with over $52 million in net cash, supporting continued execution of our long-term strategic and growth plan. Now we will be happy to take your questions. Operator? Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. Our first question today comes from Suji Desilva from ROTH Capital. Please go ahead with your question. Suji Desilva: Hi, Kobi. Hi, Karine. First question on the guidance for four design wins. Curious if that's four separate OEMs. And second of all, the specific guidance of the next three quarters, I'm curious what's driving the near-term visibility there? Kobi Marenko: So yes, it's four different OEMs. And basically, we know that for sure there are decisions that should be taken in the next three quarters. We believe that we will be able to win at least four of them. Suji Desilva: Okay, Kobi. Very helpful. Thanks. You said at least four. Okay. And then the customer programs, do you have a sense whether these model wins or opportunities are for certain premium models or across the board platforms or mainstream? Any color on the penetration you would expect if you secure these wins will be helpful? Kobi Marenko: We believe that all of the programs will start with premium cars. But with the volumes as time goes by and the years go by, this will go to non-premium models as well. We see it from the numbers. So we're starting, of course, in very high-end. And it's going to still, it won't be in entry-level vehicles, but it will be in high-end and let's say the top cars. Suji Desilva: That's helpful, Kobi. And then last question maybe for Karine. The calendar 2025 full-year guide implies a wide Q4 range here. I'm wondering what the factors are to swing it from the low end to the high end? Karine Pinto-Flomenboim: Thanks. Sorry, can you repeat the question? Suji Desilva: Sure. Your full '25 revenue guidance of $1 million to $2 million implies a fairly wide Q4 range of outcomes. I'm wondering what might swing it to the high versus low end? Is that product shipments or revenue coming in? Any color there would be helpful. Karine Pinto-Flomenboim: Understood. So as we mentioned, we have some NRE shifts, and based on the decision that is made by our customers, the sooner the decision will be made, the sooner in Q4, then we will be able to push those NRE revenues rather than push them outside to 2026. So this is what's driving mainly the tweak between the low to the high end. Suji Desilva: Okay. Thanks, Kobi. Thanks, Karine. Operator: And our next question comes from George Gianarikas from Canaccord. Please go ahead with your question. George Gianarikas: Hi, everyone. Thank you for taking my questions. Maybe just to give us a little bit more insight into how these conversations are going with the OEMs and the puts and takes, things that are happening that you see as positive, and maybe some of the reasons you're seeing for the push out in decision making? Thank you. Kobi Marenko: So I think, first of all, I think that the dialogues are going well. And we see more and more OEMs buying radars and using them in order to collect data and to train their algorithms for full self-driving. What we see now, I think with all of the OEMs, there was at the beginning of the year, there was, I believe, decisions were postponed because they didn't know what the tariff will look like and what influence it will have. And this is what caused, I think, at least two quarters of delay. Right now, there is a clear path to decisions. And I think that from now on, we will see decisions are taken, will be taken. There is price pressure from the OEMs on every component in the system. And I think because of that, we have a huge advantage because our high-end radar is almost in the price of low-end radar today in the car, and we will be able, from the beginning, to design our system for a price that is affordable, and now we see the benefit of it. George Gianarikas: Thank you. And maybe just, I know it's early, but I'd like to understand how you think we should think about 2026 and 2027, maybe, and just sort of the way we should model the ramp in your revenue, OpEx, cash burn, just so we can have sort of a sense of a new model over the next couple of years? Thank you. Kobi Marenko: So I think '26, most of our revenues will come from non-automotive, which we see right now a great ramp-up from this business. As I mentioned, from almost every vertical that we are touching, we see orders and repeated orders from different sectors, from yachts, from small cities, all of that are bringing more and more orders, and we believe that next year we should expect a nice amount of revenues from non-automotive. The second part of it is the ramp-up of revenues from China from hiring. We still don't have the final visibility on the exact month that it will start, but we believe that we will see some revenues from common vessels in China as well. Karine Pinto-Flomenboim: Just to complete for your understanding of the OpEx, so as Kobi mentioned, next year will be non-automotive. Our current OpEx structure supports those revenues. And also going towards '27, so we assume a stable level of OpEx not increasing too much, and towards the ramp-up of the automotive, we will see a ramp-up, of course, in headcount, mainly customer base, to support this ramp-up. Kobi Marenko: Thank you. Operator: And ladies and gentlemen, with that, we'll be ending today's question and answer session. I'd like to turn the floor back over to Mr. Marenko for any closing remarks. Kobi Marenko: On behalf of the management of Arbe Robotics Ltd., I would like to thank our shareholders for your continued interest and long-term support of our business. Our employees and partners, your continued dedication is deeply appreciated. In the coming months, we will be meeting with investors and presenting at various investor conferences, which we have announced, and we hope to see some of you there. If you're interested in meeting or speaking with us, feel free to reach out to our Investor Relations team. You can contact us at investors@arberobotics.com to schedule a meeting. And with that, we end our call. Have a good day. Operator: And ladies and gentlemen, that concludes today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
Operator: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Second and Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang. JinkoSolar's Investor Relations. Please proceed, Stella. Stella Wang: Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's second and third quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's IR website at www.jinkosolar.com as well as on newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding Co., Ltd., Mr. Gener Miao, Chief Marketing Officer of JinkoSolar Holding Co., Ltd., and Mr. Charlie Cao, CFO of JinkoSolar Holding Co., Ltd. Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and Mr. Cao will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under applicable law. Now it's my pleasure to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li Xiande will speak in Mandarin, and I will translate his comments in English. Please go ahead, Mr. Li. Li Xiande: In the first three quarters of 2025, our global module shipments totaled 61.9 gigawatts, once again ranking number one worldwide. Driven by our outstanding product performance and a strong presence in high-value overseas markets, gross margin improved sequentially for two consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continued to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage R&D in the past two years started to bear fruit gradually. In the first three quarters, our cumulative energy storage system (ESS) shipments exceeded 3.3 gigawatt-hours, increasing significantly for two consecutive quarters. This, combined with the rising share of overseas markets, has helped the profitability of our energy storage business improve noticeably. Considering that energy storage products have the process of installation, commissioning, and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that as economies of scale accelerate and competitiveness continues to improve, our energy storage business will more than double next year. Its revenue contribution is expected to rise significantly and it serves as a key driver of our overall gross margin expansion. In the second and third quarters, we continued to keep moderate utilization rates at a reasonable level. Since the third quarter, prices of polysilicon wafers and cells have all risen, and module prices showed some upward trends. Given that bidding rules in all provinces are still in the implementation phase, central and state-owned enterprises need some time to recalculate their IRR returns and adjust their business model for any project. It is expected that demand will take some time to release. However, we have seen some positive signals in the raw material segment. Supported by rising raw material prices, module prices in overseas markets have also increased. The upgrade of the world's high-power production capacity has become important for accelerating the industry's high-quality development. This technical upgrade also meets end-task demand for high-power products to achieve more reliable investment returns. As an industry pioneer to upgrade existing telecom capacity through technology enhancements, we made steady progress in high-power products upgrade in the third quarter. We have already delivered some high-power products carrying a premium of 1 to 2 US cents per watt compared to their conventional products. As the upgrade of the third-generation products with a maximum power of 670 watts is completed, we expect the shipment proportion of high-power products to increase quarter over quarter next year, accounting for 60% or above in 2026. Since market-based electricity reform has removed the mandatory energy storage requirements, China's energy storage industry is accelerating its market-oriented development. There is an increasing gap between peak and off-peak electricity prices, and the implementation of policies such as capacity pricing and capacity compensation means independent energy storage projects in multiple provinces can achieve sound economic returns. Driven by both improving economics and global energy transition, demand is increasing in Europe, Asia Pacific, the Middle East, and Latin America. In the US, the rapid expansion of AI data centers has led to an unprecedented surge in electricity demand, straining domestic electricity supply. Solar plus storage has therefore emerged as a safer and more easily deployed solution. We expect the global demand for energy storage to experience explosive growth driven by increasing renewable energy penetration and its declining storage cost. This once again validates our strategic decision to invest in the energy storage business in line with industry trends, and it has helped us build a long-term competitive advantage. As a leading enterprise in the PV sector, we possess long-established advantages in channels, brand reputation, and customer resources, enabling us to provide a localized one-stop solar plus storage solution. On the manufacturing side, we currently have 12 gigawatt-hours of pack capacity and 5 gigawatt-hours of battery cell capacity, and continuously improve product performance through self-developed technological breakthroughs. On the market side, we focus on high-margin overseas markets, particularly utility-scale and industrial and commercial projects. Although the lead time for reserve cycles is relatively long, demand remains strong, providing stable growth momentum for the company's energy storage business. In summary, the global supply chain is recovering, so the balance between supply and demand is gradually improving. As technological upgrades accelerate the industry's high-quality development, the market share of high-power and high-value products will continue to expand and become a dominant force in market pricing. As market competition, particularly in project bidding, increasingly favors leading enterprises that demonstrate strong technological capabilities and long-term reliability, resources such as bank financing are also concentrating towards leading enterprises, further strengthening their market share. With strong technological capabilities, long-term reliability, and global diversification of our energy storage business, we are well-positioned to further strengthen our competitiveness and benefit from the industry's next upward cycle. The 15th Five-Year Plan proposed accelerating the decarbonization of both the energy supply and the consumption sectors. The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have also recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy system. We expect that these measures will further strengthen the competitiveness of China's renewable energy sector and steer the industry back onto a healthy and rational development path. Looking forward to the fourth quarter and the full year, we will continue to actively respond to the industry's call for rational development by maintaining sustainable production levels and focusing on upgrading and transforming high-efficiency capacity. At the same time, we will proactively adapt to changes in overseas policies to ensure sustainable supply for our customers. We will keep strengthening our competitive advantages in technology and global operations, achieving a balance between scale and profitability while consolidating our industry-leading position. We expect total shipments, including solar modules, cells, and wafers, to be between 85 gigawatts to 100 gigawatts for the full year of 2025, and ESS shipments to be 6 gigawatt-hours for the full year of 2025. Gener Miao: Total shipments were 21.5 gigawatts in the third quarter, with module shipments up 9.93%. By the end of the third quarter, we became the first module manufacturer in the industry to achieve cumulative global module shipments of 370 gigawatts, with total cumulative shipments of the Titanium Series surpassing 200 gigawatts, the best-selling module series in history. In terms of geographic mix, in the third quarter, we focused on higher-value overseas markets, with shipments accounting for over 65%, achieving strong growth in Asia Pacific, emerging markets, and Europe. Shipments to the US were nearly 1.3 gigawatts, doubling against the backdrop of electricity market reform. Customer demand for high-power products continues to rise. Our high-power Titanium 3.0 series, with its high bifaciality rate of 85% and excellent low-light performance, can generate stable electricity during long, dark, and cloudy weather, effectively extending power generation hours. At the same time, in a market environment with increasing volatility in electricity prices, the outstanding power generation performance of Titanium 3.0 enables more power generation during peak price periods in the morning and evening, creating higher yield and more reliable returns for clients. According to our outdoor field test data, in Chengdu, China, under low-light conditions such as dawn and dusk, Titanium achieves a 7.2% gain compared to PERC products. And in Kagoshima, Japan, Titanium shows a 10.79% gain over PERC products in low-light conditions. In the third quarter, we delivered some high-power products that carried a 1 to 2 US cents premium compared to conventional products. We expect that our highest power, the Titanium 3.0 product with max 670 watts, will be produced on a large scale next year, further strengthening our competitiveness on the product side. We once again topped the PV Tech 2025 module test and reliability report with a triple-A rating, thanks to our solid operational capability, outstanding technological innovation, and strong recognition from global customers. As one of the few enterprises to continuously maintain top-tier creditworthiness and technological strength in the global PV industry, in the latest release of the BNEF energy storage tier-one list for Q4 2025, we were recognized as a tier-one energy storage provider for the seventh consecutive quarter. Our continuous efforts in sustainable development have also earned international recognition repeatedly. In the recent MSCI ESG, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global PV industry. Additionally, our S&P CSA score continued to improve from 2024, rising significantly to 78, far ahead of the industry. On the demand side, we expect the global PV demand to slightly contract in 2026. In China, due to the improvement, implementation of policy reform 136, the pace of carrying out the 15th Five-Year Plan, as well as industry self-discipline and anti-evolution measures, demand is expected to slightly decrease year over year in 2026. Markets outside China are generally expected to remain healthy. In the mid to long term, the urgent power demand from AI data centers, combined with most countries' commitment to reduce carbon emissions, will drive growth in the global deployment of clean energy and new grid infrastructure over the next three to five years. The Information Office of the State Council recently released the white paper on China's action on carbon peaking and carbon neutrality, which emphasizes that energy storage is a key support for building a new type of power system and an adequate base for actively developing the renewable energy plus energy storage solution. In the United States, we are already seeing some tech giants deploying co-located or nearby solar plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy plus energy storage has become an inevitable and accelerating trend. We remain optimistic about our long-term prospects in the US market. Although trade policies impose certain constraints on the manufacturing side, we have taken proactive measures and made early strategic deployments, adjusting our manufacturing and supply chain in response to policy changes to provide US customers with long-term stable and reliable solutions. We are confident that leveraging our advantage in technology innovation, high-power products, and global network, we can continue to satisfy our global clients' demand for clean, safe, high-efficiency, and reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets. Charlie Cao: Thank you, Gener. We are pleased that our focus on high-performance products and high-value markets, as well as our efforts in cost and expenses control, have delivered steadily improved financial results. Gross profit margin turned positive in the second quarter and continued to improve by 4.4 percentage points in the third quarter. Net loss and adjusted net loss narrowed sequentially for two consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter over quarter. Operating cash flow is expected to be positive for the full year 2025. Moving to the details in the third quarter, total revenue was $2.27 billion, down 10% sequentially and 34% year over year. The sequential decrease was mainly due to a decrease in solar module shipments, and the year-over-year decrease was primarily due to a decrease in the average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost of products sold, and the year-over-year decrease was mainly due to a decrease in ASP of solar modules. Total operating expenses were $363 million, up 36% sequentially and down 32% year over year. The sequential increase was due to an increase in the impairment of long-lived assets, while the year-over-year decrease was mainly due to a decrease in shipping costs as our solar module shipments decreased and the average freight rate declined during the third quarter this year. Total operating expenses accounted for 16% of total revenues, compared to 10.6% in the second quarter and 15.4% in the third quarter last year. Operating loss margin was 8.7%, compared with an operating loss margin of 10.7% in the second quarter this year and an operating profit margin of 0.3% in the second quarter last year. Moving to the balance sheet, at the end of the third quarter, our cash and cash equivalents were $3.3 billion, compared with $3.4 billion at the end of the second quarter and $3.2 billion at the end of 2024. Days sales outstanding were 105 days, compared with 97 days in the second quarter. Inventory turnover days were 90 days, compared with 66 days in the second quarter this year. At the end of the third quarter, total debt was $6.4 billion, compared to $6.7 billion at the end of the second quarter. Net debt was $3.1 billion, compared with $3.3 billion at the end of the second quarter this year. Debt conditions improved sequentially. Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year over year. The sequential increase was primarily due to an increase in solar module shipments, while the year-over-year decrease was mainly due to a decrease in ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to a lower unit cost of products sold, while the year-over-year decrease was mainly due to a decrease in ASP of modules. Total operating expenses were $266 million, down 24% sequentially and 15% year over year. The sequential decrease was mainly due to the reduced expected credit loss expense in the second quarter, while the year-over-year decrease was mainly due to a decrease in the impairment of long-lived assets, reduced expected credit loss expenses, and decreased shipping costs as the average freight rate declined during the second quarter this year. Total operating expenses accounted for 10.6% of total revenues, compared to 18.1% in the first quarter of 2025 and 16.9% in the second quarter of 2024. Operating loss margin was 7.7%, compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year. Moving to the balance sheet, at the end of the second quarter, our cash and cash equivalents were $3.4 billion, compared with $3.77 billion at the end of the first quarter this year and $1.9 billion at the end of the second quarter last year. Days sales outstanding were 97 days, compared with 111 days in the first quarter this year. Inventory turnover days were 66 days, compared to 84 days in the first quarter. Our operating efficiency is improving. At the end of the second quarter, total debt was $6.7 billion, compared to $6.4 billion at the end of the first quarter. Net debt was $3.3 billion, compared to $2.6 billion at the end of the first quarter this year. Stella Wang: This concludes our prepared remarks. Charlie Cao: We are now happy to take your questions. Operator, please proceed. Operator: Thank you. If you wish to ask a question, please press 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Philip Shen with ROTH Capital Partners. Philip Shen: Hi, everyone. Thank you for taking my questions. First one is on your gross margins. Can you share some color on what you see as the difference between yours and Canadian Solar? They reported recently 15%. You guys have Q3 gross margins at about 7%. And what was the main driver you think for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4? Charlie Cao: Thanks, Philip. And I think compared to our peer, particularly Canadian Solar, the gross margin difference is, you know, the different revenue contribution from the energy storage business. But if you look at Jinko, you know, quarter by quarter, we did improve gross margin dramatically. It's coming from the majority, you know, the module business. But for the energy storage sectors, we did want to have a, you know, very, very positive update. I think in the prepared remarks of Chairman Li, we think, you know, our energy storage business is really for the, you know, dramatic growth in next year, 2026. And we are expecting significant revenue contributions and gross margin expansions. You know, the storage is really, you know, in supply shortage. And this year, we shipped around 6 gigawatt-hours, you know, shipments. And next year, we expect to double, at least double. And in terms of the revenue recognition, it's a little bit different because, you know, the revenue is recognized, you know, for the shipments. With the final acceptance, it's a little bit delayed one quarter to two quarters. And for the energy storage business, the gross margin is at a decent level. We expect at least 15% to 20% gross margin. And, you know, looking forward, particularly for the ESS business out of China, we target 70% to 80%, you know, ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, you know, the rough revenue from ESS business compared to the total revenues of Jinko next year. So it's a very, you know, we are actually, we think our business is shifting from purely module business to module plus ESS next year. Philip Shen: Great, Charlie. Thank you very much for the color. And can you share also a little bit more color on your view? You've given us some color on the storage market. You shared that next year could be six gigawatt-hours. What might the geographic shipment mix be for 2026? And how much to the US, how much to China, and then maybe Europe and others? Thanks. Charlie Cao: Yes, yes. This year is six gigawatt-hours, and next year is double, okay? That is the total volume. In terms of geographical distributions, non-China, roughly think 70% to 80%, including the United States. And in the United States, we are in discussions with a lot of potential customers and developing, and we believe, you know, step by step, we are getting more and more orders from the US. We have a strong pipeline, particularly, I think, from Europe, Latin America, and Asia Pacific. Philip Shen: Got it. Okay. Great. Thank you. Shifting over to one more question here. On the foreign entity of concern for the US, FIEC. Can you help us understand you plan to have a big business shipping US, sorry, shipping solar modules to the US. Now you plan to ship batteries also to the US. Can you help us understand how you plan to comply with foreign entity of concern requirements for the US market? Thanks. Charlie Cao: Yes. Looking for the next year, we don't believe there's a lot of negative impact from the FIEC, let's say, OVBB, you know, compliance. We do see a lot of, you know, safe harbor projects, particularly for the solar plus some storage, you know, projects. And we committed, you know, to long term, and, you know, we, I think we really shape our supply chain, you know, globally, and including, and we are exploring options for our, you know, solar module facilities in Florida. And we think, you know, from the long term, there is going to be, you know, demand for both FIEC and non-FIEC. And we are in the, you know, if there is some kind of development, particularly for, you know, transforming our solar module facilities in the United States to the long FIEC entities, and we will let the investor know. But we have been in the process of discussion with potential investors. Philip Shen: Got it. Okay. Thank you, Charlie. I'll pass it on. Operator: Your next question comes from Alan Lau with Jefferies. Alan Lau: Hello? This is Alan from Jefferies. Thanks for taking my question. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or, yeah, our hyperscaler clients. And what type of demand are they requiring? Like, are they more like two to four hours of proof capability compatible demand, or it's more like even longer hours of storage with five? Thank you. Charlie Cao: Yeah. We're seeing the AI-driven data center, you know, is going to put a lot of demands for the global electricity from long term. And our ESS team is in discussion with potential and pipelines, you know, for the AI data center, including the US, Europe, and including China. But it's still, you know, it's in progress, and we believe we are able to reach a significant milestone early next year. Alan Lau: I see. Clear. Thanks. So in relation to the geographical breakdown, we'd like to know if the gross margin of ESS is similar across the regions, or it should be higher in Europe or the US. Like, how do you see the margins in different regions that you operate? Charlie Cao: Oh, you mean, yes, it's margin, you know, different regions, right? Yeah. Yeah. Yeah. We, you know, it's depending on different markets. And China is still a little bit low, but I think it's recovering a little bit. You know? Yes. This is very competitive in China. Europe and the US is, you know, it's still, we think that it is still a decent gross margin. So, you know? And the Middle East is a little bit low, and I think China and the Middle East is, yes, yes. The pricing, you know, the competitiveness, and the margin is relatively low to under ratings. But we think, you know, it's still very healthy. And, you know, business and in the next two years. Alan Lau: Yep. Would like to know on the cost side of ESS because I've noticed that the upstream raw materials are all the cost of raw materials like freezing, or searching, any plans to lock in any raw materials, or how are your view on different raw materials like batteries or, like, even more upstream battery materials like lithium carbonate, etcetera. Charlie Cao: Yeah. Yeah. Yeah. We, you know, because the strong demand is a material, it's unlikely in the upper work, and firstly, we have five gigawatts, you know, and battery cell capacities. And which put us at a relative advantage. And the second one, we partner with the key materials and, you know, suppliers. And the second one, we, you know, when negotiating contracts, we did anticipate, you know, some kind of material cost, you know, upwards. So it's a combination. I think it's a little bit challenging, but we think we can manage and how to minimize the impact of the material, you know, the pricing. Alan Lau: I see. I think my next question is about the speed length. On the solar module market. So how do you see the demand growth next year for maybe both solar and ESS? What is the growth rate you see? Charlie Cao: Yes. For the demand side, we should look separately for both PV and ESS. Right? So for the PV side, I think we are in a conservative way. We are expecting more or less flat year in 2026 versus 2025. So the main reason is because China demand, you know, we believe it will have a drop compared with 2025. Which, because the weight of China demand is so high in the global demand. So even with the other markets booming or other markets' growth, we still expect the total demand of the globe in the PV industry for next year will be more or less flat year. However, when we look into the ESS, it is in a different scenario. Right? So with more and more renewable installed, the grid needs more security for the ESS contribution. Certainly, we are seeing a sharp increase for the ESS side. That's why from the ESS, we are still keeping an optimistic opinion or expectation for next year's installation. If we need to quantify that, we think it will be at least a 25% increase for the ESS year over year. Alan Lau: I see. Thanks, Gener. Like to know what type of installation in China you are looking at? Like, because there are even numbers flowing around, like, are you looking at low 200 or even below 200 gigawatts in China. Charlie Cao: I am not that conservative for China because when recently, I visited a lot of our distributors and even installers in China, in all the different provinces, I think most of them still keep an optimistic view for next year. So that having said all those, I believe that it will be around, let's say, module-wise, it will be around mid-200. Let's say, around 250. About. And if we look into the grid connection number, it should be somewhere around 23%. Right? It's yours. And I think the October and in the process to get money out of China. And after regulatory approval. And we have paid the, you know, withholding tax, and we expect to get the money by the end of this month. And very soon. And for the shareholder, you know, the shareholder returns and we commit at least $100 million a year, and we had to pay a dividend early this year. And we start we bought some shares, certain shares. And I think last quarter, you know, in the middle of this year. And after the window, you know, after earning lease and we plan to repurchase this year throughout the end of the year. Alan Lau: Is that, like how much shares have been purchased or, like, how like, will the company look to basically buy all the remaining amount in the buyback program in the remaining one month? Charlie Cao: Yes. And I think we, you know, we plan to use the right, the monetization issues and the key, you know, funding and which is available, and it's around $78 million. So we, I think, depending on how the market moves, we definitely will repurchase the shares by the end of this year. And roughly, I think, this year, you know, $100 million, and we had to go dividend, I think, $70 million. So that's our, you know, the base plan. Alan Lau: That's clear. We will send you. Yes. It's a year-over-year plan, and next year, it's roughly the same plan. Charlie Cao: I see that plan. Thank you. Thanks, Charlie. Operator: Once again, if you wish to ask a question, please press 1 on your telephone and wait for your name to be announced. Next question comes from Rajiv Chaudhri with Sensorra Capital. Rajiv Chaudhri: My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18 to 33 gigawatts. And you're essentially kept to the same range that you gave for the full year back in the early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments? Charlie Cao: Yeah. I think we will close to the lower end of the range. I think because of the regulatory requirement, we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic. Rajiv Chaudhri: I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025? Charlie Cao: Well, we technically believe from the product-wise, we are looking at roughly 700 gigawatts. That's the high-level numbers we are estimating for the whole industry. Rajiv Chaudhri: And do you believe that 700 gigawatts would have been shipped out by the industry as well, or that was just the production? Charlie Cao: Well, I think it's more realized to a production closer to the production side, but because every company has slightly different ways to calculate or announce their shipment numbers. So that's why it's difficult to figure out what's the real shipment number. But production-wise, I think the number is more realistic. Rajiv Chaudhri: I see. Okay. So moving on to another relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026? Charlie Cao: It's roughly 5 billion RMB this year and next year. And by next year, we didn't have any, you know, plan to, you know, expand, you know, capacity, and it's kind of upgraded to a next-generation top kind of technology. And it's going to have significant, you know, high-end, high-power output. Solar modules, as we are able to provide to our customers, you know, next year, roughly 60%. Right. We hope we go some, you know, with price premium and relatively good margin contributions. Next year, quarter over quarter, as a capacity for the high-end, you know, upgrade high-end module capacity will be released quarter by quarter. Rajiv Chaudhri: So Charlie, just to be clear, this year, the CapEx is RMB 5 billion. And next year, it will be flat at RMB 5 billion? Charlie Cao: Yeah. Roughly. Roughly. But next year is I'll talk about this year is roughly payment of outstanding, you know, amount, you know, 5 billion. And next year, we are doing the upgrade. We are doing the upgrade existing capacities and to the next high level, you know, top-down capacity. And we foresee a lot of strong demands and with higher module price and higher gross margin contributions. Rajiv Chaudhri: So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well. And maybe substantially higher than 2025 because the gross margin will be higher. Is that a correct assessment? Charlie Cao: Yes. That's right. That's right. And, you know, we talked about firstly, I think the catalyst is the first one is ESS storage business next year. We are looking to, you know, 10% to 15% revenue contributions from ESS with decent gross margin and positive net profit release. The second one is the module business. We have, I think, the most advanced top con, you know, upgrade capacities in the industries. And developed by ourselves for the technology, and which will roughly have 60% shipment of the modules coming from the next generation Jinko developed. Top con capacities with higher, you know, gross margins. And the second one, we think from the high-level standards in the industry, anti-evolutions, you know, taking effect step by step. And the capacity will accelerate, you know, phase out and leading by the, you know, a top of on top of that industry-leading self-discipline, you know, control production volume, and reasonable, you know, pricing based on the cost will take, you know, further, I think, enforcement. So combined together, I think the industry is reaching the low point that is recovering step by step. And we think we are getting ready for the, you know, from the market and product perspective. And the plus, are shifting solar plus ESS story and the business. So the basic funding year, we are, you know, we are confident that we are able to, you know, navigate the cycles and in turn to positive earnings. That's kind of the, you know, the best plan next year. Rajiv Chaudhri: So should we no. You talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your cost for these premium products still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up? Charlie Cao: Yes. Yeah. Initially, by design, the cost is a little bit higher, but they are very, very small. You know, incremental cost. And by the way, our R&D team continues to, you know, dive into the details and to try to, you know, further improve the cost. But back to your question, I think the, you know, the high-end product cost is very, very small incremental, you know, cost increase. At the beginning. But we believe over, you know, over time, you know, our R&D team with our operational teams will continue to improve the cost. Rajiv Chaudhri: Final question, Charlie. On market share, in the past, in 2023 and '24, your global market share had gone up to somewhere between 15% to 16% of the global market. This year, it is down a little bit. I guess, because you have restrained production because of the pricing. Should we expect that your market share next year will go up again and maybe go up a lot more than 16% because the industry itself is consolidating? So and what do you think the range for next year module shipments could be? Charlie Cao: The consolidated market share after consolidation of, you know, the industry consolidation and the phase-out of capacity, the industry, you know, turns into the kind of normal situation. It's for sure, it's very good for tier-one companies. If you look at it long term, we are confident and we will continue to penetrate the market share. And next year is still, I think, you know, from the top-down approach, you know, and I think China will continue to, you know, launch, you know, implement the anti-involution policies. We don't expect significant, you know, shipments increase, you know, for the module bands. But, yes, it's a different story. Rajiv Chaudhri: I see. Okay. Thank you very much. Charlie Cao: Welcome. Operator: Your next question comes from Philip Shen with ROTH Capital Partners. Philip Shen: Hey, guys. Thanks for taking my follow-up question. One of the check-in with check back in with you on in terms of Q4 margin outlook. What kind of solar module ASP could we see in Q4? And then what kind of margin for the overall quarter that we see? Charlie Cao: We expect relatively stable Q4 versus Q3. But ESS business is contributing more revenues, and we estimate our ESS business in the fourth quarter is going to reach positive profitability levels. But the contribution is not significant, but next year is a different story. Right? We have talked about it. And for the module business, we expect, you know, relatively stable. Philip Shen: Okay. Got it. Thanks. And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins, you know, as you blend in more battery. Thanks. Charlie Cao: Yes. Phil, I think it's difficult to share those numbers or estimations right now because you know what is happening. It's like some of the key markets are still, you know, there are, you know, some key or some important policy is upcoming. For example, you know, the US, the guidance of the FIEC or material assistance or even upcoming 232. Which will significantly impact the market prices. Like in China, you know, there's anti-involution policies, and there's even more rumors coming out regarding the polysilicon. Even to the other part of the manufacturing value chain as well. So those changes could significantly change the market price overnight. That's why we believe it's still too early to share our estimation on the prices for next year. Philip Shen: Okay, Gener. That makes sense. You talked about the rumors on Poly. Can you give us a little bit more color on that? Thanks. Gener Miao: I don't have too much more to share based on there's a lot of rumors on the market or on the Internet. So I don't know what you're referring to. Philip Shen: Yeah. I was just you mentioned it, so I thought I would try to see if there's more color. Gener Miao: No. We are not part of the game, so I don't have too much to share with everyone. But thank you for your question. Philip Shen: Yep. No problem. Okay. Thank you, guys. I'll pass it on. Operator: Your next question comes from Brian Lee with Goldman Sachs. Tyler Bisset: Hey, guys, this is Tyler Bisset on for Brian. Thanks for taking our question. Just quick housekeeping questions. Can you share what was D&A and CapEx in Q2 and Q3? Charlie Cao: You mean the absolute number or percentage. Right? Hello? Hello? Tyler Bisset: Yeah. I'm sorry. Like, the actual number. Charlie Cao: I think it's a financial statement. You gotta check out, you know, the financial statements, the R&D, and the, you know, operating expenses and that we have disclosed quarter by quarter. So what would be your, you know, key question you want to explore? It D&A. And CapEx in February and March, like the absolute numbers. Charlie Cao: You mean the depreciation or CapEx? Tyler Bisset: Sorry. Depreciation. Alright. And then separately CapEx. Charlie Cao: Okay. Depreciation by quarter, I think, roughly, you know? And I think $300 million a quarter. And the CapEx, I think, is the first half year. We, you know, spend roughly 2 billion RMB. Operator: That is our last and that does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, November 13, 2025. I will now turn the call over to Clinton Hooks with StubHub. Clinton Hooks: Thank you for joining us to discuss StubHub's Third quarter 2025 results. For reference, our third quarter 2025 earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from our expectations. We assume no responsibility for updating these statements. Therefore, please exercise caution in relying on them. For detailed risk factors, please refer to our SEC filings. We'll also discuss certain non-GAAP measures, which we believe are useful to investors for evaluating our performance. These measures should not be considered in isolation or as substitutes for GAAP results. Full reconciliations to GAAP measures are available in our earnings release. