加载中...
共找到 39,819 条相关资讯
Operator: Good morning, ladies and gentlemen, and welcome to Hydro One Limited's Third Quarter 2025 Analyst Teleconference. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Wassem Khalil, Director, Investor Relations at Hydro One. Please go ahead. Wassem Khalil: Good morning, and thank you for joining us for our quarterly earnings call. Joining me on the call today are our President and CEO, David Lebeter; and our Chief Financial and Regulatory Officer, Harry Taylor. On the call today, we will provide an overview of our quarterly results, and then we'll answer as many questions as time permits. As a reminder, today's discussion will likely touch on estimates and other forward-looking information. Listeners should review the cautionary language in today's earnings release and our MD&A, which we filed this morning regarding the various factors, assumptions and risks that could cause our actual results to differ as they all apply to this call. With that, I'll turn the call over to our President and CEO, David Lebeter. David Lebeter: Thank you, Wassem. Good morning, and thank you for joining us for our third quarter 2025 earnings call. This morning, I'll provide an update on our recent activities and accomplishments during the quarter. Then Harry will take you through the financial results. Before we begin, as many of you know, I temporarily stepped away from my role as President and CEO on August 25, 2025, on a compassionate basis to care for a family member. During this time, I continue to support the company on an advisory basis. And as announced in our press release this morning, I reassumed my duties effective November 12, 2025. I would like to thank everyone for their understanding, messages, e-mails and words of support as my family and I navigate this difficult journey. We are very appreciative and grateful for the support that we received. I would also like to extend my thanks to Harry Taylor who in addition to his role as Chief Financial and Regulatory Officer, assumed the role of Interim President and CEO, during my absence. Under Harry's guidance, the company continued to execute on our stated objectives and deliver on our promise for all Ontarians. Thank you, Harry. On to the quarter. As always, safety comes first at Hydro One. Our focus on being an efficient and agile company is supported by our policies and systems that prioritize workplace safety as well as public safety, public health and safety. By empowering our employees to take actions for their health and safety ourselves, coworkers and our communities. Together, we can achieve a workplace free of life-altering injuries and fatalities. Ontario is facing historic growth in demand for electricity driven by continued economic growth, the electrification of the transportation and manufacturing sectors, population growth as well as industrial expansion and evolving technologies. Over the next 25 years, the Independent Electric System Operator or the IESO, anticipates electricity demand to increase 75% by 2050. Hydro One is proud to play a pivotal role in serving the new load. With our provincial, indigenous, municipal and industry partners, we are and will continue to build a reliable, resilient, sustainable and affordable energy system for generations to come. On September 9 of this year, alongside First Nations partners and provincial and municipal leaders, Hydro One celebrated the groundbreaking of the St. Clair transmission line project in Southwestern Ontario. The project involves constructing a double-circuit 230 kilovolt transmission line, expanding the existing Chatham Switching Station and Lambton Transformer Station and converting the existing Wallaceburg Transformer Station to 230 kV. The total investment nin the project is expected to be approximately $472 million with an in-service date in 2028. The transmission line will support improved grid resiliency and reliability as well as enhanced economic growth in the region. Along with powering homes, businesses and industry, it will support key industries including the agricultural sector and electric vehicle technology. Farming and food production are economic cornerstones in this region, and the line will help enable the expansion of farming operations to support a reliable and affordable local food supply chain in Ontario. The project will also support electric vehicle manufacturing, providing a reliable supply of clean electricity to develop a secure supply chain in Ontario. St. Clair transmission line as part of a network of projects in the region, including the Chatham to Lakeshore line that was energized in late 2024 and along with the Lakeshore transmission line being developed in collaboration with five First Nation partners. Through Hydro One's 50-50 First Nation equity partnership model, First Nation partners have been offered a 50% equity stake in the transmission line component of the project. Integrated energy plan released in June of this year highlighted the need for additional transmission capacity in the Red Lake area in Northwestern Ontario. This area is a key region for Ontario's critical minerals with several mining projects that will create large electricity demand. In August, the ISO released the Northwest Region Integrated Regional Resource Plan addendum, that recommend the urgent development of the Red Lake transmission line. This line will be a new double-circuit 230 kV transmission line that run from the Dryden transformer station up to the Red Lake switching station, along with associated station facilities to meet the growing demand capacity need after 2028. On October 29, 2025, the government announced the proposal to declare the Red Lake transmission line as a priority project and also proposed to designate hydros a transmitter for the project. The proposal is subject to required approvals and community consultation, including consultation with indigenous communities. In response to continued uncertainty surrounding tariffs and trade, Hydro One has been working to identify further actions to limit our exposure and the impact of tariffs. These actions have focused on the diversification of our supplier base beyond the United States, the prioritization of Canadian suppliers to reduce costs and encourage manufacturing within Canada to support a domestic supply chain. Now more than ever, we must focus on investing in homegrown businesses to build a strong, secure and self-reliant supply chain to further reduce risk. Recently, Hydro One was at a groundbreaking ceremony that will see Northern Transformer, a leading Canadian manufacturer of high-voltage power transformers expand its manufacturing facility in Ontario. This expansion will support the demand for high-quality, reliable and timely power transformers to support grid modernization and electrification initiatives across the province. Hydro One is proud to support the growth of the Canadian supply chain and is committed to spend approximately $165 million per year to secure energy infrastructure from Northern Transformer. Their high-voltage transformers will support a reliable supply of electricity across the province and like us, the roots are in Ontario. We congratulate Northern transformer on their expansion and look forward to our continued partnership to develop for the people of Ontario. The strength of our culture and the way we support each other and our communities shine throughout the year. This particularly on display during our signature Power to Give campaign that takes place every September. This year, Hydro One employees once again demonstrated their generosity and community spirit, raising more than $2.1 million. Employees also logged more than 5,200 volunteer hours in support of their communities. It is a remarkable achievement that will make a real difference in the lives of people and families across the communities where we live and work, and I'm incredibly proud of our employees only for their efforts in September for the way they gave back all year long. Their compassion and dedication to support and others embodies one of our key values and reflects the best of who we are at Hydro One. Our vision of building a better and brighter future for all is also reflected in the work that our teams do. We are pleased that our work and dedication continues to be recognized. For the second consecutive year, Hydro One has been named Company of the Year with the Ontario Energy Association. This award recognized both our technical contributions to strengthening Ontario's Energy Grid and the meaningful partnerships that are helping power a brighter future for the province. We are deeply honored by this recognition of our role in Ontario energy transition and proud of the dedication, skill and resilience of our people. Hydro One continues to grow, adapt and deliver for the people of Ontario at a time when the energy system is transforming faster than ever before. With that, I will turn the call over to Harry to discuss our financial results. Harry, over to you. Henry Taylor: Thank you, David. I am happy to say on behalf of everyone at Hydro One, welcome back. and good morning to everyone on the call, and thank you for joining us today. In the third quarter, we delivered basic earnings per share of $0.70 and compared to $0.62 in the third quarter of 2024. The key drivers behind the year-over-year change included higher revenues net of purchased power due to higher 2025 approved OEB rates and higher average monthly peak demand. These were partially offset by higher depreciation, amortization and asset removal costs due to the growth in our capital assets. And higher interest expense primarily due to an increase in long-term debt outstanding. And higher income tax expense, primarily due to higher pretax earnings. Our third quarter revenues net of purchase power increased year-over-year by 7%. In the Transmission segment, revenues increased by 9.4% year-over-year. primarily due to a higher average monthly peak demand. Higher revenues due to OEB-approved rates for 2025, coupled with revenue from our Chatham by Lakeshore transmission line following its in servicing in Q4 2024. And finally, equity income from Hydro One's investment in the East West Tie Limited partnership, which we closed in the first quarter of this year. Distribution revenues net of purchase power increased by 4.2% year-over-year, primarily due to the changes in OEB approved rates for 2025. We continue to see strong energy consumption within the Distribution segment, along with growth in the number of customers we support. On the cost front, operating, maintenance and administration expenses in the quarter were higher by 0.7% compared to the same period last year. In the transmission segment, costs were lower by 3.5%, mainly due to lower work program expenditures, including vegetation management expenditures partially offset by higher corporate support costs. In the Distribution segment, costs were higher by 5.8%, mainly due to higher corporate support costs resulting from lower capitalized overheads and higher bad debt expense. These were partially offset by lower work program expenditures, including vegetation management expenditures. Depreciation, amortization and asset removal expenses for the third quarter were higher by 3.4% year-over-year. This was due to the growth in capital assets as the company continues to place new assets in service, partially offset by lower asset removal costs. And with respect to our financing activities, we saw an 8.9% increase in interest expense year-over-year. This was mainly due to a higher amount of long-term debt and a slightly higher weighted average interest rate on our long-term debt. During the quarter, Hydro One issued $1.1 billion of medium-term notes. The issuance was comprised of $450 million of 3.94% notes due in 2032, and $300 million of 4.3% notes due in 2035, and $350 million of 4.95% notes due in 2055. The issuances were completed under our sustainable financing framework. We continue to be one of the largest issuers of corporate debt in Canada. And Canada continues to be our primary market for debt capital. However, as our funding needs continue to grow, we need to ensure that we have the financial flexibility to support our development and construction programs. To ensure we have this flexibility, we filed a U.S. debt shelf prospectus in the quarter that will provide us with the ability to issue debt in the U.S. capital markets. Being able to issue debt in the U.S. will provide us with an additional tool in our toolbox to help finance our capital expenditure programs. We will be responsive to market conditions as we broaden our funding alternatives and the aim to execute our inaugural issue in 2026. Our balance sheet continues to be in excellent shape, along with our creditworthiness. Our current annualized FFO to net debt metric of 3.6% remains well above the threshold limits the rating agencies use in determining our credit rating. Turning to taxes. Our income tax expense in the quarter was $60 million compared to $56 million in the same quarter last year. The increase was primarily due to a higher pretax earnings, which were partially offset by higher deductible timing differences compared to last year. The effective tax rate this quarter was 12.4% versus an effective tax rate last year of 13%. We continue to expect our effective tax rate to be between 13% and 16% for the remainder of this rate period. Moving on to capital expenditures. In the third quarter, we invested $779 million which was an increase of 0.8% over 2024. The increase occurred in the transmission segment as a result of investments in the Waasigan transmission line and the St. Clair transmission line. These were partially offset by the overlap of investments in the Orillia distribution warehouse last year. In the Distribution segment, we saw a decrease primarily due to a lower volume of wood pool replacements, lower spend on system capability reinforcement projects, lower investments in the Orillia operations center, the Orleans Operations Center and the Orillia distribution warehouse as well as a lower volume of work on customer connections compared to last year. These were partially offset by investments supporting Ontario's broadband initiative. Looking at our assets placed in service. In the third quarter, we placed $577 million in service for our customers, which was a decrease of 3.4% compared to the prior year. In the transmission segment, we saw a decrease of 21% year-over-year, primarily due to the timing of assets placed in service for station refurbishments and replacements. These were partially offset by investments placed in service in Sault Ste. Marie, upgrading an existing line. In the Distribution segment, in-service additions increased by 18% from the prior year due to assets placed in service for our second-generation advanced metering system and timing of investments placed in service for system capability reinforcement projects. These were partially offset by a lower volume of wood pole replacements, a lower volume of work on customer connections and timing of investments placed in service for information technology initiatives. Looking ahead, we continue to expect earnings per share to grow between 6% and 8% annually through 2027, using the normalized 2022 EPS of $1.61 as a base. Finally, I'm pleased to report that our Board of Directors declared a dividend of $0.3331 per share payable to common shareholders of record on December 10, 2025. With that, we'll open the phone lines and be pleased to take questions. Wassem Khalil: Thank you, David and Harry. We'll now open the call to take questions. The operator will explain the Q&A polling process. We ask that you limit your questions to one question and one follow-up. If you have additional questions, we request you rejoin the queue. In case we can't address your questions today, my team and I are always available to respond to follow-up questions. Please go ahead, Shannon. Operator: [Operator Instructions] Our first question comes from the line of John Mould with TD Cowen. John Mould: Good to have you back, David. I'd like to start with the government's Pulse Panel on the broader environment for LDCs. I guess that's a fair way to characterize that. Looking for an early read on that process for you, what does that say about where LDC financing is going in Ontario? And at a first blush, could this create more opportunities for your organization? Or -- so maybe an indication that the government is looking for alternatives to the gradual consolidation. I think it's fair to say has been pursued historically. David Lebeter: Nice to hear you on the line this morning. I expected a question on Pulse. I think you're right. It is very early to actually definitively say what is going to happen there. But ultimately, what the government wants to do is ensure that all the distribution companies in Ontario have a good plan. They understand the investments they need to make going forward. And they're adequately financed and understand where that financing will come from so they can make those investments to support the growth that I talked about by the ISO, the 75% increase in demand for energy in the province by 2050. So that is the ultimate goal. If it was to result in further consolidation, we would certainly be open to that. We're certainly going to be participating, but that we'll have to wait and see where it goes. I haven't actually had a chance to meet with the Minister of Energy on that topic yet, and I look forward to that meeting. So I can have a better understanding myself of where they're going. John Mould: Okay. And then maybe just one on the U.S. debt shelf. When you think about the next JRAP period, and I appreciate you don't want to get ahead of your filings, but just what range of debt financing do you think you might consider drawing from U.S. markets just considering the deeper liquidity that's letting you consider that in the first place? Henry Taylor: John, this is Harry answering the question. Our first issue needs to be large enough to be meaningful. We need to build both awareness and our brand for lack of a better term, with the U.S. fixed income investors. So A, it will not be small. And as I mentioned in the prepared remarks, Canada is always going to be our primary market. But as we look ahead and see the funding needs that we have to support not only our investments in the current period, but as we think the accelerating investments into the next period, we need to have a substantial U.S. program as well. We do need to make sure that we're being prudent. And so we're not just going to slavishly drive in and take 1/3 of our program and put it into the market. If on a swap-back basis, it's more expensive to do so. So the market conditions need to be right. It will be meaningful, but we don't have a specific target or allocation. And we'll see. Certainly, as we've studied other utilities as they've gone into other markets, you clearly see then doing two things: One, building an awareness being the new kid in town, in a new market, but ensuring that on a swap-back basis it is still attractive from a financial point of view and hopefully accretive ultimately versus what could otherwise be there in terms of interest expense. Operator: Our next question comes from the line of Maurice Choy with RBC Capital Markets. Maurice Choy: Thank you, and good morning, everyone. I just want to come back to a comment earlier about financial flexibility. Given the rising growth capital expenditures that your company is experiencing. Beyond the ability to issue USD dominated debt, what are the options are you exploring? And perhaps you were looking in the past? Unknown Executive: Maurice. Everything is on the table, if you will. There's nothing urgent. Through the next couple of years, we are comfortably able to fund our capital expenditure program through funds from operation and continued borrowing. As we look ahead, we're assembling our rate application and preparing the financial projections that support that. And we will need to supplement debt with equity investments and/or something like a hybrid or a convertible as well. So we're looking at the range of options could include bringing a financial partner in some specific projects, if that is ultimately the lowest cost of capital more attractive. So we are not constraining ourselves just one lane, but looking for the best alternative or alternatives available to us to keep our overall cost of capital as low as possible and support the investment profile. But I do want to reiterate, through the next couple of years, we have no need for anything beyond the funds that we generate from our operations and the debt financing. Dependent on where we -- what happen through the rate application, we'll have clarity around the capital spending program in the next rate period, and we'll be doing the work behind the scenes to get ready so that there's never an issue in terms of funding our CapEx program. Maurice Choy: Just a quick follow-up. Has there been any change in the timing of when you file the rate application, I think, fall of 2026... Unknown Executive: Still planning on fall of 2026. We want to make sure we've got sufficient time to work through the process and not run up against the end of 2027. Maurice Choy: Understood. And if I could just finish off with backing into the expert panel that was launched by the government, it feels like this review was something that was done in the past, I recall back in 2018 and 2022, I think, there was a similar review being done and it doesn't seem like we saw a lot of consolidation after even though it was recommended. Any thoughts about what may change this time around to either, A, come up with a different outcome of a report, or B, even a different outcome in terms of actions and behaviors from the 50 other LDCs? David Lebeter: Maurice, it's David speaking. As I said earlier, my to a previous question. I don't believe the panel is actually trying to drive consolidation. They want to make sure that the electricity sector in Ontario can support they have growth in demand that is going to be coming over the next 25 years. So from that perspective, it's a little bit different than those other reviews that were done in the past that we're strictly focused on consolidation. That is not the focus of this panel. Operator: [Operator Instructions] Our next question comes from the line of Benjamin Pham with BMO. Benjamin Pham: Just wanted to go back to your guidance of 6% to 8%. I want to maybe help to get your comments on your year-to-date earnings per share has been well above that. It looks like it's 14% or so year-to-date. And just curious really your thoughts on that outperformance? And how do you think about the outlook going forward? Is there some puts to think about as you think about that to guide through 2027. Henry Taylor: Ben, it's Harry. The -- we are definitely generating earnings growth above what our guidance over the entire rate period is. And this performance this year has been a very pleasant favorable variance driven a lot by load. And so we've seen in both transmission and distribution above what we had put in our own internal budget, what we used in our assumptions for the guidance that's given us this favorable variance. Now load comes, load giveth and load taketh away. We've also had years where it's been the other where weather hasn't been as volatile or is extreme, and we've seen the other trend as well. So we're sticking with the 6% to 8% over the period. So that we're not going to push expectations up and then have to come back and say, "Oh, load didn't materialize the way it had in 2025 and end up disappointing". So that's the cold hard fact why where we are. Benjamin Pham: So it sounds like if load doesn't at least decline through 2027, you're nicely tracking above that range? Or you will be nicely tracking above that range? Henry Taylor: It's yes, it's possible. I don't want to say anything more than that. Benjamin Pham: Okay. I know -- thanks -- I mean it's the second or second topic I wanted to ask is on the -- you think about the JRAP, the higher CapEx and even all the priority transmission projects you have, like there's a huge series of them coming ahead? Like how do you -- a big topic on the industry now is human capital and access to it and maybe just not enough of it. Is that something that is, I don't want to say concerning for you is how do you think about managing that in labor and parts and all that as you head into the next phase. David Lebeter: Ben, David Lebeter speaking. We obviously pay a lot of attention to the resource adequacy can we have access to our engineer, procure and construct contractors? Do we have access to the appropriate skills within the organization. It hasn't been a problem yet. And to be honest, I don't see a problem on the horizon, but it's something we always pay attention to. We want to make sure we have the right resources available the right time. North America is big. There's lots of talk about the growth that's going on. But we've been able to secure really quality individuals to build our transmission lines, and we don't see that changing going forward. Henry Taylor: And it, I'm going to add on from both a supply chain point of view and a partner point of view, it isn't all our resources who are building or constructing or even designing the transmission lines. We rely on internal but also heavily on external resources, EPC contractors in particular. With the visibility we have over the next 7 to 8 years, we are able to bring partners in early may make it competitive, but bring them in, they can plan do their human resource planning our supply chain team has good visibility. It's not like all of these are going to hit all at once. They're laddered out through the period, and we have enough visibility now that we can on the supply chain side aside, make commitments for the long lead time items with our vendors to ensure we've got production slots. We've got promise of supply. Pricing may still be negotiable depending on the time frame. Obviously, we'd like to lock them down as best we can. But if you're committing to something 3 and 4 years out, we may not be locking in the price, but we will lock in the supply. So we are -- with the visibility we have, we're able to manage some of that risk that others may not be able to manage the same way. David Lebeter: It sounds a little bit counterintuitive, but actually having a pipeline of projects makes you a more attractive client and actually makes it easier for us to secure the resources and materials we need. Operator: Our next question comes from the line of Robert Hope with Scotiabank. Robert Hope: So the provincial government, obviously, is very focused on increasing transmission in the north. The federal government is also equally focused on expanding transmission across the country. Is this an area that you have put any work in? Could we see some incremental growth, either connecting additional Northern communities or the provinces. And I guess as a final point, is this even needed? Or do you have enough transmission growth in hand right now? Unknown Executive: Well, the last part of your question is interesting, Rob, is it needed? I'm a bit greedy, so I always like to have lots of growth. But yes, we have had conversations with the federal government I know they've got an announcement coming out later on today and some more nation-building projects, so we'll see what they decide to do there. I think the overall, as a general comment, there is a focus on electrifying northern communities that for too long, have been reliant on diesel generation and that has actually hindered growth across the country, not just in Ontario. So I would say both levels of government and even municipalities that third level of government focused on, how do we connect all the communities in Canada to the grid with reliable, affordable and resilient energy. Robert Hope: Appreciate that. And then maybe just a smaller question. Broadband, there looks like there's been some puts and takes there. How are you thinking about the timing and overall size of the investment here? We still think it will be in the $300 million to $700 million addition of rate base for ourselves. I'm getting a little bit more cautiously optimistic. I think this last round of negotiation between the Ministry of Energy and Mines, which now has responsibility for the broadband portfolio and the largest of the Internet service providers has finally broken the log gem. We're going to see things start to move. And I know I've been optimistic before, but this is the most optimistic I've been as we've been on this journey. I think over the next 6 months, we're having this call we'll be able to give you a better range estimate and an idea of how well it is moving. But I feel like we finally broke the government and the ISPs have finally reached an agreement on how to move forward. And that's what's going to allow us to get out the work we need to do. Operator: Our last question comes from the line of Patrick Kenny with National Bank. Patrick Kenny: Yes, welcome back, David, and great job Harry over the last few months. Just wanted to touch base on -- I know your allowed ROE is still locked in for a couple of years, but just given the recent cost of capital update from the OEB it looks like 2026 has shaken out to be about 25 basis points below your current 9.36%. So just wondering if you've had any discussions or feedback for the OEB that might help to hold the ROE a little bit closer to where you are at today for the next JRAP period? Unknown Executive: Pat, thanks for those comments. You're right. I think for next year, 9.11% is the ROE for any rate applications that come through. using forecasts for the benchmarks that are used in the formula. When we're back at this point, it would be 9.33%. So 3 basis points below the current approved ROE. But as you know, we have earned above that. And so we don't have any real concerns as we go in I think our submission, which is a public document in the cost of capital hearing was for increased equity thickness and other adjustments. The ruling was a generic ruling that applies to all utilities regulated by the OEB, but they were at pains mentioning over and over. If a utility feels their situation is different. They are free to bring proposals in the next rate application. So that's a door that we plan on jumping through as part of the next rate application. So at this point, stay tuned. Patrick Kenny: Got it. Okay. And then maybe just back on the effective tax rate range as well. I think you mentioned, Harry, 13% to 16%. Can you just remind us what tools you might have at your disposal to achieve the lower end going forward and perhaps extend that lower end of the level into the next JRAP as well? Unknown Executive: We don't have a lot of tools ourselves. What primarily drives it is the accelerated CCA and the so-called super productivity deduction in the budget. That would certainly help keep us at the low end -- continue to keep us at the low end as we continue to invest, we take and we're entitled to use that, and that's what keeps us at the low end. And we're happy to see that proposal in the budget. It has to be turned into law so that it does continue well into the next -- our next rate period. Patrick Kenny: Okay. And last one, I guess for David, maybe on the supply chain front. So I appreciate the details on the domestic procurement. Can you just maybe update us on some of your commitments for transformers and other equipment and components over the next few years as you look to bring some of your transmission developments into the capital budget. David Lebeter: At this there. We're not -- at this point, we have no concerns. We've got locked up manufacturing capacity. We anticipate no problems at all getting the materials we need transformers, switchgear, whatever it is for any of the projects. And our supply chain pays attention to that night and day. That is one of the big risks we pay attention to. As we're developing new suppliers in Canada, we continue to work with our existing suppliers to make sure that we don't cut off an avenue. We would actually like to have more suppliers, not fewer. And that we believe will help us with pricing as well. But no concerns at this point in time. Operator: Thank you. And that does conclude our Q&A session for today. I'd like to turn the call back over to. Wassem Khalil for any further remarks. Wassem Khalil: Thanks, Shannon. The management team at Hydro One thanks everyone for their time with us this morning. We appreciate your interest and your continued support. If you have any questions that weren't addressed on the call, please feel free to reach out, and we'll get them answered for you. Thank you again, and enjoy the rest of your day. Operator: Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Have a great day.
Operator: Welcome to Surgical Science Q3 Report 2025 Presentation. [Operator Instructions] Now I will hand over to the speakers, CEO, Tom Englund; and CFO, Anna Ahlberg. Please go ahead. Tom Englund: Welcome to this earnings call for Surgical Science for Q3 2025. My name is Tom Englund, CEO. And with me today, I have our CFO, Anna Ahlberg. Quarter 3 was a clear step in the right direction for Surgical Science. Total sales of SEK 264 million was an all-time high for the company, and this result was despite the negative impact on sales from currencies of 5 percentage points. The group grew by 14% compared to the same quarter last year and by 19% adjusted for currency effects. Adjusted EBIT amounted to SEK 33 million and was negatively impacted by restructuring costs of SEK 2 million. Adjusted for these costs, profitability was 13%. Since around 6 months back, we have initiated a set of activities to improve our profitability, primarily focused on our hardware and software simulator business, that is not the robotics or development business. And we're now happy to see that these activities are beginning to have an effect, and we expect further improvements in the quarters to come. Speaking about educational products, this business unit stabilized during the quarter from the weak revenue of the previous quarter. We saw a growth of 8% compared to the same quarter in 2024 and 26% compared to the previous quarter. We saw good demand and customer activity in several regions during the quarter, with Europe showing the strongest growth at 46%. The entire ultrasound simulation segment, which became a strategic focus area in connection with the acquisition of Intelligent Ultrasound, also developed positively with high customer demand in all markets except for the U.K. In the U.K., we continue to see problems and sluggishness in the allocation of funds from the National Health Service, NHS, which is a key source of funding for our products, and this had a strong negative impact on sales in this market. The Americas grew by 9%, which was lower than our expectations and as in previous quarters, due to extended sales cycles in a tougher budgetary climate for hospitals. Sales in the U.S. for comparable units, that is when we exclude Intelligent ultrasound, decreased. Our sales team in the U.S. report signs that the market is becoming more active, and this is also visible in the number of quotes we send out and how much leads we generate inbound and external events. Still, for quarter 3, sales in the U.S. was a disappointment. During the quarter, we saw 2 prominent associations launch training programs that include certification based on simulators from surgical science. Together with the American Society for Gastrointestinal Endoscopy, ASGE, we launched a plan for training and certification in diagnostic Endoscopy or so-called EUS curriculum, which is based on our GI Mentor simulator. For the first time ever, trainees can earn an ASGE certificate of completion directly through the simulator, marking a major step towards standardization of certification. And this is important since it elevates simulation from a training tool to a recognized certification platform. In addition, our robotics Mentor robotic surgery simulator now includes the GSA curriculum from the European Academy of Gynecology Surgery's recognized framework for training in robotic surgery. AGS and Surgical Science have together developed a robotic psychomotor skills curriculum and test where all exercises have been validated and benchmarked scientifically. These 2 collaborations are important steps in our work to make simulation a widely used and recognized tool in both the training, but also the certification of physicians and health care personnel. The result for Surgical Science will be an increased overall demand for our products required for certification and also that our customers will find it easier to obtain budgetary approval for these products. Very exciting developments. Switching over to industry OEM. Industry OEM performed well during the quarter with sales increasing by 20%. Development revenue increased by 131% compared with the same quarter in 2024. And the business area saw a strong inflow of new development projects, both in medical device simulation and robotics. In the medical device simulation area, we secured what is potentially the largest single deal in the company's history in this segment during the quarter for one of the world's largest medical device companies. The contract spans over 4 years. The first phase will be a development project, including sales of a first batch of simulators for the customers' training and sales activities. And then further simulators will be ordered in the coming years. We initiated the project as well as recognized development revenue from the project during the quarter. Simulation is rapidly becoming a critical tool for these customers in their sales, marketing and customer trading activities. In addition to this, we signed another large order with the same customer during the quarter, which proves our ability to sell multiple broad projects to the same customer and cements our preferred supplier status with the customer. In the robotics product area, our RobotiX Express has been very well received in the market. RobotiX Express is a simulator for surgeons to become proficient in the robotic surgery. The demand for training robotic surgery is very, very strong and is expected to increase further in the coming years as hospitals increasingly switch to this type of minimally invasive surgery. Our ability to offer a solution to this training challenge faced both by hospitals as well as by the robotics companies will enable more surgeons to be trained more effectively in this field. Due to the length of the sales cycles, we expect significant revenue impact from RobotiX Express to start during quarter 1 of 2026. License revenue for the third quarter amounted to SEK 66 million, which is a slight increase compared with the same period in the preceding year despite the stronger Swedish krona. Intuitive, Surgical Science's biggest customer reported 19% procedure growth for the da Vinci system in the third quarter and the installed base grew by 13%, primarily driven by the new da Vinci 5 platform. In the U.S., we continue to see a decline in simulation subscribers on older generation da Vinci systems due to them being replaced with a new platform. For the second quarter in a row, our revenue from new robotic manufacturers remained at a low level. However, at the beginning of the fourth quarter of 2025, we are once again seeing stronger sales to these other robotic manufacturers. Overall, we note that several of our customers in robotic surgery are approaching commercial launches, which is expected to lead to an increase in license revenue in the coming quarters and years. Now regarding profitability. Our gross margin amounted to 65%, which is down from the 69% last year. One of the reasons for the decline is the very strong simulator sales in relation to license revenue, which thus accounted for a lower share of total sales than in the corresponding period last year. Other reasons are currency effects and also the inclusion of Intelligent ultrasound into the financial with a different margin and loss-making at the time of acquisition and Surgical Science. As I stated in the beginning, for several quarters now, we have been pursuing a number of initiatives to improve profitability within educational products. Our goal is to significantly improve profitability in this area, which will in turn impact group profitability very positively. We saw during the quarter that these initiatives started to have an effect despite the headwinds that we see from currency effects. And over the coming quarters and in 2026, I expect continued positive results, thanks to this plan. Anna Ahlberg: So continuing to look at the numbers a bit more in detail for the quarter then we had sales of SEK 264 million. That was up 14% and SEK 19 million then came from Intelligent Ultrasound or IU. And all IU sales are attributable to the educational products business area. And when we look at product groups, it's within the ultrasound product group. In local currencies, as Tom mentioned, sales was up 19%. And starting from last quarter, we now see a negative effect from currencies on our overall sales with our approximately 80% of revenues in U.S. dollars. We are doing some things to try and mitigate this, except from raising prices. We also now quote more countries in euros instead of in U.S. dollars, for example. Going out of Q2, we had an unusually high backlog or order stock for simulators, where the difference between ingoing and outgoing order stock was approximately SEK 30 million, and this was relatively evenly distributed between the 2 business areas. Most of these orders were shipped during the third quarter, and there is no significant difference between the opening and closing order book, excluding this item then after the third quarter. Looking at the business areas, the split in revenues was 53% for educational products and 47% for industry OEM, where educational products was up 8%, however, down 6% if we exclude IU revenues. And as Tom said, U.K. sales here are weak and well below expectations. The Asia region declined by 5% compared with the same quarter last year. Sales in China, they were stronger than in both the first and second quarters, but in line with the comparison period, while sales declined in India, if we look at the comparison period. Sales in Europe then remained strong despite weak sales in the U.K. and increased by 46%, where we saw for the quarter, strong sales in countries such as the Czech Republic, Poland and Portugal. And then the North and South America region increased by 9% compared with the corresponding quarter last year. However, then sales decreased for comparable units, and this is mainly attributable to the U.S. In the quarter, Brazil was a country that delivered strong sales. And yes, as we've said all through the year, then the U.S. market has been tough, a lot of leads and discussions, but the deals have taken longer to close. And for the quarter, we had costs for tariffs and customs duties, approximately SEK 2 million. These we have for this quarter been able to pass on to the customers. Industry OEM then up 20%. We saw all revenue streams increasing, and we also saw very high activity level. And as Tom mentioned, several good deals that potentially can be very large for us. For the first 9 months of the year then, this means that sales were SEK 724 million, an increase of 14% or 20% in local currencies. And IU is included with SEK 59 million, and that means that sales increased by 5% for comparable units. Educational Products up 17% or down 1% if we exclude IU. And again, Europe is the region that continues to show the strongest development and has done so throughout the year. Industry OEM, up 12% for the year-to-date, where license revenues are up 7%. And if we then move on to our revenue streams and continue with license revenues. They were then 25% of total revenues for the quarter compared to 28% last year. As mentioned, many times before, and as Tom talked about, this is lumpy for new entrants. Many of our customers are still in early phase and they purchase their licenses in batches and then that can then cause a timing effect between when the license is purchased and when it's used. So, for the quarter, as also in Q2, this part of the license sales was unusually low. However, at the start of Q4, we have seen better sales to these players. And then when it comes to Intuitive, we had the same effect as in Q2 that we saw a decline when it comes to renewals of subscriptions facing low with the older generations. However, for this quarter, this was offset by higher revenues from DV5 if we compare to Q2. Simulator sales as a whole was up 14% compared to Q3 2024, and this was the second strongest quarter ever for this revenue stream. Both areas increased, however, as we saw not if we exclude IU sales, but Indu was really strong. And also here, we've said before that this is more lumpy than for sales within Indu since it's usually tied to larger projects where development is also involved. And development revenues were up a lot also for this quarter, partly due to the project we have for a Ministry of Defense in the Southeast Asian country, but not at all entirely. Development revenues were good also for other customers. The Southeast Asian project then it's for 18 months and SEK 52 million, USD 0.9 million was recognized in Q3, and we estimate approximately the same amount for Q4 on this order. And we continue to see stable service revenues. Moving on to costs and the EBIT margin for this quarter. As Tom mentioned, our gross margin was 65% versus 69% in Q3 last year. And we had several factors influencing the fact that the margin was lower. License revenues then being a lower share of total sales and also currency effects. They had a negative impact of approximately 1.5 percentage points where the lower U.S. dollar exchange rate has not had an impact on costs yet. Part of our COGS is, of course, also in U.S. dollars, but these inputs were purchased previously and then at a higher exchange rate. The proportion of direct sales also impacts the gross margin, and it was lower within educational products and then mainly -- that is mainly then the U.S. And we talked about Intelligent Ultrasound and that they have a lower gross margin on those products. On the positive side, we see that our price increases that we've done are starting to show effect. Regarding OpEx, sales costs were 21% of sales. And for the quarter, that includes some restructuring costs, approximately SEK 1.5 million. That is then attributable to further reductions in the sales force in the U.S. as a consequence of the acquisition of IU. Admin costs were 8% of sales. And during the quarter, we completed the merge of former IU's U.S. subsidiary with one of Surgical Sciences U.S. subsidiaries, and that resulted in some slightly higher legal costs and tax consultancy fees. R&D costs, 21% of sales, where we activated SEK 7 million, a bit lower than the same period last year. And as you know, the costs on this line vary depending on how much development revenue there is for the quarter as salaries for the portion of development department staff who have worked on these projects that generate development revenue, they are transferred to cost of goods sold. And that means that more was transferred also in this quarter since development revenues were high. Going back to IU. When we acquired IU, we said that we estimated rationalizations and cost savings to between GBP 1.5 million and GBP 2 million on an annual basis. And as of Q3 and on an annual basis, we have made cost savings of approximately GBP 2.5 million in relation to the cost structure that existed in the company at the time of the takeover. And that is then mainly in the form of reduced costs related to the company's previous stock market listing and staff reductions, mainly in respect of sales personnel. For the quarter, cost savings of approximately SEK 6 million are included. And as mentioned before, then restructuring costs of SEK 1.5 million related to further personnel reductions are also included. Still, because of lower sales than expected, primarily in the U.S. -- in the U.K., as discussed before for IU, the operating result for IU was a loss of SEK 11 million. So of course, when we look at the comparison numbers after that, we have made an acquisition in February of this year of IU within the ultrasound sector. That was a loss-making company, and we have made -- taken several measures then as discussed on the cost side, still making loss, but we believe a lot in the ultrasound sector, and we see a lot of positive signs from this sector. It was also an acquisition that we were able to make at 0.5x sales. Other operating income and costs that mainly consists of costs for the company's option programs as well as the revaluation of operating assets and liabilities in foreign currencies. And for the quarter, we had a negative impact on results of SEK 7.2 million attributable to this revaluation. It was slightly negative also in the corresponding period in 2024. But as you might remember, it was -- there was a large negative due to this in Q2. So, following this, our operating profit for the third quarter, excluding the restructuring costs, was SEK 27 million or an operating margin of 11%. Organization-wise, we were 328 people going out of the quarter, 1% more than going out of Q2. With the IU acquisition, we added 48 people, and then we had a number of redundancies. We continue to employ above all software developers. However, we are also working intensely with efficiency improving projects and employ with caution and cost consciousness. And you can see the split between our sites down to the right. Adjusted EBIT, EBIT exclusive of amortization and surplus values related to acquisitions. That was for the quarter 13% compared to 22% last year. And for the first 9 months, it was 10% compared to 20% last year. Finance net, as most of you know, we have no loan financing. So net financial items for the quarter was primarily interest income on bank deposits. It was also revaluation of internal loan liabilities to subsidiaries and impacted by IFRS 16. Then our tax expense for the quarter was SEK 10 million and net profit was SEK 20 million. That means that the effective tax rate was high. The largest reason for this is that there's a larger portion of loss-making entities within the group, including Intelligent Ultrasound this year, and that then increases the relative effect of tax costs. In addition to that, we had some items that were in relation to 2024 fiscal year in the U.S. and some minimum taxes that were also paid. And as mentioned then, net result for the quarter was SEK 20 million. Looking at the cash flow, negative SEK 4 million from operating activities and from working capital negative of SEK 45 million. That is primarily because of higher accounts receivables, and that is primarily -- that is due to higher sales. We do not see any increased risk in our accounts receivable stock. Inventories decreased slightly. Cash flow from investing activities and financing activities is nothing to mention here for the quarter. And that meant that cash for the end of period September 30 ended at SEK 597 million. Tom Englund: Thank you, Anna. So, to summarize, we see continued rapid development of our company in a dynamic market where we can see positive signals, both in our external work with our customers and in our internal efforts to create a stronger, more efficient and profitable company. The strategic review that began before the summer is in its final stages. The strategy, which will lay the foundation for Surgical Sciences continued growth journey will be presented during our Capital Markets Day on December 8. If you're interested in attending in person or digitally, please sign up. Information on how you can do this can be found on our website in the Investors section. Our new strategy seeks to continue growing the company, both in segments where Surgical Science has traditionally been strong, but also in new adjacent segments with low penetration of simulation. In these areas, we have identified that our technology and expertise can create significant customer value. And the results from these efforts will be a company with several more revenue streams and a company which addresses a significantly larger market than today. And we're looking forward to presenting our strategy in more detail within short. And with that, I would like to open the floor for questions. Operator: [Operator Instructions] The next question comes from Simon Larsson from Danske Bank. Simon Larsson: Filling in for Victor today. So, Tom, you mentioned several regulatory announcements were made during Q3 in the robotics space. Should we expect any impact from these approvals already here in Q4, thinking license sales specifically? I know you stated that sort of it will impact in the coming quarters and years, but specifically Q4? Or what's the timeline here? Tom Englund: Yes, we will see an impact from these other robotics customers also already in quarter 4 of this year, yes. This is also what we stated in the CEO letter in the quarterly report. Simon Larsson: My second question then relates to cost. Given that you're tracking quite a bit below your adjusted EBIT margin target for next year and cost, of course, increased quite a bit also here in Q3. If you could give any more color on how you expect to sort of develop cost here from this point also in the context of you saying that you're implementing cost reduction initiatives. Should we expect cost maybe even to decline sequentially from this point? Or yes, how should we think about modeling cost ahead? Tom Englund: I mean, first of all, profitability is one of the key focus areas for us as a company right now. And we are -- as you said and as I said as well earlier, we are doing a lot of different activities to improve both the gross margin and ensure that we grow costs cautiously and look for efficiencies in our cost base. So, there is a lot of activities such as price increases that Anna mentioned, different types of policies in place to ensure that we can have as high revenue as possible in our educational products business unit as well as different COGS reduction activities that we're doing that will drive an improved gross margin on educational products. And then when it comes to the acquisition that we did with Intelligent Ultrasound, as Anna mentioned, that has had a significant impact on the profitability. But as Anna also said, we believe a lot in the ultrasound simulation space, and we are a much, much stronger company now with an added product portfolio and added competence from Intelligent Ultrasound than we were before the acquisition. And we have added a loss-making company to the financials. So, of Surgical Science. And then we have taken out approximately GBP 2.5 million on an annualized basis. The idea is then to continue to grow the ultrasound business up with good gross margins and then that this will then generate profitability also both as a stand-alone and together with Surgical Science then, of course. So, it's a strong focus for us is the conclusion. Operator: The next question comes from Ulrik Trattner from DNB Carnegie. Ulrik Trattner: You provided some granularity on Intuitive sales in Q2 and its contribution for the quarter. And I was wondering if you could provide some more color on this in Q3 as well as we have seen that the DV5 is increasingly its portion of the instruments sold for Intuitive as well as higher replacement sales as they report it. So just trying to also get some type of sense on when the replacement is starting to become a positive rather than a hampering factor short-term. Tom Englund: First of all, I think that it's important when you look at the robotics market to have this long-term perspective. And to just first, I want to emphasize how inherently attractive this market is because we see such a strong uptake, generally speaking, for robotic surgery. And you can see it in the numbers on procedural growth, for example, communicated by Intuitive. And you can also see it in the strong news from other players that are launching or are planning to launch new robotic systems in the market. So, I think it's an inherently attractive market segment to be in. Having said so, it will take some time until you see kind of the full potential in this market as many of the new entrants have been delayed in their efforts to come out with products in the market, but it's coming slowly. And then to your question about Intuitive and the DV5, it's great to see, first of all, that DV5 seems to be such a resounding success for Intuitive, right? And now also they have managed to get to a production level where they don't have -- where they can produce a lot of systems, which means that their volumes are ramping up, as you could see in the quarter 3 report of Intuitive. And that, of course, will drive the demand for training on these devices. And then as you rightly said, Ulrik, and what we also pointed out in the quarter 2 report, there is this kind of churn effect that we see now in the migration between old devices, DV4 or da Vinci X and Xi and the new da Vinci 5 platforms as some of the customers actually replace the systems when they are buying a new DV5. But it's not all customers who are replacing or trading in the systems. Some customers are also adding the DV5 to their fleet of robots and the DV4 will still stay. And of those customers, some of them will continue to use simulation on the old system and some will terminate it because they feel that the old system can be used clinically instead for as a training tool. So, you have many different kind of scenarios. And then to your question, sorry for the lengthy background, to your question, how will this all play out in kind of the switch in the growth between DV5 and DV4 it's very difficult for us to actually judge that because of these different scenarios or different ways that this can play out. But we feel happy about the fact that DV5 is successful in the market, and we see this kind of strong growth in installed base in general. And you also might remember that DV4, the older generation systems will still also be sold in some markets alongside the DV5. So, there could also be a simulation subscription sales towards all those new units that are going in. So that's the dynamics that we have to deal with and that affect kind of the simulation sales and the subscription renewals as well for Surgical Science. Ulrik Trattner: And just a follow-up on that with Medtronic now really sort of close on approaching FDA approval for urology indication and hernia indication as well as clinical progress on the gynecology indications. So, they look to have products on the market in the U.S. by early '26. Do you believe the lumpiness in your dynamic of reporting sales for licenses will gradually come down? Or will that increase? How should we view that? Tom Englund: Yes. I think it's a good question. And over time, it will gradually come down the lumpiness, of course, since more players are coming out with robots and those players are customers of ours buying licenses from ours. So yes. But I mean, you can't sort of look at that, I think, from within the next 1 or 2 quarters, but rather long-term, that's like within the next 1 to 2 years. So yes, then the lumpiness will come down. Ulrik Trattner: And my second question would relate to Intelligent Ultrasound. And obviously, sort of sales has been below your expectation and thus sort of EBIT contribution has been well below. And like looking at Q3, I guess you didn't expect it to start the year to have a contribution of above sort of around SEK 11 million in the quarter. So just how should we look at this short-term, given the disruption in NHS, the disruption in the U.S. Is it going to be loss-making for the foreseeable future? And will you be able to meet your financial guidance low end on the margins if Intelligent Ultrasound continues to be loss-making? Tom Englund: Yes. As I said earlier, we believe a lot in Intelligent Ultrasound, and we believe a lot in the ultrasound simulation market. And we feel super happy about the contribution of Intelligent Ultrasound's product portfolio into the product portfolio of Surgical Science. And we can already now see in the number of quotes and the sales in many regions of the world that it's going in the right direction. Then NHS is a problem for our sales in the U.K., both for Intelligent Ultrasound, but also generally for Surgical Science. And the budgetary problems that we have in the U.K. have led to dismal sales for both Surgical Science and Intelligent Ultrasound. So that's kind of one of the most important contributing factors to why sales is low. We actually see quite decent uptick in sales in other parts of the world of the ultrasound portfolio. So, we have a good product portfolio, and it will become even better going forward, which means that we can work towards becoming the world leader in ultrasound simulation. Then what we have done is, as I mentioned, we have taken out costs to make sure that we can minimize the losses as much as possible. But we definitely want to sell ourselves out of this situation. We think that we have a lot of assets, both in the team in Intelligent Ultrasound as well as in the products. So that's the plan. It's going slower, primarily driven by NHS, but we feel that we are acting as swiftly and as forcefully as we can with both costs and revenue. Do you want to add anything, Anna? Anna Ahlberg: No. Tom Englund: I hope that answers your question. Ulrik Trattner: Yes, just a clarification. Would you still be able to expect to reach your lower end margin guidance for '26 if Intelligent Ultrasound remains loss-making? Tom Englund: I don't want to comment on that right now. Sorry. Anna, do you want to. Anna Ahlberg: No. I mean, as you said, Tom, we are working and we are also -- remember, when we do our acquisitions, we do full integration. So pretty quickly, it becomes sort of -- it's an overall question and of course, increasing sales, as you said, Tom, both for Intelligent Ultrasound products and also for the rest of the product line. And then we are taking many different measures to improve profitability. This is one of them, definitely, but there are others as well. Tom Englund: I think that you can think about it that we are creating a much stronger company through the acquisition of Intelligent Ultrasound. And long-term, this will be a very, very good addition to the Surgical Science family. And despite the disappointing short-term sales results, we have not changed our positive view on the long-term attractiveness of the ultrasound simulation market and the positive contribution of Intelligent Ultrasound into Surgical Science. Operator: The next question comes from Christian Lee from Pareto Securities. Christian Lee: I have 2 questions, please. I'm curious about what you describe as potentially the largest single deal in the company's history within medical device simulation. Could you please elaborate on the potential deal size here? Tom Englund: No, we can't unfortunately. Hi, Christian. No, unfortunately, we can't elaborate due to commitments towards the customer, we can't elaborate on the deal size here. We have to let it be at potentially the largest deal. But what I can say, which is similar to what I've said previous quarters is that within the industry and within the medical device companies now, we see simulation rapidly becoming a critical tool for med device companies to present and showcase their products towards prospective customers as well as existing customers and users because it allows them to do these presentations or trainings in a safe and very efficient manner. And that's why we see kind of this increasing customer activity generally and the inflow of development projects within industry in the quarter. And this was a trend that went on just now not in this quarter only, but also in the previous quarters, right? And I think this big order now is a testament to this that we are becoming more of like a preferred supplier with some of these med device companies when it comes to providing simulation in a broad array of product areas for them. These are big companies, and they have divisions, and these divisions have subdivisions, and we are now actively going deeper and deeper into these companies. And as they are also big companies, this means that when they adopt a specific technology like simulation for their sales force and marketing efforts, for example, that means that the demand of a simulator can be quite high. And that's hence then the big deal size that this becomes. So, it's a development revenue and it's an initial purchase of some simulators. And then gradually, as this product rolls out globally, we see a very big potential for high volumes towards these customers and for this specific product that we're speaking about. Christian Lee: And my second question, simulator sales declined by almost 9% year-on-year if we adjust for the delayed deliveries pushed from the second quarter. Beyond the negative currency effects, was this mainly due to challenging comparables? And how should we think about the outlook given that you will face even tougher comparables in the fourth quarter? Anna Ahlberg: Yes. I mean, yes, as you know, we don't give guidance. But we -- as Tom said also, we see a lot of activity. We see that some markets, takes longer time. We see it's been tough in the U.K. We talked about the U.S., which is -- and we see some very strong markets like the Europe -- like in Europe, several markets there. So, we continue -- and it's also a bit different, of course, between the different product lines there where we see -- we talked about ultrasound. We have other product lines that we see a lot of activity within. So yes, we don't -- we see a lot of activities and still a lot of positives for the IU product business area, even though some markets are a bit tougher. Tom Englund: I mean we feel that the toughness primarily comes from these shortages of budgets, budget unavailability and primarily in the U.S., as we have said, right? There is a lot of things that you can do anyway to try and maximize sales given the tougher market climate. You can work on different sales activities; you can work on different marketing activities and so on. And we are doing all of those. And rest assured that we are having an extremely high pace out there in the market. And we have a good feeling and there's a very high amount of quotes going out and customer dialogues that we see. The other thing that you can do, of course, is to launch new products because new products usually can get budgets faster in a challenging market climate. So that's also why we're quite excited about the volume ramp-up now of RobotiX Express because RobotiX Express is such a product that can be added on top of the simulator sales that we already see. And that can then, of course, be a revenue contributor. And that product is targeted both towards educational products as well as for industry OEM. So, we have high hopes for this product line once we start selling it more actively here. Anna Ahlberg: And I just mentioned very briefly, but price increases is, of course, something that we continue to work with, and we see that, that has a positive effect and that we can actually take out higher prices and also has to do with how we package our products and hardware in relation to software, et cetera. So, these are all things where we work very actively. When we talk about RobotiX -- sorry, Christian, did you have another question? I don't remember if you already had 2. Christian Lee: I had 2 already. So, I'll get back to the queue. Anna Ahlberg: Okay. Thanks, because we also had a written question around RobotiX Express now that we're talking about it. Tom Englund: Yes. What is the average length of the sales cycle for the RobotiX Express product line? And what is the company doing to shorten it, so potential customers can better understand the benefits of integrating said products to improve the medical staff's curriculums? Great question. So, the sales cycle length depends a little bit on the type of customer that we engage with. We have both educational product customers or hospitals and SIM centers that are buying the RobotiX Express, and then we have the med device companies. So, when we look at the hospitals and SIM centers, you could say that in general, the sales -- average sales cycle for a hospital and SIM center is anything between 6 months to 2 years, depending on region and depending on type of institution. And this is applicable both for our existing simulators as well as for robotics simulators. What we are doing with RobotiX Express, though, is that we're marketing it at a more attractive price point because we believe that this is a product that could be sold in volume because we see a very high demand for training for surgical robotics surgeons. And this means within a more attractive price point, that means also that sales cycle could come down and be shorter than what they are for other simulators. And then when it comes to industry OEM customers, for example, robotic surgery companies that are buying the RobotiX Express platform and putting their software, simulation software onto it and then using it in their training efforts, there, of course, the sales cycle will be longer because they would need to perhaps do some hardware modifications as well as software development for the platform. So that could be perhaps around a year or something like that from the initial discussion until we engage with the customer. But of course, once we have come over that first hurdle, then it will be more like of a transactional sale since they have standardized on our platform, so to say. Anna Ahlberg: Let's see. Did we have any more questions signed up. I don't think so. We have some written questions. I think we talked about the license -- there are some questions on the license revenue side. I think we talked about those. There is one also, when we will transition to a fully subscription-based revenue model, when that will be completed? And that is the case for 2025, that it is fully subscription-based for Intuitive. I'm not sure if the question is related to that or to all. But for Intuitive, yes, it is. Regarding pricing, there's a question DV5 over DV4, we cannot -- never comment on prices for our customers. What we've said is that prices have been set for a period with the MOU with Intuitive, where the prices will go down over time. Tom Englund: Yes. And then we have a question regarding forward visibility we don't comment on. Anna Ahlberg: We will again also invite you all to the Capital Markets Day on December 8. So, I hope to see you all there. But I think with that -- Tom Englund: If there's no more questions. Anna Ahlberg: With that, I think we -- Tom Englund: Yes. But thank you all for your attendance and for the interest in our company. And yes, have a great day. Bye-bye. Anna Ahlberg: Thank you. Bye-bye.