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric. Eric Baker: Good afternoon, everyone, and thank you for joining us for our first earnings call as a public company. I want to welcome all our investors, both those who supported us throughout our private journey and those who are new to the StubHub story. We're grateful for your trust and partnership, as we embark on this next chapter together. Today, I'll focus primarily on the progress we've made in establishing StubHub as a leading live event ticketing marketplace and on our strategic initiatives. I'll then hand it over to Connie to speak to our third quarter financial performance. While we won't be providing detailed 2026 guidance on today's call, we look forward to sharing our outlook during our next earnings call in early 2026. With that said, I want to begin by stepping back and discussing the business that we have built over the last 2 decades and share the long-term vision of where we are going, one that continues to be defined by a customer-focused and relentless drive to make live entertainment accessible to everyone everywhere. The past few years have been transformative for our business. We completed the StubHub acquisition, navigated the pandemic, fully rebuilt StubHub's technology stack, restored StubHub as the clear category leader and have now entered the public market. Our thesis for the acquisition was to restore StubHub's market leadership in North America and create a unified global ticketing marketplace. Our business today is the result of the successful execution of that thesis, and we are very proud of the asset that exists as a result. Today, StubHub operates what we believe is the largest global secondary ticketing marketplace for live event tickets, selling over 40 million tickets annually across more than 200 countries and territories from over 1 million sellers all over the world. Our many years of leadership in the resale market have created brands synonymous with the category, resulting in moats around our business and durable competitive advantage through customer loyalty and trust, organic traffic and superior acquisition and conversion. We maintain what we believe is the most comprehensive operations and supply chain capabilities in our category, the largest event catalog in the world and the capability to fulfill virtually any ticket across any category, all through a single global marketplace. Our business produces a huge data asset as tens of millions of people interact with our product services on what we believe is the largest floating price marketplace for live events in the world. This data on supply, demand, pricing, user behavior, etc., provides structural advantage through differentiated product innovation, marketing optimization and pricing intelligence. Finally, this is all built on a single, modern, globally deployed technology stack, allowing us to rapidly innovate across our product surface and nimbly deploy features using new technologies, something becoming increasingly important as AI development shapes the future of digital commerce. Our business has built a rare combination of best-in-class financial attributes that create exceptional value at scale with proven durability. First, we are growing rapidly with nearly 20% GMS growth over the last 12 months. Second, our marketplace models operated with enduring economics, consistent take rates and high margins. Third, we built a profitable customer acquisition engine that allows us to grow and take market share while generating profits through our performance marketing channels. Fourth, our asset-light business model and the natural flow generated by our marketplace dynamics result in exceptional cash conversion. Fifth, we've demonstrated remarkable resilience through economic cycles, consistently growing nearly every year since inception. And finally, we operate in a large and expanding core global secondary ticketing market with durable long-term tailwinds. In addition, we have opportunities for significant TAM expansion through accessing the broader ticketing ecosystem. We believe you would be hard-pressed to find many other companies to check these boxes. That said, we are most excited about leveraging these assets to realize our vision to become the global destination for consumers to access live entertainment. We believe that buyers want one destination where they can purchase any ticket for any event in their language and currency. Sellers want to optimize revenue and attendance through broad distribution and pricing intelligence. We believe we can service these needs by building a single product that puts the world's live entertainment at fans' fingertips and services their needs throughout their entire journey. This is not something that exists in our category today. This is a product and service that can only be built by applying technology and relentless customer focus to eliminate friction around the live event experience. Technology businesses innovating on behalf of consumers have reimagined access to many products and services, information, music, video, food, but not yet for live entertainment. This is exactly what StubHub is, a business with a core competency in technology development focused on applying its expertise to revolutionize the way consumers interact with live event commerce. With this context, we can turn to some of the topics I think are top of mind regarding recent developments in our operating environment. First, we wanted to discuss some recent developments in our core resale market. Restoring StubHub's market share in North America was the key tenet of our acquisition thesis. Following our acquisition of StubHub in 2020 and the completion of the technology migration in 2022, we have consistently gained share in the North American market, transforming StubHub from a business that was roughly comparable in size to the nearest competitor in 2022 to one that is now approximately 4x larger than that same competitor based on GMS and comparable metrics. This momentum in share gains and the subsequent positive impacts of relative share we observed led us to invest in accelerating this dynamic via disciplined customer acquisition and conversion levers, specifically take rates and performance marketing, which continued in the most recent quarter. I want to highlight one specific downstream impact of this share gain, our growing share of the point-of-sale market. In our market, the point-of-sale is a software product used by power sellers to manage the listing, pricing, distribution and fulfillment of their ticket portfolios. Sellers build their operational workflows around the software infrastructure, which becomes sticky as a result, like many enterprise software products. For many years, the technology was provided by one of our competitors, whose product had the majority share of the market. We recently launched our own product called ReachPro. As our relative market share of sales volume has increased, we've seen rapid adoption of our technology. We have benefited from a powerful network effect. As our marketplace captures a larger share of sellers' sales, these sellers are increasingly willing to migrate their operations to what we believe is our far superior technology, backed by our unmatched data and insights. In the secondary market, installation of ReachPro naturally produces higher relative market share. When sellers use our tool, they tend to index their behavior around our marketplace, ensuring competitive pricing and high standards of fulfillment, leading to structural advantage and benefits for our buyers. It also provides valuable data insights, which can be used to improve the quality of our products and a strategic product development surface to launch advertising products and innovate with features that will serve large sellers even at enterprise scale. Q3 was both our largest relative market share quarter to date and the largest quarter of new seller adoption for ReachPro. We believe we have line of sight into becoming the largest provider of this product in the medium term, a durable and strategic asset created in part via our relative market share investments. This brings us to the next topic, direct issuance, which we believe will be a major innovation to original issuance ticketing distribution that will promote competition and improve the fan experience while improving economics for ticket issuers. As I mentioned earlier, we believe buyers want a single platform that offers access to all the world's live entertainment. At the same time, sellers maximize revenue and attendance by accessing the broadest possible distribution with the smartest pricing intelligence. Our strategy to unlocking this value proposition is through what we call direct issuance. Generally speaking, there are 3 seller types in the market: individuals, power sellers and enterprise sellers. StubHub and viagogo began as platforms to service individual sellers, season ticket holders, concert goers whose plans change and so on. As liquidity of the market grew, market makers developed. Power sellers selling large quantities of tickets through the marketplace on a regular basis, and we ultimately developed products such as ReachPro to allow these sellers to manage the listing, pricing and fulfillment of tickets seamlessly. For our business, direct issuance simply refers to expanding the supply side of our platform once again to allow enterprise sellers, content rights holders like teams, arts and venues to access our marketplace through a frictionless technology-enabled experience as any individual or power seller does. We believe simultaneous multichannel or open distribution using data-backed pricing intelligence is the future of ticket distribution, as it will maximize value for fans and content. To be clear, this is a very different model to legacy primary ticketing companies. Primary ticketing company's core service is to provide access control to venues. And secondarily, they provide a retail web storefront with limited or no marketing. Content today, for the most part, sells an inventory through antiquated distribution methods. They often sell tickets, expiring products that drive huge economics exclusively through these access control providers. The result is an opaque market with huge inefficiency, narrow distribution, lack of pricing intelligence and ultimately, unsold seats and tremendous value loss for content, not to mention a lack of competition leading to a terrible experience for fans. We are not competing with this model, and we are not providing access control technology. We offer something new, the ability for content to access StubHub's distribution engine through a variety of options that does not require them to switch their access control provider. We make our distribution available to content rights holders with no exclusivity requirement, broadening their distribution and empowering them with robust data insights from our scaled floating price marketplace to make informed pricing and utilization decisions. This means content rights holders can access our marketplace, distribution, data and customers, in the same way individuals and power sellers can. They can list tickets multichannel across retail outlets at whatever price points they choose to optimize their utilization and yield, and we compete to sell inventory the same we do today. We're actively making investments to grow this business and demonstrate the benefits of open distribution's content and are excited about the progress we are making. We recently signed a partnership with Major League Baseball, a great example of one of the world's premier sports properties endorsing open distribution. MLB momentum has continued, and more teams are continuing to become sellers on StubHub, several of which are doing so without any additional economic incentive or protection from us. They're selling just as any other seller on our platform does. We have also had success with the music festival category, adding Peachtree Entertainment, one of the largest independent promoters in the Southeast, and LED Presents, an independent EDM promoter on the West Coast. These promoters combined put on dozens of events attended by hundreds of thousands of fans annually. We have also continued to add talent to lead this initiative. Shaun Stewart, who spent much of his career building supply chain for travel businesses such as Expedia and Airbnb, joined as VP of Direct Issuance. Shaun will be reporting to Raj Beri, who was instrumental in building Uber Eats' APAC business and recently joined StubHub as Chief Business Officer to oversee all global supply. Direct issuance represents an addressable market opportunity well in excess of $100 billion, a transformative growth vector that we believe will drive substantial long-term growth, value creation for our business and shareholders for years to come. The other business we are in the early stages of developing is advertising, which we believe can be a large and profitable business for us, as it has been for many other marketplaces. We are pursuing 2 advertising models initially. First, sponsored listings, where sellers can bid for premier placement on event pages to dramatically increase exposure. For any given event, we may be merchandising hundreds, even thousands of tickets on our event pages. These are expiring products, meaning that sellers receive nothing if the ticket does not sell. With the sponsored listing offering, sellers can bid for higher visibility among competing inventory, improving the likelihood of a buyer seeing and ultimately purchasing their ticket. Conversations with sellers on our platform have demonstrated tremendous interest and features such as sponsored listings as an additional and powerful tool for sellers on our marketplace. As ReachPro has gained users and market share, we've also established a ready-made distribution platform for sponsored listings, as we can build access to the feature directly into ReachPro's user workflow without the heavy lift of a sales force. The second advertising model is through more traditional corporate advertising partnerships with businesses in adjacent product categories that can be additive to the customer experience. One example of this is Booking.com. Event tourism is a rapidly growing category, and we know that many of our customers are purchasing tickets for events outside of where they live. Our partnership with Booking is a great example of how we can monetize post-purchase real estate in our product to deliver a travel offering to customers. And it is also a great example of a high-quality business, recognizing the value of our customer base and paying us for access. We believe this will extend to other categories adjacent to sports, music and live event attendance. We are very excited about the potential for advertising on our platform. Of course, as with everything we do, our #1 priority is ensuring that we do not adversely impact the customer experience. Therefore, introducing advertising thoughtfully and methodically remains our focus. We recognize investors are eager for more details on direct issuance and advertising. We intend to provide a more fulsome update on the long-term opportunity on our call early next year. To close, StubHub is a business that is growing fast at scale while generating profits and cash flow. StubHub is a global category leader with the data, technology and customer focus to continue capturing share of the global ticketing market. Indeed, we are very proud of all that we have accomplished to date. However, the real goal for us is to reimagine our market to create an unprecedented experience for fans and an asset of tremendous value in the process. That is what is really exciting. With that, I'll turn the call over to Connie to discuss our financial results. Constance James: Thanks, Eric. Before I discuss our third quarter financial performance, I'd like to share our financial philosophy that guides our decision-making, and ultimately, how we look to drive long-term shareholder value. To that end, the foundation of our value creation approach rests on 3 financial principles. First, we prioritize driving sustainable market share growth by strategically investing in our marketplace ecosystem. Second, we are committed to long-term margin expansion through operational discipline and the natural leverage in our marketplace model. Third, we focus relentlessly on cash flow generation. Our business model efficiently converts adjusted EBITDA into free cash flow, providing us the financial flexibility to reinvest in the business and optimize our capital structure. With that context, let's turn to our third quarter results, beginning with our key marketplace metrics, gross merchandise sales, or GMS. GMS represents the total economic value flowing through our platform and directly drives the network effects that make StubHub increasingly valuable to both buyers and sellers. Our GMS reached $2.4 billion in the third quarter, representing 11% growth from the prior year period. This performance demonstrates the fundamental strength of our marketplace even as we navigated the anticipated impact of the federally mandated all-in pricing in the United States earlier this year. As expected, the transition has reduced conversion rates as customers adjusted to the new pricing format. Based on our internal estimates previously disclosed, we believe the implementation of all-in pricing had an estimated 10% one-time impact on the size of the North American secondary ticketing market. We expect this transition effect will continue to influence year-over-year comparisons through May 2026 as we cycle through the full 12-month period following the May 2025 implementation date. Even with this temporary growth headwind, our results demonstrate the resilience of our business model and our ability to continue to gain market share in this dynamic environment. Beyond the impact of all-in pricing, we believe our GMS growth reflects a more fundamental trend, sustained share gains across the North America secondary ticketing market, where we continue to outpace overall market, as well as continued international expansion. When excluding the outsized impact of Taylor Swift's Eras Tour from the prior year period, our GMS grew 24% year-over-year with broad-based strength across our platform and categories. Revenue for the third quarter was $468 million, up 8% compared to last year. The performance was primarily driven by our GMS growth, offset by 2 factors worth highlighting. First, as Eric discussed earlier, we made the strategic decision to further invest in market share expansion, in part through a reduction in take rates, resulting in our revenue as a percentage of GMS declining slightly to 19% this period compared to 20% in the prior year period. This measured reduction in take rates reflects our deliberate approach to balancing near-term results with long-term market leadership. Second, we experienced a reduction in inventory revenue as we strategically phased out the use of minimum guarantees for direct issuance sellers. This move is aligned with our long-term marketplace strategy of building sustainable, scalable relationships with content rights holders. Unless otherwise noted, the following discussion of our results will be on an adjusted basis to exclude stock-based compensation and other one-time costs. Full reconciliations to GAAP figures are available in our press release. Our adjusted gross margin was 84% during the quarter, up from 82% last year. The improvement primarily reflects a reduction in ticket substitution and replacement costs. Adjusted sales and marketing expenses were $255 million or 54% of revenue compared to $221 million or 51% of revenue last year. The increase as a percentage of revenue was driven by the reduction in take rates to drive relative market share gains in the North America secondary market. Adjusted operations and support expenses were $17 million or 3.5% of revenue during the quarter compared to $16 million or 3.6% of revenue last year. Adjusted G&A was $52 million or 11% of revenue during the quarter compared to $62 million or 14% of revenue last year. As we look forward, we do anticipate a modest amount of investment in technology resources. On the profitability front, we delivered adjusted EBITDA of $67 million, representing 14% of revenue, up 21% compared to $56 million or 13% of revenue in the same period last year. Finally, I want to highlight a one-time item on the income statement. Our GAAP results for the quarter include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted rewards in the quarter when the IPO-related performance conditions are satisfied. To be clear, all stock-based compensation, including this one-time expense is excluded from our adjusted EBITDA calculations. Additionally, this accounting recognition has no impact on our cash flow or cash position as it represents a noncash expense. Turning to cash flow. Before diving into our performance, I want to provide some context on how we view operational cash generation in our business. Our marketplace model has inherent favorable cash flow characteristics. We collect cash from buyers at the time of purchase, but remit payments to sellers at a later date, often after the event occurs. These cash balances show up on our balance sheet as payments due to sellers. With this timing difference, we earn a yield on these proceed balances. To illustrate, on a trailing 12-month basis, you will see $41 million of interest income on our income statement. Additionally, we are asset-light with only $26 million of CapEx over the trailing 12-month period. We also benefit from over $1 billion of NOLs, resulting in minimal cash taxes in the medium term. Over the same trailing 12-month period, our cash tax amount was only $17 million. This allows us to consistently convert cash at a rate roughly 100% of our adjusted EBITDA. In relation to free cash flow, we measured on a trailing 12-month basis to reduce the lumpiness created by quarterly timing differences between when we collect cash from buyers and when we remit payments to sellers, which is impacted by seasonality and event mix. For the 12-month period ending September 30, free cash flow was $6 million, which included $120 million of net cash outflows due to the change in our payments due to buyers and sellers. This amount was impacted by an atypical concentration in seller proceed outflows occurring in the fourth quarter of '24 following the final leg of Taylor Swift's North American tour. Our trailing 12-month free cash flow also included $153 million in cash interest costs during the period. Excluding those items, we generated $279 million in free cash flow conversion of approximately 100% of TTM adjusted EBITDA. Taking a step back, I want to frame our results within the broader context of our 2025 objectives. This year, our priorities have been clear: to grow market share in North America, to expand internationally and to lay the groundwork for long-term TAM expansion through disciplined and focused investment. From the outset, we anticipated that 2025 would present a more challenging growth environment for our market. There were 2 notable, but temporary factors shaping this year's comparisons. First, we are lapping the unprecedented Taylor Swift Eras Tour; and second, the industry transitioned to all-in pricing, which took effect in May. In addition, we are lapping the historic Yankees-Dodgers World Series as well as an unusually high concentration of major on sales that occurred in last year's fourth quarter. This year, we are observing some shifts in the timing of these on sales. Several large tours that would typically go on sale in the fourth quarter occurred earlier in late September. It remains to be seen how this concert on-sale timing dynamic plays out in November and December. Even with these temporary market dynamics in 2025, we are executing well against the objectives within our control, driving strong operational performance and expanding our leading market share position. And as we look ahead to 2026, the Taylor Swift comparison will be behind us, and we will lap the implementation of all-in pricing in May. Fan demand for live events remains strong, and we're excited about what is shaping up to be another robust year for live entertainment. Let me now address our thoughts on guidance, as we navigate our early stages as a public company. We are focused on operating the business for long-term value creation. Of course, we want to provide our investors with transparency so they can track our progress and execution against our long-term goals. While we are not providing specific guidance today, we plan to share annual guidance for our 2026 expectations when we report our fourth quarter and full year 2025 results early next year. Turning to the balance sheet. Our capital structure philosophy centers on maintaining flexibility and optionality to position our business for long-term success. This approach guided our capital markets activity during the quarter, which was designed to enhance our financial strength by prioritizing a reduction in our leverage, something that will continue to be a key priority. During the quarter, we successfully executed 2 transactions that collectively raised approximately $1 billion. First, we raised $224 million through our Series O preferred equity, which will convert into common equity at the expiration of the lockup. Next, we completed our $800 million IPO, raising net proceeds of approximately $758 million after deducting underwriting discounts and commissions. The influx of capital provided us with the opportunity to significantly improve our balance sheet by reducing leverage and lowering our debt service costs while maintaining strong liquidity. Specifically, we reduced our total debt by approximately 30%, retiring $750 million of our U.S. dollar-denominated term loan, bringing our total debt down to $1.7 billion. As a result, we ended the quarter with $1.4 billion of cash and cash equivalents or $623 million, net of our payments due to sellers, and $1.1 billion of net debt. The ratio of our net debt to TTM adjusted EBITDA was 3.9x at quarter end. Importantly, the interest rates on our remaining term loans are hedged via interest rate swaps through February 2027, resulting in a fixed, blended interest rate of 5.8%. Over the last 12 months, our debt service cost between cash interest and required amortization was $174 million. Today, our annual debt service requirement is $99 million, a reduction of $75 million, or 43%. Given the excess cash amounts we are holding, we intend to make additional debt repayments in the near term, which will reduce this cost even further. We also increased our revolver capacity by $440 million during the quarter from $125 million to $565 million, expanding our available liquidity and ability to respond quickly to any short-term capital need. Our strengthened balance sheet not only supports disciplined growth, but also reduces the interest burden, directly enhancing free cash flow generation. This creates a virtuous cycle that enables continued disciplined investment in organic growth and further deleveraging, both of which remain central to our capital allocation priorities in the near and intermediate term. With that, we will now open the call to Q&A. Operator? Operator: [Operator Instructions] And our first question comes from the line of Doug Anmuth with JPMorgan. Constance James: Eric, during 2025, you've made some substantial investments in core resale market share and also direct issuance. Can you just talk about the returns you're seeing on those 2 areas of spending and whether you expect those to continue in '26? And then, I know there's some noise as Eric mentioned in the 4Q on sales versus last year, but just curious on the thought process in not providing a 4Q guide in that you're halfway through the quarter. Eric Baker: Sure. Thanks for the question, Doug. Appreciate it. So I think you had a few things in there in terms of what we've been doing with market share investment, how we think about that and how we think about the outlook for the business. Again, I think as we said in our opening remarks, we take a long-term approach, so we are not providing guidance, and we'll be talking about 2026 when we're on our next call. But with that being said, let me address some of the things that you brought up. So first is, as you noted and as we talked about, we had a real focus this year in investing to take market share and to do that in a very systematic way. And we've been extremely pleased with the results. I think we can see in this quarter that has just passed that, that has continued to pace. Our relative market share, I think, as I said, is about 4x. And I think everyone can see what has happened out there in the market in a great way. I think what's exciting about that, again, is that we're really creating permanent advantages in terms of how people are situated. One of the things I mentioned at the opening was around the point-of-sale system. And we've seen that what we've deployed in the point-of-sale system has rapidly been taking share ahead of schedule, moving us into a dominant position, which obviously feeds the data that we have, feeds the -- we get increased durable share as people use the POS to operate their business, and it provides a great backbone for our advertising business and sponsored listings. So we're very excited about all of that. I think Connie addressed, as we go and we look forward from where we sit, there's an extremely strong market for live events. It's as strong as ever. I think Connie addressed their shifts in terms of when on sales may happen. But as we look at it, everything is going at pace. Operator: And our next question comes from the line of Eric Sheridan with Goldman Sachs. Eric Sheridan: As we turn the page on 2025, curious how you're thinking about aligning marketing investments over the medium to long term? And what signals you're getting in terms of the receptivity to marketing investments to continue to grow the user base across all the array of offerings and products you're bringing to the market? Eric Baker: Great. Eric, thank you for the question. And I think some of that echoes what I also would follow up. And I think as Doug asked about some of the various investments, and I talked about market share, and we're seeing great traction and durability in that as we sort of see the flywheel is working, I think the other thing which we've talked about is, obviously, we're very excited about our direct issuance business. And what that for us really means open distribution. And to sort of recap what that is, is we really view it as, look, our mission backing up is that for fans. We want to give them easy access to the events they want to go to so they can access those live events and get there in a very easy, delightful fashion. We also want to assist content in making sure tickets don't go unsold, seats don't go empty, and they can maximize their revenue. And that's a real pressing issue for people. I think even Live Nation on their most recent call mentioned that 98% of their events do not sell out. And there's tons of tickets, obviously, don't sell. Sports has a similar dynamic, where they're trying to fill arenas. And so I think this ties into the direct issuance initiative, and to your question, which is that we have seen a tremendous receptivity, which is that in order to solve this issue that rights owners have in order to try and increase their revenue, increase throughput, get people into the arenas, they see the wealth of data and distribution we have, that has sort of led to, obviously, Major League Baseball, where we're seeing great receptivity from the teams. We talked about the festival channel, where we signed up Peachtree and LED, and we've been doing a great job with that. Tying that back to your question in terms of some of the marketing spend, we also talked about as we built that out, we've made the investment to prove it. And we see rights owners and people in the queue coming on board where it does not require any financial payment for them to access our open distribution. And so similar to how teams like the Dodgers have done that, when I was speaking with Shaun and Raj just last week in New York, and we were looking at the pipeline, the majority of the pipeline, as it's