Operator: Thank you for standing by, and welcome to the GrainCorp Limited FY '25 results. [Operator Instructions] I would now like to hand the conference over to Mr. Robert Spurway, Managing Director and CEO. Please go ahead. Robert Spurway: Good morning, everyone, and again, welcome to the GrainCorp Results Call. This morning, we're presenting from Sydney, and I start today by acknowledging the Gadigal people of the Eora Nation and paying our respects to elders past and present. If I refer you to Slide 4 of the pack for today's agenda, I'll provide some updates to start with, including our financial year '25 highlights, strategy and growth, financial performance will be covered by Ian Morrison. We'll update you on the balance sheet and capital management and provide some comments on the outlook ahead. For those following online, I will share with you the page numbers as we go through the presentation. So starting on Slide 5. Our financial year '25 underlying EBITDA of $308 million was a lift on the prior year. We saw total grain handled of 31.6 million tonnes and recorded a record, again, in oilseed crush volumes. We've seen improved contribution from our Animal Nutrition and bulk materials sectors. And it really demonstrates we are controlling what we can in the business. That's especially so given the financial year '25 operating context, which as we updated at the half year has shown strong global production from all supply regions around the globe, meaning that Australian grain has had to compete for its place in the world. What that means is customers have been subdued in their purchasing behavior and growers who are experiencing relatively weak grain prices haven't been that willing to sell. It demonstrates again that GrainCorp given the strength of our result is responding really well to that global environment. We're finding opportunities and delivering on them where they exist. What that's created for GrainCorp is a really strong balance sheet. We have $321 million in core cash and including the $0.24 interim dividend that brings total dividends fully franked for financial year '25 to $0.48 per share. We've also completed $38 million of the $75 million share buyback. Let me turn now to Page 6. This is the numbers slide, and you can all read it more quickly than I can share it with you. It does highlight though what I've covered in that introduction. Pretty much across the board and financial metrics, we've seen an uplift on the prior year with that underlying EBITDA up to $308 million, the underlying net profit up to $87 million, and the strong core cash position of $321 million. Ian will talk you through the drivers behind that and the segment performance shortly. But before doing so, I just want to touch on some other highlights across other areas of the business and provide you with an update on our strategic progress. Moving to Slide 7 on health and safety. We always strive for zero-harm at GrainCorp as a large and operational business that's at the center of our values and what we do internally. We've, over the last 12 months, strengthened our critical risk frameworks, which has seen reduced critical incidents in areas like confined spaces, mobile plant and bunker management. And I think that highlights the sort of operations that we have across the board. So while it's disappointing to see a slight increase in incidents recorded through the year, our overall trend is in the right direction, and we are focused on delivering that zero-harm goal in everything we do. On Page 8 of the presentation, I share with you both the challenges and the opportunity of the climate transition and sustainability. I'd describe it as a real opportunity for the agriculture sector and GrainCorp sits at the center of that opportunity, and we're leading in the sector, connecting growers and customers. Over the last 12 months, we've had our near-term targets approved and set through the Science-Based Targets Initiative. That results in a 42% reduction in absolute Scope 1 and 2 emissions by 2030 with a road map in place to deliver that. We've also had Scope 3 forest land and agriculture emissions approved out to 2034. So to some extent, that defines the challenge. We're demonstrating the opportunity through initiatives like GrainCorp Next. For those of you that follow us, I've spoken about that before, it really is an initiative that connects growers with customers around the world and demonstrates our ability to deliver on a low-carbon supply chain, principally in our canola end-to-end value chain. It's allowed us to measure on-farm emissions and support growers in that respect. We have demonstrated best technology and practice and operational emissions reduction across our processing assets and logistics and that's allowed us to engage with end global customers to deliver that opportunity, both for growers and GrainCorp into the future. At the same time, we're making progress in areas like improving our energy efficiency by over 2.5% over the last 12 months, reducing dust and damaged grain to landfill. We've reached a milestone of 1 million kilograms of tarps recycled, and we've got formalized commitments in the sustainable packaging area. All of those areas and many more are covered in our sustainability report for 2025, which has also been released today. And I do commend that report to you to cover, as I said, all of those areas and many more. Moving to Page 10. Our GrainCorp vision and strategy is about delivering sustainable growth through the cycle. We described that in 3 key areas around enhance, expand, and evolve in terms of the way we look at growing our business. Perhaps Page 11 is a really important way to start looking at that, where we talk about the macro trends that we're exposed to and the macro trends that, quite frankly, provide the opportunity and the positive outlook we have for GrainCorp into the future. We're continuing to see growing demand in population across our key markets across Asia and our export capability and infrastructure is set up to meet that demand. We're also seeing quite strongly increasing supply on the East Coast of Australia as farmers employ technology and innovation to improve their practices over time. The 10-year rolling average for East Coast production improvement is at least 2.8% on a compound annual basis. So that increased production also supports the utilization of our assets as we meet that growing demand. GrainCorp is also really well set up and well protected through the diversification of the markets that we operate in. And I think that's demonstrated really well in the top right-hand side of Page 11. And another trend we're seeing across Asia, in particular, in the emerging economies is that real growth and demand for nutrition and protein and our animal feed business is exposed and aligned to the benefits that, that trend is delivering. I'm going to cover Page 12 fairly quickly because over the next few slides, I'll go into some details and some examples on how we're delivering on enhance, expand and evolve. We have invested in our country network and our business more generally. We're seeing growth from the investment we've made in Animal Nutrition and across our Nutrition and Energy business more generally. And we continue to progress our business transformation and deliver benefits from that, and I look forward to sharing those with you shortly. Moving to Page 13 to look at that enhance area, and the investments and improvements we're making in our up-country network across our Agribusiness. At the half year, we spoke about the rail upgrades at Condobolin and the benefits that brings in terms of the efficiency of sites like that. It's one of several examples across the network. Over the second half and ahead of the harvest that's now underway, we've completed a $5 million upgrade at our Burren Junction site. I was in Northern New South Wales last week, and it was great to see those bunkers in operation and the opportunity that provides to receive more grain from growers in that region. It improves our segregation and storage capacity and improves the service and value that we can provide to growers and then pass through our network. We've also improved turnaround times and capabilities ahead of this harvest with $8 million invested in new grain stackers. Just for those that aren't familiar with the operation of our business, the grain stacker allows us to more efficiently unload growers trucks and put it on our bunker storages. The ones we've got improve efficiency, improve the truck turnaround time and provide greater mobility of assets across our East Coast network. As the harvest rolls South, we'll be moving that equipment around so that many growers across our network benefit from that investment and improvement. Again, when I was in Northern New South Wales last week, it was great to talk to growers and hear the positive feedback on their experience in response to those new investments. On Page 14, at the last year's annual results for the first time, we shared with you and disclosed the contribution margin from our bulk materials business, demonstrating the diversification and utilization of our extraordinarily valuable port assets. I'm delighted to share with you today that, that progress has continued with contribution margin increasing to $41 million through 2025. We shared with you that our focus in the future continues to be on disciplined investment in that infrastructure to further increase efficiencies and free up capacity to expand our customer relationships and pursue opportunities that improve the mix and margin of the non-grain products we handle through our ports. Throughout 2025, we've been undertaking a strategic review of our GrainsConnect joint venture in Canada. The update on that is shared on Page 15. And as a result of that ongoing review, we have taken an impairment of $26 million in the carrying value of that asset. We do expect to provide a further update in the first half of '26 on our strategic review, but we would comment that over the last several years, Canada as a market has experienced some difficult and challenging trading conditions. Domestic capacity and expansion alongside the global margin environment has impacted end-to-end margins in that market. And whilst we're pleased on an ongoing basis with the operational performance and quality of our assets, and the fact that the current season shows signs of improvement, we are keen to ensure that we operate that business and set it up for success in the best interest of GrainCorp shareholders into the future. As I said, we'll provide an update over the first half of '26. Moving across to Page 16. This really is about expand, and it highlights the investment and the growth in our Nutrition and Energy portfolio. Not only are we seeing the growth there at -- in the results already, we're setting ourselves up for future growth through investment in our integrated value chain. We're undertaking improvements in our oil -- edible oil refining capability, our West Footscray foods plant. That will lower operating costs and improve product quality for customers. It will also reduce greenhouse gas emissions and represents an investment of between $25 million and $30 million, phased over financial year '26 and '27. We've spoken several times over recent result periods about our focus on the Animal Nutrition area, and I'm pleased to report that sales have increased between '21 and financial year '25 by 83% from 390,000 tonnes up to 713,000 tonnes. So not only are we seeing the bottom line impact of that flow through earnings, but it is underpinned by really strong fundamentals and growth in volume, including our acquisition of the XFA business, which continues to outperform its business case. And the expansion of that and our existing liquid feed and dry-lick business provides opportunities for the future. In Agri-Energy, as you all know, we are in an MOU with Ampol and IFM, and we've been working closely with our partners on developing the end-to-end value chain for the development of feedstocks into biofuels in Australia. The recent federal government commitment of $1.1 billion for the Cleaner Fuels Program and $250 million to the Made in Australia Program demonstrates the improving environment and the confidence we have in our strategy in that area into the future. Moving to our business transformation program. Much of which is initially focused around our Nutrition and Energy business. I'm pleased to share with you today some further detail on the benefits that we see from that program but I just want to recap on the rationale for the program first. It is a business-wide transformation designed to unlock efficiencies and drive value across our integrated value chain. It includes an opportunity to address an end-of-life version of SAP and delivers a stronger business for the future. Where we're at in the program is about 90% of the build of the technical aspects are complete, which means we're moving into the testing and deployment phase. The progress has been slowed and had some challenges, but remains on track to complete now in the second half of '26 rather than the initial planned first half of '26. What that means is a slight increase over our previous estimate of $15 million and the cost for the program going forward. So although it's being derisked that slightly extra time is adding to the cost, but we're confident in our progress in the year ahead and the derisking we've been able to achieve. In parallel, we've been working on the benefits that the program will achieve. And I'm pleased to share with you today the targeted run rates for the end of financial year '26 and the benefits beyond that. The early-stage benefits we're seeing starting to flow are estimated to be $5 million to $10 million by the end of '26 and are focused on areas like labor productivity and procurement savings initially. What we're seeing is the benefit of the overall end-to-end program, identifying opportunities and those flowing through to that commitment of $20 million to $30 million in uplift as a program complete. At this point, I'm going to hand across to our CFO, Ian Morrison, who will talk you through the financial updates and performance. Thanks, Ian. Ian Morrison: Thanks, Robert, and good morning, everyone. I'll start on Slide 19 and summarize financial performance for FY '25. At a headline level, our Agribusiness segment, is up from $162 million last year to $218 million this year. And that's largely off the back of improvements in East Coast Australia crop production, which I'll touch on more shortly. . Nutrition and Energy segment, that's slightly down year-on-year, and that's mainly as a result of lower crush margins. Other headlines, as Robert noted before, and we have recorded a noncash impairment of $26 million relating to the investment in GrainsConnect Canada. And last item, I'll just touch on briefly on this slide is net interest costs. So they are up year-on-year, and that largely reflects higher commodity values on our -- and volumes off the back of our commodity inventory funding. Now I'll move on to Slide 20 to provide further detail on the Agribusiness segment and in particular, starting off with East Coast Australia business. So as I touched on, we did see total ECA crop production of 34.7 million tonnes in FY '25, increasing from the 26.1 million tonnes in the prior year. And a feature of that crop production was stronger production in the north in Queensland and Northern New South Wales, in particular, partly offset by lower production in Victoria. In terms of total grain handled that led to a result of 31.6 million, up from 28 million in the prior year. Carry-in into FY '25 of 2.5 million supported that, but that was lower than the carry-in coming into FY '24 of 3.9 million. A feature of the results that we talked to back at the half year was the opportunity the business took to really capitalize on better margins across commodities, including chickpeas and canola seed in particular. So that was really good opportunities captured by the business. A key element I just wanted to touch on in the results as well as the impact of the Crop Production Contract, so the total impact to the P&L is $41 million in the results, and that's including the $6 million annual and premium payment. And the overall cash impact was a payment of $58 million under that contract. But the key highlight to call out, though, is that, that payment in FY '25 means that we have reached the total half on the contract. And so that means for the remaining 4 years of the Crop Production Contract, there will be no net payments by GrainCorp. And we still of course, to retain the opportunity under the contract in the downside protection in the event of drought. And so from an overall perspective, that leaves us in a strong position with the protection of that contract. And lastly, as Robert touched on earlier, really pleasing performance in our bulk materials business with our continued trajectory of improving contribution margins. I'll now move on to Slide 21 and touch on our International business. So starting off with Western Australia, we did see a strong increase in crop production in WA this year with a 55% increase on the prior year and well above the 5-year average also but the global conditions we've seen did negatively impact margins out of that market. That's with the strong competition from many other regions. So we did see a decrease in earnings out of our international business and in particular, WA this year. And as Robert touched on earlier, we've continued to see those challenging conditions experienced out of Canada, partly off the back of those strong global production conditions, limiting opportunities but also some of the specific factors within Canada also. I'll now move over on to Slide 22 and our Nutrition and Energy segment. Our crush volumes reached another record in FY '25 with total volumes of 557,000 tonnes, up 3% on the prior year. And that reflects a good focus on operational efficiencies. And a key feature this year was really good restart time from the annual maintenance shutdown we have at Numurkah -- at our Numurkah plant. In terms of crush margins, as we touched on earlier in the year, they have been below what we've seen in recent years, and that's been impacted from a few factors, partly the smaller Victorian canola crop with the weaker crop conditions in Southern regions and but also strong global supply from a large soybean crop we've seen in a number of regions. And then the last item to touch on here is we did ceased processing of edible oils at East Tamaki plant this year following the strategic review in FY '24 and have consolidated manufacturing into our West Footscray plant in Melbourne. Over to page on 23, Animal Nutrition has been a real highlight in the results with strong growth in volumes, as you can see in the chart on the right. That, of course, is benefiting from a full 12-month run rate of the XFA acquisition we completed last year compared to 6 months in FY '24, but underlying sales volumes also grew across our preexisting business, which is pleasing to see. And then from an XFA business point of view that delivered a 12-month run rate EBITDA of $14 million, and that continues to outperform the business case and continues to support investment we continue to make in that segment overall. And then just touching on Agri-Energy. Volumes remain strong and similar to prior year with good volumes across both tallow and used cooking oil. But renewable fuel feedstock demand has continued to be impacted by some of the uncertainty around U.S. biofuel policy and that has had a modest impact on margins year-on-year. I'll now just move on to Slide 24 on corporate costs. Underlying corporate costs are in line with the prior year, and we continue to stay focused on disciplined cost management. And then in terms of spend on growth projects, that continues to mainly represent our ongoing work on the oilseed crush feasibility. And the business transformation costs noted on this slide are the OpEx costs of $30 million and that increase year-on-year is, of course, as we've moved from the design phase during the course of FY '24 into implementation this year. I'll now move to balance sheet and capital management and starting off with Slide 26. So we finished this year with a strong core cash position of $321 million. That's up from $296 million at the half year and slightly down from the $337 million at last year-end. Also just touching on the slide, we took the opportunity recently to extend the maturity of our term debt from March '27 out to November 2028. And that's on the principal of $150 million, which remains unchanged. Overall, our balance sheet is in a very strong position, which allows us to continue investing for growth while also providing strong returns to shareholders. Now moving on to CapEx on Slide 27. The total capital expenditure of $77 million in FY '25, includes sustaining CapEx of $59 million that sustaining CapEx is slightly above the target range of $40 million to $50 million, and that just reflects higher spending in an above-average crop year, partially on investments across our up-country assets that Robert touched on earlier, but also in areas like tarpaulins with those higher volumes we saw in FY '25. We are also anticipating to see CapEx higher in FY '26, and that's partially as a result of the upgrade we're undertaking at our West Footscray plant in relation to edible oil refining capability. On the right-hand side, D&A is broadly in line with FY '24 and continues to stay steady. Now moving on to shareholder returns on Slide 8 -- Slide 28. As Robert noted earlier, the Board has declared a final dividend of $0.24 per share, fully franked, made up of an ordinary dividend of $0.14 per share and a special dividend of $0.10 per share. This takes total dividends in FY '25 to $0.48 per share, and that's in line with the previous year. Also during the year, we completed a $38 million of the previously announced $75 million share buyback. And overall, this year continues our strong record of capital management and positive returns to shareholders. We'll continue to assess capital management against growth opportunities across the business in line with our capital management framework. On that note, I'll now hand back to Robert. Robert Spurway: Thanks, Ian. Towards the end of the presentation, now at Page 30, I'll provide some comments on the outlook. As many of you will be aware that ABARES in the September update forecast an East Coast crop for the harvest that's now underway of 30 million metric tonnes with conditions demonstrating to be more favorable in Queensland and Northern New South Wales. And we're certainly seeing that coming through in strong yields from that area in the early harvest performance, which I'll touch on in a moment. Given a dry finish in Victoria, the -- and changes in grower planting profiles, they were forecasting an 11% reduction in the East Coast canola crop. And I would add that ABARES will again update the current crop in early December. With harvest now well underway across the country, we've seen strong receivables to date of 4.2 million tonnes across our network. And pleasingly, exports are also underway with 0.5 million tonnes exported already in the financial year. We do see global grain and oilseed supply remaining relatively strong. And that means the outlook for margins is broadly similar to what we've seen through financial year '25. Like last year, that creates the opportunity for GrainCorp to continue to find and deliver on the opportunities that are there. And as we've done so in recent years, we'll be providing earnings guidance at our AGM in February. Just to recap and in conclusion on Page 31. We've delivered improved underlying EBITDA of $308 million in financial year 2025. We've completed and delivered several initiatives to increase volume and efficiency across our network, and we continue to invest and deliver on growth across our business more generally. We've got a very strong balance sheet with core cash of $321 million. And as Ian has just recently touched on full year dividend, fully franked, of $0.48 per share on top of the $38 million returned via share buyback. We are continuing to deliver on our promises of investing in the business, providing strong returns to shareholders managing what we can and setting the business up for future growth. Thank you for your support and interest. I'll now hand back to the moderator for any questions. Operator: [Operator Instructions] Your first question comes from Owen Birrell with RBC. Owen Birrell: Just in the interest of time, just my 1 question, really around that comment that you've stated that you see the outlook for margins to be broadly similar in '26 to '25. I just want to align that with the comment around the East Coast canola crop being 11% down into this current harvest. Just wanted to get a sense as to what you think the canola crush spreads are going to look like next year if the Victorian supply is 11% down on essentially where we were this time last year. Robert Spurway: Thanks, Owen and I'll hand to Ian, who will answer that question for you. Ian Morrison: Yes. Thanks, Owen, for the question. In terms of that 11% estimate from ABARES in terms of the canola crop, although it is a bit down year-on-year, that still generates an exportable surplus overall of canola seed. So at that level, it's a relatively modest impact overall on crush margins and the broader factors that have -- of course, it's one of the legs that has an impact, but meal demand and then vegetable oil values in general also have an impact. So it's a combination of those factors. And although it is early in the year, we would expect crush margins to stay at similar levels to FY '25 at this stage. Robert Spurway: The other important factor, Owen, that I touched on is the record crush volumes that we're doing. So we would expect that to continue as well. So although the margin environment over the last couple of years, has been down on what we saw in years prior to that. We are offsetting that to some extent through the improvement in volume through the plants. . Operator: Your next question comes from James Ferrier with Canaccord Genuity. James Ferrier: What's the setup in FY '26 in relation to export opportunities around chickpeas in particular and maybe also canola seed given they both were tailwinds to varying degrees to your earnings in FY '25. Robert Spurway: Thanks, James, there are still opportunities, and we are exporting both canola and chickpeas in the early part of the program this year. As we said at the half year, the opportunities on commodities vary from year to year. And I think we called out canola and chickpeas as 2 specific examples of where we've seen opportunities in the market, we've been able to capture those opportunities and execute on them at a time in the year that made most sense in terms of extracting the maximum margin. As we look at this year, as I said, there are still opportunities on those commodities. But I think the broader picture is important that we'll be looking at where opportunities may emerge on whether that's wheat, barley, feed wheat versus milling wheat, canola and chickpeas. So all the time, we're looking at where those opportunities are, which markets make more sense. And I think the quality and the scale of our infrastructure allows us to respond to those opportunities very quickly and deliver that margin. So that's the way I think we'd look at it broadly going forward, really not much more to add than that at this point in time, James. Operator: Your next question comes from Ben Wedd with Macquarie. Ben Wedd: Just turning to sort of that receivables comment there, where you've noted 4.2 million tonnes of receivables. I think sort of looking back to last year, we were sitting at about just over 5 million tonnes. So I'd just be interested in many comments around sort of the change in pace of those receivables and how you're sort of seeing that moving forward over the rest of harvest? Robert Spurway: Yes. Really, no 2 harvests are the same, Ben. So I'd strongly urge all of you not to consider that too much. If you look at the shape of the curve, it's very similar, give or take, what we've seen on average over the last number of years. And typically, the pace of early harvest depends on the prevailing weather conditions this year, to the extent there is anything normal, it's probably what we'd see as a more normal curve in terms of uplift versus last year. . If I recall, there was a very dry finish in the north and harvest started to come in earlier in Northern New South Wales and Queensland than it has this year. Where we're at right at the moment is we're fairly well advanced in Queensland and including Southern Queensland. I'd say we're well underway in Northern New South Wales, but really getting into Southern New South Wales and Victoria harvest is yet to commence across many of those regions. So long answer to a pretty simple question. There really is just no relevance in the comparison. The commentary I'd provide, though, is that there are no 2 years the same. The harvest is progressing almost exactly as we would have forecast it based on the conditions we've been seeing over the last number of months. . Operator: Our next question comes from Richard Barwick with CLSA. Richard Barwick: Can you just talk about GrainsConnect. So obviously, another disappointing results for earnings down or down by more in FY '24, obviously you've taken the impairment. So the -- I guess 2 questions part of the impairment. What does that actually deliver? What does the impairment mean? So for example, could we see a reduction in the D&A that got flowed through. So do we get an earnings benefit from this impairment? And is there a risk of further impairment given that the strategic review is yet to be completed? Robert Spurway: Ian, I'll get you to talk to that. Ian Morrison: Thanks, Richard. In terms of the D&A part, because it's equity accounted, we pick up results from that perspective. But with this impairment, that brings down to effectively a 0 cutting value. So we wouldn't be booking the -- any ongoing gains or losses effectively. While it's impaired to that amount, we'll still, of course, track that closely, but that's how it would affect the P&L initially at least. . And in terms of further risks, it will really depend on how conditions continue to perform in Canada and what we see as the outlook. And that is a level of better optimism for the season ahead just with a better crop. So that will hopefully see a bit of an uptick in performance. And then in terms of any further exposure, it will partly depend on the cash performance ultimately of the business. . Operator: Your next question comes from John Campbell with Jefferies. John Campbell: Just with your comments and excuse me if this question has been asked because I came in a little bit late. But just your confidence around the margin environment for FY '26, given global supply seems to be continuing to make records. Yes, I mean, how much sort of risk, I guess, around that part of your outlook commentary. Robert Spurway: Yes, we have made some comments on that already, John, but I'll expand on those a little. Broadly, what we're saying is we expect that the margin environment is going to be similar in the year ahead to the year previously. I think in terms of your question, therefore, by definition, there's not a whole lot of risk to that. Ultimately, the underlying demand is there. So the fundamentals for our business remain strong. We're seeing good demand, particularly across Asia, but across global markets correlated to population and the need for food, but also increasingly a correlation to a growing demand for fuel feedstocks, particularly in the oilseed space. So what we'll be looking to do is access those margin opportunities at the times of the year that make most sense on the commodities that we handle. I think that's where our assets come into their own in terms of the agility and responsiveness we're able to make to those margin opportunities. And if you listen to the global commentary, what we're saying is very consistent with what you're hearing coming out of global markets and other major grain operators. So summing up the question, not a lot of downside risk. We'll be continuing to look for opportunities. And we'll be watching as the year proceeds the development of the next Northern Hemisphere season crop. That's likely to be the next major catalyst for potential for disruption and a reset to the margin environment. Operator: Your next question comes from Jonathan Snape with Bell Potter. Jonathan Snape: Just 2 questions, if I can. One around all the moving parts because obviously, you've got the CPC not coming through next year. You've written down the Canadian business. So I'm assuming you are not going to take $15 million in losses, that's kind of a 0 number. So all things being equal, if it was an identical season, you should be, what, $50 million, $55 million better off, I assume you're not going to be paying the annual fee anymore? And then just secondly, following on from that, with the through the cycle number, the $320 million, if memory serves me, there was a contribution in there assumed from Canada somewhere around the kind of $10 million mark, if memory serves me correctly. With that now carrying at 0, is it the cost out is kind of mitigating that contribution? Or is that still in the TTC, i.e., you might write it back up again. Robert Spurway: Look, thanks for the questions. We'll count that as one question, Jonathan, so you're not accused of getting 2 answers by your peers across the industry. Jonathan Snape: 2 subsections. Robert Spurway: And also cognizant of the fact that we're not providing guidance at this point. So we can provide some directional comments around the way you should think of the business. Of course, although we're relying on the ABARES forecast, there is some time to go before our volumes are fully known for this year. I've touched on the fact that we're seeing fairly favorable conditions come through in Northern New South Wales and Queensland. We're less certain about what Victoria, looks like at this point because the harvest there is yet to start. But all things being equal, volumes down a little bit. Margins are similar. And as you indicated, there's a number of changes we've made in the business that will provide for some upside opportunity, including the benefit of the CPC. There's probably not a lot more we can say from a quantitative point of view. And I'm not going to comment on the math you were doing in your head there, other than to say, qualitatively, that's not a bad way to look at the business. But Ian, you might be at a bit of color, particularly around Canada and those sorts of more detailed aspects. Ian Morrison: Yes. Just 1 point to add, Jon, is the annual premium under the crop production contract will continue to be paid. So that's $6 million. So from a P&L impact this year of $41 million, is a $35 million excluding the premium and $6 million with the premium. So that was one item to call out. And as Robert touched on in terms of looking at it year-on-year and East Coast volumes based on ABARES would be a bit lower, obviously, still quite a strong crop but a bit lower than last year's overall crop. So those are kind of the moving parts relative to the CPC and GrainsConnect Canada. And probably the last item to touch on that is international was a bit of a drag on earnings this year more broadly, partly off the back of the margin environment, too early to predict exactly where that goes. But the overall conditions remain relatively similar. So that's one of the key factors we'll be watching closely as well in the overall mix. And then last item to touch on from your question around through the cycle. So our Canadian joint venture was included in our through the cycle at just under a bit under $10 million, not quite at $10 million, but not far off it. But in terms of overall through the cycle, what we have been seeing is outperformance in a few areas now that are likely mitigating that. So 2 items I've touched on particularly would be bulk materials and the continued improvement there. And then also Animal Nutrition, we did add $10 million to our through the cycle from the purchase of XFA. But as you'll have seen in today's update, it's delivered $14 million, and we do continue to invest in growth of capacity in our overall Animal Nutrition business. So we are seeing some positives as well, which we'd expect to largely offset some of those headwinds we touched on. Robert Spurway: In the appendices of our pack on Page 40, we spelled out the historical performance of the business and highlighted that without the impact of the crop insurance costs over the last few years. We restated the numbers to demonstrate that we're delivering well above through the cycle in each year and on average, significantly above that at $423 million. So we can certainly talk about that in meetings over the course of the next number of days. But Slide 40 in the appendix is perhaps a good one to look at through the cycle followed by Slide 41, where we've highlighted the breakdown and the way we look at through the cycle. . Operator: Your next question comes from Scott Ryall with Rimor Equity Research. Scott Ryall: Robert, just a quick question on Agri-Energy and looking forward. You talked about progressing your MOU targeting a FEED phase in 2026, which obviously is a more costly phase than pre FEED than what you're doing at the moment. Could you just comment -- you made a comment on the cleaner fuels program and the commitment of government. Is that enough -- in your mind, is that enough to actually activate the industry in Australia or what else needs to be done? And maybe you could just give some color around your view there? Robert Spurway: Yes. Sure, Scott. Really great question. We've been delighted to have a seat on the Jet Zero Council, which has kept us very close to the whole value chain in our work with government. So that's allowed us both to be involved in the formation of policy, but also to advocate for the policy positions that will be required. We're doing that in conjunction with our MOU partners because we recognize that for this value chain to work, all parts of the sector need to ultimately see a way towards a profitable and sustainable business cases for investment. I think in answer to your question, the financial commitments by the government go a long way towards confidence in the sector and the commitment the government has. Of course, it remains to be seen how that commitment will flow through to support for individual projects. What we [ say ] more broadly is I think everyone sees the benefit of this and the economics of it in the medium to long term, particularly as carbon pricing goes up and particular in sustainable aviation fuel where airlines have no other way to decarbonize. You might have seen news in the headlines this week around Singapore moving forward on its mandate for any aircraft flying out of Singapore to be using a portion of SAF. And the fact, that there'll be a very small our ticket price burden on passengers to fund that. We think those sorts of mandates may well make sense to help bridge the gap over the near term of where Australia is versus the long-term profitability and sustainability of the sort of investment that we're proposing to make to provide feedstock to the likes of Ampol and IFM who will service the end customers, especially in the sustainable aviation fuel sector. Operator: Your next question comes from Owen Birrell with RBC. Owen Birrell: Sorry, just a quick follow-up question. Just looking at the margin environment, again, you called out, I guess, in the Agri Business, lower end-to-end margin compression. Are you able to give us a sense as to where in the value chain you're seeing all of that margin compression. Are you seeing it in the, I guess, the purchasing side from your growers? Is it in the export margins? Is it in the storage margins? Or is it purely in the marketing international? Just wondering to get a sense of where is the highest competition that's creating that margin compression across the margin chain. Robert Spurway: Yes. So the endpoint in Global Markets, but I'll let Ian talk to that. Ian Morrison: Yes. Owen, it's largely export margins from the way we would think about it because what's driving that, though, is partly behavior on the selling side does have an impact, of course, because that's one aspect overall that impacts level of purchasing you can get. And then on the demand side, from our customers when you've got generally lower prices and plentiful supply. The demand is more hand to mouth. So it's almost at both ends of the value chain is what's having an impact if you're the owner of assets and the commodity owner of the grain in between, and that does result in that margin pressure compared to what we've seen in recent years. And one other factor that, that leads to is more of a caddy market where grain prices are worth more in the future than they are today. So that leads to some of those behaviors and ultimately, has that impact on constraining margins. So pretty typical of what you can see in this type of environment and somewhat related to the overall conditions of global supply really. . Owen Birrell: So can I ask just in terms of the competition for I guess those export volumes out of Australia, are you seeing more competition by traders here? Robert Spurway: Short answer is no. Owen, it's really is somewhat -- to some extent, constrained by the production of grain in Australia. The competition we talk about is from other global supply market. So the market is behaving, I guess, it's in a rational way, exactly the way you'd expect it to behave with plantable supply growers globally, being less than, super excited about the prevailing prices. So they're not inclined to engage, and that creates fairly benign conditions in the market. What I would say, and it's important to remember that the fundamentals are still there. Demand remains. In all likelihood, there will be a supply shock at some point because historically, we've seen that occur around the globe, particularly in a globe with more volatile weather. Stocks-to-use ratios globally remain at historically low levels. So the opportunity for margins to grow quite quickly exist in the event of a disruption to global supply. So that sort of volatility and the kind of things that we'll be looking for to access margins right throughout the year, just as we did last year on chickpeas and canola and other commodities as well. We'll be doing the same again this year. Operator: Your next question comes from Ben Wedd with Macquarie. Ben Wedd: Yes. Just one for you there, on the net working capital side on Slide 45. It looks like a fairly large dip into the full year there. So just wondering any comments you can sort of make around that and sort of what that sort of implies for the year ahead? Ian Morrison: Yes. No, happy to comment on that. Good question, Ben. So dip off is really normalizing of working capital. We did see -- and I touched on it at the half year, a bit of a higher peak and also last year in to be fair, it was slightly higher. And so with the slightly lower commodity values and typically, we do see that dip off at the balance date or closer to the balance date. But we'd expect where we finished this year to be a more typical level of working capital relative to what we've seen in recent years. Operator: Your next question comes from Richard Barwick with CLSA. Richard Barwick: Can I just clarify, I think just trying to get my head around the international piece. I think you said, Ian, that what's your wording, that was a drag on earnings this year. So we know it went backwards, obviously, but does that actually in terms of relative to year before, but does that mean it actually had a negative contribution so it was loss-making this year, you can just confirm that? Ian Morrison: Yes, very modestly. This is a quick answer, Richard. Operator: Your next question comes from John Campbell with Jefferies. John Campbell: My question has already been asked. Thanks very much. Operator: There are no further questions at this time. I'll now hand back to Mr. Spurway for closing remarks. Robert Spurway: Look, again, thank you, everyone, for your interest in the company. We look forward to meeting with many of you over the course of today and the next few days. To recap, GrainCorp's in an extraordinarily strong position with core cash balance of $321 million. We're continuing to deliver what we said we would in terms of growing the business, investing in the business and providing significant returns to shareholders through the dividend and the buyback. And year-on-year, we've increased our earnings at an underlying level to $308 million. Thanks again for your time. We look forward to catching up with you through the next few days. . Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Persimmon's Plc Q3 Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to turn the call over to your host today, Mr. Dean Finch, CEO. Thank you. Please go ahead. Dean Finch: Thank you very much. Good morning, everybody. I'm joining you today from our Newcastle office, where alongside colleagues I'll later be attending the funeral of our Founder, Duncan Davidson. Of course, our thoughts are with Duncan's family and friends, but it is also a sad and poignant day for us at Persimmon as we remember a man who taught us a lot about business and life. First and foremost, Duncan inspired many, many people. What quickly struck me at Persimmon was the genuine [indiscernible] Duncan's held in by those who knew him and worked with him. I often hear a great man and a great boss. Duncan was a visionary and an entrepreneur. I have the great honor to lead this company inheriting Duncan's great legacy while trying to build on his great insights and strong foundations. Fundamentally, Duncan knew that a great value home built by great people, trusted to deliver excellence consistently would deliver for customers and for shareholders alike. I, we try to maintain these values, his drive and vision in all we do, as I hope today's results demonstrate. We're pleased with today's results as they show we performed well in a challenging market. Across the key metrics, we can see the benefit of our investment in the business and our self-help initiatives. We've maintained a good sales rate despite a clear softening for the industry over the summer and in the run-up to the budget. Customer sentiment is more fragile. So I'm delighted we've also so far maintained a sales rate ahead of last year. Initiatives such as New Build Boost, our shared equity product have helped alongside the broader investment in sales and marketing. Forward sales are up, both our total forward sales and the private forward sales element are up both around 15%. Pricing is robust, and we remain disciplined on incentive use running around 4% to 5%. Our build position is good. We're clearly focused on securing the year-end completions, and we remain on track to deliver our guidance. Our proactive approach has helped drive further planning success. This is reflected in our growing outlet base. We continue to invest in the business to drive growth and returns. We're being presented with good land opportunities and are maintaining our discipline while growing our overall land holdings. As we look ahead, the budget is clearly a crucial moment. How any measures impact customer sentiment, including amongst institutional investors will be crucial. Nonetheless, we're on track to deliver this year's guidance and are determined to continue to drive further growth to meet our medium-term growth ambitions. Thank you very much, and I'll now open it up to any questions you might have. Operator: [Operator Instructions] Our first question comes from the line of Aynsley Lammin from Investec. Aynsley Lammin: Two questions from me, please. Just wondered if you could give maybe a bit more color just on pricing and incentives, how they've kind of evolved through the autumn selling season. I think ASP private is up 1.5%. Is that mix? Is there any HPI in there? And have you ticked up incentives more recently? And then second question, just on -- obviously, you did a good job increasing site numbers. Just as you look into next year, what's the visibility like for kind of site openings, your expectation of planning for next year? Dean Finch: Aynsley, as we said, pricing has been good so far over the course of the year. I mean, we did see a softening -- well, let me rephrase that. We saw a very strong actually July and August. But then that tailed off towards the end of August as speculation mounted as to what's in or not in the budget. Although what I would say is actually over the course of the last couple of 3 weeks, we've seen sentiment improve again as numbers seem to be rebounding. So we did see a softening [indiscernible] 2 halves, very strong first part of the summer, softening in the middle, coming back a bit now. Pricing is robust, good PD performance. The area, I suppose we've seen a bit of softening is in terms of institutional demand as well. But overall, pleased with performance. It's still up, but pleased -- a bit of softening, but overall pleased with performance and incentives have held in the 4% to 5% range. So we've maintained our discipline there. In terms of site numbers, you're right, we've had excellent progress with opening outlets this year. We expect to do a similar number next year, looking to around -- open around 100 outlets subject to planning and looking to drive forward again next year by around 10 to 15 in terms of net. But obviously, that is subject to planning and subject to getting all the various other parties such as Highways, Natural England and all the other good people across the line. Operator: The next question comes from the line of Allison Sun from Bank of America. Allison Sun: Dean, just one question from my side. It's probably more question for Andrew. Is the sales price in the order book, I see it's up by around 1.5% year-over-year. Can I ask it's mostly driven by a mix impact or it's more like underlying increase? Dean Finch: Andrew, do you want to take that up? Andrew Duxbury: Yes, I'll take that. Yes. So as ever, Allison, there is the whole mix effect in terms of geographies and sites and size of products and so on. But I think fundamentally, the point comes back to the point Dean made a moment ago around pricing has been robust. I think particularly the further north that you move, the more robust pricing has been. And so I think there is -- there will always be a mix effect in there, but it's not that it's a question of the mix is driving up and house pricing is coming off. I think pricing has been robust on a like-for-like basis as well. So I think we're pleased with the pricing we've achieved actually across all of our regions. So it's a combination, but pricing has been robust and that is shown through in the forward order book, Allison. Operator: The next question we have the line from Ami Galla from Citi. Ami Galla: Two questions from me. The first one was on the investments that you've talked about in the release. One was on -- in the recent news flow, you had announced that you've acquired a planning promotion company. Can you talk a bit more about the land market? And how do you see that as an opportunity ahead? And the second one is on the new Rezide product. Can you talk about how the initial interest has been and what's the take-up of that product in the market? Dean Finch: Yes. Okay. Thank you. I mean, the land market is certainly very busy for us at the moment. I'm in a happy position of -- we are in a happy position of having choice. We have a lot of opportunities available to us. So that is enabling us to be choosy. So the immediate land bank is in great shape. Strat land is also in a good position, and we have looked to strengthen that in places with, for instance, this acquisition of Lone Star. It's a small company, but it fits where we've got some gaps. So we're very pleased with that. So yes, look, overall, land market is very healthy for us at the moment, and we're feeling good about the future. Rezide only launched last week. I think we've taken one sale so far. But it's -- I think the key point about this with New Build Boost and other products that we either have or we're developing is it gives our customers a range of choice. Clearly, affordability is the main issue still facing the market. So anything you can do to help with that helps boost our numbers. As I said, we've now got Rezide as well as new Build Boost, so it enables us to give customers more options. The key thing actually really is not so much the numbers we sell through these things, but the opportunities they bring us, we often find that the headline attracts people into the door, but then they may not end up taking that product for whatever reason, but it's extremely helpful to have these tools in the toolbox. Operator: Our next question comes from the line of Will Jones from Rothschild & Co Redburn. William Jones: Three, if I can, please. First, maybe just covering off on second half completions. I don't know if you're willing to give us a view on how Q3 looked compared to the roughly [indiscernible], I think you had last year that you gave back then. And just what risks or otherwise you see the delivery into year-end, just noting the 83% exchanged or complete compared to 85% last year. Are you reasonably comfortable around the Q4 delivery? Second, build costs. I think this time last year, you talked about some rising costs looking into this year and a couple of issues on sites with some regulatory costs. But just anything you could give us on the equivalent this time around as we look to '26. And apologies if it was covered right at the start of your intro, I just did miss it, but the comments you gave back in the summer around 2026 volume and margin aspirations, do they still apply an equal measure? Dean Finch: Andrew, do you want to pick those up, please? Andrew Duxbury: Yes, I'll take those Dean. Will, so yes, in terms of the second half delivery, I mean, we're ahead in terms of absolute numbers on exchanges and completions year-on-year, as you'd expect. I think the 83% versus 85% is in the sort of margin in the round, isn't it? So pleased with where we are and continuing to progress well for the year-end, which is why we're able to reconfirm in line with market guidance. So pleased with that. In terms of build cost and inflation, so we said coming into the year, we expected low single-digit inflation, so 2%, 3%. And I think that's around about what we have seen. And obviously, we'll talk more in January and as we go forward and coming off the back of the budget. And of course, this time last year, we just come out of a budget, which has increased national insurance and so on. So that was one of the things we were talking about this time last year, our segment was just after the budget rather than just before. But I think all other things being equal, I'd expect to continue to see that level of some inflation, but not -- certainly not where we were a couple of years ago. So -- but this year, we have seen that 2% or 3% as we said that we would do. And then just casting forward, obviously, we talked and gave some early guidance for 2026 in the summer. And obviously, that was all predicated on relatively stable market conditions. And I think we haven't explicitly given any update to that today. I think I'm reasonably comfortable with where the consensus is for volume for next year, also back in line with the guidance we gave on both volume and the trajectory of the speed of margin growth that we talked to in the summer. The one thing which I have put into the statement today, I do think interest costs next year will be just a tad higher than this year. So probably we guided this year to kind of up to GBP 20 million, next year might be closer to GBP 25 million as we continue to invest in the business. I'm talking about land investment. I'm talking about the investment into work in progress to open new outlets. I'm talking about investment into vertical integration and working through the fire safety remediation work and so on. So that's really the only sort of tap on the tiller, if you like, that I've just called out in today's statement. But otherwise, I think the guidance that we talked to in the summer is still there in terms of volume and speed of margin progression. Operator: [Operator Instructions] Our next question comes from the line of Zaim Beekawa from JPMorgan. Zaim Beekawa: Firstly, my thoughts go to Duncan's family. I hope today goes well. And then on the questions. The first would be just on Charles Church. You mentioned performing well. I was wondering if maybe you could provide some details or figure on this. And then secondly, Dean, I think you mentioned some softening in institutional demand. Is this just the nature of uncertainty around the budget or anything else going on there? Dean Finch: Should I take the second one first, Andrew, and then ask you to talk about Charles Church. Andrew Duxbury: Sure. Dean Finch: Yes. Look, I mean, it is -- and we have seen 1 or 2 of our PRS customers take the decision to pause investments until they know what's in the budget. I mean, I think it's entirely understandable. So they are taking a wait-and-see approach. I don't think it is lost business, but I think it is perhaps deferred business, and we just need to wait and see like everybody else, what comes out of the budget. Not big numbers yet, but I'll just put it out there for you to be aware of. Andrew Duxbury: Yes. Thanks, Dean. Zaim, so just on Charles Church. So we obviously relaunched Charles Church earlier this year in the spring. And we're pleased with how that's progressing. We've opened 7 new Charles Church sites in the period. And we're looking, as we've said before, to double the volume from Charles Church. It was around about 1,000 units in 2024, and we're looking to double that over the next few years. And I think we're making good progress. I think there's a couple of things I would call out, particularly. So one is having that extra product at a different price, it gives us an opportunity to sell more products to different customers, different customer base. That's helpful. It gives another string to our bow, which is particularly helpful. It allows us to drive increased outlets. So we're seeing that is of value. Clearly, it's not for every site, everywhere and some of our sites will just be Persimmon, some will just be Charles Church. In some locations, we can use Persimmon and Charles Church. So I think the extra brand and the extra outlets is giving us opportunity to play choose in a market where you're actually having alternatives and different approaches is very helpful. So we'll give more detail on the actual numbers in terms of completions and so on, obviously, in the new year. But I'm pleased that we've been able to open more outlets and start to drive that growth in Charles Church that we talked about in the spring. Operator: As we appear to have no further questions at this time. I would like to hand the call back to management for closing. Dean Finch: Okay. Thank you. Well, look, thank you all for listening in this morning. I believe we're in -- I think we're in a robust position as we enter the last few weeks of the year. I'll just repeat really what I said in the summer, which is Persimmon is building a differentiated base for itself through its investment in its land, in its brand, in its products, in its factories and its people. That's enabling us to build on our core strengths, as I see it, which is we choose what to build, where to build and how to build. And that does give us an edge, I believe. Our products are more affordable on average than our peers. We're working hard to support those with a range of accessible ownership routes and products. We continue to invest in land and target our approach to planning, which is clearly driving growth. And production is accelerating as we drive more from our factories, both through what we're using and through timber frame. So thank you very much for listening in, and have a good day all. Operator: This concludes today's conference call. Thank you for your participating. You may now disconnect your lines.
Operator: Good day, and a warm welcome to today's earnings call of the Aumann AG following the publication of the Q3 figures of 2025. I am delighted to welcome the CEO, Sebastian Roll; and the CFO, Jan-Henrik Pollitt, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move over to our Q&A session in which you have the possibility to place your questions directly to the management. And having said this, we're looking forward to your presentation. Mr. Roll, the stage is yours. Sebastian Roll: Yes. Thank you. Good afternoon, everyone, and thank you for the kind introduction, and a warm welcome from both of us. For those I haven't met yet, my name is Sebastian Roll, and I'm the CEO of Aumann. And joining me today is Jan-Henrik Pollitt, our CFO. So I really appreciate your interest in Aumann and this earnings call. Over the next few minutes, we will walk you through a brief snapshot of Aumann, the latest developments shaping our E-mobility and Next Automation segments and of course, our financial performance in the first 9 months of 2025. So let's start with a quick look at our business model. We design, as you know, and build high-end fully automated production lines tailored precisely to the needs of our international customers. With decades of experience in automation, industry leaders around the world trust Aumann to deliver innovative solutions. One of our competitive advantages is staying ahead, especially in fast-growing markets, enabling us to quickly provide customized solutions. This is why the automotive market, especially the E-mobility sector remains so attractive forum. In addition, the robotics and automation market is growing rapidly, driven by demographic change, labor shortages and cost pressure. These trends also drive our Next Automation segment, allowing us to use our automation expertise in many industries beyond automotive. Let's take a quick look at Aumann's solutions. Our portfolio range from modular solution and complex process solutions to large-scale production solutions. In modular solutions, Aumann offers standardized cell systems. They enable our customers to react fully flexible and cost optimized on market demands. In addition, Aumann develops production lines for complex processes such as winding, coating and testing. The aim is to implement special process steps in the most efficient way. Moreover, Aumann offers customized large-scale production solutions built for maximum output while ensuring high quality. Thanks to Aumann's wide range of solutions, we can fully support different production goals of our customers. This slide shows how Aumann became a technology leader in E-mobility. Starting from the traditional automotive market, E-mobility was identified as a target market. Through strategic M&A, Aumann took the first step into the e-motor. Building on our know-how, we developed different solutions for the rotor, quickly followed by solutions for the stator and finally, the full e-motor assembly. After the e-motor, we continued our journey using our skills to sell large-scale production solutions for battery modules and packs. In addition, we introduced our own modular systems, for example, for inverter assembly, but also very useful right now in the field of Next Automation. Furthermore, we entered into converting technology. This enabled us to provide production solutions for electrode manufacturing. Aumann is the leading provider of turnkey E-mobility solutions. This illustration shows the drivetrain of a fully electric car and nearly all components can be produced on Aumann production lines. From the very beginning, Aumann has placed a strong focus on the e-Drive unit. Even today, our customers follow very different approaches in developing stators and rotors. As a turnkey provider, we provide the latest production solutions for both, and we go further. With our modular production systems, we have expanded our portfolio to include production solutions for electronic components such as sensors and inverters. This allows us to offer flexible and scalable solutions perfectly tailored to each customer's needs. Now let's shift our focus to our battery portfolio. Here, Aumann benefits from its strong position in the field of energy storage. We cover the full range from battery modules and packs to cell-to-X solutions. This expertise allows us to meet customer needs and develop new solutions for future battery technologies. Let's take a look at the E-mobility market today and in the future. BEV, so battery electric vehicles sales continues to gain traction. In the first 9 months of 2025, more than 9.5 million were sold worldwide. This means a plus of 36% in comparison to the same period last year. China stays in the lead with over 6.1 million units, but Europe follows with strong growth, reaching more than 1.8 million units with 25% increase compared to last year, including Germany with an impressive 38% growth. The U.S. market, which currently shows the lowest volume in comparison, is at least growing by 12%. So this means by 2030, BEVs are expected to make up 40% of sales by 2035, even 2/3. So despite this positive growth perspective, the industry has been slowing down since 2024. The main reasons are the challenging geopolitical conditions. Nevertheless, rising BEV sales and a more stable geopolitical situation are expected to drive new investments in the near future. Let us return to the beginning of the presentation. As mentioned besides the automotive industry, we are shifting our focus on other industries that need more efficient operations, higher productivity and fewer manual steps and errors. At the same time, rising labor costs and the lack of skilled workers are driving companies to automate. In this context, we have moved our Next Automation segment from an opportunistic to a strategic approach. This segment focuses on growth industries beyond automotive, such as defense, aerospace and life science. Let's take a closer look. In our segment, Next Automation, we have defined 3 strategic growth areas. Aerospace is really picking up speed. Demand is growing in civil aviation. Boeing and Airbus expect over 40,000 new aircraft over the next 20 years. In addition, defense budget are boosting. Drones are our focus. The German Armed Force recently decided to procure systems for about EUR 1 billion. Drones combines exactly what we do best. Electric motors, battery pack, full system integration and end-of-line testing, just like in E-mobility, same technology, new applications. Besides aerospace, cleantech is booming. German government are putting EUR 500 billion into infrastructure and climate. This is driving more investment into renewables, hydrogen and energy grids. Our third pillar is life science. An aging population, strong investment and healthy margins make it a very promising industry. Now I would like to hand over to Jan. Jan-Henrik Pollitt: Yes. Thank you, Sebastian, and also a warm welcome from my side. I would now like to share with you the financial figures of the first 9 months of 2025. Let me start with a quick overview. For 2025, it was clear that we will face a decline in revenue, particularly due to the already weaker order intake in 2024. At the same time, we were committed to leveraging every possible measure to keep our margins at a high level. It is also important to note that especially with regard to the automotive industry, that investment behavior continues to be very cautious. This trend is evident across the entire spectrum of automotive OEMs and suppliers. And unfortunately, we cannot escape its impact. The market environment is still challenging. Under these circumstances in the first 9 months of 2025, we reached a revenue of EUR 158 million, which is 32% below the previous year and in line with our full year guidance. Our profitability remains strong with a double-digit EBITDA margin of 11.6%. Order intake after 9 months amounts to EUR 112 million, which is 29% lower compared to last year. Order backlog reduces from the year-end level of EUR 184 million to now EUR 136 million. Furthermore, our balance sheet remains strong with EUR 160 million net cash. Let us now jump into a few details. Across segments, we achieved a revenue of EUR 157.7 million, which means a decrease of 32% year-over-year. The revenue of the E-Mobility segment decreased by 32% to EUR 129 million. And the Next Automation segment decreases from EUR 42 million to EUR 28.7 million as the previous year contains a larger revenue from a big order in the photovoltaics area. On the earnings side, we only see the volume effect and fortunately, no quality effect. Our profitability shows a stable result despite decreased revenue. EBITDA declines in roughly the same proportion as revenue, minus 28% to EUR 18.3 million, and the EBITDA margin of 11.6% is even stronger than the previous year's level. The solid profitability in the first 9 months is based on a good quality of the order backlog, the strict cost discipline in order execution and the adjustment of capacities to the subdued market situation. The EBITDA margin stands at 11.6%, above our guidance for the full year 2025. So we are currently monitoring the performance of the final quarter and navigating cautiously due to the weak investment climate. Bottom line, 11.6% EBITDA margin mean an EBT margin of 9.5%, which underlines the company's operational performance and volume flexibility. Let us turn to order intake and order backlog. I've already mentioned the weak investment climate. We are operating in CapEx-driven business. And for CapEx, especially large-scale projects, stable conditions and strong, sometimes even bold forward-looking and long-term decisions are required. Currently, many industries and especially the automotive sector are lacking in many of these aspects. But we are far away from desperate. Internally, we are continuously working on optimizing our cost structure and capacities. Externally, we are building new sales and M&A leads. We see significant opportunities and potential for the company, and we are confident that many of these initiatives will resonate well with you. Across segments, we see a decline in order intake of 29% year-over-year to EUR 112.4 million. But on the other hand, the efforts in the Next Automation segment are gradually translated into order intake. Next Automation order intake is increased by 35% year-over-year to EUR 29.4 million, and the sales pipeline is rising. This results in a decreased total order backlog of EUR 135.8 million, which means a total reduction of 39% year-over-year. However, the current backlog is still solid in terms of profitability. Let's take a look at our segments. In the E-mobility segment, order intake of EUR 82.9 million is 39% under the previous year due to the mentioned market conditions. As a result, order backlog decreased by 44% to EUR 105.6 million. At the same time, revenue decreased by 32% to EUR 129 million in the first 9 months of '25. And EBITDA roughly develops in line with the volume effect by minus 27% to EUR 17.1 million, which means a margin of 13.3%. In the Next Automation segment, order intake increased year-over-year to EUR 29.4 million as the new positioning is opening new markets. At end of September '25, order backlog amounted EUR 30.2 million. Revenue decreased due to the large-scale order in revenue last year by 32% year-over-year to EUR 28.7 million. And the EBITDA margin increased by 1 percentage point to 12.3%, which leads to a total EBITDA of EUR 3.5 million. By the end of September 2025, our balance sheet continues to be in a good shape with an equity ratio of 63.5% and [ EUR 120 million ] cash, of which EUR 160 million are net cash. Against the backdrop of the company's solid earnings and net cash position, we have decided today to cancel the acquired shares under the 2025 share buyback program. Around 6,000 shares were transferred in October 2025 to the participants under the 2020 stock option program and the remaining approximately 1.4 million shares were canceled today as a part of capital reduction. Our solid financial foundation will continue to allow us to respond both organically and through increased M&A activities and to ensure further shareholder participation through share buybacks and dividends. To conclude, we confirm our guidance for 2025. In the last years, we increased our revenue by almost 50% and EBITDA by more than 300%. Unfortunately, this year, we cannot continue this trend. The market environment and the noticeable reluctance to invest will lead to a decline in revenue to between EUR 210 million and EUR 230 million. However, on the profitability side, we can benefit from our order backlog and the flexible structure of our company. As said, our current profitability is above our guidance, but we are navigating cautiously and are monitoring the last quarter of 2025. Therefore, we confirm our guidance of an EBITDA margin of 8% to 10%. Let me hand over to Sebastian again. Sebastian Roll: Yes. Thanks, Jan. So to sum up our presentation, unfortunately, our business in 2025 is also again strongly affected by market uncertainties and low investment activities in the automotive sector. As a result, our order intake declined to EUR 112 million with E-mobility down by around 40%. We are not the only ones. Our automotive customers are facing a year that is at least as challenging as ours. So despite these headwinds, we delivered a strong operating performance in the first 9 months 2025. We achieved a double-digit EBITDA margin because we did our homework. We reduced capacities, made our cost structure even more flexible, and we ensured cost savings in project execution. We also focus on maintaining a profitable order intake, ensuring that our order backlog remains profitable. In addition, our financial position is strong with high liquidity and a solid equity ratio. That clearly set us apart from most of our competitors and give us the freedom to shape 2026. In addition, we are pushing ahead Next Automation, unlocking growth beyond the automotive industry. Due to our strategic shift, Next Automation order pipeline is growing and order intake currently up by around 35%. Our clear goal is to accelerate this growth both organically and through M&A. Thank you very much for your attention, and we are happy to take your questions. Operator: [Operator Instructions] And I will read the question in our chat box first before I go over to our hand-up. Congratulations on the strong results in a challenging environment, especially regarding the EBITDA margin. Given Aumann's very favorable valuation, a further share buyback would generate a very good return on invested capital in the medium term. What are your thoughts on this? Aumann AG's 2026 estimates of EUR 255 million in revenue and EUR 26 million in EBITDA realistic? And where do you see these figures in the medium term? Sebastian Roll: Yes. So maybe starting with the question of the share buyback. So our solid financial foundation allows us to respond, let's say, flexible on market opportunities. So for example, this means, for sure, growth in Next Automation, as I said, organically or through M&A and for sure, also to ensure further shareholder participations through, for example, buybacks and dividends. That's why we decided today to retire shares under the 2025 share buyback program to stay ready for sure also for these kind of opportunities. The other question, I think, was concerning 2026. And sure, looking on the current figures, revenue might be weaker again next year. That's something we have to see. But Q4 is not completed yet. So that means relevant customer decisions being made till the end of the year. And then we will put all these information together and to give a picture of 2026. Fortunately, our order backlog is profitable and all the other things we have for sure to calculate and yes, to make our mind after the fourth quarter. Operator: And I will go over to our hand up from Charlie Michaels. You should be able to speak now. Your microphone is unmuted, but we cannot hear you, Mr. Michaels. I will give you a moment to find the words and go back to the questions in our chat box. Can you reveal more details regarding M&A processes? Are you involved in some? If yes, how many? What about geography in terms of M&A targets? Sebastian Roll: Yes. I mean we are involved in a handful of these M&A activities. And I think one is the geographical target to have a bigger footprint in North America, as you know. So this might be very important for us also having in mind tariffs. And the other topics for sure is within Next Automation. So we really try to push Next Automation also through M&A. And therefore, we see also some really nice targets right now with a little bit different technology and with an entry, especially in the growth areas we are right now trying to enter. Operator: And we have the same question in the chat box. I hope all questions are answered by that. Charlie Michaels, would you like to try it again? I can see that you are unmute now, Mr. Michaels, but we still cannot hear you. So sorry. I will go over in the meantime. Charles Michaels: So Charlie Michaels from Sierra, like the prior speakers and questioners, I congratulate your margins, tremendous work there, not easy in this difficult market environment. And I'm also thinking along the lines of the prior questioners on M&A. So that was an area. I think you've done some share buybacks, which we appreciated so far, too. But at this stage, I'd say it hasn't really changed things too much for the company as we've seen with the share price being relatively flattish. So the idea that you mentioned about acquisitions yourself, right, potentially in the U.S. where you're looking, I would just say that on the acquisition front, I would work hard to accelerate it. And it's not easy, but it seems to be vital for the Next Automation group. And a question -- an angle on that acquisition question is, would it make sense maybe even to consider a merger of equals, looking around for a company that's not too highly valued because that would basically, given your valuation, be difficult. But you're bringing a lot of German technical engineering expertise and a lot of cash -- and because one other issue besides making some bolt-on acquisitions to your company is just the scale of your company. So it seems to me that you can think bigger and even merge with someone in order to create scale. As you know from the past, we've been following you for a decade or so, invested for quite a long time. And I think that it's just hard to change the thing when you're small, right? That's just my thinking. Sebastian Roll: Yes. Okay, Charlie, I think, as you know, merge is not our first priority. But for sure, given our liquidity, it is possible even to acquire some bigger targets. And we also had to look on some bigger targets as well. I think it's a little bit depending. I mean if it is technical driven and we see some nice technology, some nice processes where we might to find that it is possible to get in a new market or to add something value-wise, then this would make sense. I mean it's not so easy right now because you're right. I mean, most of our competitors, as I said, are not very strong in the position right now. Some of them has an order backlog, which is not really favorable. So -- but for sure, we are looking around. I mean, merge, as I said, is not our first priority. But if there might be a bigger target, for sure, we also would have a look on it. Operator: And I will move on to Michail [indiscernible] Unknown Analyst: Yes, I have a question regarding your wording in your report. I assume it changed a little bit from the Q2 wording to the Q3. It turned, in my opinion, a little bit more positive on future orders you can get because yes, you're writing from a really a very bigger sales pipeline and significant investment impulses instead of positive investment impulses a right indication or I'm on the wrong track? Sebastian Roll: No, honestly speaking, we really hope that you are on the right track, yes. So I mean, maybe because you said having a look on the half year figures. So within the half year, we were roughly 20% above in Next Automation comparison to last year. So we accelerate this a little bit. So right now, we are 35% above previous year, unfortunately, on a low volume, but we are increasing, as you know. And in addition to this, we submitted more Next Automation quotations to customers than ever before, including large projects. So we really hope that in the upcoming quarters, we will see a really positive impact, maybe 1 or 2 large scale orders. So yes, we -- I mean, it's not so easy. I mean, Next Automation means to have new customers to see some other products and to confirm the new -- or to convince -- sorry, to convince these new customers, but it's developing step by step. And yes, it's starting to get fun. So we are really excited. Unknown Analyst: And then maybe one question on your guidance. I think -- yes, you mentioned yourself that the EBITDA is really -- was really good in the last 9 months or even also in the Q3 stand-alone. So was there any exceptional items we have to think about if you look for Q4 that maybe... Jan-Henrik Pollitt: So until now, there has not been any exceptional items in the first 9 months. We stay a little bit cautious on the last quarter because we saw a lot of volatility this year. So yes, as you said, the current profitability is higher than guided. And the last quarter is a bit of a mixed pocket when we see also a larger order intake, which is being discussed and where we need to see where the margin is in these projects. And of course, on the volume, which is to come in Q4, it is relevant for us how we behave on the capacity adjustments in the company. And therefore, we are driving a little bit cautious on Q4 right now unless we have a good profitability in the first 9 months. Operator: In the meantime, we have received no further questions or one more in the chat box. Going back to M&A, could you shed some light on time line? When can we expect information about acquisition? Is it Q1 2026 or later? Sebastian Roll: I mean we are really working hard on this, but it's a digital process. So I mean, yes, let's see. We hope to be as soon as possible on this. And I think all other things I cannot really confirm right now. Operator: And with this, we will end the earnings call for today. Thank you very much for joining, listening and all your questions. A big thank you also to you, Mr. Roll and Mr. Pollitt for your presentation and the time you took to answer the questions should further questions arise in the time between now and the Aumann Capital Forum in Frankfurt end of November. Please feel free to reach out to Investor Relations. And with this, I wish you all a healthy autumn week, greetings around the world. And with this, I hand back over to Mr. Roll for some final remarks. Sebastian Roll: Yes. Thank you. I hope we have shown that Aumann will stay strong in 2025 in another challenging year for our industries. We are focusing on what we can control. Internally, we are optimizing our cost structure and capacity. Externally, as you have seen, we are building new sales opportunities and M&A leads. So we see significant potential in our company, and we are confident that the results will follow, and we look forward to seeing you at the next conferences, and thank you very much for your interest.
Operator: Hello, and welcome to the Brookfield Corporation Third Quarter 2025 Conference Call and Webcast. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference call over to your first speaker, Ms. Katie Battaglia, Vice President, Investor Relations. Please go ahead. Katie Battaglia: Thank you, operator, and good morning. Welcome to Brookfield Corporation's Third Quarter 2025 Conference Call. On the call today are Bruce Flatt, our Chief Executive Officer; and Nick Goodman, President of Brookfield Corporation. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. As a reminder, we completed a three-for-two stock split on October 9, 2025. Accordingly, all per share amounts that are discussed during the conference call are on a post-split basis. After our formal comments, we'll turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we request that you refrain from asking more than 2 questions. I would like to remind you that in today's comments, including in responding to questions and in discussing new initiatives in our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. security laws. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks, and future events and results may differ materially from such statements. For further information on these risks and their potential impact on our company, please see our filings with the securities regulators in Canada and the U.S. and the information available on our website. In addition, when we speak about our Wealth Solutions business or Brookfield Solutions, we are referring to Brookfield's investments in this business that supported the acquisition of its underlying operating subsidiaries. With that, I'll turn the call over to Bruce. J. Flatt: Thank you, and welcome, everyone, on the call. We delivered another strong quarter of financial results. Distributable earnings before realizations were $1.3 billion for the quarter, or $0.56 per share and $5.4 billion over the last 12 months. That was $2.27 per share. That was an 18% increase over the same period last year. Our outlook remains strong with each of our underlying businesses continuing to execute their strategic plans, driving strong organic earnings growth. Turning first to markets. Economic activity and corporate earnings remain healthy. Capital markets are open and transaction activity is picking up across most asset classes. For our business, that backdrop is constructive and highly supportive of real assets. So far this year, we financed $140 billion of debt across our operations and closed $75 billion of asset sales at attractive values, including over $35 billion in just the past few months. At the same time, the direction of monetary policy is turning. After an extended period of elevated interest rates, some softness in the labor market has started to prompt policy easing from the Federal Reserve to support growth and maintain balance across the economy. And while the current environment is influencing policy decisions today, it is important to consider the structural forces that shape where policy goes from here. Over the past 15 years, governments have relied on fiscal stimulus offset slowdowns, leading to a buildup of public debt that is difficult to sustain in a higher interest rate environment. Policymakers around the world are now evaluating the tools available to stabilize these debt burdens. The most constructive outcome of that and the one that we hope for is faster economic growth that outpaces debt, which can be helped by AI and innovation. Second, austerity is always possible, but not too many governments have shown the desire to push that. And third, if growth stays modest, policymakers may instead quietly manage rates below inflation to ease debt burdens, lowering short rates and guiding long rates down. If this path is pursued, it would likely lead to a period of declining real yields and low nominal rates. This environment will provide the optimal conditions for real assets we invest into. Our portfolio is built around inflation-linked durable cash flows backed by hard assets that protect real returns. The benefits of real assets are always evident, but in this evolving environment, they are becoming an essential investment product for every portfolio. A suppression of real yields will amplify these benefits and enhance long-term value across the franchise. Turning to the business. We are entering the final quarter of 2025 with strong momentum and a record almost $180 billion of deployable capital, position our business to invest for value in powerful secular trends that define the next chapter of growth in Brookfield, but also the global economy. First, AI innovation is fueling unprecedented demand for large-scale infrastructure. Second, aging populations are reshaping global savings and driving demand for new wealth and retirement products, which is going to last for decades. And third, the real estate recovery is well underway. Nick will cover that and gaining momentum. Each of these trends represent a multi-decade opportunity to invest where our scale and expertise gives us a major advantage. To that end, we advanced a number of strategic transactions during the quarter. In our Wealth Solutions business, we received shareholder approval for our acquisition of Just Group in the U.K., a region where growing retirement market is creating significant opportunities for long-term investment. We also announced a reinsurance agreement with a leading Japanese insurance company, marking our entry into Japan insurance market, the first of many expected opportunities in the region. We agreed to acquire the remaining 26% of Oaktree that we don't own already, which will bring our ownership to 100% upon completion of the transaction. From the outset, our partnership with Oaktree has been grounded on shared principles, including a value-oriented approach to disciplined investing with a focus on compounding capital over time. Our scale and real asset expertise combined with Oaktree's deep credit experience has created one of the most comprehensive and diversified credit platforms globally. Third, we continue to partner with leading institutions, corporates and governments around the world, and this is what makes our business different, combining capital expertise and our global reach to capture opportunities for all. We have several initiatives underway to deliver the next generation of energy transition in AI infrastructure globally, and I'll just mention a few. Through Westinghouse, during the quarter, we partnered with the U.S. government to deliver $80 billion of nuclear reactors. For context, that is the equivalent of 8 large-scale nuclear plants, enough, for example, to power the entire state of Utah. These projects will help rebuild critical supply chains in the U.S. revitalize the domestic nuclear industry and marks an inflection point for the growth of nuclear energy in North America. With Bloom Energy, we are developing 1 gigawatt of behind-the-meter power generation from fuel cells to meet the growing demand from AI data centers and other energy-intensive applications and we think this is just the beginning. And through our strategic partnership with Figure recently announced a leading developer of humanoid robotics, we are providing access to our portfolio of real assets to create the real-world environments needed to develop, train and deploy this technology safely and effectively, positioning us, most importantly, at the forefront of one of the most significant technological advances of the coming decades. Looking ahead, despite our size and scale today, our growth potential is greater than it has ever been. Our investment discipline, operating expertise and access to large-scale capital positions us to deliver another strong phase of growth for shareholders in years to come. As always, thank you for your support. We appreciate your continued interest in Brookfield and over to Nick. Nicholas Goodman: Thank you, Bruce, and good morning, everyone. We delivered strong financial results for the quarter, supported by continued momentum across our core businesses. Distributable Earnings, or DE, before realizations were $1.3 billion for the quarter or $0.56 per share and $5.4 billion over the last 12 months or $2.27 per share, representing an 18% increase over the prior year period. Total DE, including realizations was $1.5 billion or $0.63 per share for the quarter and $6 billion or $2.54 per share over the last 12 months with total net income of $1.7 billion over the same period. Starting with our operating performance, each of our businesses continues to perform well. Our Asset Management business generated distributable earnings of $687 million or $0.29 per share in the quarter and $2.7 billion or $1.14 per share over the last 12 months. Strong fundraising momentum led to $30 billion of inflows during the quarter and included over $6 billion from our retail and wealth clients. Fee-related earnings increased by 17% to a record $754 million as fee-bearing capital grew to $581 billion. During the quarter, we held the final institutional close of our second vintage flagship global transition strategy with total commitments of $20 billion exceeding our target and marking the largest private fund globally dedicated to energy transition. We also launched our seventh vintage flagship private equity fund focused on essential services and industrial businesses and are preparing to launch our inaugural AI infrastructure fund, which together will drive strong fundraising momentum going into 2026. Finally, jointly with Brookfield Asset Management, we announced the acquisition of the remaining interest in Oaktree, of which $1.4 billion will be funded by the corporation. The transaction expands our ownership in Oaktree's carried interest fee-related earnings and balance sheet investments and further strengthens our global credit platform. Transaction is expected to close in the first half of 2026, subject to customary closing conditions and regulatory approvals. Turning to our Wealth Solutions business. We delivered another quarter of strong growth with distributable earnings of $420 million or $0.18 per share in the quarter and $1.7 billion or $0.70 per share over the last 12 months. This represents organic growth of over 15% year-over-year, supported by strong investment performance, robust underwriting across property and casualty lines and disciplined capital deployment. During the quarter, we originated $5 billion of retail and institutional annuities, bringing our total insurance assets to $139 billion. Importantly, we continue to focus on raising long-duration liabilities with approximately 80% of new retail annuities written during the quarter, having durations of 5 years or longer. Our investment portfolio generated an average yield of 5.7%, contributing to spread related earnings that were 1.7% above our average cost of funds. As we continue to reposition the portfolio into higher-yielding real asset investments sourced within Brookfield, we are well positioned to sustain strong spread-related earnings. During the quarter, we deployed $4 billion into Brookfield managed strategies at an average net yield of 9%, which helped support a 15% return on equity, consistent with our long-term target. We also made meaningful progress internationally, expanding across the fast-growing retirement markets in the U.K. and Japan. In the U.K., we received shareholder approval for the acquisition of Just Group, which remains on track to close in the first half of 2026 subject to customary closing conditions and regulatory approvals. Upon closing, our insurance assets are expected to grow by approximately $40 billion to $180 billion. In Japan, we announced our first reinsurance agreement in the region with a leading Japanese insurance company to reinsure annuity policies on a full basis. These initiatives strengthen our position in key international markets and position us to capture the growing global demand for retirement solutions. Our operating businesses continue to deliver growing and resilient cash flows generating distributable earnings of $336 million or $0.15 per share in the quarter and $1.7 billion or $0.72 per share over the last 12 months. These results underscore the strength of our operating performance and the continued momentum across each of the businesses. Our infrastructure and renewable power and transition businesses remain at the forefront of secular trends, reshaping global investment opportunities. Recently, we announced new initiatives to advance next-generation power and AI infrastructure including our partnership with the U.S. government through Westinghouse to deliver $80 billion of new nuclear plants in the United States. In our publicly listed private equity business, we announced plans to simplify its structure into a single listed corporate entity aimed at broadening the investor base and improving trading liquidity. Our real estate business continues to perform well, supported by improving market conditions and strong fundamentals. Leasing activity remains concentrated in high-quality, well-located assets, driving strong operating performance across the portfolio. Our Supercore portfolio continues to outperform with 96% occupancy at the end of the quarter and our Core Plus portfolio, which shares similar high-quality characteristics ended the quarter with 95% occupancy. During the quarter, we signed 3 million square feet of office leases with rents on newly signed leases averaging 15% above those expiring. Notably, at Canary Wharf, leasing activity remains very strong with over 450,000 square feet leased year-to-date putting 2025 on track to be its best leasing year in the past decade. The leasing pipeline is also the strongest it has been in years, underscoring the depth of demand for high-quality space and Canary Wharf positioned as 1 of the world's leading business destinations. Turning to monetizations. Market conditions remain highly favorable for high-quality assets and businesses like the ones we own. To date this year, we have had $75 billion of monetizations across our franchise including $22 billion of real estate assets, $14 billion of infrastructure assets, nearly $11 billion of renewable assets, $7 billion from private equity and $21 billion from credit and other diversified assets. Two recent highlights to note are as follows. In our infrastructure business, we completed the IPO of Rockpoint Gas Storage, one of the largest independent natural gas storage operators in North America. The offering was well received and oversubscribed raising CAD 810 million, the largest IPO on the Toronto Stock Exchange since May 2022. Following the IPO, we have now realized a multiple of capital over 3x for retaining significant ownership interest in the business. And in our real estate business, we advanced the sale of the remaining assets in our U.S. manufactured housing portfolio for $2.5 billion, resulting in a total investment IRR of 25% and a 3.5 multiple on invested capital. Substantially all sales completed this year were at or above carrying values and have crystallized significant value for our clients at attractive returns. Through these monetizations, we realized $154 million of carried interest into income during this quarter. Importantly, because our earnings recognition follows European water for model where carried interest is recognized only after we have returned to funds invest the capital and achieved the preferred return. A number of the realizations have advanced our mature funds closer to that carried interest realization. Shifting to capital allocation. During the quarter, we reinvested excess cash flow back into the business and returned to the $180 million to shareholders through regular dividends and share buybacks. To date this year, we have repurchased over $950 million of shares in the open market at a roughly 50% discount to our view of intrinsic value. Moving on to our balance sheet and liquidity. We continue to maintain a conservatively capitalized balance sheet and high levels of liquidity with record deployable capital of $178 billion at the end of the quarter. We also maintained strong access to the capital markets, executing $140 billion of financing so far this year, including the issuance of $650 million of 10-year senior notes at the corporation during the quarter. Other notable financings include the successful refinancing of a $1.9 billion 5-year loan at a luxury resort in the Bahamas and 2 5-year CMBS issuances at New York trophy office buildings each over $1.25 billion, reinforcing the capital continues to flow to high-quality assets at attractive returns. Bringing it all together, our financial results continue to be very strong, and we expect continued growth in our results over the remainder of the year and into 2026. I am pleased to confirm that our Board of Directors has declared a quarterly dividend of $0.06 per share, payable at the end of December to shareholders of record at the close of business on December 16, 2025. On a post-split basis, the quarterly dividend is consistent with the previous quarter's dividend. Thank you for your time, and I will now hand the call back to the operator for questions. Operator? Operator: [Operator Instructions] And our first question will come from the line of Michael Cyprys with Morgan Stanley. Michael Cyprys: If we think about the pillars of your success over the years, I think it's been your ability to adapt the business and innovate in recent years. You've added wealth solutions, continue to grow that. But recently, you've made some partnerships around AI, humanoid, partnership with Figure as one example. So I was hoping you could talk about how you see humanoid and AI broadly potentially creating another leg of the stool for Brookfield over time. I remember at your Investor Day, I think, embedded in your 2030 DE guide was about $2.6 billion of DE from capital allocation. Maybe you could help unpack the components there and how you think about other different contributors over time. Nicholas Goodman: Good morning Michael and thanks for the question. I would break the answer into 2 parts. I'd say most of the capital deployment and the focus that we have today is around building the backbone infrastructure to support the build-out of AI. The growing demand, the secular trend of the growth of AI, the need for compute capacity and also the need for the power to drive that and be able to supply the electricity for the compute capacity is where we are investing most of our time in our dollars right now. And we have a very unique position around that, given our capability and our global reach and our operating expertise around renewable energy, nuclear and other energy sources and then our data center and AI fund that we're launching soon. So I'd say that, that offers great growth potential for the franchise, and we're very well positioned to participate in that and are investing in a disciplined way to drive really, really impressive results so far. I'd say the second component and the figure transaction that you talked about. Brookfield Corporation, what we're doing is looking to stay ahead of the curve and deploy capital for the benefit of the rest of the organization and for the benefit of our operations. And what we see with the developments in AI in humanoid robotics, we believe that over time, will have a material impact on the way that businesses are run an even broader society. And so I think this is about investing as a defensive investment and an opportunity to make money, but to really learn and be at the forefront for the benefit of the broader organization and we would look to do that, I'd say, over time, we'd look to do that selectively as we see good opportunities to do so. So I don't think of this as necessarily the next leg. I think it's a force and a trend that's driving broad growth across the organization, and we're well positioned to participate in it. Michael Cyprys: Okay. And then just a follow-up question on Wealth Solutions. So you signed the first reinsurance agreement in Japan expanding your global footprint. I was hoping you could talk about that arrangement? How you see that contributing. What's the scope for others in Japan as well as elsewhere around the world. Maybe you could just update us on your global ambitions. Clearly, you have that transaction underway in the U.K. . Nicholas Goodman: Yes. Thanks. My guess, as you mentioned, we made the transaction -- well, we've agreed the transaction in the U.K., and we're working towards closing that transaction in the early part of next year. That's a significant step for us, scaling PRT and giving us access to a long-duration local of low-risk liability -- sorry, long duration pool of low-risk liabilities. And so we're excited to close that. That really sets us up well in the U.K. market. And we identified Asia and Japan as the next market that we look to grow into and doing that in partnership with local players. This reinsurance, it's a flow agreement. So it's really a transaction that will build over time, month-to-month, quarter-to-quarter as we participate in the business that they're writing. So it has the potential to scale and then it also has -- we also have the potential to partner with other local players. So very much about continued growth in both markets. And those are the 2 markets we're predominantly focused on outside of North America today. Operator: One moment for our next question. And that will come from the line of Mario Saric with Scotiabank. . Mario Saric: Coming back to the Wealth Solutions business, Nick, I was wondering how long do you think it may take to get to your approximate 200 basis point target net investment yield spread? And then secondly, how should we think about the evolution of gross versus net insurance lows? I think in this quarter, it was -- the net was about 40% of growth. So just curious on what your thoughts are on those 2 items. Nicholas Goodman: Yes. I mean, listen, the 200 basis points is a long-term -- medium- to long-term target. So it will take time to grow into it. And as you know, as cash comes in, we're very disciplined on the deployment. And we're looking at a sort of barbell approach on deployment sitting in significant short-term liquidity and balancing that with investment into real assets or in credit and equity. So it just takes time for the deployment. But as we work through the plan, we do expect that spread to start to broaden out and work towards it. Importantly, we think about ROE, Mario, as opposed to just spread and the return on equity that we're generating and the capital is compounding at 15% plus, and that is in line with our long-term targets. We're very happy with the performance there. On the gross to net flows, it should stabilize out to about 1/3 outflows versus inflows in a quarter as we move forward. . Mario Saric: Got it. Okay. And then my follow-up, just with respect to the recently announced Oaktree acquisition, has the composition of the $3 billion purchase price between BAM BN shares and cash. Has that been settled? And how do you see the transaction impacting the velocity of BN share repurchases going forward, if at all? Nicholas Goodman: So yes, Mario, we do have the elections finalized. And the end result, what I'd say roughly was $250 million of BN shares elected. The balance will be in cash and almost 100% of the BAM consideration will be in cash. And it will have zero impact on our buyback. We will buy back the 250 million of shares that we issue, but it won't have impact on our broader buyback strategy. . Operator: One moment for our next question, and that will come from the line of Alex Blostein with Goldman Sacs. . Alexander Blostein: Just maybe zoning back to trajectory of the insurance business, so really good growth. So the sales are coming through nicely. On the spread, though, and I hear your comment around the ROE. But the spread, I think in annuities was 165 basis points this quarter. So maybe help us think through kind of the near-term dynamics over the last maybe 12 to 24 months on the trajectory of that spread as you kind of start to earn your way back towards the targets. Nicholas Goodman: Yes. So first of all Alex, welcome to the call. I know it's your first one. It's great to have you. I'd just say that the spread is right 165, and it's really because we're being disciplined in deployment. And you know the way we think about the business. We run it for the long term. And so we're being patient in the deployment. We are sourcing very attractive real asset investment opportunities in the credit and equity side, as I just said, and so as we look forward, we do expect it to work its way back up, but we're not running, as you know, the business quarter-to-quarter. We're running it long term. So we're going to be patient and wait for the right investment opportunities. And as they come in, you'll start to see that spread widen out. But again, what it all comes back to is the ROE. And so we're happy with the performance. . Alexander Blostein: Got you. And then for my follow-up, we will just maybe stay with insurance. Can you spend a couple of minutes maybe on how you're progressing towards closing the Just acquisition? I know there's probably a lot of limitations to what you could say publicly. But as you were to sort of frame the spread-related earnings contribution and then strategically, how you think this could accelerate growth of your presence outside the U.S. and PRT markets in U.K. and Europe broadly, which would be helpful to understand what this deal could mean financially for the business over kind of medium term. Nicholas Goodman: So I do apologize because we are limited in what we can say, and we haven't really talked to date about what the pro forma looks like as we work our way through the regulatory approvals. I would just tell you that we're working through it. We have the shareholder vote. We're working with the regulator. As you know, we previously were licensed under Bluemont in the U.K., so we have a good relationship with PRI, but we're working through that process. . I'd say that Just has got a good track record of issuing PRT on a consistent basis in the U.K., I think in the year before we acquired them about GBP 5 billion of origination. So we would expect to hopefully be able to continue that and scale it with our capital -- but as for performers, it will have to wait until we're further along in the process. Operator: One moment for our next question. And that will come from the line of Cherilyn Radbourne with TD Cowen. Cherilyn Radbourne: Ever since the framework agreement to build new nuclear capacity in the U.S. was announced. The biggest question we've been getting from clients is -- to the extent that Brookfield alongside LPs will invest capital in nuclear project development, what kind of downside protection would you be seeking -- and is that investment likely to occur in a discrete nuclear strategy or in the DGTF strategy? . Nicholas Goodman: Cherilyn, thanks for the question. So I'd say, first of all, I'd say that it's out it's been bought within Westinghouse. So the transaction that is being done is being done between Westinghouse and the U.S. government and the U.S. government is buying as the equity investor, $80 billion of nuclear facilities. Our role within that is to help deliver the facilities and then provide, as you know, the services that we provide, which is the fuel rods, the fuel and then the servicing of the facilities going forward. So the end result will look very much like the Westinghouse business that we have today, which is to service and provide the fuel to the nuclear reactors, and it's really scaling Westinghouse as a global nuclear champion, but it will be done through Westinghouse which is owned by BGTF 1. Cherilyn Radbourne: And maybe just extending that to the plans that are being evaluated in South Carolina, maybe you can elaborate on how that might be structured? Nicholas Goodman: Yes. So again, we're in a process there, and it's very early days. But what I can tell you is, as we think about the growth in the space, we are focused on downside protection. So anything that we would do in the space where we're looking to get involved in either bringing Westinghouse services or Brookfield Capital and would be structured in a way to provide strong downside protection. . Operator: One moment for our next question, and that will come from the line of Kenneth Worthington with JPMorgan. . Kenneth Worthington: You've talked in the past about 2025 being a transition year for carry. You've talked about the improved outlook going through 2030. Given what continues to be -- continues to look like a better M&A environment and a better realization environment with better valuations. Can you talk about how carry generation is shaping up for 2026 -- and then maybe wrapping the follow-up in the same question. As we think about realizations, how are -- how is the outlook developing for realization on balance sheet versus realization in the Brookfield funds as you think about the intermediate term outlook, I guess, I'll be vague like that. Nicholas Goodman: Thanks, Ken. So I'll just say that the outlook for carry hasn't changed. So this year, as we said, would be a bit of a bridge year and it's played out in that direction, largely consistent with last year. And with the monetizations that we have in the pipeline, either those that are progressed or that we plan on launching and through the end of this year or into the early part of next year, therefore, which should close in 2026. We do still see the potential for a step up in carried interest in 2026. So that is still continuing to step up in 2026 and then again into '27 and a strong year in '28. So that's the outlook, the expectation of what we can achieve in the next 3 years really hasn't changed from what we presented at Investor Day and we're still optimistic and we still believe that it is a very healthy transaction market and the strong capital markets is supporting that activity. As it relates to the split between the balance sheet and what's being done in the funds. As you know, we operate completely independently of each other. So we continue to advance the monetizations in the fund. It's a globally diversified portfolio of many assets in many geographies, so it has the ability to be a bit nimble around where assets are ready to trade and where the capital is there and the appetite is strong. On the balance sheet, we're talking about the office and retail assets in the U.S., and I can tell you that the capital markets are stronger now even than when we had our last call when we talked about the strength of the markets. We had very successful financings in the quarter at spreads and all-in rates we couldn't have achieved even a month ago, and that all lends itself very favorably towards increasing transaction activity. We've been able to dispose of a few smaller assets, which don't make a dent in the numbers, but they do show that appetite for acquisition activity is returning. So as that picks up, we expect to see continued activity into next year. Operator: One moment for our next question. And that will come from the line of Bart Dziarski with RBC Capital Markets. Bart Dziarski: Just wanted to ask on real estate. So within the LP, the NOI really ticked up this quarter. So $465 million versus, I think, last year is about $80 million. So apologies if I missed this in the prepared remarks, but anything to call out there in terms of the drivers of that step up? Nicholas Goodman: Hi, Bart. Yes. So listen, the performance of the LP portfolio is the running returns that we earn plus it's the disposition gains that we earned. So during the quarter, we benefited from disposition gains from monetization and that's what's driving the increase, sorry, in the FFO during the quarter. . Bart Dziarski: Okay. Got it. And then just a follow-up on carry. With regards to target carry framework that you have, could you help us kind of understand if there's a pickup that will -- like will the target carry increase once your Oaktree pickup deal closes? And if so, maybe a rough frame as to how much that could increase. Nicholas Goodman: So we will own more of Oaktree target carries represents the kind of the annualized carry that's compounding for us. On the carry eligible capital that we manage. So yes, when we do acquire Atrium, we have more carry eligible capital, it will pick up, but it won't be material. It won't be a significant adjustment to the numbers that we have today. Operator: One moment for our next question. And that will come from the line of Sohrab Movahedi with BMO . Sohrab Movahedi: Okay. I just wanted to go back to the earlier remarks about broadly speaking, the 3 types of economic environments that could play out. I think Bruce was talking to that. And I understand the implications of those from an investing perspective. Is any one environment of those three better than the others from a fundraising perspective? Nicholas Goodman: Listen, I think, Sohrab, we've been through a pre severe cycle in just the last 5 years, and we've experienced a few environments in a very short period of time. And I think through all of that, demand for alternatives has stayed strong. And I mean specifically real asset alternatives and essential service investing. So I think as it plays out -- the ones that we framed for you should still attract strong demand from the clients into the assets that we have, they've proven their durability the founder place in investment portfolios and investors now appreciate and like the characteristics of the income and the returns that they generate. And so I think that irrespective of where we end up demand for real assets will stay strong. Sohrab Movahedi: Okay. I appreciate that. I just wanted to see if there's a likelihood in a scenario, some of the targets that would have been discussed, let's say, at the Investor Day could actually get upgraded. Nicholas Goodman: Sure. I mean, listen, if you go into the environment of sort of lower nominal yields then I do think real assets have the potential maybe to become even more attractive in that scenario. So maybe it could be an upside. But not to the extent that we've changed our plans today, we continue to drive the business and think that the growth outlook is incredibly strong already. . Operator: And one moment for our next question. That will come from the line of Dean Wilkinson with CIBC World Markets. Dean Wilkinson: Nick, I guess, when you look at growth of the business over time, do you hit a point where you start to worry about the law of large numbers? I mean the ability for you to put out capital is seeming to exceed the rapid rate that you're growing, BN and BAM and everything together, is there a point where that sort of flattens out? Or do you think that those opportunity sets are going to continue to grow quicker than you can actually grow the underlying business? . Nicholas Goodman: I think it's exactly that. When we look today at the trends going on in the market and the amount of capital that is needed to deliver in the areas of the infrastructure renewable power we see that being a significant growth. And I think today, the scale of the opportunities are significant. I say the quality of the opportunities are probably the best we've ever seen. And so the ability to earn returns while deploying large amounts of capital is a great place to be, and I don't think we foresee in the short term any shortage of opportunities to deploy and probably even in the medium and long term. Operator: One moment for our next question. And that will come from the line of Jaeme Gloyn with National Bank. Jaeme Gloyn: Thanks, and sorry, I jumped on late, so I apologize if this was addressed. But in the Wealth Solutions business, just looking at the annuities distributable earnings from annuities stepped down a little bit quarter-over-quarter, year-over-year. hoping you can kind of talk through a little bit of the moving parts there. and as well as the -- looks like a 10 basis point step down in the yield on investments in that portfolio. Nicholas Goodman: Yes. I would say there's nothing significant. The year-over-year performance. We continue to drive strong earnings. We may have had some one-off small movements in the portfolio of the earnings, but nothing significant. The portfolio continues to perform incredibly well. The drop-down in the spread, which we touched on briefly earlier, is really just a product of capital coming in inflows coming really being parked in cash until we invest them. And the point I made earlier was that we're being very patient and waiting for the right real asset investment opportunities and getting the right time to put the capital to work and it will come. And as we put that capital to work, you'll start to see the spread increase again back towards long-term targets. Operator: That is all the time we have for question and answers today. I would now like to turn the call over to Ms. Katie Battaglia for closing remarks. . Katie Battaglia: Thank you, everybody, for joining us today. And with that, we'll end the call. . Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, everyone, and welcome to Geodrill's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, November 13, 2025. Before we begin, certain statements made on today's call by management may be forward-looking in nature and, as such, are subject to various risks and uncertainties. Please refer to the company's press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill. Please go ahead. David Harper: Thank you, operator, and good morning, everyone. Welcome to Geodrill's Q3 conference call. Joining me on today's call is Greg Borsk, our CFO. I'll begin. Fiscal 2025 is playing out to be a year of 2 halves. Our first half was evidently solid. Quarter 3 2025 reflects the complex realities of strategic expansion. While our financial results show short-term cost absorption, they also highlight the strength of our long-term vision. We are executing a deliberate strategy to build a resilient geographically diversified platform capable of delivering consistent performance across seasonal and regional cycles. South America presents challenges but also opportunity. It is a market that demands upfront investment, operational discipline and patience. We have doubled our rig count in the region, supporting major multiphase drilling contracts. This expansion is not just about growth. It's about positioning Geodrill where we see long-term value. Geodrill has always operated where there is opportunity and risk. This is how the company started 25 years ago with risk comes reward. The higher the risk, the higher the reward. We don't chase crowded competitive markets, we never have. We go where opportunity lies. One of our key advantages is our proximity to operations. We live and work close to our drill rig fleet, boots on the ground. I live in West Africa, and we have now established hubs in South America and in Egypt that are treated with the same level of commitment. Despite these headwinds, we remain focused. Our platform in Chile is growing. Our West African operations continue to show strong post wet season demand. Surface drill programs in Egypt are restarting and our multiyear multi-rig contracts provide a solid foundation for sustained performance. We have achieved 7.8 million man hours LTI free, our bidding pipeline is highly active. Commodity prices remain favorable, and our team continues to deliver with discipline and resilience. I'll now turn the call over to our CFO, who will review our financial performance in detail. Gregory Borsk: Thank you, Dave. As Dave mentioned, in Q3, we faced significant headwinds. However, we still delivered revenue of $39 million, an increase of $4.9 million or 14% when compared to $34.1 million for Q3 2024. The increase in revenue was a result of the company's strategy to diversify its operations to South America, and to operate in a geographic region that is not impacted by wet season. The increase in revenue was predominantly the result of an increase in revenue in South America of $5.8 million partially offset by a decrease in revenue in West Africa and Egypt. The gross profit for Q3 2025 was $2.4 million being 6% of revenue compared to a gross profit of $8.4 million being 24% of revenue for Q3 2024. The decline in the gross profit margin this quarter can be summarized regionally as follows: West Africa contributed to 66% of the decline. The decline in the region was driven by wet season -- the wet season slowdown, the drilling mix, wage inflation and the Ghana cedi appreciation. We expect improvements in Q4 in Ghana, Cote d'Ivoire and steady performance in Senegal. Egypt contributed to 17% of the gross profit decline. This was due to lower revenue and lower drilling activity. Q4 recovery is expected from restarting surface drill programs in Egypt. Lastly, South America contributed to 17% of the decline. Rapid rig expansion in the region led to upfront costs and operational delays, especially in Chile. Q4 improvements are expected with stabilized operations and new job starts. EBITDA was $4.3 million or 11% of revenue compared to $7.6 million or 22% of revenue for Q3 2024. We reported a net loss for Q3 2025 of $1.5 million or a loss of $0.03 per share compared to net income of $2.6 million for Q3 2024. EBITDA and net loss were favorably impacted by the expected lifetime credit recovery of $100,000, a foreign exchange gain of $800,000 and the $1.8 million gain on equity investments. Despite operational challenges this quarter, our year-to-date performance reflects the underlying strength and resilience of our business. Over the first 9 months, we have delivered solid financial results, maintain financial discipline and reinforce our strategic positioning for long-term growth. We ended the quarter with shareholders' equity of $129 million, including net cash of $11.1 million. We remain confident in our ability to navigate the expansion in South America, leveraging our core capabilities and disciplined execution to optimize margins and capital efficiency. At this point, I will turn the call back to Dave. David Harper: Thank you, Greg. So let me jump straight to it. The drilling market is strong, and we are positioned to outperform. The global mining drilling sector is entering a multiyear expansion recycle driven by a number of factors. For example, rising commodity demand, governments doubling down on strategic resource security, and increased capital deployment across exploration and development drilling. This is translating into real activity on the ground, and Geodrill is uniquely positioned to capture outsized value through its disciplined execution, operational leverage and strategic footprint. At Geodrill, we don't chase volume for volume's sake. We focus on disciplined growth, margin integrity and operational excellence. That is what drives shareholder value. So in closing, to recap, here's what sets us apart. Global rig utilization is climbing, and Geodrill's is the highest in the industry. Our rigs are working. Our teams are delivering and our clients are extending contracts. This is not a theory. This is happening real time. It's on the ground. Our margins will return. We are seeing pricing power across key markets. And as we work through operational challenges in South America, we remain confident in our ability to deliver the improved returns we have achieved in prior cycles. Our balance sheet is clean. We are not overleveraged and we are not overextended. We have the flexibility to grow and the discipline to protect returns. And finally, our work pipeline is real. We have contracts in hand, mobilizations are done and new tenders are in advanced stages. We are building a geographically diversified operationally resilient business, and from here, it's head down execution, eyes on the prize, and we are confident in the path ahead. This concludes our prepared remarks. Q&A session, over to the operator. Thank you very much. Operator: [Operator Instructions] Your first question comes from Donangelo Volpe with Beacon Securities. Donangelo Volpe: Just looking for some clarification on the gross margin shortfall with the focus on Africa and South America. So I guess related to Africa, like was there an earlier shutdown and kind of later resumption of activity in the wet season? Or is like most of the impact through the currency appreciation of the cedi? Gregory Borsk: Donnie, it's Greg. Yes, it was actually -- it was a combination of really 3 items there. We had the wet season, so the slowdown impacted us in the 3 countries in West Africa. It hit us in Ghana. It hit us in Cote d'Ivoire and also Senegal. So you had lower drilling activity. And then we also had 2 other items that contributed to that. We had significantly higher salaries in West Africa. There's a salary increases that we put in at the start of the year. So on a quarter-over-quarter basis, they're really amplified in Q3 2025. So that led to a part of the gross margin decline. And then lastly, in West Africa, the cedi appreciated considerably. Q3 2024, the cedi was about 15, 16:1. And what we experienced in Q3 this year was about an 11 to 12:1 cedi. So it's a significant increase when we convert the cedi to U.S. dollars for reporting significant increase in our salary. So that's the West Africa. In South America, the gross margin, we had a negative gross margin and we're just significantly ramping up operations in South America, and I made a note on that in the revenue. And what's happening when you're ramping up as quickly as we are with significant jobs and significant rigs on the continent -- it's the costs are well ahead of the revenue. So we're -- we hope to catch that up in Q4. And also, we just didn't get the drill time that we needed in Q3. So that kind of explains West Africa and South America. Donangelo Volpe: Okay. I appreciate the color there. Just a follow-up on South America. I was going through the MD&A, and I kind of saw it was -- there were onboarding delays, coupled with operational issues. I'm just kind of curious on what some of those operational issues were. Was it trying to ramp up the new employees that were brought on, like were there any delays coming from the customer themselves? Like can you just provide any more color on what was happening there? And if we're expecting -- if we're kind of expecting a drag on gross margins to persist out of South America as you guys are starting new projects? David Harper: It's Dave, Donnie. Yes. Look, it was basically onboarding. The solid ramp-up, we went in quarter 3 last year, we've generated about $2 million in revenue. This time, it was significantly higher. So we've doubled the rig fleet and basically, what happens with all of that is the training and the preparation before going to a Tier 1 mining site. It begins about 2 or 3 months before you actually arrive at site. And so we had a solid -- there's one rig would come -- go out into the field, another one would come in and we'd have to go through the cycle again. So it was basically just onboarding. There is light at the end of the tunnel, I should add, and that is that the rigs are actually now in the field, and they are drilling, and they're producing. And so we're expecting a pretty solid turnaround from South America in quarter 4. So it was a tough quarter. But we're confident that the hard yards are done, all of the costs are prefinanced and upfront and revenue is the laggard. And so the rigs are in the field. They're turning, they're earning and the heavy upfront costs are pretty much absorbed now. So from here, it's -- it should be a bit of a turnaround story for sure. Gregory Borsk: Yes. Donnie, one other thing just on South America, our high-altitude job, we didn't -- we only got about 2 weeks of drilling in Q3, call it, the second half of September. But that's going to be fully operational through Q4 for us through October, November, December. And then also in South America, we have another job starting, which started for us in October. So you'll see that in Q4. So we're expecting significant revenue increase in Q4 in South America. Donangelo Volpe: Okay. But just size of that new project being started, are we expecting like similar start-up costs that we saw related to Q3? Or we would anticipate a little bit of improvement on that front? Gregory Borsk: No, yes. Sorry, we had that a bit in Q3. We did get started, but only for about 2 weeks, second half of September. So we were fully ramped up by the start of Q4. David Harper: The pain side of the price is essentially out of the way. And from here, it's the gain that follows the pain. So we'll see improvement in quarter 4 for sure. But we've had a significant increase in activity levels in South America, and all of that was essentially prefinanced throughout -- some of it was quarter 2, but the majority of it is quarter 3. Operator: [Operator Instructions] Your next comes from Vitaly Kononov with Freedom Broker. Vitaly Kononov: I have a question related to the gross margins that we just discussed. So yes, I could hear the reasons for the gross margin decrease. However, in the notes to the financial statements, also come across the drill rig expense and the contractor services that were up nearly 30% and 60% year-on-year. Could you please give us a little comment on that? What goes into those line items? Gregory Borsk: Yes. So what happens in the -- the major components of our cost of goods sold are salaries and wages. And if you look at that, our salaries and wages increased significantly. Typically, when we're having our normal gross margin, we're able to recover those salary and wages through drilling performance. And in Q3, with the start-up in South America, we didn't get the drilling performance to cover that, okay? So -- and that's due to the rapid ramp-up. Also, I think you mentioned the drill rig expenses. Again, certain of those drill rig expenses are related to operations. And if we're not getting the -- they're fixed, they're rentals, they're consumables, et cetera, and we just didn't get the revenue in the quarter in South America to capture those. Vitaly Kononov: All right. If I could hear you correctly, you mentioned that in South America drills -- the drill rigs were only in use for 2 weeks. So can you give me a little approximation that... Gregory Borsk: No, no, sorry. No, that -- no. So that's -- what we communicated was -- in South America, we have a high altitude job that is seasonal. So it didn't -- it only drilled in South America. We were only able to restart that job later in September. So that one job was only operational for 2 weeks in the quarter. We had other jobs in South America that operated throughout the quarter. And that's how we effectively -- if you look in the MD&A, we disclosed the revenue from South America. The revenue in the quarter was approximately $6 million. I think it was about $5.8 million from South America. Vitaly Kononov: Great. So since we're on the topic of South America, can you give a number estimate that you might have internally for the 19 rigs that are in use at the moment? How many are actually on site? Do you have a utilization rate that we could apply in our model? David Harper: This is specifically for South America or specifically -- or sorry, for the group? Vitaly Kononov: Well, since South America is expanding at the moment, I'm more curious about it, but you can answer to both regions. David Harper: So in terms of utilization in South America, utilization is 75%. Vitaly Kononov: Okay. Great. And so are you moving operations from Peru to Chile? What are the reasons? Do you have a real backlog of orders coming from Chile, that so? David Harper: All our focus at the moment in South America is Chile. We are 100% focused on Chile. We had one rig operating in the quarter in Peru. We will now have decided to focus on the Chile market. We'll actually be actually winding down the operations in Peru for now so that we can focus on our pipeline of work in Chile. Operator: There are no further questions at this time. I will now turn the call over to Dave Harper for closing remarks. One moment please, there is another question from John Sartz with Viking Capital. John Sartz: I noticed that despite the less than stellar results, you still like can't avoid building cash positions. So I'm wondering if there -- what plans you might have and suggestion on my part would be perhaps you might, a, reintroduce your dividend or b, buy your shares back. Gregory Borsk: Yes. The -- thanks, John. Thanks for the question. Yes, I think you did notice we did have -- the balance sheet, our balance sheet is extremely strong. If you look at -- we ended the quarter, we actually increased cash. Net cash at the end of the quarter was $11.1 million. So we're very happy with our total shareholders' equity. We have $129 million in shareholders' equity ended the quarter with net cash of $11.1 million. So we're extremely happy with the increase in net cash. And we'll look at -- we'll revisit the dividend. We'll look at a dividend when we return to profitability. John Sartz: What about share buybacks? Gregory Borsk: Share buybacks, and we look at in conjunction with the price of the share. And our share buyback, or NCIB is in there to use it as a floor. So we'll monitor the price of the stock throughout the quarter, November, December. And if we need to get in and put the -- in place, we will. But again, that's more of just to put in a floor for the stock price. But -- so it's hard to say, but we'll look at how the stock performs over Q4 and into Q1. Operator: Your next question comes from Donangelo Volpe with Beacon Securities. Donangelo Volpe: Just a quick follow-up. Just looking for some quick facts here. Q3 utilization -- or yes, the utilization rates on a regional breakdown would be appreciated. And then on a consolidated basis, the commodity mix for the quarter, given the improved activity in South America. David Harper: So utilization currently is approaching -- it's north of 70%. It was 72% a couple of days ago, and it continues to trend north. We're getting back to basically utilization that we saw in quarter 1 and quarter 2. So north of 70% kind of hovering around 72% at the moment, we think will probably trend to about 75% as we go through November. And then traditionally, what happens is we have a solid first half of December, and then we slow down for the Christmas shutdown. And that pretty much goes through to about the first or second week of January. So if we look at it on a semester basis between quarter 4 and quarter 1 through that sort of growth period, if you will, coming off a low base is the things get really solid and continue through quarter 1 and quarter 2, but we do get this culling out of the -- in the trajectory, if you will. And if you look at the history of the company, this has pretty much been the norm since -- I mean, every year is pretty much the same. We do our best work in quarter 1 and quarter 2, then come quarter 3, which is essentially the quarter we've just come through, we just reported, that's the quarter that we see as the consolidation quarter. It's the quarter in which we literally so for what we harvest through quarter 4, quarter 1 and quarter 2. Now we begin that -- we're actually seeing that harvest begin just now. It will -- we do get an interruption during the second half of December and the first half of January and it normally flows into a very solid quarter 1, which is usually followed by a very solid quarter 2. So does that answer your question? 70% -- north of 70% at the moment, probably going to trend to about 75%. And I think once we hit our straps in quarter 1, quarter 2 next year, we'll be basically possibly north of 80% last quarter 1, quarter 2, there were times there where we hit 81%, 82%, 83%. I hope that answers your question, Donnie. Donangelo Volpe: Yes, that answers the first part of it. The second part was on the commodity mix for the quarter and how that compares to last year. I would assume a little bit more copper exposure. David Harper: Yes. So looking at it of the, call it, more or less 100 rigs. I think the rig count we closed the quarter was 98 rigs. We have 20-odd rigs in South America, of which about 15 are currently drilling. So it's kind of -- it's trending north and it's moving from what was about 15% of our business to -- I expect it's going to probably end the year somewhere around 20% of our business. 80-20, gold, copper, nothing else at the moment, not drilling or anything else, just gold and copper with an approximate split of about 80-20, I would say, in around -- in high-level terms. Operator: There are no further questions at this time. I will now turn the call over to Dave Harper, CEO, for closing remarks. David Harper: And I'll just say thank you very much, everyone, for attending the call today, and thank you very much, operator. I'll say goodbye. Gregory Borsk: Thank you. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Thank you for standing by. This is the conference operator. Welcome to Westwater Resources, Inc. Third Quarter 2025 Business Update Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Stephen Cates, Chief Financial Officer. Thank you, and over to you. Steven Cates: Thank you, moderator, and good morning, everyone. Thank you for joining us for today's business update. I'm joined by Terence Cryan, our Executive Chairman; and Frank Bakker, our Chief Executive Officer. We appreciate your time and continued interest in Westwater. Before we get started, I'd like to let you know that we filed our Q3 results with the SEC yesterday. Investors are welcome to visit our website or the SEC's EDGAR database for more detailed information. Additionally, I want to remind everyone that today's discussion will include forward-looking statements. These statements reflect management's current expectations regarding various factors, such as projected demand and pricing for natural graphite, expected time lines and costs related to the Kellyton Graphite Plant and Coosa deposit as well as capital raising activities. As always, these statements are subject to certain risks and uncertainties, which are detailed in our annual report on Form 10-K for the year ended December 31, 2024, along with other SEC filings. Please also see the cautionary statement included in our November 7 press release. Actual results may differ materially from those expressed or implied in today's remarks. With that, I'll pass it over to our Executive Chairman, Terence Cryan, to provide opening remarks. Terence Cryan: Thanks, Steve, and thanks to everyone joining us today. It's been an eventful few weeks since quarter close, so I wanted to share some thoughts and provide an update on where we stand. Last week, Fiat Chrysler Automotive, a division of Stellantis, unexpectedly terminated its offtake agreement with us. This was 1 of 3 offtake agreements we had in place that underpinned our debt project financing. As many of you know, we have 2 other offtake agreements with SK On, and Hiller Carbon that remain in effect. And as Frank will share shortly in detail, we're providing large samples for these and other potential customers from our qualification line. Stellantis withdrawal from the offtake agreement has paused our debt syndication process, which was reliant on that offtake support. We haven't lost sight of our end goal, commercial production and revenue from Kellyton. We've invested approximately $125 million so far in developing Kellyton Phase 1 into one of the most advanced facilities for producing battery-grade natural graphite in the U.S. Our focus now is to optimize Kellyton's ramp-up by aligning capacity more precisely with our existing offtake commitments. This strategic adjustment will likely allow us to reduce the capital required to reach full commercial production and make our project more resilient, leaner and better positioned for the current environment. We expect to complete this review and finalize our updated strategy and communicate our plans early next year. We're still in the infancy of the U.S. battery materials market, and Westwater is at the forefront, navigating the challenges that come from developing an industry at this early stage. We're focused on developing Kellyton as a proven, reliable supplier of battery-grade graphite, advancing our Coosa deposit permitting and maintaining a strategic presence in this nascent, but high potential market. Our management team is resilient, adaptive and ready to navigate these challenges. The $55 million we raised in the second half of this year provides us with flexibility and additional runway to pursue our objectives. Westwater Resources remains the most advanced U.S.-based developer of battery-grade natural graphite. We control the largest, most advanced natural graphite resource in the continental [indiscernible] United States and have the infrastructure, including a qualification line that can deliver 1 metric ton and larger samples to current and potential customers. The vertically integrated nature of our business provides us with distinct advantages. We're committed to building a sustainable, profitable business, and we're prepared to do what it takes to succeed, adapting quickly and staying laser-focused on our objectives. We very much appreciate your continued support, confidence in our team, and we look forward to sharing more updates on our progress. With that, I'd like to invite our CEO, Frank Bakker, to provide more detail on the upcoming optimization efforts at Kellyton and the significant progress we've made so far. Frank? Frank Bakker: Thanks, Terry. I'm excited to update investors on the strides we are making at Kellyton and how we are strategically adapting to the recent market developments. If I step back for a minute, I'm incredibly proud of how far we have come since we broke ground in mid-2022. From initial construction to now, we are already delivering large sample quantities of battery-grade natural graphite from our qualification line. This is an important milestone, and it is a direct result of the hard work and dedication of our team on the ground. Personally, I spent substantial time in China, partnering closely with our vendors and reviewing the technology used there to ensure that we use proven technology for our plant here in the U.S. That hands-on effort is helping us to optimize every aspect of our process and will significantly reduce the process risk of our plant. A key part of our progress to date has been the development of our qualification line that has been a critical step not only as a springboard towards full commercial production, but also as a way to generate real meaningful samples for our customers. Last quarter, we successfully launched our commercial micronizer and shaping mills, completing full production runs of over 1 metric ton of CSPG for current and prospective customers. We are focused on delivering a quality battery-ready product. We have made improvements to our production capabilities through upgrades to the qualification line, which have resulted in faster cycle times, higher yields and better flow rates. All of this strengthens our confidence in scaling up to Phase 1 and ensures we are well prepared for what's next. As Terry mentioned, we are optimizing the Kellyton Phase 1 ramp-up to align with our existing offtake commitments. While it will take some time to fully assess and implement these changes, our goal is to complete our evaluation by the fourth quarter with updates to follow in early 2026. Importantly, through these optimizations, we aim to reduce capital expenditures and advance towards Phase 1 commercial production as swiftly as possible. Everything we are doing, including upgrading the qualification line, ramping up new mills, refining our process is all about getting ready for full-scale production. Our team is gaining invaluable hands-on experience every day on the qualification line. And with our patented environmentally friendly purification process, securing that U.S. patent last quarter really underscored our leadership in sustainable domestic battery materials. I would also like to highlight the work being done at the Coosa deposit, which remains a key part of our strategic growth plans. Coosa will allow us to vertically integrate our business. We plan to mine the graphite at Coosa and process it at Kellyton. This integrated approach will allow us to control the supply chain, the quality, reduce cost and strengthen our position in the domestic supply chain for battery materials. Right now, we are advancing the permitting process. Our team has been working closely with regulators and stakeholders to navigate the necessary steps for mine development. This is a crucial effort, and we are committed to ensuring that the development of this asset is done responsibly and on schedule. With that, I will hand things over to Steve to dive deeper into the financing side of things. Steve, the floor is yours. Steven Cates: Thanks, Frank. Good morning, everyone. I want to take a few minutes to provide you with an update on where we stand financially and share some of the key steps we're taking to stay agile and positioned for success, especially given recent market developments. Since June 30, we've raised approximately $55 million through our ATM program and a convertible note offering. As of November 5, our cash balance stands at about $53 million, giving us solid runway to continue to work on Kellyton and advance our business. As fellow shareholders, we're mindful of issuing new equity. We carefully weigh the impact of issuing equity against the importance of ensuring adequate liquidity, advancing our key projects and staying ready to move if and when new opportunities arise. The additional liquidity strengthens our balance sheet and gives us the flexibility we need to continue investing in Kellyton, advancing the permitting process at Coosa and pursuing potential government funding that could further support our growth. In terms of potential government funding, you may recall we filed an application with the U.S. Export-Import Bank. The due diligence is ongoing, although it has experienced delays due to the U.S. government shutdown. Nevertheless, we're optimistic about resuming progress soon. We've also engaged advisers to help us identify additional government funding opportunities. One potential avenue is the Department of Energy's Critical Materials innovation initiative, which is focused on advancing technologies to secure, develop and process critical minerals domestically and advance clean energy technologies. As you know, graphite is a key component of EV batteries. It is the most commonly used material for anodes, given its exceptional conductivity and makes up about 50% of the weight of a lithium-ion battery. It is also on the U.S. geological survey list of critical minerals. So this is an area we're actively exploring. In addition, we're evaluating the potential of participating in the FAST-41 program for the Coosa deposit. FAST-41 is an initiative designed to expedite the environmental review and permitting process for large-scale critical infrastructure projects. The goal is to dramatically reduce time lines by providing a more streamlined review process. We're working closely with our advisers to explore and pursue these and other options to support and accelerate our project development efforts. At the end of the day, we're focused on keeping our balance sheet strong, staying disciplined with our spending and continuing to move our projects forward. Every decision we make is about putting the company in the best position to grow and deliver long-term value for our shareholders. With that, I'll turn it back to Frank for closing remarks. Frank Bakker: Thanks, Steve. We have covered a lot of ground today. Looking ahead, our main focus remains on completing the optimization of Phase 1 at Kellyton. At the same time, we are actively engaging with potential new customers for additional offtake opportunities, and we're making progress on the permitting process for the Coosa deposit. As you all know, the U.S. battery materials sector is still in its early stages, and we are proud to be at the forefront of this emerging industry. While challenges exist, we are confident in our ability to adapt and continue moving forward. Our goal is to build a solid foundation for sustainable long-term growth and value creation for our shareholders. We also recognize the importance of listening to our shareholders. Many of you submitted questions in advance of this call, and we plan to address a handful of those questions live shortly. First, I will turn it over to the operator to handle the live questions from the queue, and then we'll pass it to Steve for questions submitted earlier. Operator, over to you. Operator: [Operator Instructions] We have the first question from the line of Heiko Ihle from H.C. Wainwright. Unknown Analyst: This is Keyes. Heiko's Associate just filling in from today. The first question, maybe provide a bit of color as to what you guys are seeing related to permitting at Coosa and namely if there have been any bottlenecks due to the government shutdown? And I guess building on that, maybe any long until things go back to normal now that we have supposedly temporarily resolved this? Steven Cates: Yes, Heiko, this is Steve or Keyes, sorry. I think we mentioned in our pre remarks just about the FAST-41 program and that we want to continue to advance permitting at Coosa, we have an adviser. I think one of the key things is to complete some studies and do some stuff. So as we apply to the FAST-41 program and try to get into that, we entered the program on solid footing. We believe we're right in the middle of the fairway, but want to take care of a couple of studies and things ahead of that, just to put us in the best position to get on that dashboard. This is probably the best permitting environment for extractive industries in the U.S. in multiple decades. So we want to take full advantage of that. Regarding the government shutdown, as it's impacted travel and everything else, it's definitely impacted a lot of things. And as far as when things get back to normal, I'm not brave enough to take a guess on the call. Unknown Analyst: Makes sense. Also, maybe a bit of a follow-up as to what you're hearing in the market related to pricing, maybe how that view has changed or rumblings you've been hearing from clients related to longer-term graphite demand. And taking that a step further, what government incentives are there besides the export import bank that are on the short list for applications? Steven Cates: Thanks. Yes. This is Steve again. I think back in the second quarter call, we spoke a little bit about what we are seeing as far as anode pricing and that we were seeing a willingness to increase that because of tariffs, because of other things that are out in the market and some uncertainty with export restrictions and things like that. What I'll say is based upon our discussions with customers now, we haven't seen any deterioration in that as of late and feel like prices are at least holding with the potential to go up again. And your second question was on government funding, correct, that follow-up? Unknown Analyst: Correct. Yes, just any government incentives out there besides export import? Steven Cates: There is. The DOE has the one that was mentioned in the pre-remarks that set aside for critical mineral processing. There's also money that has been allocated to the Office of Strategic Capital as well for critical minerals. It's a high focus of this administration. We believe that with our processing at Kellyton as well as our Coosa deposit and the extraction there of graphite, that vertical integration puts us right in the middle of the fairway of what this administration wants to do. And so we've engaged advisers to help shepherd us through the process of looking at that -- those different buckets of allocated capital that the government has set aside. Operator: We have the next question from the line of John Grazioli from Morgan Stanley. John Grazioli: I like -- my question is about some future businesses like these SMR reactors. And I've noticed that there's been a few companies like [indiscernible] Energy and so forth, they call salty reactors that use graphite in their manufacturing process. Is there any interest from these types of companies from -- with the data centers because these reactors are going to be used for these data centers. And is graphite a component that's being sourced through you guys? Frank Bakker: Well, John, this is Frank. Yes, we are not aware of that application, but thanks for bringing this up. So we'll certainly look into this. John Grazioli: Okay. That's my question. So there is no interest at this point from these SMRs. Frank Bakker: Well, we will look into it to see if that's a market we can enter into, but we are not aware of that at this moment. Operator: Ladies and gentlemen, that concludes the live Q&A session. I would like to turn the conference over back to Steven Cates for the pre-submitted questions. Thank you. Steven Cates: Thank you, operator, and thanks to all the shareholders who submitted questions in advance of our call. We've covered a number of those already through our prepared remarks as well as the questions earlier. So I think there's really one additional question based upon what we haven't covered that was a common question that wanted to address here. It had been reported that we had recently completed an offering of $75 million based upon a filing we had. And I think there's some confusion in the market that I just wanted to clear up a little bit. To clarify, the $75 million was an ATM refresh on the program, just maintaining the ATM that we've had for a number of years. It was not a single onetime offering. And just to note, the substantial majority of the approximately $55 million we've raised since June, that occurred before that ATM refresh. So I just want to provide that clarification to the market. And with that, I will turn it back to the operator to conclude the call. Operator: Thank you. Ladies and gentlemen, that concludes the conference. You may now disconnect your lines. Thank you for participating, and having a pleasant day.