transitioning, does not involve any cash payment from us. And so we think this is going in an excellent direction and tracking the way we want to see it. Operator: And our next question comes from the line of Justin Post with Bank of America. Justin Post: Wondering if you could give us any visibility on the sponsored listing ad launch, when you're thinking the timing is and how quickly that could ramp? And then second, maybe talk more about the Major League Baseball deal, are you going to get direct tickets from the league? And are you seeing more productive discussions across multiple leagues? Eric Baker: Excellent. Justin, thank you for the question. Appreciate it. I think you're asking -- let me address some of the advertising generally, including sponsored listings, then I can talk about what you asked about MLB. So let's talk about advertising. And first, let me just frame it. The way we think of our opportunity in advertising is, first of all, doing things which are value-added for our consumer base to enhance that experience and doing it for other members in the ecosystem who are selling tickets. There's 2 flavors of that advertising. One is, again, where you have things like the Booking.com deal that we did, where we work with different potential partners so that post-purchase people, if you're traveling again, we have a huge international business. People travel for these events, you can book through Booking and so forth. And so that Booking has been a great proof point and a start to that. The second, which you mentioned, is sponsored listings. And so on sponsored listings, just to explain what that is, is basically that we have sellers on our platform, and these sellers are looking to sell their tickets. And as in many marketplaces, we put the ability for these people to pay to bump their listings to the top and sort of feature them. This is not reinventing the wheel. Here's what we're excited about and get to sort of why we're excited about the progress and the promise for it. We have 2 great aspects to it that are unique. One is that these people are selling a perishable item. So it expires, and then, it's not worth anything. So it's very important to get that in front of people. And most of the supply that we have on our platform is competing to try and get in front of customers. And so if you've got similarly priced supply, taking the sponsored listings avenue is very attractive to these people, and we think, will add a lot of value and be done in a way that works for the customer. The second thing I want to highlight is I talked about our point-of-sale system in terms of relative market share and how that's helped us lock people in. That creates a very easy conduit. The point of sale, again, is what these sellers are using to operate their business. So as they operate their business, as they list tickets, as they price tickets, right in that workflow, with one click, they will be able to opt for sponsored listing. This means that basically, that product is our sales force to tie in for it. So that's why we're very excited about the opportunity. What we're trying to do is make sure that we roll it out the right way for consumers, in the right way that it works smoothly for sellers. As we've said, that will be rolling out second half of Q4. We look forward to rolling that out. Lastly, real quickly, I think, Justin, you mentioned about MLB. Let me quickly just recap what is that deal, and then, I can talk about why we're excited about it and how it looks promising. What the deal is? MLB, at the corporate level, they will be taking advantage of direct issuance with tickets that they control for certain MLB events, which is exciting. They're also helping us facilitate signing additional teams, as we already work with, as people know, the Yankees, the Dodgers and others. That has already been extremely promising. We're really liking the pipeline on that. And again, as I alluded to, many of these teams are understanding they're not concerned with or focused on a payment. They see the value of open distribution inherently driving intrinsic value for them. So that's an exciting way that it ramps in a great economic situation for us. Thank you. Operator: And our next question comes from the line of Mark Mahaney with Evercore. Mark Stephen Mahaney: Eric, I just want to ask about the direct issuance market. And if you think about it in terms of low, medium, high-hanging fruit, if there's such an expression, where do you think the best opportunities are for StubHub in the next 2 to 3 years? Is it more international? Is it more U.S.? Is it more sports? Is it more live theater? Like what are the best opportunities to ramp up into this promising market? Eric Baker: Sure. Thank you, Mark. Appreciate it. Let me again say that what we are talking about doing for content is universal to all content. So when I talk -- talking with Shaun the other day, when you go in and you say, we have a solution where we can actually get you access to more data, more distribution, more people nonexclusively to help drive your revenue and fill seats, people are like, this is great. They're very receptive to it. Because remember, what content is trying to solve every day is increasing the revenue, increasing the attendance and doing that in a way that works for fans. And we -- obviously, that's what we've been doing for years and years. So it's really just about making that as easy as possible from a product and service solution. So that's a long way of saying we're seeing a very diverse pipeline across the board. There's obviously multiple sports leagues in the United States. But globally, we've said before, we worked with European soccer franchises. Festivals we work with, I cited 2, that are domestic, but there are many internationally that we're looking at working with. We talked about the increased ramp in MLB. So I think really, this is something that is attractive across the board. Let me leave you with one other thought, Mark, on this, is that another way to think about it, and we've said this, is that this is not something which is competing with primary ticketing. We are not trying to replace primary ticketing companies. You can imagine us partnering with primary ticketing companies in order to open up our distribution to them. And that being a very powerful way to access anything across the planet because, again, this is a $150 billion-plus market. So it is a huge ocean to fish in, and we're very excited about it. Operator: And our next question comes from the line of Brian Pitz with BMO Capital Markets. Brian Pitz: Maybe a broader question on how StubHub is thinking about the future of Agentic search and ticket buying. Maybe you could provide us your views on how agents will impact either future take rates or advertising revenue going forward as we are hearing more and more industry discussions around Agentic capabilities in live event ticketing? Eric Baker: Yes. No, thank you, Brian, and thank you for the question on AI, which is obviously a very exciting topic. And so let me open by just saying, in the immediate term, everything has been business as usual with consumers using the channels that they use, and that continues. That being said, as you say, and we're always thinking long term and how this works. And I'll tell you why we're excited about the opportunities and how we think it will play out. The first thing is that any time there's top-of-the-funnel ways to reach people in competitive ways with people giving you that access top of the funnel to reach people and compete, which is traditional Google search and other methods, we believe it's extremely powerful. We believe we're extremely well positioned, and what we're seeing is that when you're looking at where you send traffic and where the agent needs to go and how they need to, they're solving for the best solution for that consumer, which naturally goes back to who has that supply chain, who has the catalog, who can be relied on for the ticket, who has the best selection, et cetera. So as we build that, we see the same way it worked even in search and everything else. That's ultimately where you need to be. Now, I think over time, what we're very excited about, Brian, is there's going to be both paid and unpaid ways to take advantage of this. We think that as we see in our dialogues with many of these companies that we talk to all the time, there may be ways where there's a paid model for them to drive traffic, but again, always with a quality score and thinking that way. And there's ways that there will be unpaid as they show. But again, the key thing is that they're going to want to drive people to the best possible outcome for consumers that's going to deliver value, and that's what we're building. So we're excited about the opportunities. That's how we see it. Operator: And our next question comes from the line of Lloyd Walmsley with Mizuho. Lloyd Walmsley: You guys talked earlier about the headwind to growth from all-in pricing. And just wondering if you guys feel like you've carved some of that back already. Is it still running at sort of the low double-digit headwind rate? And do you feel like we're just -- we're sort of -- we just have to comp through it next year? And then secondly, if you could just comment on how meaningful you think World Cup could be next year? And any early indications you're seeing on that would be great. Eric Baker: Sure. Thank you for the questions, Lloyd. Let me on all-in pricing and then World Cup. And so let me straight on, I think, as we talked about before when we've discussed this and we talked about it, the all-in pricing is a 10% headwind, we believe, for 1 year. We'll lap it in May of '26, I think, as Connie said. So that is -- we don't see any deviance from that. That's what we see. That sort of is what it is. I do want to put that in context for people to understand one thing. We talk about running our business for the long term and that we're really trying to do right by the consumers and the content. And look, I want to put this in context, we also have explained to people, we lobbied for all-in pricing for multiple years. It's something that I think you can go to the SEC website, it's public record. It's not something -- and we were the only people, I think, in our sort of sector to do that. And the reason I bring that up is we did that knowing that there would be this hit. And we knew that in the short term, it's obviously arithmetic, Lloyd, it's 10%. But in the long term, it creates a much better experience for consumers, and it's going to behoove people like us who provide the best experience. Anyway, that's all on pricing. The World Cup, again, listen, we don't -- again, we're not quantifying going forward, but what -- here's what I can tell you. The World Cup has always been a tremendous event for even going back to the days of viagogo because our heritage is international. It's phenomenal in terms of resale, and it is a global event that's going to be North America with a ton of matches, which is arguably the biggest sports spectacle on planet Earth. So we are extremely excited about it and very much looking forward to it, and we'll see. Operator: And our next question comes from the line of John Blackledge with TD Cowen. John Blackledge: One question on take rates. Could you talk about take rates between the secondary market and the emerging direct issuance business? And do you expect them to be similar as the direct issuance bid scales? And secondly, just curious if you can unpack the 3Q '25 GMS growth between North America and international? Eric Baker: Thanks, John. I appreciate the question. So let me -- I believe you had a question about how do take rates, how do you think about then direct issuance and open distribution and some stuff around our international business. Let me frame some stuff and then maybe Connie will give whatever color we can as well. So I think the first thing is when we talk about the open distribution-direct issuance model, the very straightforward answer to you is the take rates are the same. As we sit here today and everything we've seen, the take rates are the same. That's just fact. I think to help understand, so I want people to understand what we're doing here and why that is, is sometimes people again say, well, doesn't a primary ticketing company have a different take rate? And again, I just want to be very clear, we're not running a primary ticketing access control system. What we're doing is providing a marketplace, providing distribution for people just like we do for fans, just like we do for power sellers, no different. That is why we are able to tell people that when they sell through us, we're charging through the marketplace in the same way. We're not charging them. So that's the answer to that question. I think in terms of U.S. international, I'll just give you in terms of high-level flavor, and we don't break it out. So that's just not to disappoint you there. International has been a rapidly growing business for us, we're very excited about. I think sometimes we don't do a good enough job of articulating to people viagogo, which obviously went on to acquire StubHub, was built internationally. We're in 200 countries. I will tell you, Asia and Latin America are particularly strong. And I will also tell you that if you listen to different event and concert schedules for 2026 and what everyone says in the industry, which we see is tours are going increasingly global, and they're increasingly in these different geographies. So we're very excited about that. Constance James: Yes. Nothing further to add, just to emphasize that international continues to be an area where we see consistent growth. We're also excited to have Raj on board, who's going to put some direct focus on international as well, which is super exciting. So great momentum across the board. Operator: And our next question comes from the line of Shweta Khajuria with Wolfe Research. Shweta Khajuria: The first one is on direct issuance. Could you please talk to how you're thinking about the number of teams that you expect to perhaps bring on onto the platform next year? And what level of visibility do you have in terms of the timeline? Anything you can comment on when do you need to sign them all by to benefit by the end of next year? So that's the first one. And the second one, any color on just the overall demand trends that you're seeing through the quarter through October and November that could help us out as to how we think about fourth quarter going forward? Eric Baker: Yes. No, Shweta, thank you for the question. I know I think in terms of -- let me talk generally, I think about. I can talk to you generally about DI and open distribution, how we think about that. And also certainly, how do we see sort of live event demand and what's going on? Obviously, as we've said, the way that we think, and we're not providing guidance at this time, and I'm sure we look forward to the next call and talking about next year then. With that context, what I would say is in direct issuance, again, the way we think about it is, again, I think to the question that Eric may have answered -- asked earlier, is that we really have this wide ocean, and it's in so many different compartments when we talk to Shaun and Raj that you've got different leagues, different festivals, different geographies. So it's very, very broad. And what we're finding is the applicability is pretty universal and that really what we need to do is have the product and service work for people the right way. What I would also tell you is that when you get the product and service done the right way, and remember, I want to make this very clear, we are not doing this where it's not exclusive to us. It's multi-listed on multiple platforms, and it fits into their workflow. It doesn't -- that means you don't have to sign up at some predetermined date. You don't have to make a long-term decision. It becomes an option that is in your workflow at any point in time to flip the switch and sell through the retail channel. That then becomes a beautiful thing because you're not bidding on RFPs years in advance and saying, I own this for X years. So that's -- thank you for asking the question. It's an important distinction. I think, in terms of just consumer demand and live events, again, and we don't -- not giving guidance and stuff, but I will take it this way, the demand for live events is phenomenal. We don't see anything with consumer demand that's any different. I think as Connie alluded to, as she spoke, we run a marketplace business and the timing of when things go on sale on the event catalog sometimes varies. And I've been doing this for 20, 25 years, my gosh. And it can move. Sometimes things go in the fourth quarter instead of first quarter, sometimes things go in the third quarter instead of the fourth quarter. That is a timing catalog question that has nothing to do with the robust demand that we see from consumers who love going to live events and continue to do so. Operator: And our next question comes from the line of Jason Helfstein with Oppenheimer. Jason Helfstein: I guess, I want to just maybe re-ask the Shweta's question just because we're getting asked this by a number of clients. So maybe, Connie, can you help us understand, I guess, how much pull forward did you see in 3Q that may kind of be affecting fourth quarter? And I guess, how meaningful is kind of the unfavorable World Series relative to last year? And then a second question that's been coming up, Ticketmaster, Live Nation, whatever, has been under increased pressure, I think, to try to rein in speculative sellers. Can you just talk about like how you manage the business around speculative selling? And just your broad thoughts about it. Is it something that like -- kind of it's something we should all be paying attention to or just in the scope of a very big business, it's just not meaningful? Constance James: Yes. Great. Thanks for the question. And happy to provide some color. As we mentioned, we knew going in to the fourth quarter that it would be a little bit of a tough comparison. We had the unique Taylor Swift comp as well as the World Series. And as I mentioned, we did see a little bit of timing shift in relation to September. To Eric's point, what we continue to focus on is the long term. We know that there can be timing shifts from time to time. What we continue to be focused on is capturing share. And in the third quarter, we were able to do just that. In fact, if you look at our market share, we were nearing 50%. So as we look at it, we think it's merely a timing issue more than anything else. And more broadly, I'd say the outlook for '26 continues to look really strong. And so if there's a little bit of timing, the good news is that we're well positioned to capture a significant portion of those on sales when they do come in. So hopefully, that gives you a little bit of color. In relation to speculative ticketing, et cetera, I'll pass it over to Eric to provide some color. Eric Baker: Yes. No, thanks for the question, Jason. I think sometimes when people talk about, I think, within speculative ticketing, there's a lot of people in the market that -- how do we make sure that we're guaranteeing people get tickets and that it happens in an authentic way. That's our business. That's what we do. So minimizing fraud and make sure these tickets get delivered. So for us, there's not -- it's business as usual and nothing to talk about there. Operator: And our final question comes from the line of Andrew Boone with Citizens. Brianna Diaz: This is Brianna on for Andrew Boone. Just can you share how users are currently interacting with the mobile app and how that may be different than on the web? And do you see an opportunity for the mobile app to evolve into a more comprehensive platform, whether that's through loyalty program or a different lever to drive better frequency and retention? Eric Baker: Thank you for the question. Appreciate it. I think the question about mobile app, on the first thing, just we don't break out for the purposes of what we report. I think though, as you allude, and I think what we are seeing and what you're sort of alluding to is that as we are getting more and more people coming back to us all the time, as we think about what we provide to make that experience easy to know who you are to -- even with these things where we're adding in things through Booking and other things to build a more complete product, that's really what we're striving to do. So as we continue to do that, we're certainly adding the building blocks for a complete product and making it easier and easier for people to know that they just have the first port of call to go to, which is StubHub, and that's what we're excited about. Thank you. Operator: And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the call back over to Mr. Eric Baker for closing remarks. Eric Baker: Thank you, everyone, for joining us for our first earnings call as a public company. We very much appreciate it. As I said at the outset, both to those who have been along with us for our many-year journey and for those who are new to the story, thank you for taking the time. We look forward to speaking to you again in the future. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Elders Limited FY '25 Results Investor Briefing. [Operator Instructions]. I would now like to hand the conference over to Mr. Mark Allison CEO and Managing Director. Please go ahead. Mark Allison: Thank you very much, and welcome to all for the Elders' full year results presentation for the FY '25 financial year. And thank you for joining Paul and myself for the session today. As an overview, the full year results today are solid on a year-to-year basis with EBIT up 12%, transformational projects on track, positive progress on leverage and strong cash generation. Throughout the year, Elders has demonstrated solid operational and financial resilience in the face of mixed seasonal conditions. Our diversified portfolio through its national geographic footprint and multiproduct and service offering played a key role in mitigating the dry conditions across key agricultural regions and the increased competitive activity in our retail business. Stronger activity in livestock and real estate and high financial discipline also supported the solid result. On the transformational project front, we've also made good progress on Wave 2 of our SysMod project with all states rolled out and bedded down by the end of this calendar year. We are also well progressed in the final components of this project with Wave 3, and the completion phase, Wave 4, advancing in full on time. Focusing now on the areas out of our control. The FY '25 season has been a problematic year from a seasonal viewpoint, with a drier than average and late start to the winter crop across Southern Australia, with credit to our highly diversified business model, this is offset by our agency business, our real estate services business, our financial services and our feed and processing services businesses. Rural products has seen some limitation with very dry conditions in Southern Australia and Western Australia. In this context, the performance of Elders with its clear and consistent strategy, multiple diversifications, high financial discipline, hard-working and committed team and enduring customer anchor as the most trusted brand in Australian agriculture on an unprompted basis has remained resilient. This result is strong in safety, sustainability and cash flow with the full year outcome approaching the midpoint of the EBIT guidance range provided earlier this year. Moving now to the Delta Agribusiness acquisition, which completed on November 3. This acquisition is fully aligned with the Elders acquisition rationale that delivered Titan Ag, AIRR and many other bolt-on acquisitions to Elders, with pre-synergies EPS accretion, enhancement of our technical and AgTech expertise and offerings, strengthening of our geographical diversification, particularly in New South Wales and Northwest Victoria, South Australia and Western Australia, building on our crop protection and animal health regulatory package portfolio to drive our backward integration strategy, providing an additional platform for retail segmentation, allowing greater customer centricity and providing further coverage for our real estate and financial service offerings. Moving on to the FY '26 outlook. We are very optimistic on the broad outlook for Australian agriculture at a seasonal and commodity level with the return to average conditions. In addition, we welcome Delta Agribusiness to our portfolio as a platform for significant growth. The outlook and fundamentals for livestock remains sound, with prices for sheep and cattle forecast to be supported by strong international demand against the backdrop of tightening supply. The combination of a positive seasonal and commodity outlook also provides a great backdrop for continued growth of our -- in our real estate and financial services businesses. It's worth noting at this point that our first 6 weeks of trading for FY '26 is tracking some 30% up on last year for the same time on an apples-to-apples basis. So this is without the inclusion of Delta that's come in on November 3. Our approach for today is that I'll provide an overview of the results. Paul will go to the detail of our financial performance, and I'll then provide an update of our outlook and growth and transformational initiatives as we deliver the final year of our Fourth Eight Point Plan. With this overview, I will now commence with the FY '25 full results presentation. So if we can move along to the next slide. The approach, as you see with the -- it's worth noting in the appendix that there's further detail and transparency on sensitivities, business model, et cetera. So why it's worth looking at. So kicking off on the executive overview on the slide committed to improving our safety performance. So from a safety viewpoint, at the core backward-looking metric of lost time injuries, there have been 6 lost time injuries this year, which is an increase from last year. Quite a disappointing result, predominantly in the livestock area. And so we have been able to significant reduce -- significantly reduce injuries across our manual handling and our rural products area. But a disappointing result. We continue to aim for zero injuries to anyone. I think it is worth noting that at the start of the Eight Point Plan process, there were 34 lost time injuries. So we've made significant progress over the Fourth Eight Point Plans, and the lost time injury frequency and the total recordable injury frequency, and you can see the trend on the second slide, are significantly below equivalent industry benchmark. Moving to the next slide, just a quick snapshot of the financial performance. You can see the underlying EBIT, some 12% up on last year. Our return on capital of 11.3%, holding stable and maintained strong cash conversion and the dividend per share payout. And moving to the next slide. So Paul will clearly go into the detail on the financials. Moving to the next slide, and this is over the Eight Point Plan years. And you can see significant return as committed in Eight Point Plan 1, 2 and 3. At the beginning of -- prior to Eight Point Plan -- the Fourth Eight Point Plan, we took the decision to invest heavily in our transformational projects. And there's some $100 million of cost and capital being spent through this period in order to drive our systems modernization project, our automated wool project and also our Crop Protection formulation project. So we knew that, that would drag on our cost of capital and resources and focus through that period, but critical transformational projects that we're at the process of completing, with the formulation process complete, the automated wool project complete and with SysMod running into Wave 3 and 4, which are the final 2 waves through next year. Moving to the next slide. And some of the work we're doing across -- with our people and communities. It's worth noting, again, 186 years of Elders in Australian -- regional rural Australia and agriculture. Unprompted remain the most trusted brands throughout all of these areas and with significant activity across -- with multiple activities across the business. From a safety viewpoint, very clear focus on safety from an engagement enablement viewpoint, as you can see, quite high engagement enablement, as have been for many years, and also a very high focus on safety throughout our people. Moving to the next slide. And just a quick look at the work we do from a sustainable responsible future viewpoint. Many of you are aware of our alignment across many environment, people and community projects and the work we've done with our sustainability report. And you'll note the very strong and aligned partnership with the Royal Flying Doctors. So from our viewpoint, this is who we are. This is core to our DNA, and we'll continue to invest and be highly engaged with our communities around Australia. Moving to sustainability. And our progress against the emissions targets with the next slide. And you can see the trend towards the emission targets we've set. We'll continue to work through these. As many of you will also be aware, there's been a reviewed methodology on emissions calculations from livestock. So we're working through that. But I think the point to note is that we're well on track. And if you take the time to read the sustainability report, I think you'll be very impressed with the progress we're making right across the board in this area. Moving to the next slide. And this is really to emphasize one of the changes that we've made this year. Historically, we've been diversified by product and service, and we've talked about that in our business model, and it's in the business model that appears in the appendix of this pack. But you'll see right through the supply chain from crop protection, through the wholesale with the Elders Rural Service, Delta Agribusiness and then real estate and feed and processing, there's a very solid diversification component that comes out of the business. And if you look through all the key investment drivers, and I think Paul will comment on many of these, very strong EPS growth, diversification. The industry fundamentals are looking very good. And I think it's one of the points that you'll hear us make a few times that we're at the stage now where we've moved through our transformational projects and the big cost of capital resource investment, and we've got an outlook of positive commodity conditions and also seasonal conditions. So we feel very, very optimistic about the next 3 to 5 years as we run through all of these. And finally, just as a quick recap before we jump into the deep dive into the financials. The next slide, just to recap on Delta Agribusiness that joined the group on the 3rd of November, a great business, well run, very complementary from a geographical viewpoint, and it fills many gaps that we did have, very strong in its technical expertise, which also complements Elders significantly. We're looking at $12 million of synergies at EBIT level over a 3-year period in the original business case. Now given that the ACCC have put on a 12-month delay, we're discussing around the Delta Board on how we can fast track this with regard to backward integration given the strong foundation of Four Seasons' brands or products at the moment. So that's a very positive opportunity to fast track those synergies, targeting greater than 15% post synergies from an ROC viewpoint and very much aligned to Elders -- across our approach to the business. And as we've said a number of times, as divisions, all the divisions are stand-alone. So with that, I'll pass over to Paul to go through the financials, and then I'll come back towards the end on strategy and outlook. Paul Rossiter: Yes. Thanks, Mark, and welcome, everybody. I'll commence on Slide 14 of the pack, which summarizes progress against key financial objectives. Highlights include: double-digit growth in our agency real estate and feed and processing businesses; below inflation cost growth when adjusted for acquisition and transformation; strong momentum in SysMod, as Mark referenced, with all states now live on Wave 2 retail, and Wave 3 livestock to commence rollout in early 2026; product and geographic diversification, mitigating the impact of dry conditions in Southern states; Delta Ag acquisition to further enhance our geographic diversification from FY '26 and strengthen our technical capability in ag tech and precision agriculture; leverage to return to target in FY '26 through a renewed focus on capital allocation and client profitability. I'll now turn to Slide 15, which displays Elders' 5-year financial performance. I note the following progress from FY '24. Sales revenue increased $70.4 million, or 2.2% despite mixed seasonal conditions supported both by acquisition and organic growth. Gross margin increased 7.4%, up $47 million compared to the prior corresponding period or PCP. Comparatively, costs increased 6.2%, noting this includes the impact from acquisition and is therefore not comparable to inflation. Costs will be further discussed later in the presentation. Underlying EBIT increased $15.5 million compared to PCP, but has declined over the 5-year period, with FY '25 impacted by dry conditions. Moving to Slide 16 now, which contrasts FY '25 against PCP. In addition, this slide details the impact on key financial metrics from capital held on September 30 in preparation for the completion of the Delta Ag acquisition, which occurred on November 3. Elders has delivered a resilient result with the following highlights evident. Sales revenue, up $70.4 million despite dry conditions in some key cropping regions, which thankfully ended in June. Gross margin increased $47 million, to $684.6 million, up 7% year-on-year, with growth achieved across most products. Underlying EBIT increased $15.5 million, to $143.5 million, supported by a strong turnaround in agency services and continued growth in real estate. Return on capital was steady at 11.3%, notwithstanding the mixed seasonal conditions and systems modernization CapEx weighing on this metric as the capital outlay proceeds benefits. Improving this metric in FY '26 is a key priority. Cash conversion was broadly in line with expectations with a favorable outlook for FY '26. Net debt increased $20.5 million, to $457.3 million, excluding capital held for the Delta completion, broadly in line with sales growth and the impact of higher cattle prices. I'll discuss these key metrics further as we move through the pack. Moving to Slide 17, which displays Elders' gross margin diversification, a key defense against seasonal variability. As noted, gross margin increased $47 million, to $684.6 million, with growth across most products more than offsetting the impact on crop protection from dry conditions. The key drivers of this result include agency gross margin up $27.1 million, or 22%, following a strong recovery in livestock prices and increased cattle volumes. The outlook for agency services remains positive, driven by strong international demand for protein as well as some destocking in drier regions, limiting supply and supporting prices. Real estate services gross margin increased $22.5 million, or 27.2% with property management, residential, broadacre and commercial all improved on PCP, supported by both acquisition and organic growth. Feed and processing was another highlight with gross margin up $4.1 million or 23.8% due to productivity and efficiency benefits from the new feed mill commissioned in August 2024. Financial services gross margin increased $2.3 million, or 4.2%, supported by continued growth in our new broker model alongside improvement in the livestock warranty product. An increase in on-balance sheet lending was also achieved, partially because of the increased cattle prices. Collectively, the increase in gross margin across these products more than offset the reduced earnings from the exit of the Rural Bank exclusivity agreement in FY '24. Wholesale products delivered a steady result, notwithstanding lower crop protection sales from those dry regions. Growth in the above products significantly outweighed the negative impact from crop protection, which will be discussed further on the following slide. Moving to Slide 18, which analyzes product performance. This slide demonstrates the importance of our product and geographic diversification. The waterfall forward efficiency chart shows the extent of dry conditions, especially in South Australia and Western Victoria, which negatively impacted Elders' retail business with sales, gross margin percent and client confidence, all impacted. Fortunately, seasonal conditions improved from late June which caused for optimism for a recovery in these regions in FY '26. Turning now to Slide 19 to discuss costs, which increased $11.4 million, or 2.2% when adjusted for acquisitions and the impact of transformation. Part of this increase resulted from the inclusion of Elders Wool in base costs from transformation in FY '24, which added an additional $3 million, or 0.6% to base costs. Given this change in categorization, holding base costs below inflation was a pleasing outcome. Turning now to Slide 20 to discuss return on capital, which was steady in FY '24 despite mixed seasonal conditions. When adjusted for the impact of acquisitions and transformational projects, return on capital is 12.7%. Lifting return on capital is a priority for FY '26 through a renewed focus on capital allocation, client profitability and delivery of SysMod benefits. In