Operator: Good morning, and welcome to KP Tissue's Third Quarter 2025 Results Conference Call. Today's call is being recorded for replay. [Operator Instructions] I will now turn the call over to Doris Grbic, Director of Investor Relations. You may begin your conference. Doris Grbic: Thank you, operator. Good morning, everyone, and thank you for joining us to review Kruger Products Third Quarter 2025 Financial Results. With me this morning is Dino Bianco, the CEO of KP Tissue and Kruger Products; and Michael Keays, the CFO of KP Tissue and Kruger Products. Today's discussion will include certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to known and unknown risks and uncertainties. A list of risk factors can be found in our public filings. In addition, today's discussion will include certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our MD&A. The press release reporting our Q3 2025 results was published this morning and will be available on our website at kptissueinc.com. The financial statements and MD&A will also be posted on our website and on SEDAR+. The investor presentation to accompany today's discussion can be found in the Investor Relations section of our website. I will now turn the call over to our CEO, Dino Bianco. Dino? Dino Bianco: Thank you, Doris. Good morning, everyone, and thank you for joining us for our third quarter earnings call for fiscal 2025. We accelerated profitable growth in the third quarter of 2025, highlighted by strong adjusted EBITDA of $85.7 million on revenue of $561.1 million. We are particularly pleased with consumer share gains in the paper towel and facial tissue categories, which grew over a 52-week period despite a highly competitive market. In terms of our Away-From-Home division or Kruger Pro, as we call it now, sales and profitability increased by both year-over-year and sequentially, bolstered by consumer brands like Scotties and Chashmere selling well in the commercial market. Looking ahead, we are on our way to delivering a third consecutive year of strong financial results. In addition, we have significantly deleveraged our balance sheet to prepare for the next phase of investment. Now let's take a look at our quarterly numbers on Slide 6. Revenue growth of nearly 8% in the third quarter of 2025 was driven by higher sales volume in our consumer business, favorable selling prices across both Consumer and AFH segments and a positive foreign exchange impact. Revenue in Canada rose 6.8% in the third quarter, while U.S. sales grew 8.8% year-over-year. In terms of profitability, adjusted EBITDA increased 30.4% year-over-year to reach $85.7 million. The significant improvement in adjusted EBITDA can be attributed to higher sales volume, favorable selling prices, lower pulp prices and reduced freight costs. These factors were partially offset by a number of items, including higher manufacturing overhead costs which Michael will provide more details on in his review. On Slide 7, average pulp prices in Canadian dollars decreased single digits in the third quarter of 2025 from the previous quarter, while year-over-year average prices were both and NBSK and BEK declined 2.6% and 18.4%, respectively. Heading into the upcoming year, industry analysts do expect pulp prices to trend upwards. Let's move on to our operations on Slide 8. To increase tissue capacity and accelerate the growth of our business, we are proud to announce the construction of a new state-of-the-art tissue plant in the Western United States to better serve our fast-growing U.S. business with ultra-premium tissue products. The new facility equipped with the most modern TAD paper machine and related converting lines will have annual production capacity of approximately 75,000 metric tons and the startup is scheduled for 2028. Location, project scope and financing details will be announced at a later date. The new facility, along with our Memphis plant and 9 existing Canadian plants gives us a strong network to service our growing North American business. Looking at our current operations. Overall, our network production rates exceeded our targets for the third quarter. In Memphis, we are seeing positive benefits from our renewed asset strategy focused on producing premium products. Converting manufacturing results in Memphis improved sequentially, while our new multipurpose converting line is on track for startup in the second quarter of 2026. We expect to deliver an improved cost structure in 2026 following the closure of our old legacy equipment last quarter. Finally, our Sherbrooke Expansion assets continued to perform above expectations. Turning to brand support on Slide 9. We sustained our Made in Canada positioning in Q3 2025, supported by widespread in-store promotions across our portfolio. During the third quarter, we also continued equity building campaigns behind Chashmere, Purex, SpongeTowels, Scotties and Bonterra to strengthen our brand presence in their respective categories. In addition, we pursued targeted expansion and support behind our premium product portfolio, including Scotties Ultra Soft, Chashmere and Purex Ultra and UltraLuxe, as well as SpongeTowels pro and premium. We also launched our 22nd annual Chashmere collection in support of breast cancer awareness, prevention and treatment programs inspired by this year's theme of Tapestry of the North, 16 of the top Canadian designers showcased garments made entirely of Chashmere, Canada's leading bathroom tissue at a galley evening and fundraiser in Toronto on September 16. The annual campaign has raised over $5 million for the breast cancer cost since 2004 through the Canadian Cancer Society and the Quebec Breast Cancer Foundation. Turning to Slide 10. The data presented is taken from Nielsen and shows Kruger Products branded market share in Canada over a 52-week period ending September 6, 2025. The figures reflect strong growth for Kruger products in the paper towel category compared to the same period last year as SpongeTowels increased share on the strength of heightened brand support. In terms of facial tissue, our market-leading Scotties brand also enjoyed solid share gains driven by innovations in the premium product segment. For bathroom tissue, our share declined slightly over the same period due to higher pricing taken in our Canadian Consumer segment in the fourth quarter of last year. Looking at our Away-From-Home segment, on Slide 11, sales volume increased both year-over-year and sequentially in the third quarter of 2025. Similarly, revenue and profitability improved in the third quarter highlighted by a robust 11.2% adjusted EBITDA margin. As mentioned earlier, these strong financial results were supported by consumer brands like Scotties and Chashmere selling well in the commercial market, along with growing Made in Canada segment among distribution partners and end users. The expanded in-sourcing of our own paper also contributed to enhanced profitability and converting efficiency. And finally, we introduced Titan Wipers and Cloths to our AFH portfolio in the third quarter to meet the evolving needs of customers seeking high performance and reliability for the most demanding cleaning jobs. With a bold, new name and look, Titan reflects Kruger Pro's vision of being a trusted partner to our customers. Equally important, this new product line enables Kruger Pro to increase its share in the rapidly growing commercial Wiper and Cloth market. With that, I will now turn the call over to Michael. Michael Keays: Thank you, Dino, and good morning, everyone. Please turn to Slide 12 for a summary of our financial performance for the third quarter of 2025. As Dino mentioned, we generated an adjusted EBITDA of $85.7 million on sales of $561.1 million in the quarter, representing a strong year-over-year EBITDA growth of over 30%. Net income totaled $14.6 million in the third quarter of 2025 compared to $18 million in the third quarter of 2024. The year-over-year decrease is due to an FX loss variation of $12.2 million, greater income tax expense of $4.4 million higher depreciation of $4.1 million as well as an increased interest and other finance costs of $3.5 million. These items were all partially offset by the higher adjusted EBITDA of $20 million. In our quarterly segmented view on Slide 13, revenue from our consumer business grew 9.1% year-over-year to $468.3 million. This increase comes from higher sales volume, both in Canada and the U.S., favorable selling prices and a positive FX impact on U.S. dollar sales. In our Away-From-Home segment, revenue improved 1% year-over-year to $92.8 million in the third quarter. This increase was mainly due to slightly higher sales volume in Canada and a favorable FX impact. The consumer adjusted EBITDA in the third quarter totaled $78.2 million compared to $62.4 million in Q3 2024 with a margin of 16.7%, representing an improvement of 2 points over the same period last year. On a sequential basis, consumer adjusted EBITDA increased by $9 million from Q2 2025. For our Away-From-Home business, adjusted EBITDA amounted to $10.4 million in the third quarter compared to $6.6 million in Q3 2024, with a margin increasing by 4 points year-over-year to 11.2%. On a sequential basis, AFH adjusted EBITDA grew $1.4 million from Q2 2025 the year-over-year and sequential increase are partially driven by the expected benefit of in-sourcing our paper supply post Sherbrooke paper machine start-up. Moving on to Slide 14. We show a consolidated revenue for Q3 2025, which improved 7.7% year-over-year to $561.1 million. The increase was mainly driven by higher consumer sales volume, favorable selling prices and a positive FX impact. On a geographic basis, Revenue in Canada rose $19.1 million or 6.8% year-over-year, while U.S. revenue continued to grow at a strong rate, increasing $20.9 million or 8.8%. On Slide 15, we provide details of our year-over-year profitability. The adjusted EBITDA increased by $20 million to $85.7 million, resulting in a margin of 15.3% compared to 12.6% for the same period last year. The year-over-year increase was driven by higher sales volumes and selling prices, lower pulp prices and reduced freight costs. These items were partially offset by higher manufacturing overhead costs, elevated warehousing costs and increased SG&A expenses. Let's turn to Slide 16, where we compare Q3 revenue to Q2. Revenue grew $25 million sequentially or 4.7%, primarily due to higher U.S. sales volume and increased selling prices. Geographically, revenue in Canada improved by $1.7 million or 0.6%, while the U.S. increased by $23.3 million or 9.9%. On Slide 17, the adjusted EBITDA in the third quarter increased sequentially by $13.2 million or 18.2%, driven by higher sales volume, lower pulp prices, increased selling prices and a reduced manufacturing freight and warehousing expenses. These factors were partially offset by higher manufacturing overhead costs and increased marketing expenses. The adjusted EBITDA margin reached 15.3% in the third quarter compared to 13.5% in Q2 2025. Now turning to our balance sheet and financial position on Slide 18. Our cash position improved to $149.1 million at the end of the third quarter from $85.3 million at the end of Q2 2025. The increase was primarily due to higher adjusted EBITDA and a decrease in working capital. Long-term debt stood at $1.083.5 billion, a decrease of $42 million sequentially, reducing net debt by $87.9 million. That brought our leverage ratio to 3.4x compared to 4.0x in Q2 2025, demonstrating our continued commitment to strengthening our balance sheet. To conclude my section, we will review the capital expenditures on Slide 19. Our CapEx expenses for Q3 2025 totaled $16.2 million and we have narrowed our CapEx range to be between $70 million and $80 million for 2025, including some spending related to the new Memphis converting line announced in July. For 2026, our CapEx is expected to be in the range of $70 million to $90 million, which includes some of the strategic growth CapEx. Thank you for joining us this morning, and I'll now turn the call back to Dino. Dino Bianco: Thank you, Michael. Please refer to Slide 20 for a quick update on our sustainability efforts. I am pleased to report that our Bonterra brand was recently named the most sustainable brand in Canada in 2025 by Kantar BrandZ, a leading marketing data and analytics company. Bonterra, our environmentally focused product family was praised for embedding sustainability across every aspect of its operations from product development and manufacturing to materials packaging and partnerships. We are very proud of this recognition. Now please turn to Slide 21 for my closing comments. We are preparing for the launch of a new state-of-the-art TAD tissue plant in 2028 to better serve our fast-growing U.S. business. We will continue managing our margins amid volatile economic conditions. We are investing in our operations to increase efficiency and support growing capacity. We intend to continue to build our share across our portfolio on a long-term basis. Our Away-From-Home business will increasingly benefit from internally sourced paper and deliver sustainable profit, and we are actively developing our organizational capabilities to strengthen our adaptability and resilience. Finally, let's turn to our outlook for the fourth quarter of 2025. We expect adjusted EBITDA to be in the range of Q3 2025. We will now be happy to take your questions. Operator: [Operator Instructions] Your first question comes from Hamir Patel with CIBC. Hamir Patel: Congrats on the strong quarter. Some of the recent project announcements in the industry have had capital costs in the sort of USD 0.5 billion range. Is that a reasonable estimate to think for your project before any incentives? Dino Bianco: Yes. What I would say, Hamir, is we're working through the final elements. There's always some differences between project scope, but I think you've had -- there's been a couple of announcements. I think using them as a guide is probably a good place to start. We'll finalize the full cost when we announce more details early in the new year. Hamir Patel: Okay. Great. And I mean, if we took 40% of maybe that $0.5 billion proxy, that would suggest maybe a $200 million equity component. Would you consider issuing additional shares to finance the project and improve the public float? Dino Bianco: Yes. I'm not going to comment on your math. That was your math, so I'm not going to comment on that. But I would say the -- our position will be that we feel we can support the equity infusion through our current resources. I don't think... Hamir Patel: Yes. No, I realize you probably wouldn't need to tap it. I just thought to improve the float could be an opportunity. On the market share, it looks like some pretty impressive gains in towels. Do you see any additional runway there to grow market share in Canada? Dino Bianco: Yes. I think we've always said it's an area where we have the most opportunity. We're #1 share in bath and #1 in facial. I think ultimately, the consumer is going to choose who's the #1 share is. I think we're doing the right things with our business in terms of our quality, our segmentation, our in-store presence, distribution, our communication that we're doing. I think Made in Canada positioning is a strong one, and we continue to support that, given I think consumers are very anxious to buy Canadian made products. So I think all -- that whole bundle, and it's a long-term play, as I say, we're not here to just rent share for a short period of time, we want to build it long term foundationally and make sure we're offering the right product at the right value for our consumers. So yes, I do see a good runway in the towel category. Operator: Your next question comes from Kasia Kopytek with TD Cowen. Kasia Trzaski Kopytek: It's Kasia. Can you all hear me okay? Dino Bianco: Yes. Kasia Trzaski Kopytek: Perfect. Let's start with Sherbrooke. Can you talk about operating rates there and how they might compare to your broader network? And then also how the Sherbrooke sales program is ramping as well? Dino Bianco: You cut a little bit, Kasia. I heard Sherbrooke operating rates. I'm not going to give you exact numbers, but I would say Sherbrooke definitely one of the strongest operating rates in our network, and we believe based on what we're seeing from external data, definitely top-tier performer in North American tissue. So very pleased, and that's resulting in increased output capacity. And we believe -- we know that there's a strong profit being generated from that site. Kasia Trzaski Kopytek: Got you. And then I also just asked on the sales program? Sorry about cutting out. Dino Bianco: I'm sorry, the sales program? Can you repeat Kasia, sorry, you're... Kasia Trzaski Kopytek: Yes. Sorry, is this better? Dino Bianco: Go ahead, try one more time. Just speaks softly, maybe we can hear better. Kasia Trzaski Kopytek: Okay. Sorry about that. Is this better? Dino Bianco: Yes. Kasia Trzaski Kopytek: Perfect. Yes, just wondering about how the actual sales program for the output from Sherbrooke is going as well? Dino Bianco: Yes, very good. I mean we are selling everything we make. I mean, so the more that site makes, the more we sell, I think the market and our business is growing very well. You can see the numbers, obviously, and Sherbrooke been a big part of supplying that. It does supply Canada and the U.S. So it's -- and it does supply multiple categories. So very pleased with the results and very pleased with the work the team is doing there to continue to drive great output. Kasia Trzaski Kopytek: And then on -- just on the results this quarter, are you able to parse between how much the higher selling prices quarter-over-quarter were due to mix versus market price increase initiatives? Dino Bianco: Well, maybe Michael will give you some color. But the market price, we took pricing last year. And so when you're comparing quarter-over-quarter, the pricing last year took effect in Q4. So we're lapping Q3 last year, which is prepricing. So that's why we talk about the benefit of the price increase. We've not taken any additional pricing since that time. I don't know if we'll give specific details, maybe I'll look over to Mike to see if there's anything else he wants to add to that. Michael Keays: Yes. Thanks, Dino. For sure, the year-over-year comparison, which show a larger portion of that selling pricing coming from the pure change or announcement on the selling price itself that we did in the fall last year. In terms of the sequential change, that would more driven by mix and a bit less by the actual selling price change. Dino Bianco: We're selling a lot more premium product. Obviously, I just talked about Sherbrooke and that is a TAD facility. And I talked about our brands really pushing the premium side of the business. So you're seeing an improved mix through just the improved premium segment as part of our portfolio. Kasia Trzaski Kopytek: Right. Yes, that all makes sense. So I just wanted to confirm, relative to Q2 that the actual market price hikes would have been -- had a minimal impact. So it sounds like that's the case. And just on AFH, strong results quarter, obviously. And the margin is in line with what you had previously guided to as being attainable for that business, once benefits of the paper insourcing come through, which they are now. Any thought to revising the margin range higher for the future in terms of what you think that business can do? Dino Bianco: Well, I've always said, I think, low teens, and we've now crossed the 10% threshold. I think it does have the opportunity. I want to make sure I see sustained performance. Obviously, there's a bit of a watch out in the short term around what's going on in the Away-From-Home market in general in the economy and consumers. So we're watching that. We think we're well positioned. We have a very diversified portfolio across Canada and the United States. So I think I'm not going to make an announcement that's going to give guidance of a different margin structure. I'm very pleased with where we are. I've said we should be low teens. And right now, we're there. So our goal right now is to keep it, keep it delivering it across not only sales but our cost structure and our margins. Kasia Trzaski Kopytek: Makes sense. And final one for me on Memphis. There's been improvements there. Can you put any numbers around how meaningful that might be for 2026 results? Dino Bianco: No. We won't give that kind of guidance. But I certainly think the momentum that we're going to build in 2025, and we will give Q1 guidance later in February. But I think the momentum we're building is going to carry forward. I mean we're not a onetime deliver of profit. As you can see, the foundations that we're building with respect to our business, our portfolio, our cost structure are building our share. I think all are working very well, and those are sustainable in my mind, and we should continue to drive momentum. Of course, the economy and cost inputs are always a wildcard, but we feel very good about the momentum we are driving. And we should continue that into 2026, and we will provide that guidance at the right time. Obviously, for 2025 in the fourth quarter, we feel very confident because we could see that one near in and feel good about our guidance being in the range of Q3. Operator: [Operator Instructions] Your next question comes from Zach Evershed with National Bank. Zachary Evershed: Congrats on the quarter. So a few here on the next TAD project. So feel free to pass if you guys don't want to provide that level of detail yet. But we do note that construction costs have spiked over the last few years. Do you think it's likely that the return economics on the project will be lower than your first 2? Dino Bianco: That is not what our data is showing us right now. So obviously, it's still early, but I would say that we are in the range of what we believe we need to be. And even with the escalated costs, we feel we have a model here and the market situation with our growth in the premium segment, we believe we'll have a good operating plant, latest equipment and technology, likely a simplified portfolio, an improved freight structure, having said the Western United States, and we believe that will deliver similar margins. Zachary Evershed: Good color. And then thinking about your financing split to debt, what are the guardrails that you're looking at to limit your use of debt, either leverage or interest coverage ratios? Dino Bianco: Yes. We're working through that. I don't think we're going to give you a specific number. But I guess the 4 things that we're looking at, first of all, we have a proven track record of successfully completing large-scale projects. Notably, we just talked about Sherbrooke and then the Sherbrooke Expansion Project. So 2 large projects and both have exceeded the ramp-up curve. I think the other piece is we believe in a strong position right now to pursue this project. We have a cash balance of almost $150 million, and we have strong cash flow generation, a lot of it driven by those new projects that I just talked about. We also have recently completed an update with DBRS, and we've given them the details of the project and including the financing parameters and expected financial profile. And lastly, of course, we've been working on this project for a long time, and we are now ready and I think maintaining the sound financial profile and strong market access remains priorities for the company and for the Board, including any volatility during the period, making sure that we can manage that. So I think we're in a really good position I don't think we're going to give you any specific metrics as it relates to ratios at this point. So I think when we finalize the project scope early in the new year, but I don't know, Michael, if there's any further guidance that we want to provide. Michael Keays: No. I mean you covered that we have a current strong financial position. That position and cash available on hand today is in a much better position than the period of 2022 and 2023 that we went through a few years ago. The performance of our last 8 quarters over '24 and '25 has demonstrated that we have that strong cash flow generation. So we feel we're in a very, very strong position to be able to proceed with this project at this point in time. Zachary Evershed: I appreciate that. And then just one last one. As Hamir mentioned, there are a number of new machine announcements that will be coming online over the next few years after almost a drought in major additions. Can you speak to your thinking around your competitors' geographic positioning and time lines and how that may affect your ramp-up in 2028? Dino Bianco: Well, obviously, we've made the announcement knowing those announcements. We still long-term projections continue to show a need for ultra premium in the North American market. So despite those announcements, the market continues to grow and will continue to grow. So we have made this announcement knowing that the market will require this capacity. Obviously, the Western U.S. is going to be a strong position for us, given what we believe a lot of our customers are growing and opening new outlets in west of the Mississippi. So I think we'll be very well positioned from a service point of view for our customers. The other benefit being that the addition of this new facility, it will create benefit and synergy to Memphis and Sherbrooke, so our new network now, kind of this triangle between Memphis Sherbrooke and the new facility, this TAD triangle if you will, will help us really get more efficient and produce the right product in the right place for the customers. So all that, I think, just supports the need and the location that we chose. Operator: There are no further questions at this time. I will now turn the call over to Dino Bianco for closing remarks. Dino Bianco: Great. Thank you all for joining us on the call today. We look forward to speaking with you again in the release of our fourth quarter results for 2025. Thank you, and have an amazing day. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Christopher Laybutt: Okay. Good morning, everyone. It looks like we've got most people dialing in. So terrific. Thank you. Thank you very much, and good morning. Welcome to the United Utilities Fiscal '26 Interim Results Q&A session. My name is Chris Laybutt, as you all know, and I'm delighted to play the role of host for this session. Today, I'm joined by Louise Beardmore, CEO; Phil Aspin, CFO. We'll stick with the usual format. Christopher Laybutt: So if you'd like to ask a question, please raise your hand or shoot through an e-mail or a Bloomberg. And I think leading us off this morning is Julius. You were first off the rank. So please go ahead. Julius Nickelsen: I guess 2 for me. The first one is you mentioned in the presentation that like the emergence of new investment drivers that I think there's also PFAS mentioned on the slides. So just wondering, are you referring to this more like after AMP8, like into AMP9? Or is that something that we could already see now through the reopeners in AMP8? And if so, give you us any indication on how sizable that could be? And then secondly, I mean, given that I'm the first on the line, obviously, I have to ask on your expectations on Cunliffe and the white paper that comes out in December, just in terms of like which recommendation do you think we'll be taking? And what's the process? What's the time line? Any color would be appreciated. Louise Beardmore: Fantastic and nice to see you this morning, Julius. Thanks for the question. Let's take the reopeners and the growth first. I think as we went through AMP7, there were a number of opportunities for additional growth items. We saw that with green recovery. And we've been really clear both when we spoke to the capital markets and also in terms of interactions with regulators that we see lots of opportunities for growth drivers as we move forward, both in terms of additional housing, new legislation that's coming through, whether that be new drivers that we can see emerging data centers, additional areas of growth from the government. And we are engaging with regulators, as you'd expect us to in terms of those opportunities, and we expect them to play through just like they did in AMP7. You're absolutely right with AMP8, there were a series of reopeners that were actually stated in addition to those and they're particularly around asset health and the opportunities to drive asset health improvements. And so we are engaging with regulators with those conversations. In relation to Cunliffe and the white paper and the time line for the white paper, I think, look, in terms of when the recommendation of the report that came out in the summer, there were lots of recommendations, 88 in total, many of which very investor-friendly in terms of the things that Cunliffe was promoting and suggesting. And we're now obviously waiting for the government's response. We expect that to be in December. But what I think is probably useful is to just look at what am I seeing and feeling in relation to intent. And I think there's a couple of things I'd point to. The first is Emma Hardy, when she spoke at the Moody's conference, was very, very clear about her desire to drive those recommendations and also for the white paper to be out before Christmas. I met with Emma Reynolds last week as the new Secretary of State. And again, she is very, very clear. She's picking up the recommendations. She's driving those hard with the team in terms of coming out with both the white paper and the implementation plan. And also, you may not see, but she was also at the EFRA Committee this week. And again, on record was very clear about her intent in terms of driving those recommendations through. So I think what we can expect to see in December is that white paper and transition plan. And at the same time, I think what we're also expecting is that we will also see a strategic policy statement for both Ofwat and the EA. Christopher Laybutt: Okay. Thanks very much, Julius. Jenny, over to you. Jenny Ping: Two questions. One, just around politics. Obviously, we're getting more and more noise around the energy side in terms of government treasury want to do something deflationary on bills on the energy side. Are you thinking or hearing anything with regards to water, any noise there in terms of support on the affordability aspects? And then just coming back on the uncertainty mechanism, is there any firm time line in which you will be going to Ofwat to apply for the reopeners? And what should we be watching out for on sort of getting the clarity on the size of potential investments there? Louise Beardmore: So look, to pick those up in order. I think the first thing I'd say is from a bills perspective and a cash performance perspective, I've been really pleased actually with the way that cash performance is maintained with the increase that we've seen in bills. Team have worked exceptionally hard. We've doubled the number of customers who are on affordability schemes, et cetera. So we've not seen any degradation in cash performance. In fact, it's held extremely strong, and that's down to the way that, that's been managed. But one of -- Sir John's recommendations was very clearly the need for a national social tariff. And again, we expect that to come through as part of the white paper. You know that, that's something that United Utilities has long pushed for and is something that would be an extreme benefit, particularly in terms of here in the Northwest. So we continue to influence and discuss how that could look as we move forward. So I'd expect that we may well see some movement on that or clarity on implementation of that as the white paper comes out. In relation to the uncertainty mechanisms, the conversations are ongoing. You know as well as I do what our CapEx profile looks like. It goes up and then it comes down either side. It's in everybody's best interest to smooth that out. We've talked about AMP9 and AMP10 and what we can see coming with the Environment Act legislation, along with everything else that we can see. So it's in nobody's best interest to have a CapEx profile that looks like it does. And again, there were opportunities last time around, particularly in terms of things like transitional investment and the green recovery, and we expect those to play through. So conversations are ongoing. Christopher Laybutt: Okay. Thank you, Jenny. Sarah. Sarah Lester: Yes. Sorry, just to come back to the white paper. I think it's going to be a massive document, a lot of noise in there. So just to make it really simple for us, please. Three simple questions. What specifically should we be looking for? What will you be looking for? So if we can do a control find, is there something you can point to that if we see it, we can go, okay, this is good for you. Louise Beardmore: Sarah. I'm probably not expecting it to be hundreds and hundreds of pages long. So just to give you an indication, I think it will be thematic in terms of what comes forward and what they are proposing to set out. I think we're all clear that we want to understand what the regulatory regime looks like as we go forward, how that's going to be managed and how that's going to be coordinated, what supervisory regulation starts to look like and more importantly, essentially what the structures and the time lines look for as we move forward. So I think what we're all looking for is exactly the same thing, which is clarity around the time scales and what that transition plan looks like. So I think it is not going to be hundreds and hundreds and hundreds of pages long. I expect it to be thematic to set out the direction of travel, the things that they're taking forward and at pace. I also think it's important to point out, there's a number of things that can be done without legislation change. And again, I think I'd be looking to see how much of that, that they're making a commitment on and moving on ahead of any of those legislation windows as well. Christopher Laybutt: Terrific. Thank you very much, Sarah. Pavan. Pavan Mahbubani: I have 2, please. Firstly, I'd like to ask about the EPA and the 2-star rating from a few weeks ago. I can imagine you found that outcome, sorry, disappointing. And I wanted to just get a bit more color from your perspective on what drove that rating and whether you see there's anything in your underlying performance that you think you need to reprioritize? And on a related question, can you provide some color on the potential EPA reforms that we should be seeing in terms of those ratings in the coming years? That's my first question. And then secondly, I wanted to ask about funding and the balance sheet. Can you remind us if you see yourself as fully funded for AMP8? And does that change in a scenario where you have additional, whether it's reopeners or transition spend? And how should we think about your balance sheet and funding options, particularly as we look into AMP9 and beyond? Louise Beardmore: Thanks for those questions. I'll take EPA, and I'll hand over the balance sheet to Phil. So I think first things first in terms of EPA, yes, we're obviously disappointed. But we are the second highest company in terms of EPA performance. So 13 out of a possible 16 stars for this EPA period. The underlying performance remains on track. What we have seen is a change in methodology and particularly in relation to definitions on pollution. So things that were driven by both storms and power interruptions are now included in EPA. 1/3 of our pollutions are actually caused by issues with energy resilience that we're seeing up here in the Northwest. And there are 2 drivers to that. One is storms and the fact that we're on an overhead network, and that's particularly a challenge in some of our more rural areas of Cumbria and Cheshire. And secondly, the balance loading that we're seeing between renewables and the grid. So we've got some real specific challenges. And actually, Phil Duffy referenced that himself just recently at the EFRA committee, and it's something that we're focused -- very focused on both in terms of what could we do, but also working with the energy companies as well because I need to see better levels of resilience in terms of driving those improvements. We are extremely focused though on what it is we need to do. I'm really pleased to see the improvements that we're seeing in terms of combined overflow reductions, some of the areas of focus where what we're actually seeing is some of the early investment that's going in and more importantly, the improvements that we're seeing as a result. You're absolutely right. We now have a new methodology that is being consulted upon. That sees a series of changes again, most notably a change in categorization of pollutions. So currently, we have pollutions categorized 1 to 4. It's categories 1 to 3 that count for EPA. Going forward, there will be no category 4. That will all become category 3. So again, it's going to be another change. So I think we're going to continue to see the methodology change and evolve. That's out for consultation at the minute. And United Utilities, along with lots of others will be making obviously representation about its implementation. But I think what is -- there is some good stuff in the EPA too. It's going to, for example, include details about combined overflows. That's not included at this minute in time, and I think that's important. And I think what is important is anything that drives greater transparency is something that we all embrace, but we do need to understand when methodologies are changing because as a result of that, what's important is that we're tracking underlying performance, and we can see where that's improving and more importantly, if there's areas that we need to focus. So the results of the consultation are due to be published early next year, and then that will drive in terms of the implementation of the new methodology. I'll hand over to Phil in relation to balance sheet. Philip Aspin: Nice to see you. Yes, sort of as you know, we've got a very, very strong balance sheet. So today, we're reporting 60% for net debt to RCV gearing, benefiting slightly from a little bit of an inflationary tailwind at the moment. So that's sort of feeding into the numbers a little bit. And as you know, we're very comfortably within our 55% to 65% range as we look through this AMP in terms of the funding of the AMP8 program. And it's probably worth just reminding you that the headroom extends beyond that because the Moody's Baa1 threshold is 68%. So there's quite a lot of flexibility there. Clearly, in terms of any reopeners, there'll be a lot of discussion around the context, the scale, the size of that, how Ofwat may or may not fund that in period, in-period revenues. So there's quite a lot of moving parts to all of that. But I think we're approaching that from a really, really strong position. And then just longer term in terms of AMP9, clearly, we all expect a lot of funding, a lot of investment continuing into AMP9. But we also are very, very positive around the Cunliffe recommendations in the context of Cunliffe calling out the need for the sector risk profile to be looked at. And I think specifically, you cited the Moody's work that has been done where effectively, they progressively downgraded the quality of the regulatory framework over the last 2 price reviews. So if we have some reversal of that, that will extend that sort of capacity as well. So as a reminder, if we were to revert back to a Moody's position that was more in line with energy, then that 68% will become 75%. So that's worth bearing in mind. There's a lot of moving parts and understanding how that price review in the future lands is going to be a big part of that as well. Christopher Laybutt: Thank you, Pavan. Mr. Freshney. Mark Freshney: Myself, you hear me okay? Louise Beardmore: We can now. Mark Freshney: Can I ask on -- went to the hypothetical of the hypothetical when we're talking about the white paper next month. But I mean, it's clear that normally, I mean we're already starting to talk about AMP9 now. Normally, the next review should start next year, right? The regulator should -- once they're done, CMA should be moving across to the next review. Yes, the primary legislation is probably not going to be done next year for the Cunliffe implementations and then the regulator has to be set up. So it would seem that at some point, we may be looking at a rollover review or a 1- to 2-year, likely 2-year extension of this review. What are your thoughts on that? And the reason I would ask is because your returns have been fixed relative to what CMA and Ofgem are doing at fairly low levels. And this review doesn't appear -- we're yet to see outperformance. So I'm just wondering what you guys would like to see on any potential rollover review and what your thoughts are there? Louise Beardmore: Thanks, Mark. I think there's 2 things. I mean, obviously, we've guided to 100 basis points of outperformance. But just in terms of the 2 years versus 5 years in terms of the regulatory cycle, I mean, I think what matters for us is that any growth that we have to deliver is facilitated. So whether that be within a 2-year or a 5-year cycle. And we've got very strong relationships with our regulators. And I think what's important is that we get clarity over the funding mechanism. And I think it probably brings me back to one of the questions that Sarah asked me in terms of what am I most looking for in terms of the white paper is clarity around some of those time scales actually and how that evolves over time. And I think that's something that we're all looking for. CMA obviously, will publish its final outcomes in March. And I know there's already a lot of conversation going on with DEFRA, with the Cunliffe implementation team about both the regulatory cycle and some of the inputs in, particularly in terms of the long-term strategic plans for both water and wastewater. So I think we're all looking for that clarity on that time scale. But I think what's important, whether it's 2 years, 5 years, a rollover or whatever, is that the growth that is to be delivered is facilitated and recompensed accordingly. Christopher Laybutt: Terrific. Thank you, Mark. Mr. Nash. Unknown Analyst: A couple of questions from me, please. Firstly, can we go back to the CMA. They published in their initial findings what I thought was quite an interesting study on coming up with a new sort of frontier modeling sort of tool for your totex. And usually, at this point, I'm usually in front of you going, Louis, why did you not appeal the FD? And on returns, maybe clearly, you would have got higher, but the totex one was a bit of an eye opener for me because it looked to me that they seem to think that Ofwat had awarded you more totex than they would have given you if you had a CMA appeal. And so the question I've got for you on that one there is that how -- how much indication does that give to us or how much does it give to us potentially that you could be -- you should be coming in line more with the CMA number than the Ofwat number and that we could probably see a totex outperformance come through? Secondly, I like your term, I think, environmental super cycle that you have in your presentation. And you talk about PFAS. There's very little in PFAS in AMP as I understand it in spend. And I know we had a couple of questions earlier about your reopeners, but I'd be interested in what sort of scale -- what actually is the scale of the reopeners that we could potentially look and particularly with things that aren't in AMP at all like the PFAS one. I mean I've been reading some reports that the industry could be up to sort of GBP 10 billion a year of PFAS that's clearly across the whole country, but does have a reasonable PFAS exposure. So some color on that would be great. Louise Beardmore: Great. Thanks, Dom. So look, I think first things first in relation to CMA. The decision that we ultimately made was around the overall package rather than each individual item. And we've talked quite a bit about that. Obviously, it's remembering that going to the CMA opens up everything, not just the particular item that you may be appealing. And we felt that the FD for us was balanced. We saw significant movement between the interim and final position, particularly on totex allowances. And we were able to negotiate some company-specific targets on things that were important to us, both in terms of combined to overflow spills, internal flooding and also some changes to the economic models in relation to rainfall patterns. So those were things that were really important. You're absolutely right to say that when you look at some of the outcomes from the CMA, there is a number of companies where when you look at the models that they've run, they've suggested a different totex allowances. I think everybody always points to models and sort of says, well, they're very, very simplistic. And I'm sure that's what the economic regulation teams will be saying too, particularly in terms of some of those broader conditions that those models need to take into consideration. And I think what is important that is something that Cunliffe brought out in his review is that you need to understand the regionality in the context of which you're operating on. So I'm expecting there to be lots of representation on that, Dom, as part of the response that's gone back in from companies. In relation to your questions about low, should that give us some confidence about totex outperformance? I think there's 2 things. One is, look, we've got a number of transformation projects growing -- running where we are driving transformation in relation to totex delivery. And I talked at the Capital Markets Day, particularly around driving standard assets and standard deployment as a way of managing costs and managing costs within profile. I think long of the days have gone where you can deliver big totex outperformance and not continue to reinvest in your assets. There's always more that needs to be done. And so I think it's incumbent on us to continue to do the right thing. But rest assured, there is a huge focus on cost and cost delivery. In relation to the scale of the reopeners, look, PFAS is one that's talked about. And there's both obviously PFAS in water, and we've got 2 projects in there. You may have seen something on the BBC recently about well, what are these projects and one of these notices. That was the regulatory notice to enable us to access the funding to get those projects in and they're purely precautionary. But there's a couple of elements. One is PFAS in the actual water supply itself, but also in terms of biosolids. And that is an area that is continuing to emerge and evolve. We're also seeing quite significant increases in relation to housebuilding in terms of new housebuilding targets. My -- our previous Secretary State, who's now got the housing portfolio has just announced 10 cities, 2 of which in the Northwest region. So it's really an emerging and changing picture as we go through. In relation to scale, it's a bit hard to scale at this moment in time. And I think -- but rest assured, those conversations are ongoing with the regulator on those topics, driven by those areas that they're focusing on growth. We've had 35 applications, for example, for data centers. There is a huge volume of additional work that we're seeing in terms of demand, and we're now working through and prioritizing that. Christopher Laybutt: Thank you, Dom. And last but not least, James. Unknown Analyst: Very kind. A couple of questions. Firstly, on reopeners. There's been a couple of questions already on reopeners. But -- and I guess this has been touched upon a little bit. But I was wondering whether you had any visibility on how the split might look for reopeners between fast money and slow money. Obviously, the biggest theme in a way in Cunliffe was spending more on maintenance of assets. So maintenance CapEx is normally treated as OpEx. So maybe that points to a bit more kind of fast money bias, but maybe you could share some thoughts on that, if that's possible. And then the second question was just touched upon. I can't believe I'm at the end of the queue and has asked this already, but the topic of the moment data centers, which you just mentioned, you had a lot of applications. Obviously, data centers use a lot of water. Could you talk us through how we should be thinking about data centers in the context of United Utilities. Is this going to be a big driver of investment for you of demand? You mentioned the applications. Are they ones that are likely to be progressed in the near term? Or is this further out, that would be super useful. Louise Beardmore: Great. Thanks so much, James. Do you want to pick up the sort of fast and slow money and I'll pick up on data centers, Phil? Philip Aspin: Yes James. So I mean, as I alluded to with Pavan, the split of how Ofwat intend to fund any reopener is clearly one of the things that we'll have to consider in terms of how that impacts funding, et cetera. And clearly, a lot of the investment would go into CapEx and would typically be slow money. But clearly, we'll be pushing to make sure we've got the right balance between fast and slow in the context of what that means for financial ratios and the performance of the business. And as always, that Ofwat will be looking to balance that with the impact on customer bills in the near term as well. Louise Beardmore: And James, just in relation to your comments about data centers, look, they're all at various different stages of maturity. We've done 2 things. We've sort of identified areas in the region where we have spare water capacity. They're not necessarily always aligned with areas where people want data centers, but we've done a huge amount of work in that particular space. But in relation to the data centers that we're seeing, it also generates an opportunity for us as well. So how can we potentially use storm water in terms of those -- the cooling that is required. So if you think about combined sewer overflows and the challenge that I have and the fact that our sewers are never more than about 15% to 18% fall, the challenge we have is one of rainfall, and we have the highest combined rain network in the U.K., there's a significant opportunity here for how we potentially think about this slightly differently. So there's some really interesting engineering that's happening in this particular area as well. But they are all at different areas of maturity. There are certain areas where we're going to have to put in additional water resources to provide the capacity that is actually needed. But I also think it's a bit of an opportunity for the U.K. to think fundamentally differently. And we're working with a number of international organizations looking at how can we use -- there was an awful term in the sector called final affluent. But in other words, what's come out of your treatment works then gets returned into the environment, how could we use that? They don't necessarily need potable water. So just looking at this differently from an engineering perspective as well. So there's a huge opportunity in there for us to both innovate at the same time as growth infrastructure as well. Christopher Laybutt: Thank you, James. Back for another bite, Mr, Nash. Yes, we can't hear you, Dom. Unknown Analyst: I'm trying to make sure it overruns, Chris, as much as possible. Yes. One question from me, please. Supervisory regulation. Clearly, we are in some negotiations with the regulatory bodies and governments as to how that will work. What sort of options are you potentially looking at? And/or what would you like to see to come out of supervisory regulation? And do you see it as a potential sort of hindrance or a help in the way that you're actually going to perform your functions going forward? Louise Beardmore: Look, Dom, I see it very much as a help. There is a regionality about these businesses that we run, both in terms of the context of the infrastructure and even within region. You've heard me talk about the fact that we've restructured the business to be across 5 countries. Merseyside has got 84% of its wastewater system is a combined system. It's on the West Coast. Those storms hit it every single day. Even within region, it performs very, very differently. And I think regulation that understands the context of what's going on within a region, what those local priorities are, the ability to understand both the performance of the assets and the cost base is hugely important. Sir John talked a lot about moving away from notional models and the need to really understand those cost drivers, and we're hugely supportive of that. We saw the benefits some of that from the work that we did in AMP and particularly the allowances that we got in relation to some of the rainfall patterns we're seeing, CSO targets and things like that. But this moving away from this ability to just think of something being notional and really understand and both supervise and regulate accordingly, I think, is something that we would really, really encourage. Christopher Laybutt: Thank you very much. Next, Ajay. Ajay Patel: Look, I get the argument of like the scope and need for more CapEx and an improving return profile even for the sector. But the bit that always seems to be at [indiscernible] is the affordability and how this clashes with those aspirations in some respects. I'm trying to understand where -- what do you need to see happen in regulation to ensure that these are more aligned with each other? And not a series of a case of we move 5 years from now, we're asking for higher returns. We're asking for more investment, but there's a consequence of higher bills and the clash with that. And ultimately, it just adds to the risk to the sector. Louise Beardmore: Great question. And I think some of this comes back to what Jenny said a little bit at the beginning in terms of what needs to happen. We have seen a level of resilience as bills have increased, but bill increases are a challenge. And I think does a huge amount in relation to affordability support. We've doubled the number of customers that we're helping. But I think that is where a national social tariff can really play its part because I've been very, very clear that water is the only sector that doesn't have that level of universal support and that isn't right. From an energy perspective, we have warm homes discount. It isn't a postcode lottery according to where you live. And therefore, it won't surprise you that I continue to advocate for that because to some degree, that provides some additional capacity that's absolutely required. I think the other thing to remember is we all got really strong customer support in terms of the bill package that was put forward. So 3 and 4 customers supported the increase in bills and more importantly, the improvements that they would see as a result. And so I think it's also about making sure that you're spending customers' money wisely that we're driving efficiency, we're driving innovation. But at the same time, there is a cost and there is a cost for the infrastructure that's needed. And we are seeing the impact of climate change in a way that continues to evolve and to grow. And as water companies, it's essential that infrastructure is in place so we can enable a growth that we want to see, whether that be new housing targets or industrial growth targets. But at the same time, how do we make our assets more resilient. And just to give you an indication of some of the things that we're seeing, you may have heard on the news last week, there was a train that derailed up here in Cumbria, but I saw 8% of the annualized rainfall for the year fall in 1 day just in Cumbria. So the volume that is coming at us is very much changing. And the infrastructure is going to have to change and evolve to be able to cope with the climatic patterns. So I think that national social tariff is going to be key in terms of how do we maintain that balance. Christopher Laybutt: Terrific. Bartek. Bartlomiej Kubicki: I hope you can hear me well. Just to maybe talk a little bit about how you have started AMP8 in terms of the potential outperformance. Obviously, you have given a guidance on ODIs in year 1. But I just wonder, if we think about your latest debt issuance, where do you see the cost of debt versus the benchmark, meaning what kind of implied outperformance or underperformance we have here? And also similarly, if we think about your totex performance, are there any surprises to the upside or to the downside so far into AMP8 versus the allowances in terms of costs inflation or in terms of CapEx inflation? And maybe lastly, also on ODIs. Obviously, for FY '26, we know it will be negative. But shall we expect FY '27 to be already positive in ODIs? Or it's too early to say? Louise Beardmore: Bartek, do you want to pick up the first 2 and I can pick up on ODIs, Phil? Philip Aspin: Yes. So just picking up on the debt side. So your question was around how we're performing in terms of recent debt issues, Bartek. And I think probably the simplest thing is to refer you back to our Capital Markets Day slide that we sort of tabled where we showed how our performance was tracking against the Ofwat index. and that was a very, very positive position. And I'm pleased to say that existing debt issues that we've issued in this half have continued to perform in line with the expectations that we had at that time. So basically continuing to perform as we expect. On the totex side of things, I think Louis has already touched on this a little bit in the context of Dom's question around totex outperformance. And I think we are very focused on managing our cost position and living within the totex envelopes. We don't particularly see huge scope to outperform. So I think there, that's probably all I'll add to the totex position. Louise Beardmore: In relation to ODIs, Bartek, I mean, I think we've been really clear in terms of we put the 100 basis points on the table. We see that coming both from financing outperformance, ODIs and PCDs. There are some ODIs that are in penalty this year, some that are very much in reward. And we're very clear we're driving against very hard against targets. Obviously, as the infrastructure goes in the ground, you start to see the benefits of that and those ODIs continue to build. We've made a really great start. So for example, on leakage, we'll deliver a leakage benefit this year alone that was bigger than what we delivered last AMP. So there's some real great progress and work that is happening, but they continue to build as we go through the AMP period. Christopher Laybutt: Okay. Heading back to Julius with a... Julius Nickelsen: I'll try and go for a second. Maybe just on the last point on ODIs you've seen some improvement in the first half year, but could you maybe give us some indication how much of that is driven by weather? And then maybe also, I mean, the guidance hasn't changed overall on the net penalty. But has there been some change given that we had like some warmer weather this [ far ] that there will be maybe some improvements on the waste side? Just some color. Louise Beardmore: Yes. Thanks, Julius. I mean, look, we've been really clear that we expect that we will be in a penalty position for this year, but they build over the AMP, and we will be in a net reward position over the AMP period. The weather, although we have seen some dryness to the weather, we've seen some significant storms, too. So there are some areas we've made great progress and great delivery where we're seeing real improvements. We've made great strides in all of our customer service targets. We're in reward on all of those. We will deliver our targets this year in terms of CSOs, for example. And we've seen some other areas where we've got challenges driven by some of those storms. So it is a series of ups and downs. And as infrastructure goes in the ground, we continue to see that build and that delivery. But we are extremely focused on driving the benefits and that contribution to the overall 100 basis points. Christopher Laybutt: Okay. Thank you. Thank you very much, Louise, and thank you, everyone, for joining today. As always, if you have any follow-up questions, please feel free to reach out to the team and all of the materials that Phil mentioned are on the website in relation to the CMD. I'll hand back to Louise. Louise Beardmore: Brilliant. Thanks, Chris, and thanks very much to everybody for joining this morning. I suppose just to summarize really, we've made a really great start to the first year of the AMP, really strong operational and financial performance. The AMP program is going really well. I'm really pleased with the way that the organization and the supply chain have mobilized, our CapEx is all in line with expectations. And we feel that we're really well positioned to -- as we move forward in relation to the transformative period for the sector. So thank you so much for joining us this morning. No doubt, we will get the opportunity to speak in the coming days. But I know there's a lot going on and it's busy, but thank you so much, much appreciated. Philip Aspin: Thank you, everyone.
Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Synergy CHC Corporation's Financial Results for the Third Quarter ended September 30, 2025. Joining us today are Synergy's CEO, Jack Ross; CFO, Jamie Fickett; and Greg Robles with Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg, please go ahead. Greg Robles: Thanks, Karmin. Good morning, and thanks for joining our conference call to discuss our third quarter 2025 financial results. I'd like to remind everyone that this call is available for replay and via a live webcast that will be posted on our Investor Relations website at investors.synergychc.com. The information on this call contains forward-looking statements. These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will and other similar expressions. Forward-looking statements are not guarantees of future performance, and the actual results may be materially different from the results implied by forward-looking statements. Factors that could cause results to differ materially from those implied herein include, but are not limited to, those factors disclosed in the company's SEC filings under the caption Risk Factors. The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now I would like to turn the call over to the CEO of Synergy, Jack Ross. Jack? Jack Ross: Thank you, Greg. Good morning, everyone. Thank you for joining us today to discuss Synergy's performance for the third quarter of 2025. We are pleased to report our 11th consecutive quarter of profitability, reflecting our continued operational discipline and focused execution. Revenue, gross profit and income from operations increased year-over-year, underscoring the strength of our platform as we scale across new categories and geographies. Before we get into the financial results, let me touch on a few key developments across our business. During the third quarter, we made important leadership additions to support our expanding operations. First, we welcomed Teresa Thompson to our Board of Directors. Teresa spent nearly 4 decades at Costco Wholesale, including 29 years as a pharmacy OTC buyer, where she oversaw the vitamins and supplement categories across all U.S. warehouses. Her insights and category experience will be invaluable as we scale FOCUSfactor brand globally and strengthen our supplement strategy. We also added Bob Anderson as our new Director of Direct Store Distribution, otherwise known as DSD. Bob has over 20 years' experience in the beverage industry, and he will be responsible for building and optimizing our nationwide direct-to-store distribution for our beverage division. With his extensive experience, we expect to be signing new distribution partners continually and rapidly. Moving to our functional beverage momentum. This business continues to accelerate for us and is supported by a growing national and international retail footprint. During the third quarter, we secured several major distribution wins that significantly expands our retail availability to our functional beverages and shops. Looking at our domestic expansion, EG of America, the sixth largest convenience store chain in the U.S. will launch our focus and energy beverages to over 1,600 high-traffic locations nationwide in Q4 of this year. The rollout meaningfully increases our visibility in convenience channel and strengthens our position in the fast-growing functional beverage category. Additionally, Wakefern Food Group, the largest retailer owned cooperative in the U.S., will carry five focus and energy SKUs across 365 retail locations. On a regional front, we announced new partnerships with AlaBev, one of the premier beverage distributors in the Southeast U.S., who will distribute our beverages and brain health shops to over 5,000 grocery, convenience and specialty retailers across Alabama. We also signed an agreement with Atlantic Importing Company, a leading New England-based distributor to expand our beverage footprint across Massachusetts, Connecticut and Rhode Island. These partnerships reflect strong validation from top-tier retailers and distributors who see the opportunity for the FOCUSfactor beverage to lead the clean energy and brain health beverage segment. As we continue to expand our beverage business, our focus remains on disciplined execution, brand awareness and ensuring the availability of products in key markets that drive both volume and profitability. Turning to the supplement business. We continue to strengthen our momentum in this category as well. FOCUSfactor has recently been named the #1 pharmacist recommended OTC memory supplement for 2025, '26 by the Pharmacy Times. This underscores the confidence pharmacists place in our brand and our mission to deliver meaningful cognitive support to our consumers. In the U.S., our supplement business expands with Kroger, one of America's largest supermarkets operating in 35 states, which will launch 3 SKUs for the FOCUSfactor supplement across 1,600 of its 2,800 locations beginning in April of 2026. In Canada, Uniprix, one of Quebec's largest pharmacy networks will introduce the supplements across 300 stores beginning in February of 2026. Together, these launches expand our core brand presence across grocery and pharmacy channels, reinforcing our dual strategy of growing our supplements and beverages under the trusted FOCUSfactor banner. We also continue our international expansion. We have now received our first round of purchase orders from Costco, Mexico for the FOCUSfactor supplements, which will ship in December in the Q4. Also, our management team -- some of our management team is going to Dubai next week to meet with our licensing partner and attend the Middle East Organic Natural Products Expo, which will provide key contacts as we continue to develop our international footprint. Before passing the call over to Jamie to cover the financial results, I'd like to briefly touch on the public offering we closed in August. We raised $4.4 million of equity capital, which provides us with additional working capital to support our retail rollouts, inventory buildup and production and marketing initiatives. This capital enhances our flexibility to meet rising demand and invest in our continued growth. Overall, the results reflect another strong quarter of execution, meaningful progress across both the beverage and supplement business with new retail authorizations, expanded distribution partnerships, experienced leadership teams being added -- leadership people being added to our team, Synergy is well positioned to accelerate growth through the remainder of '25 and into '26. With that, I'll turn the call over to our Chief Financial Officer, Jamie Fickett. Jamie? Jaime Fickett: Thank you, Jack. I'll now review our financial results. For the third quarter of 2025, net revenue was $8 million compared to $7.1 million in the year ago quarter, reflecting an increase of 12.4%. Gross margin for the third quarter was 70.9% compared to 67.2% in the same quarter last year. The increase in gross margin was primarily driven by a favorable shift in product mix. Operating expenses for the third quarter were $4.4 million compared to $3.7 million in the year ago quarter. The increase in operating expenses was primarily due to incremental costs associated with being a public company and the added cost of launching our beverage division. Income from operations was $1.28 million, up 21.8% from $1.05 million compared to the third quarter of 2024. Net income for the third quarter was $125,300 compared to $783,600 in the year ago quarter. Earnings per share for the third quarter was $0.01 per diluted share compared to $0.11 per diluted share in the year ago quarter. Adjusted EBITDA per share for the third quarter was $0.15 per diluted share compared to $0.18 per diluted share in the year ago quarter. These decreases are due to other income in the same period last year and higher expenses this year to launch the Beverage division. EBITDA for the third quarter was $1.31 million, down 1.3% compared to $1.33 million in the third quarter of 2024. Adjusted EBITDA for the third quarter was $1.52 million, up 13.4% compared to $1.34 million in the third quarter of 2024. Moving to our balance sheet. As of September 30, 2025, we had cash and cash equivalents of $1 million compared to $687,900 as of December 31, 2024. Inventory was $2.1 million at the end of the third quarter compared to $1.7 million at December 31, 2024, and we also have an increase in our prepaid deposits of nearly $2 million, largely due to an increase in deposits on inventory for our growing beverage division. At September 30, 2025, we have a working capital surplus of $16.68 million compared to a working capital deficit of $1.12 million as of December 31, 2024. For the 9 months ended September 30, 2025, our cash used in operating activities was $3.21 million compared to cash used in operating activities of $1.38 million at September 30, 2024. The increase primarily reflects higher prepaid expenses for deposits on inventory and continued reductions in accounts payable and accrued liabilities. Now I will turn the call back to the operator. Operator: [Operator Instructions] Our first question will come from the line of Sean McGowan with ROTH Capital Partners. Sean McGowan: I have a couple of questions. Can you give us some sense of what contribution there was in the quarter from the beverages? Jack Ross: So in the current quarter -- the third quarter was $159,000 of beverage revenue. Sean McGowan: Okay. That's helpful. Now -- and that might explain or tie into the next question, which is, can you give me a little bit more color on the dynamics of the product mix? I mean, specifically, like what is the highest margin revenue source? And how high is that in order for the blended average to come out pretty high. I think it is the highest you've seen in a while, right? Jack Ross: Yes. So in our supplement business, we actually took a price increase to our Costco business of 11%, which I think our gross margin on our supplements on gross revenue is about 75% before. So it obviously increased that way. And our net -- our gross to net is about 11% of the difference. So we basically took about 11% increase in half of our business. Sean McGowan: Okay. When I said it was the highest you've seen in a while, I meant factoring in the RTD. Anyway, last question, is the G&A that you reported in the quarter indicative of what we should expect to see kind of an ongoing rate? Or given some of the executive additions that you've made that you highlighted at the top of the call as well as some others, will the kind of fourth quarter and ongoing rate be higher than what we see in the third quarter? Jack Ross: It's a good question, Sean. So we've sort of -- we'll call, added a secondary strategy to our beverage rollout. So with the sale of we'll call Poppi to Pepsi and the sale of Alani to Celsius, it really opened up, we'll call a lot of holes in the DSD networks, meaning Poppi and Alani are going back to Pepsi distribution. And we got very fortunate timings everything in life. And the DSD networks, the beer guys have opened up a lot of holes in their distribution network. So two things. Obviously, we expect to have an Allstate's strategy in our DSD network very quickly as we're signing these rapidly, and you'll read about some more next week and the week after and the week after. But more importantly, to support those guys on the DSD side, we will be also adding human capital, salespeople and service people to support those DSD distributors to bring on, we'll call regional retailers. So a little shift there where the opportunity presented itself with holes in the DSD distribution coming available, which should help us accelerate our RTD business a lot quicker than we thought in the convenience store side. So there will be some -- a long way to say, there will be some added human capital in the fourth quarter and first quarter and second quarter as we expand that Allstate DSD distribution. Operator: And at this time, this concludes our Q&A session. I would like to turn the call back over to Mr. Ross for closing remarks. Jack Ross: Thank you, Karmin. In closing, just a few final comments. We currently have over 3 million cans of drink inventory now in stock from our capital raise in August with more production being done as we speak. We are continuing to add key employees throughout our organization to build out our sales network. 2025 has been a foundational year for Synergy between refinancing our debt out to 2029, raising equity to support our balance sheet and growth and signing many key distribution partners and retailers we feel that the team has positioned the company well for an exciting 2026. We thank everyone for joining the call today, and we look forward to speaking with everyone again in March when we announce our year-end results. Thank you. Operator: And ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, everyone, and welcome to the Medexus Pharmaceuticals Second Quarter 2026 Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Victoria Rutherford, Investor Relations. Victoria, the floor is yours. Victoria Rutherford: Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals Second Fiscal Quarter 2026 Earnings Call. On the call this morning are Ken d'Entremont, Chief Executive Officer; and Brendon Buschman, Chief Financial Officer. If you have any questions after the conference call or would like further information about the company, please contact Adelaide Capital at (480) 625-5772. I would like to remind everyone that this discussion will include forward-looking information as defined in Canadian securities laws that is based on certain assumptions that Medexus believes to be reasonable in the circumstances, but is subject to risks and uncertainties. Actual results may differ materially from historical results or results anticipated by the forward-looking information. In addition, this discussion will also include non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin and adjusted gross margin, which do not have any standardized meaning under the IFRS and therefore, may not be comparable to similar measures presented by other companies. For more information about forward-looking information and non-GAAP measures, including reconciliations, please refer to the company's MD&A, which along with the financial statements, is available on the company's website at www.medexus.com and on SEDAR+ at www.sedarplus.ca. As a reminder, Medexus reports on a March 31 fiscal year basis. Medexus reports financial results in U.S. dollars and all references are to U.S. dollars unless otherwise specified. I would now like to turn the call over to Ken d'Entremont. Kenneth d'Entremont: Thank you, Victoria, and thank you, everyone, for joining us on this call today. We are now over 8 months into the commercial launch of GRAFAPEX. We are extremely pleased with the progress achieved thus far and product performance to date has exceeded our prelaunch expectations, with October 2025, representing the strongest month of patient demand we have seen since launch. The $6 million we have invested in GRAFAPEX launch to date through September 30 is already having a significant impact. As of today, we have engaged with 83% of all 180 U.S. transplant centers, 29% of U.S. transplant centers have already ordered GRAFAPEX for procedures in their institutions and 69% of those 52 institutions have reordered. For the 6-month period ending September 30, we recognized product level net revenue from GRAFAPEX of $6.2 million. We still expect that GRAFAPEX will begin contributing positively to quarterly operating cash flows by fourth calendar quarter 2025, which is our fiscal Q3 '26, reinforcing its potential as a meaningful driver of long-term value. The initial adoption by major commercial payers and leading health care institutions has been highly encouraging and early indicators of patient level demand continue to validate the value proposition GRAFAPEX delivers. To that end, product level net revenue from GRAFAPEX in fiscal Q2 '26 totaled $3.1 million relative to $3 million of GRAFAPEX personnel and infrastructure investments. In fiscal Q3 '26, we expect that the underlying patient demand of GRAFAPEX will be approximately $3 million to $4 million. This compares to $2.2 million in fiscal Q1 '26 and $2.1 million in fiscal Q2. Considering the estimated 1 to 2 months of inventory on hand at our wholesaler at September 30, we anticipate patient demand in fiscal Q3 '26 will result in product level net revenue of GRAFAPEX of between $2.5 million and $3.5 million. Starting October 1, '25, eligible procedures under Medicare involving the use of GRAFAPEX are eligible for additional reimbursement through the NTAP program or New Technology Add-on Payment. As I have mentioned previously, this program is designed to provide temporary supplemental reimbursement to institutions that use designated new, higher-cost medical technologies, making it easier for hospitals to adopt products such as GRAFAPEX and thereby improving Medicare patient access to cutting-edge care. We believe that the NTAP program's objectives are being met here, and we expect that NTAP eligibility for GRAFAPEX has and will continue to adoption and utilization in our fiscal Q3 '26. Overall, our fiscal Q2 '26 results remain solid with positive operating income, adjusted EBITDA and operating cash flows. Our results reflect the continuation of portfolio dynamics we have discussed in the past quarters, coupled with continued growth momentum of GRAFAPEX, which we view as a continuing testament to our portfolio approach. Our fiscal Q2 '26 net revenue was $24.7 million, a decrease compared to $26.3 million for the same period last year. Our fiscal Q2 '26 adjusted EBITDA was $4.4 million, a decrease compared to $6 million for the same period last year, but our second consecutive fiscal quarter of adjusted EBITDA growth since the approval and launch of GRAFAPEX in fiscal Q4 '25. We produced a modest net loss of $0.3 million for the quarter, a decrease compared to positive $0.1 million for the same period last year, but we still produced positive operating income of $1.4 million in fiscal Q2 '26, a decrease compared to $1.6 million for the same period last year. But again, our second consecutive fiscal quarter of operating income growth since the approval and launch of GRAFAPEX. Turning to a few notes on our other products. In Canada, unit demand for Trecondyv grew by 69% over the trailing 12-month period ending September 30. In September 2025, Health Canada issued a notice of compliance in respect of generic version of treosulfan for injection in Canada. We intend to monitor for and evaluate the potential effects of this development for any future commercial launch of the now approved generic product. IXINITY unit demand in the United States decreased by 3% over the trailing 12-month period ending September 30, 2025. We continue to invest judiciously in our IXINITY manufacturing process improvement initiative, which has been ongoing for some years now. This initiative has resulted in a 30% decrease in product level cost of goods, comparing fiscal Q2 2026 to fiscal Q1 2021 being the first fiscal quarter following our acquisition of the product in February of 2020. This informs our choice to make modest further investments in this process, approximately $1.2 million of which we expect to pay in fiscal year '26. Rasuvo unit demand in the United States has decreased by 2% and Metoject unit demand in Canada decreased by 9% over the trailing 12-month period ending September 30, 2025. Regarding Rasuvo, during the last quarter, we learned that another product in the branded methotrexate auto-injector market had been withdrawn by its distributor. We expect increased unit demand for Rasuvo over time as inventory of the withdrawn product sells down and patients and health care professionals look for alternatives. Rupall continues to face generic competition in Canada following the loss of its regulatory exclusivity period in January 2025, and as a result, unit demand over the 3- and 6-month period ending September 30 decreased by 58% and 55% compared to the corresponding prior year periods. While the impact of generic erosion on product level net revenue appears to have slowed in fiscal Q1 '26, generic competition will continue to have an adverse impact on product level performance. We view this pattern as still typical of products in this later stage of product life cycle. In summary, we remain focused on delivering strong overall performance across our portfolio of products in both the United States and Canada, advancing GRAFAPEX in the United States and strategically positioning the company to capitalize on future revenue opportunities. I'll now turn the call over to Brendon, who will discuss our financial results in more detail. Brendon Bushman: Thank you, Ken. Our results for fiscal Q2 2026 were solid and continue to reflect the natural transitional changes of our evolving product portfolio. We are very pleased with the early performance of GRAFAPEX, which, as Ken mentioned, generated $3.1 million of product level net revenue in our fiscal Q2 '26 and is net of working capital changes expected to begin contributing positively to operating cash flows in the fourth calendar quarter 2025, which is our fiscal Q3 '26. Turning to the full quarterly results. Total net revenue for fiscal Q2 '26 was $24.7 million. This represents a decrease of $1.6 million compared to $26.3 million for the same period last year. The $1.6 million year-over-year net revenue decrease was attributable in part to reduced net sales of Rupall in Canada and the March 2025 return of Gleolan in the United States to the licensor. This was partially offset by product level net revenue from GRAFAPEX, among other factors. Gross profit was $13.8 million for fiscal Q2 '26 compared to $14.1 million for the same period last year. Gross margin was 55.7% for fiscal Q2 '26, which is an improvement on the 53.7% we achieved in the same period last year. We expect increasing product level net revenue from GRAFAPEX, together with the absence of product level net revenue from Gleolan post March 2025 to have a positive effect on the company level gross margin. These resulting changes to gross margin are expected to continue to emerge over fiscal year 2026. Selling, general and administrative expenses were $11.9 million for fiscal Q2 '26 compared to $9.7 million for the same period last year. The $2.2 million year-over-year increase in selling, general and administrative expenses was primarily due to the $3 million of GRAFAPEX personnel and infrastructure investments we incurred in fiscal Q2 '26. We expect these investments to stabilize at approximately $3 million to $4 million per quarter, although individual future quarters could deviate from this estimate. Adjusted EBITDA was $4.4 million for fiscal Q2 '26, a decrease of $1.6 million compared to $6 million for the same period last year. The decrease was primarily due to the effects of generic competition on product level net revenue of Rupall. Net loss was $0.3 million for fiscal Q2 '26, a decrease of $0.4 million compared to net income of $0.1 million for the same period last year. We continue to generate cash from our operating activities with quarterly operating cash flow of $3.3 million compared to $6.9 million for fiscal Q2 '25. Cash on hand of $9.4 million at September 30, 2025, compares to $24 million at March 31, 2025. The primary factor in this net decrease in cash is the company's aggregate payments of $16.6 million under our senior secured credit agreement, substantially reducing our outstanding principal amount. As of September 30, 2025, our net debt was $11.7 million, a decrease of $1.5 million compared to $13.2 million as at March 31, 2025. We are in the advanced stages of a process to refinance our credit agreement and have a high degree of confidence that we will be able to announce a long-term agreement well in advance of the current facility's maturity in March 2026. As always, there can be variability in quarter-to-quarter results and the operating environment also remains variable, but we look forward to continuing to build the company and its portfolio in the coming quarters and beyond. Operator, we will now open the call to analyst questions. Operator: [Operator Instructions] Our first question is coming from Andre Uddin of Research Capital. Andre Uddin: Just looking at Rasuvo, just wondering which branded methotrexate auto-injector was withdrawn from the market? And what market share did that product have? Kenneth d'Entremont: Yes. Thanks, Andre. So it was Otrexup. If you recall, there were just 2 of us in the market. We had an 80% share and they had the rest. Andre Uddin: Okay. And just in terms of looking at NTAP, can you discuss what -- in terms of influencing NTAP GRAFAPEX sales, like since October 1, about what percentage of patients have been treated under this program, do you think? Kenneth d'Entremont: Yes, it's a great question. We estimate that the Medicare, Medicaid portion of this market is some place between 20% and 30% of total market. So obviously, the NTAP designation has a significant impact on access for those patients because it basically closes the gap between us and the generic competitive product. So it gives them early access to cutting-edge technology. So we would expect that uptake will accelerate for that group of patients. Andre Uddin: Okay. And just one last question. In terms of your BD pipeline, how does it look at this point in time? And are you considering bringing in another product? Kenneth d'Entremont: Yes, great question. Obviously, we're laser-focused on executing on GRAFAPEX. That is the future of the company. That's where we're putting the majority of our effort. But we're always scouting for additional business development opportunities in the therapeutic areas where we participate so that we can leverage the infrastructure that we have. And so we're always looking. And obviously, when we find something attractive, we'll share that with shareholders. Operator: Our next question is coming from Michael Freeman of Raymond James. Michael Freeman: A few questions here. So I wonder if you could give us an update on GRAFAPEX's formulary inclusion, insurance coverage dynamics and any feedback you're getting on the doctor and patient experience using GRAFAPEX so far? Kenneth d'Entremont: Yes. Thanks, Michael. Great questions. So first, on the reimbursement front, I think we've described that we're ahead of expectations with the launch of the product. I mean we're reporting on 6 months in. We're now 8 months in, and the reimbursement situation has been very positive, both from the institutional level where P&T committees are including the product on their formularies, which gives the physicians access within the institution. And then commercial payers are putting positive recommendations in their plans where necessary to reimburse it. So we have not run into any significant issue with respect to getting access to the product. Obviously, it just takes time for institutions to go through the process of adding it to their formulary, and that's kind of what we're experiencing right now, but we're very pleased with where we are today. With respect to the second part of your question, which was feedback from clinicians, we've always known that this is a very important addition to their options for conditioning of patients undergoing transplant. Clinically, the evidence is very strong. And so we're seeing adoption in the places where we expected it. And so again, positive feedback, which emboldens our confidence that the drug is going to be a major part of transplant and we'll achieve that target that we've set, which is 100-plus by 5 years. Michael Freeman: All right. Great. Now on IXINITY, it looks like sales have been holding in quite well despite competition. I wonder what you would attribute the durability of this product to? Kenneth d'Entremont: Yes. Thanks for that. It's been a part of people's treatment for many years now. So we have a strong group of patients who are very comfortable and satisfied with the product, and they consistently use the product. And we've got a group of sales and marketing people in the field who are doing a great job at making sure those patients remain satisfied with the product. So I think it's a combination of both. Partially, it's the drug and it works really well. And we've got people who support it, who do a really good job. Operator: [Operator Instructions] And our next question is coming from Scott Henry of AGP. Scott Henry: Ken, for starters, I didn't quite hear you had given some guidance for fiscal Q3 GRAFAPEX. Could you just repeat that? It chopped up a little on my end. Kenneth d'Entremont: Revenue fiscal Q3, I think we said $2.5 million to $3.5 million. Brendon, do you have the number? Brendon Bushman: Yes. So we're also guiding to demand sales. So we've guided to $3.4 million in demand sales, and that compares to $2.1 million, I believe, for fiscal Q2. And in ex-factory, so that the wholesaler sales, we're guiding to $2.5 million to $3.5 million, which compares to $3.1 million in Q2. Scott Henry: And so the demand should be greater than the reported sales. Why would that be? I mean, typically, when a product is growing, the opposite is true. Could you give any color on that? Brendon Bushman: Yes, I can. Kenneth d'Entremont: Yes, go ahead. Go ahead, Brendon. Brendon Bushman: So we have -- for the last 2 quarters, we have seen that be the case as the wholesaler has just held on to inventory on hand. So they're sitting at between 1.5 to 2 months of inventory right now, which is very consistent with industry norms. But we can't really control how much inventory they will have on hand at any time. So that's kind of why we're -- and just as aside, because we have a single wholesaler model, we don't necessarily have the gives and takes that we would have for some of our other products. So that's why we're really focused on guiding towards demand sales as well and then trying to bridge that to that ex-factory sales. Scott Henry: Okay. And you mentioned October was the largest month. Can you comment on the demand run rate in October, if you annualized October, what sort of level we would be at? Kenneth d'Entremont: We're not really giving granularity down to that level. But clearly, with October coming in so strong, maybe partially due to reimbursement improvement, which started in the month, we don't know for sure. We will find out later. But yes, we're well on track to kind of what we've been guiding to and expecting on GRAFAPEX. Brendon, can you give a little more color maybe? Brendon Bushman: Yes. I mean, as far as the actual demand, what we can say is it's very much in line with supporting the $3 million to $4 million that we have guided to. And as Ken mentioned, it is the strongest month of demand that we've had yet. Scott Henry: Okay. Great. Yes. The launch has been very strong, in my opinion. One of the things -- I mean, I've seen a lot of launches over the last 20 years, every launch has its own curve, and with a product like this, how would you think about based on the early information you have, what kind of launch curve this would be? Obviously, it went way up in the beginning, but now would you expect gradual growth? Or do you think you might hit an inflection point and accelerating growth as reimbursement comes together? How -- my question is, based on what you've seen, how do you think we should think about this launch trajectory going forward based on the dynamics of this market? Kenneth d'Entremont: Yes, it's a great question, and this is a very unique situation because as we've discussed previously, this is a drug that there's a lot of information out there about it. It's been launched in many other territories before it hits the U.S., which is not usually the case. So what we have observed is as expected in the early going in the first few months, we got a lot of pediatric use. There's a very strong need for it in pediatrics, and then now we're starting to get access to the adults which will really drive that revenue growth going forward. So it's almost like this 2-phase sort of a launch where a real quick update in the very beginning, plateaus now as we're seeing reimbursement come in place for adults, it starts to accelerate again. And so that's kind of what we expect. As you know well, Scott, the first year typically is a year spent on trying to get reimbursement, and we've seen strong uptake even while that effort has been ongoing. So we feel good about it accelerating into next year. Scott Henry: Okay. Final question, just on the Canadian sales. They were at a very high level in the first half of fiscal 2025. You had some competitive issues there, which brought it down to a new level. Where we are right now, do you see this as kind of a base for growth going forward? Or just trying to get a sense if this -- if the Canadian business has kind of bottomed out and we should start to think about sequential growth going forward? Kenneth d'Entremont: There's a lot in that one. So obviously, we got a broad portfolio in Canada. So there's lots of ups and downs, Rupall being the major driver of that. We said in the comments that we see that erosion starting to slow. So we would hope that, that's the case. We expect some continued erosion on Rupall, but at a declining rate. So I guess that gets to your point about is it starting to trough, and that's possible. We've got other headwinds on Metoject, which showed some continued erosion, but again, at kind of a declining rate. So all these ups and downs, I think the Canadian business is flat to declining, continue for a few quarters and then trough. Operator: Our next question is coming from David Martin of Bloom Burton. Gireesh Seesankar: This is Gireesh on for Dave. Can you provide a bit more color on the ongoing Rasuvo sales dynamics? Have you seen any early signs of market share gain with the competitor leaving? And have prices sort of stabilized in terms of gross to net adjustment? Kenneth d'Entremont: Yes, great questions. So yes and yes. The -- we did see -- we are seeing increased unit volume uptake as a result of the competitor announcing they were withdrawing and then inventory starting to work down. So that is happening. And then yes, obviously, price kind of troughed, and we don't see any further declines. Gireesh Seesankar: And do you expect price to either increase going forward? Or would it be stable? Kenneth d'Entremont: Most of this business is under contract. So you wouldn't expect to see anything happen in the short term, but as contracts expire and then get renegotiated, that will be the point at which we'd start to see some movement. Operator: Well, we appear to have reached the end of our question-and-answer session. I will now hand back over to the management team for any closing comments. Kenneth d'Entremont: I just want to thank everybody for joining us on the call today. We remain pleased with the business performance in this past quarter, which continues to underscore the strength and strategic value of our portfolio approach. This solid foundation Medexus -- positions Medexus well as we enter the next phase of growth, driven by continuing rollout of GRAFAPEX. We look forward to the opportunities that lie ahead in fiscal 2026 and beyond, and thank everybody for joining the call today. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Michael Szucs: Good day, everyone. Welcome to Cebu Pacific's investor briefing for the third quarter of 2025. The third quarter results reflect a return to the pre-pandemic pattern of lean travel demand in the Philippines. Key factors influencing this year's performance include the earlier start of the school season, which moved from late July last year to mid-June this year, and the onset of the rainy season with frequent weather disturbances that typically dampen passenger traffic compared to the second quarter summer peak. We use this period to strategically manage capacity, moderating flights and seat growth while conducting scheduled maintenance activities. This disciplined approach ensures that as we enter the fourth quarter, our operations remain resilient and well prepared to capture stronger travel demand during the holiday season. For the third quarter, CEB posted revenue of PHP 24.3 billion, up 5% year-on-year. The earlier school opening contributed to softer domestic travel, offset by continued growth in international passenger volumes, keeping our load factor stable at 84%. Ancillary and cargo revenues continued to post double-digit growth, supported by wet lease revenues and an increase in wide-body capacity. This brought Cebu Pacific's 9-month revenue to PHP 87.6 billion, 18% higher year-on-year. We carried 20 million passengers, up 14%, allowing us to maintain a healthy 85% load factor with stronger passenger yields. Lower fuel prices, a stable peso and gains from spare engine compensation further helped improve our performance. Core income before tax more than doubled to PHP 2.9 billion, and net income rose 181% to PHP 9.5 billion. Meanwhile, fleet availability and global supply challenges persist. The number of aircraft on ground for Pratt & Whitney engine inspections continues to fluctuate and remains above anticipated levels. We continue to implement proactive measures to mitigate these headwinds, maintaining safe and reliable operations, strengthening supply chain coordination and enhancing the overall travel experience for our customers. We entered the fourth quarter with a clear strategy to capture peak holiday demand. And looking ahead, we remain confident that long-term demand for budget-friendly air travel will stay strong, supported by steady economic activity in the Philippines and across the ASEAN region. These strengths underpin our confidence in sustaining growth, enhancing profitability and delivering long-term shareholder value. With that, let me turn it over to Trina to discuss the financial results in more detail. Trina Asuncion: Thank you, Mike, and good day, everyone. As Mike mentioned, third quarter results reflect the leanest travel season for the Philippines, where CEB strategically aligns with demand by moderating capacity growth and scheduling maintenance activities. This year, on the back of 1% increase in seat capacity, CEB's total revenue grew 5% year-on-year to PHP 24.3 billion. Our seat load factor remained stable at 83.6%, while both ancillary and cargo businesses performed very well. Cebu Pacific carried over 6 million passengers during the third quarter, up 1% year-on-year. Passenger revenue was broadly stable year-on-year at PHP 15.4 billion as increase in passengers were offset by 1% decline in yields. This is a reflection of the longer lean season this year as July last year still contains school holidays, whereas this year, most academic calendar started as early as mid-June. Meanwhile, ancillary revenue rose 14% to PHP 7.2 billion, supported by 8% growth in international passengers as well as the wet lease agreement with flyadeal. Cargo volume grew to 53 million kilos, 8 million kilos or 18% more than last year, coupled with a 4% improvement in yield. This was driven by CEB's additional wide-body capacity, which captured the growing demand in this segment. With PHP 24.3 billion in revenue, EBITDA for the third quarter grew by 11% to PHP 4.8 billion, reflecting an improvement from a 19% to a 20% EBITDA margin despite the lean travel season as higher revenues and lower fuel prices more than offset increases in airport, crew and maintenance costs. However, higher depreciation and financing costs brought by the larger fleet and spare engine ratio resulted in an operating loss of PHP 122 million and pretax core loss of PHP 1.7 billion. Excluding fuel, cost per ASK increased 7% to PHP 2.14, but total CASK improved, declining 2% year-on-year to PHP 3.01. Peso-dollar exchange rate closed at PHP 58.20 at the end of the quarter, almost PHP 1.9 weaker per dollar versus previous quarter's close. This resulted in a ForEx loss of PHP 1.1 billion. This was more than offset by another PHP 1.2 billion in gain from one additional spare engine received from Pratt & Whitney as well as tax benefits recognized from higher realizable net operating loss carryover, or NOCO, following the additional income from the FOC engines. As a result, Cebu Pacific reported a net income of PHP 0.5 billion for the third quarter, a turnaround from the PHP 0.2 billion net loss recorded in the same period last year. For the first 9 months of 2025, Cebu Pacific's total revenue has reached PHP 87.6 billion, an 18% increase from same period last year. Passenger revenue rose 17% year-on-year to PHP 59.7 billion. This was driven by a 14% increase in total passengers carried, supporting a healthy 84.8% seat load factor, coupled with a 2% increase in average fares. We flew 20 million passengers year-to-date at an average fare of PHP 2,990 per passenger. Ancillary revenue grew 17% to PHP 22.8 billion, likewise driven by the growth in passengers plus ancillary yields, which improved by 10% to PHP 1,097 per passenger. Cargo revenues grew strongest, showing a 30% increase year-on-year to PHP 5.2 billion as we carried almost 154 million kilos, a 33% increase with only a 3% trade-off on cargo yield. With PHP 87.6 billion in revenue, EBITDA for the first 9 months of 2025 reached PHP 22.2 billion, up 26% year-over-year for a 25% EBITDA margin, which is up from last year's 24%. Operating expenses amounted to PHP 79.8 billion, 16% higher than same period last year, driven by 11% more flights and 18% more ASK. This translated to a cost per ASK of PHP 3.05 or 2% lower year-over-year. With this, CEBs operating income reached PHP 7.8 billion, 37% higher than same period last year for an improved operating margin of 9% versus 8% same period last year. The ongoing transition towards a bigger, more fuel-efficient neo aircraft allowed for better economics per seat, while lower fuel prices and a stable peso environment helped mitigate the impact of higher operations, maintenance and fleet-related expenses. Pretax core income reached PHP 2.9 billion, more than double same period last year. And with additional gains from the free of charge engines more than offsetting ForEx losses, Cebu Pacific's net income for the first 9 months of 2025 reached PHP 9.5 billion, well above the PHP 3.4 billion net income earned same period last year. Cebu Pacific ended the first 9 months of 2025 with total assets at PHP 241.3 billion, a PHP 3.1 billion increase since start of the year and total liabilities at PHP 225.2 billion, a PHP 3 billion decrease. With 2 aircraft delivered, CEB ended the quarter with a total fleet of 98 aircraft. Net debt ended at PHP 157.3 billion, a PHP 1.1 billion increase from start of the year, while total equity rose to PHP 16.1 billion, up PHP 6.1 billion. These resulted in an improved net debt-to-equity ratio of 9.8x as well as an improved net debt-to-EBITDA multiple of 5x. Retained earnings after considering year-to-date income, net of dividends declared ended at PHP 12 billion. That's a 123% or PHP 6.6 billion increase since the start of the year. Cebu Pacific maintains a stable cash position as we generated PHP 28.2 billion in cash income year-to-date. After cash outflows for working capital of PHP 11.8 billion and PHP 1 billion in net interest payments, cash flow from operations amounted to PHP 15.4 billion. Cash outflows per CapEx amounted to PHP 4.2 billion. This was more than offset by the PHP 7.6 billion in proceeds from sale of aircraft and engines, and a PHP 1.4 billion increase in other assets, mainly from refunds of security deposits. These resulted in a net cash inflow of PHP 4.8 billion from investing activities. Financing activities reported a net cash outflow of PHP 24.5 billion, reflecting debt and lease repayments as well as the PHP 2.8 billion dividend earmarked for payout to preferred shareholders. Overall, these movements resulted in a net cash outflow of PHP 4.1 billion, ending September with a cash balance of PHP 15.8 billion. This liquidity position underscores our ability to fund operations, meet obligations and support strategic initiatives while maintaining financial flexibility. I now turn you over to our President and Chief Commercial Officer, Xander, to share Cebu Pacific's commercial and operational highlights. Alexander Lao: Thank you, Trina, and good day, everyone. Our third quarter performance reflects the impact of a longer lean season this year. Unlike last year when schools opened towards the end of July, most institutions began classes as early as mid-June. This earlier start shortened the traditional travel window and dampened overall domestic traffic during the quarter. Even so, we carried over 6 million passengers, slightly up by 1% year-on-year. International passenger traffic remained healthy, growing 8% to 1.5 million and helped offset a 2% decline in domestic volumes, which reached 4.5 million. Overall, our system-wide seat load factor remained stable at 83.6%, reflecting disciplined capacity management despite softer seasonal demand. For the first 9 months of the year, we've carried 20 million passengers, up 14% from the same period last year. This aligns with our growth in seat capacity, showing that demand continues to absorb the additional capacity we've deployed. Domestic traffic rose 13% to 14.9 million, while international grew 18% to 5.1 million, keeping our year-to-date seat load factor steady at 85%. As Mike earlier mentioned, during the lean third quarter, we deliberately managed capacity, moderating flight and seat growth while carrying out scheduled maintenance. This approach positions us well to capture stronger travel demand in the fourth quarter while ensuring resilient operations. While the earlier school start brought a softer third quarter, it also sets up an upside for the fourth quarter with the return of the week-long semesteral break in late October, a period that did not exist under last year's school calendar. This provides added opportunities for leisure travel among families and contributes to a stronger outlook for the rest of the year. In anticipation of peak holiday travel, we have increased flight frequencies, deployed wide-bodied aircraft on key domestic and international routes and added capacity in December through a damp lease agreement with Bulgaria Air for 2 Airbus A320ceos. These initiatives strengthen our readiness to meet robust demand and deliver a strong finish to 2025. CEB continues to demonstrate the strength of its market leadership, reflecting a steady increase in market share across both domestic and international segments. In the domestic market, Cebu Pacific held its market share at 55.4% during the third quarter, despite the limited capacity growth. This is higher than the 54.1% recorded for full year 2024 and the pre-pandemic level of 52% in 2019. Its international market share for third quarter also remained resilient at 21.5%, up from 20.6% last year and 19.5% in 2019. These continued gains reinforce Cebu Pacific's position as the leading carrier in the Philippines, underscoring its strong network, scale and ability to capture demand as travel momentum continues to build. Despite various operational headwinds, our on-time performance, or OTP, improved to 74% from 69% in the previous quarter as aircraft movements normalized following the completion of taxiway repairs at the Manila airport. Customer sentiment also showed significant improvement. Our quarterly net promoter score, or NPS, rose to positive 40, the highest in the past 5 quarters, while net sentiment was positive 9 for the quarter from positive 3 last year. These gains reflect the positive response to our continued efforts to enhance the end-to-end travel experience from digital booking and payment upgrades to more reliable operations and improved service delivery. We view NPS as a key indicator of customer trust and loyalty, and we remain committed to building on this momentum by further improving reliability, convenience and overall customer experience across every touch point. With the third quarter behind us, we entered the fourth quarter with a stronger outlook versus last year. Revenue per available seat kilometer, or RASK, is currently tracking 5% higher year-on-year. This improvement is supported by strong consumer spending, resilient travel demand and disciplined capacity deployment, positioning Cebu Pacific to deliver higher profitability by the end of the year. I now turn you over to our Chief Financial Officer, Mark, to share some insights on our financial outlook. Mark Julius Cezar: Thank you, Xander. The underlying fundamentals of the Philippine economy remain generally favorable, outpacing many regional peers and demonstrating resilience and steady growth. Consensus forecasts point to GDP expansion in the mid-5% to 6% range for 2025, improving modestly in 2026, supported by robust domestic consumption, gradually easing inflation and looser monetary policy. Higher disposable income should continue to bolster demand for affordable air travel. As Trina mentioned earlier, Cebu Pacific incurred FX losses in the third quarter as the peso closed weaker at PHP 58.20 per USD. Following the Bangko Sentral ng Pilipinas rate cut in early October, dollar-peso 6-month forward exchange rates for Bloomberg remained within the PHP 58 to PHP 59 range. That said, exchange rates depend on a variety of external factors, including capital flows, shifts in interest rate differentials and global risk sentiment. So this stability remains plausible, but not guaranteed. On the fuel front, analysts expect easing in oil prices to continue with 6-month forward prices showing jet fuel below $80 by the first quarter of next year. This is driven by rising supply from non-OPEC producers, planned production increases and moderating global demand, although some upside risk remains should geopolitical tensions reemerge. Taken together, a stable currency, moderating fuel cost pressures and resilient domestic demand provide a supportive backdrop for cost management and profitability through the remainder of 2025 and into 2026. These fundamentals strengthen our ability to manage exposures, maintain operational discipline and sustain earnings momentum going forward. We maintain a favorable outlook for the remainder of the year as we are encouraged by solid 9-month operational and financial results, continued strong travel demand and stable economic environment. Growth remains healthy and Cebu Pacific's growth trajectory continues to outpace competitors in both domestic and most regional markets. Despite strong demand fundamentals, the primary constraint to growth remains on supply side challenges, specifically engine availability and parts supply. These factors pose near-term risk to capacity deployment and could limit revenue upside if delays persist. We are actively mitigating these risks through contingency measures, including wet leases and close coordination with OEMs, but the situation underscored the importance of disciplined cost management and operational flexibility as we navigate these headwinds. This fourth quarter, we expect to receive 5 aircraft deliveries as 3 narrow-bodies and 2 wide-bodies, replacing 3 exiting aircraft. This will bring our fleet to 100 aircraft by year-end with neo seat capacity increasing by at least 35% year-on-year, whereas seat capacity of older ceo aircraft will decrease by 18%. This reflects steady progress in optimizing our fleet and improving cost efficiency. Nonetheless, we continue to manage 12 aircraft on ground, still higher than anticipated. While we expect the situation to improve toward the fourth quarter peak season, we now project full year 2025 capacity growth in the range of 11% and 13%, slightly below our earlier guidance of 15% due to these fleet availability and AOG constraints. For 2026, we expect capacity to grow between 6% and 12%, depending on the pace of engine return to service and aircraft deliveries. Capital expenditure is projected at PHP 35 billion to PHP 40 billion, primarily for fleet renewal, placing 3 ceos and 3 ATRs with 6 new neo aircraft. This keeps our year-end fleet at around 100 while enabling seat growth through upgauging to higher capacity aircraft. Over the long term, our transition from Airbus ceo to A320 and A321neo aircraft remains a key strategic pillar. The neos deliver 15% to 20% lower fuel burn, greater seat density and overall lower cost per ASK, reinforcing Cebu Pacific's cost leadership and sustainability goals and ensuring we remain among the region's most efficient and competitive carriers. I'm happy to note that our ESG principles are firmly embedded across the organization, including within finance, where we view sustainability not as a cost, but as an opportunity fully aligned with our low-cost operating model. We are proud that Cebu Pacific was recognized with the Sustainable Aviation Lease Deal of the Year at the 2025 Airline Economics Sustainability Deals Awards in London, for sustainability-linked Japanese operating lease with call option or JOLCO that finance a new Airbus A321neo. This transaction ties financing costs to measurable emission reduction targets, creating strong alignment between our financial and sustainability objectives. In addition, CEB was named Low Cost Carrier of the Year by CAPA and Best Airline by Roots Asia alongside other ESG awards such as diversity and inclusion and sustainable transportation from ESG business awards in HR World Southeast Asia. These milestones in both our growth and ESG efforts affirm CEB's leadership, not only in the Philippines, but also in the global aviation industry poised to deliver long-term operational resilience, profitability and sustainable growth. Our ESG strategy goes beyond compliance. It's about creating sustainable value by proactively managing risks, improving efficiency and strengthening stakeholder trust. We will continue to embed these principles across the business, ensuring that every aircraft financing decision and operational initiative reinforces both our cost advantage and our commitment to a sustainable future. I will now turn you over back to Mike. Michael Szucs: Thanks, Mark. As we close the first 9 months of the year, I'm happy to note that Cebu Pacific delivered a strong year-to-date performance despite seasonal headwinds in the third quarter. This reflects the resilience of our business model, the strength of underlying travel demand and the discipline of our teams in managing cost and capacity amid an evolving operating environment. We effectively navigated a longer lean season brought by the earlier school opening while managing ongoing supply chain challenges affecting the global aviation industry. Even with these headwinds, we maintained healthy growth ahead of the market and are well positioned for a stronger fourth quarter, supported by the return of the semesteral break, delivery of more wide-body aircraft and the peak holiday travel. Our performance also validates the benefits of our early investment in a more efficient and sustainable fleet, which continues to enhance our growth and cost position, support our ESG goals and strengthen long-term profitability. While supply side and engine availability issues remain, Cebu Pacific remains financially sound, operationally resilient and strategically positioned to capture long-term opportunities in Philippines and regional aviation. We will continue to focus on affordability, efficiency and sustainability as we pursue our mission of enabling everyone to fly. Thank you, and we look forward to an even stronger finish to the year. Operator: Good afternoon, everyone, and thank you for joining us for Cebu Pacific's third quarter 2025 Q&A session. Joining us for today's Q&A session are our Chief Executive Officer, Mike Szucs; our President and Chief Commercial Officer, Xander Lao; our Chief Financial Officer, Mark Cezar; and our VP for Investor Relations, Trina Asuncion. As a reminder, this Q&A session is being recorded. [Operator Instructions] So first, we will be addressing the questions that were submitted in advance via in e-mail. Our first question. Could you share your latest assumptions for the number of aircraft on ground, or AOG, in the fourth quarter and for 2026 to 2027? In light of your demand outlook and the competitive environment, how should we think about the implications of lower capacity guidance for profitability? And does it pose a net earnings headwind? Or do you see offsetting upside through pricing and mix, i.e. higher average fares? I think this question is for you, Xander. Alexander Lao: Yes. Thanks, CJ. I think on AOGs, we entered the year really assuming 8 aircraft on the ground, I think which supported the seat growth guidance of greater than 20% on a year-on-year basis. And currently, we're managing around 12 to 14 AOGs, which is limiting our full year growth to approximately anywhere between 11% to 13%. And I think based on, I guess, more recent developments, it now looks to be closer to 10% to 12%. Aircraft availability remains the key limiter to capacity expansion and really by extension to our net income growth. Having said that, demand is robust. Our revenue still grew 5% in our weakest quarter. In fact, peak Christmas travel is looking to provide extra uplift to our travel demand. And we did mention earlier, RASK is actually tracking up around 5% higher on a year-on-year basis. And really to capture the strength, we are adding near-term capacity in December with a damp lease with Bulgaria Air for 2 A320ceos alongside some of the incremental frequencies given the upcoming wide-body deliveries. So I think all of these combined actions really are positioning us to finish the fourth quarter with really both year-on-year growth and improved margins. We do remain in close coordination with Pratt & Whitney, and we expect AOG issues to remain, but gradually improving through 2026 to 2027. And I think on that basis, we do see the potential for anywhere between 6% to 10% growth in 2026. And 2027, if anything, remain fluid. On a net debt basis, the capacity constraint is a headwind, but we do think that the resilient demand in the Philippines, disciplined revenue management as well as the mix and pricing, which will lead to higher average fares, are offsetting a meaningful portion of the impact. And clearly, as engines return and the aircraft reenter service, we do expect to scale efficiently and continue to lift margins back towards pre-pandemic levels. Back to you, CJ. Operator: Our next question. Could you provide guidance on your 2026 aircraft deliveries, CapEx and financing plans? Additionally, please discuss your debt and leverage outlook. What is your target steady-state net debt-to-EBITDA ratio? And given your outlook, when do you expect to achieve it? I think this question is for Mark, our CFO. Mark Julius Cezar: Quite a few topics to go through there. But first, to go through the fleet and CapEx outlook for 2026. So we expect 6 deliveries in 2026, that's 4 narrow-bodies and 2 wide, that would be replacing 6 exiting aircraft now. So with that, now we expect 2026 CapEx will be between PHP 30 billion and PHP 35 billion, which would be lower than this year, which we expect to be between PHP 35 billion and PHP 40 billion. And we would finance those aircraft with a combination of finance leases and [indiscernible] for narrowbodies and operating leases for the widebodies. On the net debt and leverage levels, so as Trina mentioned in her part of the presentation earlier, leverage stands at about 5x net debt to EBITDA versus about 2x pre-pandemic. I think it's worth noting that the current net debt levels reflect 2 key drivers. First would be the PHP 250 million convertible bond issued during the pandemic, which remains classified as debt until the conversion in 2027. And second is the impact of the accelerated investment since 2023 in both aircraft and engines. If you recall, CapEx in 2023 was close to PHP 60 billion, last year was PHP 64 billion. And it's begun to slow down. We're expecting between PHP 35 billion and PHP 40 billion for this year. So well over -- it's about PHP 150 billion of incremental CapEx that we added to the balance sheet over the past 3 years this year. And this was a deliberate strategy to offset the huge capacity constraints and to capture the strong demand and growth potential we saw in the Philippine market. And the success of this strategy, you can see, it manifests in our 9-month growth and profitability improvements. And -- but with that said, now we do have to address the path to deleveraging the balance sheet. And we see that the accelerated aircraft investments -- aircraft and engine investments are reaching its tail end. After this year, we would only have 2 more wide-body deliveries. And with that, we think we are reaching the height of our net debt levels. We expect net debt to decline as EBITDA ramps up and CapEx moderates. And we would expect additional uplift on growth and EBITDA also will come from aging aircraft as we bring in more 330s and 321s. And most importantly, ungrounding of the grounded neos. And I think going forward that we do expect EBITDA growth will outpace CapEx and net debt, and thus improving our ratios. And to be specific about targets, we are looking at a sub 3 net debt to EBITDA by 2028 with the potential to return to pre-pandemic levels thereafter. Over time, we do also aim to return to a 50-50 owned versus lease ratio on the fleet to reduce our financing costs and improve capital efficiency. So overall, we remain focused on balancing growth with financial resilience, ensuring that the fleet expansion is matched with prudent financing and long-term value creation. Next, CJ. Operator: Our next question will be on the competitive landscape. How do you feel about today's competitive landscape? AirAsia has finalized its restructuring and announced an aggressive narrow-body order, including for non-ASEAN hubs, while Philippine Airlines is expanding its long-haul fleet and refurbishing its older aircraft. How will you defend market share in yields? I think that Mike can answers this question. Michael Szucs: Okay. Very difficult to really know what's going on with AirAsia at a group level and indeed at a local level with Philippine AirAsia, right. They've just -- Philippine AirAsia isn't publicly listed, but they just published their accounts under the SEC requirements. They have to publish them once a year. And just to show the difficulty that Philippine AirAsia is in, they ended December 2024 with just PHP 42 million of cash and with an OpEx of about PHP 24 billion. So that equates to about one week of cash. So they're totally supported by the parent company for them to carry on. And of course, that all depends then on the PN17 resolution. And whilst I think probably the AirAsia Group is going to satisfy the PN17, I think the next challenge is then the level of equity that they've got to raise. But just when you look at the situation in Philippine AirAsia, they've got 24 billion of liabilities that sit outside of the group. So there's -- that's an awful lot of money that's got to be repaid at some point in time. So lots of challenges for Philippine AirAsia. And I honestly don't know where they go. They're talking about growth. They're talking about aircraft orders at the group level. I mean just in terms of growth, they're talking about growing in Cebu in the next week or so. They will launch some new routes. But as per our tracking, they're still at 14 aircraft as opposed to the 25 aircraft they have pre-pandemic. So honestly, difficult to predict. You'll have your own views on AirAsia overall. We will just carry on doing what we're doing and focusing on our own business. With regard to Philippine Airlines, as we've said before, we think they did a successful restructuring through COVID. We do think their business is different to ours. They will be very focused, I think, on long haul and their A350 1000 order, which will start delivering soon; will focus very much on that strategy. So I think their strategy is different to ours. We're principally a low-cost carrier in the short-haul market. They are a long-haul carrier that will focus on premium. And, of course, there will be some overlap because they will need feed from domestic and from short haul. But we don't think that their existence is something that is going to be massively challenging to us. For us, we want to focus on the enormous opportunity that sits here in the domestic and short-haul international primarily. As we've always said, it's about 115 million people in these -- in the Philippines. And so the domestic market is key. And then flying within 4 hours flight time in Manila is 2 billion people. So really, we're a low-cost carrier, delivering in short haul. Yes, a little bit of long haul, but really short haul, and that will be our focus. Operator: So for our next question would be on capital returns. With profitability and cash flows improving significantly, would you be reinstating dividends for common shareholders? Are there specific financial covenants or milestones that need to be achieved? Mark? Mark Julius Cezar: Sure. Look, CEB has a strong history of annual dividend declarations and payments prior to the pandemic, and this reflects our commitment to returning capital to shareholders. And I think this commitment was reaffirmed with the recent dividend payout of the preferred shareholders, which brought those obligations have to be. And now with the preferred dividends current, Cebu Pacific is now positioned to resume dividends to common shareholders or subject to availability of relate earnings for dividend distribution. And I think based on current outlook, barring significant economic downturns or unforeseen events, we think we can be in a position to declare and pay out the dividends to common shareholders with the release of the full year results by next year. Specifically, I'm sorry, the full year results in 2025. Operator: So we go to our questions from the chat box. Our first question will be from [ Ray from Abaco ]. So his question is, what led to the fluctuations in international market share for CEB, especially in relation with [ Boudh ]? Alexander Lao: Yes. Thanks, CJ. Let me take that. So maybe to state first, really market share is not a target for the company. Now having said that, we did see Philippine Airlines actually expand internationally in the third quarter. They did launch a couple of new routes expanded into North America as well. But at the same time, we also do match the capacity with -- in relation to the demand. So given that the third quarter is a relatively soft -- in fact, the softest quarter for the airline, we did decide to pull back some of the international flying. So that's really one of the reasons on why there was some market -- where there were some market share shifts rather in the third quarter. Operator: Our next question will be coming from Klyne Resullar from Regis Partners. So her question is actually 3. First question would be, how should I reconcile your EBIT loss in the third quarter with Philippine Airlines 43% EBIT improvement, given that your revenue was slightly stronger in the third quarter? The second question is, can you walk us through the reasoning for pursuing a damp lease with Bulgaria Air in the fourth quarter? Wouldn't this constrain your ability to respond to peak season demand? And the last question is, can you provide CapEx guidance for 2026 and funding plans, which I think Mark already mentioned? When do you expect gearing levels? Will you be able to repay dividends performance? Michael Szucs: Trina, do you want to go first? Trina Asuncion: Sure. On Philippine Airlines now, one of the things, yes, you're correct in that both of us had a single-digit growth for the third quarter, but it looks like their EBIT has grown significantly higher year-on-year in the third quarter. It is disclosed though in their financial statements that they had a onetime revenue of about PHP 1.8 billion from the recognition of what they think would expire from their Mabuhay Miles program, no. So it is a onetime ancillary revenue, which goes -- which basically has no cost component. So it will go straight down to their EBIT line. So having said that, this will bring down their year-on-year. So it will be a reduction in their year-on-year EBIT, but they will also have still a positive operating income, if you notice, no, minimal positive operating income. So other factors that they're ahead could probably be the long-haul segment still supporting them; that's one. And they could be benefiting more from the fuel price decline given the heavier fuel consumption that they carry. I think that's for the first question. Second question, I think... Michael Szucs: The second question was about wet leasing. I think, Klyne, you may have misunderstood that we were going to be dump leasing out our own capacity. What we're doing is bringing in additional capacity. So this is 2 A320ceos from Bulgaria Air. You may recall that we used Bulgaria Air, I think, about 1.5 years ago for a similar purpose, 2 A320ceos. This is very targeted. It's only 6 weeks. It's over the super peak period, and it's absolutely to give us additional capacity during the super peak. So it's actually to enhance our ability to make money during the peak period. Mark Julius Cezar: And third one, I think I answered, Klyne, but anyway just to reiterate, PHP 30 billion to PHP 35 billion CapEx for 2026. And we are hopeful that the full year financial results and financial position would allow for a declaration of dividends sometime in 2026. Operator: So we have John raising his hand. Jon Ogden from Eastern Value. Unknown Analyst: I've just got a couple of sort of more long-range ones for you. The first one is let's think about Ryanair. Now they were trading at about $1 or something per share back in, like, 2004, and now they're about $27. So of course, everybody knows Ryanair has been a tremendous success story. So what can we -- if we drill down, why did they succeed so well even though people often don't like them? And then what lessons can we draw if we look at ourselves in 20 years' time? I mean, will we be trading at PHP 500 instead of PHP 28 or something, I don't know? So I was just intrigued to sort of think about what's the same and what's different about Europe in 2003 versus Philippines in 2025? You have this big market share in domestic, a growing aviation market. So anyway, I'll leave you to... Michael Szucs: Shall I answer that one first, Jon, and then you can come back with your second one, right? So first of all, I think there's a lot of -- I mean, look, Ryanair has been the most successful airline in the world for the last 25 years, I think, and 205 million passengers in the last 12 months. So despite people apparently saying that they don't like them, there's 205 million passengers that have flown with them. And their service credentials are actually very good in terms of on-time performance. So a lot to admire about them, frankly, from pretty much every lens. And I would say that's almost a guide to us as well in terms of our own principles about where we're going. We are very clear about what our strategy is and who we are on a similar basis. Ryanair, despite the wonderful yields that exist in premium long haul across the Atlantic, is staying focused on short-haul travel. And we ourselves are quite categoric in saying, whilst there's a bit of long haul that we might do because we can use the 330s for that, we are absolutely focused on short-haul travel. We are convenient, affordable, safe, reliable bus service in the sky for people flying domestically in the Philippines, we're an archipelago and also regionally where within 4 hours is 2 billion people. And the only -- probably one of the differences we have is we face infrastructure constraints, which mean that we have a complicated fleet. We do not choose to have all the different aircraft types we have. It's just that some runways aren't long enough or strong enough for anything other than a turboprop and some runways aren't strong enough or long enough for an A321neo, which is why we have A320s as well. So we face complexities. And perhaps the other one is they're in a much freer regulatory environment when you look across the reason we are multi-regulators. But, look, I would say that Cebu Pacific, if it looks at who it would like to mirror or looks at where is a guide in terms of simplicity and purity of strategy, I would hold Ryanair up as that example. And their success has been that they've stuck to it. So in the same way, we will not get hyped up about the fact that premium long haul post-pandemic has been the most attractive segment to be in for airlines. At some point, that will -- there will be some correction to that. So we're not going to go chasing it now. We are going to stay doing what we did pre-pandemic. Back in 2019, we were producing metrics that were very much the top of the industry, and we're going to stay doing what we were doing then, just better. Unknown Analyst: That's very good answer, Mike. The other question is, another sort of strategic one is just if you can shed any light. There's obviously ongoing side with the airline -- sorry, airports in Manila and elsewhere, Clark and so on. And that's always an evolving situation. So how do you see that situation unfolding with also renovation in the NAIA, the Bulacan Airport, possibly Sangley Point, Clark, the railway. So there's obviously opportunity for more flights, but also possibly more competition and people like Ryan -- sorry, Lion Air might come in perhaps, and they seem to be very price insensitive and, anyway, so there's a lot of things there to sort of go out as well, but it'd be interesting to hear what you say. Michael Szucs: Well, again, let me take that one on. I mean, first of all, I think if you're looking at Manila and the existing airport and you're looking at Bulacan coming online potentially by towards the end of this decade. I mean some people say 2029, some say 2030. But anyway, maybe by the end of this decade, you'll see Bulacan coming on. I think, first of all, it's worth explaining that Manila has been spilling demand for as long as any of us can remember. So additional capacity overall will be welcomed. And I think the market can absolutely, absolutely take that in the Manila catchment that is only getting bigger and bigger. And that fed through very much to a part of our -- a large part of our fleet order. When Bulacan arrives, we won't be transferring fleet from the existing Manila airport. We will be introducing a new fleet in addition. And we want to be able to put a sizable footprint down there straight away to make sure we have a presence there, but also maintaining our place here in Manila. So Manila, we see very much as the Haneda of Tokyo and Bulacan more of the Narita of Tokyo. So Manila will still attract a premium. And if I look at Manila in terms of the airport changes that have taken place, it's undoubtedly the case that as an operating environment, it's improved and we expect to see further improvements. For sure, there's been an increase in operating costs for us. We've talked about that in the past in terms of the additional hit that we've taken this year in terms of cost versus last year. Now that's done. That's kind of been the adjustment and we're now living with that. What we can look forward to is the developments over the next 12 to 18 months when we see further rollout of the enhancements that NNIC is making and which will include terminal reallocations, we think, which will help us reduce things like taxi times, thus fuel burn, which will increase utilization as well. So there's a number of benefits that we think we can see that will flow through to our operations in Manila. And given that's the largest part of our operation, we think that will overall be beneficial. So in summary, we think operational improvements coming through in Manila will be enormously beneficial to us. And with regard to the recent increase in airport costs, we think that's done now and is now built into our underlying performance. Operator: Our next question will come from John Bugg from Bamboo Investment Partners. So his question is, is it accurate observation that the entire uplift in ancillary revenues was wet leases, i.e. the plus PHP 0.9 billion. And on Page 17, the right-hand graph, do you expect the average fare would increase month-on-month into November and December as we saw last year? Michael Szucs: Trina, the first question... Trina Asuncion: Sure, sure. On the ancillary revenue, no, no, that's not it. There -- while we were very satisfied with the performance of our short-term wet lease this third quarter, I think we guided that it's not big. It's 2 aircraft for just 2 months. So while we saw that it was high margin and it's countercyclical revenue opportunity, it did not take the whole PHP 900 million lift on ancillary revenue. But what it did do for us, and I think Mike mentioned it at the last call, is that we are now more confident that we can move this forward in greater scale in the future years. We know how to execute it and we know that it works. So while this year is just dipping our toes into the program or into the structure, next year we hope to do more. We hope to at least scale it to at least 6 aircraft maybe and possibly more in the coming years. This third quarter was a combination of that, plus there was also success on a lot of our other initiatives. The take-up of bundles is still successful. The plus 1, the chose your seat or GO Flexi seat or instead of GO Basic, that pickup of those bundles are still manifest in the third quarter and some pricing and some on the bags. That's I think it. Michael Szucs: I think the second half part of the question, go ahead, Xander. I think it was on the passenger fares, I think. Alexander Lao: Yes, let me have a look at the question. I think in terms of overall passenger fares, we are still seeing increases month -- on a year-on-year basis and actually pretty strong. We are looking at a really strong December in terms of our average fares. As we did mention, we are seeing pretty strong RASK improvements. So that is actually driven by pretty strong demand and actually pretty good average fares on a year-on-year basis. Operator: And our next question via chat is from John Ogden. Just a follow-up question. Can you explain the big increase in cargo revenue? And what was behind this in terms of what cargo and is it sustainable? And how about for 2026? Alexander Lao: Sure. Let me take that as well. I think what we had mentioned earlier was there was a, I think, an increase in wide-body aircraft. So clearly, cargo market loves the wide-body aircraft, loves all of the ULDs. And that has been a key component or a key driver for us in unlocking a lot more of the cargo revenue. In fact, it's a combination of both domestic cargo revenue where we're able to deploy the wide-body aircraft into places like Cebu and Davao, but also into markets that are doing transshipment. So, for example, we do bring some of the cargo from North Asia, and we do bring it to other markets like Middle East and Australia. So in reality, a lot of the cargo revenue growth has been driven by the wide-body growth. So for next year, given that we only have maybe 2 wide-body deliveries, we should still expect pretty good volumes in terms of our -- in terms of total cargo. But the key driver to that has really been the wide-body capacity that we brought in the last year or so. Operator: Our next question -- next 2 questions will be coming from Ronalyn Lalimo from Maybank. Can you give the color on the current visibility and strength of your forward bookings for the fourth quarter of this year and includes the first quarter of 2026? Are there notable trends by market or channel? And the second question is, what is the fair value of the 5 free-of-charge engines recognized as of the 9 months of this year? Can you please confirm that it's PHP 5.95 million? Alexander Lao: Sure. So let me take the -- thanks, CJ. Let me take the first question. We are seeing pretty strong first quarter forward bookings. It is, I guess, I would say, a mix. I think domestic remains pretty strong, pretty resilient. We are seeing long haul to be okay on a year-on-year basis. So having said that, the forward booking profile as a whole is doing pretty well. And it has been really driven primarily by the strong domestic market. Mark, do you want to take the second one? Mark Julius Cezar: Yes, that's confirmed. It's about PHP 6 million. Operator: Our next question will be from Alfred from FlightGlobal. You mentioned that the supply chain challenges continue to remain above anticipated levels. Do you have any numbers to share on what the actual versus anticipated levels are? Michael Szucs: Okay. I think we may have touched on it in the presentation. There was lots of data in there, so apologies if you didn't pick it out. But we probably were looking to average this year at about 8 aircraft AOG, and we've been in the 12 to 14 sort of. So it's been sort of probably on average 5 or 6 aircraft higher on AOGs through this year. And so that's been why we've undershot in terms of our growth targets. And of course, that brings challenges for us in terms of the manage. I mean we are currently carrying a surplus of pilots, which, of course, will grow into next year. But these are costs that we have to incur that sometimes people don't necessarily reconcile because they think it's just an aircraft on the ground, but we've actually recruited people to fly these aircraft. As I say, we've got growth next year as well, even when we look at the different scenarios and predictions coming out of Pratt & Whitney. And by the way, we do need to build in the potential supply chain issues from new aircraft deliveries. But factoring all of those in, we have a window now of growth of about 6% to 10% through next year. It sounds like quite a wide window. But when you have the variability that we currently have, then that's where we anticipate growth next year. And I guess just as predicting what might be another question is when do we see the Pratt & Whitney situation fully flushing itself out. I think the earliest would be as we currently sit here today, and it could change, but we're probably -- we've got a few scars from it now. So we're not massively -- we don't look at this with big optimistic lenses. We look at it with some realism. We think probably sometime in 2028 that things will be to the stage where we will be at 0 AOGs. And I think that ties in with something that Mark said earlier on when people are looking about our leverage ratios. Our leverage ratios are going to consistently come down in the coming years. And certainly, by the time we get to 2028, that's when we can free up these assets that are sitting on our balance sheet that have a cost that aren't generating any revenue because they don't have any engines. That's the time when we really see that we can get the kicker in our performance, and we'll be able to get to our financial leverage ratios similar to getting down to where they were pre-pandemic. Operator: Our next question will be coming from [ Daldon Modesto from Oak Drive Ventures ]. Based on results, passenger revenue was essentially flat year-on-year, while ancillary revenue grew double digits and became the primary driver of top line growth this quarter. Can you give more color on how much of this ancillary uplift is structural versus seasonal? And as passenger volumes were unchanged, how should we think about sustainability -- of the sustainability of ancillary growth going into 2026? Alexander Lao: Yes. Thanks, CJ. Let me take that one. So I think Trina mentioned earlier that we did some recent enhancements in terms of the bundles, in terms of the baggage products that we have offered. Now some of it is clearly sustainable. We do think -- now it probably won't be double digit year in, year out. But having said that, we do think there is a focus to grow ancillary revenue on a per passenger basis. Now part of that could be the network mix. We -- the ancillary revenue per pax is much higher on international than it is on domestic, for example. But we did also have improvements in terms of our booking fees, for example, we did have improvements in terms of the take-up on the bundles. We also put in additional onboard meal offerings. So we do think that some of these improvements have really driven up the ancillary revenue per pax. The teams have done a great job in really pushing that portion up. So that's clearly a focus of management to see how we can deliver more ancillary revenue passenger -- yield per passenger in the coming years. Operator: Our next question would be coming from Brendan Sobie. How did the flyadeal wet lease help offset the seasonally weak third quarter? And will we see more of this in the third quarter next year? Did it have a positive contribution to your bottom line? Michael Szucs: Okay. Let me take that. Yes, I think as Trina said, it did absolutely have a positive contribution. It was profitable, but small. It was small. It was only 2 aircraft. And the other thing was it was our first time looking at it. So we effectively over-resourced it because we wanted to make sure that we could deliver it well. We were dipping our toes finding out how to do it. Now, so 2 things will happen as we go into 2026 and in the years beyond. We now have a much better idea of what sort of level of resources need to go in, plus if we upscale as well, we get efficiencies of scale. So we would think next year, we would look to grow to at least 6 aircraft that we wet lease out during Q3. And then in years beyond, we think this could grow to sort of 10 to 12 because worth bearing in mind that our Q3 was very soft for us, Q3 is super peak season in North America, Europe and Saudi Arabia as well, in particular, is strong. And the other element that we need to think about is we've got an increasing fleet of A330s. So we talked about A320s. That has been our method of wet leasing, those 2 A320ceos we put into flyer deal earlier this year. We have the potential as well to utilize the A330s going forward. And that is going to give a much bigger capacity swing or capacity offset. So there's great potential there. Anyway, we anticipate into next year, we would be doing at least 6 as opposed to the 2. And then longer term, we would look to build this up even further. But it was profitable. They were very small this year because we wanted to make sure we could deliver it. As I say, we were learning the ropes dipping our toes. Operator: [Operator Instructions] Our next question will come from Kenneth Gutierrez from BBO. To clarify Mark's statement regarding the funding of 6 aircraft deliveries next year, no commercial loan will be considered? He mentioned that the financing of the 6 aircraft deliveries will be a combination of JOLCO and operating lease. Mark Julius Cezar: I may have just inadvertently missed that. But certainly, we are open to commercial loans, commercial debt to finance next year's deliveries, at least in our minds. Operator: Thanks, Mark. So far, we've gone through all of the questions in the chat box. If there are no more further questions, we'd like to conclude this briefing. Should you have further questions, feel free to send us an e-mail any time at the address shown on your screen. So thank you, and we hope to see you again on Cebu Pacific's next investor call. Michael Szucs: Thank you very much.