terms of capital allocation, Mark will speak to the potential divestment of the Killara Feedlot in the strategy and outlook section. Moving now to Slide 21. And working capital, where we see an increase of $68 million from FY '24, mostly driven by higher cattle prices, which increased working capital in feed and processing and financial services. Resale inventory increased $12 million from FY '24, a pleasing result given the late start to winter crop in key cropping regions, which caused an uplift in carryover inventory. This carryover inventory is forecast to clear in the first half of FY '26. On to Slide 22. And cash flow, where we see an operating cash inflow of $117.9 million, a pleasing result considering the late start to winter crop, which pushed some receivables to the fourth quarter. The outlook for operating cash flow and cash conversion in FY '26 is positive with a focus on client profitability to result in some receivables being transitioned to third-party lenders away from Elders' balance sheet. I note that the physical payment of company tax for Elders Limited will recommence in 2026. We'll now move to Slide 23 to provide a detailed update on net debt and leverage. The waterfall charts display a normalized net debt and leverage position, adjusting for the benefit of capital held at balance date in preparation for the completion of Delta Ag. Breaking down the movement in net debt, we see an increase from $436.8 million at the end of FY '24, to $457.3 million at balance date, acknowledging this includes the benefit of $50 million of equity retained for flexibility in acquisitions, approximately 40% of which was deployed in FY '25. I note that the majority of net debt pertains to client receivables, which is self-liquidating in nature. Excluding receivables funded through debtor securitization, Elders' core debt is $161.9 million. Turning to leverage. We see a reduction from 3.1x at the end of FY '24, to 2.9x, normalized for Delta funds held. A return to our target range of 1.5 to 2x is forecast in FY '26 from a renewed focus on capital allocation and client profitability and increased referral of client loans to third-party lenders given trade receivables comprise almost 2/3 of net debt. I note that the return to target leverage is underpinned by but not dependent on the potential sale of Killara Feedlot. I'll now move to Slide 24, where we see significant headroom across banking covenants, noting that these calculations do not require adjustment for the capital held for the completion of Delta Ag. I also note that our bank leverage covenant excludes receivables funded through debtor securitization given their self-liquidating nature. I'll now move to Slide 25, which provides a macro overview of key growth pillars over the coming years. This slide has been included to demonstrate significant growth opportunities and focus areas over the coming years and is not meant to be exhaustive. Regarding systems modernization, Elders has now commenced the final wave of its SysMod program, which once completed, will provide Elders Rural Services with a modern technology platform in Microsoft Dynamics, which itself is evolving at pace. Delivering a return of at least 15% on the program spend is both a high priority and significant growth pillar in the coming years. The acquisition of Delta Ag represents a significant milestone for Elders, increasing points of presence and geographic diversification while enhancing Elders' technical expertise in ag tech and precision agriculture. Accelerating synergies from backward integration in crop protection and animal health are key priorities for FY '26, as Mark noted. The divisional structure is aimed at improving focus and accountability within significant business units. By way of example, real estate services gross margin has grown $45.6 million, or 77% since FY '23, but market share remains less than 5% nationally. We believe the divisional model will help accelerate growth in this and other business units. Acquisition will remain a growth pillar alongside organic growth, provided acquisition prospects meet our financial and values criteria. Finally, the new Elders' brokerage business is noted as a growth pillar, given success to date with our brokered loan book exceeding $1.3 billion from a near standing start in FY '24. Gross margin from loan brokerage has increased from $0.9 million in FY '23, to $6.1 million in FY '25 at a CAGR of 160% with our network of brokers expanded further in recent months. This concludes the financial section of the presentation. I'll pass back to Mark now, who will provide an update on strategy and outlook. Mark Allison: Thanks, Paul. And really leading off from Paul's comments on the divisional structure, just going to Slide 27 as we look at the Fourth Eight Point Plan. And historically, we've expressed the Eight Point Plan in terms of the diversification of our products and services. And we're now looking at the Eight Point Plan in terms of the 6 divisions of Elders and how that diversification across the matrix of products and services adds further to our ability to work through difficult seasonal conditions. So when you look at the -- this is the final year of the Fourth Eight Point Plan, we've had the ambition of 5% to 10% growth in EBIT and EPS through the cycles over an Eight Point Plan. Clearly, as we -- at above 15% return on capital. Clearly, as we come into a taxpaying state in the next financial year, the EPS growth ambition will need to be adjusted accordingly. But -- and we've emphasized the impact that the transformational part of our agenda over these 3 years has had from a cost of capital and resource on the business. But we're setting us up now for a very solid platform with all the transformational projects coming to a close as we go forward for the next 3 to 5 years. Going on to the next slide. And we -- our view and our move to go to a divisional structure, effective the beginning of FY '26, was really around the fact that each of these areas of the businesses had largely been run as either stand-alone or with a particular focus and emphasis through the governing Board or management team. So as we've laid them out, we've laid them out in order of supply chain, starting with Elders Crop Protection. very experienced managers right across all of the divisions. So Elders Crop Protection with Nick Fazekas. This includes our Titan Crop Protection business and our formulation businesses in Eastern Australia and Western Australia with AgriToll and Eureka. And it's a specialist crop protection business as per Nufarm, Adama, et cetera, et cetera. Then we move the next step along the supply chain to our wholesale business, with Peter Lourey. And this has -- I think you're all aware of AIRR, with multiple touch points and membership base throughout Australia for the AIRR business, and its highly efficient and effective warehouse network throughout Australia. Next, as we go to retail, we have Elders Rural Services, which has a complete offering of retail products, agency products, real estate, financial, et cetera, right across the board. And that business at the moment, since the split of divisions, I've been acting as the divisional CEO for ERS. And very shortly, we'll have an upgrade to that appointment, and we'll announce that in the next few weeks. The next business, again, Gerard Hines running Delta Agri business, very experienced and competent manager and co-founder of the business and with an excellent executive team. So the Delta Agri business doesn't have -- sorry, has a much greater focus on cropping technical service with some additional services -- products and services, but very well run, and looking forward to a period of strong growth and profitability across the board. Elders Real Estate. So Tom Russo had previously run the product of real estate before he ran the Elders network. And so we thought it was appropriate for him to take control of the separate dedicated division. The idea here is that Elders Real Estate has grown significantly, and we'll talk about the growth profile, some slides coming up. Tom is a highly experienced professional in this area, across a number of areas as well, has been the guardian of the expansion of the property management component of Elders Real Estate and also our entry into commercial real estate, which we kicked off a big time in Tasmania. So lots of growth opportunity there, highly dedicated manager and executive team and pretty exciting. And then feed and processing, that, we talked about with Andrew Talbot, another highly experienced manager with a great team. He's grown the profitability of feed and processing fivefold since the First Eight Point Plan, have done an excellent job. The record profitability of this division this year is based on a number of the investments we've made historically with feed mill, center-pivot irrigation, shading, a bunch of investments that have enhanced well [indiscernible] productivity. And it's a very, very well-run business in the portfolio. The consideration we've had with feed and processing is actually if you look across that supply chain, feed and processing is a different business to the others. And our thinking is that it's been highly successful. It's grown significantly. We've invested significant capital and got good returns as we saw with record profitability this year. But we've reflected on whether feed and processing would do much better and go to the next level with under natural ownership. And so that's the reason we're considering a divestment of the feed and processing division. And if the moons align and there's an appropriate shareholder value-creating proposition put in front of us, we'll consider it strongly. And I'll just reiterate Paul's earlier comment that our pathway to back on leverage and to a lesser extent -- well, actually, on leverage is the key metric we're thinking about, is not dependent on the divestment of feed and processing. So if the exercise comes up with options that are not to enhance the shareholder value, then obviously, we're very happy, and it's a great business and a great team to be in the Elders Group. So moving to the next slide. And if we look at the modernizing of the platform, we've talked about SysMod. We gave a commitment from a transparency viewpoint to disclose each of the cost of capital components of each of the waves as the Board approved business cases, so when it was formally approved. And we've done that. But you can see -- and if we include Wave 1, there's some $100 million to $110 million investment over this period. And this is the period in that slide that we talked about upfront, where from '22 -- FY '22, where we have had considerable transformational investment. Now with all of these investments, as we've seen with Killara on the capital investment there, there is a lag. And so the benefits of these investments are coming through now, in FY '26. And as we close off SysMod at the end of FY -- calendar FY '26, we look forward to those investments coming through into the future. And I think it's worth noting that this does really set Elders up with a contemporary platform where we can take advantage of multiple AI opportunities that historically we haven't been able to. So just looking to the next slide and running through each of the waves and the different components of the waves. That's really for information. But as I mentioned, the plan is that we'll complete these. We're still running in full on time, which I know sounds amazing for an IT project, but we're still running in full on time, and it's -- we're looking for the finish line as we run out next year. Okay. Now moving to the next couple of slides. In the next 2 slides, we've wanted to showcase a couple of products and services just to put more of a spotlight on them. And for this presentation, we picked financial services and real estate, which we had covered in the half year. But really to emphasize, in terms of the balance of our portfolio, products and services, we've now -- clearly, we've strengthened our position across the whole supply chain and real products, from Elders Crop Protection, to wholesale, to retail, all the way through and technical service. And in our portfolio, we're looking at really strengthening and rebalancing our financial services, all capital and real estate. So the characteristics of both of these services, as we look at them, and it fits nicely in our portfolio management, a high return on capital. We have a relatively low market share in both, financial services and in real estate. The brand is important. So unprompted most trusted brand in Australian -- regional, rural Australian agriculture. So the Elders brand is critical. There's excellent market outlook in both areas. And obviously, there are links to livestock outlook and general commodity outlook, but a strong outlook, and it really does help us balance the portfolio. So just a quick a quick look at financial services. And you can see, in line with Paul's comments, solid growth, replacing the Rural Bank exclusivity agreement and growing in a capital-light manner. So -- and we can go to questions on that in detail. The next slide on real estate. Very, very similar profile. And I think the gems that are probably not as obvious for everyone. One is the product -- sorry, the property management business. We have some 20,000 properties that we're managing now across Australia, which is a very solid and reliable flow for us and also our entry into the commercial real estate only in regional, rural Australia. So very, very positive platforms. And in terms of portfolio balance, a bit -- quite nuanced, and this is how we run Elders as you -- many of you are very aware. So then going to the forecast and outlook across all of the areas on the next slide with -- without going through each one of them, and [indiscernible] each one of them on the next slide. You can see our thinking is that we've had a period of difficult market conditions and significant transformational investment. We've come through that period. We've lagged benefits from the transformational investment. Right now, we're confronted with the next 3 to 5 years, we're looking at completion of the transformational projects, the commodity outlook and the seasonal outlook being average to positive and our ability to really hone in division by division to grow, to drive the capital out, as Paul mentioned, from a leverage viewpoint and to enhance the business for strong growth against the backdrop of average to good seasons. So it feels very positive. For the first 6 weeks, as I mentioned, of this trading year, FY '26, apples-with-apples. So with that, Delta included, we're up some 30% on the previous year. So very early days. But I think it does fall into the -- our thinking and how we've been talking about our outlook for FY '26 going forward. So with that, I think I'll open up for questions. So we'll just leave that slide on the screen, and we'll open up for questions. Operator: [Operator Instructions] Your first question comes from James Ferrier from Canaccord Genuity. James Ferrier: First question I wanted to ask you about was just on your view on livestock volumes in the year ahead, just in the context of the volumes that were achieved in FY '25 as a baseline, herd sizes as they stand right now. I mean everyone can see the livestock prices, but what's your view on volumes in the year ahead? Paul Rossiter: Yes. Thanks for the question, James. And it is one where there is a little bit of uncertainty going forward, I think particularly in sheep volumes. And just for those who don't know, we saw certainly higher cattle volumes in FY '25, up about 13%. Sheep volumes were down about 8.1%. So we do see that rebuild coming through SA and Western Vic, and that's likely to drag on sheep volumes into FY '26. Cattle is a little bit different just because of the geographical footprint. But it is one to watch. But what we do expect is that if volumes do taper off in sheep, we expect prices to offset because the international thematic for Australian protein remains very strong. And so we just see that price being flowing through the supply chain. James Ferrier: Yes. That makes sense. Second question, on Slide 17. We can see there that crop protection gross profit declined 9% on PCP. What was the volume of product associated with that $129 million of gross profit? Paul Rossiter: Yes, I don't have a volume number to hand, James. So I'll see if I can cover that post. But I will speak to the impact of dry conditions. So we did note a roughly $12 million impact from SA and Vic, [ Riv ] at the half. We saw that continue into the second half, mostly in Q3. We think the impact was roughly $19 million volumes. Yes, we're certainly up in Northern New South Wales, obviously down in SA and Vic, but I don't have the net numbers here. Mark Allison: I think, James, the story is on margin compression as you've seen with other businesses and the sales that we experienced particularly in the dryer areas. James Ferrier: Yes. Okay. Understood. And last one from me and probably one for Paul again. Just some thoughts on D&A, CapEx, interest and tax for the year ahead. Paul Rossiter: Yes. Look, depreciation, well, will increase given the completion of Wave 2 and the commencement of the continued amortization of SysMod CapEx. In terms of CapEx outlook, once again, in FY '26, it is dominated by SysMod. Some of Wave 4 will fall into FY '27, as you can see on the SysMod slide. So it's a bit uncertain, but we think -- I'd say, sort of $20 million to $25 million will fall from SysMod into FY '26 and perhaps another $5 million to $10 million outside of that. In terms of tax, so we will pay a small amount of tax, about $1 million following the submission of the FY '25 tax return. So it will be in February 2026, and then we'll pay effectively pay-as-you-go company tax thereafter. I think your question may be referring to the statutory tax rate, which fell in FY '25. That was pertaining to a tax credit related to prior period for R&D. So that's likely to be nonrecurring. Operator: Your next question comes from Richard Barwick from CLSA. Richard Barwick: Can I just double check, when you're talking SysMod -- and obviously, it looks like some benefits from an EBIT perspective are expected in FY '26. Are you able to put some numbers around that? And then equally, what you would see as the non-underlying OpEx impact from SysMod in '26? Paul Rossiter: Okay. So yes, thanks for the question, Richard. So in terms of benefits, the major tranche of benefits is through an uplift in retail margins. And we see that coming from better control of discounting and better categorization of clients. And just for context, a 1% uplift in retail gross margin percent is about $22 million. So 0.5% uplift there gets us fairly close to the benefits required. The other benefits we see coming from uplift in sales, and that comes from better client data over time, but probably longer dated than the retail margin benefits. In terms of non-underlying OpEx for FY '26, so if we work on roughly 60% CapEx, 40% non-underlying OpEx, over that sort of $20 million to $25 million in FY '25. Richard Barwick: Okay. And my other question is to do with the -- there's quite a sizable impairment of goodwill obviously captured within this FY '25 result. Can you just give us a little bit more background exactly what that related to, please? Paul Rossiter: Yes. So there's a couple of businesses that we impaired, both which were reported on during FY '25. So one was Currin Co, where we lost a number of agents in Victoria. The other was Esperance Rural. Yes, we had, I suppose, an unsuccessful transition post earnout. Mark Allison: I think, Richard, it's -- one of the learnings is that, as you know, we've been highly successful with our acquisition -- bolt-on acquisition template in keeping the vendors in the business. And when we do our post-implementation reviews post earnout, it's been 95% plus positive. And we've identified in the last 12 months, whether it's through tougher conditions or whatever the driver is, that the 2 years post earnout is now an area that we need to really focus on in terms of potential loss of staff as we saw with -- actually, it was longer than 2 years with Currin Co, where the vendor leaves the business, the earnout is completed. Historically, we've seen that in business as usual within ERS. And we've now established a project a couple of months ago to identify how we ensure that we don't get a repetition of that situation because it had been a very high success rate of post earnout of keeping the people. Richard Barwick: And well, I guess it's -- the obvious question is, what are the risks? I mean, obviously, you've got something in place here to try and to mitigate it, which would suggest you are a bit concerned that this could repeat with some -- because I mean you made a lot of acquisitions in the last few years. Yes, how do we think about that risk? Mark Allison: Yes. Well, I think the -- a couple of points, is that if there is -- like something in the order of 100 bolt-on acquisitions, and we've had 2 or 3 like this. Clearly, the Currin Co was a larger one. If you like a sense of Shakespearean irony, the Esperance rural supply defection was to Delta. I'm sure you enjoy that. But the -- I think the materiality of it has dropped off because we aren't pursuing the same sort of strategy on bolt-on acquisitions that we had, as you're aware, given that the rural product supply chain is pretty complete and also given that the ACCC regime is hard to unscramble to do business. The -- our sense is that, that won't be where we'll be getting our growth from. It will be more organic. But I think the issue is that post earnout, the -- and we have time. We have 2 or 3 years each time. We have to have the business as usual hooks and retentions in place for these people. Because as you know, in regional, rural Australia, the personal relationship goes a long way. Operator: Your next question comes from Ben Wedd from Macquarie. Ben Wedd: Maybe just turning to your question -- your comments around capital allocation there and particularly with the potentially moving some of the receivables into third-party lenders there. I'd just be interested in sort of, I guess, any timeframes you can give around that and how that sort of looks from an operational standpoint. Paul Rossiter: Yes. Thanks, Ben. Look, it is something -- and I think the way that I'd explain it firstly is that we are taking a return on capital approach. So where we're not seeing, I suppose, a deep relationship with clients that warrants the use of Elders' balance sheet, then we'll look to obviously do that business with the client that use third-party financiers. So we do see this as certainly something that has commenced already. It's a process that's commenced. And that will roll through FY '26 and beyond. But it won't be something that we seek to do hurriedly either. So it will be an incremental thing over a number of years with a significant start in FY '26, particularly in the fin services and seasonal finance areas. Ben Wedd: Yes. Got it. And then maybe just any comments you can sort of give us around Delta's sort of performance over the last 12 months as it might compare to Elders as well in some of those key categories like ag chem and other cropping areas. Paul Rossiter: Yes. Thanks, Ben. So I mean, just a couple of comments. I think the first thing to note is that Delta's financial year is June 30, and their footprint was very exposed to dry conditions that occurred in FY '25. So I think there are a couple of key distinctions between Delta and Elders. The other being, Elders obviously had an offset in livestock agency that doesn't exist to the same extent in Delta. Yes, so the Delta result was impacted certainly more than Elders by the dry conditions. Trading, since it started raining in July in Delta has been above -- certainly above PCP. So yes, that business is operating very well. Operator: Your next question comes from Evan Karatzas from UBS. Evan Karatzas: Maybe just to follow up on that one then, so sort of the ASIC accounts for Delta. So the EBITDA went from sort of the $53 million to $40 million. Can you sort of just give a bit more information around if you expect that original FY '24 earnings to be realized assuming, I guess, normal conditions? And then anything you can say around the synergy benefit we should expect in '26 for Delta as well? Mark Allison: Yes. I think the key point for us is that what we experienced as the turnaround from these dry conditions was outside the Delta financial year. And so that's what we've experienced ourselves. Just as a note, prior to going to the next phase on the acquisition a few months ago, we -- so Paul, myself and the Chair of the time, Ian Wilton, sat down with the Delta management team to go through their FY '25 results, just to give ourselves comfort that our proposition and thesis on the acquisition remained on track. And after the presentations, discussions, I think, Paul, it's fair to say that we felt very, very comfortable. In terms of your question on the synergies, I think it's a key point for us. We've already had meetings with the team, with [ Jarred ] and Matt and Chris and the team around the synergies. We had planned for 12-month -- sorry, a 3-year development of the -- or extraction of the $12 million synergies. Our belief is that given the timing, given the November 3 timing and the proximity to the FY '26 winter crop that we do have time to do a lot of the work that we wouldn't have been able to do if it had been in the same period the previous year. So our sense is that we can fast track those synergies and bring them through. And as you know, they're largely crop protection. They're largely providing different crop protection supply chains out of Titan into the Four Seasons brand. And with Steve Hines, the person who runs that business within Delta, there's great alignment with Nick Fazekas, who runs the overall crop protection business. So we've established the governance structure, the Board structure, et cetera, around Delta and all the divisions. And again, I feel pretty comfortable and optimistic that we will get -- we will optimize the synergies in FY '26. Evan Karatzas: Okay. And just final question. Just with the debt position, can you provide a number of -- to sort of normalize it if you remove the reduction in carryover inventory in SA, Vic and removing or transitioning some of the select client loans from Elders' balance sheet to third parties, just so we can sort of look for an adjusted or a like-for-like debt position, please? Paul Rossiter: Yes. Look, just very high level and back of envelope, I would say the carryover inventory, I've put a number of around $30 million on that, which we expect to be resolved in the first half. In terms of -- I'll put another bucket in there, Evan, in terms of overdue debtors, we think there's a $20 million to $25 million opportunity there. You may have noted that we have had a $10 million increase in 90-day plus receivables. That is 2 clients -- 2 large clients, that we expect to be resolved in FY '26. So we feel that we're at a peak in terms of overdue receivables as well. And then you've got -- in terms of client receivables or client loans, seasonal finance and loans, I've put a number of sort of around -- a target of around $50 million across financial services and seasonal finance. Evan Karatzas: Okay. That's super helpful. Maybe just a quick one, I'll just sneak it in. The 1Q comments you made, do we assume you're up 30%? Do we assume we're sort of back close to that? I think you previously mentioned, like, a through cycle 1Q average EBIT was around $37 million. Is that sort of where we're, I don't know, trending towards or run rating towards? Paul Rossiter: Yes. And I think the -- in terms of tailwinds in the business, Evan -- so I think the -- certainly, livestock prices are up relative to year-on-year. I'd say that tailwind will moderate the further we get through the financial year. Obviously, livestock prices increased throughout FY '25. But I think in terms of the Q1, it goes back a couple of years, when we gave that number, obviously noting that's not audited. But yes, it's a fair comment. Operator: Your next question comes from Paul Jensz from PAC Partners. Paul Jensz: Just one at the top, Mark, if I can. You talk about the 5% market share you have in the wider farm input space. Can you see some additions to your business or the Elders business? Or is it a case of organic growth from where you are to get a larger part of that pie? Mark Allison: Yes. Thanks, Paul. So when you say the larger rural products, are you referring to finance? Paul Jensz: Right across the board. You had a chart there with the Delta acquisition where you're a small part of a very big pie in farm inputs. and you've got the new structure that you have. I'm just wondering where to from here if you're just such a small part of the pie? Mark Allison: Okay. Yes. So that broader pie includes fuel, like all the finance, et cetera, et cetera. So a whole heap of services that we're not in. So I think our focus with -- well, I think it's -- the focus that Delta has had for a long time, will continue on, where it's a service-based customer-centric approach across the board. Delta is very small in Queensland and -- but ERS is also not that strong in Queensland. So there are geographical gaps, but it will largely be sticking to the knitting of what each of the divisions does best. And in that -- in the case of Delta, although it's got some broader offers, the focus is around that very technical rural products-based customer centricity. Paul Jensz: And that's across the broader Elders business as well, if I look at the new structure that you have? It's really just sticking to the core business? You don't see another bolt-on there? Mark Allison: No, I don't think so. I think our view is that the -- any deviations, slight deviations from where we are now, we've talked about in the Elders Real Estate business, it's around strengthening our commercial real estate in regional rural Australia area, continuing to build on our property management business, which is a really solid good business. I think in ERS, there's a lot of -- in the traditional pink-shirted DRS front end, there's a lot of efficiency. Because we've just put SysMod through ERS, they've got the front-end point of sale across all the branches across Australia. So it's really around all the efficiencies that we promised and controls. And again, customer understanding that Paul talked to in terms of data, that ERS hasn't been doing in the past. In terms of Elders Crop Protection, I think the focus will be some -- a little more on integration because the formulation businesses run stand-alone to the traditional Titan business. So we'll slowly move around integration there on systems. And then feed and processing, really, we're looking at ways of expanding efficiency with acquiring extra land with some increased backgrounding, many of the efficiency programs that we've had previously. So across each division -- and I guess it goes to the point of why having focused divisions makes so much sense. Because each of them have their own nuance, their own focus, and it allows the management teams to really drive the efficiency and profitability. Paul Jensz: Okay. And then if I -- just a second question, if I can, if I build the building blocks towards, let's say, 2027, '28 numbers that consensus have, it doesn't seem to be a lot of, I suppose, underlying organic growth if you do the SysMod 250 staff that came across with the bolt-ons, Delta and the small free kit you get from '25, some of the earnings come into '26. So I'm interested in that organic growth number because I don't think consensus has got a big number in there for it and neither do I at the moment. Mark Allison: Yes. Well, I'm not sure how the -- what the assumptions are on the models. But I do know from a -- I mean, if backward integration is organic growth, and we certainly see it that way, the backward integration opportunity for ERS still has 10-or-so percent to go of the available generic portfolio and the -- just in crop protection and in Delta, there's probably 40% to go. So I think from us doing things that we control, not relying on market conditions, there's a lot of -- and then you've got also the benefits, the lag benefits of the transformational projects. But yes, your observation is probably right, Paul. Paul Jensz: And the final one, I thought others would ask this question, Mark, but I'll do it. The press -- I love talking about management transition, Mark, and your term comes up at the end of next year. I'm interested in whether you could return fire with what the press, like, talking with management change. Mark Allison: Yes. No, I thought the comment in the Australian was relatively accurate. I said when we refreshed the Board and I stayed -- I decided to stay, I said the earliest that I'd leave would be at the end of this Eight Point Plan, so that's September next year. And that's still the case. And it's not a term in the contract. It's an ongoing contract. So basically, my position has been that as a minimum, I'll stay to the end of the Eight Point Plan. Operator: Your next question comes from John Campbell from Jefferies. John Campbell: Firstly, just for clarity, what's the dollar value of adjustments that you've made to arrive at adjusted EBIT? Paul Rossiter: So you're -- in the investor presentation, John? John Campbell: Yes. Yes, it just said $143 million, just for clarity. So I know what we're adjusting. Paul Rossiter: Okay. I might just come back offline on that. So we do have -- we've got a list in the annual report, but yes, I'll come back on that offline. John Campbell: Yes. I can see where you've got that in the accounts. I just wasn't 100% sure which is included in your adjustment calculations. But I think we've got a call on this afternoon, Paul, so we can maybe touch base then. And just Mark, around -- and you sort of touched on it, but I presume with the improving seasonal conditions in the Southern regions that impacted in FY '25, in terms of that competitive intensity in crop protection that you've been talking about, I presume you see FY '26, so that sort of level of intensity and price competition and the like abating over the course of '26? Mark Allison: Yes. I think there are probably 2 components that leads us to think that way. One of them is around the seasonal conditions, as you just mentioned. And the second one is the stabilization of COGS out of Chinese factories. So the idea of lower priced cost of goods coming into Australia and then driving market price down, that doesn't seem to be where it was. Earlier, I think 6 months ago, we were concerned that tariffs on Chinese crop protection into North America may drive dumping of product in Australia and therefore, further drive prices down. If you're caught with high-cost inventory, you're obviously going to be screwed from a margin viewpoint. But our sense is that it's stabilized. And regardless, even a stabilized normal season environment, Australia has the lowest crop protection prices for all around the world. And it's not uncommon for multinational companies to divert product from Australia to Europe because they can make so much more money out of the same active ingredient. John Campbell: Okay. So that all augurs pretty well for crop protection for '26? Mark Allison: It looks like -- yes, as I said, I think we're pretty optimistic, both commodity season and the back of the transformational projects. Operator: Your next question comes from Mark Topy from Select Equities. Mark Topy: I just wanted to ask a question around the property side, the retail, the growth and both in the gross margin and the sort of volumes and some expectation around that and maybe some breakdown between what's organic and what's been achieved by acquisition because you clearly got a very strong growth rate. Can you give us some sense of how that looks going forward now? Paul Rossiter: Yes. Thanks, Mark. So just for clarity, so that was for real estate services. Mark Topy: Yes. Paul Rossiter: Yes, yes. So look, we -- in terms of growth, we see roughly the split between acquisition and organic, about 60% acquisition in F '25, 40% organic. I do note that one of the significant benefits from the acquisition of Knight Frank was to substantially grow our commercial real estate business. It also introduced a valuations business to the group as well. So when we think about real estate growth, it is across residential properties under management, broadacre, commercial and now valuations. So there's a few strings to the bow there. I'd also just make a comment in regards to broadacre. It did grow, but very fractionally in F '25, that part of the book was held back by the dry conditions in South Australia and Victoria. We do expect sort of pent-up vendor demand as those regions improve. Mark Topy: Right. Just thinking about the Tasmania market, kind of, say, how much growth opportunity do you see in that market going forward? Mark Allison: Yes. I think with Tasmania per se, I think it's -- it would be incremental growth. But I think the big benefit of that acquisition, which is the old Knight Frank business, is the commercial real estate knowledge, networks, et cetera, in the Mainland. And we're already seeing that is very, very important. So there are many contacts and insights that we didn't have on commercial real estate that we've gained from that business that is really helpful in our approach to Mainland expansion in commercial real estate. Mark Topy: Great. And just on the Delta side then, can you just talk to the systems and system harmonization in terms of what's being done in the Elders and whether any CapEx might be required if you like to harmonize Delta in line with Elders? Mark Allison: Yes. So the SysMod project is predominantly Elders'. And our approach at the end of Wave 4 when we switched off the AS400, and we're completely on Microsoft Dynamics 360 -- 365, sorry, we might have got a discount. Definitely not. So from that point forward, each of the acquisitions or each of the other divisions, whether that be AIRR, Elders Crop Protection or Delta, will be business case-based. So if there's a business case from the Delta Board around aligning, enhancing systems, then it will be treated on a return on capital business case basis. And we want to take it to business as usual because it's not just an ideological, everything has to be on the same system. This is all around return to shareholders. And all the systems that they're all operating on are fine. Mark Topy: They're all fine. Okay. I was going to say. And then in terms of -- I know you want to accelerate the Delta, but in terms of any risk areas, in terms of that integration, I noticed, for instance, they've got -- they're using different property managers. Do you perceive any sort of issues in migrating Delta across to Elders in that regard? Mark Allison: No. Well, I mean, it's all going to stay the same. So there's -- in terms of backup and stuff, which I think you're talking about. So we've got a mandatory integration. We've got a [ might ], and then there's a light touch component of it. Each of those are being developed with project teams between the businesses. So the -- our view is that it's a well-run business. It's got good management. It's got a strong Board governance to set the direction, and we'll be making the right decisions for the right reasons rather than any kind of ideological control-based decision. Of course, the mandatories around safety, financial transparency, regulatory compliance and so they're mandatories, as you'd expect. Operator: Unfortunately, that does conclude our time for questions. I'll now hand back to Mr. Allison for closing remarks. Mark Allison: Okay. Well, thank you very much to everyone. I did note that we have a couple more in the queue. So apologies to those. Paul and I have a back-to-back with all Elders staff. So 2,000 or 3,000 people will be waiting on the line for 5 minutes. So we've had to call it there. So for those that we haven't been able to talk to, we look forward to talking to you in our one-to-one sessions. But I appreciate everyone coming in, and thank you very much. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Elders Limited FY '25 Results Investor Briefing. [Operator Instructions]. I would now like to hand the conference over to Mr. Mark Allison CEO and Managing Director. Please go ahead. Mark Allison: Thank you very much, and welcome to all for the Elders' full year results presentation for the FY '25 financial year. And thank you for joining Paul and myself for the session today. As an overview, the full year results today are solid on a year-to-year basis with EBIT up 12%, transformational projects on track, positive progress on leverage and strong cash generation. Throughout the year, Elders has demonstrated solid operational and financial resilience in the face of mixed seasonal conditions. Our diversified portfolio through its national geographic footprint and multiproduct and service offering played a key role in mitigating the dry conditions across key agricultural regions and the increased competitive activity in our retail business. Stronger activity in livestock and real estate and high financial discipline also supported the solid result. On the transformational project front, we've also made good progress on Wave 2 of our SysMod project with all states rolled out and bedded down by the end of this calendar year. We are also well progressed in the final components of this project with Wave 3, and the completion phase, Wave 4, advancing in full on time. Focusing now on the areas out of our control. The FY '25 season has been a problematic year from a seasonal viewpoint, with a drier than average and late start to the winter crop across Southern Australia, with credit to our highly diversified business model, this is offset by our agency business, our real estate services business, our financial services and our feed and processing services businesses. Rural products has seen some limitation with very dry conditions in Southern Australia and Western Australia. In this context, the performance of Elders with its clear and consistent strategy, multiple diversifications, high financial discipline, hard-working and committed team and enduring customer anchor as the most trusted brand in Australian agriculture on an unprompted basis has remained resilient. This result is strong in safety, sustainability and cash flow with the full year outcome approaching the midpoint of the EBIT guidance range provided earlier this year. Moving now to the Delta Agribusiness acquisition, which completed on November 3. This acquisition is fully aligned with the Elders acquisition rationale that delivered Titan Ag, AIRR and many other bolt-on acquisitions to Elders, with pre-synergies EPS accretion, enhancement of our technical and AgTech expertise and offerings, strengthening of our geographical diversification, particularly in New South Wales and Northwest Victoria, South Australia and Western Australia, building on our crop protection and animal health regulatory package portfolio to drive our backward integration strategy, providing an additional platform for retail segmentation, allowing greater customer centricity and providing further coverage for our real estate and financial service offerings. Moving on to the FY '26 outlook. We are very optimistic on the broad outlook for Australian agriculture at a seasonal and commodity level with the return to average conditions. In addition, we welcome Delta Agribusiness to our portfolio as a platform for significant growth. The outlook and fundamentals for livestock remains sound, with prices for sheep and cattle forecast to be supported by strong international demand against the backdrop of tightening supply. The combination of a positive seasonal and commodity outlook also provides a great backdrop for continued growth of our -- in our real estate and financial services businesses. It's worth noting at this point that our first 6 weeks of trading for FY '26 is tracking some 30% up on last year for the same time on an apples-to-apples basis. So this is without the inclusion of Delta that's come in on November 3. Our approach for today is that I'll provide an overview of the results. Paul will go to the detail of our financial performance, and I'll then provide an update of our outlook and growth and transformational initiatives as we deliver the final year of our Fourth Eight Point Plan. With this overview, I will now commence with the FY '25 full results presentation. So if we can move along to the next slide. The approach, as you see with the -- it's worth noting in the appendix that there's further detail and transparency on sensitivities, business model, et cetera. So why it's worth looking at. So kicking off on the executive overview on the slide committed to improving our safety performance. So from a safety viewpoint, at the core backward-looking metric of lost time injuries, there have been 6 lost time injuries this year, which is an increase from last year. Quite a disappointing result, predominantly in the livestock area. And so we have been able to significant reduce -- significantly reduce injuries across our manual handling and our rural products area. But a disappointing result. We continue to aim for zero injuries to anyone. I think it is worth noting that at the start of the Eight Point Plan process, there were 34 lost time injuries. So we've made significant progress over the Fourth Eight Point Plans, and the lost time injury frequency and the total recordable injury frequency, and you can see the trend on the second slide, are significantly below equivalent industry benchmark. Moving to the next slide, just a quick snapshot of the financial performance. You can see the underlying EBIT, some 12% up on last year. Our return on capital of 11.3%, holding stable and maintained strong cash conversion and the dividend per share payout. And moving to the next slide. So Paul will clearly go into the detail on the financials. Moving to the next slide, and this is over the Eight Point Plan years. And you can see significant return as committed in Eight Point Plan 1, 2 and 3. At the beginning of -- prior to Eight Point Plan -- the Fourth Eight Point Plan, we took the decision to invest heavily in our transformational projects. And there's some $100 million of cost and capital being spent through this period in order to drive our systems modernization project, our automated wool project and also our Crop Protection formulation project. So we knew that, that would drag on our cost of capital and resources and focus through that period, but critical transformational projects that we're at the process of completing, with the formulation process complete, the automated wool project complete and with SysMod running into Wave 3 and 4, which are the final 2 waves through next year. Moving to the next slide. And some of the work we're doing across -- with our people and communities. It's worth noting, again, 186 years of Elders in Australian -- regional rural Australia and agriculture. Unprompted remain the most trusted brands throughout all of these areas and with significant activity across -- with multiple activities across the business. From a safety viewpoint, very clear focus on safety from an engagement enablement viewpoint, as you can see, quite high engagement enablement, as have been for many years, and also a very high focus on safety throughout our people. Moving to the next slide. And just a quick look at the work we do from a sustainable responsible future viewpoint. Many of you are aware of our alignment across many environment, people and community projects and the work we've done with our sustainability report. And you'll note the very strong and aligned partnership with the Royal Flying Doctors. So from our viewpoint, this is who we are. This is core to our DNA, and we'll continue to invest and be highly engaged with our communities around Australia. Moving to sustainability. And our progress against the emissions targets with the next slide. And you can see the trend towards the emission targets we've set. We'll continue to work through these. As many of you will also be aware, there's been a reviewed methodology on emissions calculations from livestock. So we're working through that. But I think the point to note is that we're well on track. And if you take the time to read the sustainability report, I think you'll be very impressed with the progress we're making right across the board in this area. Moving to the next slide. And this is really to emphasize one of the changes that we've made this year. Historically, we've been diversified by product and service, and we've talked about that in our business model, and it's in the business model that appears in the appendix of this pack. But you'll see right through the supply chain from crop protection, through the wholesale with the Elders Rural Service, Delta Agribusiness and then real estate and feed and processing, there's a very solid diversification component that comes out of the business. And if you look through all the key investment drivers, and I think Paul will comment on many of these, very strong EPS growth, diversification. The industry fundamentals are looking very good. And I think it's one of the points that you'll hear us make a few times that we're at the stage now where we've moved through our transformational projects and the big cost of capital resource investment, and we've got an outlook of positive commodity conditions and also seasonal conditions. So we feel very, very optimistic about the next 3 to 5 years as we run through all of these. And finally, just as a quick recap before we jump into the deep dive into the financials. The next slide, just to recap on Delta Agribusiness that joined the group on the 3rd of November, a great business, well run, very complementary from a geographical viewpoint, and it fills many gaps that we did have, very strong in its technical expertise, which also complements Elders significantly. We're looking at $12 million of synergies at EBIT level over a 3-year period in the original business case. Now given that the ACCC have put on a 12-month delay, we're discussing around the Delta Board on how we can fast track this with regard to backward integration given the strong foundation of Four Seasons' brands or products at the moment. So that's a very positive opportunity to fast track those synergies, targeting greater than 15% post synergies from an ROC viewpoint and very much aligned to Elders -- across our approach to the business. And as we've said a number of times, as divisions, all the divisions are stand-alone. So with that, I'll pass over to Paul to go through the financials, and then I'll come back towards the end on strategy and outlook. Paul Rossiter: Yes. Thanks, Mark, and welcome, everybody. I'll commence on Slide 14 of the pack, which summarizes progress against key financial objectives. Highlights include: double-digit growth in our agency real estate and feed and processing businesses; below inflation cost growth when adjusted for acquisition and transformation; strong momentum in SysMod, as Mark referenced, with all states now live on Wave 2 retail, and Wave 3 livestock to commence rollout in early 2026; product and geographic diversification, mitigating the impact of dry conditions in Southern states; Delta Ag acquisition to further enhance our geographic diversification from FY '26 and strengthen our technical capability in ag tech and precision agriculture; leverage to return to target in FY '26 through a renewed focus on capital allocation and client profitability. I'll now turn to Slide 15, which displays Elders' 5-year financial performance. I note the following progress from FY '24. Sales revenue increased $70.4 million, or 2.2% despite mixed seasonal conditions supported both by acquisition and organic growth. Gross margin increased 7.4%, up $47 million compared to the prior corresponding period or PCP. Comparatively, costs increased 6.2%, noting this includes the impact from acquisition and is therefore not comparable to inflation. Costs will be further discussed later in the presentation. Underlying EBIT increased $15.5 million compared to PCP, but has declined over the 5-year period, with FY '25 impacted by dry conditions. Moving to Slide 16 now, which contrasts FY '25 against PCP. In addition, this slide details the impact on key financial metrics from capital held on September 30 in preparation for the completion of the Delta Ag acquisition, which occurred on November 3. Elders has delivered a resilient result with the following highlights evident. Sales revenue, up $70.4 million despite dry conditions in some key cropping regions, which thankfully ended in June. Gross margin increased $47 million, to $684.6 million, up 7% year-on-year, with growth achieved across most products. Underlying EBIT increased $15.5 million, to $143.5 million, supported by a strong turnaround in agency services and continued growth in real estate. Return on capital was steady at 11.3%, notwithstanding the mixed seasonal conditions and systems modernization CapEx weighing on this metric as the capital outlay proceeds benefits. Improving this metric in FY '26 is a key priority. Cash conversion was broadly in line with expectations with a favorable outlook for FY '26. Net debt increased $20.5 million, to $457.3 million, excluding capital held for the Delta completion, broadly in line with sales growth and the impact of higher cattle prices. I'll discuss these key metrics further as we move through the pack. Moving to Slide 17, which displays Elders' gross margin diversification, a key defense against seasonal variability. As noted, gross margin increased $47 million, to $684.6 million, with growth across most products more than offsetting the impact on crop protection from dry conditions. The key drivers of this result include agency gross margin up $27.1 million, or 22%, following a strong recovery in livestock prices and increased cattle volumes. The outlook for agency services remains positive, driven by strong international demand for protein as well as some destocking in drier regions, limiting supply and supporting prices. Real estate services gross margin increased $22.5 million, or 27.2% with property management, residential, broadacre and commercial all improved on PCP, supported by both acquisition and organic growth. Feed and processing was another highlight with gross margin up $4.1 million or 23.8% due to productivity and efficiency benefits from the new feed mill commissioned in August 2024. Financial services gross margin increased $2.3 million, or 4.2%, supported by continued growth in our new broker model alongside improvement in the livestock warranty product. An increase in on-balance sheet lending was also achieved, partially because of the increased cattle prices. Collectively, the increase in gross margin across these products more than offset the reduced earnings from the exit of the Rural Bank exclusivity agreement in FY '24. Wholesale products delivered a steady result, notwithstanding lower crop protection sales from those dry regions. Growth in the above products significantly outweighed the negative impact from crop protection, which will be discussed further on the following slide. Moving to Slide 18, which analyzes product performance. This slide demonstrates the importance of our product and geographic diversification. The waterfall forward efficiency chart shows the extent of dry conditions, especially in South Australia and Western Victoria, which negatively impacted Elders' retail business with sales, gross margin percent and client confidence, all impacted. Fortunately, seasonal conditions improved from late June which caused for optimism for a recovery in these regions in FY '26. Turning now to Slide 19 to discuss costs, which increased $11.4 million, or 2.2% when adjusted for acquisitions and the impact of transformation. Part of this increase resulted from the inclusion of Elders Wool in base costs from transformation in FY '24, which added an additional $3 million, or 0.6% to base costs. Given this change in categorization, holding base costs below inflation was a pleasing outcome. Turning now to Slide 20 to discuss return on capital, which was steady in FY '24 despite mixed seasonal conditions. When adjusted for the impact of acquisitions and transformational projects, return on capital is 12.7%. Lifting return on capital is a priority for FY '26 through a renewed focus on capital allocation, client profitability and delivery of SysMod benefits. In terms of capital allocation, Mark will speak to the potential divestment of the Killara Feedlot in the strategy and outlook section. Moving now to Slide 21. And working capital, where we see an increase of $68 million from FY '24, mostly driven by higher cattle prices, which increased working capital in feed and processing and financial services. Resale inventory increased $12 million from FY '24, a pleasing result given the late start to winter crop in key cropping regions, which caused an uplift in carryover inventory. This carryover inventory is forecast to clear in the first half of FY '26. On to Slide 22. And cash flow, where we see an operating cash inflow of $117.9 million, a pleasing result considering the late start to winter crop, which pushed some receivables to the fourth quarter. The outlook for operating cash flow and cash conversion in FY '26 is positive with a focus on client profitability to result in some receivables being transitioned to third-party lenders away from Elders' balance sheet. I note that the physical payment of company tax for Elders Limited will recommence in 2026. We'll now move to Slide 23 to provide a detailed update on net debt and leverage. The waterfall charts display a normalized net debt and leverage position, adjusting for the benefit of capital held at balance date in preparation for the completion of Delta Ag. Breaking down the movement in net debt, we see an increase from $436.8 million at the end of FY '24, to $457.3 million at balance date, acknowledging this includes the benefit of $50 million of equity retained for flexibility in acquisitions, approximately 40% of which was deployed in FY '25. I note that the majority of net debt pertains to client receivables, which is self-liquidating in nature. Excluding receivables funded through debtor securitization, Elders' core debt is $161.9 million. Turning to leverage. We see a reduction from 3.1x at the end of FY '24, to 2.9x, normalized for Delta funds held. A return to our target range of 1.5 to 2x is forecast in FY '26 from a renewed focus on capital allocation and client profitability and increased referral of client loans to third-party lenders given trade receivables comprise almost 2/3 of net debt. I note that the return to target leverage is underpinned by but not dependent on the potential sale of Killara Feedlot. I'll now move to Slide 24, where we see significant headroom across banking covenants, noting that these calculations do not require adjustment for the capital held for the completion of Delta Ag. I also note that our bank leverage covenant excludes receivables funded through debtor securitization given their self-liquidating nature. I'll now move to Slide 25, which provides a macro overview of key growth pillars over the coming years. This slide has been included to demonstrate significant growth opportunities and focus areas over the coming years and is not meant to be exhaustive. Regarding systems modernization, Elders has now commenced the final wave of its SysMod program, which once completed, will provide Elders Rural Services with a modern technology platform in Microsoft Dynamics, which itself is evolving at pace. Delivering a return of at least 15% on the program spend is both a high priority and significant growth pillar in the coming years. The acquisition of Delta Ag represents a significant milestone for Elders, increasing points of presence and geographic diversification while enhancing Elders' technical expertise in ag tech and precision agriculture. Accelerating synergies from backward integration in crop protection and animal health are key priorities for FY '26, as Mark noted. The divisional structure is aimed at improving focus and accountability within significant business units. By way of example, real estate services gross margin has grown $45.6 million, or 77% since FY '23, but market share remains less than 5% nationally. We believe the divisional model will help accelerate growth in this and other business units. Acquisition will remain a growth pillar alongside organic growth, provided acquisition prospects meet our financial and values criteria. Finally, the new Elders' brokerage business is noted as a growth pillar, given success to date with our brokered loan book exceeding $1.3 billion from a near standing start in FY '24. Gross margin from loan brokerage has increased from $0.9 million in FY '23, to $6.1 million in FY '25 at a CAGR of 160% with our network of brokers expanded further in recent months. This concludes the financial section of the presentation. I'll pass back to Mark now, who will provide an update on strategy and outlook. Mark Allison: Thanks, Paul. And really leading off from Paul's comments on the divisional structure, just going to Slide 27 as we look at the Fourth Eight Point Plan. And historically, we've expressed the Eight Point Plan in terms of the diversification of our products and services. And we're now looking at the Eight Point Plan in terms of the 6 divisions of Elders and how that diversification across the matrix of products and services adds further to our ability to work through difficult seasonal conditions. So when you look at the -- this is the final year of the Fourth Eight Point Plan, we've had the ambition of 5% to 10% growth in EBIT and EPS through the cycles over an Eight Point Plan. Clearly, as we -- at above 15% return on capital. Clearly, as we come into a taxpaying state in the next financial year, the EPS growth ambition will need to be adjusted accordingly. But -- and we've emphasized the impact that the transformational part of our agenda over these 3 years has had from a cost of capital and resource on the business. But we're setting us up now for a very solid platform with all the transformational projects coming to a close as we go forward for the next 3 to 5 years. Going on to the next slide. And we -- our view and our move to go to a divisional structure, effective the beginning of FY '26, was really around the fact that each of these areas of the businesses had largely been run as either stand-alone or with a particular focus and emphasis through the governing Board or management team. So as we've laid them out, we've laid them out in order of supply chain, starting with Elders Crop Protection. very experienced managers right across all of the divisions. So Elders Crop Protection with Nick Fazekas. This includes our Titan Crop Protection business and our formulation businesses in Eastern Australia and Western Australia with AgriToll and Eureka. And it's a specialist crop protection business as per Nufarm, Adama, et cetera, et cetera. Then we move the next step along the supply chain to our wholesale business, with Peter Lourey. And this has -- I think you're all aware of AIRR, with multiple touch points and membership base throughout Australia for the AIRR business, and its highly efficient and effective warehouse network throughout Australia. Next, as we go to retail, we have Elders Rural Services, which has a complete offering of retail products, agency products, real estate, financial, et cetera, right across the board. And that business at the moment, since the split of divisions, I've been acting as the divisional CEO for ERS. And very shortly, we'll have an upgrade to that appointment, and we'll announce that in the next few weeks. The next business, again, Gerard Hines running Delta Agri business, very experienced and competent manager and co-founder of the business and with an excellent executive team. So the Delta Agri business doesn't have -- sorry, has a much greater focus on cropping technical service with some additional services -- products and services, but very well run, and looking forward to a period of strong growth and profitability across the board. Elders Real Estate. So Tom Russo had previously run the product of real estate before he ran the Elders network. And so we thought it was appropriate for him to take control of the separate dedicated division. The idea here is that Elders Real Estate has grown significantly, and we'll talk about the growth profile, some slides coming up. Tom is a highly experienced professional in this area, across a number of areas as well, has been the guardian of the expansion of the property management component of Elders Real Estate and also our entry into commercial real estate, which we kicked off a big time in Tasmania. So lots of growth opportunity there, highly dedicated manager and executive team and pretty exciting. And then feed and processing, that, we talked about with Andrew Talbot, another highly experienced manager with a great team. He's grown the profitability of feed and processing fivefold since the First Eight Point Plan, have done an excellent job. The record profitability of this division this year is based on a number of the investments we've made historically with feed mill, center-pivot irrigation, shading, a bunch of investments that have enhanced well [indiscernible] productivity. And it's a very, very well-run business in the portfolio. The consideration we've had with feed and processing is actually if you look across that supply chain, feed and processing is a different business to the others. And our thinking is that it's been highly successful. It's grown significantly. We've invested significant capital and got good returns as we saw with record profitability this year. But we've reflected on whether feed and processing would do much better and go to the next level with under natural ownership. And so that's the reason we're considering a divestment of the feed and processing division. And if the moons align and there's an appropriate shareholder value-creating proposition put in front of us, we'll consider it strongly. And I'll just reiterate Paul's earlier comment that our pathway to back on leverage and to a lesser extent -- well, actually, on leverage is the key metric we're thinking about, is not dependent on the divestment of feed and processing. So if the exercise comes up with options that are not to enhance the shareholder value, then obviously, we're very happy, and it's a great business and a great team to be in the Elders Group. So moving to the next slide. And if we look at the modernizing of the platform, we've talked about SysMod. We gave a commitment from a transparency viewpoint to disclose each of the cost of capital components of each of the waves as the Board approved business cases, so when it was formally approved. And we've done that. But you can see -- and if we include Wave 1, there's some $100 million to $110 million investment over this period. And this is the period in that slide that we talked about upfront, where from '22 -- FY '22, where we have had considerable transformational investment. Now with all of these investments, as we've seen with Killara on the capital investment there, there is a lag. And so the benefits of these investments are coming through now, in FY '26. And as we close off SysMod at the end of FY -- calendar FY '26, we look forward to those investments coming through into the future. And I think it's worth noting that this does really set Elders up with a contemporary platform where we can take advantage of multiple AI opportunities that historically we haven't been able to. So just looking to the next slide and running through each of the waves and the different components of the waves. That's really for information. But as I mentioned, the plan is that we'll complete these. We're still running in full on time, which I know sounds amazing for an IT project, but we're still running in full on time, and it's -- we're looking for the finish line as we run out next year. Okay. Now moving to the next couple of slides. In the next 2 slides, we've wanted to showcase a couple of products and services just to put more of a spotlight on them. And for this presentation, we picked financial services and real estate, which we had covered in the half year. But really to emphasize, in terms of the balance of our portfolio, products and services, we've now -- clearly, we've strengthened our position across the whole supply chain and real products, from Elders Crop Protection, to wholesale, to retail, all the way through and technical service. And in our portfolio, we're looking at really strengthening and rebalancing our financial services, all capital and real estate. So the characteristics of both of these services, as we look at them, and it fits nicely in our portfolio management, a high return on capital. We have a relatively low market share in both, financial services and in real estate. The brand is important. So unprompted most trusted brand in Australian -- regional, rural Australian agriculture. So the Elders brand is critical. There's excellent market outlook in both areas. And obviously, there are links to livestock outlook and general commodity outlook, but a strong outlook, and it really does help us balance the portfolio. So just a quick a quick look at financial services. And you can see, in line with Paul's comments, solid growth, replacing the Rural Bank exclusivity agreement and growing in a capital-light manner. So -- and we can go to questions on that in detail. The next slide on real estate. Very, very similar profile. And I think the gems that are probably not as obvious for everyone. One is the product -- sorry, the property management business. We have some 20,000 properties that we're managing now across Australia, which is a very solid and reliable flow for us and also our entry into the commercial real estate only in regional, rural Australia. So very, very positive platforms. And in terms of portfolio balance, a bit -- quite nuanced, and this is how we run Elders as you -- many of you are very aware. So then going to the forecast and outlook across all of the areas on the next slide with -- without going through each one of them, and [indiscernible] each one of them on the next slide. You can see our thinking is that we've had a period of difficult market conditions and significant transformational investment. We've come through that period. We've lagged benefits from the transformational investment. Right now, we're confronted with the next 3 to 5 years, we're looking at completion of the transformational projects, the commodity outlook and the seasonal outlook being average to positive and our ability to really hone in division by division to grow, to drive the capital out, as Paul mentioned, from a leverage viewpoint and to enhance the business for strong growth against the backdrop of average to good seasons. So it feels very positive. For the first 6 weeks, as I mentioned, of this trading year, FY '26, apples-with-apples. So with that, Delta included, we're up some 30% on the previous year. So very early days. But I think it does fall into the -- our thinking and how we've been talking about our outlook for FY '26 going forward. So with that, I think I'll open up for questions. So we'll just leave that slide on the screen, and we'll open up for questions. Operator: [Operator Instructions] Your first question comes from James Ferrier from Canaccord Genuity. James Ferrier: First question I wanted to ask you about was just on your view on livestock volumes in the year ahead, just in the context of the volumes that were achieved in FY '25 as a baseline, herd sizes as they stand right now. I mean everyone can see the livestock prices, but what's your view on volumes in the year ahead? Paul Rossiter: Yes. Thanks for the question, James. And it is one where there is a little bit of uncertainty going forward, I think particularly in sheep volumes. And just for those who don't know, we saw certainly higher cattle volumes in FY '25, up about 13%. Sheep volumes were down about 8.1%. So we do see that rebuild coming through SA and Western Vic, and that's likely to drag on sheep volumes into FY '26. Cattle is a little bit different just because of the geographical footprint. But it is one to watch. But what we do expect is that if volumes do taper off in sheep, we expect prices to offset because the international thematic for Australian protein remains very strong. And so we just see that price being flowing through the supply chain. James Ferrier: Yes. That makes sense. Second question, on Slide 17. We can see there that crop protection gross profit declined 9% on PCP. What was the volume of product associated with that $129 million of gross profit? Paul Rossiter: Yes, I don't have a volume number to hand, James. So I'll see if I can cover that post. But I will speak to the impact of dry conditions. So we did note a roughly $12 million impact from SA and Vic, [ Riv ] at the half. We saw that continue into the second half, mostly in Q3. We think the impact was roughly $19 million volumes. Yes, we're certainly up in Northern New South Wales, obviously down in SA and Vic, but I don't have the net numbers here. Mark Allison: I think, James, the story is on margin compression as you've seen with other businesses and the sales that we experienced particularly in the dryer areas. James Ferrier: Yes. Okay. Understood. And last one from me and probably one for Paul again. Just some thoughts on D&A, CapEx, interest and tax for the year ahead. Paul Rossiter: Yes. Look, depreciation, well, will increase given the completion of Wave 2 and the commencement of the continued amortization of SysMod CapEx. In terms of CapEx outlook, once again, in FY '26, it is dominated by SysMod. Some of Wave 4 will fall into FY '27, as you can see on the SysMod slide. So it's a bit uncertain, but we think -- I'd say, sort of $20 million to $25 million will fall from SysMod into FY '26 and perhaps another $5 million to $10 million outside of that. In terms of tax, so we will pay a small amount of tax, about $1 million following the submission of the FY '25 tax return. So it will be in February 2026, and then we'll pay effectively pay-as-you-go company tax thereafter. I think your question may be referring to the statutory tax rate, which fell in FY '25. That was pertaining to a tax credit related to prior period for R&D. So that's likely to be nonrecurring. Operator: Your next question comes from Richard Barwick from CLSA. Richard Barwick: Can I just double check, when you're talking SysMod -- and obviously, it looks like some benefits from an EBIT perspective are expected in FY '26. Are you able to put some numbers around that? And then equally, what you would see as the non-underlying OpEx impact from SysMod in '26? Paul Rossiter: Okay. So yes, thanks for the question, Richard. So in terms of benefits, the major tranche of benefits is through an uplift in retail margins. And we see that coming from better control of discounting and better