Operator: Ladies and gentlemen, welcome to the Hapag-Lloyd Analyst and Investors 9 Months 2025 Results Conference Call and Live Webcast. I'm Iruna, the Chorus Call operator. Hapag-Lloyd is representative by Rolf E. Jansen, CEO; and Mark Frese, CFO. [Operator Instructions] The conference is being recorded. The presentation will be followed by a Q&A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf E. Jansen. Please go ahead, sir. Rolf Jansen: Thank you very much, and welcome, everyone, and thanks for taking the time to be with us today. Yes, short presentation, as always, before we jump into the questions that you may have. I would say that when we look at the first 9 months, a couple of things to mention. I think good strong volume growth over the first 9 months, again, a decent quarter in Q3, on the back of that, good revenue growth. When we look at Q3, I think earnings improved sequentially. But of course, year-to-date performance remained below last year. When looking at Q3 in isolation, I think that was actually a fairly solid result. I think we start to see that the first cost savings from Gemini are starting to come in. We see the network running smoother and smoother. So that gives us a lot of confidence that we'll see further improvement as we go towards the end of the year and moving into 2026. We will continue to invest into the future. We also have some things -- we also continue to work on our Terminal division, but nothing specifically announced there at the moment. think we have narrowed our outlook a little bit going forward. And when you look at the midpoint on EBIT, then you see that we have slightly raised that compared to what we had a couple of months ago. Switching to market. Let's still say it's a fairly robust market. When you recall all the forecast that there were for the container trade in the beginning of this year, but also in fairness in the beginning of last year, then certainly over the last 7 quarters, we have seen a stronger market than many people had expected. In 2024, the market grew over 6%. The first 9 months now, we are again looking at close to 5%. That's a lot more than people had anticipated. And I think that's pretty encouraging and shows also that global trade is quite resilient. We still expect the last quarter to be somewhat weaker, but of course, that remains to be seen. Spot rates under pressure after the relatively early peak season, seen a bit of an uptake in the last couple of weeks with last week again a bit weaker. But I think we also see that demand still remains fairly strong and utilizations remain high. So hopefully, we'll see some further recovery of those spot rates as we move forward. Switching briefly to Gemini. I think it is fair to say that we have set a new benchmark for reliability in the industry. I think with very consistent performance even in very volatile markets and under difficult market positions. I think the network has delivered on its promise pretty much every month. I also believe that drives our above-market growth. We also see customer feedback very positive with our Net Promoter Score that we measure twice a year at the moment at an all-time high. And we also still see, as I mentioned before, quite a lot of things that we can still do better. And we will continue to implement those smaller improvements month after month after month, and that will allow us to get to our anticipated cost saving run rate in the course of 2026. Next steps. make sure that we continue to grow volume on the back of an excellent product and also make sure we get adequately paid for that because if we are able to help our customers to run their supply chains a lot better, then that must be more efficient for them as it allows them, for example, to take out inventory. And of course, we would like also to be adequately paid for that. We will also come with the introduction of a new quality promise for on-time delivery on box level because that's, in the end, the ultimate promise to customers that we make that we deliver their box on time. A little bit on investments before I hand it over to Mark. We have announced also this morning a decision to invest in up to 22 new ships in smaller vessel classes as we have a significant amount of tonnage in those vessel classes that is going out of service in the second half of this decade. That means we need to replace them. We also have to reduce our exposure to the highly elevated time charter at the moment -- market at the moment. And of course, that also helps us to reduce our operational cost base, and it helps us also on our decarbonization journey. The ships that we will order will probably be in a couple of different classes, one around 1,800 TEUs, class around 3,500 and class around 4,500 TEUs. With that, let me now first hand it over to Mark. Mark Frese: Thank you, Rolf. Good morning also from my side, and thank you for joining us today for our 9 months results presentation, which will show that in a complex and volatile market environment, we have delivered a solid operational performance. Our strong volume growth, which is well above the market average, demonstrates the benefits of our strategic positioning, particularly the successful implementation of our Gemini East West network. In the coming quarters, we aim to sustain this growth momentum and still keeping the flat capacity stable. As anticipated, earnings are lower than last year's exceptional performance, and that is primarily due to softer freight rates and continued cost pressure. To address this, we are intensifying our cost discipline and further optimizing our network to enhance efficiency and competitiveness. At the same time, we maintain a robust balance sheet with ample liquidity and a moderate leverage, providing the flexibility to pursue whatever strategic priorities. We focus on or opportunities come up, and we navigate market volatility effectively with that. Let's now take a closer look at our financial performance. Revenue and earnings in the third quarter improved sequentially, driven by a temporary higher spot rates resulting from front-loading effect in the U.S. EBIT increased from USD 189 million in Q2 to USD 228 million in Q3. However, compared to last year's exceptional results, earnings were lower due to the significantly weaker overall freight rate environment. Looking at the first 9 months, revenue grew by 5%, supported by strong volume growth across both operating segments, which helped offset partially the lower freight rate environment. At the same time, persistent cost pressure weighed on operating performance, for the period, group EBIT reached USD 905 million and group profit totaled to USD 946 million. Looking now at the performance of the Liner segment, we can see that revenue in the business segment increased to USD 15.7 billion in the first 9 months. This development was driven by above-market volume growth, particularly in the Gemini trades. EBIT amounted to USD 858 million in the first 9 months, that is compared to USD 1.9 billion during the same period of previous year. In Q3, EBIT improved sequentially to USD 219 million, a temporarily higher cost -- higher spot rates out of Asia lifted our average freight rate by around about 5% compared to the quarter before. After the 9 months of '25, we transported or in the month '25, we transported 10.2 million boxes, representing a volume growth of 9%. As said, well above market rate. This strong performance reflects our sustained investment in efficient fleet capacity and the successful transition to the new Gemini East West network. Particularly noteworthy given the tariff-related demand fluctuations we have navigated through. So growth was especially strong on the Pacific and Asia-Europe trade routes. In contrast, Atlantic volumes improved only modestly due to the soft demand between Europe and North America, while transport volumes between Latin and Europe -- Latin America and Europe were constrained by operational disruptions in ports. Following a persistent decline in the average freight rate improved, which improved 5% in Q3 2025 quarter-over-quarter, driven by front loading effects. However, the first 9 months of '25, the average freight rate stood at USD 1,397 per TEU, almost 5% lower compared to the prior year. Having a look on the unit cost in the first 9 months of '25, they increased by 5% to USD 1,338 per TEU, and this increase was driven by higher storage costs due to port congestions and operational delays, increased hinterland transportation costs from growing the growing share of door-to-door business and plant start-up investment associated with the Gemini Network. In addition, external factors such as rising trade imbalances, higher regulatory compliance cost and for sure, as we all know, the FX effects, which we have experienced generally, elevated the cost base. To mitigate these external factors, you can assume we structured strong, and we are executing already a comprehensive cost program. I would also like to provide more context on the Gemini startup costs as these are likely more pronounced for Hapag-Lloyd than for Gemini partner, as well as on the initial cost savings that are already becoming visible. For us, the new network represents a more significant transformation, which is temporarily associated with higher unit costs. We have not only redesigned the network but also changed the terminals we call the capacity we operate. While we already see clear cost benefits per available slot right now, such such as reduced ship system costs and lower bunker consumption, the unit cost per transport book are still elevated for now. But when we look ahead, growing volumes at stable capacity and further network optimization will drive unit cost down, resulting in tangible positive impact on our P&L in the coming quarters. Let's now have a closer look on the T&I segment. Revenue in the Terminal business increased, as you can see here, by 15% to USD 370 million -- USD 375 million in the first 9 months. This growth was supported by encouraging throughput developments. We have seen and the acquisition of our Terminal in Le Havre, in France this year in March. EBIT amounted to USD 46 million, which is below the prior year level, primarily due to weaker performance at Latin America terminals. This was driven by the U.S. tariff related market volatilities. And we have seen strong unfavorable weather conditions there. Additionally, we continue to ramp up this relatively new business segment which is quite normal that is associated with a temporarily higher cost base. Turning to our cash flow development on the next chart, operating cash flow for the first 9 months. As you can see here, '25 amounted to USD 2.6 billion. We invested around about USD 1.5 billion, mostly investment in containers, as well as in the modernization of our fleet, under our fleet upgrade program. These investments are designed to enhance the cost efficiency and to reduce CO2 emissions across our operations. Including income from interest, dividends and divestments of USD 309 million in net cash outflow from investments totaled to USD 1.2 billion resulting in a robust free cash flow of USD 1.4 billion. Financing cash outflows amounted to USD 2.5 billion, primarily reflecting the dividend payment of more than $1.6 billion to our shareholders, along with debt redemptions and interest payments. Overall, the cash position decreased by USD 1.1 billion, resulting in a still robust cash balance of USD 4.6 billion at the end of Q3. For sure, we continue to maintain a very resilient balance sheet with ample liquidity and moderate leverage. Strong liquidity reserves still there, which includes cash fixed income investments, undrawn revolving credit facilities, which totaled to USD 7.5 billion. This provides us with significant flexibility to fund strategic initiatives and for sure, navigate effectively through difficult market period and volatility. And with that, I will hand it back to Rolf now for the market update and our outlook. Thank you. Rolf Jansen: Thank you, Mark. Yes, maybe just a few words on supply and demand. I think we see here the trend that we have seen over the last years, I would say, a remarkably strong growth in '24. Personally, I would also expect that the '25 is going to come in a little bit stronger than we anticipated. That's a better picture we have seen over the last couple of years. Of course, it's uncertain what's going to happen in '26. It's, however, quite encouraging that over the last 2 years, if you add them up, I think, 6-plus percent in '24, I think we're going to be close to 4% in '25. That's accumulated close to 11% in 2 years, which is well above what everybody expected. For next year, the expectations for now are a little bit lower, but also also fleet growth will be a little bit lower. So for now, we anticipate an environment where there is going to be somewhat lower growth. But when we look at the last couple of years, there's certainly also a scenario thinkable where things remain fairly robust because also when we look around the globe this year, then we certainly see that trades to and from the U.S. have been under pressure, but quite a few other trades have actually done fairly well. Looking at the order book. Order book is still quite big. Could that be lower? Yes, could be. On the other hand, let's also not forget that we are still expected until the end of the decade, overall growth will be 15% to 20%. And we also expect that there's quite a bit of the capacity that is going to be taken out as towards the end of this decade, more than 4 million TEU of capacity will actually have to be replaced by newer tonnage, which is also the background of the order that we just earlier talked about. And on the back of the demands that are being put upon us to work on decarbonization. Also, that is certainly an incentive to sell a little bit slower, which normally would require a bit more capacity. So all in all, no very significant change in the order book. It definitely remains on the high side, but it means it also covers a much longer period as when people order ships today, you can get them in '28, '29 or sometimes also only in 2030. So contrary to what we used to look at in the past when we had an order book typically covering 2.5 years. Today, it covers more to even 4, 4.5, sometimes even 5 years. Moving to the outlook before we hand it -- before we wrap it up and then hand it over to you. We made some slight adjustments to the outlook. As you can see here, mainly on group EBITDA and group EBIT, where we narrowed the range, which we would also expect, if we get closer towards the end of the of the year, and we also raised the midpoint a bit. Then when we look at priorities, I would say, make sure that we leverage the Gemini performance to continue to grow our business at adequate pricing but also make sure that we get all the savings into the book, make sure that we continue to focus on high customer satisfaction. We've been doing that now quite consistently over the last number of years, and we need to make sure that it stays like that. We will try to further expand our Terminal division through acquisitions and potentially also investments here and there also because it drives quite a lot of synergies with the Liner business. We also will invest in the expertise and resilience of our team amongst through a large leadership program. And then finally, we have to ensure that we maintain strict cost discipline as costs are currently definitely at an elevated level. We already mentioned [indiscernible] , and we need to ensure that over the next 12 to 18 months, we see the planned improvement in unit costs. And with that, I would hand it over to the operator, as I think we now move to Q&A. Operator: [Operator Instructions] The first question from the phone comes from Omar Nokta with Jefferies. Omar Nokta: I have a couple of questions. Maybe just first on the new buildings. Can you give us a sense of what kind of capital expenditure you're anticipating for these vessels? When you expect to take delivery of them? And also, where do you plan to deploy them? Are these going to be in that sort of the ideal workhorse for the Gemini network? Rolf Jansen: Okay. If I take that, maybe, Mark, you can say probably something around the CapEx but I think if we look at delivery, most of that will come in '28 and '29. And when we look at where we can deploy them, those are many places across our network, but it would not be illogical to expect quite a few of them to be deployed in our shuttle or feeder networks in Europe or Asia, but only some of them will also be used in IoT Americas or in Africa in Latin America. Omar Nokta: And then in terms of cost, any sense? Rolf Jansen: I mean, I think in the end, we will commit to those ships. I think we're still figuring out what will be the exact split between the various categories and some of it will be time charter and some of it we will own. So it's a bit too early to say something about what the overall CapEx will be. Omar Nokta: Okay. And then just a final one for me, just on the operational costs. I know you mentioned that 2026 is when we'll start to see the benefits of Gemini. Are you able to give any kind of maybe quantify the type of cost savings you anticipate to show next year? Rolf Jansen: I mean what the type or the -- sorry, I didn't hear it -- type or size? Omar Nokta: Yes, just like the dollar amount you anticipate or percentage change versus this year, any kind of range you're able to share? Rolf Jansen: I think when you look at the cost savings that we expect from Gemini, we have, I think, earlier on, gave an indication that we expect it to be net [ $350 million to $400 million ]. And at the moment, I have no reason to have -- to pull out a different number. Operator: The next question from the phone comes from Alexia Dogani with JP Morgan. Alexia Dogani: I have 3 please. Just firstly, on the 4Q outlook, clearly, the low end of the range is very negative and we're only 6 weeks away from the end. How should we interpret that low end that you've provided today? And should we see this as the potential exit rate into 2026? That's my first question. Secondly, Rolf, you made some comments about the Gemini pricing. And can you elaborate a little bit on what the alliance wants to do in terms of kind of capturing the value of this new operating model? Is it really about pricing? Or is it about volume gains? And there has been in the press some discussion around Maersk considering an on-time surcharge. This is slightly counterintuitive because obviously, you operate a scheduled business, customers should expect it to be on time, otherwise, the schedule -- kind of point is missed. And I think at the 2030 strategy presentation, you showed that actually the top thing that customers want is low price. How does that actually change given your experience over the past 12 months? And then my final question is, you helpfully show that the market expects container volumes to grow 15% to 20% by 2030. That implies a 4% to 5% per annum volume CAGR and suggest a multiple of 1.5 to 2x real GDP based on kind of current global forecast. What gives you confidence the multiple can be staying at these higher levels? Because clearly, in '24 and year-to-date, '25, we've had a lot of, let's say, external events affecting demand, be it disruption and tariff front loading. Is that your feeling? And if not, isn't it slightly counterintuitive that tariffs have no impact on trade? Rolf Jansen: Let me maybe try and take them one by one, and then Mark, you may want to add something on the outlook. Maybe start from the bottom. To be honest, I can't really reconcile your math, yes. Because when I look at 15% growth until 2030, that's 5 years. So that's roughly 3% a year growth, which is roughly a multiplier of 1x of GDP when you look at the long-term average of 3%. So personally, I think that's actually not looking at 1.5x GDP, but more looking at just onetime GDP, which I think also when you look at the last number of years, it will not come every year, but on average, we're actually not so far from that. Then when we look at Gemini pricing, I think there is definitely value to be captured from a difference in reliability and a difference in OTD between one and the other, whether you should call it a separate charge for being on time. I think I can relate to your comment that putting a separate charge for being on time is probably odd. But I would also say that if I can choose between 2 carriers, where one of them is going to be on time, and the other one is very unpredictable, that I am willing to pay a little bit more for people that are on time because it allows us to take -- it allows me to take money out of my supply chain. And we have clearly seen in discussions also with customers that they see that and that they do see real opportunity to take 1 or 2 weeks' inventory out of the supply chain, which clearly has value. And then, of course, we need to make sure that we sell that value as well. And part of that to your point, will come in terms of hopefully higher prices or adequate prices and the other one may also be above market growth. I agree with you that there's a those 2 value components in there. And then maybe, Mark, do you want to comment on the outlook. Mark Frese: Yes. Thank you. Yes, on the outlook, you might call it a cautious view. It's maybe 2, but it's due to the scene short-term volatility, which is more attributed not only to the general shipping volatility but also due to the geopolitical uncertainties we are facing, and we are looking at a freight rate environment, which is under pressure right now. Volume growth is slightly slowing down. So let's see what the last weeks are bringing for this year, but I think that is the character of our outlook overall. Alexia Dogani: Thank you for clarifying the growth rate. Can I just do a little follow-up on the GEMINI pricing. When you're competing or when you are on the same route, and you're offering kind of your customers a contract price, should we expect much differentiation between you and your partner? Or given you operate the same network, you're on the same alliance, kind of the pricing opportunity is equally spread? Or just trying to understand a little bit kind of the potential divergence or not. Rolf Jansen: I think your pricing differential you should mainly see with those that have a different product. So I would expect, but I don't know -- and we operate completely independently from that perspective. But I would assume that the Gemini partners are able to get a price premium for being on time compared to those that are not on time. So that's where I think the delta that you will see and that will not come from one day to another, and it will not come in every customer segment. But I think the delta that you will see will be more between Gemini and the other networks then between the partners within Gemini. Operator: The next question from the phone comes from Cristian Nedelcu, with UBS. Cristian Nedelcu: If I can please come back on the cost savings. Could you help us a bit what was the run rate in $1 million that you expect in terms of cost savings in Q4? And what is the time line to get to the $1 billion cost savings that you are flagging in the past? The second one on Gemini. Could you remind us, looking at your ocean volumes, what's the percentage split between BCOs and forwarders. And within your customer base, what proportion do you believe are the time-sensitive BCOs that most likely will find on time proposition as very appealing? Rolf Jansen: Maybe start with the cost savings. I think what we have said is that we expect that in 2026, well over half of that $1.3 billion that we are targeting is going to be effective. We expect to get to full run rate in 2027, and we will see some effects already in the fourth quarter, but those will be limited. In terms of ocean volume, our split traditionally, we have been a bit more focused on the forwarder side. I think at some point in time, we were like 70-30 for orders for BCOs. Today, we are closer to 60-40. And as far as it's around what's the percentage of the customer base are time sensitive, I would say that probably the majority of the BCO business. Cristian Nedelcu: Understood. And could I please add one question if you allow me. Coming back on the very strong volumes from China to the rest of the world. So leaving aside the U.S. for a second. The last 4, 5 months, we've been seeing China, Europe, up 10%, 12% and so on. Do you have any data from your customers, what are the inventory levels in Europe or other LatAm or other countries? I'm just thinking to what extent part of this growth has been just an export push that is currently leading to higher inventories and we actually might see the consequences of that over the next months. And I'm asking this because the value of Chinese exports in October was down 1% year-over-year, and there was a steep deceleration in the exports from China to Europe from double digit to low single-digit growth year-over-year. Rolf Jansen: I think what we saw in October, it's definitely a slower return to work, if you want after Golden Week than we have seen in previous years. In some years, that's good, some years, that's a little bit worse. I think you shouldn't look -- I don't think we should read too much into that. If I look at the last couple of weeks, demand has really been, again, quite strong. We just were a little bit slow coming out of the [indiscernible] After Golden Week. So I don't see too much into that. In terms of inventory, I think that speculation is always out there. I think I'm now hearing since 1.5 years that we are front-loading. At some point in time, one would argue that, that has to stop I think listening to speaking to customers, I do not think that there are many of them that sit on very excessive inventory. What will be critical is what consumer demand will be towards the end of the year, which typically for retail is a peak season, that will probably drive what's going to happen post-Christmas. But I don't see huge amount of front-loading. And yes, you hear -- you speak to one or the other that has high inventories. We also speak to people that have actually fairly low inventory. So difficult judge and there's only a limited amount of really reliable data on that out there. Operator: The next question from the phone comes from Marco Limite with Barclays. Marco Limite: My first question is again on the '25 outlook. This time on the upper end of the guidance because the upper end of the guidance basically implies Q4 EBITDA as strong as Q3, but Q4 is seasonally weaker from a volume perspective. So basically, I guess, implies spot rates up quarter-over-quarter. I mean, is that possible? Do you think that, that sort of scenario? Second question is on your Gemini start-up costs. If you can remind us how much startup costs you had in Q2, how much they have been in Q3 and how much we should expect in Q4? And the third question, if you allow me. I mean if I look at the Q3 results, it just like OpEx was behind of consensus. Is there a single factor or maybe among the many factors that you will point out for higher inflation? Could that be, for example, very strong headhaul growth, but backhaul growth and backhaul volumes not being that strong. And therefore, how can you offset that going forward? Rolf Jansen: Maybe I'll start with the -- I think when you look at the Gemini costs, I think we overall once gave an indication that, that was between [ EUR 150 million and EUR 200 million ]. I think that prediction still holds. The majority of that we incurred in the first half of the year, and we have still a little bit in Q3 and Q4. When you look at OpEx, I think we already mentioned that we also started [indiscernible] Because we believe that OpEx needs to come down. We start seeing that also. So from that perspective, pretty comfortable that, that is indeed going to happen. I think your point to backhaul volume, I think we have certainly seen in the repositioning costs. We've seen a little bit of a spike. Some of that is catch-up and there's still something to do with Gemini, but that's certainly a factor that plays a role. And then I'll leave the comments on the outlook to Mark. Mark Frese: Yes. When we look at that right now, for sure, that scenario is thinkable in the sense that what's reflected in the perspective. And that's why you can see it. But overall, it stays, I think a cautious outlook. Marco Limite: Okay. Just a follow-up to that. Is it fair to assume that you still have got a lag in revenue bookings, so the weak September that includes Q3 actually was in Q4. So basically, we are implying a very strong October, which we have seen also November remaining at very strong with October. Rolf Jansen: I'm not sure we fully understand the question. I think I mentioned earlier that -- and I think it was called out by the previous person asked the question that export volumes out of China have been -- have been a little bit slow following Golden Week. So that's why volume is not exceptionally strong in the month of October. In the last couple of weeks, we see demand picking up again. That's basically what the comment was that we made. It's not technical time shift in a sense when that was your question, too. Marco Limite: I was referring to revenue recognition delay between spot and your revenues, but any your answer was clear. Operator: The next question from the phone comes from Lars Heindorf with Nordea. Lars Heindorff: Also a few one on Gemini. I wonder if you could maybe quantify a bit more about the start-up costs that you have Maersk -- on their call said that I mean, Q3 was the first full quarter with Gemini up and running. So what is actually the difference there between you and them in terms of the start-up cost? Why do you incur maybe later start-up costs compared to Maersk? And then a second one on Gemini, which is the balance again between you and Maersk, are you a net seller or a buyer of capacity? And maybe if you can -- I don't know if you can say anything about the magnitude of that sort of balance in terms of the vessel sharing agreements that you have on -- in the Gemini Agreement? And then the last one is on the rates. Well, I think you said you had a comment in your starting remarks that you said you hope that rates will rebound a bit here into the fourth quarter? Maybe just what is behind that? Are you seeing any signs of recovery? I know there has been a few FAK and GRI successful increases in October and then you have seen a bit of weakness as of lately. But yes, just wondering exactly what is behind that comment. Rolf Jansen: Let me maybe start with the last one on rates. Of course, nobody can predict the rate, unfortunately. I think we saw a bit of a -- we saw some seasonal weakness after Golden Week, then I think we saw rate eroding, which was sort of logical because it took a little bit of time before volumes came back. And we've had a couple of GRIs that ,as you rightfully point out that have been that [indiscernible]. Now we see actually fairly strong bookings. Last week was strong. The beginning of this week is very strong. So I think that gives us some momentum in the market to hopefully get some further rate increase in the short-term market because those [ fleets ] are really very low. I think your second point on the balance. I mean, from all the mainline capacity that we operate and that Maersk operates, I mean, we are balanced in terms of provision. I think we have -- I think we announced it also earlier, we have a 60-40 split roughly on the main line of capacity and Maersk provides 60% of that, and we provide 40% of that. So from that perspective, we're not a net seller or buyer. I know there was a comment on the earnings call of Maersk, and that may have to do with the technical arrangement that we have made on the shuttle space, but I can't look into Maersk books, so I don't know why they exactly treat, but that's my hypothesis. On the Gemini start-up costs, I think it is right. I think you are right. The start the changes were probably a little bit bigger for us than for Maersk because we changed a lot of terminal providers. Maersk was doing a little bit more of hub and spoke already. And whereas the corporation runs really well. And I think we're also happy with network. I think it's also fair to say that there was in some processes, that's probably a little bit more learning for us than there is for Maersk because, for example, in our case, also the empty flows change a lot, and that takes a little bit of time to stabilize that. And that's why, I guess, that some of those cost savings might come a little bit later in our case than what we see at Maersk. Lars Heindorff: Can I just have just another follow-up, but just another one, sorry, is on Suez. there has been a lot of talks lately. We've seen having a few versus going through Suez, also larger vessels. And also now here this morning is some news about Maersk in talks with the authorities down there. Apparently, maybe of course, depending on the security situation that they will return. What's your view on that? I mean, what will it take for you to return to Suez? Rolf Jansen: I mean, I think we've always said that as soon as it's again sufficiently stable and safe, then we will consider a gradual return to Suez. I think we're talking very closely to our partners which is Maersk but also others in other services on when that is the case. We're following it closely while at the moment, I do not see us returning very soon. Operator: The next question from the phone comes from Andy Chu with DB. Andy Chu: Just one question for me. Just on the cost savings, there are quite a few numbers flying around this morning. I think you mentioned in the presentation the full run rate of savings is expected by 2026. But just in terms of the net cost savings, what should we be putting in for 2026 and 2027? Rolf Jansen: I think when you look at our -- there's 2 or 3 things I think that were mentioned. One is, what are the run rate savings we expect from Gemini, that we have previously indicated $350 million to $400 million. And there is no reason to deviate from that number. Then we talk about the [indiscernible] Program, where we are targeting $1.1 billion plus in cost savings, and we expect the vast majority of that to be effective in '26, and we expect the full amount to be effective in '27. Andy Chu: Maybe just one strategic question. Obviously, Maersk has had a pretty good performance in Terminals. So when I look at sort of the weighting of Hapag's business mainly being container shipping focus, does that kind of -- does the current environment sort of shift any kind of thinking in sort of the mix of the business? Rolf Jansen: No, not really. I think we've been -- we've, of course, been in a way we entered the Terminal space much later than some of our competitors. But we will continue to grow that business. I think that if you take into account that we effectively only started somewhere in the beginning of this decade. And today, we are engaged in 22 terminals. I think that's actually a pretty good result, and we will continue to grow that. But of course, we are -- APMT started, I think, in the last century or around 2000. So of course, they have a lot more history and track record there than we have at this point in time. And that's something that we simply need to catch up. Andy Chu: And then just on logistics, you mentioned sort late to the party and Terminals. Is it a party that you'll never join with logistics? Rolf Jansen: We have no plan to go into logistics, the way that others do. Operator: We have a follow-up question from the line of Mr. Nedelcu with UBS. Cristian Nedelcu: Two questions. I wanted to add, the hub and spoke model, how are you thinking about potentially deploying it to other trade lanes and what is the time line there? And secondly, if we leave aside the cost savings initiatives that you mentioned earlier, what is the inherent cost inflation you would expect for 2026? Is it 2%, 3%? Is that reasonable or more or less? Rolf Jansen: I think to take the last one first. I think when you look at cost inflation going into next year, if we would not take measures, then I think that is -- that would unfortunately definitely be more than 2%, yes. I think that's a low mid-single-digit number that you realistically would have to have in mind. And then when you look at hub and spoke, yes, we certainly see the hub and spoke model working. So will that also be used in other trades over time. Probably yes, but I don't see that tomorrow. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf E. Jansen for any closing remarks. Rolf Jansen: Not much to add. Thank you for your time, really appreciate it. Also, hopefully, we were able to give you some insight, and thanks also for the questions. Take care. Bye-bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Nina Grieg: Good morning, and welcome to Grieg Seafood's third quarter presentation. My name is Nina Willumsen Grieg, and I am the CEO of Grieg Seafood. Together with me for presenting today is also our CFO, Magnus Johannesen. Our agenda today is quite standard. I will start by presenting operations and some details, and Magnus will follow an update on financial review and capital allocation. Summing up, I will restate a little bit what we said last time on our strategy going forward. So starting with the highlights of the quarter. I am pleased to report that we have received full regulatory clearance for both U.S. and Norway. That was important for us. The progress in -- process in Canada is progressing, and we remain confident in closing the transaction during Q4. This will allow us to going into 2026, focusing on our core Norwegian operations and strengthening our financial position. Harvest volume for the quarter was almost 7,000 tonnes for continued operations. Due to lower market prices and higher costs, the operational EBIT for our farming activities was NOK 3.2 per kilo and close to 0 for the group. Operationally, Q3 has seen strong Freshwater results, but the environment at sea has been challenging as for many others. However, by taking out our nonperforming fish groups at higher cost this quarter, we were able to ensure a maximum MAB into Q4 and keep our guidance for the year at 30,000 tons. I will get back to the details on this. This quarter has also been a lot about setting up the structure for the new Grieg Seafood and getting started on cost reductions. As we emphasized last quarter, we are moving forward with a clear direction. We will go from global to regional and from growth to profitability. Our goal is simple: operational excellence. And we have made significant progress this quarter even before closing of the transaction. We have defined a new operating model with operational capabilities centered in Rogaland. We have reduced or postponed NOK 110 million in 2025 CapEx and made significant headquarter cost cuts -- cost cuts, sorry. Cost discipline remains a top priority. The main change we have done is the reduction of 55% of our staff across sales and shared service functions. It has been a tough task and a tough quarter for us, having to say goodbye to talented and valued colleagues. But today, we have a rightsized and highly capable team ready to deliver. Deep diving into operations and the quarterly performance all our Freshwater facilities, including our joint ventures and delivered solid production. At sea, however, this quarter has been challenging, as I mentioned, with high water temperature and sea lice pressure. As a result, some pens have had increased mortality and lower growth, and we decided to change our harvest plan to take them out. I am of the strong belief that success in fish farming is flexibility and robustness in our plants. Incidents will happen, but the higher average weight from post-smolt improves our risk profile and flexibility. The nonperforming fish we harvested was put to see as late as this year in March but was already at an average weight of 2.8 kilos. So while it's still small, it was ready for harvesting. Having this flexibility to harvest, our actions ensured optimal MAB utilization for Q4 as well as fish welfare. As a result, the farming cost for the quarter was high at NOK 70.4 per kilo, mainly due to this harvesting of small fish and also write-downs of biomass in general. We expect farming costs to decrease in Q4, but it will still be somewhat above our long-term target of NOK 60. So summing up, the key figures for this quarter, our cost level is not satisfying, but due to our high contract share, we are still profitable in Rogaland, with an operational EBIT of NOK 21.7 million. Post-Smolt is increasingly becoming the strategy for Norwegian salmon farmers, whether in closed containment or on land. However, few have advanced as far as we have in Rogaland. Our post-smolt is gradually increasing in average size, and we are seeing real economies of scale as both Tytlandsvik and Årdal Aqua are putting large smolt to sea. Årdal is expected to increase fish sizing significantly in Q4, with one batch already above 2.6 kilos. The post-smolt we put to sea now is significantly higher than any of our peers. The distribution of smolt size has shifted dramatically over the last few years, as you can see on the middle chart, with more than 50% being above 1 kilo. Our main objective for 2025 have been to minimize the lower-sized groups. And this year only our Broodstock smolt is below 500 grams. Finding the right sized smolt for each site is a key part of our production planning. And the benefits are clear, and we have presented them many times. We are seeing improved survival rates, reduced sea lice treatments and less time in sea per generation. This means that we can utilize our best farming sites more efficiently, and it is changing how we plan and how we optimize and how we harvest. Turning to the opposite side of our value chain with some comments on sales and processing with high price volatility and changing consumer trends, maximizing the value of our fish is a key success factor. So even with lower volumes, we will retain an internal sales team as we see several positive effects. While we are not focused on building brands, our packing station and sales team have a good standing within strong markets, and we have consistently outperformed the price benchmark. We also as we have tried to illustrate in the right chart here, we also see the value of strong collaboration between our farming and sales team. While difficult to achieve, we strive to plan harvest timing, responding to price changes from week to week. Value-added processing will also be part of increasing the value of our fish. The new facility at Gardermoen will ramp up through next year towards 10,000 tonne capacity, 8,500 tonnes next year, utilizing both internal and external raw material. We are actively seeking partners for external fish. Constructions will be finalized in December, and we expect production to begin in early January with organization and training already underway. And with that, I give the word to Magnus and finance. Magnus Johannesen: Thank you very much, Nina, and good morning, everyone. My name is Magnus Johannesen. I'm the CFO of Grieg Seafood. As last quarter, these financial numbers have been prepared in accordance with IFRS 5, which means that we are splitting between discontinued and continued operations in our financial reporting. This makes the figures somewhat difficult to interpret when going through slide by slide, but I will make sure that we try to stay on the right path. Starting with profit and loss for the continued operations. We see a decline in our sales revenues due to lower prices and lower average weights in combination with the lower volumes due to advanced harvesting. This is, however, offset by our very high share of contracts as well as very high superior share of the fish that we did harvest. All in all, we did come in with an operational EBIT of negative NOK 1 million, corresponding to a EBIT NOK 0.2 per kilo. However, it's important to note that this is heavily influenced by transitional cost increases coming from the changes that we are in. Hence, we do expect this to come down significantly moving forward quarter-by-quarter. There's also some tax effects from the transaction that we are now doing. We have reversed a deferred tax benefit as we no longer see the Canadian loans being in a loss position. This is the reason why we have an increased cost in our taxes this quarter. Moving on to cash flow. This is prepared for the continued and discontinued operations. Starting with the operational cash flow. We see net cash flow from operations coming in at negative NOK 304 million. It's driven -- it's positively contributing that we have a positive EBITDA of NOK 101 million. But at the same time, we have a significant biomass buildup in all regions, including the discontinued and continued. Moving to investment activities. The net cash flow for investment activities is negative NOK 168 million. However, out of this NOK 130 million is relating to the continued financing of constructing the postman facility in Finmark. And this shows how much we need to do until closing despite being a locked-box transaction. To compensate, we have a positive contribution from our net cash flow from financing activities of NOK 340 million. This is due to the continued financing, both for operational losses but also the CapEx commitments that we have in our divested regions. Isolating the discontinued operations, we have a net change in cash and cash equivalents of negative NOK 437 million, if were only looking at Finmark and Canada. Moving then to net interest-bearing debt, which is prepared for the continued operations but have elements from a discontinued operations within the bridge. I will try to walk through those numbers. So we started with the continued operations having a net interest-bearing debt level of approximately NOK 3.7 billion. However, going through the quarter, we still have to finance the discontinued operations, both in terms of operations but also in terms of investments. As such, we have an increase of net interest-bearing debt of a bit above NOK 700 million. But out of this, almost NOK 400 million is directly attributed to financing of ADAMSELV, Finmark operations as well as the Canadian operations. This shows how much pressure we still have on our liquidity and net debt levels from the discontinued regions but it's still a box transaction, and we do expect some of this to be repaid at closing. Focusing then on capital allocation. We wanted to clarify the numbers that we communicated that we prioritized dividend last quarter. As such, we have a preliminary estimate of NOK 4 billion in dividend distribution to our shareholders following the closing of annual accounts next year. As such, this is both through the 2 important elements. Grieg Seafood will have a very strong liquidity position despite this dividend. But we do have to ensure that we do have to comply with the equity ratio constructions as we start new Grieg Seafood. As such, we are focusing on 2 key aspects: we are still optimizing and reviewing our balance sheet. And as part of this, we are in the final phase of negotiating a new bank syndicate backed by Nordea and SEB. This will provide sufficient liquidity, sufficient financial partners as well as a very strong margin. As part of this exercise, we are optimizing our balance sheet as we move forward. And hence, we are -- we have every intention to redeem the hybrid bond either through a tender offer or through replacement capital. Secondly, we are focusing on liquidity. We need to make sure that Grieg Seafood going forward have sufficient liquidity to be a strong player in the aquaculture industry. We stand firm on our estimate of our operational liquidity buffer of NOK 250 million, but we have yet to determine the amount of liquidity needed to account for other risk. But we have intention to comply with paying further dividend as we move along in line with our dividend policy. And with that, I will give back the word to Nina to go through the future building blocks. Nina Grieg: Thank you, Magnus. One slide to sum it up. I will restate our strategic building blocks because they are becoming important for us. Strengthening, prioritizing and future proofing our operations. To strengthen Rogaland and enhance profitability is our main focus going into 2026. As we have started, we will do this through post-smolt development, MAB optimization, aligning our cost base with a new scale and ensuring a strong sales performance. This will form the basis for any new future development. Going along, we will consider potential growth opportunities. However, future investments will focus on projects that truly strengthen Rogaland, prioritizing the regional synergies that we can see there, not just increasing volume. And as our third building block, we will look into how we will position Grieg Seafood for the future. We are seeing a lot of regulatory uncertainties in our industry at the moment and our ambitions and plans remain flexible, but we are -- we will establish a structured process to expand the use of new technology also at sea. The Q3 results have not met our expectations. However, looking at the underlying fundamentals of our production, the organizational changes we have implemented and a positive market outlook for 2026, I am optimistic ahead to next year. Thank you. And I can open for questions. Henrik Knutsen: Henrik Knutsen, Pareto Securities. You have quite a lot more biomass on your balance sheet. You're going to harvest out less volumes year-over-year in Q4. And still, you're only guiding 1,000 tonnes of growth into 2026. Is that conservative? Or should we think that you have a very tilt towards the first half of the year in 2026 in terms of harvest profile? Nina Grieg: I think we -- for now, we stick with our -- what we have said, and we will get back with an updated trading update, but I think it is a -- I at least believe in that prognosis that we have set. So call it realistic. Magnus Johannesen: On the harvest profile. Nina Grieg: It's always naturally is good towards second half, of course, but we have a lot of big fish at sea. Herman Dahl: Herman Dahl, can you say something about the size you're harvesting out in Q4 and compared to more challenging sites you've taken out in Q3? Nina Grieg: Do you have the average size for Q4? I don't have that on the back of my head. But as I said, we -- of course, since we changed our harvest plan, we kept bigger fish, so some increase from this quarter. Herman Dahl: And one more, if I may. The price achievement in Q3 was very good. What should we think about price achievement going into Q4 with regards to contract, particularly? Magnus Johannesen: We still have a very strong contract position also in Q4, similar to the contract position we have had in Q3. Christian Nordby: Christian Nordby, Arctic Securities. In terms of the hybrid bond, you talk about the tender offer or replacement capital. Can you elaborate what you mean by replacement capital? Magnus Johannesen: Yes. So in accordance with the term sheet of our bond, we can replace the hybrid with subordinate capital to the hybrid and pay out the hybrid at [indiscernible] But we do -- we are important for us to maintain a good dialogue with the hybrid owners. So we will both see -- we have a dialogue with them in terms of a tender offer. And if a tender offer is not successful, we do have progressing discussions on our replacement capital facility. Unknown Analyst: [indiscernible]. Could you say something about the health of the fish groups expected to be harvested into 2026 and how that could compare to your long-term target of NOK 60 per kilo? Nina Grieg: We are done harvesting out the challenging groups early and end up Q3, early Q4. So the health now is good. Of course, we don't know what will happen with downwards and winter wounds this year, but I'm positive with the trend we saw last year. So all in all, it looks much better now than it did during Q3. Tore Andreas Tonseth: Tore Andreas Tonseth, SB1 Markets. A follow-up first on the question. You state that you see a normalization of the cost in Q4, so that means that you're looking at around NOK 60 in Q1? Nina Grieg: We don't guide specifically on that level, but towards our... Magnus Johannesen: We -- so the cost for the full year is expected to slightly above NOK 60, around NOK 62.5 and that gives you the estimate for Q4 as well. Nina Grieg: He asked for Q1. Magnus Johannesen: Q1, that will be a very strong quarter. Tore Andreas Tonseth: And also a follow-up with the locked-box, you are allowed to have a minus NOK 100 million EBITDA. The locked-box ended in October. So what's the -- are you within that? Magnus Johannesen: We are well within that yes. I would say, basically, it's -- there's no impact as of 30th September in terms of the EBITDA losses -- excess losses. Maybe open questions from the web. Unknown Executive: There are currently no questions from the web. Magnus Johannesen: Good. With no other questions, thank you very much for coming. Nina Grieg: Thank you. Have a nice day.
Delphine Cassidy: Good morning, everyone, and welcome to Orica's 2025 Full Year Results. I'm Delphine Cassidy, Chief Communications Officer; and I'm delighted to have you with us today. In the room with me is Sanjeev Gandhi, our Managing Director and CEO; and James Crough, known as Jamie, our CFO. Both Jamie and Sanjeev will be presenting shortly. We thank you for your support and value your participation and interest in Orica. As per normal, there's ample time for questions after both Jamie and Sanjeev present. So feel free to queue up, and we'll address your questions as soon as possible. I can confirm that the materials that we'll be covering today have been lodged with the ASX and can be found on the ASX and Orica websites. Before we start, can I ask you to have a look at the disclaimer on Slide 2. Thank you. And with that, I hand it over to Sanjeev. Sanjeev Kumar Gandhi: Thank you, Delphine. Good morning, everyone, and thank you all for joining the call today. I'll start very quickly with Page 3, which is just a very brief recap of who we are: The world's leading mining and infrastructure solutions company. Let me start with our #1 priority, safety, on Slide #5. I am extremely pleased to report that this year, we've had 0 fatalities across our operations, and our serious injury case rate has fallen to 0.093, the lowest ever on record for Orica. This outcome reflects our focus on safety leadership wherever we operate. We have empowered our people to speak up and stop work whenever they identify risks. While we celebrate this amazing improvement, we remain absolutely vigilant. Safety is nonnegotiable given the environment that we operate in. We are continuing our targeted safety programs, for example, focusing on preventing vehicle and equipment collisions to ensure every Orica employee and contractor goes home safe. I'm also pleased to note that we recorded 0 significant environmental incidents in FY 2025, underscoring our commitment to operating responsibly in every community where we work. Turning now to sustainability on Slide 6. There is a small typo, and I'd like you to correct that, which is under the Scope 3 column in the second last line, the word phase is missing, so it should read as reduction pathways as part of the next phase of decarbonization. I'm sorry about that. Our commitment to decarbonization is delivering measurable results. We have significantly cut our greenhouse gas emissions and have already eliminated 1 million tonnes of CO2 equivalence at our Kooragang Island site alone through new abatement technology. Overall, our gross Scope 1 and 2 emissions are now 51% below 2019 levels, well ahead of schedule, and we are firmly on track to meet our interim target of a 45% net reduction by 2030. This puts us in a strong position as we work our way towards our ambitions of net zero emissions by 2050. During the year, we completed the first full year of tertiary abatement at Yarwun and commenced sourcing renewable electricity in Australia and in Canada, lifting our renewable power coverage to 22%. Renewable electricity procurement in Australia and Canada is currently supporting our goal of achieving 100% renewable electricity by 2040. We continue to explore emerging low-carbon technologies from renewable hydrogen to alternative raw materials to carbon capture and utilization. These efforts demonstrate that our focus on sustainability is not only the right thing to do for the planet, but it's also supporting efficiency and innovation in our business. Turning now to our financial results for FY 2025 on Slide 7. Financial performance in FY '25 has been outstanding. Double-digit profit growth, strong free cash flow and value generation for shareholders, all while strengthening our balance sheet. This gives us a great platform to build on for the future. Let me walk you through the highlights. Our EBIT rose 23% to $992 million year-on-year. This is the highest earnings we have achieved in the last 13 years. This reflects the strength of our strategy, the resilience of our business model and the outstanding execution of our global teams. Net profit before significant items increased 32% to $541 million, and earnings per share rose by 29% to $1.118. This represents the value we are delivering to shareholders through disciplined growth and operational excellence. Notably, we've seen earnings growth across all 3 of our core segments and across all of our regions. Blasting Solutions, digital solutions and specialty mining chemicals have contributed to the strong earnings growth. This demonstrates the strength and resilience of our diversified portfolio and the success of our Beyond Blasting strategy. Our cash generation remains robust with net operating cash flow up 18% to $949 million. Leverage ratio is now at 1.39x. Return on net assets has improved to 13.8%, reflecting our continued focus on capital efficiency, asset utilization and profitability. The growth in earnings has translated into higher returns for shareholders, enabling the Board to declare an increased final dividend for FY 2025, bringing our full year dividend well within our targeted range of 40% to 70% payout ratio. We are pleased to share our success with investors in this way. In addition, our on-market buyback of up to $400 million is nearly complete, and the Board has approved an increase of the buyback by a further $100 million to a total of $500 million to be completed by March next year. This capital management initiative, our first ever share buyback in more than a decade, reflects our confidence in Orica's future and our commitment to maximizing shareholder value. Jamie will talk more on the financial performance shortly. Looking at the earnings across our segments and our regions. Earnings were up across all regions and all business segments. Starting with Australia, Pacific and Asia. APA delivered EBIT of $658 million, up 23% on the prior year in an environment with significant weather events in Australia and also in Asia. In Blasting Solutions growth was driven by higher demand for value-added products and services, which improved our product mix and margins. We benefited from successful contract renewals and wins and increased manufacturing output due to the nonrepeat of the major turnaround at Kooragang Island in the prior year. These gains more than offset some softness in demand in some areas, for example, lower thermal coal volumes in Indonesia. We also realized a one-off $15 million benefit from selling carbon credits generated by our abatement projects in Australia. In Digital Solutions, robust fundamentals in gold and copper fueled greater uptake of our Axis mining intelligence products, and we saw significant customer adoption of OREPro and OREPro 3D for blast modeling. In Mining Chemicals, strong gold demand drove record sodium cyanide sales supported by new customer wins and our ability to reliably supply customers through our global network of assets. Moving to North America. North America reported EBIT of $212 million, up 15% year-on-year. Our technology leadership and focus on future-facing commodities like copper and gold has provided a strong platform for growth in this region. Demand for our premium blasting products remained strong, and adoption of our patented WebGen wireless blasting system, accelerated, driving growth in the region. These positives helped offset external headwinds, including reduced demand from the U.S. thermal coal sector and a subdued quarry and construction market in the United States. We continue to maintain disciplined cost control in our business. In Digital Solutions, North America saw an uplift in demand for blast measurement tools like FRAGTrack and for in-situ geotechnical monitoring instruments. In Mining Chemicals, we successfully completed major safety upgrades at the Winnemucca cyanide plant in Nevada, which will support higher production going forward. The integration of the Cyanco acquisition in North America is substantially complete, and we are already unlocking customer synergies between explosives and the cyanide business. In EMEA, which is Europe, Middle East and Africa, EBIT delivery was $101 million, which is up 18% on prior year. This strong result was underpinned by increased demand for advanced solutions in underground mining as well as a pickup in construction and mining activity in key markets across this region. Leveraging our global experience, we achieved deeper penetration in important emerging markets across Africa and Central Asia. At the same time, we maintained a firm focus on commercial discipline and strategic portfolio optimization, which improved the quality of our earnings. In Digital Solutions, EMEA's earnings benefited from new contracts in major growth regions, and several new partnerships were executed for environmental monitoring solutions. We also saw a growing uptake of OREPro and OREPro 3D software and continued growth in GroundProbe radar deployments and services across the region. In Mining Chemicals, better customer mix and the use of our multi supply sources boosted cyanide margins, and we expanded our emulsifier products into new emerging markets. Finally, to LatAm. Latin America's EBIT was $90 million, up 4% on the prior year. This was a good outcome given the challenges in this region. We achieved rapid customer adoption of new blasting technology, notably increased use of WebGen wireless blasts and 4D tailored explosives. While the competitive dynamics remains challenging in this region, good progress has been made on securing new business and new contract wins. The Latin American team have also implemented portfolio adjustments and operational improvements aimed at managing costs and the ongoing supply challenges. In Digital Solutions, Latin America saw a very strong uptake of our RHINO monitoring technology and continued growth in GroundProbe and Axis product sales. We are leveraging the Terra Insights acquisition synergies to accelerate adoption of our Geosolutions products. In Mining Chemicals, we successfully expanded into new high-growth mining regions in Latin America and benefited from customer synergies between Orica and Cyanco, which are driving higher market penetration for our cyanide and blasting offerings. We also ramped up our Cyantific technical services in the region, providing added value to our gold mining customers. Moving to a segment view, starting on Slide #9. Starting with Blasting Solutions. Across all our regions, the core explosives and blasting services business performed exceptionally well. EBIT for Blasting Solutions was $868 million, up 15% year-on-year. We achieved margin expansion by shifting further towards higher-value premium products and by deploying more of our patented LP and the non-repeat of last year's ammonia shutdown at Kooragang Island contributed to the earnings uplift. Moving to Digital Solutions on Slide #10. The Digital Solutions segment is rapidly scaling up and has firmly established itself as a key growth engine for Orica. EBIT from Digital Solutions was $92 million, up 32% versus prior year. This step-up in growth reflects accelerating customer adoption of our digital products and the integration of the recent acquisitions. All parts of the digital portfolio contributed strongly. In Orebody Intelligence, improved exploration activity drove higher demand for our Axis analyzers and sensors, we are also advancing a strong pipeline of new products for release in 2026 focused on gold and copper exploration and production. In Blast Design and Execution, recurring software and sensor subscriptions are growing steadily, supported by robust gold prices that encourage mining customers to invest in or precision tools like OREPro and OREPro 3D. In Geosolutions, cross-selling is driving growth with many blasting customers also adopting our monitoring systems. GroundProbe's recurring monitoring services revenue continues to increase. Terra Insights, which we acquired last year, delivered earnings ahead of its investment case. Cross-selling opportunities are being realized, for example, by offering monitoring solutions to our blasting customers. The combination of growing revenue streams and high customer retention demonstrates Orica's delivery of technology-focused growth, reinforcing our position as a leader in digital mining solutions and clear demonstration of growing beyond blasting. Turning now to Slide 11, which demonstrates how Orica is driving growth by expanding not only our addressable market, but also deepening our market penetration in the digital space. We continue to see robust fundamentals in the digital space. Exploration activity is accelerating, and the mining industry's rapid digitization is driving demand for advanced instrumentation and integrated digital solutions, areas where Orica is setting the pace. Orica's innovation and R&D are not just responding to market needs, they are actively creating new markets. By bringing innovative solutions to the mining sector, we are expanding offerings to our customers, and in turn, growing the total addressable market itself. Our total addressable market has expanded at a 39% compounded annual growth rate since 2023, driven by both organic innovation and the successful integration of strategic acquisitions, Axis and Terra Insights. Digital Solutions revenue has grown even faster at a 30% compounded average growth rate after adjusting for the timing of the acquisitions. The years following the Axis and Terra Insights acquisition have delivered clear synergy benefits, accelerating both our TAM and the revenue growth. As shown on the previous slide, the high proportion of recurring revenue and low churn demonstrates the value and stickiness of our offerings and the strength of our customer relationships. Moving on to Specialty Mining Chemicals on Slide #12. EBIT was $101 million, up 47% on the prior year. Robust gold market fundamentals with gold prices and demand hitting all-time highs have driven significant demand for sodium cyanide and our services. We achieved strong sales volume, supported by new customer wins and by leveraging Orica's unrivaled global manufacturing and distribution network to ensure reliable supply. Our integration of Cyanco, which we acquired in 2024, has progressed very well, and we are beginning to realize the synergy benefits across the blasting and the cyanide businesses. During the year, and as previously disclosed, we completed planned safety upgrades at the liquid cyanide facility at the Winnemucca plant on plan. Similar safety upgrades are being completed on the solid cyanide facility in October. We expect full production at Winnemucca from FY 2027 onwards, and we expect to start up the Winnemucca site with full production from the end of next week. Our Yarwun and Alvin cyanide plants ran at record rates. And despite undertaking major safety and maintenance upgrades at our Winnemucca plant, our global supply chain allowed us to meet customer needs without any interruptions. We have continued to expand our emulsifier product portfolio, increasing exposure to copper and iron ore markets and entering into new regions and growing our revenue streams. We've launched the new OptiOre range of mineral processing reagents targeting future-facing commodities like copper and critical minerals. Our scientific technical services offering for gold processing has seen steady uptake, providing extra value to customers beyond the chemical itself. In summary, our Specialty Mining Chemicals business today is the world's largest mining-focused sodium cyanide producer with an integrated sodium cyanide production network of approximately 240,000 tonnes annually. This, along with the positive outlook and demand for gold, underpins the continued growth forecast in the medium term. I will now hand over to Jamie to talk about our financial performance in detail. James Crough: Thank you, Sanjeev. Good morning, everyone, and thank you again for joining us today. I'll move to the key financial metrics shown on Slide #14. As Sanjeev mentioned earlier, the continued successful execution of our strategy is reflected in our financial performance. Whilst top line sales revenue grew by 6% to $8.1 billion this year, our earnings before interest and tax rose to $992 million, an increase of 23% compared to the prior year. I'll provide more details on this in the next slide. Net profit after tax, pre individually significant items, increased by 32% to $541 million. As previously disclosed at the half year and our business update in September, significant items totaling $379 million after tax have been recognized this year, primarily relating to impairment and restructuring of our Latin America blasting business, in addition to litigation costs. Of the total significant items, approximately $235 million is noncash in nature, mainly relating to the Latin America impairment. After inclusion of these significant items, statutory net profit after tax finished at $162 million for the year. Net operating cash flow finished at $949 million, an increase of 18% versus the prior year, reflecting continued strong cash generation across the business in addition to disciplined working capital management. Return on net assets improved to 13.8%, an increase from 12.8% in the prior year. Our strong performance in 2025 has enabled us to deliver continued improvement in EPS, pre-significant items, to $1.118 per share, an increase of $0.254 per share or 29% from last financial year. A key highlight of our results throughout 2025 is the strong alignment between improved earnings, stronger cash generation and importantly, maximizing total shareholder returns over time in line with our refreshed capital management framework. Turning now to Slide #15. We shared our refreshed capital management framework in March this year, and the framework is designed to provide clarity and transparency in how we think about deploying capital across the business and through the cycle. We've applied the framework consistently throughout this year and the quality of our earnings demonstrates a number of proof points. These include continued strong operating cash flow, efficient working capital management, disciplined capital expenditure and investment, and importantly, we have safeguarded the strength of our balance sheet and, as a result, delivered increased returns to shareholders. A clear example is our successful on-market share buyback. In March, we announced an on-market buyback of up to $400 million to take place over the following 12 months. I'm pleased to share that this initial program is substantially complete with $399 million of shares repurchased to date, representing 4.1% of issued capital. Given our robust position, the Orica Board has approved an increase of up to an additional $100 million to the existing on-market buyback for a total program of up to $500 million. The buyback is expected to be fully completed by March 2026. Over the coming slides, I'll talk to you the key aspects of our 2025 results in more detail, which highlight the continued successful application of our capital management framework. Turning now to the EBIT bridge on Slide #16, where you can see that we've delivered improved earnings across all reporting segments. Starting with Blasting Solutions. Volume mix and margin increased by $81 million from the prior year, inclusive of $15 million of proceeds from the sale of carbon credits recognized in the first half. This was driven by continued strong demand for our higher-margin premium products and technology solutions, a positive recontracting cycle and continued commercial discipline. Growth in volume mix and margin slowed in the second half due to lower sales volumes in Indonesia and the U.S. due to reduced thermal coal demand. Margin growth from our blasting solutions technology product range increased by 46% in 2025 on top of the 55% increase delivered in 2024 with strong continued demand for the safety, efficiency, environmental and cost benefits delivered to customers through our WebGen wireless blasting, 4D and Fortis specialty emulsion ranges. In the Digital Solutions segment, earnings increased 32% to $92 million, an increase of $23 million from the prior year. Growth was underpinned by strong customer uptake of our digital platforms and sensor technology and acceleration in global exploration activity, particularly in the gold and copper segments and increasing recurring revenue. We also benefited from the full year contribution of the Terra Insights acquisition, continuing to realize the benefits of cross-selling opportunities across the Geosolutions portfolio with the integration of GroundProbe and Terra essentially complete. Our FRAGTrack, OREPro and OREPro 3D products continue to attract significant customer demand, together with our Axis Mining Technology business, acquired at the bottom of the cycle, well positioned to support existing business and new contract wins, in line with strong metals exploration activity. In the Specialty Mining Chemicals segment, earnings increased by $32 million to $101 million, an increase of 47% from the prior year. This growth reflects the full year contribution from the Cyanco acquisition, a critical investment supporting continued strong demand for sodium cyanide amidst sustained high gold prices, together with new contract wins in both the cyanide and emulsifier product ranges. Pleasingly, our recent acquisitions have created opportunities to further bundle digital monitoring and optimization services with cyanide supply. As Sanjeev mentioned earlier, Cyantific and OptiOre provide opportunities to expand revenue streams and importantly, grow the segment beyond cyanide. Across our blasting solutions and specialty mining chemicals manufacturing assets, we've also delivered improved performance versus the prior year. Earnings increased by $36 million primarily attributable to the non-repeated costs incurred from the 6-yearly Kooragang Island ammonia plant turnaround conducted in the first half of 2024. Pleasingly, the strong production performance at our Yarwun cyanide facility continued throughout the second half, which is important as we progress through critical safety upgrades at our Cyanco-Winnemucca production facility. Maintaining uninterrupted supply to our customers and having the flexibility to adapt supply points across our chemical supply chain reinforces Orica's position as the world leader in the mining-focused production of sodium cyanide. And finally, global support costs are lower than the prior year, primarily due to the classification of litigation costs as a significant item in 2025, some small property sales and ongoing disciplined cost management. In summary, our earnings growth has been broad-based, supported by increased contributions from every segment with a continued focus on execution and commercial discipline. Consistent with our capital management framework, this demonstrates our objective of resilient through-cycle performance and pleasingly, this has continued into the start of the new financial year. Turning now to trade working capital on Slide #17. Encouragingly, the improvements that we've focused on over the past 18 months have been maintained this financial year. Total trade working capital cycle days on a 12-month rolling basis are in line with the prior year. Days sales outstanding remained consistent at 46 days, reflecting our sustained commercial discipline as sales revenue grew by $482 million or 6% during the year. Days inventory held increased by 2 days, seen as a prudent measure given significant geopolitical uncertainty, particularly in the U.S. and raw material shortages occurring through 2025. Importantly, we've been able to fully offset this through a 2-day improvement in rolling days payable, closing at 51 days and moving us closer to top quartile total trade working capital performance, relative to industry benchmarks. Absolute trade working capital finished at $620 million. Foreign exchange had a $30 million unfavorable impact, partly offset by $14 million in efficiency improvements with ending trade working capital to sales finishing the financial year at 7.6%, improving from 7.9% at September last year. This disciplined working capital results supported the increase in net operating cash flow and remains a key focus area for the organization. Turning now to Slide #18. Total capital expenditure for 2025 was $460 million, broadly in line with the prior year. Of this, $286 million was allocated to sustenance capital expenditure. This included successful completion of turnaround events at our Carseland and Kooragang Island sites in the first half and the Winnemucca and Alvin facilities in the second half. We continue to invest in our mining services downstream business, including enhancements to our mobile delivery systems fleet in growing markets to support increased sales of specialist emulsions such as 4D together with investments in our cyanide barge fleet to support increased sales. Allocation to growth capital expenditure was slightly higher this year with $172 million invested in line with our strategy of supporting growth in the Digital Solutions segment, capacity expansions and efficiency improvements in our continuous manufacturing plants and further development of technology-focused blasting solutions. Growth capital expenditure is closely managed in line with the capital management framework where investment must achieve hurdle rates significantly above our pretax weighted average cost of capital as evidenced in our growing margins this financial year. Sustainability-related capital expenditure was $2 million following completion of key projects such as tertiary catalyst abatement across our nitric acid plants. We expect 2026 capital expenditure to remain broadly in line with the prior year. Moving now to Slide 19 on the balance sheet and liquidity. We continue to strengthen our balance sheet during the year with a number of key funding initiatives successfully executed. During the year, we refinanced or extended $461 million of existing committed bank debt facilities and added a new $90 million debt facility. In July, we also announced the successful issuance of USD 390 million in the long-term notes in the U.S. private placement market. Now as an indicator of how Orica's balance sheet is viewed externally, investor demand for the notes were strong, with a total order book of circa USD 4 billion, and this resulted in funding at favorable pricing. As a result, at 30 September, the average tenor of drawn debt was 5.5 years, an increase from 4.7 years at the end of September 2024. Net debt ended at $1.9 billion, excluding lease liabilities, an increase of $304 million from the prior year. This increase was driven by cash outflows, including $630 million of on-market share buybacks and dividends, together with $415 million of strategic capital investment. This was partly offset by our strong operating cash inflows. Consistent with our capital management framework, our leverage ratio is 1.39x EBITDA and sits comfortably within the lower half of our target range of 1.25 to 2x. We maintained a robust liquidity position. At year-end, we had $747 million in cash and $1.6 billion in undrawn committed facilities. And in December 2024, Standard & Poor's reaffirmed Orica's BBB stable investment-grade credit rating. In summary, our balance sheet is strong. It positions us well to weather external volatility, support continued delivery of our strategy and, ultimately, increased returns to shareholders. Turning now to the dividend slide on Page 20. Under our capital framework, we have maintained our target dividend payout range of 40% to 70% of underlying earnings. The Orica Board of Directors today have declared a final dividend of $0.32 per share, which brings the full year dividend to $0.57 per share, unfranked, representing a full year payout ratio of 50.2%. This represents a $0.10 per share or 21% increase on the 2024 full year dividend of $0.47 per share. This increase, together with the successful on-market share buyback, demonstrates our commitment to delivering enhanced returns to shareholders in a sustainable and disciplined manner, consistent with our capital management framework. In closing, Orica's outstanding financial performance and disciplined capital management have positioned us for sustainable and enduring growth and to maximize shareholder returns. Our resilience, strategy, talented global team and commitment to innovation, ensure we are well prepared for future opportunities and to drive continued success for all of our stakeholders. With that, I'll now hand back to Sanjeev. Sanjeev Kumar Gandhi: Thank you, Jamie. Moving now to Slide 22. Our strategy is driving growth and market leadership by delivering innovative solutions that create value for our customers. This approach has underpinned consistent performance improvement over the past 5 years and notably the strong performance in FY 2025, a 13-year high. The successful integration of acquisitions, the technologies we have deployed and the markets we've entered are all translating into strong results. Orica today is an exciting and innovative company with a resilient business model and continues to deliver shareholder value going forward. Moving to Slide 20 to Slide 23. We continue to increase our exposure to resilient commodities while reducing reliance on thermal coal. This shift ensures we are aligned with global trends and future-facing commodities, supporting both growth and sustainability. Our strategic priorities remain fully aligned with the growth drivers I've discussed, continue to grow our core blasting business, drive uptake of digital solutions and the recurring revenue they bring and expand our specialized offering in mining chemicals. Underpinning these priorities is an unrelenting focus on commercial discipline and quality of earnings, operational excellence and collaboration with our customers on new technologies. Turning to Slide 24, I will give you an update on our strategic scorecard. Orica remains firmly on track with our safety, sustainability and financial targets. We are maintaining a strong safety record and have achieved our 2026 net Scope 1 and Scope 2 emission reduction targets ahead of schedule with further reductions planned by 2030 and 2035. We are driving organic growth, accelerating technology adoption and expanding into high-growth markets and future-facing commodities. Our average 3-year RONA is tracking within the target range of 13% to 15%, and this has been increased to 13.5% to 15.5% for FY 2026 to 2028. We maintain a dividend payout ratio, and our annual capital expenditures aligned with strategic priorities. Turning now to the outlook for FY 2026 on Slide 25. We remain excited about Orica's future. The strong performance in 2025 has given us an excellent momentum entering the new year. Despite external uncertainties, our core markets and business fundamentals remain robust. We expect to continue growing EBIT across all 3 business segments in the year ahead. In Blasting Solutions, demand for premium products and advanced services is expected to stay strong, driven by increased customer penetration and ongoing technology adoption. Earnings growth will be supported by improved product mix, recontracting margin uplift and commercial discipline despite lower thermal coal demand in Indonesia and the U.S. and a planned turnaround at the Carseland plant in Canada. In Digital Solutions, we see continued strong earnings growth. Mining companies are increasingly embracing digitization, automation and productivity analytics. We plan to further use the adoption of our digital offering across our customer base and use AI to improve productivity outcomes. This, combined with recurring revenue streams and an expected further uptick in exploration activity, will drive earnings higher in this segment. In Specialty Mining Chemicals, the outlook is very encouraging. Gold prices remain elevated, and industry forecasts point to sustained strength in demand for gold and hence, sodium cyanide. With our integrated sodium cyanide production network, we are well placed to supply this demand and win additional contracts and anticipate further earnings growth from this segment. Beyond the segment outlook, we expect depreciation and amortization to be $520 million to $540 million, slightly higher, reflecting recent investments. Given the ongoing geopolitical challenges and external market volatility, we will increase our focus on cost management to protect and strengthen our business performance. Net finance cost, effective tax rate and capital expenditures should be broadly in line with FY 2025. The sale of our Stage 2 surplus land at Deer Park is on track to complete during 2026. We do expect ongoing litigation costs will be around $50 million to $60 million, as previously disclosed. As Jamie mentioned, the increased share buyback of up to $100 million is expected to be completed by March 2026. Following the recent incident at CF Industries Yazoo facility on the 5th of November, we received a notification on 10th of November from CF Industries claiming force majeure that will impact certain of its contractual obligations and indicating that it is presently unable to manufacture industrial ammonium nitrate. We are assessing the notice, and we will leverage our global manufacturing and supply network to minimize any potential impacts. Looking beyond 2026 on Slide #27. We are confident that Orica will deliver sustained profitable growth and accelerate value creation for shareholders. Some key drivers over the midterm in the next 3 to 5 years. In Blasting Solutions, we expect our core blasting business to deliver GDP plus earnings growth through the mining cycle. We expect to grow faster than the mining industry. This will be driven by increased penetration of our products and services, continued rollout of our advanced blasting technologies and further improvements in our margin mix. The fundamentals of our core market are strong. Commodities like gold, copper and critical minerals are in high demand, and customers are seeking productivity and sustainability improvements that our solutions provide. In Digital Solutions, we expect further acceleration in earnings growth moving from low double-digit percentages into the mid-teens EBIT growth. The mining industry's digital transformation is just beginning. And Orica, through our BlastIQ, OREPro, GroundProbe and Axis Technologies, is at the forefront of this trend. We have opportunities to grow our digital services in both our existing customer base and in new markets like civil tunneling and infrastructure. High recurring revenue and low churn will underpin this growth, making it a prominent earnings stream. In Specialty Mining Chemicals, we now expect earnings will grow from mid-single digit to high single-digit EBIT growth over the medium term, reflecting the strong fundamentals in gold and potentially increase demand in base metal processing. We will continue to be laser-focused on translating growth into improved returns. We are targeting to deliver a 3-year average RONA of 13.5% to 15.5% over the next 3 years, an upgrade from the previous 13% to 15% range. This will be driven by higher earnings and disciplined capital use. We will maintain a strong balance sheet with a leverage range of 1.25 to 2x EBITDA and continue our dividend policy of 40% to 70% payout ratio. In summary, the outlook for Orica is very positive. We have built considerable momentum in FY 2025, and we expect that momentum to continue into this financial year. Our markets, especially in commodities like gold, copper and critical minerals, are favorable. Our technology-led strategy is resonating with customers as demonstrated by the uptake rates. And our financial discipline provides a strong foundation. We are confident in our ability to continue delivering profitable growth across all segments and to create substantial value for our shareholders and customers in the years ahead. With that, I'll now open to Q&A. Operator: [Operator Instructions] First question comes from the line of William Park of Citi. William Park: Firstly, just with respect to the headwinds that you've called out in Indonesia and the U.S., could you be able to provide some quantitative color around the earnings impact that you've seen in FY '25 for your Blasting Solutions business and your expectation of those headwinds into '26, please? Sanjeev Kumar Gandhi: Yes. So I'll start with the U.S. We've seen -- William, we've seen a 10-year trend of coal extraction in the U.S. declining gradually. That has not changed. Now we do have the new U.S. government talking about bringing out more coal, and that might give us a bit of an uplift, but it's still early days. Now I'm not sure whether this is going to happen, but I can tell you structurally the challenge that the United States has today. There's a lot of investment going into data centers driven by AI. And as you all know, data centers need a lot of energy. Now the U.S. power grid is kind of maxed out at the moment. There's not been significant investments there, and they have shifted from coal-based power to gas-based power obviously because of the cost arbitrage because gas is still very competitive there. Now if there is the surge, this predicted surge in electricity consumption as these data centers come online, the grid does not have capacity to supply power. The only latent capacity that the U.S. grid has is coal-based power plants because they are not running at full loads today. Now if that comes true, then we will see an uptick in coal consumption. But I'm not -- I can't predict if that will happen and when that will happen, but that's a possibility. So in our forecast for 2026, we have expected and we have anticipated a continuous gradual decline in coal output in the Permian Basin in the United States, and that is reflected basically in our forecasts. Indonesia is interesting. Indonesia has been a relatively new trend. Since June of this year, we've seen a decline in exports of Indonesian coal into China and into India. And so it's been recent and it's been low -- I would say, around 10% decline in exports of coal from Indonesia overseas. And there are 2 reasons for this. One is obviously the coal pricing has corrected downwards. And the gap and the premium that customers pay power customers for the high-quality coal, so the low ash content, high low sulfur content, high calorific value coal versus the lower quality coal, which Indonesia offers has shrunk. And this means that the higher quality coal, which is mainly Hunter Valley coal, Mongolian coal has stronger demand. So there's been a bit of a shift from Indonesian coal to the Hunter Valley coal and to the Mongolian coal. Now this obviously benefits us because it's a shift from the Indonesian demand into Australia and Mongolia, where we are active. But that has been the first trend. The second trend is that there's been an increased coal output of Chinese coal. So as a result, we have seen this decline in Indonesian coal exports. And we've seen a similar trend in India. India has been increasing their own coal production where we are active as a mining services provider, but they have slightly reduced imports from Indonesia. Now whether this is a long-term trend, whether this is going to continue, it's hard to say because China issues, coal quotas once a year. So we'll have to wait till after Chinese New Year to see what the new coal quotas are, which are indicators of how much China will import in 2026, '27 onwards and what would be the impact of Indonesian coal. So that's all I can tell you at the moment. It's a very recent development. We are watching it closely. But obviously, we do have exposure to thermal coal in Indonesia because we are the largest mining services provider in that country. William Park: That's very clear. And then my second question relates to the force majeure that you've alluded to involving CF Industries. Can you just remind us, so the volume take-up on an annualized basis was around 800,000 tonnes from memory. Presumably, all of this is at risk. And can you just provide some color around some of the options that you have available to effectively replenish these volumes? And maybe some color around, I guess, the contracted price and spot price. Any color around that would be great. Sanjeev Kumar Gandhi: Yes. Thanks, Will. Look, it's a very recent development. It's just -- we received the force majeure letter 2 days back. So we are obviously looking through it and analyzing what it means to us. You're right, the contract has an obligation to offtake up to 800,000 tonnes, but our nominations depend on our market needs. And obviously, given in mind the coal decline and all of that, we have not nominated to the full extent. So the risk is not 800,000 tonnes, if it is a risk at all. So that's the first answer. The second answer is, obviously, we have our own global network. We've got the big manufacturing in Carseland. We've got all the other alternatives. So at the moment, we are busy mobilizing our global network. You have to remember, this is not the first supply disruption that Orica has faced in the last 5 years. We've gotten, unfortunately, pretty good at managing supply disruption. So the team is busy working and we have lined up supply, and we don't foresee any immediate disruptions of supply to our customers. We need to wait and see what the supplier tells us in terms of duration. So once we know that, we'll have more information and then we'll have more planning. But again, just to keep in mind, we've got this notice just 2 days back. So it's very early days now. And our focus today is, first, to ensure that our customers don't get disrupted, which we are planning to do with our internal network and obviously through sourcing options. William Park: And just the last one around the trend, I guess, with respect to exploration that you're seeing and I guess the acceleration in momentum, particularly in Axis that you've alluded to. Could you provide some comment around some of the observations that you're having with respect to the exploration levels across the regions that you're operating and how Axis is sort of performing in the first 1.5 months in FY '26. Sanjeev Kumar Gandhi: Thanks, William. I mean, look, you know the exploration market value, you've been following us. We've been telling the market now for the last 18 months that we've seen an uptick in exploration after a nearly 4-year decline in exploration activity. So we've seen some record lows in exploration and with the juniors not investing capital and all the other challenges. On the other hand, demand continues to grow. So we're falling short on supply. So it was inevitable that exploration would pick up. We first saw this in gold. We've seen this now for the last 18 months, extremely strong pull in exploration activity in gold. We now start to see this in copper. This is obviously going to go forward into critical minerals and rare earths. So we continue to see a strong uptick in the exploration pipeline. We are a global player today. We've scaled up Axis globally. We operate in all parts of the world with the major drillers everywhere in the world. So we are at the front line and seeing what the pipeline is, and it looks very, very promising. That's the first piece of good news. The second news is when we met in Sydney when we did our digital roadshow there, we did say that we are going to launch into production drilling. So we are on the verge of launching the first Axis products into the production drilling market, which is obviously another exciting entry -- market entry for us. This, by the way, will double the TAM that we have in the exploration market. So just another example of when we bring in new technologies, we acquire new businesses, we grow the TAM very, very strongly, and then we obviously increase our penetration and market share. So it's looking very promising. And obviously, the pricing reflects the need for more exploration and more mining to happen and follow. So let's put it this way, I'm very optimistic about the exploration market. Operator: Next, we have Brook Crawford from Barrenjoey. Brook Campbell-Crawford: Sanjeev, just a quick one on the outlook. Just note that you expect growth in blasting in FY '26. Just want to check if you expect GDP plus type growth levels in FY '26 in blasting, I guess, adjusting for the carbon credit benefit you had in FY '25, which would be similar to the midterm target. Sanjeev Kumar Gandhi: Yes. Thanks, Brook. So yes, that's the guidance that we are giving you that during -- through the mining cycle, over the midterm, we are expecting GDP-plus growth, which means growth faster than the mining industry because of increased penetration. I did call out that for next year, we have a major Carseland shut at the end of the financial year, and you know what this means. This is a big shut. So it's more than a month. And this is basically led by our own maintenance schedules, but also our supplier turning down the ammonia unit for their own maintenance. This -- as you can imagine, as it did in 2024 with Kooragang Island and ammonia has an impact, obviously, on the blasting business and then the non-repeat of the carbon credits. But despite all of that, we do expect blasting business globally will grow, and we will perform better than in 2025 for a couple of reasons. One is, obviously, we still have recontracting benefits coming through, not just from 2025 but also new contracts that we are winning as we speak. We've got further penetration and scale up of blasting technologies. So wireless 4D, everything else that goes around with it, specialized emulsions and all the other products and services that we have there. So that's another area where we continue to see growth in mix and margin. And then we obviously have also new wins in new regions, in new markets that we have entered now in the last 18 months, and that starts to scale up as we speak. So we'll also see some tailwind coming from that. So overall, the segment will be growing, the blasting segment, but there will be these 2 impacts. One is the one-off carbon credits that has to be taken out. And then we will have the Carseland shut, which, as you all know, has some impact on our earnings. Brook Campbell-Crawford: That's helpful. And just on the buyback, you have increased to $100 million. It just seem a little bit light. I mean, for context, I think you did more than $100 million in the month of September alone. So just want to check why perhaps it's a conservative increase in that program through to the end of March. Sanjeev Kumar Gandhi: Yes. Thanks, Brook. It's a good question. As you can imagine, we have discussed this intensively with the Board. Look, my view is this is the first buyback we have announced and successfully completed in more than a decade at Orica. It's all about building our credibility and we tell you what we'll do and then we do what we tell you, as I've been saying over the last 5 years. First of all, I'm very happy that we completed the first tranche. We were expecting to do this over 12 months. We finished it earlier. We purchased below VWAP. So that's all very, very positive. And we still have a few more months to go. So we thought the best thing to do was to just extend the buyback so that we still completed within the 12 months. And we did want to buy 5% of our equity and we ended up with 4.1% because the share price went up. So obviously, we still want to do that 5%. Now in the new year, once we are finished with all of that, you know we have a Board refresh. We will have a new Chair coming in. We are also thinking about a strategy refresh with the new Board. So we'll put all of that together. And once we finish the March milestone, then everything else is again on the table -- back to the table. I'll hand over to Jamie. He wanted to add a few things there. James Crough: Brook, it's Jamie here. So as Sanjeev said, we were targeting around 5% of market capitalization for this buyback. To date, we've bought back about 4.1%. And I think I said at the Investor Day in March that we were targeting this over the 12 months. So we've been quite successful in terms of volume and cost. So the weighted average purchase price has been around $20.15, and you can see we've been trading about 12% above that recently. And given the time frame that we've got until March of next year, another $100 million would get us up to about 5%. And I quite like the March timing for a few reasons. So we delivered the net operating cash flow to our results in September. We release our results in November. We do our strategic planning cycle in February. So we look at what does the business look like for the next 2, 5, 10 years? What are the growth options that we have in front of us? How do we deploy capital to support that? What delivers the greatest return to shareholders? So I like the March timing. So we'll complete the balance of the $100 million, and then we'll come back next March and talk about what the focus is for the business then. Brook Campbell-Crawford: And just really a quick one on the blasting in term growth. I just want to confirm, are you talking nominal or real GDP growth? Sanjeev Kumar Gandhi: Nominal, Brook, just to make things easier for everybody. Operator: Next question comes from Mark Wilson from RBC. Mark Wilson: Sanjeev and Jamie. just a couple of quick comments about the CF Industries' force majeure, and I realize it is early days. Just with your contractual arrangements, should this be a prolonged shutdown? And you do have to take on additional freight and sourcing costs. Would you be able to recover those from other customers offering CF Industries or insurance? Sanjeev Kumar Gandhi: Yes. I cannot comment on CF. We've got the legal team looking at this force majeure announcement. So -- and it's an old contract, a complex contract. So we look through all of that. But yes, we will do everything we can to ensure that this does not come back and hurt us in terms of earnings and margins. There will be increased costs if you have to source for a longer period of time, we don't know. So we have -- our supplier has to tell us how long they are out and when will the supply restart, and we have a valid legal contract in play for the next 6 years. So it's obviously a discussion we'll have with them. Their clear focus right now is to look at the safety of the operations, and then there will be an investigation and all the other stuff that happens around the regulation. So it's still very, very early days. But as I said, we have covered supply. At the moment, we are fine. And the most -- more important data point is how long is the outage so that we can start preparing for all kinds of eventualities, including passing on costs and managing costs and everything else that gets related with this kind of disruption. Mark Wilson: Okay. That's great. And then just on the cash flow, good improvement there, particularly on the trade working capital side. Just wondering how much more progress you think you can make. And I did notice there was a reasonable increase in non-trade working capital. Can you just touch upon that? James Crough: Yes. Thanks for the question, Mark. We focus very heavily on working capital and have done a number of years now. We've done some benchmarking work on where we sit in the industry. So we've looked at as many companies in the blasting business or the agricultural space or the chemical space to sort of benchmark each part of our working capital. I think on the receivables side, if you look over the last 5 years, the region has done a great job renegotiating terms as contracts have come up for renegotiation, which is the best way to improve DSO. So I think in terms of benchmarking, we're probably in the top half in that space. There's more that we can do there. On the inventory side, it's interesting. We're quite hard on ourselves in the way that we manage inventory in the business. Comparatively, we're in the top quartile. If you look at our DIH, it's relatively strong, particularly if you look at inventory to sales. In our benchmarking work, we were top 2 in that space. But our issue was really around DPO. And comparatively, we were very much in the bottom 25%. I don't think that we were leveraging our buying power as well as we could have. So this year, the supply chain team has done a great job. We've renegotiated around $400 million of supply agreements. Around $250 million of those were below 30 days, they're now above 30 days. And around $150 million were between 30 to 60 days, which are now on greater than 60-day terms. So that supported the increase in DPO. But that remains our area where I think there's the most room for improvement. But we are very, very conscious of the conversion of EBITDA to cash, given we are a very working capital-intensive business. And the increase in non-trade working capital was basically due to restructuring costs, which have since been paid. Operator: Next, we have John Purtell from Macquarie. John Purtell: Just had a couple of questions, please. Just the first one, obviously, you've upped your medium-term EBIT growth targets for mining chems and digital. And I know you've alluded to some of the factors, Sanjeev, here. But obviously, the gold price moves around. So just be interested in what are the factors outside of the gold price that are giving you the confidence to up those targets? Sanjeev Kumar Gandhi: Yes. Thanks, John. So I'll touch briefly on digital, and then I'll go back to chemicals, which is a very special macro that plays out there. Digital, it's just a matter of us getting comfortable with our recent acquisition, Terra Insights. So the acquisition is complete. The business has delivered above acquisition business case. So we just get more comfortable with it. You know it was a new technology. This was the part of the sensing and monitoring piece in the value chains, both in civil and in mining that we were not active in. We were only active in monitoring through GroundProbe. So we have significantly expanded -- doubled basically our offering in that industry. So the first year was all about integrating, taking control of the business and getting comfortable with the technology. Now we feel comfortable. We see the runway. And that is why we've said instead of the low double digit, we'd like to grow this thing, the digital business and earnings in mid-teens. And this also then goes back to Axis. Axis has been with us a couple of years. We have invested capital. We have scaled the business up. Today, we are a global player with a significant market share, a clear #2 in the exploration space. And then as I said earlier, we are entering into production drilling. That's going to double our TAM, and we are starting from 0 market share. So we're going to go there and increase our growth. So -- and then obviously, our core blasting technology business, it's all about optimizing blast outcomes, fragmentation and less waste and all of the other stuff that we do there, which is very, very successful and appreciated. So digital business will grow. Earnings will grow harder to mid-teens, as we have said. Chemicals is interesting because it's not directly connected -- our business is not directly connected with the gold price. It obviously helps -- our gold is at $4,000 an ounce. There is a structural issue in the gold industry. There's not been enough exploration. The ore that exists today, proven ore deposits is very, very dilute. So you're talking 1 gram, 2 grams per tonne of rock blasted. And the demand is there. So what this means is you're -- first of all, you need to explore more, which is what we have seen in the Axis business, so that's coming through. Secondly, you see marginal gold assets over the on the right of the cost curve. They become more competitive now with the pricing of gold. So they start to come back into production. That means more demand for us. Thirdly, because the ore is so diluted, you have to blast more to get that gold ore out and then you have to use more extraction chemicals to get the purity we want. So even if gold supply doesn't increase, you have to increase servicing of the gold industry to keep with your output. And that's a very interesting macro that plays to our favor because we do the digital part in Axis. We do the blasting for the gold customers and then we do the extraction using sodium cyanide. So that's the first macro that gives us confidence. The second one is that we are now nearly finished with the Winnemucca safety upgrade. So we had one major turnaround plan. We split it into 2 to straddle the financial year 2025 and this one. Because the demand was so strong, I did not want to shut the site down. So we kept some part of the site running to cater to customers. And we have got 3 lines there. So we shut the first line then the second line for the liquids. We finished with the safety upgrades. We will finish the solid safety upgrades by next week, then we'll have the plant up and running, and then we're going to test capacity. And we're going to max our production, and that's where the uptick will come. And that's why we said let's increase our earnings forecast from the middle single digits to the higher single digit earnings. And that's what gives us confidence to do that, John. John Purtell: And just a second question on the profit bridge slide there, the margin mix is obviously up $81 million for EBIT in blasting. I think you mentioned that, that includes the $15 million carbon credit benefit. So you've got a $66 million underlying there. So I think the broader question is, do you think you can maintain that level of improvement in '26? Or is that going to be difficult given some of the thermal coal regional weakness you've called out? Sanjeev Kumar Gandhi: John, our focus has always been mix and margin optimization, right? I've told the market several times, our volumes don't really drive our earnings. So it's all about scaling up our blasting technologies. The WebGen has got a lot of runway to go, right? And we have now gone open cut in WebGen. So we started with underground the first couple of years. We have launched the second version. We are now looking at even the next iteration of WebGen, which is very, very exciting. So this thing has a long, long way to go. And our biggest success has been our new emulsion, the variable density emulsion, where we are able to basically control energy intensity within a hole and to provide the outcomes that the customers need. And now we're bringing it together. So now we are selling solutions, including WebGen and 4D together. And the upselling potential there because of the value proposition is huge. And this is going to drive continuously our earnings. And we are launching new products. We are launching new emulsions for cold climates. We are now launching new products for the underground sector. We are going hard into the metals industry. And as you know, the macros and mining are -- it's going deeper. It's going underground into more difficult geographies. And we are so strongly placed with our global footprint to cater to new demand coming everywhere in the world. That's why mix and margin will continue to drive this. And then on top of that, the digital business is all mix and margin right? There is no volume there. It's all about services, recurring revenue, SaaS. So that's continuing to grow. And then the specialty mining chemicals expectation is that volumes will grow and margins will also grow. So yes, pretty confident. The only call out, as I said earlier on the call, is 2026. We've got the Carseland shut down, and you have to pull out the $15 million from the carbon credit that was a one-off. Operator: Next, we have Scott Ryall from Rimor Equity Research. Scott Ryall: Sanjeev, I just want to follow up on your carbon credits comments just then, you still get carbon credit issued under the scheme that you've agreed with government, right? Sanjeev Kumar Gandhi: Yes, Scott, that's a good question. Look, we are generating the highest -- one of the highest quality -- I should temper that. One of the highest quality carbon credits in Australia. We've started on this journey even before the safeguard mechanism existed. So we obviously have got a head start over the other 214 heavy emitters in Australia who are under the carbon credit regime. At the moment, we are banking them, right? And that's why you see the difference. If you look at our sustainability results, you see a difference between gross and net emissions, which is significant. And that difference is basically the carbon credits that we are generating every day at Kooragang Island and Yarwun, but which we are not monetizing or we are not surrendering. So we are banking them at the moment. And we'll continue to do that until 2029 when the safeguard mechanism kicks in, which is basically a 5% reduction year-on-year. And at that point of time, we will be well under any kind of penalties, right? And then -- but what we are doing is we are banking these carbon credits for future because at a period of time, as our production grows, our emissions will -- we continue to mitigate them. But at some point in time, we are going to be caught by the safeguard mechanism credit, and that's when we are going to start to utilize those carbon credits. So my expectation is in the foreseeable future, we do not expect to pay any kind of penalties under the safeguard mechanism. Now if you have excess carbon credits and if the market is very strong and if a good customer or a partner comes to us and says, can you help us out, at the right price, we are willing to sell them. But our base strategy is that we would like to bank them because we don't need to sell them today. And we can bank them and keep them in our inventory. And at the right time, we can either monetize or use them to offset our emissions in the future. Scott Ryall: Right. Perfect. And then just if I can touch on the CF Industries issues again. You've given color, I guess, that it's all very recent. If I look at the facility in question, just -- it does just shy of 600,000 tonnes of ammonia, which, if that was all channels to ammonium nitrate, would be over 2 million tonnes. And you've said you're up to 800,000, but obviously less than that. Do you have a sense of how this puts the U.S. or the North American market more broadly than just your supply of ammonium nitrate? And I guess what I'm looking at is, you made a good comment that during COVID, you managed your supply chain pretty well as a global player. Do you have regional players who are highly exposed for this incident as well? Sanjeev Kumar Gandhi: So I mean, look, I don't think the numbers you quoted are correct, but you should check up the website to see what the right numbers are because I think these are published numbers. They are a big fertilizer player. They are not really an explosive player. We are the biggest explosives customer. So a lot of the excess capacity that they might have in their system mainly goes to the fertilizers industry. It doesn't really go into the explosives industry. If you look at the U.S. supply and demand for nitrogen, the U.S. market is long, and it will remain long because, obviously, the ag business is a seasonal business. And because of the coal decline over the last 10 years, we've seen length coming in the U.S. market. So the market was never short or tight. It's been long. And we have to see now what the tenure of the shut is and when can they get these assets up and running. And then we have to decide what -- if at all, there's a longer-term impact. But again, it's really, Scott, early days. I can't really tell you more than that. Scott Ryall: Okay. So you're more -- you're more focused on your internal ability to service your own customers' needs as opposed to the competitive advantage that may give you from being a global player? Sanjeev Kumar Gandhi: Absolutely. Because we don't produce in the U.S., so right, we are kind of agnostic to what happens to other people, and especially the fertilizers industry because we don't play in that industry. Operator: Next, we have Nathan Reilly from UBS. Nathan Reilly: Sanjeev, just with your East Coast gas supply, previously, you've indicated that you've recontracted, I think, out to 2031. Can I just confirm, is that you're fully contracted out to that period now. Can you also maybe sort of talk through the cost impact doesn't feel like it's that material going forward? Sanjeev Kumar Gandhi: You're touching a nerve here, Nathan. No, no. We are fully contracted until 2031 on the East Coast, both at Yarwun and at Kooragang Island. These are not easy negotiations. But we've got leverage because we are big. I think we are one of the largest consumers of natural gas in New South Wales. So we've got some leverage. I'm not happy because I have to pay more. But as you said very rightly, we have smart ways of managing that and mitigating that through internal efficiency measures and then also through pass-throughs. So I don't expect any kind of material impact on the -- on our margins in the -- on the East Coast of Australia. But this whole gas discussion is now really coming to a head. I think both gas suppliers and gas consumers like ourselves, we have come to the realization something has to give. The equation has to be more equitable. The government is working. We have submitted our own submissions to them and our own imports and facts and figures, and everything is in black and white. In this country, gas has quadrupled in the last 12 years, gas price, right? So we used to have average gas prices of $4 today, the market talks about $18, $19. So that's just ridiculous. It's not sustainable. So I'm now hoping and waiting for the government to come up with some kind of reservation policy, first step, on the East Coast because getting more supply in, that ship has sailed, right? It will take 3 to 5 years to get in more supply. So the first thing to do is use the Western Australia model, have reservation for genuine users like Orica. And then the second step to get in more supply, and then also look at the pricing so that everybody has an equitable stake in this industry. So that's where I'm hoping, Nathan, and we'll watch what the government does. Nathan Reilly: Okay. Very clear. And finally, just on your legal fees. I think you've guided that you're expecting that to be -- will be a significant item, but $50 million to $60 million, I think, in '26, but that's on top of the expenses you incurred in '25. It seems like it's an awfully big number. Can you just give us a breakdown in terms of what's -- obviously, there is CF arbitration issue in there, but just give us an idea of what else is hitting that number? Sanjeev Kumar Gandhi: Yes. So this is ongoing. We've had legal fees since 2020, 2021. We always had legal fees. Given the nature of our business, we are global, there's always some kind of contract issue with the supplier, with the customer, some IP issues. Last year, we spent some money on a significant IP issue in Australia, and we came out winners there. So that was money well spent. We are going to continue to invest in protecting IP and defending our IP also in 2026. There's a bit of that. There's a few legacy issues about some acquisitions and divestments made in the past, where we are tackling some of these either claims from our side or claims on the other side that we are defending. And then obviously, we've got the ongoing litigation. So it's a mix of everything, but it's in a similar ballpark as to what we had in 2025, and we will have them in '25 -- in this new financial year. Post that, we will see what happens in terms of the ongoing litigations and then we'll have -- we'll take a call. Operator: Next, we have Daniel Kang from CLSA. Daniel Kang: Sanjeev and Jamie, just have a few questions, which I might just ask all at once. So firstly, just on your upgraded medium-term EBIT forecast for Digital Solutions and Specialty Mining Chemicals. Can you just help us with your medium-term margin expectations? Secondly, given the strength of gold markets, just wondering if you can provide some color on sodium cyanide pricing trends. Is there scope to improve pricing terms on your customer contracts? And just finally, your Digital Solutions slide on Slide 11, I think. Great to see TAM has grown by 39% CAGR, but it seems like revenue has lagged that at 30%. So theoretically, it does imply some share loss. Can you just talk about market share trends? Sanjeev Kumar Gandhi: Thanks, Dan. It's the other way around. The day you acquire a business, the TAM comes into your accessible market and then you grow your market share. So if you look at the timing of the acquisition, we have grown faster than the market. And now the fact that the market has grown faster is because the full TAM is accessible to us with our new products and solutions, which are now integrated. And now we have the potential to increase our penetration by increasing our market share. So it's the other way around, not the way you put it, but it's the other way around because you first get the TAM and then you get the growth and the earnings out of it. So that's an upside that we'll do better. And then I mentioned in Axis, we were doing only exploration. So the TAM included just the exploration. Now we are launching this year into production. So the TAM has doubled, but our sales are still 0 because the product is being launched now. So as we grow into the production market, you'll see our sales revenue catch up. So that just tells you there's more upside. It's not a loss -- share loss. It's basically us starting into a new market and then bringing in new products and solutions and growing our share in that market. In terms of margins and pricing in sodium cyanide. Pricing is not that relevant. It's a commodity. It's the margin that we make out of it, and that's what we do here is play our supply network. So we've got 3 manufacturing sites in 2 continents, and we've got 4 distribution centers globally on top of that. So it's all about landing the product at the lowest landed cost to our customers, which basically gives us the best netback. And there's nobody else in the world who can do this because there is nobody else with multiple locations and supply chain facilities that we do -- we have. So that's where the upside is. So there are situations where sodium cyanide price might come down because the byproducts producer might ship a consignment through a distributor and dump it somewhere, but that does not decide margin. The margin is decided by how you optimize delivery and supply chain and handling of the product, which, as you can imagine, is a very difficult product to manage. So it's not directly relevant, the pricing mechanism. It's an input. It's a factor of input. So there's natural gas in it. There is a sodium hydroxide in there, and there's a bit of ammonia that goes into conversion. And obviously, the cost of these ingredients is very different in different parts of the world. So it's more a margin game and a netback game in this business. It's not so much a pricing game there. Operator: Next, we have from Ramoun Lazar from Jefferies. Ramoun Lazar: Sanjeev and Jamie, just one for me just around the capital position. Obviously, you've got Deer Park that you're expecting to monetize at some point in '26. I'm just trying to understand how you're thinking about capital deployment. Is there anything in the M&A space or in the portfolio that you think you need to add -- to continue to add to the strategy of growing beyond blasting? Or should we think about those surplus funds coming back to shareholders via buybacks? James Crough: Yes. Thanks for the question, Ramoun. Just your question on Deer Park. So we look at all of our land portfolio and whether it's surplus to need. So just in Deer Park, in particular, so the market engagement, so far, has been very positive. I think we're approaching conclusion of discussions with all interested parties. I think we'll know more by around March of next year who the most likely successful party will be. In terms of funds from that, I think it's going to be Q4 next year. The challenge will be, is it Q4 of our financial year or Q4 of the calendar year. So I'll know more about that in March of next year. We're also looking at the land that we have at Botany. Now first and foremost, our priority here is our environmental and community commitments and remediation. That's the primacy and the thing we focus on there most. As we work through the individual lots through remediation milestones, there may be opportunities to divest parcels as we move through remediation. That probably won't be until 2027. And obviously, if you look at the location of the land, it's in a very favorable spot. So you can imagine that, that would be well valued, but that will be probably 2027. What do we do with those funds? It really comes back to the capital management framework, right? So if we've got surplus balance sheet capacity, we will look at what options we have to deploy. If it's M&A, it has to be enduring investment consistent with the strategy. It has to deliver the requisite return above pretax WACC to be accretive to shareholders and accretive to EPS. We look at things all the time. We probably look at 50 things a year, most years we do none. Last year, we did 3 or 2. If there's no way to deploy that capital in terms of M&A that's consistent with strategy and EPS accretive and enduring, then we'll look to return it to shareholders. That's exactly the reason why we spent so much time on the capital management framework this year. Ramoun Lazar: Yes, understood. I guess what I was trying to ask is, is there anything in the portfolio that you think is missing that you could look at potentially adding to via M&A or that you can, I guess, develop internally? James Crough: Yes. It's a good question. So we're obviously the market leader in terms of the provision of sodium cyanide into the gold industry. If you look at the energy transition, right now, we don't have a chemical offering in the copper space. Now we won't get into sulfuric acid or hydrochloric acid, they're very much commoditized, but some of the specialist chemicals in the purification process, we will potentially have a look at. I don't expect that to be significant M&A. They're probably smaller bolt-on acquisitions at this stage. So we're actively looking at that. We may do something in that space next year, maybe not, but there's no significant M&A that we're looking at as we sit here today in that space. I don't know, Sanjeev, if you want to add to that? Sanjeev Kumar Gandhi: No, Ramoun, I don't think there's anything else missing in our portfolio. So what we are trying to do at the moment with specialty mining chemicals, given the business is so successful and we understand chemistry -- we were a chemical company or we are a chemical company -- is look at offerings beyond gold, so replicate the same model, do digital blasting and extraction in other commodities. So copper is an obvious target. We're also looking at rare earths and critical minerals because there is also a lot of processing that goes into that. And for processing, you need to handle hazardous difficult chemistry, reagents, flocculants, floaters, extractors. And this is specialized chemistry. This is basically, I would say, a black box chemistry where you sell small ingredients at very high margin, very high pricing, and it's all about value delivery in terms of optimizing extraction. So that's the area that we really would like to grow into because we don't own the chemistry there. The chemistry is available in the market, we know who has it, we have been engaging with quite a few people. But whether we make a deal or not, time will tell. It has to be at the right value for us. And if it is not, then we'll continue with the capital management framework here. In Digital, we don't need anything else. We are investing in AI, but it's all homegrown AI. We are developing our own agents. We are developing our own AI tools to leverage our sensors, our data, our software and the cloud that we have put into place to monetize more value out of that. So that's more organic growth. I don't expect unless something falls into our lap at the right valuation that we'll buy anything in digital. Operator: Our last question comes from Lee Power from JPMorgan. Lee Power: Sanjeev, just on Slide 10, where you chat about churn rates that have come down. Is there something specific going on with the type of contracts up for renewal? Or something else going on around how you're approaching pricing or your competitors approaching pricing that might explain the change in churn rate? Sanjeev Kumar Gandhi: Yes. So the churn rate has improved, which is a positive that tells you that -- so the churn rate basically means the percentage of businesses that we are losing, and that's come down, which is great. And this tells you that our offerings are getting better, the business is getting stickier, and customers are seeing value. So they are -- so we are obviously winning new business with new customers. What is really exciting is we win a lot of business in digital at our competitors' blasting sites, which is a lot of fun, as you can imagine. But we are also able to retain business and then expand businesses because digital business is fast moving. We come up with a new offering every, whatever, 6, 8, 9, 10 weeks. And it's all about putting stuff together and then adapting the solution to your particular ore body or your particular mining method or your particular commodity and then coming up with a new solution. So churn rate going down is very, very positive, and this means the business is getting stickier, and customers are loving what we are able to offer. Lee Power: Yes. I guess I was coming from like the other side, often like churn rate and price go somewhat in opposite direction. So I was trying to work out if there's something else where maybe the rest of the industry has kind of started pushing price as well and that's starting to show through in churn rates. Sanjeev Kumar Gandhi: We use the same philosophy as we do with blasting. We are here price leaders. We are the market leader in the digital space globally. So we are the one who set pricing and benchmarks. We are not a price taker. And we have not yet seen a reason to compete for share on pricing because our products are just superior and better. Lee Power: That's a good sign. And then sorry, just to go back to Brook's question around Blasting Solutions. Is your point that -- you've obviously got the medium-term targets, you're going to grow, but you -- given the Carseland shut, you might be below that medium-term target you've set. Is that what I should take out of your answer to Brook's question? Or if I'm mistaken, what should I be taking out of that? Sanjeev Kumar Gandhi: I did not hear you very clearly because I lost you for a minute there. Would you repeat that and summarize it, the question? Lee Power: Yes, sorry. So I was asking just a follow-up on Brook's question around Blasting Solutions and the '26 guide. There's obviously a lot of moving parts. You said there is going to be growth. I'm just trying to work out is, do those moving parts end up that your growth rate will be positive and yet below the GDP plus EBIT growth target you have in the medium term? Or is it going to be at or above that rate? Sanjeev Kumar Gandhi: Look, we'll try and grow earnings as hard as possible. I'm just trying to remind everybody of the one-offs, which is the 15 million carbon credit and the Carseland shut, right? So always keep that in account when you factor in earnings growth in blasting for 2026. Going forward, obviously, because these things will not recur in '27 onwards, then we will go back to a more normal cadence. Why am I calling out Carseland? Because this is as significant an event as we had Kooragang Island in 2024 where the whole site was down for a very extended period of time. And that's why I'm calling that out specifically. So yes, obviously, that will have more of an impact in 2026, and then it will wash out in 2027. So again, that is just something to keep in mind. Otherwise, we are committed to the forecast we've given you, which is GDP plus. Operator: Thank you for all the questions. That concludes our Q&A session. I will now turn the conference back to Delphine. Delphine Cassidy: Thank you all for joining us today. If there are further questions, please feel free to reach out to me. And we look forward to meeting you over the next couple of weeks. Thank you, and have a good afternoon.
Giuseppe Esposito: Good morning, everyone, and welcome to Poste Italiane Third Quarter and 9 Months 2025 Results Conference Call. Shortly, our CEO, Matteo Del Fante, will take you through some opening remarks, and then the CFO, Camillo Greco, will cover the financials. As usual, the presentation will be followed by a Q&A session where you can ask questions either via phone or through our webcast platform. And for any topics we won't be able to cover today, please do contact the Investor Relations team. We will provide any clarifications you might require. With that, over to you, Matteo. Matteo del Fante: Thank you, Giuseppe. Good morning, and thank you for joining us today for our Q3 and 9 months 2025 results call. As we celebrate 10 years since going public, we're proud to report another record-breaking quarter, reflecting sustained growth as we approach the end of 2025. The positive momentum established in the first half of the year has continued in the third quarter. We remain focused on executing our strategic plan, and we're fully on track to achieve our updated '25 guidance. In the first 9 months, we delivered record results across group revenues, adjusted EBIT and net income. Each business unit contributed to a robust 4% year-on-year increase in top line, reaching EUR 9.6 billion in total revenues. Adjusted EBIT grew by 10% to just over EUR 2.5 billion for the period and net profit reached EUR 1.8 billion, representing an impressive 11% compared to the previous year. Since the start of the year, we have seen solid net inflows in investment products, confirming strong commercial performance in insurance product and improved net inflows in postal savings. I'm pleased to report that the migration of our clients to the Super App has been successfully completed. To date, the app is used by 15 million clients with 4.1 million daily active users in November '25, which is more than our previous apps combined and the highest level among Italian apps. Our balance sheet remains extremely solid with our insurance Solvency II ratio at 312%, well above our stated ambition of 200%, providing us with significant financial flexibility. On November 26, we'll pay a record interim dividend of EUR 0.40 per share, totaling EUR 518 million, up a remarkable 21% from last year. I'm pleased to share that our initiative to unlock synergies with TIM are currently underway. At the end of September, we launched TIM Energia powered by Poste Italiane in more than 750 TIM retail outlets. This marks a significant step in combining the strength of both organizations, expanding our retail customer reach through TIM's network and Poste Italiane trusted energy offering. In the coming months, we will continue the strengthening of the strategic partnership and roll out additional joint initiatives to deliver synergies and value creation for all stakeholders. While our investment in TIM remains strategic, we are also pleased to note that the value of our stake has nearly doubled, now at EUR 1.1 billion. These results underscore the strength of our business model, flawless execution and our ability to adapt and grow in a dynamic environment, all while maintaining strict cost discipline. Let's move to group financial results on Slide 4. Poste delivered a very strong performance in the third quarter and first 9 months of the year. These were the best Q3 and 9-month results ever reported by the group in terms of revenues, EBIT and net profit. Focusing on the 9 months, revenues at EUR 9.6 billion, up 4% year-on-year, adjusted EBIT at EUR 2.5 billion and net profit at EUR 1.8 billion, up a remarkable 10% and 11%, respectively. In the quarter, we achieved record group revenues at EUR 3.2 billion, up 4% year-on-year. Adjusted EBIT reached EUR 856 million and net profit is at EUR 603 million, up 8% and 6%, respectively. On Slide 5, the strong revenue momentum across all our business segments continues into the year. In Mail, Parcel & Distribution, revenue growth was driven by higher parcel volume and supported by increasing client diversification. The anticipated decline in mail volume is effectively mitigated through ongoing repricing actions. In Financial Services, revenue increased by 5% year-on-year to EUR 4.2 billion, supported by NII and solid commercial performance. Insurance Services delivered strong profitability in both Life and Protection segments. Revenues rose 10% in the 9 months, reflecting stable CSM and higher release. Postepay Services' unique and integrated ecosystem of everyday services delivered sustainable revenue and profitability growth. The telco customer base remained solid and stable, while the number of energy clients has grown to approximately 950,000 on track to reach the target of 1 million clients by year-end. TIM Energia powered by Poste Italiane launched on September 29 will provide an additional boost to this business. Let's go to Slide 6 and EBIT evolution by segment. Mail, Parcel & Distribution reported an adjusted EBIT of EUR 137 million for the 9 months, in line with our full year guidance. Financial Services operating profitability is up a sound 23% in the 9 months to EUR 790 million, driven by NII and overall strong revenue trends. In the 9 months, Insurance Services adjusted EBIT is up 9% to EUR 1.2 billion, supported by both Life Investment and Protection. Finally, Postepay Services EBIT growth of 9% to EUR 416 million is driven by resilient top line performance, significantly outperforming the market. On Slide 7, let's take a closer look at what we're building through our strategic partnership with TIM. Several work streams are underway to maximize synergies between the 2 groups. We have signed a contract that will allow the migration of Poste Mobile MVNO operation to the TIM mobile infrastructure starting in Q1 2026. On the commercial front, we have reached the first significant milestones with the launch of TIM Energia powered by Poste Italiane now available through more than 750 TIM retail offices with very encouraging early results. Looking ahead, we're actively working on additional cross-selling opportunities on both retail and SME customers, including in the areas of insurance and payments. At the same time, we're exploring cost efficiency initiatives through joint procurement. We will communicate these developments to the market in a phased manner as relevant agreements are finalized. Poste Italiane is taking a decisive step forward in digital innovation through a new joint venture with TIM Enterprise dedicated to cloud-related IT services. This partnership will drive Italy's cloud transformation, harnessing the potential of generative AI and open source technologies. Our mission is to accelerate the nation's digital evolution, empowering public administration and private enterprises with secure and advanced solutions. The joint venture will deliver services across both leading public cloud platforms and sovereign national infrastructures. With that, let's look at the detail of the financials. Over to you, Camillo, please. Camillo Greco: Thank you, Matteo, and good morning, everyone. Let's move to Slide 9 on Mail, Parcel & Distribution. Revenues amount to EUR 934 million in Q3 and EUR 2.8 billion in the 9 months, up 3% and 2%, respectively. Mail revenues for EUR 180 million in Q3 and at EUR 1.5 billion year-to-date are in line with our fiscal year '25 guidance presented in February. Parcel revenues were up 10% to EUR 420 million in Q3 and up 8% to EUR 1.2 billion in the 9 months, supported by all customer segments, which continue to improve our revenue diversification. Distribution revenues from other business units are up 3% in the 9 months, reflecting positive commercial trends. Adjusted EBIT at EUR 137 million year-to-date is in line with the guidance provided for the full year. Let's look at volumes and tariff on Slide 10. Parcel volumes are up a solid 14% in Q3 and 12% in the 9 months to 245 million items. In Q3, we also increased the portion of items delivered via the wholesale network to 45%, up 5 points versus last year, leading to a positive contribution to the overall profitability. Looking at pricing, the average tariff was impacted by higher volumes with lower pricing and unit costs as we continued to have high volumes in secondhand items and boxless returns. On Mail, the volume trend is in line with expectations, showing a slower volume decline in Q3 compared to the first half of the year. The bulk of the volume decline remains concentrated on lower value items such as direct marketing and registered mail. We continue to compensate anticipated volume decline with ongoing repricing actions across both regulated and market products. Moving to Financial Services on Slide 11. Gross revenue for Q3 landed at EUR 1.6 billion and just shy of EUR 5 billion for the 9 months, up 3% and 6%, respectively. Net interest income came at EUR 669 million in Q3, up 3% and at EUR 2 billion year-to-date, up 6%, benefiting from higher average deposits and lower cost of funding. Postal saving distribution fees amounted to EUR 443 million in Q3, up 3% and EUR 1.3 billion, up 5% year-to-date, supported by improved gross inflows driven by commercial initiatives as well as longer maturity of products sold. Consumer loans distribution fees reached EUR 63 million in the quarter and EUR 203 million in the 9 months, both up 15%, driven by higher margins, confirming the strength of our multi-partnership model. Asset management fees came in at EUR 47 million in Q3 and EUR 136 million in the first 9 months, impacted by a different product mix with lower upfront fees, while AUM continued to grow, thanks to positive net flows. Finally, adjusted EBIT came in at EUR 262 million in Q3, up 16% and EUR 790 million in the 9 months, up 23% compared to 2024 on the back of strong revenue performance. Moving to Slide 12. TFAs continued to grow, reaching EUR 601 billion, up EUR 10 billion from the start of the year. Let's look at each component. We reported strong EUR 2.3 billion net inflows in investment products, confirming the positive momentum in life insurance where net inflows totaled EUR 1.2 billion. Postal savings net outflows improved in Q3, supported by strong performance of 100-year anniversary postal bond. Deposits were up, benefiting from stable retail balances at EUR 58 billion and higher, though more volatile balances from TA clients. Moving to Slide 12 -- moving to Slide 13, sorry. Insurance Services revenues amounted to EUR 446 million in Q3, up a strong 12% year-on-year and EUR 1.4 billion in the 9 months, up 10%, supported by both Life and Protection. In Q3, we continue to report positive Life net flows driven by strong GWP, up 7% year-on-year with an increased share of multi-class products now with over 70% of Life investment and pension GWP. Our advisory offering built in the context of the new commercial service model is leading to proactive rebalancing of our clients' portfolios, resulting in a lapse rate of 8.3% in the quarter, more than 50% of which have been reinvested into new Life Investment & Pension products. Life Investment & Pension revenues are up 11% to EUR 393 million in Q3 and up 10% to EUR 1.2 billion year-to-date on the back of stable CSM stock and higher CSM release. Protection revenues were up a solid 11% in the 9 months to EUR 147 million, supported by higher gross written premium and up 14% in the quarter. Combined ratio stood at 83%, while we confirm our fiscal year '24 guidance of about 85%. Adjusted EBIT of EUR 1.2 billion in 9 months, up 9% compared to 2024 and up 11% in Q3, reflecting top line trends. Our stock of CSM is stable at EUR 13.7 billion, driven by strong new business and positive financial variances. This provides us with strong visibility on the future profitability of the business. Normalized CSM growth stood at 3.5% on an annualized basis, up from 2% in 2024, with strong increase in new business value and expected return more than compensating the release. Let's look at the solvency ratio evolution on Slide 15. PosteVita Group Solvency II was 312% at the end of September and well above the managerial ambition of circa 200% of the cycle. This ratio already includes the impact of foreseeable dividend based on 100% net profit remittance. The marginal reduction in the ratio was mainly related to economic variances such as higher risk-free rates. Our Solvency II ratio currently stands between 305% and 320%. Moving to Postepay Services on Slide 16. The Postepay ecosystem continues to represent a sustainable engine of growth, innovation and customer engagement for the group. Revenues rose to EUR 409 million in Q3 and EUR 1.2 billion in the 9 months, up 3% and 5%, respectively. Payments are up 1% to EUR 298 million in Q3 and are up 2% to EUR 878 million in the first 9 months, supported by transaction value growth of 10% in the quarter and 9% year-to-date, offsetting shortfall due to EU law change. We are significantly outperforming the market and growing our market share in a competitive environment. Net of instant payment shortfall, payment revenue growth is at around 5% in both the quarter and the 9 months. Telco revenues are stable in the quarter and are up 1% in the 9 months to EUR 247 million, supported by our resilient client base and the fiber offer. Finally, energy net revenues totaled EUR 86 million in the 9 months, reflecting an increased customer base that now stands at around 950,000 clients and comfortably heading towards our 1 million client base target by the end of the year. Adjusted EBIT grew a robust 6% to EUR 140 million in Q3 and 9% to EUR 416 million in 9 months, underpinned by solid top line performance and in line with guidance. Since the start of the year, our average workforce has remained just under 120,000, consistent with the level of full year 2024, with hirings broadly offsetting exit of circa 6,000 FTEs. Our workforce productivity improved year-on-year as the growth in value-added per FTE exceeded the increase in HR cost per FTE. Moving to group HR costs on Slide 18. At the end of September, ordinary HR costs increased by 2% to just under EUR 4.2 billion due to higher FTEs. The new salary increase effective September 1 as part of the latest collective agreement and variable compensation. In the 9 months, ordinary HR costs on revenues are down to 39% with improving operating leverage. Moving to Slide 19. Non-HR costs increased by EUR 168 million year-on-year, mainly driven by EUR 112 million additional variable COGS, reflecting higher business volumes. Fixed COGS are basically flat, while D&A are up by EUR 54 million, in line with increased investments driving our transformation. In general, our focus on cost and CapEx discipline across all divisions remains sharp and protecting the bottom line profitability as well as cash flow remains our top priority. Thank you for your time. Let me hand over to Matteo for a wrap-up. Matteo del Fante: Thank you, Camillo. Following 5 straight quarters of record performance, we have once again achieved outstanding results with 9 months revenues of EUR 9.6 billion, up 4% year-on-year and adjusted EBIT rising 10% to EUR 2.5 billion. On the strength of these results, we can confirm that we are absolutely confident of hitting our EUR 3.2 billion adjusted EBIT and EUR 2.2 billion net profit for 2025 guidance. We continue to build on solid momentum with a clear commitment to creating long-term value for our stakeholders. Our focus remains on driving revenues growth and diversification, further improving our cost and capital efficiency and maximizing the potential of people, technology and data. We continue to maintain a robust balance sheet with low leverage and a Solvency II ratio at 312%, well above our managerial target. This strong financial position provides us with ample flexibility and underpins our confidence in a competitive dividend policy. As a result, we're distributing an interim dividend of EUR 0.40 per share, up 21% year-on-year, totaling nearly EUR 520 million to be paid to shareholders on November 26. I'm pleased with the progress of our collaboration with TIM, which will generate meaningful synergies for both groups. The first of several projects, TIM Energia Powered by Poste Italiane was launched in September is now available through more than 750 TIM outlets. This partnership will deliver significant value for all stakeholders in the future. Once again, these excellent results are a testament to the dedication and professionalism of our people whose daily commitment remain at the heart of our success. With that, thank you for listening, and Giuseppe, over to you for the Q&A. Giuseppe Esposito: [Operator Instructions] The first question is from Tommaso Nieddu at Kepler. Tommaso Nieddu: The first one is on the Super App. So the migration of the Super App has now been completed with 15 million users and over 4 million daily active users, which is kind of impressive. So could you elaborate on the next phase of that in terms of cross-selling across all your main verticals, I don't know, like payments, insurance, energy. And any more color would be highly appreciated. Then on the SPID, you currently manage almost 30 million digital identities and it's still growing. So if you can give us any update on a potential introduction of a fee-based model similar to other providers. So basically, if you could update us on your latest thinking around SPID monetization. And just a third one, very, very quick on insurance. If you can give us more color on the negative operating variances that impacted the CSM evolution this quarter. So was it mainly different lapses assumptions? Matteo del Fante: Thank you, Tommaso. I will take the first 2 and leave Camillo for the third one. Yes, so we're very proud that moving clients and users from one app that you close into a new app is a risky exercise because there is an attrition percentage of clients that don't get used to the new app. So doing this migration process in a smart and organized way is crucial in terms of not losing business. And 4.1 million daily active users, which is almost the double of the second Italian player in our -- on our data is a level of daily active users that we never reached in the past, not even adding the daily active user or a single app we had in the past. So that's good. In terms of the revenue and the business impact of the new app, we have basically an increase of the diversification and cross-selling that is coming with the use of the app. And that cross-selling is increasing in a very meaningful way our revenue and margin figures. So we don't disclose our cross-selling indices, but I can tell you that one additional product, so moving by one, our cross-selling index creates a multiple of revenues additional to the firm. So this is really the way forward. I'm very happy with that. Second question on SPID, yes, since several months, several key identity provider under SPID have started asking a limited amount of money to users on an annual basis, something in the range of EUR 6 to EUR 7 per year per user. And that's something that we are observing in the market and we'll make our consideration before we announce the plan in 2026. But we're a strong believer of SPID. We believe that SPID not only is serving over 1 billion cases of utilization per year in public administration service providers. So that has become the standard and very effective standard with very good use cases for public service provider. But as you know, there is also the use of SPID by private service provider. That is increasing. It is also creating meaningful and increasing revenues to post, but we believe that there is a huge potential in the system to double up from public to private service providers. Camillo Greco: With respect to the last question on operating variances, they were driven -- the amount was driven by 3 different factors. The first was a higher degree of lapses, where, however, I want to remind the audience that half of that amount is of self-help as we moved customers to more sort of market-oriented products, i.e., multi-class. So there is half of that lapse rate that is associated to that around 4.3%. The second point that impacted operating variances is an update of the mortality tables. And the third point was a time value of money related to the upfront payment for the insurance provider of stamp duty tax. Giuseppe Esposito: Next question is from Alberto Villa at Intermonte. Alberto Villa: A couple of questions from my side. One is regarding the trend in card stocks. We have seen some decline there, especially for Postepay cards in total number, but then transactions and all the other metrics are positive. I was wondering if that's related to Reddito di Cittadinanza or other events that impacted the number of cards issued. And the second one is if you can help us modeling for the financial income 2026. So in terms of -- we have seen some different indications from banks regarding the evolution of NII. Obviously, you have different levers. But in order to understand what we can expect in terms of evolution of financial income next year, what to bear in mind? Matteo del Fante: I -- on the first question, you have half of the answer related to the Reddito di Cittadinanza. But don't forget that we have started already 5 years ago a trip to replace our prepaid card, the yellow card without IBAN migrating into our Evolution. So you have and you have -- in the past 5 years, you had a very meaningful increase of the Postepay Evolution that actually increased in the quarter by 3%. We're now EUR 10.7 million Evolution. And Evolution is clearly for us, producing EUR 18 per year of revenues and giving to our clients the best proxy to a current account because with the IBAN, you can have your salary credited and you can do basically everything you do with a current account. On the second topic of NII. Obviously, we will disclose our targets in 2026, but we see clearly a slightly lower interest rate environment, especially on the short term of the curve. And that means for our floating rate portfolio, lower net interest income. As we said since ever, basically since March '18, we will always compensate lower NII with higher capital gains. And this, I can make the statement today, will remain our objective also for 2026 and onwards. And to that respect, I'm pleased to report, and this is really the market coming this way that for the first time, we have our investment portfolio that has a positive mark-to-market. It's around EUR 700 million as of yesterday. And on a gross basis, we have over EUR 2 billion of positive capital gains that we can use next year and onwards to sustain our investment returns with a slightly lower NII scenario. Giuseppe Esposito: Our next question is from Gian Luca Ferrari, Mediobanca. Gian Ferrari: Two for me. The first one is on the EUR 1.8 billion revenue guidance on Parcels. Even if I take a low end of this number, so EUR 1.75 billion, it would imply kind of 15% increase in Parcel revenues in Q4, which seems to be implying a strong acceleration versus Q3. So I was wondering if the EUR 1.8 billion is confirmed or not? The second is on the role of net insurance in the mandatory cat coverage for SMEs. I think net insurance will be your company dedicated to explore this opportunity. And can you confirm that you will not retain any cat risk and net insurance and Poste Group will outsource to reinsurers all the cat risk? And sorry, the final one, if you can give us the impact on the revision of the standard formula in 2027. Matteo del Fante: Okay. I will start with the first 2 and let Camillo go on the last one on the standard formula. Revenues. I mean part of revenues grew 7%, 9% and 10% in Q1, Q2 and Q3. Q4 is the peak year -- the peak quarter, sorry, Gian Luca. And that's where we usually more than outperform the market. So it's clearly ambitious. But if I look at the volumes, we have 12% growth in 9 months and 14% growth in Q3. So certainly, Q3 has shown an acceleration. And if I combine the acceleration of Q3 to the positive commercial momentum we have to the peak, hopefully, we will get broadly in line with our EUR 1.8 billion. We might be short a little bit if things don't go well, but we're broadly in line. The second question was net insurance. Yes, it's correct. One, net insurance is the company in the group that will take care of the new cat insurance product. Two, it's correct the fact that it will be fully reassure. Three, I can tell you that it's not a big budget product at the moment, but there is a strong focus and all I can say at this point is that I'm relatively optimistic that this will give us some additional growth in protection from '26 onwards. On the third question on solvency regulatory changes and the standard formula, please. Camillo Greco: Okay. So we do expect from 2027 a marginal improvement, think about mid- to high single-digit impact on our Solvency II ratio. That is driven mainly by 2 factors. The first one is the reduction of cost of capital for the calculation of the risk margin and the second is the changes to the volatility adjustment. Mid- to high single digit can mean up to 10 points. Giuseppe Esposito: Next question is from Giovanni Razzoli, Deutsche Bank. Giovanni Razzoli: Two questions. The first one is on the parcels. There is a lot of narrative on Italian press about the possible taxation -- fixed taxation on small inbound parcels. I don't know whether it is included in the budget law or is something that is rumored by the press as an idea. Do you think this is a challenge vis-a-vis your volumes of parcels inbound, especially from China? And can you share with us what is the perimeter of these activities, which could be potentially impacted? And in general, what -- how do you see the potential negative initiative going forward on the parcel volumes? And the second question is on the postal savings. I think that the performance of the third quarter was very, very good, very strong inflow. You mentioned that there has been an ad hoc marketing campaign for the 150th anniversary of this product. Shall we take this as a reversal of the trend? For instance, you had lower redemptions in the Q3? Or shall we assume that this is a reversal -- structural reversal of the negative trend that we have seen in the recent past because of the redemptions? Matteo del Fante: Okay. Thank you, Giovanni. Very good question on taxation. I mean this is not, from what we understand, the national initiative, but it comes at European level. And it would be an additional duty today, the FTE was referring to EUR 1. I heard from other postal operator that it can be as much as EUR 2 per item import from countries outside the EU. The first order impact is clearly for those players that are more involved with delivering those items. And we have a meaningful distribution role of parcel coming specifically from Chinese platforms. So if this tax lowers the amount of items shipped from China, the first order could be a marginal impact. Usually, what we have seen in the past, it's not the first time there was already something on customs 18 months ago that the market readjusts and EUR 1 or EUR 2 will not really change the attractiveness of those platform. There is also a second level of impact, which I think is positive or we should try to consider it and to play it on the positive side, which is this is making for the Chinese platforms less interesting to infrastructure theirselves in Italy. So you know that today, the largest platform in Italy is Amazon, and they have their own network. And looking forward and looking at what's happening around the globe, the Chinese platform are also getting organized with their own logistics. This kind of barriers probably put their investment appetite in any specific region a bit more distant. On postal savings, there is no reversal on the net, Giovanni -- on the net funding because the amount of redemption that we face every year is extremely significant. It's only showing that the CDP that is issuing the product has done a very good job in providing products that are in line with the market that are attractive and that help us -- and it's no coincidence the fact that given the number of Italian, we counted them a couple of weeks ago when we celebrated 150 years of postal savings. There are 27 million Italians that own postal savings. So our daily activities in the consultancy firms, in other teller on postal savings is very intense. And when we have a product, we have our salespeople being able to engage clients, not only on postal savings, but generally speaking, on all our products of savings and loan. So for us, the quality of the offer of CDP is extremely important to keep a positive dialogue with our clients. And I think, Giovanni, this is the most important news that we can take out of this positive trend. Operator: The next question is from Andrea Lisi, Equita. Andrea Lisi: From my side. The first one, I was really interested on having more detail for what you can share about the joint venture with TIM for the cloud-based services. What should we expect here? Obviously, also the timing for the setup of this joint venture, the kind of services you expect to provide? And also, obviously, I know that it is really preliminary, but the kind of penetration and growth you expect to achieve here? And the second is on dividend. You have indicated that you want to keep the dividend policy really appealing for shareholders. So also considering the interim dividend of EUR 0.40, what should we expect in terms of evolution of the dividend policy and the dividend payout? Matteo del Fante: Thank you, Andrea. The JV would require a bit more time, and I'm sure TIM will -- and Pietro will do his own care and [indiscernible] care and duty to explain it to investors along the road. What I can tell you at this point in time is that there is a clear process of migration to cloud, which is not only moving data from on-prem data warehouses to cloud. The beauty of moving to cloud is changing your operation and using that data in a more flexible way. So it's adding services to clients that are moving to cloud. So when you offer -- when TIM offers and the commercial responsibility of the work of the JV remains with the TIM that obviously has a commercial sales force dedicated to this offer to migrate into cloud. Increasingly, they will add products, services and value for clients. When it comes to public sector clients, there is a couple of additional consideration that needs to be made. The first one is related to the PSN, the next-generation EU big effort, which has achieved a very meaningful result in terms of moving the majority of the public administration into cloud. And now is the second wave of increasing the services and the value of using that cloud for the public administration. And the JV will allow TIM to internalize some of the work and value-added integration of system that was previously mainly outsourced. And the second consideration is the preliminary indication we received from core public sector clients, public administration clients that this initiative and the role of TIM in this space is very welcome because with our acquisition, we finally have in the country a national cloud provider. Think about the sovereign cloud topic, for example, with -- in the current geopolitical situation is clearly a very hot topic in the hands of the public administration. So finally, there is an Italian player that gives total confidence to the public administration to move and use data in a smarter way in the future. And this is the role that the JV will have to perform in supporting the commercial activities of TIM. And I think you will see more on this from TIM side, especially and also from our side with the announcement of the 2026 guidance in Q1 of 2026. Dividend, you said it all. We always stated that we want our dividend policy to be competitive, which basically means we look at our peer group that is clearly in the insurance space, is clearly in the banking sector. We look at the banking sector, including the buyback programs that we don't do. So when the share performs, we have left some room in terms of dividend payout to follow and make the dividend in terms of dividend yield appealing and competitive to our investor base. This is the work that we will perform over the next 2 to 3 months and second half of February when we will announce the 2 preliminary results, 5 results, 6 guidance, we will also have our position on 2026 dividend. Giuseppe Esposito: The next question is from Daniel Wilson at Morgan Stanley. Daniel Wilson-Omordia: Just 2, one on CDP and one on the Solvency II review again. On CDP, can you walk us through the kind of process of the renewal of the agreement with them whether there's any potential upside to the floor and the ceiling of the fees you can generate on postal savings? And secondly, on the Solvency II review, I know you spoke about it just now. I thought the mid- to high single-digits benefit seemed a little bit lower than I was expecting, especially given that you guys have quite a high risk margin versus your solvency capital requirement. And I would have thought that the kind of risk margin changes would have been a pretty big benefit to you guys. So I'm wondering what are the offsetting factors from the benefits you're getting to bring you to that mid- to high single-digit benefit? Matteo del Fante: I will let Camillo answer both questions. Thank you, Daniel. Camillo Greco: So the first question carries through until CDP agreement carries through until the end of 2026 with respect to how the agreement is performing. I would say that it is performing well. We guided for the year at a number of around EUR 1.7 billion in terms of revenues. We are going to be at least towards the high end of that, and we still have an additional year to perform. This was done in order not to have the agreement overlapping with the CEO change in potential change at the end of the summer. So that is the first point. With respect to the second question, I confirm that at this point, the estimate is around 10 basis points from 2027. We have both positive and negative factors. But at this point, you should stick to what we advise, which is around 10 basis points incremental benefit, percentage points, obviously. Giuseppe Esposito: And finally, we have a last question from Michael Huttner at Berenberg. Michael Huttner: Two. One is the EUR 1.1 billion TIM valuation. Where is that or the benefit of that, if you like? Where can I see it? And the second is on your lovely Slides 36 and 37, where you talk about Life net inflows and the mix between multi and segregated and all that. The feeling I have, but I'm more interested in what you're saying is you're not particularly interested at the moment in the big numbers, the volumes. So Generali this morning announced that their volumes went from EUR 3.3 billion in Q2 to EUR 4 billion in Q3. So quite an amazing number. Your numbers are lagging a lot, but it's not a criticism, just an observation. And the feeling I have is you're much more interested in transforming your portfolio, so moving your policyholders from the old segregated accounts into the multi-class. I wonder if you can explain how is that working? And what the benefit is, obviously, both for your policyholders, but also for investors? Matteo del Fante: Okay. Thank you, Michael. I will let... Giuseppe Esposito: Michael. Yes. Sorry, Michael, on TIM, to be clear, the current market value of the stake is EUR 1.9 billion, not EUR 1.1 billion. EUR 1.1 billion is roughly speaking, the amount invested. Michael Huttner: And where is the benefit of that? Where -- does it boost your solvency or your capital or anything? Giuseppe Esposito: No, no, no. The stake is equity accounted, so we don't do any mark-to-market. So basically, the changes in the accounting value will follow the pro rata net profit and dividends of TIM going forward. So there's no mark-to-market. But obviously, the mark-to-market is important from a balance sheet valuation perspective. Matteo del Fante: Yes. Basically, if you want to be precise, if we have put EUR 1.1 billion, which we could have invested at, let's say, 3.5% in government securities, we have basically giving up around EUR 40 million of NII. The strategy there is to extract 2 things. The first one is synergies. And we already signed the MVNO contract, which is making us saving versus the previous contract, EUR 20 million per year from next year. So that's already in the bin. I mentioned several times in my presentation, the Poste Energia contracts sold, that's additional value that is created by this partnership and this stake basically in our accounts. I spent a few words on the JV, and there is certainly more to come in terms of synergies. So that's the first block that will more than compensate the capital return that we would have had investing the EUR 1.1 billion in government securities, which is, as you know, the only thing we can do by law. The second benefit for investor, Michael, will be once the company and is already in the strategic plan announced by TIM, we start paying dividends. So there will be a return on capital as an investor and that return on capital now has also the benefit of being on EUR 1.9 billion when we invested only EUR 1.1 billion. So it would be clearly more than compensating it would be with the leverage component. The second question, I leave it to... Camillo Greco: Yes. So the second question was what are the trends towards shifting customer policies from capital guaranteed to partly noncapital guaranteed. And the answer is that in provided that the customers we do interact have the right financial profile, moving from capital guaranteed to noncapital guaranteed in an environment where rates are expected to go down, the expected return of a noncapital guaranteed product is superior. So the expected return for the customer should be to have a better return on the policy. And as far as we are concerned, we have different pricing between capital guaranteed and noncapital guaranteed with a different mix are sort of similar, but in the interest of customers, it's a more performing instrument in this rate environment. Michael Huttner: And so is there a capital benefit to you guys from doing this in terms of less required capital? Camillo Greco: There is a marginal benefit in terms of less capital for us, yes. Matteo del Fante: Yes. Sorry, just the last word, Michael. The capital benefit is marginal because the equity exposure embedded in our multi-class is residual. So our products always have -- even if it is a multi-class contract, there is always a minimum of 60% of Class I and the 40% has again a fixed income component. So at the end, we have less release than doing purely equity-linked unit products. Giuseppe Esposito: So that was the last question. So thank you very much for joining us today. Matteo del Fante: Thank you, everybody.