categorization of clients. And just for context, a 1% uplift in retail gross margin percent is about $22 million. So 0.5% uplift there gets us fairly close to the benefits required. The other benefits we see coming from uplift in sales, and that comes from better client data over time, but probably longer dated than the retail margin benefits. In terms of non-underlying OpEx for FY '26, so if we work on roughly 60% CapEx, 40% non-underlying OpEx, over that sort of $20 million to $25 million in FY '25. Richard Barwick: Okay. And my other question is to do with the -- there's quite a sizable impairment of goodwill obviously captured within this FY '25 result. Can you just give us a little bit more background exactly what that related to, please? Paul Rossiter: Yes. So there's a couple of businesses that we impaired, both which were reported on during FY '25. So one was Currin Co, where we lost a number of agents in Victoria. The other was Esperance Rural. Yes, we had, I suppose, an unsuccessful transition post earnout. Mark Allison: I think, Richard, it's -- one of the learnings is that, as you know, we've been highly successful with our acquisition -- bolt-on acquisition template in keeping the vendors in the business. And when we do our post-implementation reviews post earnout, it's been 95% plus positive. And we've identified in the last 12 months, whether it's through tougher conditions or whatever the driver is, that the 2 years post earnout is now an area that we need to really focus on in terms of potential loss of staff as we saw with -- actually, it was longer than 2 years with Currin Co, where the vendor leaves the business, the earnout is completed. Historically, we've seen that in business as usual within ERS. And we've now established a project a couple of months ago to identify how we ensure that we don't get a repetition of that situation because it had been a very high success rate of post earnout of keeping the people. Richard Barwick: And well, I guess it's -- the obvious question is, what are the risks? I mean, obviously, you've got something in place here to try and to mitigate it, which would suggest you are a bit concerned that this could repeat with some -- because I mean you made a lot of acquisitions in the last few years. Yes, how do we think about that risk? Mark Allison: Yes. Well, I think the -- a couple of points, is that if there is -- like something in the order of 100 bolt-on acquisitions, and we've had 2 or 3 like this. Clearly, the Currin Co was a larger one. If you like a sense of Shakespearean irony, the Esperance rural supply defection was to Delta. I'm sure you enjoy that. But the -- I think the materiality of it has dropped off because we aren't pursuing the same sort of strategy on bolt-on acquisitions that we had, as you're aware, given that the rural product supply chain is pretty complete and also given that the ACCC regime is hard to unscramble to do business. The -- our sense is that, that won't be where we'll be getting our growth from. It will be more organic. But I think the issue is that post earnout, the -- and we have time. We have 2 or 3 years each time. We have to have the business as usual hooks and retentions in place for these people. Because as you know, in regional, rural Australia, the personal relationship goes a long way. Operator: Your next question comes from Ben Wedd from Macquarie. Ben Wedd: Maybe just turning to your question -- your comments around capital allocation there and particularly with the potentially moving some of the receivables into third-party lenders there. I'd just be interested in sort of, I guess, any timeframes you can give around that and how that sort of looks from an operational standpoint. Paul Rossiter: Yes. Thanks, Ben. Look, it is something -- and I think the way that I'd explain it firstly is that we are taking a return on capital approach. So where we're not seeing, I suppose, a deep relationship with clients that warrants the use of Elders' balance sheet, then we'll look to obviously do that business with the client that use third-party financiers. So we do see this as certainly something that has commenced already. It's a process that's commenced. And that will roll through FY '26 and beyond. But it won't be something that we seek to do hurriedly either. So it will be an incremental thing over a number of years with a significant start in FY '26, particularly in the fin services and seasonal finance areas. Ben Wedd: Yes. Got it. And then maybe just any comments you can sort of give us around Delta's sort of performance over the last 12 months as it might compare to Elders as well in some of those key categories like ag chem and other cropping areas. Paul Rossiter: Yes. Thanks, Ben. So I mean, just a couple of comments. I think the first thing to note is that Delta's financial year is June 30, and their footprint was very exposed to dry conditions that occurred in FY '25. So I think there are a couple of key distinctions between Delta and Elders. The other being, Elders obviously had an offset in livestock agency that doesn't exist to the same extent in Delta. Yes, so the Delta result was impacted certainly more than Elders by the dry conditions. Trading, since it started raining in July in Delta has been above -- certainly above PCP. So yes, that business is operating very well. Operator: Your next question comes from Evan Karatzas from UBS. Evan Karatzas: Maybe just to follow up on that one then, so sort of the ASIC accounts for Delta. So the EBITDA went from sort of the $53 million to $40 million. Can you sort of just give a bit more information around if you expect that original FY '24 earnings to be realized assuming, I guess, normal conditions? And then anything you can say around the synergy benefit we should expect in '26 for Delta as well? Mark Allison: Yes. I think the key point for us is that what we experienced as the turnaround from these dry conditions was outside the Delta financial year. And so that's what we've experienced ourselves. Just as a note, prior to going to the next phase on the acquisition a few months ago, we -- so Paul, myself and the Chair of the time, Ian Wilton, sat down with the Delta management team to go through their FY '25 results, just to give ourselves comfort that our proposition and thesis on the acquisition remained on track. And after the presentations, discussions, I think, Paul, it's fair to say that we felt very, very comfortable. In terms of your question on the synergies, I think it's a key point for us. We've already had meetings with the team, with [ Jarred ] and Matt and Chris and the team around the synergies. We had planned for 12-month -- sorry, a 3-year development of the -- or extraction of the $12 million synergies. Our belief is that given the timing, given the November 3 timing and the proximity to the FY '26 winter crop that we do have time to do a lot of the work that we wouldn't have been able to do if it had been in the same period the previous year. So our sense is that we can fast track those synergies and bring them through. And as you know, they're largely crop protection. They're largely providing different crop protection supply chains out of Titan into the Four Seasons brand. And with Steve Hines, the person who runs that business within Delta, there's great alignment with Nick Fazekas, who runs the overall crop protection business. So we've established the governance structure, the Board structure, et cetera, around Delta and all the divisions. And again, I feel pretty comfortable and optimistic that we will get -- we will optimize the synergies in FY '26. Evan Karatzas: Okay. And just final question. Just with the debt position, can you provide a number of -- to sort of normalize it if you remove the reduction in carryover inventory in SA, Vic and removing or transitioning some of the select client loans from Elders' balance sheet to third parties, just so we can sort of look for an adjusted or a like-for-like debt position, please? Paul Rossiter: Yes. Look, just very high level and back of envelope, I would say the carryover inventory, I've put a number of around $30 million on that, which we expect to be resolved in the first half. In terms of -- I'll put another bucket in there, Evan, in terms of overdue debtors, we think there's a $20 million to $25 million opportunity there. You may have noted that we have had a $10 million increase in 90-day plus receivables. That is 2 clients -- 2 large clients, that we expect to be resolved in FY '26. So we feel that we're at a peak in terms of overdue receivables as well. And then you've got -- in terms of client receivables or client loans, seasonal finance and loans, I've put a number of sort of around -- a target of around $50 million across financial services and seasonal finance. Evan Karatzas: Okay. That's super helpful. Maybe just a quick one, I'll just sneak it in. The 1Q comments you made, do we assume you're up 30%? Do we assume we're sort of back close to that? I think you previously mentioned, like, a through cycle 1Q average EBIT was around $37 million. Is that sort of where we're, I don't know, trending towards or run rating towards? Paul Rossiter: Yes. And I think the -- in terms of tailwinds in the business, Evan -- so I think the -- certainly, livestock prices are up relative to year-on-year. I'd say that tailwind will moderate the further we get through the financial year. Obviously, livestock prices increased throughout FY '25. But I think in terms of the Q1, it goes back a couple of years, when we gave that number, obviously noting that's not audited. But yes, it's a fair comment. Operator: Your next question comes from Paul Jensz from PAC Partners. Paul Jensz: Just one at the top, Mark, if I can. You talk about the 5% market share you have in the wider farm input space. Can you see some additions to your business or the Elders business? Or is it a case of organic growth from where you are to get a larger part of that pie? Mark Allison: Yes. Thanks, Paul. So when you say the larger rural products, are you referring to finance? Paul Jensz: Right across the board. You had a chart there with the Delta acquisition where you're a small part of a very big pie in farm inputs. and you've got the new structure that you have. I'm just wondering where to from here if you're just such a small part of the pie? Mark Allison: Okay. Yes. So that broader pie includes fuel, like all the finance, et cetera, et cetera. So a whole heap of services that we're not in. So I think our focus with -- well, I think it's -- the focus that Delta has had for a long time, will continue on, where it's a service-based customer-centric approach across the board. Delta is very small in Queensland and -- but ERS is also not that strong in Queensland. So there are geographical gaps, but it will largely be sticking to the knitting of what each of the divisions does best. And in that -- in the case of Delta, although it's got some broader offers, the focus is around that very technical rural products-based customer centricity. Paul Jensz: And that's across the broader Elders business as well, if I look at the new structure that you have? It's really just sticking to the core business? You don't see another bolt-on there? Mark Allison: No, I don't think so. I think our view is that the -- any deviations, slight deviations from where we are now, we've talked about in the Elders Real Estate business, it's around strengthening our commercial real estate in regional rural Australia area, continuing to build on our property management business, which is a really solid good business. I think in ERS, there's a lot of -- in the traditional pink-shirted DRS front end, there's a lot of efficiency. Because we've just put SysMod through ERS, they've got the front-end point of sale across all the branches across Australia. So it's really around all the efficiencies that we promised and controls. And again, customer understanding that Paul talked to in terms of data, that ERS hasn't been doing in the past. In terms of Elders Crop Protection, I think the focus will be some -- a little more on integration because the formulation businesses run stand-alone to the traditional Titan business. So we'll slowly move around integration there on systems. And then feed and processing, really, we're looking at ways of expanding efficiency with acquiring extra land with some increased backgrounding, many of the efficiency programs that we've had previously. So across each division -- and I guess it goes to the point of why having focused divisions makes so much sense. Because each of them have their own nuance, their own focus, and it allows the management teams to really drive the efficiency and profitability. Paul Jensz: Okay. And then if I -- just a second question, if I can, if I build the building blocks towards, let's say, 2027, '28 numbers that consensus have, it doesn't seem to be a lot of, I suppose, underlying organic growth if you do the SysMod 250 staff that came across with the bolt-ons, Delta and the small free kit you get from '25, some of the earnings come into '26. So I'm interested in that organic growth number because I don't think consensus has got a big number in there for it and neither do I at the moment. Mark Allison: Yes. Well, I'm not sure how the -- what the assumptions are on the models. But I do know from a -- I mean, if backward integration is organic growth, and we certainly see it that way, the backward integration opportunity for ERS still has 10-or-so percent to go of the available generic portfolio and the -- just in crop protection and in Delta, there's probably 40% to go. So I think from us doing things that we control, not relying on market conditions, there's a lot of -- and then you've got also the benefits, the lag benefits of the transformational projects. But yes, your observation is probably right, Paul. Paul Jensz: And the final one, I thought others would ask this question, Mark, but I'll do it. The press -- I love talking about management transition, Mark, and your term comes up at the end of next year. I'm interested in whether you could return fire with what the press, like, talking with management change. Mark Allison: Yes. No, I thought the comment in the Australian was relatively accurate. I said when we refreshed the Board and I stayed -- I decided to stay, I said the earliest that I'd leave would be at the end of this Eight Point Plan, so that's September next year. And that's still the case. And it's not a term in the contract. It's an ongoing contract. So basically, my position has been that as a minimum, I'll stay to the end of the Eight Point Plan. Operator: Your next question comes from John Campbell from Jefferies. John Campbell: Firstly, just for clarity, what's the dollar value of adjustments that you've made to arrive at adjusted EBIT? Paul Rossiter: So you're -- in the investor presentation, John? John Campbell: Yes. Yes, it just said $143 million, just for clarity. So I know what we're adjusting. Paul Rossiter: Okay. I might just come back offline on that. So we do have -- we've got a list in the annual report, but yes, I'll come back on that offline. John Campbell: Yes. I can see where you've got that in the accounts. I just wasn't 100% sure which is included in your adjustment calculations. But I think we've got a call on this afternoon, Paul, so we can maybe touch base then. And just Mark, around -- and you sort of touched on it, but I presume with the improving seasonal conditions in the Southern regions that impacted in FY '25, in terms of that competitive intensity in crop protection that you've been talking about, I presume you see FY '26, so that sort of level of intensity and price competition and the like abating over the course of '26? Mark Allison: Yes. I think there are probably 2 components that leads us to think that way. One of them is around the seasonal conditions, as you just mentioned. And the second one is the stabilization of COGS out of Chinese factories. So the idea of lower priced cost of goods coming into Australia and then driving market price down, that doesn't seem to be where it was. Earlier, I think 6 months ago, we were concerned that tariffs on Chinese crop protection into North America may drive dumping of product in Australia and therefore, further drive prices down. If you're caught with high-cost inventory, you're obviously going to be screwed from a margin viewpoint. But our sense is that it's stabilized. And regardless, even a stabilized normal season environment, Australia has the lowest crop protection prices for all around the world. And it's not uncommon for multinational companies to divert product from Australia to Europe because they can make so much more money out of the same active ingredient. John Campbell: Okay. So that all augurs pretty well for crop protection for '26? Mark Allison: It looks like -- yes, as I said, I think we're pretty optimistic, both commodity season and the back of the transformational projects. Operator: Your next question comes from Mark Topy from Select Equities. Mark Topy: I just wanted to ask a question around the property side, the retail, the growth and both in the gross margin and the sort of volumes and some expectation around that and maybe some breakdown between what's organic and what's been achieved by acquisition because you clearly got a very strong growth rate. Can you give us some sense of how that looks going forward now? Paul Rossiter: Yes. Thanks, Mark. So just for clarity, so that was for real estate services. Mark Topy: Yes. Paul Rossiter: Yes, yes. So look, we -- in terms of growth, we see roughly the split between acquisition and organic, about 60% acquisition in F '25, 40% organic. I do note that one of the significant benefits from the acquisition of Knight Frank was to substantially grow our commercial real estate business. It also introduced a valuations business to the group as well. So when we think about real estate growth, it is across residential properties under management, broadacre, commercial and now valuations. So there's a few strings to the bow there. I'd also just make a comment in regards to broadacre. It did grow, but very fractionally in F '25, that part of the book was held back by the dry conditions in South Australia and Victoria. We do expect sort of pent-up vendor demand as those regions improve. Mark Topy: Right. Just thinking about the Tasmania market, kind of, say, how much growth opportunity do you see in that market going forward? Mark Allison: Yes. I think with Tasmania per se, I think it's -- it would be incremental growth. But I think the big benefit of that acquisition, which is the old Knight Frank business, is the commercial real estate knowledge, networks, et cetera, in the Mainland. And we're already seeing that is very, very important. So there are many contacts and insights that we didn't have on commercial real estate that we've gained from that business that is really helpful in our approach to Mainland expansion in commercial real estate. Mark Topy: Great. And just on the Delta side then, can you just talk to the systems and system harmonization in terms of what's being done in the Elders and whether any CapEx might be required if you like to harmonize Delta in line with Elders? Mark Allison: Yes. So the SysMod project is predominantly Elders'. And our approach at the end of Wave 4 when we switched off the AS400, and we're completely on Microsoft Dynamics 360 -- 365, sorry, we might have got a discount. Definitely not. So from that point forward, each of the acquisitions or each of the other divisions, whether that be AIRR, Elders Crop Protection or Delta, will be business case-based. So if there's a business case from the Delta Board around aligning, enhancing systems, then it will be treated on a return on capital business case basis. And we want to take it to business as usual because it's not just an ideological, everything has to be on the same system. This is all around return to shareholders. And all the systems that they're all operating on are fine. Mark Topy: They're all fine. Okay. I was going to say. And then in terms of -- I know you want to accelerate the Delta, but in terms of any risk areas, in terms of that integration, I noticed, for instance, they've got -- they're using different property managers. Do you perceive any sort of issues in migrating Delta across to Elders in that regard? Mark Allison: No. Well, I mean, it's all going to stay the same. So there's -- in terms of backup and stuff, which I think you're talking about. So we've got a mandatory integration. We've got a [ might ], and then there's a light touch component of it. Each of those are being developed with project teams between the businesses. So the -- our view is that it's a well-run business. It's got good management. It's got a strong Board governance to set the direction, and we'll be making the right decisions for the right reasons rather than any kind of ideological control-based decision. Of course, the mandatories around safety, financial transparency, regulatory compliance and so they're mandatories, as you'd expect. Operator: Unfortunately, that does conclude our time for questions. I'll now hand back to Mr. Allison for closing remarks. Mark Allison: Okay. Well, thank you very much to everyone. I did note that we have a couple more in the queue. So apologies to those. Paul and I have a back-to-back with all Elders staff. So 2,000 or 3,000 people will be waiting on the line for 5 minutes. So we've had to call it there. So for those that we haven't been able to talk to, we look forward to talking to you in our one-to-one sessions. But I appreciate everyone coming in, and thank you very much. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, good day, and welcome to the Yatsen Holding Limited Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Irene Lyu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead. Irene Lyu: Thank you, operator. Please note that discussion today will contain forward-looking statements relating to the company's future performance, and our intent to qualify for the safe harbor and liability as established by The U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yatsen Holding Limited's business and financial results is included in certain filings of the company with the Securities Exchange Commission. The company does not undertake any obligation to update its forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes. Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Joining us today on the call from Yatsen Holding Limited's senior management are Mr. Jinfeng Huang, our Founder, Chairman, and CEO, and Mr. Donghao Yang, our CFO and Director. Management will begin with their prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen Holding Limited's Investor Relations website at ir.yatsenglobal.com. I will now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir. Jinfeng Huang: Hello, everyone. Thank you for joining our third quarter 2025 earnings call. The beauty market in China continues to show signs of recovery in the third quarter, particularly in the skincare category, which remained robust and supported overall industry growth. Amid this improving backdrop, we remain focused on executing our long-term strategy to build a competitive, resilient brand portfolio anchored in R&D and innovation. Through disciplined execution, we delivered our fourth consecutive quarter of revenue growth, with total net revenues increasing by 47.5% year over year and exceeding the high end of our guidance. Our momentum continues to be driven by strong growth from skincare and sustained performance of our hero product engine, rather than short-term promotions. Our skincare brands grew by 83.2% year over year and reached 49.2% of total revenue, making another step forward in our category upgrade strategy and reinforcing our transformation toward a more sustainable, margin-accretive portfolio. Meanwhile, our net loss narrowed meaningfully as a result of the improved gross margin, optimized operating efficiency, and a more disciplined resource allocation. Net loss margin improved significantly from 17.9% in the prior year period to 7% this quarter, demonstrating the continued progress in our profitability trajectory. These results reflect the strength of our brand as well as our commitment to distinct execution. Looking ahead, our priority is to continue progressing toward profitability in a disciplined and sustainable way. We expect further improvement to be driven by a higher skincare mix, ongoing gross margin optimization, and greater marketing efficiency. While we will continue to invest in innovation and hero products, we remain disciplined in balancing growth with profitability. Now let me share some brand and product highlights during this quarter. Galani delivered strong momentum and remained one of the fastest-growing premium skincare brands. The brand's PO series continued to perform well, with the number one VC Serum and the number two AVA serums ranking among the top-selling serums across major e-commerce platforms. The newly introduced number three VB7, launched in mid-September to further build up the brand's ABC cellular level skincare framework, quickly became one of the brand's best-selling items on Douyin. We are also seeing encouraging signs of regimen adoption, with more consumers purchasing multiple products within the series, supporting stronger customer lifetime value. Doctor Wu recorded healthy growth during the quarter, supported by strong performance from its core categories. In September, Doctor Wu unveiled its first anti-aging product in the UK, leveraging decades of clinical expertise in skin renewal. The newly launched TDI N Serum gained strong traction across e-commerce platforms, driven by its innovative formula featuring a high concentration of active ingredients and a patent penetration technology, underscoring the brand's ability to build trust through clinically validated innovation. In China, Doctor Wu continued to lead the mandelic acid category across online platforms. In addition, Doctor Wu presented its research at the ninth Annual Academic Conferences of the Dermatology Committee of the Chinese Non-Government Medical Institution Association, further demonstrating the brand's commitment to clinically grounded innovation and strengthening its leadership in renewal-focused skincare. Our flagship brand, Fabulare, also continued to make progress following the successful launch of the Translucent Blurring Setting Powder and BioPhase Essence Foundation. The brand focused on streamlining its core product assortment, improving hero product quality, and enhancing overall product experience under the makeup unification concept. Several of these hero products delivered performance above expectations, driving Perfect Diary's base makeup category to exceed 40% of the total sales and supporting a more sustainable and distinct recovery. In the third quarter, COVID-19 also excelled in new channel performance and achieved the number one ranking among makeup brands on WeChat video channel, reflecting the brand's strengthened competitiveness and growing consumer IND and innovation have consistently served as the cornerstone of our product development and brand building. We are committed to advancing scientific research to strengthen our long-term competitiveness. During the quarter, we participated in the IFCC Congress for the fourth consecutive year. This time, 11 of our papers were shortlisted by the IFCC, covering topics from molecular mechanism, clinical translation to AI algorithm, and emotion skincare. This work highlights our full chain capabilities, from fundamental science to technology translation and clinical validation, and it directly supports future hero highlights across our brands. As we finish the third quarter, we are pleased to see continued progress in both growth and operational improvement. We remain confident that our strategic focus on R&D, together with disciplined execution and a sharper resource allocation, will enable us to deliver sustainable long-term growth. At the same time, we will remain highly disciplined in capital allocation, prioritizing investments that strengthen our core brands and innovation capabilities while creating long-term value for shareholders. Thank you. I will now turn the call to Donghao Yang. Donghao Yang: Thank you, Jinfeng, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in RMB amounts, and all percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for the 2025 increased by 47.5% to RMB 998.4 million from RMB 677 million for the prior year period. The increase was primarily due to an 83.2% year-over-year increase in net revenues from skincare brands combined with a 25.2% year-over-year increase in revenues from color cosmetics brands. Gross profit for the 2025 increased by 51.9% to RMB 780.5 million from RMB 513.8 million for the prior year period. Gross margin for the 2025 increased to 78.2% from 75.9% for the prior year period. The increase was primarily driven by an increase in sales of higher gross margin products. Total operating expenses for the 2025 increased by 31.9% to RMB 864.1 million from RMB 655.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the 2025 were 86.5% as compared with 96.8% for the prior year period. Fulfillment expenses for the 2025 were RMB 61.8 million as compared with RMB 50.4 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the 2025 decreased to 6.2% from 7% for the prior year period. The decrease was primarily driven by fulfillment costs optimization coupled with the leveraging effect of higher total net revenues in the 2025. Selling and marketing expenses for the 2025 were RMB 682.3 million as compared with RMB 494.4 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the 2025 decreased to 68.3% from 73% for the prior year period. The third quarter included a portion of our planned upfront investments for the Double Eleven shopping season. These investments typically elevate selling and marketing ratios in the short term but support revenue acceleration and stronger brand equity in the fourth quarter and beyond. Excluding these seasonal effects, we continue to see improving marketing efficiency driven by a higher skincare mix and more disciplined spending across channels. General and administrative expenses for the 2025 were RMB 80.2 million as compared with RMB 85 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the 2025 decreased to 8% from 12.6% for the prior year period. The decrease was primarily driven by lower share-based compensation expenses coupled with the deleveraging effect of higher total net revenues in the 2025. Research and development expenses for the 2025 were RMB 39.8 million as compared with RMB 25 million for the prior year period. As a percentage of total net revenues, research and development expenses for the 2025 increased to 4% from 3.7% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from a rise in research and development headcount. Loss from operations for the 2025 was RMB 83 million as compared with RMB 141.3 million for the prior year period. Operating loss margin was 8.4% as compared with 20.9% for the prior year period. Non-GAAP loss from operations for the 2025 was RMB 60.6 million as compared with RMB 98.5 million for the prior year period. Non-GAAP operating loss margin was 6.1%, as compared with 14.5% for the prior year period. Net loss for the 2025 was RMB 70.4 million as compared with RMB 121.1 million for the prior year period. Net loss margin was 7%, as compared with 17.9% for the prior year period. Net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for the 2025 was RMB 0.7 as compared with RMB 2.2 for the prior year period. Non-GAAP net loss for the 2025 was RMB 51.5 million as compared with RMB 76 million for the prior year period. Non-GAAP net loss margin was 5.2% as compared with 11.3% for the prior year period. Non-GAAP net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for the 2025 was RMB 0.5 as compared with RMB 0.77 for the prior year period. As of September 30, 2025, the company had cash, restricted cash, and short-term investments of RMB 1.1 billion as compared with RMB 1 billion as of December 31, 2024. Net cash used in operating activities for the 2025 was RMB 126.8 million as compared with RMB 175.9 million for the prior year period. The operating cash flow was primarily due to working capital movement, including inventory positioning and receivables timing ahead of Double Eleven. These are seasonal and planned effects. We expect operating cash flow to improve as these improved investments convert into revenue in the fourth quarter and as we continue to optimize inventory efficiency and marketing ROI. Looking at our business outlook for the 2025, we expect our total net revenues to be between RMB 1.32 billion and RMB 1.49 billion, representing a year-over-year increase of approximately 15% to 30%. These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A. Operator, Operator: Thank you. We will now begin the question and answer session. To ask a question, begin the question session. And if you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, if you wish to ask your question, please immediately repeat your question in English. And our first question will come from Maggie Huang with CICC. Please go ahead. Maggie Huang: Thank you for taking my question. This is Maggie Huang from CICC. Firstly, congratulations on beating our revenue guidance. I have two questions. My first question is about our performance during the Double Eleven festival. Is that in line with our expectations? And have we observed any change in the competition from foreign high-end brands? And my second question is, how do we expect the profitability of the fourth quarter and the next year? That's my questions. Thank you. Donghao Yang: Well, I think first of all, the Double Eleven performance for the whole company in general is in line with our expectations. And of course, some of the brands are exceeding our expectations. So having said that, I think we are very happy to observe some of not only the existing hero SKUs are doing well, but some of the newly launched products have gained very strong momentum during the Double Eleven Shopping Festival, which will contribute to further growth potentials in coming quarters. Those products we already mentioned in the earnings call. Going back to your question about the challenges and also competition coming from the foreign high-end brands, we did observe a very big challenge and also competition. For the past Double Eleven Shopping Festival, some of the high-end brands are struggling with very big O2O price up the hero product. We did see that with our R&D supporting some of our new product launches, those products are still gaining very strong momentum. Looking forward, I think the competition during the Double Eleven Shopping Festival will load some of the pantry for some of the foreign high-end brands, which means it will hurt their long-term growth. So having said that, I'm happy to see that our high-end brands are still keeping a very strong momentum by balancing the price promotion. And also, we are focusing on promoting some of the new SKUs. So going back to the Q4, I think we are on the right track to reach profitability. And that's our long-term goal. And then we are seeing the balance of growth and also the right track for profitability. Maggie Huang: Okay, got it. It's very clear. Thank you very much. And I have no more questions. Donghao Yang: Thank you. Operator: Next question will come from Lucia Zhang with CP Securities. Please go ahead. Lucia Zhang: Thank you for taking my question. This is Lucia Zhang from CP Securities. I also have two questions. The first one is we can see that the skincare business of the company has achieved rapid growth this year. So from which efforts should we make efforts to sustain the growth maybe in the last quarter and next year? And the second question is about profitability. So in which aspects will the company make efforts to continuously improve their profitability? Thank you. Jinfeng Huang: Well, so going back to the fundamental drivers for our skincare business, I think the number one thing is about the R&D. The beauty market has always been driven by further and better innovation. So we are very happy to see that, yeah, with our R&D growth engine, we can launch a very strong pipeline this year and also for the coming years as well. The second thing we can think of is with our expansion for our skincare portfolio, including the benefit expansion and also product line expansion, we see further link sales for our product portfolios, which can help us to drive further marketing ROI. The third thing is our skincare brand. I think overall, for the three major skincare brands, we still have a pretty far potential to reach their optimized revenue level. So during this process, as we continue to drive brand awareness and also continuously drive the customer base, we still have the potential to grow our existing skincare brand. And last but not least, I think for us, we focus on launching some new products on some of the key channels. And then in the future, we will expand into other channels and also drive a better channel mix. So with that, I think that will contribute to the sustainable driver for the allocation. Going back to your questions about how can we continuously improve, I think as we said many times before, I think the product mix optimization and the channel mix optimization can help us drive the gross margin and also the further ROI on the marketing expenses. The second one is as we focus more on the customer CIM and also the product link sales, this will help us to further drive better ROI on the marketing expenses. The third thing is very important. For some of our brands, those brands are reaching what we call the optimized threshold. And in the future, as the brands like the revenue scale grow up, we will see further leverage on the true branding expenses ROI. So those are some of the things we see as very important to drive continuous improvement for profitability. Lucia Zhang: Thank you. That's really helpful and clear. Operator: The next question will come from Jennifer Wong with Hightower Securities. Please go ahead. Jennifer Wong: Hi. This is Jennifer Wong from Hightower Securities. So congratulations on the company's great performances. Could you please introduce just give us some colors on expected expenses of the company in the future? And maybe could you please share how do you view the increasingly fierce competition in the online channel? Thank you for your answers. Donghao Yang: Bob, can you help me to clarify what you mean by expenses? Jennifer Wong: Like, general expenses, operating expenses, etcetera, just generally speaking. Donghao Yang: Okay. Well, if you look at our financial statements, I see we see pretty stable G&A expenses in the past quarters. But having said that, I think moving forward, as the scale of our total revenue grows, I think we will see some operational leverage on the general and administrative expenses. We will continue to invest in some of what we think short-term wise, we will categorize as expenses, but we see it more like an investment, including R&D, and also for branding dollars to really build up the brand equity. Those are some of the areas that we focus on. And what sorry. What was your second question? Jennifer Wong: Oh, that's how do you view the ongoing sales competition on the online channel? How do you think our company is going to face such kind of situation? Thank you for your answers. Donghao Yang: I think as we said before, when we are looking at the beauty market, there are so many players, and then one of the reasons that we can continuously and also accelerate our growth is mainly driven by some of the investments we have devoted to R&D in the past few years and also our continuous commitment to brand building. So we did something right before why we are getting the growth today. So if we are looking at the competition, as long as we continue to focus on what we have done right, and then we will see more and more robust product lineup and better innovation is coming. And we will see the higher brand awareness so that we can get some more operational and also brand building optimization. And also, we will see some of the operational efficiency improving by our product mix and the channel mix optimization. And we will see some organization growth, but we focus on the cornerstones of our product innovation, customer focus, CIM, and etcetera. So as long as we focus on doing the right thing, we think in the future, we will achieve the long-term sustainable growth result. Thank you. Jennifer Wong: Thank you for your kind response. We're very looking forward to seeing the company's rapid growth. Donghao Yang: Appreciate it. Thank you. Operator: And this concludes our question and answer session. I would like to turn the conference back over to management for any additional or closing comments. Please go ahead. Irene Lyu: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen Holding Limited directly. Our contact information for IR in both China and the U.S. can be found in today's press release. Thank you and have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, good day, and welcome to Full Truck Alliance Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead. Mao Mao: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor for liability, as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update these forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to the financial results, please see the earnings release issued earlier today. Joining us on the call from FTA's senior management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financing and Investment Officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast play of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang, please go ahead, sir. Hui Zhang: Hello everyone. Thank you for joining us today for our third quarter 2025 earnings conference call. In the third quarter, FTA continued to reduce logistics costs and enhance efficiency across the road freight industry by leveraging digital and intelligent technologies, amid a complex and evolving macro environment. Anchored by our core “user-centric” ethos, we strengthened our user protection mechanisms, enhanced our platform ecosystem, and further elevated the overall experience for both shippers and truckers. Our ongoing enhancements to transaction efficiency and service quality drove total fulfilled orders to 63.4 million, a year-over-year increase of 22.3%. This continued growth underscores the industry’s accelerating transformation from traditional offline logistics transactions to digital and intelligent logistics solutions. Furthermore, we consistently improved operating metrics across three key areas during the quarter: user operations, ecosystem development, and technology enablement. For shipper users, we further expanded our brand visibility and drove targeted user acquisition of SME shippers, while refining the user experience across different cargo categories and freight scenarios. As a result, average monthly active shippers reached 3.35 million in the third quarter, up 17.6% year over year. The number of shipper members grew significantly year over year, reflecting rising user engagement and stickiness. In addition, fulfilled orders contributed by direct shippers increased to 54%, demonstrating ongoing optimization of our user structure. In terms of trucker ecosystem, we continued to promote and enhance our trucker credit rating and membership program to incentivize high-quality service and elevate trucker benefits. These initiatives boosted capacity and increased reliability of truckers, driving the overall fulfillment rate to 40.6%, an increase of approximately 6 percentage points year over year. Simultaneously, we reinforced our trucker protection framework to better safeguard their rights and interests. By the end of the quarter, the number of active truckers fulfilling orders over the past 12 months reached 4.48 million, marking another historical high. On technology, we accelerated full-chain AI deployment across the platform, leveraging our extensive scenario-based logistics data to address critical pain points in freight matching. Moreover, the successful acquisition of Giga.AI, previously known as Plus PRC, significantly bolstered our AI capabilities and technological foundation, positioning us for sustained innovation and operational excellence. Our robust operational performance this quarter translated into healthy financial results. Total revenues reached RMB 3.36 billion, representing a year-over-year increase of 10.8%. Transaction service revenues grew 39.0% year over year to RMB 1.46 billion, accounting for 43% of total revenues and reflecting continued optimization of our revenue mix. Non-GAAP adjusted operating income reached RMB 849.1 million, while non-GAAP adjusted net income reached RMB 988.1 million. Looking ahead, FTA will continue to penetrate the road freight markets and cultivate a resilient and sustainable ecosystem for both shippers and truckers, driving the industry’s digital and intelligent transformation and empowering enterprises with greater logistic competitiveness through continuous technological innovation. Thank you all once again. Now, I’ll pass the call over to Simon, who will provide an update on our third quarter’s business progress and financial results. Simon Cai: Thank you, Mr. Zhang, and thank you all for joining today's earnings conference call. I will now provide an overview of our operational highlights and financial results for the third quarter of 2025, starting with our operational performance. During the quarter, we sustained solid growth momentum with continued improvements in key operating metrics highlighting the strength and resilience of our business model. Despite challenging macro conditions and adverse weather such as typhoons and certain regions that temporarily disrupted freight demand during the quarter, we continued to deliver strong order volume growth. Total fulfilled orders once again significantly outperformed the broader freight industry, reaching RMB 63.4 million in the third quarter representing a year-over-year increase of 22.3%. The steady growth in fulfilled orders was driven by the healthy engagement of our shipper users and the ongoing enhancement of our fulfillment service infrastructure leading to improvements in both scale and service quality. In the third quarter, our overall fulfillment rate reached 40.6%, increasing by more than 6 percentage points from the prior year period. Specifically, the average fulfillment rate of mid and low frequency shippers reached nearly 60% and their contribution to total fulfilled orders increased to 54%. The positive outcomes are the result of our ongoing optimization in shipper structure, which further strengthens the reliability and sustainability of our ecosystem. These achievements underscore the effectiveness of our long-standing refined operations strategy, laying a solid foundation for the platform's long-term high-quality growth. Turning to user growth. Average monthly active shippers reached 3.35 million in the third quarter, increasing by 17.6% year-over-year. Our shipper membership program continued to gain traction with over 370,000 active members in the 288 membership program during the quarter, representing a significant year-over-year increase. In the meantime, 12-month rolling retention rate for shipper members held steady at around 80%, underscoring the strong appeal of our services and the high stickiness of our user base. In addition, the number of active truckers fulfilling orders over the past 12 months hit a new record, increasing to 4.48 million in the third quarter, while the next month retention -- next month's retention rate for the truckers who responded to orders was consistently above 85%. We're delighted to see that our trucker users continue to demonstrate strong platform loyalty. During the quarter, we also continued to enhance our trucker infrastructure by expanding the breadth and the depth of the right protection program, which helped improve truckers' order acceptance rate and experience. For example, supported by targeted incentive programs and diversified protection mechanisms, the number of trucker members continue to grow. These trucker members have significantly higher order acceptance rate as compared to nonmembers, creating a positive flywheel of user engagement, other growth and platform stickiness. Now turning to monetization. Building on a solid foundation of steady growth in order volume, we continue to explore and unlock monetization opportunities. These efforts enabled us to deliver another quarter of robust top line performance despite strategic changes to some noncore business such as freight brokerage, backed by significant improvements in operating leverage. As a result, transaction service revenue grew 39% year-over-year to RMB 1.46 billion. To further break down, monetized order penetration rate reached 88.6%, up nearly 6 percentage points from the prior year period, and average monetization per order increased to RMB 25.9 from RMB 24.4 in the prior year period. These improvements stem from our deepened understanding of high-value users and our ability to meet their increasingly diversified needs through upgraded services and tailored incentive programs. At the same time, our growing scale enable us to drive down unit operating costs, leading to enhanced monetization efficiency and profitability while maintaining fair trucker earnings and strong order fulfillment. Looking ahead, we remain keenly focused on further unlocking the monetization potential of high-value users, leveraging our intelligent freight matching system and flexible subsidy strategies. In addition, our refined and tiered membership system enables us to cultivate and empower our core transportation capacity, further reinforcing a virtuous cycle of user growth, operating excellence and profitability improvements. We're confident that we are well positioned to achieve our full year targets and deliver long-term sustainable value to our platform and stakeholders. Now I'd like to provide a brief overview of our 2025 3rd quarter financial results. Our total net revenues in the third quarter were RMB 3,358.2 million representing a 10.8% increase year-over-year, primarily attributable to an increase in revenues from freight matching services. Net revenues from freight matching services including service fees from freight brokerage models, membership fees from listing models and commissions for transaction service were RMB 2,797.6 million in the third quarter representing an increase of 9.6% year-over-year, primarily due to the record increase in transaction service revenues. Revenues from the freight brokerage service in the third quarter were RMB 1,094.3 million, compared to RMB 1,280.9 million in the same period of 2024, primarily attributable to a decrease in transaction volume and partially offset by an increase in service fee rate. Revenues from freight listing services in the third quarter were RMB 247.1 million, up 10.6% year-on-year, primarily due to the falling number of total paying members. Revenue from the transaction service in the third quarter were RMB 1,456.1 million, up 39% year-over-year, primarily driven by increase in other volume penetration rate and per other transaction services. Revenues from value-added services in the third quarter were RMB 560.7 million, up 16.9% year-over-year. The increase was primarily due to growing demand for credit solutions. Third quarter cost of revenues was RMB 1,605.2 billion compared with RMB 1,364.9 million in the same period of 2022, primarily due to increases in VAT-related tax charges and other tax costs, net of grants from government authorities. These tax-related costs net of government ground totaled RMB 1,427.2 million compared with RMB 1,221.6 million in the same period of 2024, primarily due to an increase in tax costs net of government grounds related to the company's freight brokerage service. Our sales and marketing expenses in the third quarter were RMB 438.8 million, compared with RMB 412.5 million in the same period of 2024. The increase was primarily due to further investments in enhancing user ecosystem construction and protecting user rights and interests. General and administrative expenses in the third quarter were RMB 161.6 million compared with RMB 222.9 million in the same period of 2024. The decrease was primarily due to lower share-based compensation expenses. R&D expenses in the third quarter were RMB 233.3 million compared with RMB 195.1 million in the same period of 2024. The increase was primarily due to the inclusion of Giga.AI previously known as Plus PRC's R& -- Plus PRC's R&D costs. Following the completion of our further investment in Giga.AI on July 9, 2025, and its subsequent consolidation into our financial results. Income from operations in the third quarter was RMB 776.3 million, an increase of 1.9 percentage from RMB 762 million in the same period of 2024. Net income in the third quarter was RMB 921 million compared with RMB 1,121.9 million in the same period of 2024. Under non-GAAP measures, our adjusted operating income in the third quarter was RMB 849.1 million compared with RMB 884.5 million in the same period of 2024. Our adjusted net income in the third quarter was RMB 988.1 million compared with RMB 1,241.2 million in the same period of 2024. Basic and diluted net income per ADS were RMB 0.87 in the third quarter compared with RMB 1.06 in the same period of 2024. Non-GAAP adjusted basic net income per ADS was RMB 0.94 in the third quarter of 2025 compared with RMB 1.18 in the same period of 2024. Non-GAAP adjusted diluted net income per ADS was RMB 0.96 in the third quarter of 2024 compared with RMB 1.17 in the same period of 2024. As of September 30, 2025, the company had cash and cash equivalents, restricted cash, short-term investments, long-term time deposits and wealth management products with maturities over 1 year of RMB 31.1 billion in total compared with RMB 29.2 billion as of December 31, 2024. For our fourth quarter 2025 business outlook, we expect our total revenues to be between RMB 3.08 billion and RMB 3.18 billion compared with RMB 3.16 billion -- RMB 3.17 billion in the same period of 2024. Excluding freight brokerage service, net revenues are expected to range from RMB 2.18 billion to RMB 2.28 billion, representing an estimated year-over-year growth rate of 17.1% to 22.5%. These forecasts are based on the company's current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof. That concludes our prepared remarks. We would now like to open the call to Q&A. Operator, please go ahead. Operator [Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs. Ronald Keung Goldman Sachs Group, Inc. [Foreign Language] I want to ask about field orders that had still maintained very solid growth momentum, increasing 22%. So what were the main growth drivers? And can you share the outlook for the fourth quarter and next year? Simon Cai: Yes. Thank you, Ronald. Our fulfilled others continue to outgrow the broader market in the past quarter due to key 3 factors. First, solid user acquisition provided a strong foundation for growth with deeper brand penetration along SMEs and steady improvements in the market's acceptance of online freight matching models, the number of newly registered shippers continue to grow organically. In addition, we continue to focus on proactively reaching potential users through key touch points via highly efficient marketing channels, including app stores and high-traffic offline placements such as high-speed railway stations. As a result, the first order conversion rate of new users improved substantially year-over-year. Secondly, higher engagement from existing users, coupled with ongoing product optimization, continue to enhance our matching efficiency. During the quarter, human frequency among shipper members further improved year-on-year, demonstrating strong customer loyalty and stickiness. On the trucker side, we introduced the new cargo zone, which highlights newly posted high-quality orders and help truckers secure attractive opportunities more efficiently and driving improved performance in matching and fulfillment. On the shipper side, we further streamlined the order posting interface by removing or reducing unrelated entries and product sections. These initiatives made the other placement process more intuitive and efficient, significantly improved user experience and effectively boosted repeat order intent. Third, the new uses new business continued to drive incremental other incremental growth momentum supported by improving service quality and growing user base, both our lesson truckload and interested businesses continue to deliver robust growth in the third quarter. As these 2 businesses continue to mature and improving operational efficiency, we expect that on top of the solid growth in our core food truckload business, they will further satisfy the diversified needs from both our new and existing shippers and supporting our long-term order volume growth. Looking ahead, we remain confident in our platform's order volume growth momentum. Despite ongoing macro uncertainties, our dominant position and rising digitalization penetration has driven deeper engagement among SME shippers and maintain stable member retention and enhanced matching efficiency consistently, all supporting sustained order growth. At the same time, we will continue to optimize our user ecosystem by strengthening qualification reviews and credit rating systems to attract and retain highly credible, highly active users and laying a solid foundation for our high-quality order growth. Thank you. Operator Your next question comes from Eddy Wang from Morgan Stanley. Eddy Wang Morgan Stanley [Foreign Language] In the third quarter, the number of the monthly active shippers reached 3.35 million, representing a year-over-year increase of 17.6%. What are the major drivers behind the growth? Simon Cai: Thank you, Eddy. In the third quarter, the number of monthly active shippers continue to grow very steadily, supported by more efficient multichannel user acquisition and organic growth driven by referrals. These drivers not only grew our user base but also helped to strengthen the overall engagement and quality of our active users. First, our highly efficient multichannel user acquisition efforts continue to drive steady growth in shipper users. We implemented a dual approach combining brand exposure and targeted conversion. We improved online acquisition efficiency by strengthening App Store campaign management and optimized keyword search while refining download page design and user conversion funnels. Off-line wise, we expanded advertising in high-traffic areas such as high-speed real stations, subway business districts and key commercial hubs. We also leveraged the scenario-based outreach channels, such as truck stickers to reach SMEs with actual shipping needs. This integrated online and offline approach not only enhance brand awareness, but also effectively attracted high potential shippers laying a solid foundation for sustained user growth. Second, word-of-mouth referrals continue to serve as the primary driver of organic shipper growth. Unlike consumer-facing businesses, most shippers are small- and medium-sized business whose decisions are driven mostly by trust, often requiring longer commercial cycles, but resulting in higher retention and repeat purchase rates. During the quarter, we continued to invest in service reliability, capacity assurance and fulfillment experience optimization, further strengthening user trust. As a result, word-of-mouth referrals from existing shippers became the most efficient channel for user acquisition. Notably, new shippers acquired through referrals tend to be of higher quality with stronger fulfillment rates and long-term engagement as compared with other acquisition channels while coming at lower acquisition costs. Looking ahead, we will continue to pursue a dual engine growth strategy, combining brand-led acquisition and referral-driven expansion. On 1 hand, we'll continue to optimize our marketing strategy to improve acquisition, efficiency and brand penetration within target user groups. On the other hand, we will -- user satisfaction by improving service quality and strengthening protection mechanisms, reinforcing trust and professionalism within the shipper community. These initiatives will support high-quality sustained growth across the shipper ecosystem supporting our long-term growth. Thank you. Operator Your next question comes from Brian Gong from Citi. Brian Gong Citigroup Inc. [Foreign Language] I have a quick question on ecosystem improvement on trucker side. Can you give an update on key divestments of trucker members in the third? Simon Cai: Thank you, Brian. As of the end of September, our active trucker members continue to grow steadily, reaching almost 1 million members achieving further growth compared with the previous quarter. Structurally, roughly 30% of trucker MAUs in the long-haul segments or membership subscribers and contribute to over 40% of the volume in the long haul segment. This state underscores the higher engagement and stronger stickiness of our trucker members who have become the core pillar of our capacity network. During the quarter, we continued to upgrade our trucker membership tiering system. The current framework focuses on 3 key dimensions for truckers, cost reduction, fulfillment enhancement and risk protection. Our commission coupons helped truckers effectively reduce service costs during order fulfillment and our premium cargo bidding cards increased truckers' visibility and ranking priority in matching with high-quality shipments. We also relaunched the freight payment protection program, expanding its coverage scope, which further strengthened truck trust and security doing transactions directly addressing many of the fundamental operation needs. Overall, the trucker membership program has become a key driver in securing high-quality trucker capacity and improving fulfillment efficiency on the platform. Looking ahead, as we further expand membership benefits and refine incentive programs, we expect trucker programs to contribute to a growing share of our total transportation capacity and building a stronger and more sustained -- sustainable foundation for continued order growth and fulfillment stability. Thank you. Operator Your next question comes from Yuan Liao from Citic. Yuan Liao: [Foreign Language] Under the current policy environment of innovation, so how has the company implement any measures to align with these policy objectives and offer enhanced protection of our benefits to shippers and truckers? Simon Cai: Under the current policy environment of an anti evolution, the -- so we basically -- against the overall background of anti evolution and promoting high-quality growth, our strategic directions remain clear. We will continue to pursue sustainable high-quality growth through ecosystem refinement, structural optimization and user protection enhancement. First, we remain committed to enhancing ecosystem integrity with a key focus on advancing healthier user protocols by implementing ID verification and fulfillment credit scoring as well as refining user tiering. We enhanced the value of user accounts and increased switching costs which in turn accelerates the exit of low-quality users. At the same time, we have shifted the focus of our credit rating system for both shippers and truckers or frequency of transaction to quality of their behaviors. This system evaluates metrics such as fulfillment rates, positive feedback rate and complaint rate, reinforcing both through rewards and disciplinary measures to guide users towards higher standards and stronger trust fostering a healthier platform ecosystem. Second, we have focused on emphasizing fair pricing and healthy competition on our platform. For example, to prevent malicious pricing competition, we employ algorithms to identify and block abnormally low prices in real time, removing or restricting orders that fall significantly outside reasonable market price ranges. Additionally, we incorporated a price rationality weighting into our order matching, prioritizing the pairing of high-quality freight with reliable truckers. This approach protects truckers' earnings and enhance shippers fulfillment certainty. Together, these measures provide a robust technological foundation to healthy market behaviors between truckers and shippers. At the same time, we achieved notable progress in strengthening user protection and trust. Our upgraded comprehensive protection program currently provides full coverage for key risks for both user groups, including fleet payment defaults, empty runs and cargo damages to address truckers top concerns of timely freight settlement, we have implemented a guaranteed compensation account that provides trucker members with expedited reimbursement for freight, empty runs and cancellations, ensuring prompt payment and minimizing trust barriers throughout the fulfillment process. Overall, we are building a more sustainable efficient and transparent freight ecosystem by continuously optimizing user -- our user base, fulfillment certainty and matching and protection framework. Our focus on high-quality growth is reflected not only in a healthier user base but also in continuous improvements in our service quality and governance. Looking ahead, we will continue to focus on improving user trust, operational efficiency and fulfillment quality driving development sustained development of the freight industry and laying solid foundation for our growth. Operator Your next question comes from Wenjie Zhang from CICC. Wenjie Zhang China International Capital Corporation Limited [Foreign Language] My question is regarding freight brokerage business. I wonder what's the rate of progress of the business since the pricing adjustment in August? Could you give an update on user retention and profitability for in these changes? Simon Cai: Yes. Thank you. The business generally performed better than we expected. So in the third quarter, our freight brokerage business transition to a higher service fee rate, steadily and the overall performance was good. Following the expected gradual removal of tax rebates and increasing service fee rates to between 10% to 11%. User behavior showed healthy structural improvement. From a user perspective, churn from shippers in the third quarter was primarily concentrated among those who demanded frequent VAT invoicing service only and contributed to limited value to the platform beyond invoicing fees. Conversely, retention rates among shippers with small and medium value VAT invoices remained above 80%, significantly exceeding our expectations. These users are generally less price sensitive and care more about the convenience of freight matching and fulfillment certainty, which kept their engagement rates stable following the policy adjustments. Currently, invoicing plus freight matching orders represent over 70% of the total orders in our freight brokerage services, highlighting the growth importance of our matching service and the strong alignment between this business and the platform's core capabilities. At the same time, we are closely monitoring user retention and structural shifts in our user base, with a particular focus on the long run stability of small- and medium-sized shippers and ongoing conversions of new users, ensuring that the benefits of these structural optimizations are sustained and reinforced. From a financial standpoint, the freight brokerage business primarily aimed to increase stickiness by enhancing shipper experience and platform engagement rather than a major profit contributors. Although this is emphasis on invoicing results in relatively low margins and a limited impact on our overall profit, it still plays a strategic role in strengthening our user engagement and refining more order fulfillment. Looking ahead, we will continue to focus on improving the experience for small and medium-sized shippers, gradually expanding contribution from high-quality users and ensuring that the freight brokerage business delivered sustainable performance under the new policy. Operator Your next question that comes from Ritchie Sun from HSBC. Ritchie Sun HSBC Global Investment Research [Foreign Language] In the third quarter, revenue from freight listing reached RMB 247 million, up 10.6% year-on-year. So what were the main growth drivers? And how do you feel the user payment conversion trends going forward? Simon Cai: Thank you, revenues from -- our freight listing service continued to grow steadily in the past quarter, primarily driven by growth in paying users and the ongoing optimization of the membership structure. As of September 2025, the number of shipper members on our platform reached 1.27 million. The majority of the incremental growth came from the 288 membership program, which was launched last year. This program was designed to meet the needs of small and medium-sized business owners new to our platform by lowering the entry barrier and offering benefits such as freight rate, coupons and other placement tracking. The program significantly improved membership conversion and user satisfaction. Looking at the membership mix, while 688 memberships achieved steady year-over-year growth in this quarter, the 288 membership showed the most robust growth across free membership tiering with active members increasing by more than 300% compared with the same period last year. The strong growth not only broadened our user base, but also strengthen the platform payment rate. Notably, the number of high-frequency shippers under the RMB 1688 tier continue to decline, reflecting a structural shift in our shipper base. This change reflects the platform's ongoing optimization and matching efficiency and fulfillment guarantees, which are gradually replacing traditional agent roles and further encoding the quality of our user ecosystem. Turning to user conversion. Our latest data shows that around 20% of the users who reach the limit of their 288 membership chose to upgrade to the RMB 688 tier. These results are aligned with our initial expectation when designing the program and underscore the effectiveness of our tiered membership system. Our membership business has established a healthy growth cycle that attracts users, low-entry barriers ratings and with area experience and drives upgrades through tiered benefits. This model enables long-term and steady penetration among direct shippers and supports the high-quality growth of the overall business. In addition, retention among existing members remains robust, demonstrating solid user stickiness. As of the end of the third quarter, our 12-month rolling retention rate for shipper members held steady at around 80%, consistent with prior quarters. This validates our ongoing optimization in member experience and reflects strong recognition from shippers from our platform's reliable fulfillment capabilities and responsive service. We expect the 288 and 688 memberships to continue driving growth in freight listing service revenue. Meanwhile, as the platform continues in-house features such as fulfillment protection and shipment tracking and payment conversion rates are expected to trend up steadily. We will continue to optimize our membership program and benefits aiming to further strengthen long-term user retention and lifetime value. Thank you. Operator Thank you. That concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments. Mao Mao Head of Investor Relations Thank you all for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Have a good day. Operator That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Hello, and welcome to the Air Industries Group Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. This call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date the statement is made. These forward-looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties, some of which are beyond our control and cannot be predicted or quantified. Future developments and actual results could differ materially from those set forth and contemplated by or underlying the forward-looking statements. In light of these risks and uncertainties there can be no assurance that the forward-looking information will prove to be accurate. This call does not constitute an offer to purchase any securities nor a solicitation of a proxy, consent, authorization or agent designation with respect to a meeting of the company's shareholders. At this time, I would like to turn the call over to Lou Melluzzo, President and CEO. Please go ahead, sir. Luciano Melluzzo: Thank you, Donna. Good morning. Before we begin, I'd like to note that given the level of detail in our press release and Form 10-Q, we'll keep our prepared remarks brief. We will, of course, take a few questions at the end if anybody has them. Now on to the numbers. But before I turn the call over to Scott, I do want to let you know that on our consolidated balance sheet, we are reflecting all of our credit facility and subordinated debt as current. Our credit facility matures at the end of December of 2025, and our related party subordinated notes mature on July 1, 2026. At this time, I can't comment further other than to say that the company is actively engaged in a constructive discussion with all lenders regarding potential refinancing or extension of these obligations. I encourage you to refer to our Form 10-Q for more details on the status of these notes and related disclosures. With that, I'll turn the call over to Scott for the numbers. Scott? Scott Glassman: Thank you, Lou, and good morning, everyone. Our results for the third quarter of 2025 showed a meaningful improvement compared to both the first 2 quarters of this year and the third quarter of 2024. Net sales for the 3 months ended September 30, 2025, were $10.3 million. Gross profit was $2.3 million or 22.3% of sales. This is a strong improvement, reflecting the benefits of our cost reduction initiatives earlier this year. Our operating income came in at $316,000, our net loss for the quarter was just $44,000 or $0.01 per share compared to a loss of $404,000 in Q3 of 2024. Adjusted EBITDA for the 9 months ended September 30 was $2.7 million, up nearly 5% from the prior year. Let me touch briefly on the balance sheet. Our total debt has increased by approximately $2.4 million. Inventories increased by $5.6 million, reflecting our investment in work in process inventory and materials to support future deliveries. Accounts receivable has decreased by $2.1 million and accounts payable has increased by approximately $2 million. With that, I will turn the call back over to Lou. Luciano Melluzzo: Thanks, Scott. As you heard, our third quarter performance showed measurable improvements in profitability and operational discipline. While we remain focused on completing our ongoing lender discussions and finalizing the right capital structure for the future, we are confident in the strength of our core business. We continue to benefit from strong backlog levels and a healthy demand from both existing and new customers. Our focus remains squarely on execution, cost control and driving shareholder value. We look forward to a strong finish to fiscal 2025 and continued momentum into 2026. Thank you for your time and support. Donna, with that, I would like to open the line to questions and answers, if you may. Operator: [Operator Instructions] Mr. Melluzzo, we're showing no questions in queue at this time. I would like to turn the floor back over to you for closing comments. Luciano Melluzzo: Thank you, Donna. Thank you all for taking the time to be on the call today and for your continued interest in Air Industries Group. We look forward to updating you on the progress of our ongoing operations on the next call. Thank you all for joining. Donna, you may end the call. Operator: Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines at this time, and enjoy the rest of your day.