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Manulife Financial Corporation Third Quarter 2025 Results Conference Call. [Operator Instructions]. And the conference call is being recorded. [Operator Instructions]. I'd now like to turn the conference over to Mr. Hung Ko, Global Head of Treasury and Investor Relations. Please go ahead. Hung Ko: Thank you. Welcome to Manulife's earnings conference call to discuss our third quarter 2025 financial and operating results as well as our refreshed strategy that was announced yesterday afternoon. Our earnings materials, including webcast slides for today's call are available in the Investor Relations section of our website at manulife.com. In addition, I would like to note that a video recording of our refresh strategy presentation and the related materials are also available in the same section of our website. Before we start, please refer to Slide 2 for a caution on forward-looking statements and Slide 33 for a note on the non-GAAP and other financial measures used in this presentation. Please note that certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from what is stated. Turning to Slide 4. We'll begin today's presentation with Phil Witherington, our President and Chief Executive Officer, who will provide a highlight of our third quarter 2025 results and a strategic update, including an overview of our refresh strategy. Following Phil, Colin Simpson, our Chief Financial Officer, will discuss the company's financial and operating results in more detail. After their prepared remarks, we will move to the live Q&A portion of the call. With that, I'd like to turn the call over to Phil. Philip Witherington: Thanks, Hung, and thank you, everyone, for joining us today. Before I start, I'd like to thank Marc Costantini, who's with us on the call today for his outstanding contributions to Manulife throughout his career at the company and wish him well in the next chapter of his career. Marc's 2 stints with Manulife total more than 25 years. And in his most recent role as Global Head of Inforce Management, he had an immense impact in a short period of time, including the completion of several monumental reinsurance transactions, which unlocked significant value for shareholders. While we're sad to see him go, we know he will flourish as a CEO, and we wish him nothing but the best. Inforce Management has been embedded as a capability in our organization and it will remain an important enabler of our commercial success. Naveed Irshad President and CEO of Manulife Canada has taken on an expanded role and assumed responsibility for Inforce Management and reinsurance globally while continuing to lead the Canada segment. Shifting back to the purpose of today's call. Yesterday, we announced our third quarter 2025 financial results. At the same time, we unveiled our refreshed enterprise strategy, which builds on our strengths, is growth focused and is anchored in our ambition to be the #1 choice for customers. Materials related to our refreshed strategy, including a video, are available in the Investor Relations section of our website, but I want to highlight a few key takeaways: to deliver on our ambition, drive sustainable growth for the long term and build on our total shareholder return momentum, we're pleased to introduce new and elevated strategic priorities. Maintaining a diversified and balanced portfolio is important to us as it provides resilience and access to multiple sources of growth without overreliance on any single market. We continue to be well positioned to capture the exceptional growth opportunities across Asia and global WAM, and I'm pleased to share that we have reached an agreement with Mahindra. A leading conglomerate and consumer brand in India to form a joint venture to enter the India insurance market subject to regulatory approvals. Mahindra is an incredibly strong and trusted partner with whom we have an existing asset management relationship, and I'm excited about expanding our partnership further. Our continued focus on Asia and global WAM will be accompanied by deliberate investments to enhance and strengthen our leadership position in our home market and maintain a scaled presence in the U.S., which remains the largest insurance market and the largest economy in the world. We will also leverage our early leadership in AI to become a truly AI-powered organization, and we will utilize our strengths in product, digital innovation and partnerships to become the most trusted partner for our customers' health, wealth and financial well-being. These efforts will be further enabled through superior distribution, making it easier for customers, agents and partners to engage with us and of course, through our winning team and culture, which is critical to every aspect of the execution of our strategy. At our Investor Day in 2024, we announced various key performance indicators and targets including total shareholder return, employee engagement and Net Promoter Score, which we remain focused on delivering. I am incredibly excited about this next chapter for Manulife, and I'm confident that executing on our strategy will further strengthen our ability to deliver on both our 2027 financial targets and sustain our growth for the next decade and beyond. Moving on to our quarterly results on Slide 7, which reflects our continued focus on execution and demonstrate the strength and diversity of our businesses. We generated strong insurance new business performance this quarter, with each insurance segment delivering growth of 15% or greater in new business CSM, providing clear evidence of our future earnings potential. While Global WAM experienced net outflows of $6.2 billion, which Colin will discuss in more detail shortly, it continued to generate positive operating leverage with margin expansion year-over-year. From a profitability standpoint, core EPS grew 16% from the prior year supported by a record level of core earnings, reflecting strong underlying business growth in Asia, Global WAM and Canada segments, along with other factors, which Colin will talk about further. Our strong core earnings generation contributed to third quarter core ROE of 18.1%, demonstrating that our core ROE target of 18% plus by 2027 is within reach, and we remain confident that we'll deliver on it. Our balance sheet remains strong with a LICAT ratio of 138% and a leverage ratio of 22.7% and we generated another quarter of book value per share growth with an increase of 7% from the prior year while continuing to return a significant amount of capital to shareholders. On to Slide 8, I'd like to dive a little deeper into the recent performance of our high-potential businesses, particularly Asia and Global WAM as they remain critical elements of our refreshed enterprise strategy. Over the past several years, both segments demonstrated strong track records of generating consistent growth and resilience through a volatile operating environment. The performance from both Asia and Global WAM has meant that on a year-to-date basis, our highest potential businesses are contributing 76% of core earnings exceeding our 2025 target of 75%. Asia had another outstanding quarter of growth, delivering a 29% year-on-year increase in core earnings to a record level. Our NBV margin also remained resilient, improving year-on-year to 39% backed by the solid growth in new business during the quarter. In Global WAM, we also delivered a record level of core earnings, maintaining another quarter of strong growth and this was our eighth consecutive quarter of double-digit pre-tax growth from the prior year and our focus on disciplined growth with proactive expense management enabled us to continue to generate positive operating leverage and steadily increase our core EBITDA margin, which expanded by 310 basis points year-on-year to 30.9% this quarter. These are great results. And as I reflect on the future and what comes next, I'm confident that our refreshed strategy supported by clear priorities will position us to deliver sustainable growth and achieve our new ambition to be the #1 choice for customers. With that, I'll hand it over to Colin to discuss our quarterly results in more detail. Colin? Colin Simpson: Thanks, Phil. The third quarter was indeed a strong quarter for Manulife, where we continue to demonstrate the ongoing strength, quality and resilience of our business. Let's begin on Slide 10, where we talk about our growth in the quarter. The momentum in our insurance new business performance continued in the third quarter. Our APE sales increased 8% from the prior year, with strong contributions from our North American businesses. This resulted in continued growth in our value metrics with 25% and 11% growth in new business CSM and new business value, respectively. Growth in new business CSM was strong, with each insurance segment delivering growth of 15% or greater compared to the prior year quarter. In fact, our total new business CSM increased over 20% year-over-year for the fifth consecutive quarter, further highlighting the strength of our diversified franchise and providing an encouraging read-through to the future earnings potential of each business. Headwinds in North American Retail and our U.S. retirement channel led to net outflows of $6.2 billion for Global WAM following 6 consecutive quarters of positive net flows. In our retail business, this was primarily due to continued pressure in the intermediary and wealth channels, while the headwinds in our U.S. retirement business were anticipated as elevated markets resulted in higher absolute level of participant withdrawals. Moving on to Slide 11, which summarizes the main earnings drivers when compared to the same period last year. We continue to see growth in our insurance businesses in Asia and Canada, which contributed to a higher insurance service results. We also saw a net favorable impact from the annual actuarial review of methods and assumptions or basis change during the quarter. Although this was partially offset by unfavorable claims experience in the U.S. I would note that U.S. insurance experience improved from the previous quarter, even though claims severity remains somewhat elevated on a small number of policies in contrast with last year's favorable experience. Moving down on the DOE table, you'll note a year-over-year improvement in our net investment results, mainly due to a release in the expected credit loss or ECL provision driven by updates to our parameters and models compared with an increase in the provision in the prior year. Note that we continue to expect an ECL charge of $30 million to $50 million per quarter on average, and year-to-date, the increase in ECL is $86 million post tax. Excluding the impact of the ECL, our core earnings growth would have been 6% compared with the prior year. Global WAM continues to be a significant contributor to our core earnings and reported a 19% growth in pre-tax core earnings this quarter. You'll notice the lower income tax amount despite the growth in our core earnings. This is mainly driven by an adjustment to our year-to-date withholding tax accrual, reflecting the use of our internal funding for the Comvest acquisition. Finally, I would also add that the most recent U.S. reinsurance transaction with RGA reduced our core earnings by $12 million across multiple lines of the DOE. Turning to Slide 12. Core EPS increased 16% from the prior year, reflecting the strong double-digit growth in core earnings as well as the impact of share buybacks. In fact, even after adjusting for ECL, we saw strong growth of 11%. We reported $1.8 billion of net income this quarter, which reflects neutral market experience where a $291 million gain from higher-than-expected public equity returns was offset by a charge of $289 million in our ALDA portfolio from lower-than-expected returns. Our ALDA performance was primarily impacted by lower-than-expected returns on private equity and commercial real estate investments as well as our timber assets, reflecting a recent decline in commodity prices. During the quarter, we also completed our annual basis change, which included our comprehensive triennial review of our U.S. long-term care business, or LTC. The basis change resulted in a net favorable impact of a $605 million decrease in overall pre-tax fulfill and cash flows, which comprised a $1.1 billion increase in CSM partially offset by a modest decrease in net income of $216 million post tax as well as a small impact to OCI. I would also note that the overall impact of the LTC study was slightly favorable, largely driven by favorable re-rate experience and assumed future premium rate increases as well as updates to reflect higher terminations, partially offset by higher utilization of benefits given the higher cost of care. The premium increases included amounts tied to future asks as well as approvals in excess of our prior assumptions, illustrating our conservatism in embedding these into our reserves. It is important to note the favorable net impact from the basis change further validates the prudence of our reserves. We reported a modest favorable impact on core earnings this quarter, and we also expect a similarly modest positive impact on core earnings going forward. More information on the basis change is available in the appendix of this presentation. Moving to the segment results. We'll start with Asia on Slide 13, where we generated solid growth across all new business metrics despite a very strong prior year comparable. APE sales increased 5% from the prior year, led by strong growth in Asia Other. While Hong Kong sales declined year-on-year compared to a very strong prior year quarter, we generated sequential growth of 4%. The overall increase in sales contributed to solid growth and value metrics, with new business CSM and new business value increasing 18% and 7%, respectively. All of this together with improved product mix drove NBV margin expansion from the prior year of 2.5 percentage points to 39%. Asia core earnings also delivered another strong quarter of strong year-on-year growth, increasing 29% as we benefited from continued business growth momentum. The net favorable impact of basis change and improved insurance experience as well as a release in the ECL provision compared with an increase in the prior year quarter. Over to Global WAM on Slide 14. Global WAM continued to build on its growth momentum, delivering record-level core earnings with a solid 9% increase year-on-year. This was again supported by higher average AUMA and higher performance fees, as well as continued expense discipline, partially offset by lower favorable tax true-ups and tax benefits. On a pre-tax basis, we achieved our eighth consecutive quarter of double-digit year-over-year growth, delivering a 19% increase in the third quarter. Net flows were challenged this quarter, resulting in net outflows of $6.2 billion. Our retail business saw net outflows of $3.9 billion related to our North American intermediary and wealth channels, followed by net outflows of $1.6 billion in our retirement business. Here, we saw higher outflows due to market appreciation as people generally had higher account balances, which resulted in ordinary course withdrawals also being higher. Our institutional business also saw modest net outflows of $0.7 billion and with the close of our third infrastructure fund in the quarter, we expect this to be a positive contributor to flows as money is deployed over the course of next year. Despite the challenges in our net flows, we delivered another quarter of positive operating leverage with core EBITDA margin of 30.9%, which expanded 310 basis points from the prior year, or 80 basis points sequentially, backed by our continued proactive expense management. With regards to eMPF, I can confirm we officially commenced our onboarding to the new platform in Hong Kong on November 6 and thus expect to reflect an impact to core earnings in our Retirement business starting in the fourth quarter. Next, let's hand over to Canada on Slide 15, where we delivered another quarter of solid results. APE sales increased 9% from the prior year, reflecting continued double-digit growth in our individual insurance business, primarily due to higher par sales. Our individual insurance business was the key contributor to a strong new business CSM growth of 15% year-on-year as our group insurance business does not generate CSM. We also delivered a solid 4% year-over-year growth in core earnings, driven by higher investment spreads as well as continued growth in our group insurance business and favorable insurance experience and individual insurance. The basis change provided additional uplift, but these drivers were partially offset by less favorable insurance experience in group insurance. Lastly, our U.S. segment's results on Slide 16. In the U.S., we delivered another quarter of strong APE sales growth of 51%, fueled by higher broad-based demand for our suite of products. This momentum led to more than doubling of our new business CSM and a 53% increase in new business value. Core earnings decreased 20% year-on-year, primarily due to unfavorable life insurance claims experience this quarter compared with favorable experience a year ago, along with lower expected investment earnings. These impacts were partially offset by a release in the ECL provision compared with an increase in the prior year as well as favorable lapse experience in our life business. While large claims variability presented challenges, the fundamentals of our U.S. business remains strong and position us well for steady earnings in the long term. Our confidence is reinforced by the sequential improvement in core earnings and the continued strong growth in our new business metrics this quarter, which bodes well for our future earnings in the segment. Looking beyond our earnings, it's worth noting our overall LTC insurance experience was once again modestly positive, including favorable incidents reported in the CSM. Bringing you to our book value on Slide 17. Even after returning nearly $4 billion of capital to shareholders year-to-date through dividends and share buybacks, we continue to grow our adjusted book value per share which was up 12% from the prior year quarter to $38.22. On a stand-alone quarter basis, we continue to demonstrate our strong cash generation capability and returned over $1.3 billion of capital to shareholders, including both dividends and share buybacks during the period. And as Phil mentioned in our refreshed strategy update, we expect our remittances for 2025 to be approximately $6 billion, putting us well on our way to achieving our cumulative 2027 target of at least $22 billion. Let's now move to our balance sheet on Slide 18. Our LICAT ratio remained strong at 138%, providing a $26 billion buffer above the supervisory target ratio. Our financial leverage ratio improved sequentially as well as year-on-year, standing at 22.7% and remaining well below our medium-term target of 25%. Together, these metrics highlight the strength and stability of our robust capital position and balance sheet, which provide ample financial flexibility to drive future growth. And finally, moving to Slide 19, which summarizes the progress against our 2027 and medium-term targets. I'm pleased with our overall financial performance this quarter. In particular, with record core earnings supported by our continued top line momentum despite some headwinds that impacted our net flows and ALDA performance. This quarter, we also generated core ROE of 18.1%, with a meaningful expansion of 1.5 percentage points year-on-year. As Phil highlighted in our refreshed strategy update, we have a clear path to achieving our 2027 core ROE target of 18% plus, and I'm confident in our ability to do so. Overall, our third quarter results reflect the ongoing strength of our underlying business performance and the quality of our portfolio. And when combined with our focused execution against refreshed strategic priorities I'm excited for the future and the opportunities that lie ahead. This concludes our prepared remarks. Before we move to the Q&A session, I would like to remind each participant to adhere to a limit of two questions, including follow-ups and to requeue if they have additional questions. Operator, we will now open the call to questions. Operator: [Operator Instructions]. The first question comes from John Aiken with Jefferies. John Aiken: Phil, I'm very intrigued about the venture that you announced in India. I was hoping you might be able to give us a couple of more details in terms of what type of products you think you're going to be offering? What you bring to the table in what I believe is a very competitive marketplace. And then finally, the regulatory approval process, how long do you think that will take before you can actually open shop the business? Philip Witherington: John, this is Phil. Thanks for the question and the first question today. Certainly, the announcement we made yesterday of our intention to enter the India market through a JV with Mahindra is very exciting. We've been looking at an India market entry from an insurance perspective for many years and have been really observing the environment to wait for the right moment. And what we've seen in recent years is that the regulatory environment has moved favorably, the digital infrastructure within India has moved very favorably. There's been consistent economic growth and market maturity within the insurance sector, as well as that, there has been a notable increase in wealth across the India population and that creates insurance needs and provides an ability to purchase insurance products. And I think a really important component of our entry strategy here is really moving with the right partner and Mahindra, who's been our partner on the asset management side since 2020 is a fantastic partner and has not only substantial local knowledge, but a strong brand as well as a distribution infrastructure. So in terms of some of the specific questions that you ask on what we bring to the table, we bring our global expertise in the insurance sector to this partnership. And it's not only about product development, but it's also an aspect such as risk management, which is so important to managing insurance businesses. It's too early to get into a topic such as which product will -- what the products will look like. I expect it would take in the order of 12 to 18 months to get this operation off the ground and up and running, including the regulatory approval process that you referenced, and I look forward to providing updates along the way. Operator: And the next question comes from Alex Scott with Barclays. Taylor Scott: Wanted to see if you could talk a little bit more about what you're seeing in some of your Asian markets and the growth has been pretty good. What's your outlook for contingent strength of sales over the next couple of years? Steven Finch: Yes. Thanks, Alex. It's Steve Finch here. I can take that. Yes, as you noted, we've had some strong momentum in results in Asia as Colin covered, we saw continued solid momentum in sales growth in the quarter with our new business value metrics up 7% on NBV, 18% up on CSM, new business CSM, which bodes well for our future earnings. And we've seen broad-based success across multiple markets, continued strength in the value metrics in Hong Kong. And then in Asia Other, we had a strong result in our China business as well as continued momentum in Singapore, our Indonesia agency and as well as our bank partner in the Philippines. So we've continued to see broad-based success. And what we see is the market fundamentals and customer demand remain strong and aligned with the strategy that Phil updated on, we're continuing to make the investments for growth, and we're well positioned to capitalize in markets across the region. Taylor Scott: That's helpful. So the next question I wanted to ask about your private credit exposure. See if you could put numbers around some of the different forms of private credit you have. And also just ask if you have any comments, just on some of the comments that have been made by industry participants out there that have been a little more critical of private credit recently. Trevor Kreel: Alex, it's Trevor. Thanks for the question. So yes, in terms of private credits, just for context, our below investment-grade private credit portfolio is around CAD 4 billion. It's a little bit less than about 1% of our general account assets. It is -- the strategy is largely focused on middle market lending to private equity-sponsored companies. It's pretty diverse by issuer, sector and sponsor. And we do manage and underwrite these assets in-house. I would say we see our participation as kind of being on the low end of the risk spectrum. Our performance has actually been quite strong even with COVID, even with the rate increases. And the credit expense has actually been I think well within our loss assumptions. So we are actually quite happy with the strategy. In terms of use of private credit, I would say we're always looking at new asset classes to diversify the balance sheet. I think given the nature of private credit, the ratings, the term and the fact that it's floating rate. The most natural home for us on the balance sheet is probably our par and adjustable liabilities where investment experience is passed back to the policyholders. So I think we might look to add a little bit more there where we thought it was sort of appropriate for the balance sheet. Operator: And next question comes from Gabriel Dechaine with National Bank Financial. Gabriel Dechaine: First question is for the -- yes, the GWAM business, the Mandatory Provident Fund fee changes that are -- they're going to start having an effect in Q4. So we all are aware of this, but you alluded to some actions you would take and you contemplated this regulatory change when you laid out your 2027 vision. Maybe you can shed a bit more light on what some of these offsets are, how impactful it could be when they could become effective, I guess? Paul Lorentz: Yes. Thank. It's Paul Lorentz here. Yes. Just on that, the guidance we provided around about USD 25 million a quarter remains intact once we get through the entire transition. So we did transition earlier this month. It will take us some time to decommission systems, obviously, reduce our FTE footprint there because we're no longer servicing the business. So you'd expect to see some of that come through those costs continue into Q1, and then we would expect most of those to disappear into Q2. In terms of outlook for Q4, we did end the quarter with higher AUMA versus the average. So there is a little bit of upside there in terms of revenue, but that would be offset by the eMPF coming in for 2 months of the quarter. And then in Q1, we would obviously get the full run rate coming through. Gabriel Dechaine: So just to put a finer point, are you expecting to fully offset at some point in the future or not? Paul Lorentz: Yes. So most of the expense actions we took were upfront to try and get ahead of it. That's why we've seen such an improvement in our margin, frankly, leading up to the transition. So we are very proactive in terms of not waiting for the transition to happen. So we feel we've taken most of the costs out, except for those that are remaining, which will disappear in Q1. Gabriel Dechaine: Okay. Then a question on the actuarial review, which I always am hesitant to ask about because it could get a little bit technical. But in the LTC components, specifically, there's a familiar pattern you increase your morbidity reserves, essentially and then offset that with future premium increases expected. But on the medical cost inflation that you're observing, you talked about higher utilization because of rising health care costs. Is that just another way of saying the utilization is -- well, is it actually higher or it's the same utilization and it's just costing you more because it's kind of a nuanced message there. And what kind of I guess, inflation, are you factoring into this updated assumption up to 10% a year or something like that, I don't know. Stephanie Fadous: Gabe, it's Stephanie. Thank you for the question. So for the for the LTC triennial review, what we saw is a modest favorable impact that's in line that with the experience that we would have seen since the last review. But as you point out, there were different parts. And if we dive in a little deeper, we have been seeing utilization losses for a number of quarters. And to your question, that is a result of higher medical inflation. So this is something we were focused on. And we fully address what we've observed, and we are also reflecting elevated inflation for a little longer period of time. There were also, as you point out, other parts that led to positives, we had absorbed consistent termination gains, which led to a favorable impact to reserve, and we have also reviewed our premium rate increase assumption, which we remain very conservative and embedded less than 30% of the total outstanding ask. Gabriel Dechaine: Got it. And any sense of what medical cost inflation you're assuming? Stephanie Fadous: So as I mentioned, we did reflect that it would -- like the medical cost inflation has come down since its peak, but it's still slightly elevated we would -- we reflected that, that would persist a little longer before returning to our longer-term view. And I think I would leave it with our longer-term view is higher than general inflation expectations. Operator: And the next question comes from Tom MacKinnon with BMO Capital. Tom MacKinnon: Yes. A question maybe for Phil here. Just the thinking behind this refreshed strategy. I mean you came out with these 2027 targets about 16 months ago, you're standing by them. Is it really a new team, you wanted to kind of refresh it because you've got a new kind of leadership team. And I noticed that now you're talking about kind of more balanced growth across the portfolio. I'm just interpreting it, I leave it up to you to here to paraphrase. But investing to grow in Canada and the U.S. How should we be thinking about that in terms of outlook for share buybacks, they still look like that's going to be fairly robust. But yes, maybe you can address some of those points I've raised. Philip Witherington: Thanks, Tom. This is Phil. And there's quite a lot in there to unpack. So if I miss something out, please do call me out on it, and I'll provide a supplement. But the logic for the refreshed strategy update, I do acknowledge that the strategy we've had for the past 8 years has served the company tremendously well we've been through a period of hugely successful transformation. And we felt having achieved what we wanted to achieve with the last strategy as a leadership team, we felt that this was the right time to take a fresh look. And something that I've said before is that given that the external environment continues to evolve, it's really important that the strategy is never static that we always look at what's changing externally and how do we position the company? Yes, of course, to deliver on our 2027 targets but have a much longer time horizon beyond that when we think about setting the company up for long-term success. So Tom, you picked up on something that's really important and that is balanced growth. And having a diversified organization is something that we truly value. It's something that provides resilience. One of the things that is not changing as part of this strategy is that Asia and global wealth and asset management remain compelling growth opportunities, and we will do everything within our means to fulfill that opportunity. But at the same time, given the transformation that has been delivered over the course of the past 8 years, our new business footprint in both Canada and the U.S. is attractive. We're generating attractive margins, and we see an opportunity to invest to grow our new business in the U.S. and Canada and in particular, in the U.S., to grow new business so that it sustains our scale. And that, therefore, is the relevance, I think, to our overall portfolio diversification, we sustain a level of diversification within the overall organization. On this topic as well, our strategy clarifies that we do believe that it's important to be in the mega economies of the future, and we have a hugely successful business in the U.S., both on the GWAM side and on the insurance side with John Hancock. We have a successful scale business in China and where we saw a strategic gap was the scale of our presence in India. And that was really the logic for us taking decisive action to enter the India insurance market. There are other elements of our strategy that I won't go into, but I'd just call out that being a leader in AI and an AI-powered organization is important to us. And I think that's very important to our overall competitive position and future success. But Tom, you referenced the importance of capital generation. And I do want to emphasize that, we expect to continue the strong capital generation that the company has seen in recent years. Colin referenced our expectations for remittances for 2025. I think that's a good example, $6 billion. And when it comes to capital deployment and share buybacks, our highest priority is unchanged, and that's to organically invest in our business as well as sustaining and growing our shareholder dividend. And then for what's left over, buybacks and strategic M&A are possibilities. But I will emphasize, when it comes to strategic M&A, the bar is high, and that means that buybacks, we expect to continue to be an important form of capital deployment for us. I hope that covers all the points you raised, Tom. Tom MacKinnon: No, that's fulsome. And congratulations to Marc Constantini as he kind of moves on to his next role here. So all the best. Operator: The next question comes from Doug Young with Desjardins Capital Markets. Doug Young: I'm going to go back to the actuarial review. And there was, I think, a change in methodology in Asia. Correct me if I'm wrong, from the PPA to the GMM and I think this had a decent positive impact on the CSM. And so I'm just trying to understand why the shift and what impact did that shift have on core earnings in the quarter and with all the moving parts and the core earnings going forward, Colin, I think you talked a bit about it will have a positive impact. Can you put a point on what that positive impact might be. Stephanie Fadous: Doug. It's Stephanie. I'll start and see if Colin wants to add. But you're right. So the -- in terms of the impact of the annual review, which was favorable and led to a reserve reduction of $605 million. A large part of this was driven by a change in how we account for some health insurance contract in Hong Kong. We're moving from the PAA approach or what you would call short-term insurance contract to reserving for the lifetime. I'd add that since we implemented our IFRS 17, we've been studying industry practice, and we found that most payers accounted for these products over the lifetime, so we're now aligning with this practice. What this does is we've capitalized our cash flows in the reserve, and we've set up a CSM to offset it. No impact to total insurance contract liability in terms of the impact to core earnings for this item and there are small timing differences. So there will be a modest favorable impact, and then you asked about the impact of the annual review overall on core earnings. Due to the favorable impact we saw an increase in CSM which will lead to an increase in CSM amortization of approximately $30 million per quarter. Doug Young: Per quarter, okay. And is there any other changes being contemplated? Stephanie Fadous: At this time, with no other changes of the type being contemplated. Doug Young: Okay. And then just second, on the credit side, thanks for the detail on private credit. But what got my eye is, it seems like the parameter movements caused a reversal of credit provisions this quarter, and it was kind of tied into the positive moves in equity markets, and I kind of -- everyone can see the positive move in equity markets. But I was a bit surprised that positive move in equity market has an impact on the ECL or as significant impact on ECL. So I just wanted to kind of understand the mechanics there a little bit. Trevor Kreel: Doug, it's Trevor. Thanks for the question. So yes, in terms of the ECL, as you noted, there was a $44 million release, which was better than the charge than we saw in Q2. And just to remind people, the ECL charge is broadly two main components. The first one is basically the impact of defaults and rating changes, which you would expect. And then there is, secondly, this modeled impact reflecting changes in the broader economic environment. And we include both of those components in our definition of core earnings. As you said, for Q3 specifically, the majority of the benefit was driven by this positive impact from the market movement impact or the market environment impact driven by strong equity markets. So just to your -- I guess to your question, so we use a third-party model, and that third-party model basically generates this market environment impact. And it includes a variety of metrics. So equity markets is one, volatility, interest rates et cetera, and how those have actually been correlated to credit experience in the past. So that's what the model is basically doing. It's not a linear impact, but given the strength of equity markets and our consistency of that strength. The model obviously picked it up and felt that the environment was obviously much less risky than it had been in prior quarters, and that leads to the release. Doug Young: And I guess the point is, I mean, this obviously was favorable this quarter, but this is another area where if equity markets were to decline, you could see the reverse happen, I guess that's kind of obvious, but... Trevor Kreel: Yes, exactly. Operator: And the next question comes from Paul Holden with CIBC. Paul Holden: First question, I want to ask about the Hong Kong APE sales. Obviously, they were quite strong over the prior 4 quarters and now a little bit of a decline year-over-year. So really, I guess what I want to understand is what should we expect over the next few quarters as you continue to lap some pretty good comps. Do you think you can produce positive growth in sales. Or is it going to be similar to this quarter or maybe there's a bit of a, I don't know if you call it, a normalization in growth? Steven Finch: Yes. Thanks, Paul. It's Steve here. And as you noted, the Hong Kong, the APE was down modestly year-over-year. And that was off, as Colin noted earlier, a very strong base, the prior year. And your point about growth, we've seen year-to-date, the APE has increased 46% year-over-year. So that demonstrates the growth that we've had. In addition, while the APE declined in the quarter, our value metrics performed strongly. So in Hong Kong, we are happy with these results and NBV and NB CSM were up 10% and 12% year-over-year, respectively. And that was due to some favorable mix, some additional health and protection that we saw in the quarter. In terms of outlook in Hong Kong, Q4 was another strong year last year. We typically see seasonal variability, so we'd expect some drop off in Q4 and picking up again in Q1. But if I back up to look at the underlying fundamentals and look a bit further out than that, the market fundamentals do remain very strong, and demand is high from our customers. We also see that in Hong Kong and in Singapore as well, an international financial center, and there's a strong flow of funds. So the underlying drivers are favorable, and we're making significant investments in our capabilities to support customers and distributors. So as we look out over the medium term, we remain very optimistic about the Hong Kong market. Paul Holden: Okay. Second question is going back to the strategy refresh. So I want to get a better sense of how we should think about the earnings trajectory for Canada and U.S. When I hear investments in those markets, I think about maybe in the short term, higher expenses as a result of those investments, but longer-term growth rates. Is that the right interpretation? Philip Witherington: Paul, this is Phil. Thanks for the drill-down question there on the strategy. The way I see this, I mean, we only have one target when it comes to medium-term earnings growth and that's the 10% to 12% core EPS. But my expectation, and this is the leadership team's expectation is that each of our segments contribute to that growth. And the lens that we've applied in resetting the strategy is really to make it clear that growth will not only come from Asia and Global WAM, the U.S. and Canada will be important contributors to that. And so this is about investing to sustain scale, investing to sustain capital generation, investing to sustain growth rates. And I don't want to get too precise or issue any formal guidance. But I think what's reasonable are the sort of -- we're not looking double digits for Canada and the U.S., but it's sort of low to mid-single digits for the U.S. and a little higher for Canada. But I think we have great businesses in North America, and this strategy really clarifies that we see those businesses being an ongoing and important part of the overall portfolio. Operator: The next question comes from Mario Mendonca with TD Securities. Mario Mendonca: Phil, a related question. So when I reflect back on what the U.S. business was in the past and what it's become. I remember, as I suspect many people on the call do, that the U.S. business was a much broader business, long-term care, universal life, variable annuities, variable universal life. There was a lot going on, but it was a really messy business as well. So as you think about this refresh in the U.S., is the point that -- is the goal to drive higher sales levels in your existing product mix? Or will you return Manulife to its former self with just a much broader product suite in the U.S. Philip Witherington: Thank you, Mario, for the question. And let me be really clear up front. There is no intention in the U.S. or John Hancock to go back to the days of variable annuities and that higher market risk types of products. What we have -- there are really two elements to our strategy and I'll come on to this. What we're really thinking about is when we reflect on the transformation that we've delivered in the U.S. over the course of the past 7 to 8 years, is we've created differentiation through our focus on behavioral insurance that promotes health and wellness. And that creates differentiation in the market that has enabled us to be successful in what I would say is quite a niche footprint in the high net worth, focusing on the high net worth customer segment. It's profitable. The business we write is profitable, the margins are now at a similar level to the margins that we generate on average in Asia. So the question for us is twofold. One is how do we potentially broaden the scope of solutions that we provide to customers, but within our risk appetite. So not going back to where we were 10, 15, 20 years ago. And secondly, how do we take the solutions that we have and enable those solutions to be accessed not only by high net worth individuals, but affluent individuals and families and emerging high net worth individuals. So that's really an expansion of the relevant customer segments that we focus on. And I feel with some of the strategic changes that we're making in the U.S. and the team that we have we're very well positioned to be able to deliver on that opportunity and sustain our scale, earnings and capital generation from what is the largest economy and the largest insurance market in the world. Mario Mendonca: So Phil, does that mean that you stick with your existing product suite? I couldn't quite figure that out. Philip Witherington: In the near term, we're sticking with our existing product suite and scaling that or moving that into additional customer segments. We are also looking to be fully transparent, Mario, also looking at opportunities in adjacent products that help fulfill a wider range of customer needs, but within our risk appetite, and we have robust risk disciplines that apply not only in the U.S. but around the world. Mario Mendonca: Okay. A quick follow-up question. Look none of this is free. I see that the efficiency target is no longer formally part of your strategic refresh, but I appreciate that it's still a priority. Would it be fair to say that the sub-45% efficiency ratio that's something you could sacrifice in the near term in pursuit of this refreshed strategy in Canada and the U.S. Philip Witherington: Actually, Mario, we're not withdrawing our sub-45% targets when it comes to efficiency ratio. I expect that to be maintained. And going in the other direction on this, yes, we'll be investing in our businesses, but part of our investments at an enterprise level include becoming an AI-powered organization. And we're already seeing the benefits of our investments and leadership position in AI pay off when it comes to mitigating expense growth and providing an ability for the organization to do more with less. And so I think there are forces moving in both directions that will enable us to continue to be efficient. Mario Mendonca: And Marc, congratulations on a great career there and hope to see you in your new role. Philip Witherington: He's smiling. Thanks Mario. Operator: The next question is from Darko Mihelic with RBC Capital Markets. Darko Mihelic: Just a real quick question on corporate. There's a bit of noise in there. You actually have a negative CSM. Colin, how should I think about this business unit on a go-forward basis from a modeling perspective? Colin Simpson: Good to hear from you. Corporate was a little bit more -- was different to the trend, actually, and a large part of that was the withholding tax accrual release that we made in respect of the Comvest acquisition. But I think going forward, you would expect us to have a result of $300 million to $400 million in this line, and that reflects further investments in central products. You mentioned the CSM, the negative CSM, that is related to our COLI product that we've owned for many years. It's really just an intercompany settlement and nothing to really focus on. It will be steady for the next few quarters. Darko Mihelic: Okay. And a question for Steve Finch. Steve, the question is really twofold. One is your agent count still declining. Maybe you can talk a little bit about what it is you're doing there? And when does it -- if does it affect sales power? And then on top of that, just quickly, is there -- how should we think about the build-out of India in terms of the earnings drag for the next couple of years? Steven Finch: Thanks, Darko. And on the agency side, our focus there, our strategy is building out a high-quality and professional agency. And which it's not really driven by that metric in terms of number of agents. So we -- if we look at other metrics in terms of top-tier agency, our APE per active agent is growing significantly. Our NBV per agent is also growing materially. And we've seen growth in our agency sales this year as a result of this. One of the other objective measures there is a measure of top-tier agents is $1 million roundtable. Manulife was third globally in terms of number of MDRT qualifiers in '24, and the run rate is in the 20s, 20% for growth tracking through 2025 as well. And what we're continuing to do to drive this is we're making investments. And broadly speaking, those investments are training and development, really investing in our people to be able to recruit high-quality agents, train them very well, develop them into leaders, and create highly professional agents, along with investments in technology and tools, AI tools that are making the agents more efficient providing better service to our customers, identifying from all the data that we've got on customer interactions, what the next best need for the agent would be. And we're seeing benefits from these investments. So we are pleased with the -- what we're seeing come out of these investments in the agency strategy. It's one of the core -- it is the core distribution engine of the franchisee representing a little over 1/3 of the sales. Philip Witherington: And Steve, did you want to cover the India -- the India earnings question? Okay. You go ahead, Steve. Steven Finch: Yes. Thanks. As Phil said earlier, we're -- we still have a ways to go to get the entity set up. We're not giving those forward projections at this time in terms of financial metrics, but we look forward to updating on that in the future. Philip Witherington: Yes, that makes sense. And just to supplement, in terms of one financial metric we can provide is we expect the capital cost of India over the course of the next decade to be around USD 400 million capital injection. In the first 5 years, that's around USD 140 million to USD 150 million. And I think that helps really to put some parameters around what the overall financial dynamics are, but a hugely exciting move for Manulife. Operator: Thank you. And this concludes the question-and-answer session. I would like to turn the conference back over to Mr. Hung Ko for any closing remarks. Hung Ko: Thank you, operator. We'll be available after the call if there are any follow-up questions. Have a good day, everyone. Operator: Thank you. This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning. I would like to welcome everyone to the Plaza Retail REIT Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise everyone that this conference is being recorded. And I will now turn the conference over to Kim Strange, Plaza's General Counsel and Secretary. Ms. Strange, please go ahead. Kimberly Strange: Thank you, operator. Good morning, everyone, and thank you for joining us on our Q3 2025 results conference call. Before we begin, we are obliged to advise you that in talking about our financial and operating performance and in responding to questions today, we may make forward-looking statements, including statements concerning Plaza's objectives and strategies to achieve them as well as statements with respect to our plans, estimates and intentions or concerning anticipated future events, results, circumstances or performance that are not historical facts. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making these forward-looking statements can be found in Plaza's most recent annual information form for the year ended December 31, 2024, and management's discussion and analysis for the third quarter ended September 30, 2025, which are available on our website at www.plaza.ca and on SEDAR Plus at www.sedarplus.ca. We will also refer to non-GAAP financial measures widely used in the Canadian real estate industry, including FFO, AFFO, EBITDA, adjusted EBITDA, NOI and same-asset NOI. Plaza believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similar titled measures reported by other real estate investment trusts or entities. They should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. For definitions of these financial measures and where to find reconciliations thereof, please refer to Part 7 of our MD&A for the third quarter ended September 30, 2025, under the heading Explanation of Non-GAAP Financial Measures. I will now turn the call over to Jason Parravano, Plaza's President and CEO. Jason? Jason Parravano: Thank you, Kim. Good morning. We appreciate you joining us today as we review our financial performance and key achievements for the third quarter of 2025. Q3 was a milestone quarter for Plaza, delivering our highest quarterly FFO per unit in recent years at $0.111, an 8.8% increase over the same period last year. This performance reflects the strength of our portfolio and the disciplined execution of our strategy, which we have been pursuing for the last year. Our total FFO rose to $12.4 million, up 8.6% year-over-year, driven by higher NOI from same asset growth, acquisitions and intensification projects. We stayed on track with strong same-property performance with same-property NOI increasing 1.7% year-over-year, driven by solid leasing activity and disciplined expense management. Had it not been for bad debt adjustments related to an unforeseen tenant closure, same-asset NOI for the 9-month period would have reached 2.3% and 2.7% quarter-over-quarter. Leasing fundamentals remain robust with blended leasing spreads of 14% over the renewal term. Notably, our leasing spreads on negotiated renewals over the renewal term were just over 18%. This underscores our ability to drive value from the existing portfolio and demonstrates the favorable delta between our in-place and market rents. Our committed occupancy rate remains at an all-time high of 98%. Excluding enclosed malls, our occupancy rate climbed even higher and is near perfect at 99%. These metrics continue to reflect all-time high performance levels, reinforcing sustained tenant demand and the strategic positioning of our portfolio in markets characterized by limited retail supply. As renewals continue to take effect during the year, we expect continued positive impact on same-property NOI, complemented by contributions from intensification and optimization projects currently underway across the portfolio. We delivered roughly 70,000 square feet of space to No Frills during the quarter at various properties in the portfolio for them to complete their fit up and construction. Benefits from these projects will have a greater impact at the start of 2026. In the meantime, we continue to work through other leasing and property enhancement projects that will further strengthen performance. AFFO figures are skewed as a result of our optimization initiatives, which are delivering significant FFO growth and value creation. We're currently in the preconstruction or construction phase of approximately 300,000 square feet of intensification, development and strategic optimization projects that we launched earlier this year. While many of the costs associated with our optimization projects are captured in leasing costs and have a short-term negative impact on FFO -- on AFFO, the resulting incremental NOI validates the investment. These projects are strategically designed to enhance long-term value and operational efficiency across the portfolio. Similar to last quarter, of the reported leasing costs impacting AFFO year-to-date, $2.4 million of that is related to projects, which will generate $650,000 of NOI for Plaza. There remains just under $1 million to spend in leasing costs subsequent to the quarter end to complete set projects. This represents an unlevered return of approximately 20% on these optimization projects alone compared to the 17% we initially budgeted. Excluding these impacts, leasing costs would have been lower than the prior year. We're looking forward to the opening of these stores as they will add significant traffic and complement the properties and existing tenants alike. As part of our 2025 capital recycling program, we have sold 19 properties at prices in excess of our IFRS values. We have, for the most part, completed our program for this year. As mentioned in prior quarters, strong purchaser demand converted to successful closings. Our capital recycling initiative is aligned with our ongoing efforts to increase the average property size in our portfolio, reduce the average age of the assets and enhance the overall quality of the portfolio. It also supports capital required to execute our 3-pillar strategy. As a result of the significant value creation on our optimization projects, our equity requirements are far less than expected, which has allowed us to put proceeds to use in paying down debt as well as consolidate our ownership position in certain properties. As Plaza's focus has always been retail, we know it very well. We remain focused on being a best-in-class owner and operator of retail properties. We're the only REIT on the TSX offering investors access to pure-play essential needs, value and convenience retail. I will now turn the call over to Jim Drake, our CFO. Jim Drake: Thank you, Jason. Good morning, everyone. Further to Jason's comments, we had a busy and successful quarter. On operating results, total NOI was up 4% for the quarter, 3% year-to-date. Growth is attributed to our optimizations, intensifications, developments and acquisitions, which have generated $4 million of NOI year-to-date. Same asset increases from rent escalations and strong lease renewal spreads also delivered growth. The result was the significant FFO per unit increase Jason mentioned. AFFO per unit was impacted by our optimization program, where the required leasing costs have a temporary impact on AFFO, but improves the quality of our assets and will result in increased revenues in the future. On the balance sheet, our debt-to-assets ratio is down 10 bps versus Q3 last year at 53.4%, including land leases. Net debt to adjusted EBITDA was 9.2x, consistent with Q3 last year. We maintain a balanced mortgage maturity ladder with $13 million of fixed rate mortgages rolling for the remainder of the year at a weighted average rate of 3.6% and overall loan-to-value of 48%. We continue to see strong interest in our mortgage offerings with competitive spreads generally at 170 to 200 bps over GOC bonds. Our liquidity at quarter end was $57 million, including cash, operating line and available debt facilities. This will allow us to take advantage of upcoming opportunities, including further optimization and intensification projects. Finally, for the fair value of our investment properties, we took a $2.9 million write-down during the quarter, generally due to a change in the development strategy at a property. Our weighted average cap rate is now 6.82%. Those are the key points for the quarter. We will now open the lines for any questions. Operator? Operator: [Operator Instructions] And your first question comes from the line of Tal Woolley from CIBC Capital Markets. Tal Woolley: Just wondering, obviously, you guys are almost full up on occupancy, but you have been calling out like some tenant failures. Are these just regular sort of run-of-the mill kind of like independent retailers? Or are there anything sort of you're seeing as a trend there that's developing. Jason Parravano: Yes. So Tal, it's essentially one tenant, and it's not a secret out there. It's Toys "R" Us. So we had one Toys "R" Us property in the portfolio. They did have term, and they vacated unannounced, I believe, in the month of May. Tal Woolley: Okay. And that was the same for last quarter, too? Jason Parravano: Well, it would only have affected one month in the last quarter, for the month of June. So this is a full quarter effect. Tal Woolley: Okay. Got it. And then the incremental leasing costs you're booking in AFFO, can you just talk a little bit about the nature of it? Like is it commissions, CapEx, TIs, like what's the -- what are you really putting into the ground... Jason Parravano: We're increasing the quality of tenants in certain locations. And obviously, some tenants are much more sophisticated. So HVAC requirements, electric requirements, partly TIs as well, but basically getting buildings down back to an acceptable base building form and the costs associated with that. Tal Woolley: Got it. And you're seeing healthy renewal spreads. You sort of talked about how you expect that to filter into your NOI performance going forward. Just wondering like if we're thinking about the next couple of years for same-property NOI, is 2% the right number? Or should we be thinking about something a little bit higher? Jason Parravano: Jim, do you want to take that one? Jim Drake: Sure. I think 2% is safe. As Jason mentioned, we are 1.7% reported this quarter, but would have been 2.3% without that bad debt. So I think 2% is certainly achievable and safe. Those renewal spreads, obviously, we're doing renewals, in some cases, 6 months to a year in advance. So those will filter through into next year and beyond. Tal Woolley: Okay. And on the ongoing sort of push to consolidate your holdings, how much of that activity should we be expecting next year? Jason Parravano: So we're targeting 3 portfolios within the existing portfolio to try to increase and consolidate our position in the next 5 quarters. In terms of a dollar amount, Jim, do you have that handy with you right now? Jim Drake: On the equity side, it might be $8 million or $9 million, but I think it really depends on the uptake from the existing investors in those LPs. Tal Woolley: Got it. And then finally, just wondering about sort of refinancing rates. Obviously, bonds have been jumping up and down here. I'm just wondering where you're sort of seeing your mortgages come in at right now. Jim Drake: So the standard would be, call it, 170 to 200 bps over GOC bonds. We're generally preferring longer 10 years, but we will do some 5-year if it matches lease term. So all-in rates today would be mid-4s to 5%, just over 5%. Operator: [Operator Instructions] And your next question comes from the line of Mark Rothschild. Mark Rothschild: Jason, can you talk a little bit about what you're seeing in the acquisition market and the pricing cap rates for any properties that you want to see? And maybe just how has that evolved over the last little while with increasing demand for your property type? Jason Parravano: I think seller expectation is at an all-time high, which bodes well for us. We haven't really seen a compression in our IFRS cap rates just based on the third-party cap rates that we've been provided with. But actual transaction activity, I think, is getting done at cap rates, which are lower than what we're valuing our portfolio at. Everyone is chasing grocery-anchored retail real estate right now. That is -- that has become again the most -- the hottest asset class in Canada. Mark Rothschild: And when you say bode well, I assume you don't mean for your ability to actually complete acquisitions. Jason Parravano: Correct. Our strategy is not -- well, look, we're always looking at potential third-party acquisitions. We have $1.8 billion in assets under management. Of that, $1.2 billion to $1.3 billion would be considered our share of those properties. We have $600 million -- that means we have $600 million of properties, low-hanging fruit that we already own a piece of that would be great targets for us to consolidate our ownership position in and own more of what we like. Mark Rothschild: And are you saying that you're able to get access to that at IFRS or at market? Or how should we think about the pricing on that? Jason Parravano: It's a case-by-case basis, but typically, we're buying that at market values, at IFRS values. Operator: Mr. Parravano, there are no further questions at this time. Please proceed. Jason Parravano: Well, thank you all for joining us today and your continued support and trust. We remain committed to creating long-term value for our unitholders, our tenants and the communities they serve. We appreciate your time and look forward to the journey ahead. Take care and talk soon. Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.
Operator: Thank you for standing by, and welcome to the MediPharm Labs conference call to discuss its third quarter 2025 results. Our speakers on today's call are David Pidduck, President and Chief Executive Officer; and Greg Hunter, Chief Financial Officer. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The information during this call should be considered together with the more detailed information disclosure, financial data and statements available on the company's website and on its SEDAR profile at sedarplus.ca. As set out on the webcast slide, I would like to note that remarks during this earnings call may contain forward-looking information and forward-looking statements within the meaning of applicable securities laws. This includes, without limitation, statements about MediPharm Labs and its current and future plans, expectations, intentions, financial results, operations, levels of activity, performance, goals or achievements and other future events, trends, profitability, business developments. All statements other than statements of historical facts are forward-looking statements. The statements made are based on the company's current expectations, estimates and beliefs as of today's date. The company's remarks may also contain references to certain non-IFRS financial measures, including adjusted EBITDA. These measures do not have any standardized meaning according to International Financial Reporting Standards, or IFRS, and therefore, may not be comparable to similar measures presented by other companies. Please review the company's most recent disclosure materials filed on SEDAR for the risks associated with forward-looking information and the use of non-IFRS financial measures, including the section titled Reconciliation of non-IFRS Measures in the company's most recent MD&A available on SEDAR. Please note that all dollar amounts mentioned on today's call are in Canadian dollars unless otherwise noted. And now I would like to turn the call over to Mr. David Pidduck. Please go ahead. David Pidduck: Good morning, and thank you for joining us for MediPharm Labs Third Quarter 2025 Earnings Call. As you saw in our news release earlier today, in the third quarter of 2025, MediPharm continued to successfully execute against our strategic priorities, reducing costs while driving sales momentum and delivering 17% revenue growth year-over-year. This growth demonstrates the effectiveness of our strategy, highly differentiated capabilities and the dedication of our team. We continue to strengthen our position across complex regulated markets to deliver trusted pharmaceutical-grade cannabinoid solutions, advancing patient care and building a stronger global foundation for long-term shareholder value. In Q3 2025, international medical cannabis revenue grew 83% compared to prior year, with international medical sales now representing 56% of our total revenues. This is a significant achievement and underscores the success of our international product and market expansion strategy. Our achievements in international markets are built on years of preparation, investment, operational execution and regulatory capabilities that are not easily replicated. MediPharm holds a unique and unrivaled suite of pharmaceutical licenses and registrations, including an FDA-inspected facility. We maintain a portfolio of GMP-compliant products offered across the EU, U.K., Australia, Brazil and other jurisdictions, enabling us to operate confidently in complex regulatory environments. Our multiple GMP licenses are not just compliance checkmarks. They are strategic advantages that allow MediPharm to compete in the highest value-add segments of the global cannabis market. Our international capabilities position MediPharm as a trusted partner for delivering innovative, pharma-grade products globally and again, represent years of rigorous quality and regulatory work. It takes significant time and expertise to achieve this level of licensing and to support clinical research partnerships with pharmaceutical cannabis. Our infrastructure is purpose-built for international success, and our revenue results in Q3 demonstrate the impact of enduring partnerships, operational excellence and distribution networks that enable consistent and scalable growth. Financial stability has also made MediPharm appealing and reliable partner internationally. We have virtually no debt and remain committed to disciplined cost management, reducing Q3 2025 operating expenses by 19% year-over-year. At the same time, we are investing strategically to capture growth opportunities and meet rising demand in our core export markets, including Germany, Australia and the United Kingdom. Our balanced approach allows us to strengthen our path to profitability while positioning the company for continued long-term revenue growth. In addition to our international revenue success in Q3, we have several noteworthy international progress updates to highlight. In Q2 2025, we announced our plans to expand cultivation capacity by approximately 30% at our EU GMP-certified Napanee facility. I'm pleased to share that our operations team delivered on this commitment, successfully completing the first harvest from our newly added grow room recently. We've begun production on our first purchase order for Teuto, a leading pharmaceutical manufacturer and marketer in Brazil, and we plan to ship in Q4. While pricing pressure remains a challenge, we are working closely with partners to adjust positioning with launch time lines dependent on permits and partner compliance with authorization windows. MediPharm is one of just a few North American companies with partners to receive multiple sanitary authorizations for cannabis products while holding an ANVISA GMP license. The Brazilian medical cannabis market is growing annually and is expected to exceed USD 260 million by 2026. Subsequent to Q3, MediPharm also recently completed the company's first production order for France in partnership with an authorized distributor, marking entry into one of Europe's most promising emerging medical cannabis markets. This collaboration underscores our ability to develop new pathways to market for the company and ability to supply pharmaceutical-grade products that meet stringent European standards. France is the largest consumer of cannabis in Europe and has been gradually expanding its medicinal cannabis market. The French medicinal cannabis market is projected to reach revenues of over $250 million in 2025 and is poised to grow as new legislation develops. Looking ahead to 2026, we have partnered with a top-tier distributor in New Zealand, which in Q4 received approval to launch MediPharm products in the new year. We expect this partnership will position us to enter New Zealand, a developing, highly regulated market with strong growth potential. We are confident that these new market entries into Brazil, France and New Zealand will contribute to continued international growth in 2026. We also continue to monitor the U.S. market. As earlier this year, communication from the U.S. federal government and various media reports indicated that current administration is reviewing the rescheduling of cannabis federally in the U.S. Speculation is that this could mean the U.S. government potentially changing the classification of cannabis from a Schedule I drug to a Schedule III drug, though this is not confirmed. If this were to occur in the future, we expect that the rescheduling may signify some recognition of the medical benefits of cannabis at the federal level in the United States. Schedule III classification could expand the possibility for U.S.-based research on medical cannabis products. MediPharm has gone through the complex process of foreign drug manufacturing site registration with the U.S. FDA and has already shipped medical cannabis active pharmaceutical ingredients, API, and cannabis products to the U.S. for research, including National Institutes of Health, NIH-funded clinical trial. MediPharm was the first Canadian company to register a CBD API DMF with the U.S. FDA. With the possible rescheduling of cannabis, MediPharm Labs holds existing licenses and expertise to serve the anticipated expansion of U.S.-based research. Beyond new market entries, we continue to diversify our product mix internationally in our core regions of focus, including expanding our portfolio in Australia to include new flower strains, additional inhalable cartridges, edibles and novel metered dose inhalers. These innovations strengthen our leadership in advanced delivery technologies. As discussed in our Q2 '25 earnings call, the launch of our metered dose inhalers aligns with our strategy to deliver innovative pharma quality cannabinoid products globally. In Q3 2025, we launched these inhalers in Australia. And in Canada, we extended our inhaler portfolio to include minor cannabinoid formulations. Our metered dose inhalers offer patients a discreet, precise smoke-free delivery method, supporting both medical and wellness applications. The inhaler provides a fast onset format without smoke or vapor. It features direct-to-lung delivery for higher bioavailability of cannabinoids compared to ingested formats. And the metered dosing feature helps ensure greater precision and repeatability in dosing for more consistent outcomes. I'm especially excited about the transformative potential of our inhaler technology to meet consumer needs for a smoke-free controlled experience with fast onset. We envision a future where this format could become an attractive option for consumers who are seeking alternatives to combustible products, offering convenience and consistency that traditional consumption methods cannot match. As we prepare to launch our metered dose inhalers in additional international markets, including the U.K., we see meaningful opportunities to make this innovation more widely available and to explore how it can fit into evolving consumer preferences across both medical and wellness applications. We remain committed to offering a diverse range of products tailored to the evolving needs of patients and consumers with the metered dose inhaler offering more rapid onset, while our other products like tinctures, soft chews and soft gels allow for a slower onset and longer duration of effects. MediPharm's wellness focus combines innovative delivery technologies with patient-focused services and education. In Canada, we operate our own clinic network to provide direct access and support for patients, while internationally, we advance education through clinic partnerships and physician outreach. This commitment to education enhances patient engagement and informed prescribing, and it complements our role in supporting research by supplying pharmaceutical-grade products for studies aimed at improving patient outcomes. We are proud to support cannabinoid-based pharmaceutical research by supplying pharmaceutical-grade products for over 10 clinical studies and trials. On our Q2 earnings call, I spoke about the LiBBY Alzheimer's clinical trial. Today, I'd like to highlight another important research initiative MediPharm is supplying clinical materials for, the CAN-DRE epilepsy trial. This triple-blind placebo-controlled study is led by Dr. Lauren Kelly at the Children's Hospital Research Institute of Manitoba and spans multiple sites from Alberta to Nova Scotia. The trial is expected to enroll 90 participants to evaluate changes in seizure frequency across 3 formulations: a placebo, a highly purified CBD isolate and a cannabis herbal extract. Safety profiles will also be assessed. This is the first head-to-head comparison of isolate versus full spectrum formulations, addressing a key hypothesis supported by emerging clinical evidence. We value the opportunity to contribute to research that could shape future treatment options for patients. It has been estimated that almost 1 out of every 100 people in Canada have epilepsy and about 30% of people with epilepsy do not respond well to conventional therapies. Drug-resistant epilepsy, DRE, is when people do not achieve sustained seizure freedom after the use of several seizure medications. This clinical trial is being done to compare changes in seizure frequency reported at maintenance phase compared to baseline. Our collaborations with leading universities, medical institutions and pharmaceutical companies across Canada and internationally aim to advance the science of cannabinoid therapies and generate evidence that improves patient outcomes. These partnerships demonstrate our leadership in pharmaceutical cannabinoid solutions and highlight our commitment to driving innovation that matters for patients and partners. While international medical cannabis remains our priority growth driver, we continue to support partners, patients and wellness consumers with exceptional products and services in Canada and abroad. Our domestic strategy emphasizes margin-accretive products and prioritizes profitability over top line growth. I will now turn the call over to Greg Hunter, our CFO, to provide a detailed overview of our Q3 financial performance. Greg Hunter: Thanks, Dave, and good morning, everyone. As Dave noted, MediPharm continues to execute on our strategy to grow revenue, expand internationally and drive operational efficiencies to become profitable and cash flow positive. Our Q3 2025 results reflect meaningful progress on these priorities. Revenue for Q3 was $11.4 million, an increase of $1.6 million or 17% versus prior year, driven by strong growth in our international medical cannabis business. International medical cannabis revenue increased $2.9 million or 83% year-over-year to $6.4 million in the quarter with broad-based growth across our German, Australia and United Kingdom customer base. International medical cannabis accounted for 56% of total revenue this quarter, up from 36% a year ago. Canadian medical cannabis revenue was $3.0 million in the quarter and decreased versus prior year, driven by sales to third-party medical channels, while our Canna Farms medical channel remains stable. Canadian adult-use and wellness revenue was $1.8 million in the quarter, up 4% year-over-year and 9% sequentially versus Q2. Gross profit for the quarter was $2.6 million, reflecting margin pressure from product mix with our international business. We remain focused on optimizing product mix and production efficiency to improve margins. A key part of this strategy is the introduction of innovative products such as our metered dose inhalers. As Dave noted, these inhalers represent a novel pharmaceutical-grade delivery technology that offers patients a precise smoke-free option. By expanding this differentiated portfolio, we believe we are creating value through innovation and thus improving our margin profile. General and administrative expenses of $3.2 million in the quarter decreased 19% versus prior year and 40% versus prior quarter. Marketing and selling expenses of $1.2 million in the quarter decreased 17% versus prior year and 15% versus prior quarter. Total operating expenses, which include G&A, marketing and selling and R&D was $4.4 million in Q3 and decreased $1 million or 19% versus prior year and $2.3 million or 35% versus prior quarter. Management continues to focus on further expense reduction opportunities. Adjusted EBITDA loss of $1.1 million in Q3 was impacted by product mix, while year-to-date adjusted EBITDA improved $0.3 million compared to prior year. Net loss for the quarter was $2.2 million, an improvement of $0.6 million year-over-year and $1.6 million versus Q2 2025. While we don't provide formal guidance, we are encouraged by our revenue trajectory and expect continued progress, though we anticipate some variability as international markets mature. Our focus remains on driving profitable growth and achieving cash flow positivity. Turning to our balance sheet and liquidity. We ended the quarter with $10.6 million in cash, up $0.2 million from Q2 2025, driven by disciplined cash management and supported by $0.4 million in redundant asset sales. Trade and other receivables were $7.7 million with 90% aged 60 days or less. Trade and other payables were $8 million. And unlike many other cannabis companies, we are up-to-date on cannabis excise duties, sales taxes and trade payable obligations. The company has virtually no debt and owns 2 production facilities with an appraised value exceeding $15 million. In summary, Q3 was a step forward for MediPharm. We delivered strong revenue growth, improved our cost structure and maintained a robust balance sheet. We are well positioned to invest in both organic and inorganic growth opportunities as the industry evolves. To summarize, revenue in Q3 increased 17% versus prior year and year-to-date revenue increased 14%. International medical cannabis revenue in the quarter increased 83% versus prior year and 71% year-to-date. Adjusted EBITDA in Q3 was impacted by margin pressure, but year-to-date, it improved $0.3 million versus prior year. Net loss of $2.2 million in the quarter improved $0.6 million versus prior year and improved $1.6 million versus Q2 2025. Year-to-date net loss of $6.3 million improved $2.6 million versus prior year. And finally, we have a strong balance sheet relative to our peers with $10.6 million in cash and virtually no debt. We remain focused on innovation, expanding our international footprint, strategic M&A and supporting clinical research partnerships that differentiate MediPharm in the market. I'll turn it back to Dave to close this portion of our call before taking questions. David Pidduck: Thank you, Greg. As you have heard today, MediPharm is delivering on the company's strategy, and we are making measurable progress on our key priorities. International revenue continues to represent more than half our business, and these results reflect years of investment in infrastructure, compliance and partnerships that position us uniquely in the pharmaceutical cannabinoid space. Our long-term vision is clear. We aim to lead globally in delivering pharmaceutical-grade cannabinoid solutions that improve patient outcomes and create sustainable value for shareholders. We are uniquely positioned to lead in global medical markets as governments around the world continue to raise the quality and regulatory bars even higher. We enjoy the advantages of our 2 owned facilities with GMP certifications across multiple jurisdictions; our strong balance sheet, including $10.6 million in cash; our commitment to furthering clinical research; and our proven ability to drive revenue in highly regulated environments while implementing cost savings. On our last call, I also discussed MediPharm's successful M&A track record, the most significant to date being our 2023 VIVO transaction, which has been a key strategic pillar in our international growth and profitability. We continue to engage in meaningful M&A discussions with select partners where we believe a potential transaction could deliver significant cost synergies, revenue opportunities and enhance shareholder value. While the global cannabis sector remains complex and challenging, MediPharm's pharmaceutical capabilities and strong financial position give us a distinct advantage. We are well positioned to pursue both nonorganic growth through strategic acquisitions and organic growth through continued execution of our global strategy. As we look forward, MediPharm is committed to scaling responsibly, innovating meaningfully and strengthening our presence in the highest value segments of the industry. Our differentiated licensing foundation, operational excellence and combined focus on profitability and cash flow gives us confidence in our ability to deliver long-term growth and value for shareholders. Thank you for your continued support as we execute on this vision. The operator will now begin our Q&A session. Operator: [Operator Instructions] We do have a question from Troy. It is what specific actions will management take to reverse the gross margin compression from 39% in Q1 to 22% in Q3? David Pidduck: Yes. Thanks for the question, Troy. We -- as you saw, we had a margin that was lower than we had in previous quarters. And I think we have a lot of variability depending on the mix. And the mix comes from both a product perspective in terms of which high-volume products are coming through and what the mix is between international business and our other business. So we have seen variability in revenue, and we've seen variability in margin. In this quarter, we had a -- our plant was shut down for a week, and that impacts somewhat on the margin. And we expect that the mix going forward will be healthier and that we'll see stronger margins going forward. And Greg, you want to build on that? Greg Hunter: Yes, I can just add to that. So we like to think Q3 was a low watermark on our margin, as you indicated, 22%. There are a couple, as Dave mentioned, a couple, I would say, anomalies in the quarter impacting it, one being the shutdown of 2 of our plants in August. So if you were to adjust for that factor, margin would have been more in the line of 26%, which is still lower than we've seen. And a lot of that was impacted by mix. We had a lower mix of some of our higher-margin international products like dronabinol and oil within the quarter. And so go forward, what is management doing on? I mean, as you've seen it with our margin profile over the last quarters, we've been ruthlessly focused on improving that through cost reductions, which we did implement some additional ones in late Q2, early Q3, which will spill over into Q4. So we should get the benefit of that as well as we said in our prepared remarks with product mix as we look at new international markets with higher-margin products, whether that be Brazil, New Zealand, France and with new products such as inhalers. The last thing I'd just add on some of the things we're looking at on investments to drive operational efficiencies within the plant around automation. So rest assured, we believe it is the low watermark, and we are ruthlessly focused on not just improving margin, but overall cost structure within MediPharm. David Pidduck: And maybe -- thanks, Greg. One more thing I'll add to that, which was in our remarks, products like the inhaler, which have -- are differentiated, innovative and are launching both in Canada and in other markets, they tend to come with higher margins. So as the mix goes to newer launch products and we're more successful, and the same thing goes of new markets that we're entering. Generally, when you're entering into a new market, it's earlier in its life cycle, and we can expect higher margins from there. So I think that combination with what Greg is talking about, we're optimistic that the margin profile is going to improve. And as you noted, our cost structure continues to be ratcheted down. And so those together, we'll see improving margins going forward. Operator: And there are no further questions at this time. Ladies and gentlemen that concludes today's call. We thank you all for joining. You may now disconnect.