Operator: Good morning, everyone, and thank you for waiting. Welcome to Cosan's Third Quarter 2025 Earnings Release Conference Call. [Operator Instructions] The conference call is being recorded and will be available on the company's IR website at cosan.com.br. [Operator Instructions] Please note that the information contained in this presentation and in statements that may be made during the conference call regarding Cosan's business prospects, projections and operating and financial goals are based on beliefs and assumptions of the company's Executive Board as well as information currently available. Forward-looking considerations are not a guarantee of performance as they involve risks, uncertainties and assumptions and refer to future events that depend on circumstances that may or may not materialize. Investors should bear in mind that overall economic circumstances market conditions as well as other operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araujo. Rodrigo Alves: Hi, everyone. Welcome to our earnings call of the third quarter of 2925. Here, we have the disclaimers about future projections and future assumptions with respect to the company's results. Next slide, please. So looking at the financial highlights of the third quarter of 25, you can see that we had an EBITDA under management of BRL 7.4 billion that's about BRL 1 billion less than 2024 and mostly impacted by the results of Moove, Radar and Raizen that we're going to detail later on. We also had given the lower EBITDA and the higher financial expenses, we had a lower net income in the period, negative BRL 1.2 billion. Our net debt was relatively stable in the quarter, slightly higher than Q2 '25. We had a quarter with lower dividends received. Of course, we have a concentration of dividends in the beginning and end of the year. So that's reflected in dividends for Q3. And in that sense, we also have our debt service coverage ratio of 1x. And this is, of course, one of the main reasons why the company needed to improve and enhance its capital structure and did the transactions that we announced recently. And in terms of safety, we continue to have positive metrics, low metrics in terms of incidents. Of course, there's an increase compared to Q2 '25, but still highly efficient ratios. And we continue, of course, to have safety as a priority for the company and continue our journey of improving safety over time. Next slide, please. In terms of operational performance for Q3 '25, we had in the case of Rumo, we had largest -- an increase in the transported volumes but also a reduction in the average tariffs that resulted in an increase in EBITDA of 4%. The company has been repositioning itself over the course of the year to improve its competitiveness in the Brazilian logistics market. In the case of Compass, we had higher distributed volumes in the quarter, also an increase in the participation of the residential segment that has healthier margins and it's quite accretive for the company as well. We continue to see the increase in the volumes sold by Edge in the unregulated market in Brazil. So we saw a growth of 6% of Compass EBITDA in the quarter. In Moove, something that we've been talking about. We already see the company having stable volumes compared to '24. When we compare to the second quarter of 25, there was a 13% increase in the volumes sold. So the company is gaining back its track in terms of volume, even though the EBITDA was 7% lower, and we are working on eliminating the logistics and tax inefficiencies of the new production settlements settings for the company after the fire in the Rio de Janeiro plant. We continue with the CapEx of the reconstruction of the plant. And in terms of insurance, the company has already received until October roughly BRL 500 million of proceeds in insurance. In the case of Radar, we had the sale of properties that impacted positively the results in 2024 that didn't occur in '25. So that's the main reason for the difference year versus year, and we will have the land appreciation review in the fourth quarter. We expect increase in the value of the portfolio given the current market environment. Finally, in Raizen, we have an increase in the pace of harvesting that was favored by weather conditions. So the sugarcane crushing increased in the quarter, even though we had lower sugar prices that affected EBITDA. And we also have an overall lower volume given the drought and fires that affected the company's production for this year. In the fuel distribution segment, we see a very healthy environment. We see operations of the federal police in Brazil and the crackdown of irregular players that's translating into higher margins and healthier margins. So we have quite relevant margins in the fuel distribution segment in Raizen. Next slide, please. In terms of liability management, you can see that, as I mentioned, gross debt relatively stable, net debt slightly higher, interest coverage about 1x. And in terms of the amortization schedule, we continue to have a duration of roughly 6 years with an average cost of CDI plus 90 bps. So no relevant change in terms of the debt structure of the company. And finally, when we look at the cash position through the quarter, we have no relevant events in terms of liability management. We only have the dividends received and interest payments in the quarter. So those were the only events that happened this quarter compared to the second quarter. So that's the main reason for the changes in the cash balance. So next slide, please. So thank you for participating in our earnings call of the third quarter of 2025, and we continue with the remaining of our earnings call. Thank you. Thank you for joining. Operator: [Operator Instructions] Before we begin the Q&A session, Mr. Marcelo Martins would like to say a few words. Please go ahead, Mr. Martins. Marcelo Martins: Good morning, everyone. Thank you for joining us at our earnings release conference call. And before we move on to the Q&A session, I'd just like to make a few comments because this is a key time for the company. I'd like to talk about what Cosan is going through right now. Since there's been a change in management at Cosan, more specifically when Nelson stepped down as a CEO and went to Raizen and I joined as a CEO, roughly 12 months have gone by. So a year after that change, and that's when we first started discussing our objective to improve Cosan's capital structure very objectively, and we discussed different alternatives. We've always made it clear that we wanted to as efficiently and constructly as possible, preserve the portfolio and look for an encompassing solution that would be definitive and to provide a positive perspective for the business and for Cosan. All of you who have taken part in conversations with us, with me here at Cosan or at other events will know that we've always made it clear that our first option was to potentially divest from some assets, but we also wanted to preserve the quality and integrity of our portfolio to continue to be a compelling company for future investments. And that's precisely what we did. We looked at what Brazil was going through, what the market was going through and came to the conclusion that the best option was to find relevant shareholders that could make significant contributions to the future of the company at an investment size that would also make sense. So in our pursuit, we identified a few potential investors, and I am completely confident that we ended up with the best investors possible for the future of this company. We were able to not only increase capitalization significantly, so reducing the company's issues substantially. So even if we still have a residual divestment balance so that we can reduce Cosan's debt to 0 or close to 0 in the near future, which is another commitment I've made to investors. We looked for a relevant transaction with the contribution of these new shareholders as the main factor and also some subscriptions to this new public offering that ended last week. I'm very happy to say, and I can speak for myself, for Cosan and Rubens as a controlling shareholder of Cosan that we are extremely happy to have highly valuable shareholders who have huge credibility in the market. They're very successful. They're fantastic risk managers, portfolio managers. They are very familiar with the infrastructure sector and considering our portfolio right now, they will make amazing contributions to the future of this company. So before anything else, I wanted to thank Boston and their commitment the level of involvement they've shown to the process and the fact that we were able to conclude this transaction. So looking forward, very excited and fully confident in the future of this company. That said, we know that as of now and over the next few months, probably the next year, we will be focusing entirely on integrating the new shareholders with a shareholder getting to know the companies in depth. You know the level of contribution they'll be making and what we expect as well at the Board at Cosan and the invested companies. The objective is to fully engage this group of shareholders, looking at future investments, that should bring the company's debt to 0 or close to 0. We also want to make it very clear that we do have divestment priorities, but this plan will be executed at the right pace so that we can really create value without any pressure to sell assets at any price. That is not going to happen, has not happened and will not happen, especially now that we are in a much more comfortable position when it comes to capital structure. So we will be focusing on our portfolio on identifying the priorities at Cosan looking forward and divesting so that we can execute our plan as efficiently as possible. And we're going to look at growth options down the line once we know the way forward, then we'll be able to look at assets that will become part of this portfolio in the future because, obviously, we want to unlock value and to use the levers we've always used in the past, but which hasn't been possible for the time being, given that we'll be focusing on rebalancing our capital structure. That's the main change now. We have a completely open horizon whilst a while back, there was quite a high level of uncertainty. So that was basically what I had to say. These are just my opening remarks, and we can now begin the Q&A session so that Rodrigo and I can answer any questions you might have about our results. Operator: We will now begin the Q&A session with Mr. Marcelo Martins, Mr. Rodrigo Araujo, and Ms. Camila Amorim. [Operator Instructions] Our first question is from Gabriel Barra from Citi. Gabriel Coelho Barra: My first point based on what Marcelo said is about supply. What was the allocation rationale in terms of supply and the outcome? I know Marcelo touched on it, but if you could provide us with a bit more detail, it would be really interesting to hear about that. And second question, also touching on what Marcelo said is after this capitalization, the company is a bit more comfortable and can now think about restructuring the portfolio, selling assets. If we could talk specifically about Raizen, even if the company is in a more comfortable position now with a better capital structure, Raizen has been burning cash and you've changed the perspective of the second offering to strengthen the subsidiary company's capital structure. So could you tell us about Cosan's strategy considering the subsidiary companies? Will there be a third entrant? What are the options on the table? Could you tell us about that? So those are my 2 questions. Rodrigo Alves: Thanks Barra. I'll start with your first question, and Marcelo can answer your second question. About the offering, this transaction was big enough to be relevant for the company's capital structure and for new partners to come in with expertise in infrastructure in Brazil with a long-term strategy and an amazing plan with the new partners. And that can be seen in the stats of the offering. The first offering was 10x the demand. The second offering was also significant. So we had 2 very successful offerings. And an interesting challenge in terms of allocation. For the first offering, we kept what we said to the market when we announced the offering, so we prioritized existing shareholders. The first offering had one non-shareholder that was long term strategic and was allocated. The rest were all part of the company's existing base. The second offering was a priority offering but we went beyond that and gave allocation priority to the existing shareholder base. 2/3 of the offering was allocated to the existing base. So we've really prioritized the company's long-term shareholders who've been with the company a long time, believing in our recovery journey. So in summary, we had 2 successful offerings where we kept what we had said that we were going to prioritize our existing shareholders. I'll turn it over to Marcelo so he can talk about our capital structure. Marcelo Martins: Well, Gabriel, adding to what Rodrigo said, we were very happy with the level of interest and demand for our first and second offering, which is a clear testament to the fact that the market is betting on the future of the company as well as knowing that this was the best solution possible considering the different alternatives and that we were committed to the market to resolve our capital structure this year. That's why it was so important to deliver on all these elements within 2025. As for Raizen, yes, we do understand solutions for the company's capital structure are required urgently. And I just want to say that I'm very happy with what the company's management has been delivering. And considering all of our expectations concerning what was to be delivered, I'd say management has complied with what we had expected for this year, 100%. Despite the challenging scenario, deliveries have been very positive. And a lot of points were addressed during the call on Friday. We know that this is the best way possible and it will be very positive for the portfolio and for the companies in the future. But obviously, capital structure challenges remain our conversations with Shell have progressed considerably. On a number of aspects that can be potential solutions or solution, we have made progress, although we haven't yet come to a conclusion about the way forward. I'd say that in our conversations with them, the clearest direction compared -- is much clearer than we had a few years -- weeks ago, but we haven't come to a final conclusion yet to announce to the market. We have been working hard on it. This is a massive priority for me and Cosan's team. After Cosan's capitalization we know that we need to focus on that, and we'll continue to work on it with a sense of urgency and closely with Shell so that we can come to a conclusion. I can't share with anything with you for the time being because we're still working on it. We haven't come to consensus on their side or on our side. So no conclusions yet. What we did do recently during the second offering was to announce that we might be using proceeds from that offering to capitalized companies, broadly speaking, and Raizen is included in that. So that remains, obviously. We have already disclosed that because we think that's a key consideration when it comes to Cosan. And depending on the solution, if it's a broad solution with a positive effect, we will definitely consider that capitalization. As I said, we haven't decided on the terms yet. And in fact, the structure to be pursued so that we can continue to deleverage the company hasn't been decided on yet. But our commitment to get to the right solution and to potentially making a capital contribution remains as we had said previously. Operator: The next question is from Isabella Simonato from Bank of America. Isabella Simonato: You touched on many different points, including the new shareholders and Raizen's process. And on Friday, during the call, you also announced several Board changes to the directors. I would imagine that comes from a shareholders' agreement that was signed. But if we could also talk about the context of the changes in directors, which at the end of the day also had an impact on Raizen at a crucial time, as we all know, when they're working on the balance sheet. So if you could provide us with more color about that, that would be very helpful. Marcelo Martins: Well, yes, those changes to the Board are a consequence of the new partners coming in. We had agreed that those changes would take place. And obviously, totally in line with the new partner's contributions to the company. Not only were we expecting those changes, but we also believe that they are extremely positive to the future of the company. Another point, which I didn't mention during my opening remarks, but I will now, before I address the financial changes is that we have been making significant changes at Cosan to streamline the team and to streamline the company itself. We believe that in line with Cosan's future and the contributions the company will have to make to its portfolio, it is important to streamline the holding company and to generate more efficiencies, which is something we've been thinking about for a while and now is the time to do it. I think that streamlining process will be very accretive in terms of value to Cosan. Streamlining the holding company and reducing expenses will also be a huge contribution in addition, obviously, to the capital increase. So that's how we're going to proceed. As for the changes in CFOs. Now that Rodrigo is leaving and with the objective of bringing in people from inside the company who have the knowledge and who can run this area with in-depth knowledge of the portfolio and the process, it had to be somebody from the company. Bergman has been with us a long time, 14 years, I think. He's been through many companies in the group. He has a lot of experience within the group. So he's highly qualified to take on the job. And since the holding company is focusing on the portfolio, the partnership with the new partners and focusing on the portfolio more constructively, it was key to bring in someone, if I may use a word in English that could hit the ground running. So he is somebody who is going to come in and hit the ground running and continue to manage things as we expect them to be managed now that Rodrigo is leaving. And somebody who is going to come into Rafa's place to make the right contributions, who had experienced enough to run such a complex company as Raizen. Hence, Lorival is now taking Rafa's place. What I wanted to say is that during the 2 years, Rodrigo spent with us, he made massive contributions even though it wasn't a long time, he was extremely active. He had a huge role to play and made exceptional contributions to the company. When we said we were going to sell our stake at Vale and with the current capitalization, that means we move BRL 20 billion in the Brazilian capital market in 12 months. That's a historical milestone for any company in Brazil, especially considering current times. So I really want to thank Rodrigo for his contribution, and I wish him the greatest of successes in his next professional stage. Isabella Simonato: Excellent. Marcelo, if I can have a follow-up question, please. Looking at the shareholders' agreement, it's clear that the new shareholders can join the Board, and it's slightly different at Raizen. Rubens -- and will be more in charge of the JV and the JV decisions. Did you make that decision? Did Shell have an opinion? And also, congratulations, Rodrigo, on the last 2 years. And I wish you success on your next stage. Marcelo Martins: These are actually, our new shareholders' agreement will keep the same terms as the pre-existing shareholders agreement. And these were the terms for Raizen already. So what we agreed with the new partners is that we wouldn't change anything. We would keep the same terms. There was no reason to change it, and that is our agreement with Shell. That's why Raizen was the exception. We have kept the appointment of the Board members in line with the shareholders agreement that is in force. As Rodrigo leaves, we're going to replace him at Raizen. We have an idea of who's going to do that, and we should be doing that soon. I just wanted to make that clear. And obviously, it won't be anyone appointed by the new partners for the reason I have just given you. Operator: The next question is from Thiago Duarte, BTG. Thiago Duarte: Good morning, everyone. Marcelo, Rodrigo pleasure to talk to you. If we can go back to Marcelo's opening remarks about the role the holding company has to play in this new context. Historically, Cosan has been going through different formats as a holding company, diversification, then simplification, eliminating holding companies along the way. In the last few years, there's been a significant investment cycle at the holding company and the subsidiary companies. And now with the offering, things are much more tangible. You're talking about a significant simplification with new partners coming in the controlling shareholders group, not only in terms of reducing expenses, but also bringing down the company's debt to 0. So given that context, once this process is concluded or is on the right track, a significant part of it has already been done. What will be the role that Cosan as the holdco will have to play in the future? And I also have a second question. Considering the funds that you raised and considering that a major part of it, if not all, will be used to reduce the holdco's debt, as you said. My question is what part of that debt would you be tackling? Do you think it will be the cost of debt or the maturity, the duration? What kind of an impact will that have on your liability and liquidity? Rodrigo Alves: I'll start with your second question, Thiago, and then I'll turn it over to Marcelo to talk about the holding company. Yes, you're right in terms of how the funds will be used. Substantially, they will be used to pay for the debt, we had already announced that during the offerings. In terms of priorities, there is a cost packing order to be tackled because the duration is compatible. And there's a lot that can go into call in the short term. And the trade-off will end up being positive between a high cost, but also a duration contribution. In terms of the duration itself, I think there is a first stage where there will be a reduction but once the company's credit improves, we'll have more opportunity for tactical operations in the long term. We don't have anything maturing by 2028. So in terms of that kind of pressure there isn't any. And a really good duration for the holding company's horizon. So we'll be focusing on costs, but naturally, there will be an opportunity for a part of the debt, which is callable in the short term to have a positive impact on the duration as well. I'll turn it over to Marcelo so he can answer your first question about the holding company. Marcelo Martins: Well, Thiago the last time Cosan had a capital increase before this one, obviously, was in 2007. So that was roughly 18 years ago. And that capital increase took place before we started diversifying our portfolio because the first acquisition of sugar and ethanol took place in 2008 when we acquired Esso Brasileira de Petróleo. So in practice, all the financing of these acquisitions of the companies in the portfolio took place in the last 17 years, which means that if we had leveraged the company in time because, obviously, that capital increase was crucial for that acquisition, but not enough to build up a portfolio that leveraging took place gradually over time. And it wasn't efficient because it's -- this is a pure holding company. Up to the point where the macro scenario changed, interest rates, skyrocketed and that coincided with the recurring leveraging of our stake at Vale. So we started going in a direction to where to resolve the company's capital structure, either would have to make a significant sale in the portfolio or have a capital increase somehow, which is what we did. So the holding company played a role in the last 17, 18 years that has changed. It doesn't make any sense continuing to use Cosan as a leveraging tool for future growth. First, because it's been clear to us for a while, especially our experience with Vale that we shouldn't develop any other verticals using Cosan's resources. So future investments will be made through the controlled companies when that makes sense again when the time is right. So there's no sense in continuing to leverage Cosan over time. It doesn't make financial sense. It's fiscally inefficient. So the holding company, regardless of our active participation in portfolio management, the holding company will no longer be a vehicle for future investments. We need to consider creating efficiencies and streamlining it over time, and that is our objective for now. Now what will happen once we get to a size that makes sense and the leverage that makes sense, then we'll discuss it again. But right now, we want to create efficiencies and streamline it. Operator: The next question is from Matheus Enfeldt from UBS. Matheus Enfeldt: My first question is based on what Marcelo said about timing. I know it's hard to say, but there's a lot of news about Cosan being in a hurry to resolve investments, to reduce the company's balance sheet in the very short term, which diverges from what you said, Marcelo which is that you now have the time to do it gradually. So I'd like to hear about that timing difference. When do you think we'll be able to see new decisions about the company's portfolio? And also in terms of timing, the message about Raizen sounded very different to my ears in the sense that Raizen doesn't need capital immediately, that it's in no rush, that it can perhaps wait for 2 or 3 years. Whereas what you said, Marcelo, is that they want to resolve it in the short term. So could a potential solution for Raizen happen in the next 6 months? Or do you think it will be over the next 2 or 3 years? So that's my first question. Second question is about Moove. We haven't talked about Moove yet. I'd like to hear more about the company's results. You had quite a solid result. How much of that came from operations? How much of that is a result of insurance proceeds or tax credits? I'd just like to hear about what's recurring and how the operational business is running? Rodrigo Alves: Thanks for the questions. I'll start with your question about Moove and Marcelo can talk about the company's balance sheet and timing. Let me just recap what we showed during the presentation. In terms of volume, the company is well covered. If you compare it to the same period last year, you can see that there's been significant volumes recovery, the reconstruction CapEx. Obviously, the dismantling and reconstruction of the Rio de Janeiro plant is ongoing. And given the volume solution, the company is focusing on eliminating tax and logistics complications in the setup, which transfer interstate products, a return of ICMS credits. The logistics is much more complex than if it was centralized in a single asset. So the company is working on that so that it can land on a new production setup. It's not just about the real plan, part of what was going to be done that will be done to the facilities that we've been acquiring over time, especially in Sao Paulo. So the company is on track to position itself competitively. And given everything that happened, that's quite remarkable. In terms of the insurance proceeds, yes, there was a considerable recognition in the second quarter, another BRL 200 million in the third quarter. But the main thing than the accounting recognition was what we expected that would happen, which is significant cash coming in, BRL 300 million in the second quarter, in October another BRL 200 million, which we have announced and that reiterates our confidence in the process. And we are confident that the company will recover. And again, the Rio de Janeiro plant reconstruction CapEx, as I said, part of the insurance was associated to property. So we expect that Rio's plant CapEx will also be covered and realized over time. I think that's it. And I'll turn it over to Marcelo. Marcelo Martins: Matheus, let me make it very clear so that there is no doubt. Our sense of urgency at Raizen is obviously much more along the lines of 6 months than 2 years. There's no question about that. As we continue to talk and define a strategy with Shell, not only will we announce that, we will also start executing on it as soon as possible. And there is definitely a sense of urgency. No, we do not think that we can wait for 2 years before we find a solution for Raizen's capital structure. The point is that it has been delivering significantly but that's part of the equation. The sense of urgency is there. As for the portfolio, what I said was there is no need for any fire sale of assets. In other words, we will do what's best to solve the company's indebtedness and the portfolio's prospects without burning assets. That doesn't mean there is no sense of urgency, but it's changed with the capitalization. So we have resolved a major part of the capital structure. And the rest will be done, delivered and announced will be executed in a time frame that makes sense, in a schedule that makes sense, for the price that makes sense and the right mood in a coordinated and organized fashion. We don't want to give anybody the impression that we're rushing around trying to sell assets. We didn't do it in the past when we needed to raise funds. So obviously, we're not going to do it now, considering that a major part of that solution has been found. Operator: The next question is from Monique Greco from Itaú. Monique Greco: I have a couple of questions. If you could provide us with more detail about some of the things you've already touched on. First question is if you can comment on the streamlining measures at the holdco level. Have you mapped them? Have you started implementing them? Do you have a time frame in mind to get to the streamlined level you would like? I heard that you are hoping to cut annual expenses by half at the holdco level. My second question is about the divestment agenda. Could you comment on the order and the pipeline? What would make a sense focusing on first? Rodrigo Alves: Thank you, Monique, and thank you for the questions. Well, with regard to implementing measures, as Marcelo said, we have mapped a process to streamline the structure at the holdco level, partly decentralizing some the rules, which is something we had already been doing. Now looking forward, we want to bring the holdco to a level that is strictly necessary. So we'll be focusing on what will remain in the portfolio. For next year, considering this personnel streamline, we should be saving about BRL 30 million for next year. That 50% reduction entails a few other initiatives. As you know, our prospectus announced that we are looking into the company's ADR because of its relevant annual cost. It's over BRL 10 million when we consider all the associated costs. So that's something we're considering, and other things as the physical space as well as other expenses based on what the company has been doing and will take place over time. So without giving you a time frame, we believe that it is very doable to bring -- to cut down on costs by half. As Marcelo said that is key in terms of capturing the value of the deal we announced. So it is in our interest to implement those measures as quickly as possible so that we can capture them also as soon as possible. And Marcelo will tell you about our divestment agenda. Marcelo Martins: As we've been saying to the market, Monique, divestments should take place following the order of capital allocation priority within the portfolio. And obviously, considering that we should start with Radar. So if you look at our portfolio and the level of priority of the business is looking forward, I think Radar is possibly the company where we might consider thinking selling a more considerable share. The rest will come as a consequence of that first step, obviously, depending on the size of the divestment, then we can allocate it to the other businesses as we consider a combination of value, size of the business and the future strategy for investment in those businesses. That's why it's the asset that makes the most sense to start with at the moment. Operator: The next question is from Regis Cardoso from XP. Regis Cardoso: Good morning, Marcelo, Rodrigo. Congratulations on the offering. Your exit will surprise, Rodrigo, but it will leave an important legacy. Marcelo you just talked about Radar, would it make sense to sell more assets or a stake in the company itself? And if you could talk about Rumo, would it make sense to sell a stake? Is there a minimum stakehold and needs to have to remain as a controlling shareholder? And the same applies to Moove, I would imagine that in time, a decision to raise funds at Moove would depend on resuming production. And I don't know if there's anything else on your radar in terms of when it would be possible to normalize things. Marcelo Martins: Well, first of all, with regards to Radar, it's a combination of factors. We can continue to sell properties that are part of the portfolio or sell a part of Cosan's stake. Obviously, there is a trade-off between speed and what makes the most sense in terms of adding value. So we'll look into that to make a decision on the best way forward. We know that, that is compelling to many investors. We have an exceptional portfolio, one of the best portfolios in Brazil. Its size is considerable and a performance track record that is also exceptional. So those are all very positive factors when we consider a significant divestment in that business. As for the other businesses, and I can speak for all other businesses, they are considered very relevant to the portfolio with the potential to create huge value, all of them without exception. If we are effectively going to consider selling a stake in some of them, more diluted stake in more than one of them or if we're going to concentrate it more in one rather than the others, will depend on, first, understanding our strategy looking forward as well as potential buyers and opportunities that may arise. Always, always bearing in mind that value is key. We have built this portfolio over time. We've made considerable progress in terms of growth investments. And obviously, we will make divestments that make sense for the right price depending on the demand, but also obviously considering what is key to the portfolio as a priority. Regis Cardoso: May I ask a follow-up question, please? What about capitalization at Raizen? Is there a maximum amount that you'd be willing to contribute? Marcelo Martins: Well, that is under discussion, but in the context of the offering, I think we've made it clear where that amount would be, right? Where that value would be. We're currently discussing that. I mean it will depend on how our conversations with Shell goes. It depends on what they will be willing to do. It depends on many other factors. But on our side, let's remember all of our statements, the first offering, the second offering and the context. So it will be within those thresholds that we announced to the market. Operator: This concludes the Q&A session. I will now turn it over to Mr. Marcelo Martins for his closing remarks. Marcelo Martins: Well, thank you again for joining us. And this has been a very exciting journey. Our objective is to resolve Cosan's capital structure and more broadly speaking, all the group's companies. We are extremely happy with where we've got to and very excited with the prospects for the group, its portfolio and a clear notion that we will be able to create significant value, again, as we have done in the past. So we want to stop just resolving the company's capital structure and start building again. But until we do so, that's what we'll be focusing on. Construction will come after that. Once again, I want to thank Rodrigo and the whole team for their huge effort, the professionalism, everyone at Cosan, even through tough times when we're talking about cutting down on our personnel, as we know, their level of commitment and professionalism is unique. We are undoubtedly one of the best companies in terms of its people. I want to thank my own team. I want to work -- to thank everyone who works for the companies in the portfolio, and thank you for joining us. Thank you. Operator: Cosan's Third Quarter 2025 Earnings Release Video Conference Call is now concluded. For further questions, please contact the Investor Relations department. Thank you so much for joining us, and have a great afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]